{ "docId": "019dd923-622c-750b-8b98-ff42cd6c571b", "docSlug": "09bbf36d82e5", "documentTitle": "Avery Dennison Corporation (AVY)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-11-10 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 23, "pageCount": 89, "prevPage": 22, "nextPage": 24, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 6, "notes": "Uses expert testimony to undermine management's growth narrative for the RFID segment.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "callout_box" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-ff42cd6c571b/23", "deckHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b#slide-23", "components": [ { "bbox": { "h": 0.03, "w": 0.14, "x": 0.85, "y": 0.81 }, "kind": "callout", "text": "Deflationary Pricing", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6ecb9b18-6b92-4964-bf8d-2cee19a83da0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.96, "x": 0.02, "y": 0.17 }, "kind": "paragraph", "text": "Avery's Retail Branding and Information Solutions (RBIS) has been heavily impacted by the slow down in retailing and apparel. The lone growth driver within the segment is RFID, which management says is a $500m business with 15-20% p.a. growth potential. Avery increased its exposure to RFID at the wrong time by acquiring Smartrac in Feb 2020 for $255m. Avery has tried to focus on pushing RFID adoption in other industries. However, our research and conversations with an industry expert has shown the reason for the market's slow adoption of RFID technology is due to competing simple barcode technology, which is 5-10x less expensive than RFID. Other industries that may adopt RFID (such as airlines and restaurants) have been extremely challenged in the COVID-19 pandemic environment.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7ab351b3-5ef4-4080-bc07-aa9441cf4d36", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.22, "w": 0.84, "x": 0.15, "y": 0.37 }, "kind": "quote", "text": "Delta airlines uses an Avery Dennison inlay in every bag tag... RFID got overhyped when it was first introduced 20 years ago... It's looked at as maybe an old and dated technology... you're not just competing RFID or not. It's not a binary decision.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3cc1d11f-dec9-416d-a73c-d026bfaffcfd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.13, "w": 0.84, "x": 0.15, "y": 0.85 }, "kind": "quote", "text": "So end market pricing for RFID tags will also vary quite dramatically... on average the market price is around between $0.06 to $0.08 is typically what we see at the moment. We've also seen over the last five years that as that has come down from previous levels north of $0.10...", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cd028c10-4802-44bf-b6af-20559b8c0985", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.84, "x": 0.15, "y": 0.62 }, "kind": "quote", "text": "You've got alternative technology that you're competing against... The additional cost of ink is like a half a penny where even the highest volume applications for RFID are down in the $0.02 to $0.03 cent range. But on average, it's probably 5 to 10 cents for an RFID inlay.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d61868a7-91b0-4a89-b3b7-6a68cb8db7a2", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "One is that RFID got overhyped when it was first introduced 20 years ago and so the impression it has on the decision-maker is a negative brand. It's looked at as maybe an old and dated technology... — Former Avery Dennison RFID Sales Manager", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6ec-7186-b7d6-73312c58d789", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.68, "x": 0.28, "y": 0.05 }, "kind": "title", "text": "Retail Branding And Info Solutions Segment Reliant On RFID, An Old Technology, To Drive Growth", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "281c7c2c-6eae-497d-90d8-aad88f264cb7", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "2a4be801-7970-40df-b634-94c82c245f8f", "evidence": "Uses expert testimony to contradict management's growth claims regarding RFID technology.", "confidence": 0.9 } ], "arcBeats": [ { "to": 40, "from": 16, "beatId": "0c899a39-e9bd-4a86-98ef-bc50704d3fda", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The deck highlights multiple signs of financial strain and improper accounting", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }