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Friday, April 29, 2022

1-800-Flowers.com (FLWS)
What To Do Now?

1-800-FLOWERS.COM, Inc. is the leading provider of gourmet and floral gifts for all occasions. For nearly 40 years, 1-800-FLOWERS® has been helping deliver smiles for customers with gifts for every occasion, including fresh flowers, premium, gift-quality fruits, and other gourmet items from Harry & David®, popcorn and specialty treats from The Popcorn Factory®; cookies and baked gifts from Cheryl’s®; premium chocolates and confections from Fannie May®; gift baskets and towers from 1-800-Baskets.com®; premium English muffins and other breakfast treats from Wolferman’s; carved fresh fruit arrangements from FruitBouquets.com; and top quality steaks and chops from Stock Yards®. The Company’s BloomNet® international floral wire service provides a broad range of quality products and value-added services designed to help professional florists grow their businesses profitably.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Patrick McCann, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Fiscal Q3 miss. The company reported fiscal Q3 2022 revenue of $469.6 million, missing our estimate of $478.8 million by 1.9%. Adj. EBITDA also missed our expectation in the quarter at a seasonal loss of $12 million compared with our forecast of a loss of $8 million.

Costs challenges.  Gross profit margin was down in all three business segments compared with the prior year period. The sharpest gross margin decline was in the Gourmet Foods & Gift Baskets segment. The decline in company wide gross margins, down over 600 basis points, was due to increased labor costs, higher inbound and outbound shipping costs, and write-offs of inventories …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

 

Thursday, April 28, 2022

ACCO Brands (ACCO)
Post Call Thoughts and Updated Models

ACCO Brands Corporation designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products primarily in the United States, Canada, Northern Europe, Brazil, Australia, and Mexico. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International. The company offers office products, such as stapling, binding and laminating equipment, and related consumable supplies, as well as shredders and whiteboards; and academic products, including notebooks, folders, decorative calendars, and stationery products. It also provides private label products, as well as business machine maintenance and repair services. The company offers its business, academic, and calendar product lines under the Artline, AT-A-GLANCE, Derwent, Esselte, Five Star, GBC, Hilroy, Leitz, Marbig, Mead, NOBO, Quartet, Rapid, Rexel, Swingline, Tilibra, Wilson Jones, and other brand names. In addition, it designs, sources, distributes, markets, and sells accessories for laptop and desktop computers, and tablets comprising security products; input devices, such as presenters, mice, and trackballs; ergonomic aids, including foot and wrist rests; docking stations; and other personal computers and tablet accessories under the Kensington, Microsaver, and ClickSafe brand names. The company sells its products to consumers and commercial end-users primarily through resellers, including traditional office supply resellers, wholesalers, mass merchandisers, and retailers, as well as directly to consumers through on-line and direct mail. ACCO Brands Corporation is headquartered in Lake Zurich, Illinois.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Back-to-School. The Back-to-School season is off to a strong start. The North American market should see a strong season, while the improvement in Mexico and Brazil, neither of which are back to pre-COVID levels, should add to demand. With in-country manufacturing, we believe ACCO is well positioned to benefit if supply chain issues persist.

Price Hikes.  Overall, ACCO still has yet to recover inflationary cost increases and we anticipate additional targeted price increases throughout all markets during the year. ACCO took a sizable price increase in EMEA on April 1 and another price increase will be taken on July 1. Hopefully, these will offset cumulative inflationary pressures in that market …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

 

1-800-FLOWERS.COM, Inc. Reports Results for Its Fiscal 2022 Third Quarter

Research, News, and Market Data on 1-800-FLOWERS.COM

 

