Avery Dennison Corporation (AVY) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Avery Dennison's 2026 high-value category Showcase. I think you all know me, but I'm Willie Gilchrist, Vice President of Investor Relations. It's great to see you here today at our headquarters in manner. We're excited to feature our high-value categories and their strategic importance to our financial objectives. Today's presentation materials are available on our website. And the presentation is being recorded. A replay will be available later this afternoon. Before we dive in, a couple of important reminders for you all. For those joining us in person, you received an embellix digital activation trigger patch -- when you checked in, if you tap it with your phone, it bring you to a access today's agenda, presentation slides, showcase demonstration, speaker bios and more information event. Couple of other things to note. Although we do not anticipate any emergencies here today, for those of you in the room with us, in the event there is an emergency, please evacuate the building. You'll see a map here, got fines holes 1 and 2 in the parking lot, and that's going to keep you safe. Second thing is, in addition, please note that throughout today's discussion, we'll be making references non-GAAP financial measures. The non-GAAP financial measures that we use are defined and qualified and reconciled from GAAP in the appendix of the presentation. I remind you that we'll be making certain predictive statements that reflect our current views about our future performance and financial results. These forward-looking statements are made subject to the safe harbor [indiscernible]. Finally, we have a great agenda here for you today. We're all thrilled about this and very excited. You'll be hearing from Dean and Greg and several other leaders on the strategic importance of higher categories. We'll take you through each of these high categories over the next about 90 minutes, and then we'll invite everyone back up on stage for Q1. After that, we'll have lunch, and then we will do a person. We'll do a demonstration of all the high-value categories at the facility here. With that, I'm going to turn it over to Deon Stander, our President and CEO.

All right. Good morning, everybody, and welcome to Avery Dennison's high-value category showcase. So whether you hear in person today or on the webcast, thank you for making the time to spend with us at your day today as well. I'm Dean Stander, I'm the President and CEO of Avery Dennison. On behalf of the whole Abridenson team, we're excited to share a deeper view into our high-value categories. which are the key growth platforms where we consistently deploy capital both organically and inorganically. Today is all about giving you a clear view of what these platforms actually do. The expanding addressable markets they tap into the secular tailwinds behind them, our competitive moats and of course, the specific growth initiatives driving our performance within those. But before we zoom into the individual platforms, let's just take a step back and really look at the foundational a snapshot of Avery Dennison today. As you know, at our core, Avery Dennison is a global leader at the intersection of material science and digital identification. We operate in over 50 countries with 35,000 employees. We build solutions that address key industry challenges, such as optimizing supply chains, reducing waste, mitigating loss and driving its advancing circularity and connecting brands directly with consumers. Financially, this positioning delivers strong, highly resilient performance. In 2025, we rated $9 billion in net sales, balanced across our Materials and Solutions group. And while the enterprise delivered solid mid-single-digit organic growth in the past 5 years, our high-value categories outpaced the core baseline with high single-digit growth, now representing nearly $4 billion of our total top line. Crucially, high-value category margins consistently trend above our enterprise average, proving that as these platforms scale they systematically lift the profitability of the entire company. But beyond these headline numbers, our momentum is underpinned by the structural resilience of our broader portfolio. And as you can see, this structural resilience rests on 3 key pillars. Firstly, roughly 60% of our sales are tied to essential less economically sensitive end markets like food, beverage, pharma, and personal care; providing durable demand through any cycle. Second, the global footprint is exceptionally well balanced. Strong core positions across North America and Europe are complemented by emerging markets that now represent roughly 30% of our revenue, giving us direct exposure to faster-growing economies. And third, as you can see in the chart, our portfolio transformation is accelerating. High-value categories now represent roughly 45% of our total sales, up nearly 10% over the last 5 years. This diversification provides us a distinct advantage a resilient foundation that protects earnings through macro volatility, paired with dynamic growth engines that drive outsized profitable revenue growth in time. Expanding these categories to nearly half our revenue isn't happening by chance. It is a direct outcome of how we execute our core enterprise strategies. So to be clear, these strategies are proven and have guided us across cycles with high-value category growth remaining a consistent foundational pillar. While high-value cutter expansion is listed as our first pillar, it directly aligns with our commitments to lead at the intersection of the physical and digital and environmental and social responsibility while allocating capital with discipline. At the same time, pillars 2, 4, and 5 emphasize continuing to grow our base business profitably is vital for us. These market-leading businesses provide reliable foundation to deliver earnings and cash flow and enable investment across our portfolio. Together, these 5 pillars give us the strategic balance to deliver GDP-plus growth and top quartile returns through any cycle, which we believe is a recipe for superior value creation. Now let's look at how the strategic engine operates within our first reporting segment, the Materials Group. The Materials Group is the undisputed global leader in self-adhesive label materials roughly 2.5x the size of our next largest competitor, generating over $6 billion in sales, approximately 38% of this segment is now in high-value categories. This business is built on durable competitive moats. Our global scale serving over 10,000 converting partners, our deep material science expertise and vertical integration into adhesives, capital-efficient assets that yield strong free cash flow conversion. The financial impact of our high-value category strategy here is clear. While our core businesses grow steadily, the high-value category platform delivers mid-single-digit organic growth at profit margins that trend consistently above the segment baseline. In short, Materials Group combines a highly productive cash generative foundation with strong growth, high-value category businesses that drive long-term GDP plus growth. Now turning to our Solutions group, you can see how high-value categories scaling creates an even faster growth acceleration. The Solutions Group serves as our high-growth digital and branding engine generating $2 billion in net sales with high-value categories now accounting for approximately 60% of the total mix, backed by vertical integration, extensive application expertise and over 1,500 patents in intelligent labels alone, this group solves critical industry challenges and supply chain visibility labor efficiency and brand identity. The financial impact is compelling. Our high-value category platforms and solutions growing at low double-digit organic growth while generating premium margins above the segment average. Solutions Group is leveraging these category expansions to power outsized top and bottom line growth. So while each segment addresses different customer needs, all of our high Valley category growth engines are linked by common macro tailwinds. And as you can see on the slide, whether in Materials & Solutions every value category in our portfolio is propelled by 3 powerful secular tailwinds: digitization, sustainability, and personalization. Because our high-value category sits squarely at the intersection of these trends, they enable us to solve the 4 primary industry challenges we recognize, which are optimizing labor and supply chain efficiency, reducing waste and mitigating loss, advancing circularity and sustainable materials and connecting brands and consumers more transparently. Solving these ubiquitous challenges expands our addressable markets, positions us as the partner of choice with customers and gives us confidence that our high-value categories will continue to outpace GDP across cycles. To bring this all together, my final slide illustrates how this intentional strategy has systematically shaped our financial portfolio over the past decade. Our strategies have proved our long-term financial thesis -- and what you see here is direct relationship between expanding our high-value category exposure, drive organic outgrowth and expanding overall enterprise margin. In our materials group, high-value categories are growing at mid-single-digit rates outpacing GDP, leading to the high-value category mix expanding to nearly 40% and driving meaningful underlying margin expansion. Meanwhile, for the Solutions Group, the transformation has been even more dramatic growing mid-teens has helped us improve the high-value category exposure to 60% of our sales, which has contributed to substantial margin expansion. The specific strategies and end market growth drivers for each high-value category that you will hear about later today underpin the strong confidence and conviction we have in continuing to see outsized growth across our portfolio. And over time, these high-value categories will continue to expand as a percentage of our total revenue, serving as one of the key engines for continued margin expansion[indiscernible]. With this foundation set, I'm delighted to hand over the stage to Daniels, our newly appointed Materials Group President. Danny brings strategic -- deep strategic expertise across our businesses and he will take you through a deeper dive into our materials platform and the growth drivers within it. So Danny, over to you.

Thanks, Deon and hello, everyone. It's really great to be here to talk about the materials group and specifically the opportunity that we have within Performance Materials. Before I dive into the Performance Materials, I would like to spend a few minutes on my impressions about the Materials group over the last 100 days for me in the role. I spent a considerable amount of time in the materials group over the last 16 years. And so I come to the role with a good understanding of our markets, strategies, our strengths, and our opportunities. In recent weeks, I've spent an opportunity to visit many of our sites around the globe, and it's given me very clear understanding of our strength where we can perform better and our opportunities that will drive profitable growth and create superior long-term value. What I've seen and heard has been inspiring. Across our reads, our employees and our leadership teams, both prioritize -- recognize the strength and opportunities and share strong conviction in our group's long-term potential. They also have clear understanding of the priorities that are required to realize the potential. So what are these priorities? They are: first, growing our base business above our markets; second, accelerating our differentiated growth in high-value categories; third, leveraging our capabilities and access to converter channel access to lead at the intersection of physical and digital and drive intelligent label growth; and lastly, continuing to use our proven productivity playbook and disciplined capital allocation to ensure our manufacturing cost advantages enable us to grow profitably and generate strong returns. So this is a great time to be part of the materials group. High-performing business with the potential for accelerating profitable growth. We are approaching these opportunities from a position of strength, building on resilient franchise with a strong market position, strong profitability and the best team in the industry. I'm excited to be part of this team in its future. Now as Deon mentioned, growth in high-value categories will be key to delivering robust organic growth, exceptional returns and strong economic value added. Today, we will highlight 3 of them: specialty and durable labels, which will be covered by Marianna, our Vice President and General Manager of Materials Group in EMENA, Graphics and Reflective Solutions, which will be covered by Bethany our VP and GM of our Graphic Solutions in North America and Performance Materials, which I will cover. Over the last decade, these businesses have generated mid-single-digit organic growth CAGR, they serve markets with above average growth potential and large profit pools, and they all leverage our core capabilities. So let me start with Performance Materials. Performance Materials are highly engineered functional materials, including pressure-sensitive tapes, liquid adhesives and sealants that serves specific critical customer needs in being, ceiling, embodying sealing, protection, thermal management, connectivity and many other functional materials in end markets. As you can see on the left-hand side of the slide, Performance Materials is a $500 million business for us today and has growth at mid-single-digit CAGR. It's composed of our industrial and medical tapes and adhesives businesses, including our recent acquisitions of Taylor Adhesives. Sales fall into 4 end markets, building and construction, for example, the adhesive views to install flooring in your homes, industrial, and electronics, connecting semis in your phones, automotive, including brake shims, and noise vibration and EV vehicles and medical, for example, in wearables. In the middle of the slide, you can see that sales are concentrated across North America and EMEA, followed by Asia Pacific. All cuts represent strong growth potential. In the next few minutes, I would like to share how we view these products and solutions, the markets and the significant growth and margin opportunities we see in them for the materials group. Now it all starts with the value of our products and solutions deliver to our customers. Our customers rely on us to help them address strong number of industry challenges from labor scarcity and productivity pressures to sustainability and regulatory requirements. With our ability to custom genetics, we're also helping them adapt to the evolving technology trends such as flexible electronics and mineralization and meet new functional requirements such as lightweighting, electrification, conductivity, noise and vibration damping and thermal management. In addition to the growth tailwind and solving large customer challenges, a key to the attractiveness of this space is that these products typically provide critical functionality while representing only a very small part of the total end product cost, allowing us to capture strong margins by leveraging our application expertise and adhesive vertical integration to custom engineer the specific product needs. As I mentioned earlier, the market for these businesses are large and growing at attractive rates and we see significant opportunities for further expansion. As you can see on this slide, our current addressable high-value market, we estimate to be approximately $20 billion, and we expect it to grow by mid-single digits driven by strong secular trends and evolving customer needs. They include -- these include increasingly complex platforms, performance specs, growing industry applications like electrification and thermal management demand for more sustainable solutions and work in productivity needs and safety requirements. On a regional basis, the overall market is well balanced between developed and emerging regions with Asia Pacific experiencing the strongest growth. From a competitive standpoint, an interesting and unique characteristic of this market is while globally it's large in size with fragmented competition individual segments could be in nature with high competitive concentration. So for example, the top 5 industry players hold just 25% global share, but in specific flooring and adhesives, flooring adhesives, the top 5 players hold about 75% share, clearly more concentrated. Finally, on this slide, you can see that we sell to a wide range of customer segments piling manufacturers, converters, and distributors and the key differentiator for most of these customer groups, as I highlighted earlier, is product performance, quality and service. Now let's talk about where we are and how we intend to leverage our strategic capabilities to win here. As I mentioned, the markets is highly fragmented. Our Performance Materials business competed with a range of large generalist providers as well as niche specialists. And in many of our markets, we're building from a modest share position, providing us with a great growth opportunities. On the left side of the slide, you see that we bring a number of key differentiators to these markets, which we believe position us well to grow our rings and increase our competitive moat over time. First, in product in product performance and innovation, we bring strength in material science, customer relation, and application expertise. Second, in manufacturing, quality and reliability, we bring vertical integration in adhesive manufacturing laminating expertise and a global network of assets that can produce at scale with industry-leading quality, reliability, and efficiency. Our strategy on the right-hand side is to leverage these strong differentiabilities to drive organic growth rates at least in line with the mid-single-digit industry rate and to expand our margins. Some of these key initiatives that will drive our -- some of these key organic initiatives that will drive our growth are leveraging our existing product lines and relationships to enter new distribution channels and broaden our geographic reach increasing our presence in fast-growing end markets, such as energy storage, building construction, electronics and medical applications and expanding the adoption of the solvent-free adhesive innovations, including our proprietary advanced acrylics and UV Walmart. Let me spend a couple of minutes on these innovations as we believe they are unique and offer great potential. So based adhesives are the gold standard for many of today's adhesive applications. They provide a superior binding strength and excellent UV, chemical moisture and temperature resistance. But they also have a couple of challenges. The higher cost and potential safety risk and high VOC levels. So we asked ourselves, is it possible patch solvent performance by reducing cost and the environmental impact. And the answer is yes. Building on decades of material science expertise, our R&D and engineering teams have successfully developed proprietary differentiated technology platforms that deliver solvent like properties across a range of applications from automotive, building construction to medical applications, and they do it with lower overall cost and superior environmental performance. These technology innovations are opening an entirely new opportunity for growth in our external trade adhesives, performance tapes and specialty label businesses. In addition to these robust organic initiatives, we also see say upside potential with disciplined bolt-on M&A. Now some of you might be asking, what's your approach to M&A in this space? Well, we target high-value opportunities that have strong strength, strategic fit, can expand our capabilities and differentiation and strengthen our portfolio. Look for companies that complement, strengthen or expand our current product lines and market penetration, and we look for potential combinations that offer significant cost benefits. And finally, I know this is important to you, we approach the relation of these opportunities in a disciplined way, ensuring we deliver superior returns. Now a good example to bring to life one of the product opportunities that we talk about is tailor adhesive in our growth opportunities in artificial turf for adhesive. Outdoor artificial turf, think about football fields or any athletic field in our schools, provide an excellent surface but have a broad range of usage and comes with predictable, reasonable maintenance cost. It is increasingly used in municipal, educational, and residential projects. And we estimate the addressable market globally to be about $700 million, growing at 8% CAGR North America, which is Taylor primary market, is growing at 11% CAGR. [indiscernible] is taking share from natural grass and that increases the need for unique adhesives. Tapes are -- these are -- there are substantial opportunities to capture adhesive share with a higher performing, more versatile product. So after a lot of work about R&D and engineering teams, we have developed a product that meets the need. A new terrain turf adhesive, which we launched recently, and we see significant interest from customers. We adopted our proving indoor polyurethane technology for exterior use and brought terrain to market quickly and cost effectively. What Terrain does is replace labor-intensive 2-part adhesive with a ready-to-use single component solution that eliminates the site -- the need for site mixing accelerate installation times and minimize costly contractor errors. It also provides contractors with an extended working time for precise SEM adjustments yet Ceres rapidly to support heavy traffic in just 6 hours. Finally, it's waterproof formula inherents our strict indoor air quality standards, giving us a sustainability focus low VOC product that puts us in a great position to capture projects, increasingly specify sustainability materials, sustainable materials. With Terrain, we developed a superior product that is well positioned to capture growth and premium margins. And this is just 1 example of our product innovation. You have an opportunity to see many of them later on in the showcase boots. So in conclusion, taken all together, our Performance Materials business have very attractive growth and profit opportunities across a number of high-value end markets, and we have many of the key capabilities required to win. In every market and industry we serve, we have innovation that constantly advances the materials we use in the proprietary technologies we use. We are vertically integrated in adhesives, which gives us deep advantages in developing, scaling and delivering our products and we have a global footprint, allowing us to serve both developed and emerging markets with a great quality, service and efficiency. We're focused on leading our existing capabilities to grow organically and supplementing it with disciplined M&A to drive further differentiation, expanding growth opportunities and margins. We will continue to build on more than 9 decades of expertise in material science, process technology and manufacturing innovation to deliver value in a rapidly changing world for our customers and all of our stakeholders. So the bottom line -- the Materials Group is a high-performing business, and I hope that you today, you'll see that the performance materials, graphics and reflectives and specialty and durables, are very attractive spaces to invest in and have great potential for superior value creation. We have the right capabilities. We have the right assets, and we have the right teams to win. Up next, Mariana Rodriguez, Vice President and General Manager of Materials Group Emina will share our perspective on our largest high-value category of specialty and durable labels.

