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Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, should be read in conjunction with the accompanying unaudited Condensed Consolidated Financial Statements and related notes thereto. NON-GAAP FINANCIAL MEASURES We report our financial results in conformity with accounting principles generally accepted in the United States of America, or GAAP, and also communicate with investors using certain non-GAAP financial measures. These non-GAAP financial measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. These non-GAAP financial measures are intended to supplement the presentation of our financial results prepared in accordance with GAAP. We use these non-GAAP financial measures internally to evaluate trends in our underlying performance, as well as to facilitate comparisons with the results of competitors for quarters and year-to-date periods, as applicable. Based on feedback from investors and financial analysts, we believe that the supplemental non-GAAP financial measures we provide are also useful to their assessments of our performance and operating trends, as well as liquidity. Reconciliations of our non-GAAP financial measures from the most directly comparable GAAP financial measures are provided in accordance with Regulations G and S-K. Our non-GAAP financial measures exclude the impact of certain events, activities or strategic decisions. The accounting effects of these events, activities or decisions, which are included in the GAAP financial measures, may make it more difficult to assess our underlying performance in a single period. By excluding the accounting effects, positive or negative, of certain items (e.g., restructuring charges, outcomes of certain legal matters and settlements, certain effects of strategic transactions and related costs, losses from debt extinguishments, gains or losses from curtailment or settlement of pension obligations, gains or losses on sales of certain assets, gains or losses on venture and other investments, currency adjustments due to highly inflationary economies, and other items), we believe that we are providing meaningful supplemental information that facilitates an understanding of our core operating results and liquidity measures. While some of the items we exclude from GAAP financial measures recur, they tend to be disparate in amount, frequency or timing. We use the non-GAAP financial measures described below in this MD&A. •Sales change ex. currency refers to the increase or decrease in net sales, excluding the estimated impact of foreign currency translation, and, where applicable, currency adjustments for transitional reporting of highly inflationary economies and the reclassification of sales between segments. Additionally, where applicable, sales change ex. currency is also adjusted for the estimated impact of extra days in our fiscal year and the calendar shift resulting from extra days in the prior fiscal year. The estimated impact of foreign currency translation is calculated on a constant currency basis, with prior-period results translated at current-period average exchange rates to exclude the effect of foreign currency fluctuations. Our 2025 fiscal year began on December 29, 2024 and ended on December 31, 2025; fiscal years 2026 and beyond are coincident with the calendar year, beginning on January 1 and ending on December 31. •Organic sales change refers to sales change ex. currency, excluding the estimated impact of acquisitions and product line divestitures. We believe that sales change ex. currency and organic sales change assist investors in evaluating the sales change from the ongoing activities of our businesses and enhance their ability to evaluate our results from period to period. •Adjusted free cash flow refers to cash flow provided by (used in) operating activities, less payments for property, plant and equipment, less payments for software and other deferred charges, plus proceeds from sales of property, plant and equipment, plus (minus) net proceeds from insurance and sales (purchases) of investments. Where applicable, adjusted free cash flow is also adjusted for certain acquisition-related transaction costs, proceeds from company-owned life insurance policies and net cash used for Argentine Blue Chip Swap securities. We believe that adjusted free cash flow assists investors by showing the amount of cash we have available for debt reductions, dividends, share repurchases and acquisitions. •Operational working capital as a percentage of annualized current quarter net sales refers to trade accounts receivable and inventories, net of accounts payable, divided by annualized current quarter net sales, and excludes cash and cash equivalents, short-term borrowings, deferred taxes, other current assets and other current liabilities. We believe that operational working capital as a percentage of annualized current quarter net sales assists investors in assessing our working capital requirements because it excludes the impact of fluctuations attributable to our financing and other activities (which affect cash and cash equivalents, deferred taxes, other current assets and other current liabilities) that tend to be disparate in amount, frequency or timing, and may increase the volatility of working capital as a percentage of sales from period to period. The items excluded from this measure are not significantly influenced by our day-to-day activities managed at the operating level and do not necessarily reflect the underlying trends in our operations. 