• Total net revenues for the quarter were $469.6 million, down 1.0 percent compared with $474.2 million in the prior year period. Compared with the Company’s fiscal 2020 third quarter, prior to the pandemic, revenues were up 68.4 percent.
• Net loss for the quarter was $23.4 million, or a loss of $0.36 per share compared with net income of $1.4 million, or $0.02 per diluted share, in the prior year period, primarily reflecting significant year-over-year cost increases for inbound and outbound shipping, labor, and digital marketing. Adjusted net loss¹ for the quarter was $21.0 million, or a loss of $0.32 per share, compared with adjusted net income¹ of $1.5 million, or $0.02 per diluted share, in the prior year period.
• Adjusted EBITDA¹ for the quarter was a loss of $12.0 million, compared with adjusted EBITDA¹ of $15.4 million in the prior year period.
• Company provides revised full-year guidance including revenue growth of 3.0 percent to 5.0 percent, adjusted EBITDA in a range of $110.0 million-to-$115.0 million and adjusted EPS in a range of $0.55 -to- $0.60 per diluted share.

(¹ Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for a reconciliation of non-GAAP results to applicable GAAP results.)

JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), today reported results for its fiscal 2022 third quarter ended March 27, 2022.

Chris McCann, CEO of 1-800-FLOWERS.COM, Inc., said, “Our results for the fiscal third quarter were below our expectations. A solid Valentine’s Day holiday for our 1-800-Flowers brand was offset by overall slower consumer demand for everyday gifting occasions throughout the period. These results reflected a continuation, and in some areas an escalation, of the macro-economic cost headwinds that we discussed back in January at the start of the quarter, combined with slower consumer demand reflecting growing consumer concerns with rapidly rising inflation and geopolitical unrest.

“While total revenues for the quarter were essentially flat with the prior year period, they were up more than 68 percent compared with our fiscal 2020 third quarter. Over the past three years we have essentially doubled our revenues to more than 
$2 billion and we anticipate driving further growth in the current fiscal fourth quarter and for the full year by leveraging our large customer file, the strong growth we continue to see in our Celebrations Passport loyalty program – which has grown more than 40 percent since the beginning of the current fiscal year – as well as initiatives in new innovative products and partnerships,” he said.

In terms of bottom-line results, McCann said that while the Company anticipates facing continued cost headwinds in the near term, “Our strong balance sheet enables us to invest in our operating platform, including investments to automate warehouse and distribution facilities, optimize our outbound shipping operations and build and bring in inventory early. Over the longer term, we anticipate these initiatives will enable us to improve our gross margins and drive enhanced bottom-line performance.”

McCann added, “Looking ahead, the current macroeconomy is highly unpredictable, with rising inflation and other factors impacting both costs and consumer demand. However, it is important to note that we have faced challenging macro market conditions in the past and, because of the strength of our unique business platform, combined with our talented and experienced team across the enterprise, we have emerged a bigger, better, and stronger company, and we are confident that we will continue to grow our company and build shareholder value over the long term.”

Third Quarter 2022 Financial Results

Total consolidated net revenues were 
$469.6 million, down 1.0 percent compared with 
$474.2 million in the prior year period. Compared with the Company’s fiscal 2020 third quarter, prior to the pandemic, revenues were up 68.4 percent.

Gross profit margin for the quarter was 32.8 percent, a decline of 610 basis points compared with 38.9 percent in the prior year period, primarily reflecting increased costs for inbound and outbound shipping, labor, and write-offs of expired perishable inventory. Operating expenses as a percent of total revenues, improved 60 basis points to 38.4 percent of total sales, compared with 39.0 percent in the prior year period. Operating expenses, excluding stock-based compensation, the costs associated with a one-time employee class action legal settlement, and appreciation-or-depreciation of investments in the Company’s non-qualified compensation plan, improved 10 basis points to 38.1 percent of total sales, compared with 38.2 percent in the prior year period.

The combination of these factors resulted in a net loss for the quarter of 
$23.4 million, or (
$0.36) per share compared with net income of 
$1.4 million, or 
$0.02 per diluted share, in the prior year period. Adjusted net loss¹ for the quarter was 
$21.0 million, or (
$0.32) per share, compared with adjusted net income¹ of 
$1.5 million, or 
$0.02 per diluted share, in the prior year period. Adjusted EBITDA¹ for the quarter was a loss of 
$12.0 million, compared with adjusted EBITDA¹ of 
$15.4 million in the prior year period.

