LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that it will release its second quarter 2024 earnings after the market close on August 1, 2024. The Company will host a conference call and webcast to discuss the results on August 2 at 8:30 a.m. EST. The webcast can be accessed through the Investor Relations section of www.accobrands.com and will be available for replay.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn and play. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Christopher McGinnis Investor Relations (847) 796-4320
Kori Reed Media Relations (224) 501-0406Source: ACCO Brands Corporation
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that its board of directors has declared a quarterly cash dividend of $0.075 per share. The dividend will be paid on June 12, 2024, to stockholders of record as of the close of business on May 17, 2024.
“This is the Company’s 26th quarterly cash dividend since it began paying dividends in 2018. The Company’s dividend has become an important part of our capital allocation strategy, and we remain committed to supporting our quarterly dividend with our robust free cash flow. At the current stock price, on an annualized basis, our shareholders are receiving a 6% yield on their investment,” said Tom Tedford, President, and Chief Executive Officer of ACCO Brands.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn and play. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that it will release its first quarter 2024 earnings after the market close on May 2, 2024. The Company will host a conference call and webcast to discuss the results on May 3 at 8:30 a.m. EST. The webcast can be accessed through the Investor Relations section of www.accobrands.com and will be available for replay.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn and play. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Reported net sales of $1.833 billion, with gross margin expanding 420 basis points
Operating income of $45 million; adjusted operating income grew 17% to $205 million
Loss per share of $(0.23); adjusted EPS of $1.09, above the Company’s outlook
Net operating cash flow improved $51 million, generated adjusted free cash flow of $118 million
Reduced total debt by $88 million with a consolidated net leverage ratio of 3.4x at year-end
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today reported financial results for the fourth quarter and fiscal year ended December 31, 2023.
“I am pleased to report that our fourth quarter financial performance, including our reported net sales and adjusted EPS and free cash flow, was better than expected. During the year, we successfully executed against our 2023 priorities and implemented our previously announced restructuring plans, which enabled us to significantly expand our gross margin, deliver strong free cash flow, and reduce our consolidated net leverage ratio to 3.4x at the end of 2023. We believe our achievement of these results against a challenging demand environment is a testament to the solid execution of our team and our geographically diverse portfolio of leading brands. The restoration of our gross margins and improved cash flows enables us to make investments that position the Company for long-term growth,” stated ACCO Brands’ President and Chief Executive Officer, Tom Tedford.
Fourth Quarter Results
Net sales declined 2.2 percent to $488.6 million from $499.4 million in 2022. Comparable sales fell 4.6 percent, as favorable foreign exchange increased sales by $12.2 million, or 2.4 percent. Both reported and comparable sales declines reflect softer demand due to a weaker macroeconomic environment, which has also led to lower global demand for our technology accessories. These factors more than offset growth in our International segment, driven by the recovery of back-to-school sales in Latin America.
Operating loss was $52.8 million versus operating income of $35.6 million in 2022, primarily due to a non-cash goodwill impairment charge of $89.5 million related to the North America segment. In 2023, we recognized restructuring charges of $20.9 million, compared to $7.3 million in the prior-year period, with the increase related to our continuing footprint rationalization and cost reduction programs. Adjusted operating income increased 30.6 percent to $68.3 million from $52.3 million in the prior-year period. This increase reflects recovery of gross margin from the effect of cumulative global price increases and cost reduction actions, as well as moderating input costs. This was partially offset by higher SG&A expense, primarily due to an increase in incentive compensation compared to the prior year.
The Company reported a net loss of $59.4 million, or $(0.62) per share, compared with prior-year net income of $18.8 million, or $0.20 per share. The net loss is primarily due to the non-cash goodwill impairment charge of $89.5 million, with no associated tax benefit, as well as the higher restructuring charges noted above. In addition, there was a favorable change in discrete tax items of $21.8 million, largely related to recent tax legislation in both Brazil and the United States. Adjusted net income was $37.5 million, or $0.39 per share, compared with $30.5 million, or $0.32 per share in 2022. The increase in adjusted net income was due to the items noted above in adjusted operating income, partially offset by higher interest and non-operating pension expenses.
Full Year Results
Net sales decreased 5.9 percent to $1.83 billion from $1.95 billion in 2022. Favorable foreign exchange increased sales by $11.3 million, or 0.6 percent. Comparable sales decreased 6.5 percent. Both reported and comparable sales declines reflect the challenging macroeconomic environment, especially in North America and EMEA, and lower than anticipated return to office trends, as well as tight inventory management by our customers in North America. Sales of technology accessories were most negatively impacted. This more than offset the benefit of cumulative price increases across all segments, and volume growth in Latin America.