Thank you, Danny. Good morning, everyone. It is a pleasure to be here today to talk about our specialty and durable labels business, our largest high-value category in Materials Group and Evensen. Last year, these categories generated 1.2 billion in global sales. They have delivered compounded annual growth in the mid-single digits over the past 5 years. Of equal importance, they commanded premium margins, and we believe they will continue to do so. Our solutions are highly valued because they solve unique performance challenges and deliver critical functionality across a wide range of applications. We were clear with our customers and end users to develop these solutions, and they are frequently locked directly into product specifications. They built sticky, long-lasting relationships, and a highly reliable revenue stream. Growth opportunities for these categories are global. Europe represents today the largest market for us followed by North America and Asia Pacific. But because pressure-sensitive labels penetration is lower in emerging markets, we expect higher growth in Asia Pacific, where the adoption of label technologies is accelerating. This morning, I want to focus on why we're excited about these categories and the initiatives driving our continued growth. So what are specialty and durable labels. Specialty and durable labels are used in demanding applications across a wide array of end markets. Everything from food, beverage, and consumer electronics to automotive chemicals and pharmaceuticals. Specialty label materials solve targeted application requirements and compliance needs. Some examples of this include recloser packaging for food freshness, ice bucket resistance in wine and spirits, decorating labels in premium food and beverage and insulation for cold chain logistics. Durable label materials bring certified performance standards. They are engineered to withstand extreme environmental challenges, like high temperatures, harsh solvents, UV exposure, or mechanical stress across multiyear life cycles. Think about semiconductor applications, solar panels, chemical drums and auto parts to name a few. What makes this category so attractive is a combination of resilient end markets, durable secular tailwinds, a market structure that heavily favors our scale. Roughly 75% of our end markets are highly stable, and overall, they delivered growth above GDP. This underlying growth dynamics are supported by a few long-term mega trends, which you can see on the left-hand side of the slide. Aging population, demand for freshness and convenience in food premiumization in beverage, cold chain expansion, electrification as well as requirements for increased durability across finished goods. All of these trends are boosting growth rates across these categories. So how -- and why do we win here? First, this market is where performance, reliability, quality and compliance really matters. Customer needs solutions that performed consistently in demanding applications. This creates differentiation far beyond price and puts a premium on technical expertise. Second, while the competitive landscape is relatively concentrated, the converted customer base is fragmented across thousands of players. This gives an advantage to scale global players like us serving customers across geographies while delivering agile execution at a local level. We also see customer needs are getting more complex. They require higher performing and functional materials, and they need a partner to help them navigate evolving regulatory requirements. Our ability to combine global innovation capabilities with deep technical expertise and local execution positions us well to capture these opportunities. That translates directly into how we create and deliver value, and we have multiple levers to do so. We grow with attractive end markets, gain share through differentiated solutions and expand business with existing customers. We also help accelerate premiumization and innovation as well as leverage our global scale to drive operational efficiency. We believe we are well positioned to take advantage of this industry's growth while expanding the value we create from that growth. Today, Avery Dennison is a recognized industry leader already in this specialized labeled markets. We have built leadership on decades of material science expertise, and we maintain it through focus on market-driven innovation. What positions us to win is simple, deep technical expertise, strong customer and end user connectivity and consistent product performance and reliability. We combine our leading R&D capabilities were world-class process technologies. Just as importantly, our close relationships with converters and then users gives us front row into where markets are evolving. Those insights give us an edge to turn emerging needs into differentiated solutions. This powerful creation of capabilities and experience is central to our strategy. Our value proposition is multidimensional. We offer a portfolio that delivers in complex applications we're vertically integrated in pressure sensitive DCs and films. We have the technical expertise to engineer solutions that solve customers' complex challenges. We have the process technology and scale to consistently deliver on product performance and quality, and we have the technical support capabilities and long-standing converter relationships to ensure end-to-end customer satisfaction. Looking ahead, we're driving growth through several key initiatives. We are increasing our share in core markets through next-generation materials. In sectors like beverage, food, and personal care, we're enabling premiumization and sustainability. We are expanding our recycled and compostable label material product lines, developing products that enable clarity and innovating with high-performance solutions in pharma, chemicals, and durable goods. We're capturing new growth opportunities in attractive areas such as electrification and mobility, cold chain and functional packaging. We're combining our own expertise with strategic partner networks to develop engineered solutions for these emerging needs. An example of this is Therma VIPs, which provides temporary insulation for pharmaceutical gold chains. We also have [indiscernible] , which reduces food waste by extending the shelf life of fruits and vegetables. These are just a couple of examples of how we transform a simple label into functional packaging. Underlying all of this is our broad converter channel access customer engagement. By collaborating closely with our customers from identifying the problem to solution delivery we bring differentiated products to market, creating long-term sustainable value. A key driver of our commercial success is our strategic partner network and a go-to-market model. Much of our work with end users or OEMs goes well beyond just a single product. Our collaboration model starts with deep engagement across the full ecosystem. This gives us line of sight into market needs, validates product performance, and creates pull-through demand, shaped by this insights, innovation is market-focused and delivers differentiated and application-specific solutions. By investing in the technical and compliance needs of our customers, we also become strategic partners and expand our addressable market and long-term sources of growth. It is a connected customer-led model from insights to adoption to value creation. This model is creating market expansion opportunities in many markets such as durable goods, electrification, and pharmaceuticals. Now let me give you an example of how this all comes together. Let's take the pharmaceutical market as an example of this. There's a few key market trends driving increased needs for specialized labels in the pharma sector. A couple of these are, for example, the biologics market growing by high single digits, while the GLT1 patient population is expected to nearly triple over the next few years. This require label solutions that perform. And these tailwinds create a multiyear growth opportunity for suppliers that can consistently meet pharma's rigorous standards. In practice, our customers in this space face a few packaging challenges. Regulatory complexity where a single-drug formulation may require multiple versions due to languages or country-specific requirements, supply flexibility where manufacturers must have a quick response to the manships or vaccine rollouts, packaging line integrity, where on high-speed filling lines, even a small issue like a DC bleeding can jam equipment resulting in costly downtime. We address these challenges through our dedicated global pharma portfolio. We qualify multiple materials for a single application and provide technical and compliance support at a local level. By deeply understanding our customer needs, we bring new solutions to life, anything from light blocking labels that protects sensitive biologics to embedded RFID technologies that enhance supply chain visibility. You'll get to see some of this during the showcase. To sum it up, specialty and durable labels represent an exciting high-value growth opportunity for us. We're well positioned to win, and we will continue to invest and expand our leadership position in these categories. Thank you for your time today. Up next, Bethany Nock, General Manager of Graphic Solutions North America will cover graphics and reflective solutions.

Hi, everyone. Thanks, Marionne. It's great to be here with you today. Graphics and Reflective Solutions represent our second largest high-value category within Materials Group. Today, I'll give you a closer look at these product lines and explain what makes them such an important part of our business and our growth story. Before I do that, let me ask you to picture your ride here today. You likely saw a luxury vehicle that used car wrap and had a cool color and gave it that nice finish or maybe a semi truck that had a huge brand image or a logo on the side. Those are all often a result of our graphic films. Our Graphic Solutions include premium quality, decorative and functional films. These films are used for personalization. Our films also provide protection and visual enhancement, not only for vehicles, but also for buildings, trains, signage and storefronts. Our reflective product lines use highly engineered retroreflective materials to enhance roadway visibility and safety. And I guess on your way here today, you probably saw plenty of road signage and even temporary work zone signage. Those are all products within our reflective business. These high-value categories serve a broad and diversified market. In graphics, the majority of our sales are concentrated in corporate branding, automotive and architectural segments. And reflective, our business is focused on transportation infrastructure, traffic and highway work zone safety sectors. If you look over to the lower left of the slide, you can see that overall, these product lines delivered over $700 million in 2025. They have organically grown at mid-single-digit CAGR over the last 5 years. And these products capture premium margins. End market customers have demanding expectations in terms of quality, reliability and durability. We consistently meet those expectation with unique expertise in the materials used, application challenges and regulatory requirements. We are innovators able to develop new solutions to address tough challenges. We are a vertically integrated end-to-end manufacturer and we can reliably deliver on [indiscernible] at scale. We estimate the total addressable market to be approximately $4.5 billion, and we believe the market will continue to grow at mid-single-digit rate, driven by long-term trends. Within the automotive sector, consumers are increasingly interested in vehicle personalization and customization, luxury car owners prefer products that are offering protection. They want to be able to protect that high-end vehicle. And then think about electric cars. Many people own an electric vehicle and think about that. You know they're not taking it in for an oil change. OEMs and dealers are looking for new opportunities to expand their high-margin service and accessory revenues. They find our graphics products are an attractive add-on option. Our primary customers and reflective are contractors that are supporting government-funded and regulated transportation and infrastructure projects. Demand for our materials continue to grow. This is driven by increasingly urgent need to repair, revitalize, and sometimes replace much of the world's aging infrastructure. There is also a continued shift toward digital printing and cost efficiencies and the creation of reflective road signs. These high-value categories have 2 distinct competitive landscapes. Graphics products have a large, diverse, and fragmented end user customer base installers which is served by a concentrated set of distribution channels. The reflective competitive landscape is fairly concentrated with a fragmented customer landscape of approximately 1,400 global customers, including direct converters, road contractors, work zone, and vehicle OEMs. Market size opportunity aligned closely with regional economic development. Roughly 65% of our addressable market is currently located in developed countries. We expect higher rate of growth across the Asia Pacific region, in line with faster growth rates in household income on our -- for car fleets and road infrastructure as well. Both sets of markets come with customer and industry challenges that our products are designed to address. In automotive end users, customers and converters have strict quality and durability expectations. And OEMs have shrinking profit pools that they wish to replenish, offering customization opportunities to consumers. Reflective customers require products that address road sign visibility issues, including graphite vandalism, adverse weather conditions. All of our customers face for scarcity issues and rising costs. Across our markets, Avery Dennison holds a strong competitive position. We are #2 in most of these markets and are focused on building our leadership. Within graphics, we are leveraging film differentiation superior process technology and expanded channel access to accelerate our profitable growth in the automotive aftermarket and in the OEM market. We use our significant experience in material science technology to produce functionalized films and engineered adhesives that continually improve product performance and innovation. Our in-house color cast PVC films are delivering greater color customization and flexibility. We are leveraging our proprietary material science capability, in micro replication to create more highly reflective materials like our unique full cube reflective technology that is improving solutions for complex road geometries. We codeveloped digital printing equipment and workflow software, and we are transforming from a traditional material supplier into an end-to-end solution provider. We now streamlined customer expectations ensure regulatory compliance and deliver strong, superior performance with warranty coverage creating competitive advantage and we're not standing still. We have a number of key initiatives to play and drive in that future growth. We are pursuing a number of strategies to broaden market share and capture new innovation. These include accelerating growth by expanding into our auto OEM, dealer, and installer relationships, embedding value and added digital services as well as scaling advanced printing, and product solutions into emerging markets. The growth opportunity for graphics and automotive market is particularly compelling. Major trends are reshaping this market and creating increased demand for next-generation vehicle services. Over the last several years, one of our fastest-growing categories within graphics, has been our premium cast film portfolio, which enables both printed designs and customizable color wrap change in for fleet as well as personal vehicles. We've been a leader in this category for more than 20 years and we continue to benefit from the growing trends in vehicle personalization. But as consumer awareness and adoption increase, our opportunities are expanding beyond the traditional aftermarket and into OEM and dealership channels. EV adoption is accelerating that shift. OEMs and dealers are looking for ways to differentiate their offerings with service packages and margin revenue streams. But all that said, personalization is just one part of the opportunity. Vehicle owners, particularly in the luxury and premium segments are increasingly looking for appearance and value. They want to protect that value of their vehicles. This is driving demand for paint protection films, which is an important part of our portfolio. It protects against scratches, stone ships, staining, all with self-healing technology that helps maintain the appearance of vehicle. Our strong position and reputation in vehicle reps provides a great natural foundation to move into that adjacent and growing category. Looking ahead, we see an excited convergence between personalization and protection. With next-generation solution films that combine color change and protective functionality into a single product. Our ambition then is to extend the leadership in cast films into growing functional protective film category, bringing the same innovation, performance, and differentiation that has offered us and defined our position in cast films. We began by expanding into clear protective films and have since extended the portfolio into color PPF or paint protection film that enables the protection and personalization in this category and for new opportunities of growth. Now let's consider the industry shift into digital printing. That's driving the growth in the reflective business. Road signs take a beating across useful life from Graffiti, do and other environmental factors. Transportation agencies are increasing expectations and sign shops are looking for new ways to improve both product and manufacturing efficiency in growing numbers, they are adopting digital printing solutions, which are both more sustainable and more cost effective. Our strategy is to deliver best-in-class one-stop shop printing solution to this market that begins with an end-to-end ecosystem. We provide a unified product package with proprietary ink and film materials, software and equipment needed to operate backed by a single source warranty ownership. This one-stop solution, which is unique in the industry, also comes with an ongoing global technical support, ensuring that shops can operate efficiently and reliably. Our traffic jet printers deliver built-in anti-graffiti and anti-de overlays that have set new durability benchmarks. We have now installed over 1,000 traffic jet system globally. And as performance specifications continue to rise, we are well positioned to lead the industry's ongoing digital, which continues to play a key role in advancing our high-value strategy. In conclusion, we have a strong $700 million base business. We have deep innovation, the teams, the service and the footprint in Graphics and Reflective Solutions to drive consistent profitable growth across this attractive growth market. So on your way home today, I hope you look around and thank Avery Dennison Graphics and Reflective solutions. Now on to Francisco Melo, our President of Intelligent Label Technologies and Digital Solutions.

Thank you, Bethany, and good morning, everyone. It's great to have you with us today, and I'm delighted to provide an update on the enterprise Intelligent Labels platform. Intelligent Labels is a progressive family of sensor technologies that today primarily consists of UHF or RAIN RFID, enabling businesses to digitize physical items at scale, unlocking supply chain optimization, product traceability, and authentication from factory to consumer to resell or recycling. As AI continues to transform industries, the need for accurate real-time data becomes even more critical for powering AI models that inform the right decision making. Our intelligent labels solutions provide the important item level ground data, ground truth data that powers these models. We reached over $900 million in sales in 2025, having compounded at low teens organically in the past 5 years. Our margins are higher than the company average, driven by the value we create for customers through our solution selling approach. We focus on customers' challenges, understand what drives their ROI and work in partnership to establish a solution that meets their needs. We continue to drive adoption, realizing new use cases and value creation opportunities for customers and have strategically invested ahead of the market growth to both capitalize adoption and maintain our leadership position. Today, end customers' demand is concentrated in developed markets, primarily in North America and Europe, while our manufacturing footprint is strategically positioned at the source of production. We primarily serve customers in apparel, logistics, general merchandise, and food segments, helping them address and overcome challenges related to labor and supply chain efficiency, waste reduction, and shrink, transparency, and circularity while simultaneously helping brands better connect with our consumers. Our addressable market is large at 350 billion units underpenetrated and with units expected to grow at mid-teens, driven by favorable secular trends. In retail segments, customers are relying on RFID to data to improve the omnichannel fulfillment and drive sales uplift. This began in apparel, but expanding to general merchandise as consumer buying behaviors continue to shift to an omnichannel approach. Consumer demand is also shifting with expectations for better product availability, faster delivery and specifically for food, increased freshness, which is becoming a critical differentiator in grocery. Across all segments, our customers are grappling with higher labor costs, increasing the need for improved efficiencies, and productivity across the supply chain. With the explosive growth of AI, item-level data will help unlock additional value for businesses where accurate data is essential to fuel business models and improve decision-making. While apparel remains the largest market segment at approximately 60% of unit value, we are increasingly seeing new large-scale opportunities in food, logistics, and general merchandise, creating a runway for future growth. Specifically in food, freshness management is a key driver as growers look to improve product availability to drive foot traffic and increase sales lift and reduce waste. This was highlighted in the McKinsey survey, which found that in North America, both consumers and retailers rank freshness and quality among the most important factors in the in-store experience. Our unique position in the industry is defined by our leadership across 2 critical areas of the RFID value chain. We design and develop high-performance, high-quality inlays, that we sell directly to end users, leveraging our data management and converting capabilities and through our converted network as based materials. The combination of the end user access and the vast converted network uniquely positions us to drive adoption across multiple categories. Most other companies in our space only play in one node of the value chain. We are focused on delivering growth by leveraging our competitive advantages and leading position across 3 main areas. First, we have an industry-leading unique go-to-market capability where we have relationships with end users that enable us to understand their problems gain insights into what drives the ROI and partner directly with them to accelerate adoption, along with the capability to fulfill both directly and through channel partners. Second, we hold the broadest patent portfolio in the space due to our world-class innovation talent spanning RFID engineering capabilities and material science expertise. We're able to bring these capabilities together to overcome significant technical challenges to create first-to-market innovations that expand the use cases and accelerate access in new categories. Third is our scale. We've produced well over 100 billion inlays to date, multiple times more than other players. We have manufacturing capabilities that leverage proprietary high-speed process technologies and a footprint to meet the supply chain continuity requirements of our customers. In addition to these core capabilities, we are exploring how our access to billions of item-level data points, combined with the newer AI models can deliver differentiated value through data-driven solutions that help customers realize greater returns from their RFID deployments and create new monetization opportunities for us. Our growth will be enabled by a combination of go-to-market execution, sensor innovation to drive adoption and expand use cases across our target segments. Our investments in Willett buses our sensor portfolio, creating offering for passive Bluetooth low energy solutions that enable condition monitoring throughout the supply chain, a key growth driver in the Food segment. The food opportunity represents the largest addressable market for intelligent labels. Retailers are looking to digitize the supply chains and address 2 key priorities. Maximizing product freshness and driving profitability. With resin margins in food, opening inventory and ensuring freshness are critical. Condition monitoring throughout the supply chain to ensure freshness combined with efficient in-store inventory management as a direct impact on profitability. Earlier this year, we launched the AD IdentiFresh inlay series containing first-to-market FID innovation designed specifically to meet RF performance requirements in the food category. Our proprietary antenna design and inlay construction overcome key operational challenges in the food retail environment improving real performance on densely stacked items, particularly within high moisture environments like meat cases, enabling item level management to FID creates value for the customer through improved efficiency, and labor productivity, presiance management, waste reduction and sales uplift. Our strategic partnership with Willett enables us to scale low-energy Bluetooth technology for condition monitoring throughout the supply chain, hawking real-time data flows to inform decision-making and maximize product freshness. Combining the 2 technology creates the opportunity for true end-to-end supply chain management for the food sector from pallet to case to item level. As you can see from the pie chart on this slide, we are early in the commercial activation of the full TAM. Customers are yet at varying stages of assessing, piloting and commercializing in only about 10% of the total addressable space. And momentum is building in our pipeline is increasing nearly 40% in the past year alone. Recent announcement of Kroger and Walmart, combined with ongoing pilots and programs with other retailers are a testament to the work we are doing to drive adoption in the segment. Our experience deploying RFID programs in the past 2 decades, combined with our unique innovation capabilities spanning from our F&G material science creates a competitive advantage for[indiscernible] . We're also addressing upcoming legislative requirements related to PPWR, packaging and packaging waste regulation and EPR extended producer responsibility under which customers and businesses will be required to meet new compliance requirements for recycling and end-of-life management of packaging materials. Our AV clean flake, our FID products have been recognized by the Association of Plastic Recyclers and resi class as compatible with existing PET recycling streams. We continue to drive adoption in this space to ensure we remain the go-to innovation partner for our customers as legislation evolves. As you can see, the opportunity in front of us is significant. Momentum in new categories is building and secular trends like AI will further accelerate the need for sensor technologies that establish ground truth data. Thank you for your time. I would now like to turn it over to Ned Peverley, our Vice President and General Manager of Vestcom.

Thank you, Francisco, and good morning, everyone. It's a pleasure to be with you here this morning to discuss the Vestcom business. We are continuing to expand our shelf edge solution set where we play in the central role in driving retail productivity and shopper engagement while navigating and capitalizing on key digitization trends. Vestcom delivers market-leading price communication and media solutions. At the retail shelf edge, built on a foundation of advanced data composition capabilities to seamlessly manage the complexity of high promotion frequency retail. As store digitization accelerates through digital media integration and the adoption of electronic shelf labels or ESLs, Vestcom StorLink software platform is powering our next phase of growth. In 2025, Vestcom exceeded $500 million in sales for the first time in our history, delivering a mid-single-digit organic growth rate since Avery Dennison acquired the business in 2021. Currently operating entirely within the U.S., Vestcom generates attractive premium margins. This profitability is driven by data management expertise and our ability to generate outsized value for our clients by engaging shoppers driving sales, and reducing costs. By delivering on our value proposition in a compelling way for decades, we've earned the business of over 70 leading retailers across grocery, drug, dollar, and specialty channels, including the likes of Kroger, Albertsons, Ahold Delhaize, Walgreens, CVS, and Dollar General. We provide a comprehensive portfolio of shelf-edge pricing execution and ESL management software that enable retailers to bring their pricing and merchandising strategies to life in store. Once a retailer outsources their shelf edge of Vestcom. We then also retain the right to partner with CPGs to use the shelf edge as a media vehicle to deliver their brand messaging to shoppers at their point of decision. What better time to influence a shopper's decision than when she's in the aisle with a shopping cart ready to make a purchase. Our addressable market in the U.S. retail is over $2 billion and growing low single digits, powered by tailwinds in physical retail media and store digitization. In our core grocery, drug and dollar channels, clients face structural headwinds from rising labor costs and store labor scarcity. Retailers increasingly rely on our shelf edge automation to streamline execution and drive store-level productivity. Equally important, physical stores are reemerging as the primary engine for brand differentiation. Retailers are seeking ways to engage, educate and inspire shoppers right at the point of decision using rich product information, lifestyle attributes and dynamic messaging to build loyalty and expand basket size, this drive to elevate the in-store experience directly intersects with a massive financial catalyst, explosive growth of retail media networks or RMNs. Retail Media has become vital to retailer profitability, delivering high-margin ad revenue that directly bolsters their bottom line. As online channel saturate, brands are shifting retail media network spend back into physical stores where research reports widely site that over 85% of retail transactions still occur. While paper shelf tags remain our largest volume foundation, growth is shifting toward an emerging Software-as-a-Service opportunity driven by expanding ESL adoption. While U.S. grocers are accelerating ESL adoption to capture labor efficiency small format retailers and drug and dollar stores seem to lag due to lower operational ROI from the investment. Increasing consumer concerns and legislative activity to limit dynamic pricing may also slow mass adoption here in the U.S. This creates a bifurcated landscape where paper solutions remain essential alongside digital formats. From a competitive standpoint, the market remains split between traditional print converters that lack software and dynamic media capabilities and hardware-driven vendors that face commoditization and lack deep retail operational expertise. Here at Vestcom, we hold a unique position as a central data orchestrator, connecting retailers, CPG brands and hardware platforms to deliver both analog and digital communication in store. Vestcom operates from an unmatched position of strength at the retail shelf edge, anchored by deep-rooted retail partnerships, proprietary technology, and a proven ability to solve complex operational challenges. Our competitive mode is defined by 3 primary pillars: first, our breadth of solutions. We're the only provider capable of seamlessly executing both analog and digital shelf edge solutions, enabling a hybrid store with operational consistency across paper tags, ESLs in both digital and analog media. Secondly, our product innovation in a master. Our expertise in complex data management and proprietary composition powers our software to orchestrate both physical and digital endpoints from a single source root. Our unique ability to integrate item-specific price and promotion data with branded media highly differentiated among media providers. Third, our unmatched operational and commercial scale. Our national network of specialized service bureaus delivers near-perfect execution with 99.8% on-time in-full performance. While our dedicated national CPG media sales team actively engages over 500 CPGs, unlocking high-margin ad revenues that help fund our retailers shelf edge infrastructure. Building on these advantages, Vestcom is evolving into a true omnichannel provider, the only partner in the industry capable of delivering both physical and digital shelf edge solutions at scale. This leverages our deep retail acumen, unmatched pricing and promotions expertise, execution excellence while adapting to the evolution of digitized retail. Our strategy is focused on high-margin growth centered around 3 core initiatives: first, growing our analog media business by maximizing opportunities as the exclusive in-store media partner at Walgreens while further expanding our blades media solution across targeted clients. Second, winning a greater share of ESL deployments through establishing StorLink as the software of choice across all major ES deployments, while capturing a meaningful portion of ESL hardware business through our strategic partnership with Salem. And third, scaling in-store digital media by expanding our in-store digital media footprint through a combination of organic development and strategic partnerships. In addition to these core initiatives, we're also leveraging our relationships with food retailers to unlock pilots and help accelerate the adoption of intelligent labels across our client base. To double-click into our digital transformation, our growth story centers on accelerating our footprint across 2 key areas: electronic shelf labels or ESLs, and in-store digital media. For electronic shelf labels, U.S. large format grocers and mass retailers continue to explore ESLs, catalyzed by Walmart's nationwide rollout. In this expanding space, Vestcom Storelink platform will serve a critical role as retailers central one source of truth software to orchestrate and deliver price and promotional messaging across both ESLs and analog tags. Our competitive advantage here is clear. We're already deeply data integrated with our retailers' core systems. We seamlessly enable both digital and analog environments and our software is completely hardware agnostic, preventing vendor lock-in for our clients. When it comes to in-store digital media, the market is forecast to grow at low teens CAGR through 2029, reaching $1 billion with most U.S. retailers actively testing various solutions in preparation for scale deployments. In this expanding in-store media as a Vestcom is uniquely positioned to serve as the preferred in-store media provider, offering a diverse portfolio of analog and digital solutions with tag media exclusive to Vestcom. Our competitive edge stems from 3 distinct strengths. First, we have a dedicated national CPG sales team already in place, engaging over 500 brand partners. Second, we have a unified physical and digital strategy; and third, we uniquely integrate item-level price and promotional messaging directly into dynamic media content. Later today, you'll get to see within our demo showcase the opportunity to experience these solutions in action. In summary, as physical retail evolves, Vestcom is well positioned to continue serving as an indispensable partner for the modern shelf edge, driving sustainable, high-margin value. Thank you for your time, [indiscernible].