Segment Results:

The Company provides selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and Gifts, and BloomNet^® segments in the tables attached to this release and as follows:

• Gourmet Foods and Gift Baskets: Revenues for the quarter were 
  $167.4 million, down 4.5 percent compared with 
  $175.2 million in the prior year period primarily reflecting the shift of the Easter holiday later into the Company’s fiscal fourth quarter as well as lower deferred revenue entering the quarter, compared with the prior year period, partly offset by higher year-over-year wholesale revenues and revenues associated with Vital Choice^®, which the Company acquired in October, 2021. Gross profit margin was 25.3 percent, a decline of 1,410 basis points compared with 39.4 percent in the prior year period, primarily reflecting increased costs for labor, inbound and outbound shipping and charges associated with the write-off of expiring inventories. Segment contribution margin¹ was a loss of 
  $17.1 million compared with segment contribution margin of 
  $12.1 million in the prior year period, reflecting the reduced revenues and gross margin and higher year-over-year digital marketing costs. Adjusted segment contribution margin¹ for the quarter was a loss of 
  $14.2 million excluding one-time costs associated with the settlement of an employee class action lawsuit.
• Consumer Floral and Gifts: Total revenues in this segment were 
  $264.2 million, an increase of 1.5 percent compared to 
  $260.4 million in the prior year period, primarily reflecting solid growth for the Valentine’s Day holiday partly offset by softer everyday gifting sales. Gross profit margin was 36.7 percent, down 110 basis points compared with 37.8 percent in the prior year period primarily reflecting increased shipping costs. Segment contribution margin¹ was 
  $20.5 million, down 8.9 percent compared with 
  $22.5 million in the prior year period, primarily reflecting the reduced gross margin and higher year-over-year digital marketing costs.
• BloomNet: Revenues for the quarter were 
  $38.4 million, down 1.0 percent compared with 
  $38.8 million in the prior year period. Gross profit margin was 38.7 percent, down 560 basis points, compared with 44.3 percent in the prior year period, primarily reflecting higher inbound shipping costs and product mix. As a result, segment contribution margin¹ was 
  $9.8 million, down 18.8 percent compared with 
  $12.0 million in the prior year period.

Company Guidance

The Company is updating its guidance for fiscal year 2022 year reflecting reported results for the first three quarters of the year as well as its outlook for the remainder of the year. The updated guidance includes:

• Total revenue growth of 3.0 percent to 5.0 percent, compared with the prior year;
• Adjusted EBITDA in a range of 
  $110.0 million-to-
  $115.0 million;
• Adjusted EPS in a range of 
  $0.55 -to- 
  $0.60 per diluted share, and;
• The Company anticipates that Free Cash Flow for the year will be down significantly compared with the prior year based on its updated guidance and its plans to use its strong balance sheet to invest in inventory to support its growth plans and address the headwinds it sees in the macro economy.

The Company’s guidance for the year is based on several factors, including,

• The continuing headwinds associated with the ongoing pandemic, increased costs for labor, inbound and outbound shipping and marketing, as well as consumer concerns regarding rising price inflation and geopolitical issues, somewhat offset by:
• the Company’s ability to continue to attract new customers and add new members to its Celebrations Passport^® Loyalty program, which is helping drive increased frequency, retention, and cross-category/ cross-brand purchases.

Definitions of non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with 
U.S. generally accepted accounting principles(“GAAP”). Certain of these are considered “non-GAAP financial measures” under the 
U.S. Securities and Exchange Commission rules. Non-GAAP financial measures referred to in this document are either labeled as “non-GAAP” or designated as such with a “¹”. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Selected Financial Information below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

EBITDA and Adjusted EBITDA:

We define EBITDA as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See Selected Financial Information for details on how EBITDA and adjusted EBITDA were calculated for each period presented. The Company presents EBITDA and adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company’s credit agreement uses EBITDA and adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. The Company also uses EBITDA and adjusted EBITDA to evaluate and price potential acquisition candidates. EBITDA and adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of the limitations are: (a) EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, the Company’s working capital needs; (b) EBITDA and adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company’s performance.