Operating income was $44.7 million compared to $34.8 million in 2022. The increase in operating income is primarily due to a lower non-cash goodwill impairment charge of $89.5 million versus the $98.7 million recorded in 2022. In 2023, we recorded restructuring charges of $27.2 million compared to $9.6 million in 2022, with the increase related to our continuing footprint rationalization and cost reduction programs. 2022 includes a benefit related to the change in value of the PowerA contingent earnout of $9.0 million, which did not repeat in 2023. Adjusted operating income increased to $204.8 million from $175.8 million in 2022. Both reported and adjusted operating income increases reflect the benefit of cumulative global price increases and cost reduction initiatives, partially offset by negative fixed cost leverage and higher SG&A expense, primarily due to increased incentive compensation.
Net loss was $21.8 million, or $(0.23) per share, compared with a net loss of $13.2 million, or $(0.14) per share, in 2022. The net losses were primarily related to the items noted above in operating income. In 2023, there was a significant increase in discrete tax benefits largely related to recent tax legislation in both Brazil and the United States, partially offset by reduced operating tax gains. Adjusted net income was $105.6 million compared with $101.0 million in 2022, and adjusted earnings per share were $1.09 per share compared with $1.04 per share in 2022. The increase in adjusted net income was due to the items noted above in adjusted operating income, partially offset by higher interest and non-operating pension expenses.
Capital Allocation and Dividend
For the full year, the Company significantly improved its operating cash flow to $128.7 million versus $77.6 million in the prior year, driven primarily by improved profits and working capital. Adjusted free cash flow in 2023 improved by $40.0 million to $117.5 million versus $77.5 million in 2022. Adjusted free cash flow in 2022 excludes the contingent earnout payment. The Company’s consolidated leverage ratio as of December 31, 2023 was 3.4x.
On February 16, 2024, ACCO Brands announced that its board of directors declared a regular quarterly cash dividend of $0.075 per share. The dividend will be paid on March 27, 2024 to stockholders of record at the close of business on March 15, 2024.
Restructuring and Cost Savings Program
On January 30, 2024, the Company announced a multi-year restructuring and cost savings program, with anticipated annualized pre-tax cost savings of at least $60 million. The program incorporates initiatives to simplify and delayer the Company’s operating structure and reduce costs through headcount reductions, supply chain optimization, global footprint rationalization, and better leveraging the Company’s sourcing capabilities. As a result of these actions, the Company will improve its speed of execution and bring key leaders closer to customers.
In connection with the program, the Company recognized pre-tax restructuring charges of $20.9 million in the fourth quarter of 2023, related to costs associated with the headcount reductions, as well as the closing of its Sidney, NY manufacturing facility. This was the fourth facility closure announced in 2023.
New Operating Segments
As previously announced, the Company will be implementing a new operating model, consolidating its three reportable segments into two reportable segments. The Americas reporting segment will include the U.S., Canada, Brazil, Mexico and Chile and the International reporting segment will include EMEA, Australia, New Zealand, and Asia. The Company will report on this basis for the fiscal year commencing January 1, 2024.
Business Segment Results
ACCO Brands North America – For the full year, North America net sales of $887.2 million decreased 11.1 percent from $998.0 million in 2022, and comparable sales declined 10.7 percent. Fourth quarter segment net sales of $199.0 million and comparable sales of $199.1 million both decreased 11.8 percent versus the prior year. Both full-year and fourth quarter reported and comparable sales decreases reflect softer demand due to a weaker macroeconomic environment, lower than anticipated return to office trends and retailers maintaining lower inventory levels, which resulted in lower demand for technology accessories and office products. This more than offset the benefit of cumulative pricing actions.
In North America, full year operating loss was $5.9 million versus an operating loss of $4.9 million in 2022. In 2023, we recorded a $89.5 million non-cash goodwill impairment charge compared to the $98.7 million recorded in the prior year. In 2023, restructuring charges were $16.7 million, an increase from the $5.3 million in 2022, largely related to our cost reduction and productivity programs. Adjusted operating income was $122.4 million, up from $121.5 million in the prior year, as benefits of the cumulative effect of pricing and cost actions, were largely offset by lower volume and negative fixed cost leverage.
ACCO Brands EMEA – Full year net sales in the EMEA segment of $547.2 million decreased 5.7 percent from $580.3 million in 2022. Favorable foreign exchange increased sales by 1.0 percent. Comparable sales declined 6.7 percent. Fourth quarter segment net sales of $159.1 million increased 2.0 percent versus the prior year’s net sales of $156.0 million. Favorable foreign exchange increased sales by 4.6 percent for the quarter. Comparable sales of $152.0 million decreased 2.6 percent versus the prior-year period as volume declines moderated sequentially in the quarter. Both full year and fourth quarter comparable sales declines reflect reduced demand, especially for technology accessories, due to a weaker macroeconomic environment. This more than offset the benefit of cumulative pricing actions.
