Shein, the Chinese fast fashion juggernaut, is aiming to achieve a massive $80-90 billion valuation in its eventual US stock market debut according to sources familiar with the company’s IPO plans.
The online fashion retailer has quickly become one of the largest in the world on the back of its ultra-fast production cycles and rock bottom pricing. Shein boasts a selection of over 5,000 fashion items with over 1,000 new products added daily. This rapid launch cadence along with AI-driven fashion designs and targeted social media marketing have supercharged Shein’s popularity among Gen Z consumers.
Shein’s meteoric rise has made it one of the most valuable private companies in the world. The company hit a $100 billion valuation in its last funding round in 2021. However, subsequent secondary market trades of Shein shares revealed erosion in its value, with estimates between $50-60 billion earlier this year.
The firm is looking to capitalize on the growth in online shopping with its planned US stock exchange listing. Shein is aiming to raise around $2 billion from public market investors as it continues its quest for global fashion industry dominance.
Shein has not officially confirmed its IPO plans yet, but is said to be targeting the second half of 2023 for its market debut. The timing remains in flux given the recent stock market volatility and economic uncertainty.
Unlike most ecommerce firms, Shein has claimed profitability since its inception. The company boasts strong margins partly derived from minimal advertising spend. Shein instead relies extensively on social media influencers and word-of-mouth among its primarily Gen Z fanbase.
The Chinese company does not disclose its financials publicly, but reportedly generated over $16 billion in sales in 2021. It has also expanded aggressively in Europe, the US and other international markets. Shein’s app was the second most downloaded shopping app globally on iOS last year after Amazon.
However, Shein faces controversies around alleged labor rights violations, plagiarized designs, and environmental concerns related to its fast fashion model. Critics also argue the opacity around its operations and finances warrant closer regulatory scrutiny especially as it plans to go public.
Shein’s US IPO will be a key test of investor appetite for cash-burning technology unicorns in the current market. Chinese companies listing in the US also face tighter regulations now. A number of them have opted instead for Hong Kong and domestic China exchanges more recently.
Nonetheless, the online fashion giant has its sights set firmly on tapping into public markets to fuel its next wave of worldwide expansion. Shein aims to leverage its digital-first model and supply chain agility to continue eating market share from struggling traditional retailers.
If Shein manages to pull off a $90 billion IPO, it would rank as one of the largest US listings ever for a foreign company. The blockbuster offering could set the stage for Shein to disrupt the global fashion hierarchy dominated by H&M, Zara and other legacy incumbents.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , 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.
Moving Forward, but Cyclicality Still Here. CVG is making progress on the business transformation to a less cyclical, higher margin, faster growing business, as evidenced by the 17% y-o-y growth in the Electrical Systems business. But the cyclicality of the Vehicle Solutions business remains, and will be a headwind in 2024.
Continuing to Add New Business. CVG recorded approximately $15 million of new business wins in the quarter, increasing the YTD number to $140 million, almost to the 2023 goal of $150 million of new business wins. The majority of new business wins continue to be within the Electrical Systems segment.
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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 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.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , 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.
Continued Margin Expansion. Gross profit margin increased 400 basis points to 32.3%, primarily due to the cumulative effect of global price increases and cost reduction actions. Year-to-date, ACCO has delivered 380 basis points of gross margin improvement and is now back to 2019 gross margin rate.
But Environment Is Challenged. Macroeconomic weakness, with prolonged softer global demand for technology accessories, and a stronger U.S. dollar, led to lower than expected sales in the quarter. In addition, major retailers in North America continue to focus on holding lower inventory levels, impacting ACCO revenue. The challenged environment is expected to continue at least through the fourth quarter.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
Reported net sales of $448 million, with gross margin expanding 400 basis points
Operating income of $32 million; adjusted operating income grew 8% to $46 million
EPS of $0.15; adjusted EPS of $0.24, at the high end of the Company’s outlook
Net operating cash flow improved $80 million year to date; maintains full year 2023 free cash flow outlook of at least $110 million
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today reported financial results for the third quarter and nine months ended September 30, 2023.
“We are pleased with our overall performance and delivered significant gross margin improvement in the third quarter. Gross margins expanded 400 basis points year over year. This improvement reflects the continued recovery of margin from our pricing actions that lagged the pace of inflation last year, as well as cost savings from our restructuring and footprint rationalization efforts. However, macroeconomic weakness, with prolonged softer global demand for technology accessories, and a stronger U.S. dollar led to lower than expected sales in the quarter. Our updated full year sales outlook now reflects a continuing softer demand environment. We remain confident our margin recovery and cost mitigation efforts will drive operating income growth and improved cash flow,” said Tom Tedford, President and Chief Executive Officer of ACCO Brands.