Segment Contribution Margin and Adjusted Segment Contribution Margin:

We define segment contribution margin as earnings before interest, taxes, depreciation, and amortization, before the allocation of corporate overhead expenses. Adjusted segment contribution margin is defined as segment contribution margin adjusted for certain items affecting period-to-period comparability. See Selected Financial Information for details on how segment contribution margin and adjusted segment contribution margin was calculated for each period presented. When viewed together with our GAAP results, we believe segment contribution margin and adjusted segment contribution margin provide management and users of the financial statements with meaningful information about the performance of our business segments. Segment contribution margin and adjusted segment contribution margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the segment contribution margin and adjusted segment contribution margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as operating income and net income.

Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share:

We define adjusted net income (loss) and adjusted or comparable net income (loss) per common share as net income (loss) and net income (loss) per common share adjusted for certain items affecting period-to-period comparability. See Selected Financial Information below for details on how adjusted net income (loss) and adjusted or comparable net income (loss) per common share were calculated for each period presented. We believe that adjusted net income (loss) and adjusted or comparable net income (loss) per common share are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP net income (loss) and net income (loss) per common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

Free Cash Flow:

We define free cash flow as net cash provided by operating activities less capital expenditures. The Company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free cash flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since free cash flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.

About 1-800-FLOWERS.COM, Inc.

1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help customers express, connect, and celebrate. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, Stock Yards® and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad range of products and services designed to help members grow their businesses profitably; Napco?, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital livestreaming floral, culinary and other experiences to guests across the country. 1-800-FLOWERS.COM, Inc. was recognized among the top five on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter.

FLWS-COMP / FLWS-FN

Special Note Regarding Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s ability to achieve its updated guidance for fiscal-year 2022; the impact of the Covid-19 pandemic on the Company; its ability to successfully integrate acquired businesses and assets; its ability to successfully execute its strategic initiatives, including its investments in its operating platform; its ability to cost-effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and industry and economic conditions that may affect, among other things, the levels of discretionary customer purchases of the Company’s products and the costs of shipping and labor. Reconciliations for forward looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including for example those related to compensation, tax items, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The lack of such reconciling information should be considered when assessing the impact of such disclosures. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties. For a more detailed description of these and other risk factors, refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

Conference Call:

The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, April 28, 2022, at 8:00 a.m. (ET). The conference call will be webcast live from the Investor Relations section of the Company’s website at www.1800flowersinc.com. A recording of the call will be posted on the Investor Relations section of the Company’s web site within two hours of the call’s completion. A replay of the call can be accessed beginning at 2:00 p.m. ET on the day of the call through May 5, 2022, at: (US) 1-877-344-7529; (
Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID #:5119258.

Note: The attached tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.

 

Investor Contact:

Joseph D. Pititto

(516) 237-6131

invest@1800flowers.com



Media Contact:

Kathleen Waugh

(516) 237-6028

kwaugh@1800flowers.com

Source: 1-800-FLOWERS.COM, Inc.

Wednesday, April 27, 2022

ACCO Brands (ACCO)
Sales and Profits Exceed Management Expectations For 1Q22

ACCO Brands Corporation designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products primarily in the United States, Canada, Northern Europe, Brazil, Australia, and Mexico. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International. The company offers office products, such as stapling, binding and laminating equipment, and related consumable supplies, as well as shredders and whiteboards; and academic products, including notebooks, folders, decorative calendars, and stationery products. It also provides private label products, as well as business machine maintenance and repair services. The company offers its business, academic, and calendar product lines under the Artline, AT-A-GLANCE, Derwent, Esselte, Five Star, GBC, Hilroy, Leitz, Marbig, Mead, NOBO, Quartet, Rapid, Rexel, Swingline, Tilibra, Wilson Jones, and other brand names. In addition, it designs, sources, distributes, markets, and sells accessories for laptop and desktop computers, and tablets comprising security products; input devices, such as presenters, mice, and trackballs; ergonomic aids, including foot and wrist rests; docking stations; and other personal computers and tablet accessories under the Kensington, Microsaver, and ClickSafe brand names. The company sells its products to consumers and commercial end-users primarily through resellers, including traditional office supply resellers, wholesalers, mass merchandisers, and retailers, as well as directly to consumers through on-line and direct mail. ACCO Brands Corporation is headquartered in Lake Zurich, Illinois.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