The EMEA segment posted full-year operating income of $38.7 million compared with operating income of $21.7 million in 2022. In 2023, we recorded restructuring charges of $8.9 million versus $3.4 million in 2022, with the increase related to our ongoing footprint rationalization and cost reduction programs. Adjusted operating income was $62.5 million, up from $37.0 million in 2022. The increases in both reported operating income and adjusted operating income reflect recovery of gross margins from price increases and cost savings actions, more than offsetting negative fixed cost leverage and higher incentive compensation.
ACCO Brands International – International segment net sales of $398.4 million for the full year increased 7.9 percent from $369.3 million in 2022. Favorable foreign exchange increased sales by 2.6 percent. Comparable sales were $388.7 million, up 5.3 percent versus the prior year. Fourth quarter segment net sales of $130.5 million increased 10.9 percent versus the prior year’s net sales of $117.7 million. Favorable foreign exchange increased sales by 4.4 percent for the quarter. Comparable sales were $125.3 million an increase of 6.5 percent versus the year-ago period. Both full year and fourth quarter reported and comparable sales increases reflect stronger pricing and volume growth in Latin America, more than offsetting the impact of weaker economic conditions in Australia and Asia and overall lower demand for technology accessories.
Operating income for the full year was $60.7 million, an increase from $50.5 million in 2022. Adjusted operating income of $68.1 million increased from $58.3 million in the prior year. The increase in both operating and adjusted operating income were primarily due to the cumulative benefit of pricing and cost actions, somewhat offset by higher go-to-market spending, people costs and incentive compensation.
2024 Outlook
“We are taking actions to reposition the company for long-term, sustainable, profitable growth. In January, we announced a multi-year restructuring and cost savings program, to reset our cost structure. The program is expected to deliver at least $60 million in annual cost savings once fully implemented and will better leverage our global platform and leading brands. We continue to focus on our margin profile by exiting low margin business and better leveraging our sourcing and supply chain infrastructure. These actions will enable us to accelerate investments in new product development, innovation, and other growth initiatives, while increasing our profitability and cash flow, leading to improved shareholder value,” concluded Mr. Tedford.
For the full year, we expect reported sales to be down in the range of 2.0% to 5.0%. The Company’s sales outlook reflects the uncertain demand environment for its categories. Full year adjusted EPS is expected to be within a range of $1.07 to $1.11. The Company expects 2024 free cash flow to grow to at least $120 million and to end the year with a consolidated leverage ratio of approximately 3.0x to 3.2x.
In the first quarter, we expect reported sales to be down in the range of 6.5% to 8.0% and adjusted EPS within a range of $0.01 to $0.04. Seasonally, sales can shift between first and second quarter due to the timing of back-to-school shipments in North America.
Webcast
At 8:30 a.m. ET on February 23, 2024, ACCO Brands Corporation will host a conference call to discuss the Company’s fourth quarter and full year 2023 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, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, and play. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) 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 directly comparable GAAP financial measure in the “About Non-GAAP Financial Measures” section of this earnings release.
Forward-Looking Statements
Statements contained herein, 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, and those relating to cost reductions and anticipated pre-tax savings and restructuring costs 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. Forward-looking statements are subject to the occurrence of events outside the Company’s control and actual results and the timing of events may differ materially from those suggested or implied by such forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. Investors and others are cautioned not to place undue reliance on forward-looking statements 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 the impact of inflation and global geopolitical and economic uncertainties and fluctuations in foreign currency exchange rates; and the other factors described below.
Among the factors that could cause our actual results to differ materially from our forward-looking statements are: our ability to successfully execute our restructuring and cost savings plans and realize the anticipated benefits of these plans and our other ongoing productivity initiatives; our ability to obtain additional price increases and realize longer-term cost reductions; 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 exchange rate 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 accessories business; continued disruptions in the global supply chain; risks associated with inflation and other changes in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services and the cost of finished goods; 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, 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, 2022, and in other reports we file with the Securities and Exchange Commission.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that its board of directors has declared a quarterly cash dividend of $0.075 per share. The dividend will be paid on March 27, 2024, to stockholders of record as of the close of business on March 15, 2024.
“This is the Company’s 25th quarterly cash dividend since it began paying dividends in 2018. The Company’s dividend has become an important part of our capital allocation strategy and we remain committed to supporting our quarterly dividend with our robust free cash flow. At the current stock price, on an annualized basis, our shareholders are receiving a 5% yield on their investment,” said Tom Tedford, President, and Chief Executive Officer of ACCO Brands.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) announces a multi-year restructuring and cost savings program, with anticipated annualized pre-tax cost savings of at least $60 million. The program incorporates initiatives to simplify and delayer the Company’s operating structure and reduce costs through headcount reductions, supply chain optimization, global footprint rationalization, and better leveraging of our sourcing capabilities. As a result of these actions, the Company will improve its speed of execution and bring key leaders closer to the customers. In connection with this program, the Company will file a Form 8-K with the SEC disclosing its restructuring charges.