Mr. Tedford concluded, “With our strong cash flow we have reduced debt, and lowered our leverage ratio, positioning us well for the future. We are evaluating ways to further optimize our cost structure and simplify our operations to better leverage our global scale. In addition, we are focused on accelerating our new product development and innovation, as this is a critical component for delivering organic revenue growth over the long term. I am confident that these initiatives, along with our geographically diverse portfolio of leading brands and talented employees, will enable us to further strengthen the company going forward. We are committed to expanding our margin profile and using our strong cash flow to support our quarterly dividend and reduce debt.”
Third Quarter Results
Net sales declined 7.7 percent to $448.0 million from $485.6 million in 2022. Comparable sales fell 9.9 percent, as favorable foreign exchange increased sales by $10.5 million, or 2.2 percent. Both reported and comparable sales declines reflect softer demand due to a weaker macroeconomic environment which has also led to lower global technology spending, and the stabilization of return to office trends.
Operating income was $32.2 million versus an operating loss of $63.0 million in 2022. In 2022, the operating loss was due to a non-cash goodwill impairment charge of $98.7 million related to the North America segment. In 2023, we recognized restructuring charges in EMEA of $3.0 million related to our continued footprint rationalization program. Adjusted operating income increased 7.5 percent to $46.0 million, from $42.8 million in the prior year. This increase reflects recovery of gross margin from the effect of cumulative global price increases and cost reduction actions. This was partially offset by negative fixed cost leverage, and higher SG&A expense primarily due to an increase in incentive compensation compared to the prior year.
The Company reported net income of $14.9 million, or $0.15 per share, compared with a prior year net loss of $68.7 million, or ($0.73) per share. The increase in reported net income was primarily due to the non-repeat of a goodwill impairment charge, partially offset by higher restructuring and income tax expense in the current year. Adjusted net income was $23.1 million, or $0.24 per share, compared with $24.1 million, or $0.25 per share in 2022. Reported and adjusted net income reflects higher interest and non-operating pension expenses.
Business Segment Results
ACCO Brands North America – Third quarter segment net sales of $218.9 million decreased 14.9 percent versus the prior year. Adverse foreign exchange reduced sales by 0.3 percent. Comparable sales of $219.6 million were down 14.6 percent. Both decreases reflect softer demand due to a weaker macroeconomic environment, which has caused lower volumes for technology accessories and certain office products, as well as tight inventory management by retail customers. This more than offset the effect of cumulative pricing actions.
Third quarter operating income in North America was $19.9 million versus an operating loss of $78.4 million a year earlier. The operating loss in 2022 was due to a $98.7 million non-cash goodwill impairment charge. Adjusted operating income was $25.5 million compared to $25.8 million a year ago. The benefit of pricing and cost savings actions was more than offset by the impact of lower sales, negative fixed cost leverage and higher incentive compensation.
ACCO Brands EMEA – Third quarter segment net sales of $126.6 million decreased 2.8 percent versus the prior year. Favorable foreign exchange increased sales by 5.4 percent. Comparable sales of $119.6 million decreased 8.2 percent versus the prior-year period. Both reported and comparable sales declines reflect reduced demand for technology accessories and lower overall demand in the region. This more than offset the effect of cumulative pricing actions.
Third quarter operating income in EMEA was $6.9 million compared to $4.9 million a year earlier, and adjusted operating income was $13.6 million compared to $7.4 million a year ago. In 2023, operating income includes a restructuring charge of $3.0 million related to our footprint rationalization program. 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 – Thirdquarter segment sales of $102.5 million increased 4.5 percent versus the prior year. Favorable foreign exchange increased sales by 4.3 percent. Comparable sales of $98.3 million increased 0.2 percent versus the year-ago period. Both sales increases reflect stronger pricing and volume growth in Latin America, more than offsetting the impact of weaker economic conditions in Australia and Asia.
Third quarter operating income in the International segment was $16.4 million versus $17.3 million a year earlier. Adjusted operating income was $17.9 million compared to $19.2 million a year ago. The decline in both reflects increased spending to support go-to-market strategies and a favorable reduction of our bad debt reserve during the prior year, which more than offset pricing and cost savings actions.
Nine Month Results
Net sales decreased 7.2 percent to $1,344.2 million from $1,448.2 million in 2022. Adverse foreign exchange reduced sales by $0.9 million, or 0.1 percent. Comparable sales decreased 7.1 percent. Both reported and comparable sales declines reflect lower sales of technology accessories and softer demand in North America and EMEA due to the challenging macroeconomic environment, as well as tight inventory management by our customers. These more than offset the benefit of price increases across all segments, and volume growth in the International segment.
Operating income of $97.5 million compares to an operating loss of $0.8 million in 2022. The operating loss in 2022 was primarily due to a non-cash goodwill impairment charge of $98.7 million, partially offset by the change in value of the contingent consideration. In 2023, we recorded $6.3 million of restructuring charges, largely related to our footprint rationalization program. Adjusted operating income of $136.5 million increased from $123.5 million last year. Both reported and adjusted operating income increases reflect the benefit of 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 income was $37.6 million, or $0.39 per share, compared with a net loss of $32.0 million, or ($0.33) per share, in 2022. The increase in reported net income was primarily due to the non-repeat of a goodwill impairment charge, partially offset by higher restructuring and income tax expense in the current year. Adjusted net income was $68.1 million, compared with $70.5 million in 2022, and adjusted earnings per share were $0.70 compared with $0.73 in 2022. Reported and adjusted net income reflect higher interest and non-operating pension expenses.
Capital Allocation and Dividend
Year to date, the Company significantly improved its operating cash flow to $70.7 million versus a cash outflow of $9.6 million in the prior year, driven primarily by improved working capital management. Adjusted free cash flow improved by $75.2 million and was an inflow of $63.2 million versus an outflow of $12.0 million a year earlier. Adjusted free cash flow in 2022 excludes the contingent earnout payment. At the end of the third quarter of 2023, our consolidated leverage ratio was 3.8x.
On October 27, 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 December 6, 2023, to stockholders of record at the close of business on November 15, 2023.
Updated Full Year 2023 Outlook
Reported sales for 2023 are now expected to be down 6 percent to 7 percent. The full year adjusted EPS outlook is now expected to be in the range of $1.03 to $1.07. Low double-digit growth in adjusted operating income is expected to be mostly offset by higher interest and non-cash, non-operating pension expenses. The update reflects the expectation of continued soft demand due to economic uncertainty and a stronger U.S. dollar. The Company is maintaining its 2023 free cash flow outlook to at least $110 million and now expects to end the year with a consolidated leverage ratio of approximately 3.5x.
Webcast
At 8:30 a.m. ET on November 3, 2023, ACCO Brands Corporation will host a conference call to discuss the Company’s third 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 inflation and global geopolitical and 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.
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2023
December 31, 2022
(in millions)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
73.7
$
62.2
Accounts receivable, net
351.7
384.1
Inventories
368.5
395.2
Other current assets
41.1
40.8
Total current assets
835.0
882.3
Total property, plant and equipment
585.7
589.2
Less: accumulated depreciation
(417.5
)
(404.1
)
Property, plant and equipment, net
168.2
185.1
Right of use asset, leases
86.4
88.8
Deferred income taxes
92.5
99.7
Goodwill
664.8
671.5
Identifiable intangibles, net
814.4
847.0
Other non-current assets
22.4
20.3
Total assets
$
2,683.7
$
2,794.7
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable
$
2.9
$
10.3
Current portion of long-term debt
67.2
49.7
Accounts payable
173.0
239.5
Accrued compensation
47.1
38.3
Accrued customer program liabilities
97.0
103.3
Lease liabilities
19.2
21.2
Other current liabilities
112.5
126.7
Total current liabilities
518.9
589.0
Long-term debt, net
892.2
936.5
Long-term lease liabilities
73.9
75.2
Deferred income taxes
134.0
144.1
Pension and post-retirement benefit obligations
140.3
155.5
Other non-current liabilities
86.4
84.3
Total liabilities
1,845.7
1,984.6
Stockholders’ equity:
Common stock
1.0
1.0
Treasury stock
(45.1
)
(43.4
)
Paid-in capital
1,908.5
1,897.2
Accumulated other comprehensive loss
(537.5
)
(540.3
)
Accumulated deficit
(488.9
)
(504.4
)
Total stockholders’ equity
838.0
810.1
Total liabilities and stockholders’ equity
$
2,683.7
$
2,794.7
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Income (Loss) (Unaudited)
(In millions, except per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
% Change
2023
2022
% Change
Net sales
$
448.0
$
485.6
(7.7
)%
$
1,344.2
$
1,448.2
(7.2
)%
Cost of products sold
303.2
348.2
(12.9
)%
915.9
1,041.2
(12.0
)%
Gross profit
144.8
137.4
5.4
%
428.3
407.0
5.2
%
Operating costs and expenses:
Selling, general and administrative expenses
98.8
93.9
5.2
%
291.8
284.3
2.6
%
Amortization of intangibles
10.8
9.9
9.1
%
32.7
31.5
3.8
%
Restructuring charges
3.0
0.1
NM
6.3
2.3
NM
Goodwill impairment
—
98.7
NM
—
98.7
NM
Change in fair value of contingent consideration
—
(2.2
)
NM
—
(9.0
)
NM
Total operating costs and expenses
112.6
200.4
(43.8
)%
330.8
407.8
(18.9
)%
Operating income (loss)
32.2
(63.0
)
NM
97.5
(0.8
)
NM
Non-operating expense (income):
Interest expense
15.6
12.1
28.9
%
45.0
32.6
38.0
%
Interest income
(1.6
)
(2.6
)
(38.5
)%
(6.2
)
(6.2
)
NM
Non-operating pension expense (income)
0.2
(0.5
)
NM
0.5
(3.2
)
NM
Other income, net
(3.6
)
(7.4
)
(51.4
)%
(2.1
)
(10.2
)
(79.4
)%
Income (loss) before income tax
21.6
(64.6
)
NM
60.3
(13.8
)
NM
Income tax expense
6.7
4.1
63.4
%
22.7
18.2
24.7
%
Net income (loss)
$
14.9
$
(68.7
)
NM
$
37.6
$
(32.0
)
NM
Per share:
Basic income (loss) per share
$
0.16
$
(0.73
)
NM
$
0.40
$
(0.33
)
NM
Diluted income (loss) per share
$
0.15
$
(0.73
)
NM
$
0.39
$
(0.33
)
NM
Weighted average number of shares outstanding:
Basic
95.4
94.5
95.2
95.6
Diluted
96.7
94.5
96.8
95.6
Cash dividends declared per common share
$
0.075
$
0.075
$
0.225
$
0.225
Statistics (as a % of Net sales, except Income tax rate)
Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Gross profit (Net sales, less Cost of products sold)
32.3
%
28.3
%
31.9
%
28.1
%
Selling, general and administrative expenses
22.1
%
19.3
%
21.7
%
19.6
%
Operating income (loss)
7.2
%
(13.0
)%
7.3
%
(0.1
)%
Income (loss) before income tax
4.8
%
(13.3
)%
4.5
%
(1.0
)%
Net income (loss)
3.3
%
(14.1
)%
2.8
%
(2.2
)%
Income tax rate
31.0
%
(6.3
)%
37.6
%
(131.9
)%
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
(in millions)
2023
2022
Operating activities
Net income (loss)
$
37.6
$
(32.0
)
Payments of contingent consideration
—
(9.2
)
Loss on disposal of assets
(0.3
)
(0.1
)
Change in fair value of contingent liability
—
(9.0
)
Depreciation
25.2
28.6
Amortization of debt issuance costs
2.3
2.0
Amortization of intangibles
32.7
31.5
Stock-based compensation
10.4
7.8
Non-cash charge for goodwill impairment
—
98.7
Changes in operating assets and liabilities:
Accounts receivable
30.9
48.8
Inventories
35.5
(20.9
)
Other assets
(5.4
)
(20.1
)
Accounts payable
(72.8
)
(80.8
)
Accrued expenses and other liabilities
(17.8
)
(47.2
)
Accrued income taxes
(7.6
)
(7.7
)
Net cash provided (used) by operating activities
70.7
(9.6
)
Investing activities
Additions to property, plant and equipment
(9.7
)
(11.8
)
Proceeds from the disposition of assets
2.2
0.2
Net cash used by investing activities
(7.5
)
(11.6
)
Financing activities
Proceeds from long-term borrowings
121.9
218.0
Repayments of long-term debt
(145.4
)
(95.2
)
Repayments of notes payable, net
(7.3
)
(7.6
)
Dividends paid
(21.4
)
(21.5
)
Payments of contingent consideration
—
(17.8
)
Repurchases of common stock
—
(19.4
)
Payments related to tax withholding for stock-based compensation
(1.7
)
(2.5
)
Proceeds from the exercise of stock options
—
4.3
Net cash (used) provided by financing activities
(53.9
)
58.3
Effect of foreign exchange rate changes on cash and cash equivalents
2.2
(0.3
)
Net increase in cash and cash equivalents
11.5
36.8
Cash and cash equivalents
Beginning of the period
62.2
41.2
End of the period
$
73.7
$
78.0
About Non-GAAP Financial Measures
We explain below how we calculate each of our non-GAAP financial measures. This is followed by a reconciliation of our current period and historical non-GAAP financial measures to the most directly comparable GAAP financial measures.
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 (Loss)/Adjusted Income (Loss) Before Taxes/Adjusted Net Income (Loss)/Adjusted Net Income (Loss) Per Diluted Share:Represents operating income (loss), income (loss) before taxes, net income (loss), 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. In addition, this calculation of adjusted EBITDA is used in our loan agreement to calculate our leverage ratio covenant.
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.
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share data)
The following tables set forth a reconciliation of certain Consolidated Statements of Income (Loss) information reported in accordance with GAAP to Adjusted Non-GAAP Information for the three months ended September 30, 2023 and 2022.
Three Months Ended September 30, 2023
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
32.2
7.2
%
$
21.6
4.8
%
$
6.7
31.0
%
$
14.9
3.3
%
Reported GAAP diluted income per share (EPS)
$
0.15
Restructuring charges
3.0
3.0
0.7
2.3
Amortization of intangibles
10.8
10.8
2.8
8.0
Gain on sale of property
—
(1.5
)
(0.5
)
(1.0
)
Operating tax gains
(D)
—
(1.3
)
(0.4
)
(0.9
)
Other discrete tax items
—
—
0.2
(0.2
)
Adjusted Non-GAAP
$
46.0
10.3
%
$
32.6
7.3
%
$
9.5
29.1
%
$
23.1
5.2
%
Adjusted net income per diluted share (Adjusted EPS)
$
0.24
Three Months Ended September 30, 2022
SG&A
% of Sales
Operating(Loss) Income
% of Sales
(Loss) Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
$
93.9
19.3
%
$
(63.0
)
(13.0
)%
$
(64.6
)
(13.3
)%
$
4.1
(6.3
)%
$
(68.7
)
(14.1
)%
Reported GAAP diluted loss per share (EPS)
$
(0.73
)
Release of charge for Russia business
0.7
(0.7
)
(0.7
)
(0.1
)
(0.6
)
Restructuring charges
—
0.1
0.1
0.1
—
Goodwill impairment charge
—
98.7
98.7
—
98.7
Amortization of intangibles
—
9.9
9.9
2.6
7.3
Change in fair value of contingent consideration
(C)
—
(2.2
)
(2.2
)
(0.6
)
(1.6
)
Operating tax gains
(D)
—
—
(7.3
)
(2.5
)
(4.8
)
Other discrete tax items
—
—
—
6.2
(6.2
)
Adjusted Non-GAAP
$
94.6
19.5
%
$
42.8
8.8
%
$
33.9
7.0
%
$
9.8
29.0
%
$
24.1
5.0
%
Adjusted net income per diluted share (Adjusted EPS)
$
0.25
See “Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Income (Loss) to Adjusted EBITDA (Unaudited)” for further information regarding adjusted items.
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share data)
The following tables set forth a reconciliation of certain Consolidated Statements of Income (Loss) information reported in accordance with GAAP to Adjusted Non-GAAP Information for the nine months ended September 30, 2023 and 2022.
Nine Months Ended September 30, 2023
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
97.5
7.3
%
$
60.3
4.5
%
$
22.7
37.6
%
$
37.6
2.8
%
Reported GAAP diluted income per share (EPS)
$
0.39
Restructuring charges
6.3
6.3
1.6
4.7
Amortization of intangibles
32.7
32.7
8.6
24.1
Other asset write-off
(B)
—
1.1
0.3
0.8
Gain on sale of property
—
(1.5
)
(0.5
)
(1.0
)
Operating tax gains
(D)
—
(1.3
)
(0.4
)
(0.9
)
Other discrete tax items
—
—
(2.8
)
2.8
Adjusted Non-GAAP
$
136.5
10.2
%
$
97.6
7.3
%
$
29.5
30.2
%
$
68.1
5.1
%
Adjusted net income per diluted share (Adjusted EPS)
$
0.70
Nine Months Ended September 30, 2022
SG&A
% of Sales
Operating (Loss) Income
% of Sales
(Loss) Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
284.3
19.6
%
$
(0.8
)
(0.1
)%
$
(13.8
)
(1.0
)%
$
18.2
(131.9
)%
$
(32.0
)
(2.2
)%
Reported GAAP diluted loss per share (EPS)
$
(0.33
)
Charge for Russia business
(0.8
)
0.8
0.8
0.2
0.6
Restructuring charges
—
2.3
2.3
0.6
1.7
Goodwill impairment charge
—
98.7
98.7
—
98.7
Amortization of intangibles
—
31.5
31.5
8.3
23.2
Change in fair value of contingent consideration
(C)
—
(9.0
)
(9.0
)
(2.3
)
(6.7
)
Operating tax gains
(D)
—
—
(11.2
)
(3.8
)
(7.4
)
Other discrete tax items
—
—
—
7.6
(7.6
)
Adjusted Non-GAAP
$
283.5
19.6
%
$
123.5
8.5
%
$
99.3
6.9
%
$
28.8
29.0
%
$
70.5
4.9
%
Adjusted net income per diluted share (Adjusted EPS)
$
0.73
See “Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Income (Loss) to Adjusted EBITDA (Unaudited)” for further information regarding adjusted items.