1Q22 Operating Results. ACCO reported Q22 revenue of $441.6 million, up 7.6% year-over-year and up 11.2% on a comparable basis, with all segments posting growth. We had forecast $420 million. Adjusted EPS was $0.11, compared to $0.10 last year. We had forecast adjusted EPS of $0.09.

Growth Across All Segments.  ACCO experienced meaningful comparable sales growth across all segments. Both reported and comparable sales were driven by higher sales prices, a positive 6.4% impact, and higher volumes, up 4.7%. ACCO saw strong demand for school products, computer accessories, and business products. Adverse foreign exchange reduced net sales by $14.9 million, or 3.6% …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

 

Wednesday, April 27, 2022

Travelzoo (TZOO)
Flies By Expectations

Travelzoo is a US-based company which acts as a publisher of travel and entertainment offers. The company informs a varied number of members in Asia Pacific, Europe, and North America, as well as millions of website users, about the best travel, entertainment and local deals available from various companies. It provides travel, entertainment, and local businesses in a flexible manner to the various customer. The company operates in three geographic segments namely Asia Pacific, Europe, and North America. Travelzoo derives its revenue through advertising fees including listing fees paid by travel, entertainment, and local businesses to advertise their offers on company’s media properties. Most of the company’s revenue is derived from the North America.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Exceeds Q1 estimates. Q1 revenues of $18.4 million was better than our $16.8 million estimate, with better than expected revenue growth in Europe and a nice rebound in North America. With costs slightly below estimates, adj. EBITDA was significantly better, $3.0 million versus our $0.6 million estimate.

Operating on all cylinders.  Both Europe and North America contributed to the strong revenue. Europe increased 66% to $5.9 million and North America was up 19% to $11.7 million from the year earlier quarter. The company benefited from two acquisitions in the quarter, (not detailed), but enhanced European revenues and saved costs, expanding margins …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

 

ACCO Brands Posts Strong First Quarter

Research, News, and Market Data on ACCO Brands

 

LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced its first quarter results for the period ended March 31, 2022.

• Net sales were $441.6 million, up 7.6 percent; comparable sales were up 11.2 percent with all segments posting increases
• EPS was $(0.03) versus $(0.21) in 2021; adjusted EPS was $0.11, up 10.0 percent
• Strong recovery in International segment, especially in Brazil and Mexico
• Continued sales momentum in North America and EMEA

“We had an excellent first quarter, with sales and profits above our expectations. Our performance is a result of the strategic transformation of our Company towards sustainable comparable sales growth and demonstrates the benefits of our geographic diversity and balance, the strength of our brands, and skillful execution by our employees. All segments delivered meaningful comparable sales growth. These results give us strong momentum going into our very important back-to-school season and reinforce our outlook for a record year,” said Boris Elisman, Chairman and Chief Executive Officer of ACCO Brands.

First Quarter Results

Net sales increased 7.6 percent to $441.6 million from $410.5 million in 2021. Comparable sales increased 11.2 percent. Both reported and comparable sales were driven by higher sales prices and increased volume, primarily from strong demand for school products, computer accessories, and business products. Adverse foreign exchange reduced net sales $14.9 million, or 3.6 percent.

Operating income was $6.8 million versus an operating loss of $1.1 million in 2021. The increase was a result of $6.5 million of lower charges for the contingent consideration and inventory step-up related to the PowerA acquisition, as well as $3.6 million of lower restructuring costs. Adjusted operating income was $22.6 million compared with $24.6 million in the prior year as inflation was not sufficiently offset with price increases, especially in EMEA. Foreign exchange reduced operating income $1.2 million.