Authenticity for leagues, teams and global icons. And third is professional identity. Where we provide certified durability and safety performance across industrial and corporate workwear. Our offering is streamlined into 3 integrated solutions. First, the embellishments themselves which include high-definition transfers, embroider patches, woven, and specialty 3D badges. Second is experiences that encompass custom studio and digital consumer engagement. And third, are services that span our in-house creative agency and application services. Embellix operates in an addressable market that is greater than $3 billion and continues to expand through adjacencies with mid-market -- with market -- end market growth of mid-single digits overall. This expansion is supported by secular tailwinds, including rising consumer demand for customization, growth in active lifestyles, digital fan engagement, and the global cultural shift towards experience-based spending. While our current sales exposure is heavily weighted towards mature end markets, driven by the global performance brands, sports teams, and licensing networks lower penetration in the Asian end market represents additional long-term growth opportunity. The competitive landscape in this space is highly fragmented, composed mostly of regional embellishers and niche converts. Brands and teams prioritize quality, supply chain reliability, and resiliency, rapid turnaround time and global continuity of product. Embellx bridges a critical operational gap by linking brand and league headquarters directly to Tier 1 garment manufacturing hubs worldwide. In doing so, we solve the industry's most cost friction points eliminating global branding consistency, shortening lead times for volatile hot market demand and providing full regulatory compliance. The unique combination of material science expertise digital technology know-how positions us as a key partner to facilitate physical to digital connections between fans, teams, athletes, and artists under tight time frames. We are a global leader with numerous advantages over our nearest regional competitors. When you examine our right to win, our ability to outpace the market and drive margin expansion is on 4 structural differentiators. First, our approach to integrated solutions architecture. We do not operate as a commoditized trim vendor. Instead, we leverage our Embelex portfolio, delivered through automated factory platforms application services and turnkey retail solutions with the ability to also integrate unique digital experiences to create a unified ecosystem. This shifts our customer relationships from transactional purchase orders into sticky, multiyear strategic partnerships that deliver higher lifetime value. Second, we operate with global scale and localized execution and have optimized our manufacturing operating system around standardized site archetypes, by balancing high-volume, cost-efficient agent production hubs with agile nearshore cells closed by key distribution centers to deliver hyperspeed turnarounds worldwide. This dual-track network allows our brand partners to navigate trade tariffs, inventory volatility without sacrificing speed to market. Third, we focus on upstream strategic wiring, bridging brands, and garment factories and embedding our teams directly into brand design centers. 18 to 24 months before product launch. By collaborating on early concept development, we mandate our embellishment technologies into seasonal lines and secure exclusive rights for major global sporting events building long-term revenue visibility. And lastly, we leverage our material science expertise to deliver high durability specialty solutions that solve complex garment decoration challenges. These proprietary materials protect delicate technical fabrics while accelerating factory throughput and lowering application energy costs for garment manufacturers. Our strategy has positioned us to drive growth and growth aligned with attractive end market growth expanding share across brand, fan and professional identities as well as white space opportunities. We will do this through a number of key initiatives, including scaling experiences through custom studio in venue customization, which you'll spend -- you'll see a little bit more detail this afternoon and shifting customer engagement from transactional consumables to high-value connected solutions and ongoing brand expression ships. Focusing on innovative solutions to differentiate ourselves that unlock entry into high-growth market segments and adjacent apparel categories. We are deepening our strategic relationships and licensing portfolios across global performance brands, sports leagues, and arena operators to secure exclusive events and tournament rights similar to what we just executed with the World Cup. A key growth opportunity for Embelex is custom Studio, our in-venue customization solution. Custom Studio delivers live product customization powered by on-demand function, digital designs and connected operations. Built for clubs, venues and retailers, it is a turnkey system that enables in-venue fan-driven personalization. Custom Studio changes the game by transforming every merchandise moment to a connected fan experience. We have a short video to bring this game-changing solution. [Presentation]

Custom Studio is a key part of our fan identity go-to-market pillar. We're capturing major tournament rights, while expanding our licensing footprint in adjacent high-growth categories like music, merchandise, entertainment, and venue pop-up. Through our consumer research, we have validated the pain points and opportunities surrounding in-venue customization with respondents highlighting that they will abandon purchases if wait times are too long and that they are willing to pay a premium for personalized merchandise. Custom studio creates the opportunity to maximize monetization around emotional consumer moments and hot market events or fancy seamless experience and the opportunity to customize merchandise to commemorate the moment. Custom studio has been designed to increase speed and efficiency by blending elevated design and mobile-first custom kiosks to engage fans. To drive operational efficiency, we have also integrated clear count RFID into the offering to automate component inventory management, eliminate backouts while boosting throughput. In summary, Embelex represents a highly attractive growth opportunity supported by a well-defined strategic road map by capitalizing on favorable secular tailwinds scaling our software materials platforms and optimizing our global operating system in a lot positioned for future growth. Thank you. I look forward to answering any of your questions this afternoon. And I will now hand it over to Greg Lovins, our Senior Vice President and Chief Financial Officer, to cover the financial section of the presentation.

All right. Thank you, Michael. Good morning, everybody. So -- as Dean highlighted today, today is really about showing you how our high-value categories contribute to our long-term growth into overall delivering on our enterprise strategies. As you've seen throughout each of the deep dive discussions here, we have differentiated positions in attractive markets, and we're excited about the profitable growth opportunities across each of these platforms. I'm going to walk you through a few key areas here this morning with a quick review of our total company historical financial performance, a reminder of our long-term financial framework and growth algorithm, and our performance against that framework. Our -- and how our -- we continually shift our portfolio using M&A into the future. So -- this next slide here demonstrates how our balanced strategy has consistently translated operational execution into value creation over the past decade. Looking across our key financial metrics, 4 clear performance trends stand out. First, on top-line growth, we have consistently delivered GDP plus organic growth over the 5-year cycles, highlighting our resilience through market volatility and while macro disruptions and disjointed end markets in recent periods moderated our growth, a resilient model has allowed us to navigate these headwinds and maintain strong earnings trajectory. Second, regarding margin expansion, our intentional mix shift towards high-value categories, combined with persistent productory efforts, has driven sustained expansion in EBITDA margins. This combination of top line growth and margin expansion has directly compounded bottom line, nearly tripling our adjusted earnings per share over this 10-year horizon. And finally, underpinning it all is our disciplined focus on economic value added or EVA, increase or overall EVA at a 10% compound growth rate as we've consistently generated returns well above our cost of capital. This proven long-term track record gives us confidence in continuing to deliver on our financial framework as we look forward. Now let's review our long-term framework as we laid out in September of 2024 and how we're progressing against our key metrics on the next slide. As a reminder here, this framework is built on 4 key pillars that guide our value creation model, delivering strong top line growth with 5% or more sales growth ex-currency, while expanding our margins. with an adjusted EBITDA margin of 17-plus percent by 2028. In compounding our adjusted earnings per share at 10% annually, while delivering top quartile return on capital relative to our peers. Looking at our performance against this framework from the 2023 baseline through to the midpoint of our guidance for 2026, we're tracking well against the majority of these targets while managing through macro challenges over the past couple of years. While top-line growth is overall tracking behind our long-term target so far, we're on track from a volume mix perspective. which has been partially offset by deflation related pricing, particularly in 2024 and 2025. Our margin execution is progressing well, and we're on track to meet or exceed this target, powered by positive mix shift and our continuous drive for productivity. That strong top-line growth and margin expansion drives our EPS growth, which is also largely on track, while our disciplined capital deployment continues to sustain top quartile returns on total capital. In short, our operating model is performing, and we're fully focused on executing against these goals over this cycle. To see how this top-line performance breaks down in detail, let me double-click on the long-term growth algorithm that we also laid out in September of 2024, and show you how we're performing against each of these building blocks. As you saw in the previous slide, our long-term growth algorithm targets 5% or more sales growth ex currency, with the growth vectors behind these targets driven by volume and mix growth over time. That target is built on 1 point of profitable growth contribution from our base bus, then with the majority of our growth coming from the high-value categories with 2 points from our non-intelligent label high-value categories, and 1.5 points from intelligent labels, then with additional upside from strategic M&A in these high-value categories. Looking at our progress against this growth algorithm, -- our execution across the majority of our building blocks is tracking in line with our expectations. Again, from 2023 through the midpoint of our '26 guidance, our base business is delivering low single-digit growth contributing the expected 1 percentage point to the company growth rate. As you heard from all the leaders this morning, our non-intelligent labels high-value categories have been delivering strong growth at a mid-single-digit rate, adding roughly 2 points to the company's growth rate. And disciplined M&A has contributed approximately 0.5 point of additional growth, largely from the Tailored Adhesives acquisition that we closed at the end of 2025. Intelligent Labels has been growing at a mid-single-digit pace, which is below our long-term target rate. Macro end market challenges in apparel and general merchandise alongside slower-than-anticipated adoption in food and logistics categories have led to slower growth over the past couple of years than we had hoped for. As Francisco discussed, we maintain our strong conviction in this significant market opportunity. We have a strong leadership position and strong competitive advantages that allow us to drive adoption across these categories, with ample room for continued growth in apparel and significant white space in food and logistics. Looking at this 5-year cycle through 2028. We expect growth rates in the next 2 years to accelerate from the mid-single-digit pace over the last 3 years in Intelligent Labels, with growth over the 5-year cycle in the high single-digit range. Now in total, these building blocks are delivering approximately 3.5 points of sales growth ex currency through 2023. And while that's below our long-term target due to deflation related price reductions, our volume mix growth is on track with a 5-point compound growth rate, demonstrating the strong fundamental resilience of our portfolio overall. Now executing on this organic growth algorithm reshapes our business over time, systematically accelerating our portfolio mix shift into these high-value categories. This slide here demonstrates how that shift delivers over the next few years through 2030. For this, we assumed the organic growth rates on the previous slide that we've talked about, coupled with our base business growing in the low single-digit range. With these assumptions, organically, our high-value category should expand from mostly 45% in 2025 to roughly half of our revenue by 2030. The core takeaway here is structural as high-value categories become a progressively larger portion of our overall mix, they systematically elevate the company's baseline growth rate, delivering in strong top-line growth rate with Dennison as a whole, while directly driving structural margin expansion over time. This organic trajectory forms our baseline, but our strong balance sheet, improving capital deployment playbook give us the financial capacity to accelerate this mix shift through disciplined M&A as well. On the next sheet, you can see we're sitting comfortably within our target leverage range today. And over this cycle, we have roughly $8 billion of investment capacity in the next 5 years. And that's backed by a strong, robust free cash flow generation. We deploy this capital through a consistent disciplined framework, reinvesting organically with roughly half of our internal CapEx directed towards high-value categories. Returning capital to shareholders through growing dividends and leveraging a flexible bucket for opportunistic share buybacks and strategic M&A. As you see on the right side of this chart, our M&A strategy is laser-focused on acquiring or investing in attractive high-value categories where we're uniquely positioned as a high view owner to accelerate growth. Over the past several years, we've demonstrated this discipline across our platforms, expanding intelligent labels through SmartTrack, TexTrace and the Willie's investment building out Vestcom and Embelixs through acquisitions and strengthening Performance Materials with the Tailor's Adhesives acquisition. These transactions are clear examples of how we systematically find high-return opportunities across our categories, which we'll continue to pursue moving forward. Ultimately, our disciplined capital allocation framework reinforces our portfolio mix shift, driving outsized growth and delivering top-tier total shareholder returns over the long term. To wrap up, our high-value categories continue to serve as a primary growth engine for Avery Dennison driven by strong market growth, competitive differentiation and a disciplined capital allocation strategy, we remain confident in our ability to deliver on our long-term financial targets. So thank you all again for your interest in Avery Denison. We'll be happy to take your questions as we get everybody back on stage.

