AVY

2025. The primary factors affecting this decrease were: • The net impact of raw material deflation-related price reductions • Higher employee-related costs • Higher interest expense • Growth investments These items were partially offset by the following factors: • Benefits from productivity initiatives, including material re-engineering and savings from restructuring actions, net of transition costs • Higher volume/mix 23 Table of Contents Cost Reduction Actions 2025 Actions During 2025, we recorded

access to commercial paper markets were to become limited, we would need to obtain short-term funding under our Revolver, which would expose us to variable interest rates

resulting from, among other things, increased raw material, energy and freight costs

resulting from, among other things, increased raw material, energy and freight costs

below. • Based on recent rates, favorable impact from foreign currency translation to our full-year net sales and operating income • Unfavorable impact from higher interest expense to our operating income • Our full-year effective tax rate to be in the high-twenty percent range • Incremental savings from restructuring actions, net of transition costs • Unfavorable impact to our operating income from the normalization of the majority of our prior-year temporary cost savings, which was largely related

Future acquisitions could result in increased debt, dilution, liabilities, interest expense, restructuring charges and amortization expenses related to intangible assets

tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

In September 2025, we issued €500 million of senior notes, due September 11, 2035, which bear an interest rate of 4

of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures

of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures

access to commercial paper markets were to become limited, we would need to obtain short-term funding under our Revolver, which would expose us to variable interest rates

tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

In September 2025, we issued €500 million of senior notes, due September 11, 2035, which bear an interest rate of 4

resulting from, among other things, increased raw material, energy and freight costs

The demand for our products is impacted by the effects of, and changes in, worldwide economic, geopolitical, social and labor conditions, which have had in the past and could in the future have a material adverse effect on our business

Risk Related to Our International Operations The demand for our products is impacted by the effects of, and changes in, worldwide economic, geopolitical, social and labor conditions, which have had in the past and could in the future have a material adverse effect on our business

Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

imported from China, tariffs by China on U

countries in Europe and certain countries in Asia Pacific, primarily China

other regions and countries, including Canada, Mexico, China, India and the European Union

countries in Europe, including Belgium and Luxembourg, and certain countries in Asia Pacific, including China and Malaysia

other regions and countries, including Canada, Mexico, China, India and the European Union

and opportunities, and applying technology to address them. Our investment in innovation aims to accelerate growth by developing new products and solutions, expand margins through material re-engineering, and enable customer success by leveraging scalable innovation platforms and delivering sustainability initiatives and advanced technologies. Many of our new products result from our research and development efforts. These efforts are directed primarily toward developing products, solutions and operating

before taxes adjusted for other expense (income), net; interest expense; and other non-operating expense (income), net. Refer to Note 11, “Segment and Disaggregated Revenue Information,” to the unaudited Condensed Consolidated Financial Statements for more information. Materials Group Three Months Ended (In millions) March 31, 2026 March 29, 2025 Net sales including intersegment sales $ 1,683.0 $ 1,524.0 Less intersegment sales (33.7) (43.9) Net sales $ 1,649.3 $ 1,480.1 Segment adjusted operating income

Statements for more information regarding (gain) loss on venture and other investments, net. Refer to Note 8, "Contingencies," and Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information regarding outcomes of legal matters and settlements, net. Interest Expense Interest expense increased in 2025 compared to 2024 primarily due to the €500 million of senior notes we issued in September 2025 and the €500 million of senior notes we issued in N

to conduct business, result in legal claims or proceedings, damage our reputation, or result in the loss or diminished value of profitable opportunities and the loss of revenue as a result of unlicensed use of our intellectual property. Contractual provisions with third parties, including cloud service providers, substantially limit our ability to fully recover these potential losses. If the personal information of our customers or employees were to be misappropriated, we could incur costs to compensate our cu

to conduct business, result in legal claims or proceedings, damage our reputation, or result in the loss or diminished value of profitable opportunities and the loss of revenue as a result of unlicensed use of our intellectual property. Contractual provisions with third parties, including cloud service providers, substantially limit our ability to fully recover these potential losses. If the personal information of our customers or employees were to be misappropriated, we could incur costs to compensate our cu