19 Table of Contents Avery Dennison Corporation OVERVIEW AND OUTLOOK Fiscal Year The three and six months ended June 30, 2026 consisted of 91 and 181 days, respectively, and the three and six months ended June 28, 2025 consisted of 91 and 182 days, respectively. Our 2026 fiscal year is coincident with the calendar year, beginning on January 1 and ending on December 31; our 2025 fiscal year began on December 29, 2024 and ended on December 31, 2025. Net Sales The factors impacting net sales change, as compared to the prior-year period, are shown in the table below. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 Net sales change 11 % 9 % Foreign currency translation (2) (3) Sales change ex. currency(1) 9 6 Acquisitions (1) (1) Organic sales change(1) 8 % 4 % (1) Totals may not sum due to rounding. In the three months ended June 30, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by unfavorable mix. In the six months ended June 30, 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by unfavorable mix and the impact of raw material deflation-related price reductions. Net Income Net income increased from approximately $355 million in the first six months of 2025 to approximately $372 million in the first six months of 2026. The primary factors affecting this increase were: •Higher volume •Benefits from productivity initiatives, including savings from restructuring actions, net of transition costs •Net benefit of pricing and raw material costs, including material re-engineering •Favorable foreign currency translation These items were partially offset by the following factors: •Unfavorable mix •Higher employee-related costs •Higher provision for income taxes •Higher restructuring charges, net of reversals Cost Reduction Actions 2026 Actions We recorded $34.7 million in restructuring charges during the six months ended June 30, 2026 related to our 2026 actions. These charges consisted of severance and related costs for the reduction of approximately 600 positions, as well as asset impairment charges, at various locations across our company related to actions taken to optimize our operational footprint and workforce headcount. Restructuring charges were included in “Other expense (income), net” in the unaudited Condensed Consolidated Statements of Income. Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information. 20 Table of Contents Avery Dennison Corporation Cash Flow Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net cash provided by operating activities $ 544.7 $ 192.5 Purchases of property, plant and equipment (67.5) (66.0) Purchases of software and other deferred charges (13.9) (15.2) Proceeds from sales of property, plant and equipment .7 15.7 Proceeds from insurance and sales (purchases) of investments, net 5.8 8.8 Adjusted free cash flow $ 469.8 $ 135.8 During the first six months of 2026, net cash provided by operating activities increased compared to the same period last year primarily due to changes in operational working capital and lower incentive compensation payments, partially offset by higher tax payments, net of refunds. During the first six months of 2026, adjusted free cash flow increased compared to the same period last year primarily due to an increase in net cash provided by operating activities. Outlook Certain factors that we anticipate will contribute to our 2026 results are described below. •Based on recent rates, a favorable impact from foreign currency translation to our full-year net sales and operating income •Higher interest expense •A full-year effective tax rate in the high-twenty percent range •Incremental savings from restructuring actions, net of transition costs •An unfavorable impact to our operating income resulting from the normalization of the majority of our prior-year temporary cost-saving actions, which largely relate to lower incentive compensation ANALYSIS OF RESULTS OF OPERATIONS FOR THE SECOND QUARTER Income Before Taxes Three Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales $ 2,462.9 $ 2,220.5 Cost of products sold 1,733.5 1,581.4 Gross profit 729.4 639.1 Marketing, general and administrative expense 394.8 352.4 Other expense (income), net 21.1 .5 Interest expense 35.9 34.0 Other non-operating expense (income), net (5.1) (3.3) Income before taxes $ 282.7 $ 255.5 Gross Profit Gross profit for the second quarter of 2026 increased from the same period last year due to higher volume, the net benefit of pricing and raw material costs, including material re-engineering, benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and favorable foreign currency translation, partially offset by unfavorable mix and higher employee-related