Well, thank you all for your attention so far. We'll now move to about a 30-minute Q&A session. Before we do, just a few quick reminders. -- on the scope -- we won't be taking questions on currently quarterly performance or our 2026 facial outlook. We will be doing that on our Q3 call coming up in about a month. Second point is we kind of ask that your questions focus on today's strategic topics. Teams have put a lot of work in here, and so we want to focus on what they presented. Second, I'll keep this session smoothly. Please raise your hand, and I'll have -- I'll call your name, to Mike's Sarah Emily will find you, and then you can begin your question once they have brought to you the mic. Please state your name and your company first. And let me just sell to 1 question and 1 follow-up, and we'll get to as many questions as we can in and there'll probably be 2 time for a follow-up after that. So with that, let's kick off with the first question. Go ahead, George.

George Staphos, Bank of America. Thanks for the presentation and details, everybody. ringer. Two questions. Couple of years ago when you figure Analyst Day, the total addressable market for audio was roughly 350 million units. But right now, at least in the presentation, it's also 350 billion units. Can you talk to us about how the market over the last couple of years within those categories, recognizing an opportunity to snapshot this growth? Why has the market improves? Is that the orienting question number one. . Question number two, again, we really appreciate dialogue on high value going missing a little better for every segment, it seems like markets are higher than the company average. Yes, when I look at return on capital, which is -- but if I look at basically the EBITDA divided by our assets since '20, it really hasn't moved. Again, no one's done that have over the last 3 years than, but why is that the case as capital intensity in these inofcategories increased. And so you're getting more growth with more margin, but it costs more to get there.

Francisco, will you ask -- address the first 1 and Greg, you handle the second.

Sure. Happy to. So thank you, George, all for the question. When we look at the total addressable space, we obviously are pulling together the overview of what we think to be everything that can be addressed within the service space call it. When we bring that together, we obviously see some of the trends of what's happening in the space. So if you look into the apparel space, it typically trends within GDP. So there could be small variations within that. But in the bigger picture of things, we don't really go category by category and adjust it as such. Another example of that you'll hear later on we're actually expanding the portfolio. You heard us talk about the investment in William. So that does expand a little bit. But on the bigger picture of things, it is a number that is not really relevant from saying it's a couple of billion more or a couple of bit less. We just feel that it's consistent from a total opportunity perspective.

George, let me just add, typically, markets will grow depending on the end markets, now the grow GDP, plates and GDP. And so part of our assumption whether it's $350 billion or $362 billion, -- it's -- it's big enough, I mean that's the point of this at the end of the day. I think we have a long runway ahead of us. And our conviction is given our position given our innovation, given our teams, I think we're ideally positioned to take advantage. Our objectives remain the same. We want to continue to be the majority provider in all our FID markets. And we've, as you know, invested ahead of the curve to create the adoption mechanism as many of these markets because my view has consistently been that when these markets do drive adoption through cycles, we're going to disproportionately benefit from that.

Yes. I think on your second question, George, I don't think anything has changed on the capital intensity, kind of organic capital intensity of our business over time. Certainly, we've been investing ahead of the curve, and we've talked about that in intelligent labels and building that capacity over the last number of years. But outside of that, I don't think there's much of a difference from an organic perspective. However, in the last 5 years, we have done a number of acquisitions. Obviously, we acquired Smart late 2020 and then Vestcom, a number of Embelex acquisitions. We closed on Tailored Adhesives at the end of last year. So we have been adding capital investments into the acquisition space, and it takes a couple of years to regain that from an ROTC perspective. So I think we're on still the right trajectory there, and we feel good about what we're delivering now, but continue upward momentum on ROTC over time.

John McNulty, BMO. Can you help us to think about the high-value category in aggregate margin perspective, where it was maybe 5 years ago? And when you look forward over the next 5 years, does that margin profile improve because of the incremental value add? Does it come down a bit just because just target broader and broader markets? Like how should we be thinking about the trajectory of that over time?

Yes. Let me start, and then I'll Greg and Wayne as well. I think over the last period that you referred to, we've seen slight margin incretion across those high-value categories. Large as a consequence of some of the innovation that we bring to bear. Now as we look forward, all things being equal, John, given our innovation, given our position, we should see more margin accretion over time in that but we're also investing ahead of the curve, for example, in IL. And so there's going to be a point at which it's not going to happen for the next while anyway. But as we invest ahead of the curve, whether it's in innovation or particularly, let's say, an IL and those assets and so forth, you're not necessarily drive the incremental margin that you'd expect until you then get scale leverage out of those assets in time as well. So that's the way I'd think about it. In aggregate across the portfolio, they remain higher than the segment and company average and there are individual pieces I've talked about this before, within each high-value category, which may be slightly less margin, some slightly higher, depends on the differentiation. But on aggregate, they typically all are across the company average higher.

Maybe just as the follow-up on the food side for IL, it sounds like it came in a little slower than maybe you'd hoped at least a few years relative to a few years ago. I guess, can you speak to the interest and the excitement that's picked up since the Walmart and Kroger moves? And is there any metric, whether it's whatever the top 10 grocers that you can speak in terms of pilot penetration and traction there. I guess, can you help us to think about where that growth trajectory is going and how it's accelerating .

Frances, do you want to dress?

Yes, sure. Happy to. We've seen -- first of all, let me start by saying we continue extremely confident in the value that we're able to create within the category. You heard me say earlier on that we saw our pipeline expand by from 40% from prior year to this year, which obviously means that we have a number of pilots and initiatives, which is significantly broader. We typically don't talk line by client and region by region. But I would say both in North America and in Europe as main focus areas where we're seeing significant progress and data that allows us to, again, reinforce that we have both initial rollouts that are starting to approach and the number of pilots that continue to reinforce that belief. And that typically addresses what I said earlier on about typically freshness and those elements has been core elements from a value perspective.

I think, John, the only thing I'd say is I've always been pretty clear view on this that -- the first customer that you get in a new segment is useful because it proves that there is an ROI of some sort. The second one is actually strategically important because it means that within that segment, there's ubiquity of that solution. The third one really says that the flywheel is now starting to drive from a duction perspective. And our job is to make sure we're getting that adoption cycle going quicker. So the number of improve pilots that we're seeing the trials, some of the rollouts, I think they're all adding to the overall momentum sense. And my conviction this area has really grown even more over the last couple of years. I'm frustrated that we haven't actually delivered on the growth over the last couple of years some cyclical events. But my conviction level is very high, particularly in food where you can see a compelling ROI that the retailers are consistently feeding back to us as well.

Let's go here to go with Mike.

Thanks, guys, for the presentation. tee helpful. Two quick questions. A couple of years ago, you mentioned in Intelligent Labels organic sales growth rate around 15%. I wanted to see whether that still is intact with an that growth rate, particularly that you've followed over the last couple of years. I think, Greg, you mentioned maybe in the next couple of years, you're going to drive high single-digit growth. So how do you get back to that 15%, what do you -- and what is that -- is that a slower direct target and 2 of it is, when do you think you'll get there? And then to just some high-value categories growing mid-single digits, I think you said you expect some acceleration in those in that mid-single-digit growth rate as well. When do you think you will be -- what should we expect to see that is 2 years founders, -- what should we see those categories start to reaccelerate?