“The actions we are announcing today will better position the Company for long-term sustainable profitable growth. The cost reduction actions, as well as a renewed focus on innovation and new product development, will provide fuel for reinvestment and an improved growth trajectory for the long-term. During 2023, we were able to restore the Company’s margin profile and strengthen the balance sheet despite a slow demand environment. Our preliminary results indicate that we ended the year with reported sales and cash flows above our previously communicated outlook. I remain confident in the long-term growth prospects of the Company given our geographically diverse operating platform and our collection of leading brands” said ACCO Brands’ President and Chief Executive Officer, Tom Tedford.
The Company will operate and report under two segments. The Americas reportable segment will include the U.S., Canada, Brazil, Mexico and Chile and the International reportable segment will include EMEA, Australia, New Zealand and Asia. The Company will report on this basis for the fiscal year commencing January 1, 2024.
As a result of the segment realignment, effective January 1, 2024, Cezary Monko has been appointed Executive Vice President and President of the International segment and Patrick Buchenroth, has been appointed Executive Vice President and President of the Americas segment. These leaders have a long-established, successful history with the Company.
The Company will provide additional details about the restructuring program during its upcoming fourth quarter and full year 2023 earnings call.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Forward-Looking Statements
Statements contained in this press release, other than statements of historical fact, particularly statements relating to cost reductions and the anticipated pre-tax savings from the cost reduction program, restructuring costs, footprint rationalization, simplifying and streamlining our operations, reducing complexity, enhancing the speed of decision-making, leveraging our sourcing capabilities and the timing of implementation and completion of the cost reduction program, 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. Forward-looking statements are subject to the occurrence of many events outside the company’s control and actual results and the timing of events may differ materially from those suggested or implied by such forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties.
Factors that could affect our results or cause our plans, actions and results to differ materially from current expectations described in this press release include, among others, our ability to successfully execute the actions identified as part of the cost reduction program and realize the anticipated cost savings and operational synergies as well as 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, 2022, and in other reports we file with the SEC. Forward-looking statements should be considered in light of these risks and uncertainties. Investors and others are cautioned not to place undue reliance on forward-looking statements when deciding whether to buy, sell or hold the company’s securities.
Christopher McGinnis Investor Relations (847) 796-4320
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that Beth Simermeyer has been elected to the Board of Directors, effective December 5, 2023.
“We are excited to welcome Beth, a dynamic business leader with a proven track record of success to ACCO Brands’ Board of Directors. Beth’s extensive marketing expertise, P&L ownership and global leadership mindset, will further enhance our Board and help us execute on our strategic transformation. We look forward to leveraging Beth’s insights to continue to further strengthen the company going forward,” said Boris Elisman, Executive Chairman of ACCO Brands Corporation.
Ms. Simermeyer brings substantial business leadership experience in marketing, transformation, innovation, growth acceleration, acquisitions and top and bottom-line delivery in the consumer goods, industrial and healthcare sectors. In her most recent role as Global Group President, Executive Vice President, Healthcare and Life Sciences at Ecolab (NYSE: ECL) she launched and led the global Life Sciences business that has become a top investment priority for the company. During her more than thirty-year career, Ms. Simermeyer held several senior brand and general management roles, including Ecolab’s Chief Marketing Officer, where her responsibilities spanned sustainability, customer insights, branding and communications. Prior to joining Ecolab, Ms. Simermeyer was Senior Vice President, North America at S.C. Johnson. She started her career at The Procter & Gamble Company (NYSE: PG). Since 2019, she has served as an Independent Director at the Securian Financial Group.
About ACCO Brands
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Christopher McGinnis Investor Relations (847) 796-4320
Kori Reed Media Relations (224) 501-0406
Source:
December 7, 2023
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that Beth Simermeyer has been elected to the Board of Directors, effective December 5, 2023.
“We are excited to welcome Beth, a dynamic business leader with a proven track record of success to ACCO Brands’ Board of Directors. Beth’s extensive marketing expertise, P&L ownership and global leadership mindset, will further enhance our Board and help us execute on our strategic transformation. We look forward to leveraging Beth’s insights to continue to further strengthen the company going forward,” said Boris Elisman, Executive Chairman of ACCO Brands Corporation.
