Mitch Butier
Chairman of the Board, President and Chief Executive Officer at Avery Dennison
Thanks, John, and good day everyone. We are pleased to report our 10th consecutive year of strong top and bottom line growth. Our Label and Graphic Materials business delivered strong performance in the year of significant raw material inflation and constrained supply. Retail Branding and Information Solutions posted both strong top line growth and significant margin expansion. Industrial and Healthcare Materials made solid progress, and importantly, our intelligent labels platform continues to deliver significant growth and increasing potential.
In addition to great results for the year, 2021 marked an important milestone for the company as a final year of measurement for the five-year financial targets we communicated in early 2017. This is the third long-term performance cycle we've completed since first introducing this discipline back in 2012. And I'm pleased to report that we once again achieved our company goals. Our consistent performance over the years reflects the resilience of our industry-leading market positions, the strategic foundations we've laid, and our agile and talented workforce. Our playbook is working extremely well as we continue to focus on five overarching strategic pillars: driving outsized growth in high value categories, growing profitably in our base businesses, focusing relentlessly on productivity, effectively allocating capital, and leading in an environmentally and socially responsible manner. Over the last five years we achieved, exceeded even, our long-term company wide goals set in early 2017 including delivering an EPS CAGR of 17% and growing the company to $8.4 billion in revenue. There were many important milestones achieved over this time horizon, one standout of course is Intelligent labels, now a $700 million platform. This business tripled in size over the last five years growing 20% annually on an organic basis. The strong growth over this time horizon was driven primarily by apparel as we continue to drive further adoption of the technology and expand programs with major customers in this key end market. And while we continue to expect apparel to be the key growth driver in the coming few years, we see even greater opportunity over the long run in other key untapped markets. For example in the food segment, three quick service restaurants after successful pilots are in the early stages of rolling out RFID to improve supply chain traceability and inventory accuracy. And in logistics, we continue to work with shipping and logistics players seeking further automation to drive speed and productivity. As the leader in ultra high frequency RFID we are positioned extremely well to not only capture these new opportunities, but to create them. To that end, we are continuing to invest in developing new applications in markets, adding new technologies both physical and digital, increasing our manufacturing capacity and expanding our team, the best, most experienced in this space. The momentum in Intelligent labels where we continue to expect long-term growth of 15% to 20% annually is a great example of the progress we continue to make, but it is only one example of many across the portfolio. Over the last five years we've made solid progress in achieving the objectives in IHM, great progress in LGM, and truly remarkable progress in RBIS. We are focused on creating exceptional value for all of our stakeholders across the entire company.
Now, looking specifically at 2021, the year was no different as we made solid progress on our strategic pillars while posting impressive results. We delivered EPS of $8.91 for the year up 25% from 2020 and 35% from 2019 levels. We grew the topline by roughly 19% on the constant currency basis and 16% organically. All three segments delivered strong results relative to both 2020 and 2019 with solid growth in our base businesses and continued above average volume growth from high value categories. These strong results come at a time of continued and increasing challenges; the ramping up of COVID infections in many countries, continued supply chain constraints, and additional inflationary pressures or tax in the industry, our customers and our teams. The biggest challenges are now in LGM North America and Europe where we are seeing both increase in constraints on the availability of raw materials and additional inflationary pressure. The team has continued to find ways to manage these compounding challenges and deliver impressive results over the last couple of years and we are confident we will do so again in 2022.
Now a brief summary of the year by segment. Label and Graphic Materials delivered another year of strong margins and exceptionally strong top line growth reflecting above average volume growth as well as pricing. Throughout the year orders remained elevated. This was driven by continued strong demand for consumer packaged goods and e-commerce trends as well as to a lesser extent we believe inventory building downstream from us given the supply chain challenges and significant inflationary pressures. We experienced raw material constraints across many categories throughout the year. Currently, we are seeing some easing of constraints in chemicals and resins, but increasing constraints from paper and transportation. We exited the year with annualized inflation of more than $600 million and nearly 20% increase in our materials businesses alone as the cost of raw materials and freight continue to rise. Given the magnitude of this inflation and the lag in the timing of our price increases, margins moderated in the back half of the year for this business. While we are experiencing even more inflation as we start this year particularly in paper, we expect to offset the higher cost over the cycle. We remain confident in our ability to continue driving GDP plus growth in this high return business.
Retail Branding and Information Solutions continues to deliver impressive results with margins expanding to another record on significant revenue growth for the year driven by strength in both high value categories as well as the base business. As I mentioned earlier, momentum in our intelligent labels platform continues as sales grew roughly 30% on an organic basis compared to 2020 and roughly 40% compared to 2019. And our recent Vestcom acquisition is not only achieving its performance goals but also showing positive early signs in providing additional channel access to Intelligent labels. In the Industrial and Healthcare Materials segment, sales rebounded versus prior year well above 2019 levels and operating income grew significantly. We've made solid progress in this group of businesses over the last few years, however, the challenges in some of its end markets, principally automotive have hindered our ability to achieve our ambitions. Despite these challenges, we are focused on achieving the long-term potential of this Group.
Now as for capital allocation, we continue to execute a balanced strategy. We have increased our pace of growth and capability-building investments both organically and through M&A. Over the last couple of years we've completed several acquisitions, expanded our venture program and started ramping up the pace of organic investments which we recently began further accelerating. The overriding focus of our M&A venture program and organic investments is to further increase our presence in high value categories, increase our pace of innovation and advance our sustainability initiatives, and we intend to continue this path all while maintaining a strong balance sheet and returning cash to shareholders.
With these great results in mind. It's important to highlight that our overriding focus is on the long-term success of all of our stakeholders, and we have a clear set of objectives and strategies focused on our mutual success. We're making great progress towards our 2025 and 2030 sustainability goals and are on track to deliver our 2025 financial objectives. As you know, the overarching objective of our long-term financial targets is to deliver GDP plus growth and top-quartile returns on capital. This is a recipe for superior value creation over the long term, and we are confident in our ability to continue doing so. After delivering a 20% increase in EPS in 2021 ex currency, we are again targeting double-digit EPS growth in 2022. While 2022 is already shaping up to be just as challenging as the last couple of years, we are prepared for it commercially, operationally and financially. And once again, I want to thank our entire team for their tireless efforts to keep one another safe while delivering for all of our stakeholders. This has been a particularly taxing time for our teams and we are all grateful for their dedication, agility and focus. Thank you. Now, I'll hand the call over to Greg.