Statements for more information regarding (gain) loss on venture and other investments, net. Refer to Note 8, "Contingencies," and Note 15, “Segment and Disaggregated Revenue Information,” to the Consolidated Financial Statements for more information regarding outcomes of legal matters and settlements, net. Interest Expense Interest expense increased in 2025 compared to 2024 primarily due to the €500 million of senior notes we issued in September 2025 and the €500 million of senior notes we issued in N

and opportunities, and applying technology to address them. Our investment in innovation aims to accelerate growth by developing new products and solutions, expand margins through material re-engineering, and enable customer success by leveraging scalable innovation platforms and delivering sustainability initiatives and advanced technologies. Many of our new products result from our research and development efforts. These efforts are directed primarily toward developing products, solutions and operating

before taxes adjusted for other expense (income), net; interest expense; and other non-operating expense (income), net. Refer to Note 11, “Segment and Disaggregated Revenue Information,” to the unaudited Condensed Consolidated Financial Statements for more information. Materials Group Three Months Ended (In millions) March 31, 2026 March 29, 2025 Net sales including intersegment sales $ 1,683.0 $ 1,524.0 Less intersegment sales (33.7) (43.9) Net sales $ 1,649.3 $ 1,480.1 Segment adjusted operating income

and cost of raw materials and energy, which may be subject to significant price fluctuations, and our ability to control or offset increases in raw material and labor costs. Raw material and freight cost increases have impacted our business. Raw materials represent a significant portion of our costs and a critical factor in our profitability. The markets for the raw materials used in our businesses can be volatile, impacting availability and pricing. Additionally, energy costs can be volatile and unpre

370 positions, as well as asset impairment charges, at various locations across our company as a result of actions taken to optimize our operational footprint and workforce headcount. Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information. 18 Table of Contents Avery Dennison Corporation Cash Flow Th

rating downgrades. Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all imports, with higher rates on certain goods. Additionally, it applied significant tariffs on goods from Canada, Mexico, China and the European Union, each of which announced reciprocal tariffs. The amount of these tariffs or the classes of goods on which they a

practices in 2025, including performance management, development and learning. Compensation & Benefits Our total rewards philosophy is to offer market-based, competitive wages and benefits in the markets where we operate. All of our employees were paid at least the applicable legal minimum wage, and over 98% of our employees were paid above the applicable legal minimum wage, at year-end 2025. Pay is generally positioned around the market median, with variances largely based on knowledge, skills, years of experi

practices in 2025, including performance management, development and learning. Compensation & Benefits Our total rewards philosophy is to offer market-based, competitive wages and benefits in the markets where we operate. All of our employees were paid at least the applicable legal minimum wage, and over 98% of our employees were paid above the applicable legal minimum wage, at year-end 2025. Pay is generally positioned around the market median, with variances largely based on knowledge, skills, years of experi

rating downgrades. Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the European Union. In 2025, the U.S. implemented a 10% global baseline tariff rate on nearly all imports, with higher rates on certain goods. Additionally, it applied significant tariffs on goods from Canada, Mexico, China and the European Union, each of which announced reciprocal tariffs. The amount of these tariffs or the classes of goods on which they a

370 positions, as well as asset impairment charges, at various locations across our company as a result of actions taken to optimize our operational footprint and workforce headcount. Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information. 18 Table of Contents Avery Dennison Corporation Cash Flow Th

and cost of raw materials and energy, which may be subject to significant price fluctuations, and our ability to control or offset increases in raw material and labor costs. Raw material and freight cost increases have impacted our business. Raw materials represent a significant portion of our costs and a critical factor in our profitability. The markets for the raw materials used in our businesses can be volatile, impacting availability and pricing. Additionally, energy costs can be volatile and unpre