Yes. So Mike, on IL, Greg was clear in this in this 5-year cycle, we've only seen sort of single-digit growth, not what we'd anticipated in the first 3 years. And so our current view is that we will assume that by the time we get to the end of the 5-year cycle, you're going to be at this kind of high single-digit rates. The math on that would imply somewhere around double-digit growth couple of years, and that's where we see it to be. I think in the long term, what I would say about IL overall is my learning has been that while the market size and the opportunity is significant, we're going to continue to see some episodic gyrations. And those episodic generations are the adoption related in the sense that you have a couple of customers go 1 year, the next year, there may be only one, you have this up and down performance. The second thing is just what the macro environment may do. We have more of a challenging macro environment. It certainly impeded some of our business that relates, for example, apparel, even maybe some of the logistics piece as well. So we feel good about where the direction of the business is. I'm confident that as this adoption cycle increases, the flywheel gets going, we're going to see the other piece that Francisco talked about, which is, at the end of the day, a lot of AI modeling relies on accurate data -- that's really what it is. accurate data, AI drives much more insight and actionability, but if your data is not accurate. It's really tough to drive action and insight. And so I actually think it is going to be a catalyst for more item-level identification right from the source. So our product was made, why it was formulated, where it came from all the way through the supply chain to retail, ultimately to the end of life at consumer level as well. Remind me of the second question sorry, Mike.

You expect to hit that 15% thing. You expected that 15% target. It sounds like you do with [indiscernible].

It's going to be very long. There were years we'll be more then there'll be years and we will be less than that, like that's the way.

Probably in near term or you expect a high single-digit growth in the next year.

We're going to need -- yes, the math would suggest you're going to have to have double-digit growth as we go through the next couple of years, yes. And that's what our conviction is around that. I think as it relates to high-value categories, I think your question was around growth of high-value category-specific.

So the last couple of years, obviously, those is mid-single digits. Should we expect at some point for them to grow higher than it seems like you're present various initiatives along in the different segments to drive more pronounced growth. When should we see that growth at to start flowing.

So I will answer that by saying, I think we've made really solid progress high-value categories. You can see the market drivers there, not competitive position. We've been growing mid-single digits. Clearly, we have an ambition to do more of that as we take share if we deliver our innovation, but I wouldn't say that is going to be manifest in a particular period. I think for us to say that we're going to grow mid-single digits for now moving forward is a very good baseline to have. And if we outperform that, great, that will be fantastic as well. .

Let's go over here to Josh.

Josh Spector from UBS. I had a couple of questions around the Performance Materials piece. I think if you go through all these presentations, the market share 15%, 20% performance Materials about 2%. So I was wondering how you could talk about how you approach acquisitions growth in that market overall. Is there a higher hurdle rate you take to M&A in that area because of the lower market share and perhaps more volatility and the last thing on this is more just some of those and even what you talked about with solutions, it's more adhesive technology. It's not really a total solution like a label or maybe some of the tagging and branding on the solutions side. So why does all that fit together and what Avery is trying to do overall.

Yes. So on the first question around M&A, I think like I said, working for companies that will basically enhance our capabilities today and then we're high-value on resolve. If you think about the market, when you're saying it the share is low, and it's true, we're operating from a modest share position. The really important thing is to look at the application-specific shares. So the market, while it's large, fragmented within specific applications. There are niches and that's the application expertise. And there, the share concentration looks a little different. So for example, the Taylor acquisition we've done -- we've acquired a leader in the flooring adhesive space that is actually providing us with a significant share within that application. So I think the way we're going to look at it forward is looking for specific application leaders in areas that when we acquire them, provide us with a significant position within that specific end market or application, et cetera, that we're looking for. On top of it, we're looking for things where we can add value or they can add value to us. For example, again, on Taylor, it was the technology or on adhesives, we can basically enable Taylor is doing in a better, faster way as well as procurement because we're backward in good into acrylics and they were a big customer of acrylics and so those are kind of the elements that we're looking for. I think the second question that you said around kind of the adhesive element and it's not dilution, I would argue that it's a critical -- if you looked at everything that everybody talked about here, Adhesive is a critical component of actually enabling that solution. And so while it's not a solution on its own, it's a critical enabling technology that we have a unique expertise in -- and we're backward integrated into it, which is different than many of our competitors. And that provides us with a unique position to actually win and create superior value in those opportunities.

Let's go to Jeff .

Jeff Zekauskas at JPMorgan. I think I might try the acquisition question again. Some of the other adhesive companies have acquired in medical adhesives. And medical adhesives, I think, is very much pressure-sensitive adhesive technology. And various companies of various sizes in various geographies have been available, but it seems that that's been a market more recently where you've not had an active interest. Why is that?

Let me start off by saying, Jeff, we actually do maintain a fairly healthy M&A pipeline across all these. And I wouldn't necessarily comment on any opportunity that we're looking at now. But certainly, in the context of the way Danny framed it, I think we're -- I always think about this, that ultimately, M&A is just an expression of a strategy. So it has to be a supportive one of our strategy, which we lifted up. I think the second thing for me is, it typically has to be in 1 of our high-volcategories, which adhesives is -- and we have to be the high-value owner. So we need to bring something to that. I always use the example that we could go buy a completely remote type of business in which we have no expertise. It will be high value, but we don't bring anything to it. We're not a financial buyer. We're here to make sure that we're delivering value in the way that we are set up and for the markets that we serve as well. So as it relates to medical adhesive technology, much there is -- a lot of it is precious in it, but some of it is not as well. The way I think about that is if we can find clear examples where we can bring differentiation in that market or where we can add competency and capability to that through vertical integration, the critics example, they don't quote it. Then certainly, they are on our watch list as well. And you know yourself, some of these assets don't always become available at the ideal times as well, so.

Hillary Cacanando from Deutsche Bank. So a question for Danny. You mentioned the addressable market is $20 billion. Where do you see the largest opportunity to gain market share out of the $20 billion and when you look at your current end markets, which market is underpenetrated right now where you see good opportunity for the next 5 years.

Yes. I mean I think you'll hear some of the -- in the showcase, you'll see some examples of building and construction and general UV Wormalt and what that can do. And as far as opening new opportunities for us as well as replacing solvent. You'll hear some things around from a Taylor team around what we can do in flooring. So there isn't -- I wouldn't call it there's 1 place -- like I said, it's a pretty broad and fragmented kind of place. And we are looking for opportunities where we have unique capabilities. So in flooring, for example, we drive more in building construction. We have some unique capabilities that we're trying to drive more penetration, et cetera. So that's kind of how we're looking at it. The market is -- like I said, it's very large and there is many opportunities. What we're looking for is places like Dan mentioned, where there is -- the value is high. So the value that we can bring is high, which will allow us to capture PMA margins and where we can have unique capabilities. And today, it's through kind of a purchase settie adhesives. We're adding to the portfolio through the acquisition of Taylor and that's kind of another lens that we're looking from an M&A perspective. .

Think about our Performance Materials business, both liquid adhesives and segment and performance types as well. So, we've historically a relatively good-sized performance types business, where we're leveraging our traditional technology and skill and capability, including vertically into adhesives to provide what I would call utility on the label. So we provide performance tapes going to fractions. They hold and replace mechanical fasteners, but they also provide noise, vibration and some dampening as through the adhesive construction. So it's the combination of these 2 things that really matter for us as well in terms of really identifying an application in interterritorial using a material sensibility and then getting that stickiness it comes out of really expect in for a very long time as well.

And then a question on sustainability. It seems like there's a huge sustainability push in Europe, right, with PPWR and -- are you seeing anything similar in the U.S.? Does it seem like there is any type of like regulatory push, but maybe from the consumer customer-driven side or anything like that, anything similar that provides you with opportunity in terms of sustainability.

So Mariano, why don't you talk through Europe but also give some input into what you're seeing in the U.S. as well, and we can follow in. .

For sure. So I'm leading the European business, I'll speak a little bit through that lens. This is a central part of our strategy, right? So over the last several years, PPWR has been a center focus for us in terms of the development we have to do in innovation with material science to bring products that enable circularity. I think one of the things we're seeing also is how we can continue to add value, not just as a material supplier, but also helping navigate through very complex environment that we're living through in terms of regulation and the evolution of this regulation over the next few years. We see that we are in Europe definitely leading from a global standpoint. And I think that is giving us definitely a position of advantage overall in terms of our global positioning on sustainability. I think the trends that we see in North America are a little bit different, but there are a lot of signs there in terms of how certain states or certain end users et cetera, are putting still sustainability at the forefront. So really how we view it is we've got a perfect place in Europe to be able to advance this and accelerate. And then with our global and ability to translate solutions from one place to the other, that position us well for being able to be ready in other places in the world like North America, when this trends continue to happen.