Ms. Simermeyer brings substantial business leadership experience in marketing, transformation, innovation, growth acceleration, acquisitions and top and bottom-line delivery in the consumer goods, industrial and healthcare sectors. In her most recent role as Global Group President, Executive Vice President, Healthcare and Life Sciences at Ecolab (NYSE: ECL) she launched and led the global Life Sciences business that has become a top investment priority for the company. During her more than thirty-year career, Ms. Simermeyer held several senior brand and general management roles, including Ecolab’s Chief Marketing Officer, where her responsibilities spanned sustainability, customer insights, branding and communications. Prior to joining Ecolab, Ms. Simermeyer was Senior Vice President, North America at S.C. Johnson. She started her career at The Procter & Gamble Company (NYSE: PG). Since 2019, she has served as an Independent Director at the Securian Financial Group.
About ACCO Brands
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Christopher McGinnis Investor Relations (847) 796-4320
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands (NYSE: ACCO), a world leader in branded consumer and end user products, was named one of America’s Safest Companies in 2023 by EHS Today. The magazine for environment, health, and safety leaders, announced its list of the 2023 America’s Safest Companies last month with 10 companies on the list. These companies are involved in a broad range of activities, from industrial contracting to robotics, from packaging to cabinetry, from consumer packaged goods to electrical construction, and more.
ACCO Brands was among the outstanding companies being honored because of a committed understanding of the value that safety brings to an organization. This is the third time that ACCO Brands has been awarded this title, something only six other companies have achieved.
For more than 20 years, the America’s Safest Companies competition has sought to identify those characteristics that differentiate good safety programs from great ones, and to then celebrate the best practices and procedures that exemplify safety excellence.
“Every America’s Safest Company winner is a standard-bearer of safety excellence. Each winning company has engrained into their culture and their employees a consistent and constant need to keep every person and every situation free from harm,” said EHS Today Editor-in-Chief Dave Blanchard.
To be considered as one of America’s Safest Companies, organizations must complete an application that requires them to demonstrate excellence in several areas: support from leadership and management for EHS efforts; employee involvement in the EHS process; innovative solutions to safety challenges; injury and illness rates lower than the average for their industries; comprehensive training programs; evidence that prevention of incidents is the cornerstone of the safety process; good communication about the value of safety; and a way to substantiate the benefits of the safety process.
As a company with a personal stake in all things ergonomic, ACCO Brands understands the discomfort of aches and pains. That is why the company provides on-site massages using the certified active release technique (ART) to all U.S. manufacturing and distribution center employees—regardless of whether those aches and pains are job-related or not.
“While there is a significant cost to providing the ART benefit to our employees, we believe we have prevented many minor employee issues from becoming more serious medical issues and have a healthier workforce as a result of this program,” says James Edwards, senior director of environmental, health and safety, ACCO Brands.
The best practices from the 2023 America’s Safest Companies are featured in a special section in the July/August 2023 issue of EHS Today magazine and on the brand’s website, www.ehstoday.com. Since 2002, America’s Safest Companies has honored more than 250 organizations for their unwavering commitment to worker safety, health, and environmental stewardship.
About ACCO Brands ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play, and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
About EHS Today Owned by Endeavor Business Media, EHS Today is an American occupational safety, and health media brand. It is the leading US magazine for environmental, health and safety management professionals in the manufacturing, construction, and service sectors.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that its board of directors has declared a quarterly cash dividend of $0.075 per share. The dividend will be paid on December 6, 2023, to stockholders of record as of the close of business on November 15, 2023.
“This is the Company’s 24th quarterly cash dividend since it began paying dividends in 2018. The Company’s dividend has become an important part of our capital allocation strategy and we remain committed to supporting our quarterly dividend with our robust free cash flow. At the current stock price, on an annualized basis, our shareholders are receiving an almost 6% yield on their investment,” said Tom Tedford, President and Chief Executive Officer of ACCO Brands.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that it will release its third quarter 2023 earnings after the market close on November 2, 2023. The Company will host a conference call and webcast to discuss the results on November 3 at 8:30 a.m. ET. The webcast can be accessed through the Investor Relations section of www.accobrands.com and will be available for replay.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Christopher McGinnis Investor Relations (847) 796-4320
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) a leading global consumer, technology, and business branded products company, today published its 2022 Environmental, Social and Governance (ESG) Report.
“At ACCO Brands, we are committed to operating our business with the highest ethical standards. We foster accountability to our stakeholders with strong governance and risk management policies and practices,” noted Tom Tedford, President, and Chief Operating Officer. “Our ESG report highlights our progress in delivering on our commitments to our employees, the environment, and the communities in which we live and work. Our work is organized under the pillars of People, Planet and Products and is guided by our long-standing values: to act with integrity, embrace diversity and act responsibly in our global community,” concluded Mr. Tedford.
To access the Company’s 2022 ESG Report and learn more about the Company’s ESG efforts, read the full report by clicking here.