costs. Marketing, General and Administrative Expense Marketing, general and administrative expense increased in the second quarter of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable foreign currency translation and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs. 21 Table of Contents Avery Dennison Corporation Other Expense (Income), Net Three Months Ended (In millions) June 30, 2026 June 28, 2025 Other expense (income), net, by type Restructuring charges, net of reversals: Severance and related costs, net of reversals $ 16.2 $ 7.9 Asset impairment and lease cancellation charges 2.4 .1 (Gain) loss on venture and other investments 1.2 1.8 Loss from Argentine peso remeasurement .8 1.8 (Gain) loss on sales of assets — (11.1) Outcomes of legal matters and settlements .5 — Other expense (income), net $ 21.1 $ .5 Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges. Interest Expense Interest expense increased in the second quarter of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025, partially offset by a decrease in commercial paper borrowings. Net Income and Earnings per Share Three Months Ended (In millions, except per share amounts and percentages) June 30, 2026 June 28, 2025 Income before taxes $ 282.7 $ 255.5 Provision for income taxes 78.6 66.5 Net income $ 204.1 $ 189.0 Per share amounts: Net income per common share $ 2.67 $ 2.42 Net income per common share, assuming dilution 2.67 2.41 Effective tax rate 27.8 % 26.0 % Provision for Income Taxes Our effective tax rate for the three months ended June 30, 2026 increased compared to the same period last year primarily due to lower discrete benefits from decreases in certain tax reserves. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information. 22 Table of Contents Avery Dennison Corporation RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SECOND QUARTER Our chief operating decision maker uses segment adjusted operating income to evaluate segment performance and allocate resources. Segment adjusted operating income is defined as income before taxes adjusted for other expense (income), net; interest expense; and other non-operating expense (income), net. Refer to Note 12, “Segment and Disaggregated Revenue Information,” to the unaudited Condensed Consolidated Financial Statements for more information. Materials Group Three Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales including intersegment sales $ 1,832.7 $ 1,596.2 Less intersegment sales (36.6) (46.0) Net sales $ 1,796.1 $ 1,550.2 Segment adjusted operating income(1) 284.0 242.5 (1) Segment adjusted operating income excluded other expense (income), net, of $3.9 million and $(7.0) million in the second quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments and (gain) loss on sales of assets. Net Sales The factors impacting net sales change, as compared to the prior-year period, are shown in the table below. Three Months Ended June 30, 2026 Net sales change 16 % Reclassification of sales between segments (2) Foreign currency translation (3) Sales change ex. currency(1) 12 Acquisitions (2) Organic sales change(1) 10 % (1) Totals may not sum due to rounding. In the second quarter of 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume in part resulting from customer inventory stocking and our pricing actions, partially offset by unfavorable mix. On an organic basis, net sales increased by a high single digit rate in North America, a mid-teens rate in Europe, the Middle East and North Africa, a high single digit rate in Asia Pacific and a low single digit rate in Latin America. Segment Adjusted Operating Income Segment adjusted operating income increased in the second quarter of 2026 compared to the same period last year primarily due to higher volume, the net benefit of pricing and raw material costs, including material re-engineering, and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, partially offset by unfavorable mix and higher employee-related costs. Solutions Group Three Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales including intersegment sales $ 692.4 $ 682.8 Less intersegment sales (25.6) (12.5) Net sales $ 666.8 $ 670.3 Segment adjusted operating income(1) 76.5 67.0 (1) Segment adjusted operating income excluded other expense (income), net, of $17.2 million and $7.2 million in the second quarters of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments and outcomes of legal matters and settlements. 