1) Strong Q2 Performance
- Organic sales growth accelerated to 8% YoY, with adjusted EPS up 19% at $2.89.
- Adjusted EBITDA margins expanded to 17.1%, reflecting strong operational execution.
- Free cash flow generation was robust at over $360 million.
- Customer inventory stocking in the Materials Group contributed approximately $0.25 to earnings.

2) Segment Insights
- Materials Group: Organic sales grew 10%, driven by high-single-digit volume/mix growth and low-single-digit pricing realization. High-value categories saw mid-single-digit growth, while base categories grew low-double-digits.
- Solutions Group: Organic sales increased 3%, with low-single-digit growth across high-value and base solutions. Embelex showed low-double-digit growth, while Vestcom was slightly down.
- Intelligent Labels sales grew low-single-digits, with strong performance in apparel and general retail, but faced headwinds in logistics.

3) Challenges and Headwinds
- Anticipated customer destocking in Q3 could lead to a $0.50 sequential headwind in EPS.
- Continued geopolitical uncertainty and inflationary pressures are impacting customer behavior and pricing strategies.
- Raw material inflation was mid-single-digit YoY, with expectations of high-single-digit inflation in the second half of the year.

4) Operational Plans and Innovations
- Focus on innovation-led differentiation to drive market share and new business opportunities.
- Continued investment in productivity and pricing actions to mitigate inflation impacts.
- Strong emphasis on supply chain resilience and customer service excellence to navigate market dynamics.

5) Guidance and Outlook
- Full-year 2026 guidance is set at $10.00 to $10.30 in adjusted EPS, with organic sales growth projected at 3% to 4%.
- Expecting a larger than normal sequential earnings decline in Q3 due to customer destocking.
- Confidence in long-term growth driven by resilient portfolio and disciplined capital allocation.

Bottom line: Avery Dennison's strong Q2 results reflect effective operational execution and strategic focus on innovation, despite challenges from inflation and customer destocking. The company maintains a positive outlook for 2026, emphasizing resilience and growth potential for shareholders.