About ACCO Brands
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
President and Chief Operating Officer Thomas Tedford Appointed Chief Executive Officer Effective October 1, 2023; Boris Elisman to Continue as Executive Chairman Before Retiring in the first half of 2024
LAKE ZURICH, Ill,–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) (the “Company” or “ACCO Brands”), one of the world’s largest suppliers of select categories of branded academic, consumer and business products, today announced its Board of Directors has appointed the Company’s President and Chief Operating Officer, Thomas Tedford, as CEO effective October 1, 2023. Mr. Tedford has also been elected a member of the board effective that date. Mr. Tedford will succeed ACCO Brands current CEO, Boris Elisman, who will continue as Executive Chairman until his retirement in the first half of 2024. He has notified the Board that he will not stand for reelection at the 2024 stockholders’ meeting.
“The appointment of Tom as ACCO Brands next CEO is part of a succession plan that Boris and the Board have been preparing over the past few years,” stated Lead Independent Director, Thomas Kroeger. “We have worked closely with Tom and have full confidence in his commitment to creating value for our shareholders. He brings deep knowledge of our industry, our customers, the overall Company, and its operating segments to his new role. Tom has worked closely with Boris and the Board in developing and executing on the Company’s strategic transformation and will continue to do so, assuring a smooth and seamless transition of leadership and positioning us for profitable growth.”
“On behalf of everyone at ACCO Brands, we would like to thank Boris for his exemplary leadership and dedicated service as CEO. Boris’s innumerable contributions during his 18-year tenure, the last 10 leading the Company as CEO, have successfully expanded the growth opportunities for the Company,” Mr. Kroger concluded.
Mr. Elisman said, “During my tenure at ACCO Brands, the Company and the industry have undergone significant changes and I am proud of our teams’ accomplishments during this period. Having worked closely with Tom for many years, I know the company is in great hands to continue to progress and accelerate profitable growth. It has been my privilege to lead this great company, and I look forward to continuing to serve as Executive Chairman to ensure a smooth transition.”
Mr. Tedford commented, “It is an honor to have the opportunity to lead ACCO Brands and our talented team of dedicated employees as we build upon the current momentum in our business. Boris has been a great mentor and a tremendous leader. I have worked with him for more than a decade and appreciate his leadership and bold actions to transform ACCO Brands. I look forward to continuing to work closely with Boris to complete this leadership transition.”
“I am grateful for the support of our Board of Directors and am excited to work with them and our executive leadership team. I believe there are immense opportunities to enhance our leadership position in key categories, grow through share gains and new innovative product solutions, optimize our supply chain, and improve our margin profile as we remain focused on delivering shareholder value and customer satisfaction. Near-term we are committed to prioritizing our free cash flow towards supporting our dividend and debt reduction,” added Mr. Tedford.
Thomas Tedford Bio
Mr. Tedford joined ACCO Brands in 2010 and was named President and Chief Operating Officer in 2021. From 2011 to 2021, Mr. Tedford served first as Executive Vice President and President of ACCO Brands Americas ultimately becoming Executive Vice President and President, ACCO Brands, North America. During his tenure, he successfully led the operational, cultural and leadership integrations of key strategic acquisitions, the introduction of new products and the development of new markets. Prior to joining ACCO Brands, Mr. Tedford had 15 years of progressive sales, sales leadership, marketing, operational and executive management experience, operating in highly competitive and demanding industries. Mr. Tedford has expertise addressing complex challenges, optimizing performance, developing growth strategies, innovating product solutions, and building high-performing teams.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play, and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
Reported net sales of $494 million, with gross margin expanding 450 basis points
Operating income of $55 million, flat to prior year; adjusted operating income of $66 million grew 14% year over year
EPS of $0.27; adjusted EPS of $0.38, above Company’s outlook
Net operating cash outflow improved $59 million year to date driven by improved working capital management
Maintains full year 2023 adjusted EPS outlook of $1.08 to $1.12
Raises full year 2023 free cash flow outlook to at least $110 million
Lowered end of year consolidated leverage ratio outlook
August 08, 2023 04:00 PM Eastern Daylight Time
LAKE ZURICH, Ill.–(BUSINESS WIRE)–ACCO Brands Corporation (NYSE: ACCO) today announced its second quarter and first six-month results for the period ended June 30, 2023.
“Our top priority entering 2023 was to restore our margin profile, and I’m pleased to report that we have made great progress on that front in the first half. Second quarter and year-to-date gross margin expanded 450 and 360 basis points, respectively, due to greater traction from our pricing, productivity and restructuring initiatives. This has yielded much better than expected adjusted EPS. The higher operating profits experienced through the first six months give us confidence in our full year 2023 outlook for adjusted EPS and free cash flow. While we are pleased with the strong start of the year, we are more cautious on the second half demand environment. With improved working capital management, we are well positioned to end the year with a lower leverage ratio than previously expected. We remain committed to supporting our quarterly dividend and reducing debt with our strong cash flow” said Boris Elisman, Chairman and Chief Executive Officer of ACCO Brands.