The Company reported a net loss of $2.7 million, or $(0.03) per share, compared with a net loss of $20.4 million, or $(0.21) per share, last year. The improvement was due to higher operating income, $3.5 million of lower interest expense, and non-recurrence of $12.0 million of other expense related to the debt refinancing in 2021. Adjusted net income was $10.4 million compared with $10.0 million in 2021. Adjusted earnings per share were $0.11 compared with $0.10 in 2021.

Business Segment Results

ACCO Brands North America – Sales and comparable sales of $208.5 million increased 10.4 percent from $188.8 million in 2021, primarily due to higher prices and volume increases in school products, computer accessories, and business products.

Operating income was $13.9 million versus an operating loss of $0.7 million in 2021. Adjusted operating income of $19.8 million increased from $11.2 million in 2021. Both increases primarily were due to higher sales.

ACCO Brands EMEA – Sales of $156.1 million decreased 0.5 percent from $156.9 million in 2021, primarily due to adverse foreign exchange of $12.4 million, or 7.9 percent. Comparable sales of $168.5 million increased 7.4 percent mainly due to price increases and higher volume, primarily from computer accessories and business products.

Operating income of $5.6 million decreased from $16.8 million in 2021 due to inflation that exceeded the benefit of price increases and $0.8 million from unfavorable foreign exchange. Adjusted operating income decreased to $9.1 million from $21.2 million in 2021 for the same reasons.

ACCO Brands International – Sales of $77.0 million increased 18.8 percent from $64.8 million in 2021 due to increased volume, particularly in Brazil and Mexico from a return to in-person education, and price increases. Adverse foreign exchange was $2.5 million. Comparable sales were $79.5 million, up 22.7 percent, for the same reasons.

Operating income of $4.2 million increased from $0.6 million in 2021 due to higher sales, lower bad debt reserves, the benefit of long-term cost reductions, and price increases, partially offset by inflation. Adjusted operating income of $6.2 million increased from $3.1 million due to those same factors. Foreign exchange reduced operating income $0.4 million.

Capital Allocation and Dividend

For the quarter, the Company had $104.2 million of net cash outflow from operating activities and used $107.6 million of free cash flow, including capital expenditures of $3.4 million. The Company paid $7.3 million in dividends.

On April 25, 2022, ACCO Brands’ board of directors declared a regular quarterly cash dividend of $0.075 per share. The dividend will be paid on June 22, 2022, to stockholders of record as of the close of business on May 27, 2022.

Full Year 2022 Outlook

“Our momentum from 2021 carried through the first quarter. We expect a strong back-to-school sell-in in the second quarter and continued good execution as we deal with ongoing inflation and supply chain issues. We expect to have another year of record sales, record adjusted earnings per share, and significant free cash flow growth,” concluded Elisman.

The Company is adjusting its full year outlook to reflect first quarter results, improved business expectations, and a more negative foreign exchange impact.

Webcast

At 8:30 a.m. EDT on April 27, 2022, ACCO Brands Corporation will host a conference call to discuss the Company’s first quarter 2022 results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations section of www.accobrands.com. The webcast will be in listen-only mode and will be available for replay following the event.

About ACCO Brands Corporation

ACCO Brands Corporation is one of the world’s largest designers, marketers and manufacturers of branded academic, consumer and business products. Our widely recognized brands include AT-A-GLANCE^®, Esselte^®, Five Star^®, GBC^®, Kensington^®, Leitz^®, Mead^®, PowerA^®, Quartet^®, Rapid^®, Rexel^®, Swingline^®, Tilibra^®, and many others. Our products are sold in more than 100 countries around the world. More information about ACCO Brands, the Home of Great Brands Built by Great People, can be found at www.accobrands.com.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this earnings release to aid investors in understanding the Company’s performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section of this earnings release.

Forward-Looking Statements

Statements contained in this earnings release, other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, strategies, business operations and similar matters, results of operations, liquidity and financial condition, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the company’s securities.