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

tariffs on goods imported into the U

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

tariffs on goods imported into the U

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

Our future results are subject to changes in worldwide economic conditions, tariffs, social, geopolitical, and market conditions in the regions in which we operate and the impact of fluctuations in foreign currency exchange and interest rates

are Making Possible TM products and solutions that help advance the industries we serve, providing branding and information solutions that optimize labor and supply chain efficiency, reduce waste and mitigate loss, advance sustainability, circularity and transparency, and better connect brands and consumers

shortages

shortages

shortages

shortages

are Making Possible TM products and solutions that help advance the industries we serve, providing branding and information solutions that optimize labor and supply chain efficiency, reduce waste and mitigate loss, advance sustainability, circularity and transparency, and better connect brands and consumers

from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availab

from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availab

from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availab

from, among other things, increased raw material, energy and freight costs; labor shortages; geopolitical, social, supply chain and other disruptions; epidemics, pandemics or other outbreaks of illness, disease or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availab

initiatives, including savings from restructuring actions, net of transition costs • Prior-year losses on venture and other investments • Net benefit of pricing and raw material costs, including material re-engineering These items were partially offset by the following factors: • Unfavorable mix • Higher employee-related costs • Higher provision for income taxes • Higher restructuring charges, net of reversals • Growth investments Cost Reduction Actions 2026 Actions We recorded $15.9 million in r

in our Materials Group reportable segment to address raw material inflation; more recently, we implemented deflation-related price reductions as a result of lower raw material costs. If we experience inflationary headwinds in the future, we may implement similar pricing actions. Our performance depends in part on our ability to offset increased raw material costs by raising our selling prices or re-engineering our products. It is also important for us to obtain timely delivery of materials, equipment and

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K

information solutions include item-level RFID solutions; visibility and loss prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand protection and security solutions; and Vestcom ® -brand shelf-edge productivity and media solutions. In the Solutions Group, our primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; SML Group Limited; Arizon RFID Technology Cayman Co Ltd; and Tag

Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K

Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

international trade regulations (including tariffs), as well as the impact these changes have on demand for our products

information solutions include item-level RFID solutions; visibility and loss prevention solutions; price ticketing and marking; care, content, and country of origin compliance solutions; brand protection and security solutions; and Vestcom ® -brand shelf-edge productivity and media solutions. In the Solutions Group, our primary competitors include Checkpoint Systems, Inc., a subsidiary of CCL Industries Inc.; R-pac International Corporation; SML Group Limited; Arizon RFID Technology Cayman Co Ltd; and Tag

Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K

refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales

refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies and the reclassification of sales

or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades

or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades

or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades

or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades

refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies, and the reclassification of sales

refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies and the reclassification of sales

N Liquidity Operating Activities (In millions) 2025 2024 2023 Net income $ 688.0 $ 704.9 $ 503.0 Depreciation 206.4 197.1 187.4 Amortization 121.8 115.1 111.0 Provision for credit losses and sales returns 51.2 47.4 49.9 Stock-based compensation 27.9 28.7 22.3 Deferred taxes and other non-cash taxes (19.9) (18.5) (24.4) Other non-cash expense and loss (income and gain), net 48.8 67.2 37.1 Trade accounts receivable 44.0 (107.3) (16.7) Inventories 53.2 (90.7) 111.7 Accounts payable (144.4) 106.7 (87.6) Taxes on incom

Operating Activities Three Months Ended (In millions) March 31, 2026 March 29, 2025 Net income $ 168.1 $ 166.3 Depreciation 53.3 48.8 Amortization 33.5 29.1 Provision for credit losses and sales returns 11.6 11.9 Stock-based compensation 5.8 7.9 Deferred taxes and other non-cash taxes (21.1) (14.8) Other non-cash expense and loss (income and gain), net 14.2 20.5 Changes in assets and liabilities and other adjustments (128.9) (286.0) Net cash provided by (used in) operating activities $ 136.5 $ (16.3) During the

associated with the euro in 2025, may result in a variety of negative effects, including lower net sales, increased costs, lower gross margins, increased allowance for credit losses and/or write-offs of accounts receivable, and required recognition of impairments of capitalized assets, including goodwill and other intangible assets. Foreign currency translation increased our 2025 net sales by approximately $29 million compared to the prior year. We monitor our foreign currency exposures and sometimes use hedg

other disruptions, and the threat landscape remains challenging with our digital business transformation, remote or hybrid employees, the increasing use of artificial intelligence (“AI”), and interconnected supply chains expanding the risk of attack