“Our results reflect the resilience of our brands and the transformative actions undertaken to expand our product categories, broaden our geographic reach, bring innovative new consumer-centric products to market and streamline our cost structure. We remain confident that our strategy has us positioned to deliver sustainable organic growth as global economies improve,” concluded Mr. Elisman.
Second Quarter Results
Net sales declined 5.3 percent to $493.6 million from $521.0 million in 2022. Adverse foreign exchange reduced sales by $0.8 million, or 0.2 percent. Comparable sales fell 5.1 percent. Both reported and comparable sales declines were due to reduced volume, reflecting a more challenging macroeconomic environment, especially in our EMEA segment, and weaker global sales of computer accessories.
Operating income was $55.2 million versus $55.4 million in 2022. In 2022, operating income benefitted from income related to a change in the value of the PowerA contingent earnout of $9.4 million, partially offset by $1.9 million in restructuring charges. Adjusted operating income increased 14 percent to $66.2 million from $58.1 million in the prior year. This increase reflects improved gross margin from the effect of cumulative global pricing and cost reduction actions, partially offset by negative fixed cost leverage and higher SG&A expense primarily due to an increase in incentive compensation.
The Company reported net income of $26.4 million, or $0.27 per share, compared with prior year net income of $39.4 million, or $0.40 per share. Reported net income in 2023 reflects higher interest, tax and non-operating pension expenses. Reported net income in 2022 benefited from the items noted above in operating income. Adjusted net income was $36.5 million, or $0.38 per share, compared with $36.0 million, or $0.37 per share in 2022. Adjusted net income reflects the increase in adjusted operating income, partially offset by higher interest and non-operating pension expenses.
Business Segment Results
ACCO Brands North America – Secondquarter segment net sales of $292.6 million decreased 4.6 percent versus the prior year. Adverse foreign exchange reduced sales by 0.5 percent. Comparable sales of $294.2 million were down 4.1 percent. Both decreases reflect softer demand from business and retail customers due to a weaker macroeconomic environment and lower volumes for computer accessories. These factors more than offset stronger pricing, and volume growth in gaming accessories. Timing for some back-to-school sales was earlier than anticipated.
Second quarter operating income in North America was $55.1 million versus $50.7 million a year earlier, and adjusted operating income was $60.7 million compared to $57.2 million a year ago. Both increases reflect the benefit of pricing and cost actions and favorable mix, which more than offset the impact of lower sales and negative fixed cost leverage.
ACCO Brands EMEA – Secondquarter segment net sales of $125.7 million decreased 8.8 percent versus the prior year. Favorable foreign exchange increased sales by 0.3 percent. Comparable sales of $125.3 million decreased 9.1 percent versus the prior-year period. Both reported and comparable sales declines reflect reduced demand due to a weaker environment in the region and lower volumes for technology accessories. This more than offset the effect of cumulative pricing actions.
Second quarter operating income in EMEA was $5.7 million versus a loss of $1.5 million a year earlier, and adjusted operating income was $9.5 million compared to $2.1 million a year ago. The increases in both reported operating income and adjusted operating income reflect improved gross margins from the cumulative effect of price increases and cost savings actions more than offsetting negative fixed cost leverage.
ACCO Brands International – Secondquarter segment sales of $75.3 million decreased 1.6 percent versus the prior year. Favorable foreign exchange increased sales by 0.7 percent. Comparable sales of $74.8 million decreased 2.3 percent versus the year-ago period. Both sales decreases reflect lower volumes due to weaker economies in Asia and Australia, mostly offset by growth in Latin America.
Second quarter operating income in the International segment was $6.7 million versus $6.3 million a year earlier, with the increase due to lower restructuring expense. Adjusted operating income was $8.3 million compared to $8.6 million a year ago.
Six Month Results
Net sales decreased 6.9 percent to $896.2 million from $962.6 million in 2022. Adverse foreign exchange reduced sales by $11.4 million, or 1.2 percent. Comparable sales decreased 5.7 percent. Both reported and comparable sales declines reflect lower volume, especially in EMEA and North America due to the challenging macroeconomic environment, lower sales of technology accessories, and the timing of back-to-school shipments and lower channel inventory compared to a year ago. These more than offset the benefit of price increases across all segments, and volume growth in Latin America.
Operating income of $65.3 million compares to operating income of $62.2 million in 2022, which included a benefit of $6.8 million related to a change in the value of the PowerA contingent earnout. Adjusted operating income of $90.5 million increased from $80.7 million last year. Both reported and adjusted operating income increases reflect the benefit of global price increases and cost reduction initiatives, partially offset by higher SG&A expense primarily due to increased incentive compensation.