Our outlook is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding both the near-term and long-term impact of the COVID-19 pandemic; changes in the competitive landscape, including ongoing uncertainties in the traditional office products channels; as well as the impact of fluctuations in foreign currency and acquisitions and the other factors described below.

Among the factors that could cause our actual results to differ materially from our forward-looking statements are: the ongoing impact of the COVID-19 pandemic; a relatively limited number of large customers account for a significant percentage of our sales; issues that influence customer and consumer discretionary spending during periods of economic uncertainty or weakness; risks associated with foreign currency fluctuations; challenges related to the highly competitive business environment in which we operate; our ability to develop and market innovative products that meet consumer demands and to expand into new and adjacent product categories that are experiencing higher growth rates; our ability to successfully expand our business in emerging markets and the exposure to greater financial, operational, regulatory, compliance and other risks in such markets; the continued decline in the use of certain of our products; risks associated with seasonality; the sufficiency of investment returns on pension assets, risks related to actuarial assumptions, changes in government regulations and changes in the unfunded liabilities of a multi-employer pension plan; any impairment of our intangible assets; our ability to secure, protect and maintain our intellectual property rights, and our ability to license rights from major gaming console makers and video game publishers to support our gaming business; continued disruptions in the global supply chain; risks associated with changes in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services and the cost of finished goods; the continued global shortage of microchips which are needed in our gaming and computer accessories businesses; risks associated with outsourcing production of certain of our products, information technology systems and other administrative functions; the failure, inadequacy or interruption of our information technology systems or its supporting infrastructure; risks associated with a cybersecurity incident or information security breach, including that related to a disclosure of personally identifiable information; our ability to grow profitably through acquisitions; our ability to successfully integrate acquisitions and achieve the financial and other results anticipated at the time of acquisition, including planned synergies; risks associated with our indebtedness, including limitations imposed by restrictive covenants, our debt service obligations, and our ability to comply with financial ratios and tests; a change in or discontinuance of our stock repurchase program or the payment of dividends; product liability claims, recalls or regulatory actions; the impact of litigation or other legal proceedings; our failure to comply with applicable laws, rules and regulations and self-regulatory requirements, the costs of compliance and the impact of changes in such laws; our ability to attract and retain qualified personnel; the volatility of our stock price; risks associated with circumstances outside our control, including those caused by public health crises, such as the occurrence of contagious diseases like COVID-19, severe weather events, war, terrorism and other geopolitical incidents; and other risks and uncertainties described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, and in other reports we file with the Securities and Exchange Commission (“SEC”).

About Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. We explain below how we calculate and use each of these non-GAAP financial measures and a reconciliation of our current period and historical non-GAAP financial measures to the most directly comparable GAAP financial measures follows.

We use our non-GAAP financial measures both to explain our results to stockholders and the investment community and in the internal evaluation and management of our business. We believe our non-GAAP financial measures provide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful period-to-period comparisons and enhance an overall understanding of our past and future financial performance.

Our non-GAAP financial measures exclude certain items that may have a material impact upon our reported financial results such as restructuring charges, transaction and integration expenses associated with material acquisitions, the impact of foreign currency fluctuation and acquisitions, unusual tax items and other non-recurring items that we consider to be outside of our core operations. These measures should not be considered in isolation or as a substitute for, or superior to, the directly comparable GAAP financial measures and should be read in connection with the Company’s financial statements presented in accordance with GAAP.

Our non-GAAP financial measures include the following:

Comparable Net Sales : Represents net sales excluding the impact of material acquisitions with current-period foreign operation sales translated at prior-year currency rates. We believe comparable net sales are useful to investors and management because they reflect underlying sales and sales trends without the effect of acquisitions and fluctuations in foreign exchange rates and facilitate meaningful period-to-period comparisons. We sometimes refer to comparable net sales as comparable sales.

Adjusted Gross Profit : Represents gross profit excluding the effect of the amortization of the step-up in inventory from material acquisitions. We believe adjusted gross profit is useful to investors and management because it reflects underlying gross profit without the effect of inventory adjustments resulting from acquisitions that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.