other disruptions, and the threat landscape remains challenging with our digital business transformation, remote or hybrid employees, the increasing use of artificial intelligence (“AI”), and interconnected supply chains expanding the risk of attack

price paid per share includes transaction costs to acquire the shares and excludes the non-deductible 1% excise tax on the net value of repurchases imposed under the Inflation Reduction Act of 2022. (3) In April 2025, our Board authorized the repurchase of shares of our common stock with a fair market value of up to $750.0 million, excluding any fees, commissions or other expenses related to such purchases and in addition to the amount outstanding under our previous Board authorization. Board authorizations

in our markets due to increasing environmental regulations and sustainability trends. If we do not respond appropriately to these changes, it could negatively impact customer demand, our market share and pricing, any of which could materially adversely affect our business. Adverse weather conditions and natural disasters, including those related to the impacts of climate change, have and can adversely affect our business. A substantial amount of our label materials is sold for use in packaging in the food

or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades. Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the Eur

or virus; and uncertainty in global credit or financial markets could result in a material adverse effect on our business as a result of, among other things, lower consumer spending, fluctuations in foreign currency exchange rates, reduced asset valuations, diminished liquidity and credit availability, volatility in securities prices, and credit rating downgrades. Trade-related uncertainty remains elevated between the U.S. and other regions and countries, including Canada, Mexico, China, India and the Eur

in our markets due to increasing environmental regulations and sustainability trends. If we do not respond appropriately to these changes, it could negatively impact customer demand, our market share and pricing, any of which could materially adversely affect our business. Adverse weather conditions and natural disasters, including those related to the impacts of climate change, have and can adversely affect our business. A substantial amount of our label materials is sold for use in packaging in the food

to these changes, it could negatively impact customer demand, our market share and pricing, any of which could materially adversely affect our business. Adverse weather conditions and natural disasters, including those related to the impacts of climate change, have and can adversely affect our business. A substantial amount of our label materials is sold for use in packaging in the food, beverage, and home and personal care market segments. In recent years, there has been an accelerated focus on sustai

in the Middle East, the Russia-Ukraine war, the Israel-Hamas war, the U.S.'s engagement in Venezuela, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could have a material adverse effect on our business. Since the Russia-Ukraine war began in 2022, we have maintained our position of not shipping products to the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European

in the Middle East, the Russia-Ukraine war, the Israel-Hamas war, the U.S.'s engagement in Venezuela, terrorist attacks and the potential for other hostilities or natural disasters in various parts of the world – could have a material adverse effect on our business. Since the Russia-Ukraine war began in 2022, we have maintained our position of not shipping products to the Russian market. The impact of the continuing war, as well as any further retaliatory actions taken by Russia, the U.S., the European

to these changes, it could negatively impact customer demand, our market share and pricing, any of which could materially adversely affect our business. Adverse weather conditions and natural disasters, including those related to the impacts of climate change, have and can adversely affect our business. A substantial amount of our label materials is sold for use in packaging in the food, beverage, and home and personal care market segments. In recent years, there has been an accelerated focus on sustai

outages, civil unrest or other hostilities, and labor stoppages). Our business operations have been and may continue to be adversely affected by the current and future political environment in China, both relating to in-country changes in laws and regulations or the interpretation thereof, as well as a result of its response to tariffs by the U.S. government on goods imported from China, tariffs by China on U.S. goods, the increasing use of economic sanctions and export control restrictions, and tensions rela

and weight and price information for packaged meats and other foods. Self-adhesive materials provide consistent and versatile adhesion and are available in a large selection of materials, which can be made into labels of varying sizes and shapes. Our graphics and reflective products include a variety of films and other products that are sold to the architectural, commercial sign, digital printing and related market segments. We also sell durable cast and reflective films to the construction, automotive and

(vi) charters of the Audit, Talent and Compensation, Governance, Cybersecurity, and Finance Committees of our Board of Directors

from obsolescence, natural disasters, power failures, human error, viruses, social engineering, phishing, ransomware or other malicious attacks and cybersecurity events