Net income was $22.7 million, or $0.23 per share, compared with net income of $36.7 million, or $0.37 per share, in 2022. Reported net income in 2023 reflects higher interest, tax and non-operating pension expenses. Reported net income in 2022 benefitted from the items noted above in operating income. Adjusted net income was $45.0 million, compared with $46.4 million in 2022, and adjusted earnings per share were $0.47 for both year periods. Adjusted net income reflects the increase in adjusted operating income offset by higher interest and non-operating pension expenses.
Capital Allocation and Dividend
Year to date, the Company improved its operating cash outflow by $58.6 million to $39.3 million versus $97.9 million in the prior year, driven primarily by improved working capital management. Adjusted free cash flow improved by $50.1 million and was an outflow of $45.4 million versus an outflow of $95.5 million a year earlier. Adjusted free cash flow in 2022 excludes the contingent earnout payment.
On August 1, 2023, ACCO Brands announced that its board of directors declared a regular quarterly cash dividend of $0.075 per share. The dividend will be paid on September 12, 2023, to stockholders of record at the close of business on August 22, 2023.
Full Year 2023 and Third Quarter Outlook
The Company is updating its full year 2023 outlook and providing a 3Q outlook. For the full year, reported sales are expected to be down 1 percent to 3 percent, including a 1.5 percent positive impact from foreign exchange. The Company is also maintaining its full year adjusted EPS outlook to be in the range of $1.08 to $1.12. Mid-teen growth in adjusted operating income is expected to be partially offset by higher interest and non-cash non-operating pension expenses. The Company is raising its 2023 free cash flow outlook to at least $110 million and expects to end the year with a consolidated leverage ratio of 3.3x to 3.5x, lower than previously expected.
In the third quarter, reported sales are expected to be flat to down 3 percent, which includes approximately a 4 percent positive impact from foreign exchange. Adjusted EPS is expected to be in the range of $0.21 to $0.24, which compares to $0.25 of adjusted EPS in the prior-year third quarter.
Webcast
At 8:30 a.m. ET on August 9, 2023, ACCO Brands Corporation will host a conference call to discuss the Company’s second quarter 2023 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, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) 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 directly comparable GAAP financial measure in the “About Non-GAAP Financial Measures” section of this earnings release.
Forward-Looking Statements
Statements contained herein, 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 the impact of the war in Ukraine; the impact of inflation and global economic uncertainties, fluctuations in foreign currency exchange rates 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: our ability to successfully execute our restructuring plans and realize the benefits of our productivity initiatives; our ability to obtain additional price increases and realize longer-term cost reductions; 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 exchange rate 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 accessories business; continued disruptions in the global supply chain; risks associated with inflation and other changes in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services and the cost of finished goods; 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, 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, 2022, and in other reports we file with the Securities and Exchange Commission.
About Non-GAAP Financial Measures
We explain below how we calculate each of our 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 exchange rate fluctuations and acquisitions, unusual tax items, goodwill impairment charges, 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 Sales : Represents net sales excluding the impact of material acquisitions, if any, with current-period foreign operation sales translated at prior-year currency rates. We believe comparable sales are useful to investors and management because they reflect underlying sales and sales trends without the effect of material acquisitions and fluctuations in foreign exchange rates and facilitate meaningful period-to-period comparisons. We sometimes refer to comparable sales as comparable net sales.
Adjusted Selling, General and Administrative (SG&A) Expenses : Represents selling, general and administrative expenses excluding transaction and integration expenses related to 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 and goodwill impairment 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 or adjusted EPS.
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 and goodwill impairment 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/Adjusted Free Cash Flow: Free cash flow represents cash flow from operating activities less cash used for additions to property, plant and equipment. Adjusted free cash flow represents free cash flow, less cash payments made for contingent earnouts, plus cash proceeds from the disposition of assets. We believe free cash flow and adjusted free cash flow are useful to investors because they measure our available cash flow for paying dividends, funding strategic material acquisitions, reducing debt, and repurchasing shares.
Consolidated Leverage Ratio: Represents balance sheet debt, plus debt origination costs and less any cash and cash equivalents divided by adjusted EBITDA. We believe that consolidated 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.
We also provide forward-looking non-GAAP comparable sales, adjusted earnings per share, free cash flow, adjusted free cash flow, adjusted EBITDA, and adjusted tax rate, and historical and forward-looking consolidated leverage ratio. We do not provide a reconciliation of these forward-looking and historical non-GAAP measures to GAAP because the GAAP financial measure is not currently available and management cannot reliably predict all the necessary components of such non-GAAP measures without unreasonable effort or expense 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 results. The probable significance of each of these items is high and, based on historical experience, could be material.
Christopher McGinnis Investor Relations (847) 796-4320