23 Table of Contents Avery Dennison Corporation Net Sales The factors impacting net sales change, as compared to the prior-year period, are shown in the table below. Three Months Ended June 30, 2026 Net sales change (1) % Reclassification of sales between segments 4 Foreign currency translation (1) Sales change ex. currency(1) 3 Organic sales change(1) 3 % (1) Totals may not sum due to rounding. In the second quarter of 2026, net sales increased on an organic basis compared to the same period in the prior year due to low single digit rate increases in both the base business and high-value categories. Company-wide, on an organic basis, net sales of intelligent labels increased by a low single digit rate compared to the same period in the prior year. Segment Adjusted Operating Income Segment adjusted operating income increased in the second quarter of 2026 compared to the same period last year primarily due to benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and the net benefit of pricing and raw material costs, partially offset by higher employee-related costs. ANALYSIS OF RESULTS OF OPERATIONS FOR THE SIX MONTHS YEAR-TO-DATE Income Before Taxes Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales $ 4,761.4 $ 4,368.8 Cost of products sold 3,367.2 3,108.2 Gross profit 1,394.2 1,260.6 Marketing, general and administrative expense 769.9 699.4 Other expense (income), net 38.9 20.4 Interest expense 71.5 64.9 Other non-operating expense (income), net (9.2) (6.6) Income before taxes $ 523.1 $ 482.5 Gross Profit Gross profit for the first six months of 2026 increased from the same period last year primarily due to higher volume, favorable foreign currency translation, the net impact of pricing and raw material input costs, including material re-engineering, and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs. These increases were partially offset by unfavorable mix and higher employee-related costs. Marketing, General and Administrative Expense Marketing, general and administrative expense increased in the first six months of 2026 compared to the same period last year primarily due to higher employee-related costs, unfavorable foreign currency translation, and growth investments, partially offset by benefits from productivity initiatives and savings from restructuring actions, net of transition costs. 24 Table of Contents Avery Dennison Corporation Other Expense (Income), Net Six Months Ended (In millions) June 30, 2026 June 28, 2025 Other expense (income), net, by type Restructuring charges, net of reversals: Severance and related costs, net of reversals $ 30.7 $ 12.6 Asset impairment and lease cancellation charges 3.7 .3 (Gain) loss on venture and other investments 2.5 16.1 Losses from Argentine peso remeasurement 1.3 2.5 (Gain) loss on sales of assets (.1) (11.1) Outcomes of legal matters and settlements .7 — Transaction and related costs .1 — Other expense (income), net $ 38.9 $ 20.4 Refer to Note 4, “Cost Reduction Actions,” to the unaudited Condensed Consolidated Financial Statements for more information regarding restructuring charges. Interest Expense Interest expense increased for the first six months of 2026 compared to the same period last year primarily due to the €500 million of senior notes we issued in September 2025, partially offset by a decrease in commercial paper borrowings. Net Income and Earnings per Share Six Months Ended (In millions, except per share amounts and percentages) June 30, 2026 June 28, 2025 Income before taxes $ 523.1 $ 482.5 Provision for income taxes 150.9 127.2 Net income $ 372.2 $ 355.3 Per share amounts: Net income per common share $ 4.87 $ 4.51 Net income per common share, assuming dilution 4.85 4.50 Effective tax rate 28.8 % 26.4 % Provision for Income Taxes Our effective tax rate for the six months ended June 30, 2026 increased compared to the same period last year primarily due to a net discrete charge in 2026 from increases in tax reserves related to a foreign court ruling impacting tax group requirements, as compared to discrete benefits from a favorable foreign tax ruling related to deductibility of interest expense and decreases in certain tax reserves in the same period last year. Refer to Note 6, “Taxes Based on Income,” to the unaudited Condensed Consolidated Financial Statements for more information. 25 Table of Contents Avery Dennison Corporation RESULTS OF OPERATIONS BY REPORTABLE SEGMENT FOR THE SIX MONTHS YEAR-TO-DATE Materials Group Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales including intersegment sales $ 3,515.7 $ 3,120.2 Less intersegment sales (70.3) (89.9) Net sales $ 3,445.4 $ 3,030.3 Segment adjusted operating income(1) 538.2 472.8 (1)Segment adjusted operating income excluded other expense (income), net, of $11.6 million and $(2.6) million in the first six months of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, loss from Argentine peso remeasurement, (gain) loss on venture and other investments, (gain) loss on sales of assets, outcomes of legal matters and settlements, and transaction and related costs. Net Sales The factors impacting net sales change, as compared to the prior-year period, are shown in the table below. Six Months Ended June 30, 2026 Reported net sales change 14 % Reclassification of sales between segments (2) Foreign currency translation (5) Sales change ex. currency(1) 8 Acquisitions (2) Organic sales change(1) 6 % (1) Totals may not sum due to rounding. In the first six months of 2026, net sales increased on an organic basis compared to the same period in the prior year primarily due to higher volume, partially offset by unfavorable mix and raw material deflation-related price reductions. On an organic basis, net sales increased by a mid-single digit rate in North America, and high