{ "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": 25, "pageCount": 89, "prevPage": 24, "nextPage": 26, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "Uses a dialogue-based format to highlight discrepancies between management's narrative and industry expert insights.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-ff42cd6c571b/25", "deckHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ff42cd6c571b#slide-25", "components": [ { "bbox": null, "kind": "callout", "text": "While RFID margin percentage may remain stable, topline pricing pressure will reduce the absolute level of Avery's profitability.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6ec-7186-b7d6-c85cce0b4243", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.94, "x": 0.03, "y": 0.185 }, "kind": "paragraph", "text": "While management highlights the strength of its margins in the RFID business, our conversations with an industry expert tell a different narrative. While RFID margin percentage may remain stable, topline pricing pressure will reduce the absolute level of Avery's profitability. As pricing continues to come down, Avery's only option to grow profitability will be to increase volumes and have the entire market continue to grow in a rough economic backdrop.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "20f9d150-69cb-49df-89b2-a5768f49d190", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.77, "x": 0.2, "y": 0.34 }, "kind": "quote", "text": "Have they been able to maintain pricing power or is this a deflationary pricing category for them? Would you expect there, even though it's growing, would you expect their profitability and marketing to go down over time?", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "48e83909-d7b8-4efb-8b45-a58bfd2fca24", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.77, "x": 0.2, "y": 0.46 }, "kind": "quote", "text": "Margins will be the same because that is how they are managing the business. Net profit on legacy business may slowly shrink because as their costs come down, the total dollar or margin might shrink. 40% of a penny versus two pennies is just less money. You've got the customers that choke on the tag cost and don't want to add 5-10 cents. Those old-time time customers that were complaining about price were complaining when it was a dollar a tag. A lot of the same capabilities you were paying a dollar for 20 years ago.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "4a4a660f-5cfa-4f01-b05e-d2b35d2494e6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.77, "x": 0.2, "y": 0.695 }, "kind": "quote", "text": "Do you think this work from home trend is a negative for Avery? As more workers are remote, and don't need to go into the office every day, there is less demand for work apparel, and hence less need for apparel tags and RFID?", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b4394807-6515-48c3-a093-b6c4d7dbb291", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.77, "x": 0.2, "y": 0.825 }, "kind": "quote", "text": "Yes, that's right.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e588eb42-3560-48f3-a196-b2ff93d9185e", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“Margins will be the same because that is how they are managing the business. Net profit on legacy business may slowly shrink because as their costs come down, the total dollar or margin might shrink. 40% of a penny versus two pennies is just less money.” — Former Avery Dennison RFID Sales Manager", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6ec-7186-b7d6-ceb5bdad617f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.5, "x": 0.32, "y": 0.015 }, "kind": "title", "text": "Profitability Looking To Come Under Pressure", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "846df901-de16-4262-96dd-be85ff194328", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "expose_contradiction", "slug": null, "matchId": "71a6f337-5efc-44a8-93d9-f1472f53ab73", "evidence": "Contrasting management claims with expert testimony", "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 }