Adjusted Selling, General and Administrative (SG&A) Expenses : Represents selling, general and administrative expenses excluding transaction and integration expenses related to our material acquisitions. We believe adjusted SG&A expenses are useful to investors and management because they reflect underlying SG&A expenses without the effect of expenses related to acquiring and integrating acquisitions that we consider to be outside our core operations and facilitate meaningful period-to-period comparisons.

Adjusted Operating Income/Adjusted Income Before Taxes/Adjusted Net Income/Adjusted Net Income Per Diluted Share: Represents operating income, income before taxes, net income, and net income per diluted share excluding restructuring charges, the amortization of intangibles, the amortization of the step-up in value of inventory, the change in fair value of contingent consideration, transaction and integration expenses associated with material acquisitions, non-recurring items in interest expense or other income/expense such as expenses associated with debt refinancing, a bond redemption, or a pension curtailment, and other non-recurring items as well as all unusual and discrete income tax adjustments, including income tax related to the foregoing. We believe these adjusted non-GAAP financial measures are useful to investors and management because they reflect our underlying operating performance before items that we consider to be outside our core operations and facilitate meaningful period-to-period comparisons. Senior management’s incentive compensation is derived, in part, using adjusted operating income and adjusted net income per diluted share, which is derived from adjusted net income. We sometimes refer to adjusted net income per diluted share as adjusted earnings per share.

Comparable Adjusted Net Income Per Diluted Share: Represents adjusted net income per diluted share excluding the incremental current year impact of foreign exchange. We sometimes refer to comparable adjusted net income per diluted share as comparable adjusted earnings per share.

Adjusted Income Tax Expense/Rate: Represents income tax expense/rate excluding the tax effect of the items that have been excluded from adjusted income before taxes, unusual income tax items such as the impact of tax audits and changes in laws, significant reserves for cash repatriation, excess tax benefits/losses, and other discrete tax items. We believe our adjusted income tax expense/rate is useful to investors because it reflects our baseline income tax expense/rate before benefits/losses and other discrete items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.

Adjusted EBITDA: Represents net income excluding the effects of depreciation, stock-based compensation expense, amortization of intangibles, the change in fair value of contingent consideration, interest expense, net, other (income) expense, net, and income tax expense, the amortization of the step-up in value of inventory, transaction and integration expenses associated with material acquisitions, restructuring charges, non-recurring items in interest expense or other income/expense such as expenses associated with debt refinancing, a bond redemption, or a pension curtailment and other non-recurring items. We believe adjusted EBITDA is useful to investors because it reflects our underlying cash profitability and adjusts for certain non-cash charges, and items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.

Free Cash Flow: Represents cash flow from operating activities less cash used for additions to property, plant and equipment, plus cash proceeds from the disposition of assets. We believe free cash flow is useful to investors because it measures our available cash flow for paying dividends, funding strategic material acquisitions, reducing debt, and repurchasing shares.

Net Leverage Ratio: Represents balance sheet debt, plus debt origination costs and less any cash and cash equivalents divided by adjusted EBITDA. We believe that net leverage ratio is useful to investors since the company has the ability to, and may decide to use a portion of its cash and cash equivalents to retire debt.

This earnings release also provides forward-looking non-GAAP comparable net sales, adjusted earnings per share, comparable adjusted earnings per share, free cash flow, adjusted EBITDA, net leverage ratio and adjusted tax rate. We do not provide a reconciliation of forward-looking comparable net sales, adjusted earnings per share, comparable adjusted earnings per share, free cash flow, adjusted EBITDA, net leverage ratio or adjusted tax rate to GAAP because the GAAP financial measure is not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort due to the inherent difficulty of forecasting and quantifying certain amounts that are necessary for such a reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, the variability of our tax rate and the impact of foreign currency fluctuation and material acquisitions, and other charges reflected in our historical numbers. The probable significance of each of these items is high and, based on historical experience, could be material.

 

Christine Hanneman
Investor Relations
(847) 796-4320

Julie McEwan
Media Relations
(937) 974-8162

Source: ACCO Brands Corporation