single digit rates in Europe, the Middle East and North Africa and Asia Pacific and decreased by a low single digit rate in Latin America. Segment Adjusted Operating Income Segment adjusted operating income increased in the first six months of 2026 compared to the same period last year primarily due to higher volume, favorable foreign currency translation, the net benefit of pricing and raw material costs, including material re-engineering, and benefits from productivity initiatives, including savings from restructuring actions, net of transition costs. These increases were partially offset by unfavorable mix and higher employee-related costs. Solutions Group Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net sales including intersegment sales $ 1,356.1 $ 1,364.2 Less intersegment sales (40.1) (25.7) Net sales $ 1,316.0 $ 1,338.5 Segment adjusted operating income(1) 135.0 135.2 (1)Segment adjusted operating income excluded other expense (income), net, of $27.1 million and $17.3 million in the first six months of 2026 and 2025, respectively. Exclusions related to charges associated with restructuring actions, (gain) loss on venture and other investments and outcomes of legal matters and settlements. 26 Table of Contents Avery Dennison Corporation Net Sales The factors impacting net sales change, as compared to the prior-year period, are shown in the table below. Six Months Ended June 30, 2026 Reported net sales change (2) % Reclassification of sales between segments 3 Foreign currency translation (1) Sales change ex. currency(1) 1 Organic sales change(1) 1 % (1)Totals may not sum due to rounding In the first six months of 2026, net sales increased on an organic basis compared to the same period in the prior year due to a low single digit rate increase in high-value categories, partially offset by a low single digit rate decrease in the base business. Company-wide, on an organic basis, net sales of intelligent labels increased by a low single digit rate compared to the same period in the prior year. Segment Adjusted Operating Income Segment adjusted operating income in the first six months of 2026 was comparable to the same period last year primarily due to higher employee-related costs, which were offset by benefits from productivity initiatives, including savings from restructuring actions, net of transition costs, and the net benefit of pricing and raw material costs. FINANCIAL CONDITION Liquidity Operating Activities Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net income $ 372.2 $ 355.3 Depreciation 106.4 100.3 Amortization 66.8 58.4 Provision for credit losses and sales returns 27.2 25.3 Stock-based compensation 12.2 14.7 Deferred taxes and other non-cash taxes (19.2) (12.0) Other non-cash expense and loss (income and gain), net 29.2 20.8 Changes in assets and liabilities and other adjustments (50.1) (370.3) Net cash provided by operating activities $ 544.7 $ 192.5 During the first six months of 2026, net cash provided by operating activities increased compared to the same period last year primarily due to changes in operational working capital and lower incentive compensation payments, partially offset by higher tax payments, net of refunds. Investing Activities Six Months Ended (In millions) June 30, 2026 June 28, 2025 Purchases of property, plant and equipment $ (67.5) $ (66.0) Purchases of software and other deferred charges (13.9) (15.2) Proceeds from sales of property, plant and equipment .7 15.7 Proceeds from insurance and sales (purchases) of investments, net 5.8 8.8 Proceeds from settlement of net investment hedges — 6.2 Payments for acquisitions, net of cash acquired, and venture investments (75.5) (10.7) Net cash used in investing activities $ (150.4) $ (61.2) 27 Table of Contents Avery Dennison Corporation Purchases of Property, Plant and Equipment During the first six months of 2026, in our Materials Group reportable segment, we primarily invested in equipment to support growth and improve productivity in the U.S., certain countries in Europe, including Ireland and Luxembourg, and certain countries in Asia Pacific, including China and Malaysia; in our Solutions Group reportable segment, we primarily invested in equipment to support growth and improve productivity in certain countries in Asia Pacific, including Vietnam and China, the U.S. and certain countries in Latin America, primarily Mexico. During the first six months of 2025, in our Materials Group reportable segment, we primarily invested in equipment to support growth in the U.S., certain countries in Europe and certain countries in Asia Pacific, primarily China; in our Solutions Group reportable segment, we primarily invested in buildings and equipment to support growth in certain countries in Asia Pacific, including Vietnam and China, and the U.S. Purchases of Software and Other Deferred Charges During the first six months of 2026 and 2025, we primarily invested in information technology upgrades in the U.S. Proceeds from Insurance and Sales (Purchases) of Investments, Net During the first six months of 2026, we received lower proceeds from sales of investments. Proceeds from Settlement of Net Investment Hedges During the first six months of 2025, we settled €420 million notional amount of net investment hedges. Payments for Acquisitions, Net of Cash Acquired, and Venture Investments During the first six months of 2026, we made an approximately $75 million minority investment in Wiliot Ltd. We funded this investment using a combination of cash and commercial paper borrowings. In addition, we paid for purchase price adjustments related to our acquisition of W.F. Taylor Holdings, Inc. and for another venture investment. During the first six months of 2025, we paid $10.7 million for venture investments. Financing Activities Six Months Ended (In millions) June 30, 2026 June 28, 2025 Net increase (decrease) in borrowings with maturities of three months or less $ (9.6) $ 816.2 Repayments of long-term debt and finance leases (3.4) (551.6) Dividends paid (148.5) (142.9) Share repurchases (198.2) (360.0) Net (tax withholding) proceeds related to stock-based compensation (9.4) (12.6) Payments for settlement of fair value hedges — (13.5) Other (.5) 15.9 Net cash used in financing activities $ (369.6) $ (248.5) Borrowings and Repayment of Debt During the first six months of 2026 and 2025, our commercial paper borrowings were used to fund dividend payments, share repurchases, venture investments, capital expenditures and other general corporate purposes. During the first six months of 2025, commercial paper borrowings were also used to repay long-term debt. In the first quarter of 2025, we repaid our €500 million of senior notes at maturity using the net proceeds from the €500 million of senior notes we issued in the fourth quarter of 2024, cash flows from operations and commercial paper borrowings. In the second quarter of 2025, we repaid our $25 million of medium-term notes at maturity using cash flows from operations and commercial paper borrowings. Dividends Paid We paid dividends of $1.94 per share in the first six months of 2026 compared to $1.82 per share in the same period last year. In April 2026, we increased our quarterly dividend rate from $0.94 per share to $1.00 per share, representing an increase of approximately 6%. Share Repurchases During the first six months of 2026 and 2025, we repurchased approximately 1.2 million and 2.0 million shares of our common stock, respectively. Payments for Settlement of Fair Value Hedges During the first six months of 2025, we settled €420 million notional amount of fair value hedges. 28 Table of Contents Avery Dennison Corporation Analysis of Selected Balance Sheet Accounts Long-lived Assets In the six months ended June 30, 2026, goodwill decreased by approximately $11 million to $2.26 billion, primarily reflecting the impact of foreign currency translation. In the six months ended June 30, 2026, other intangibles resulting from business acquisitions, net, decreased by approximately $51 million to $776.2 million, primarily reflecting current-year amortization expense. Refer to Note 2, “Goodwill and Other Intangibles Resulting from Business Acquisitions,” to the unaudited Condensed Consolidated Financial Statements for more information. Shareholders’ Equity Accounts As of June 30, 2026, the balance of our shareholders’ equity was $2.32 billion. Refer to Note 8, “Supplemental Equity and Comprehensive Income Information,” to the unaudited Condensed Consolidated Financial Statements for more information. Impact of Foreign Currency Translation Six Months Ended (In millions) June 30, 2026 Change in net sales $ 139 International operations generated approximately 69% of our net sales during the six months ended June 30, 2026. Our future results are subject to changes in worldwide economic conditions, tariffs, and social, geopolitical and market conditions in the regions in which we operate, as well as the impact of fluctuations in foreign currency exchange and interest rates. The favorable impact of foreign currency translation on net sales in the first six months of 2026 compared to the same period last year was primarily related to euro-denominated sales and sales in China. Effect of Foreign Currency Transactions The impact on net income from transactions denominated in foreign currencies is largely mitigated because the costs of our products are generally denominated in the same currencies in which they are sold. In addition, to reduce our income and cash flow exposure to transactions in foreign currencies, we enter into foreign exchange forward, option and swap contracts where available and appropriate. Refer to Note 5, “Financial Instruments,” to the unaudited Condensed Consolidated Financial Statements for more information. Analysis of Selected Financial Ratios We utilize the financial ratios discussed below to assess our financial condition and operating performance. We believe this information assists our investors in understanding the factors impacting our cash flow other than net income and capital expenditures. Operational Working Capital Ratio Operational working capital, as a percentage of annualized current-quarter net sales, is reconciled to