Avery Dennison (AVY) Financials

Avery Dennison’s latest quarterly results show a business that is still profitable and generating cash, but with a few balance-sheet and cash-flow trends investors should watch closely. Over the last four years, AVY has generally delivered steady revenue growth, solid operating margins, and consistent dividend payments. At the same time, debt remains meaningful, treasury stock has continued to build, and quarterly cash flow can be lumpy because of working-capital swings and acquisition activity.

What stands out most in Q1 2026: revenue rose modestly year over year to $2.30 billion from $2.27 billion, gross profit improved to $664.8 million, and net income was essentially flat at $168.1 million. Operating cash flow was positive at $136.5 million, but it was far below the prior quarter’s unusually strong $376.8 million. The company also continued returning cash to shareholders through dividends and buybacks while carrying a sizable debt load.

• Revenue is trending upward over time. Q1 2026 revenue of $2.30 billion was above Q1 2025’s $2.15 billion and above Q1 2024’s $2.15 billion, showing gradual top-line expansion.
• Gross profit and gross margin remain resilient. Q1 2026 gross profit of $664.8 million on $2.30 billion of revenue implies a gross margin of about 28.9%, slightly better than recent comparable quarters.
• Operating income remains solid. Q1 2026 operating income of $289.7 million continued the company’s pattern of healthy operating profitability.
• Cash generation is still positive. AVY produced $136.5 million of operating cash flow in Q1 2026, which supports dividends, capex, and debt management.
• The dividend is clearly supported by earnings. Q1 2026 diluted EPS of $2.18 easily covered the $0.94 quarterly dividend per share.
• Long-term earnings power has held up. In the last four fiscal years, AVY has remained consistently profitable, with quarterly net income generally ranging from the low $100 millions to low $200 millions.
• SG&A has been broadly controlled. Selling, general and administrative expense stayed relatively stable around the mid-$300 million range in recent quarters.
• Capital spending is moderate. Q1 2026 capex was $28.3 million, suggesting the company is not currently in a heavy investment cycle.
• Share count has drifted lower over time. Basic shares outstanding have generally declined versus 2023, reflecting ongoing buybacks.
• Debt remains elevated. At March 31, 2026, AVY had $605 million of short-term debt and $3.19 billion of long-term debt, for total debt of about $3.79 billion.

Looking at the balance sheet, total assets were $8.98 billion in Q1 2026 versus $8.35 billion in Q1 2025 and $8.22 billion in Q1 2024. Equity also improved to $2.30 billion from $2.17 billion a year earlier. That said, liabilities were still large at $6.68 billion, and current liabilities of $2.80 billion exceeded current assets of $3.22 billion by a fairly narrow margin once debt and working capital are considered.

One important point for retail investors: AVY’s cash balance moved sharply around quarter-end, from $329.1 million at year-end 2024 to $195.9 million in Q1 2025, then up to $255.1 million in Q1 2026. That swing, along with the big change in operating cash flow from quarter to quarter, suggests working-capital timing can materially affect reported cash generation.

From a trend perspective, the company looks stable rather than high-growth. Revenue has inched higher, earnings have remained durable, and free cash flow appears sufficient to fund dividends and repurchases. The main negatives are leverage and occasional volatility in operating cash flow, especially when working capital or acquisitions move around.

Bottom line: Avery Dennison still looks like a steady cash-generating industrial name with a shareholder-friendly capital return policy. Investors should like the consistency of earnings and dividends, but they should keep an eye on debt levels, acquisition-driven balance-sheet changes, and whether operating cash flow can stay strong after the unusually weak Q1 2026 conversion relative to Q4 2025.