working capital below. Our objective is to minimize our investment in operational working capital, as a percentage of annualized current-quarter net sales, to maximize our cash flow and return on investment. As shown below, operational working capital, as a percentage of annualized current-quarter net sales, in the second quarter of 2026 decreased compared to the second quarter of 2025. (In millions, except percentages) June 30, 2026 June 28, 2025 (A) Working capital $ 395.5 $ 121.7 Reconciling items: Cash and cash equivalents (227.3) (215.9) Other current assets (348.0) (314.5) Short-term borrowings and current portion of long-term debt and finance leases 500.5 922.0 Accrued payroll and employee benefits and other current liabilities 979.8 832.6 (B) Operational working capital $ 1,300.5 $ 1,345.9 (C) Second-quarter net sales, annualized $ 9,878.7 $ 8,882.0 Operational working capital, as a percentage of annualized current-quarter net sales: (B) ÷ (C) 13.2 % 15.2 % 29 Table of Contents Avery Dennison Corporation Accounts Receivable Ratio The average number of days sales outstanding was 66 days in the second quarter of 2026 compared to 67 days in the second quarter of 2025, calculated using the accounts receivable balance at quarter-end divided by the average daily sales in the respective quarter. The decrease in average number of days sales outstanding primarily reflected the impact of foreign currency translation, partially offset by the timing of collections. Inventory Ratio Average inventory turnover was 6.7 in the second quarter of 2026 compared to 6.2 in the second quarter of 2025, calculated using the annualized second-quarter cost of products sold and divided by the inventory balance at the respective quarter-end. The increase in average inventory turnover primarily reflected higher volumes due to customer inventory stocking. Accounts Payable Ratio The average number of days payable outstanding was 80 days in the second quarter of 2026 compared to 75 days in the second quarter of 2025, calculated using the respective accounts payable balance at quarter-end divided by the annualized second-quarter cost of products sold. The increase in average number of days payable outstanding primarily reflected the timing of vendor payments, partially offset by the impact of foreign currency translation and acquisitions. Capital Resources Capital resources used to fund our operational needs include cash flows from operations, cash and cash equivalents, and debt financing, including access to commercial paper borrowings supported by our $1.20 billion revolving credit facility (the “Revolver”). The Revolver is used as a back-up facility for our commercial paper borrowings and can be used for other corporate purposes. No balance was outstanding under the Revolver as of June 30, 2026 or December 31, 2025. As of June 30, 2026, we had cash and cash equivalents of $227.3 million held in accounts at third-party financial institutions. Our cash balances are held in numerous locations around the world. As of June 30, 2026, the majority of our cash and cash equivalents was held by our foreign subsidiaries, primarily in Asia Pacific. To meet our U.S. cash requirements, we have several cost-effective liquidity options available. These options include borrowing funds at reasonable rates, including borrowings from foreign subsidiaries, and repatriating foreign earnings and profits. However, if we were to repatriate foreign earnings and profits, a portion would be subject to cash payments of withholding taxes imposed by foreign tax authorities. Additional U.S. taxes may also result from the impact of foreign currency fluctuations related to these earnings and profits. Capital from Debt The carrying value of our total debt decreased by approximately $55 million in the first six months of 2026 to $3.68 billion, primarily due to the revaluation of our euro-denominated debt and lower commercial paper borrowings. Credit ratings are a significant factor in our ability to raise short- and long-term financing. The credit ratings assigned to us also impact the interest rates we pay and our access to commercial paper, credit facilities and other borrowings. A downgrade of our short-term credit ratings could impact our ability to access commercial paper markets. If our access to commercial paper markets were to become limited, we believe that the Revolver and our other credit facilities would be available to meet our short-term funding requirements. When determining a credit rating, we believe that rating agencies primarily consider our competitive position, business outlook, consistency of cash flows, debt level and liquidity, geographic dispersion and management team. We remain committed to maintaining an investment grade rating. Off-Balance Sheet Arrangements, Contractual Obligations, and Other Matters Refer to Note 11, “Commitments and Contingencies,” to the unaudited Condensed Consolidated Financial Statements for this information. Except as otherwise indicated therein, we have no material off-balance sheet arrangements as described in Item 303(b) of Regulation S-K.