ACCO Brands Corporation and Subsidiaries
Reconciliation of Net Income (Loss) to Adjusted EBITDA (Unaudited)
(In millions)
The following table sets forth a reconciliation of net income (loss) reported in accordance with GAAP to Adjusted EBITDA.
Three months ended September 30,
Nine months ended September 30,
2023
2022
% Change
2023
2022
% Change
Net income (loss)
$
14.9
$
(68.7
)
NM
$
37.6
$
(32.0
)
NM
Stock-based compensation
1.5
0.6
NM
10.4
7.8
33.3
%
Depreciation
7.9
9.0
(12.2
)%
25.2
28.6
(11.9
)%
(Release) charge for Russia business
—
(0.7
)
NM
—
0.8
NM
Amortization of intangibles
10.8
9.9
9.1
%
32.7
31.5
3.8
%
Restructuring charges
3.0
0.1
NM
6.3
2.3
NM
Goodwill impairment charge
—
98.7
NM
—
98.7
NM
Change in fair value of contingent consideration
(C)
—
(2.2
)
NM
—
(9.0
)
NM
Interest expense, net
14.0
9.5
47.4
%
38.8
26.4
47.0
%
Other income, net
(3.6
)
(7.4
)
(51.4
)%
(2.1
)
(10.2
)
(79.4
)%
Income tax expense
6.7
4.1
63.4
%
22.7
18.2
24.7
%
Adjusted EBITDA (non-GAAP)
$
55.2
$
52.9
4.3
%
$
171.6
$
163.1
5.2
%
Adjusted EBITDA as a % of Net Sales
12.3
%
10.9
%
12.8
%
11.3
%
See “Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Income (Loss) to Adjusted EBITDA (Unaudited)” for further information regarding adjusted items.
Reconciliation of Net Cash (Used) Provided by Operating Activities to Adjusted Free Cash Flow (Unaudited)
(In millions)
The following table sets forth a reconciliation of net cash (used) provided by operating activities reported in accordance with GAAP to Adjusted Free Cash Flow.
Three months ended September 30, 2023
Three months ended September 30, 2022
For the nine months ended September 30, 2023
For the nine months ended September 30, 2022
Net cash provided (used) by operating activities
$
110.0
$
88.3
$
70.7
$
(9.6
)
Net (used) provided by:
Additions to property, plant and equipment
(3.6
)
(4.8
)
(9.7
)
(11.8
)
Proceeds from the disposition of assets
2.2
—
2.2
0.2
Payments of contingent consideration
—
—
—
9.2
Adjusted Free Cash Flow (non-GAAP)
$
108.6
$
83.5
$
63.2
$
(12.0
)
Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Income (Loss) to Adjusted EBITDA (Unaudited)
A. The income tax impact of the non-GAAP adjustments and other discrete tax items.
B. Represents the write off of assets related to a capital project.
C. Represents income from the change in fair value of the contingent consideration for the PowerA acquisition.
D. Represents gains related to the release of reserves for certain operating taxes.
ACCO Brands Corporation and Subsidiaries
Supplemental Business Segment Information and Reconciliation (Unaudited)
(In millions)
2023
2022
Changes
Adjusted
Adjusted
Reported
Adjusted
Operating
Reported
Adjusted
Operating
Adjusted
Adjusted
Operating
Operating
Income
Operating
Operating
Income
Operating
Operating
Reported
Income
Adjusted
Income
(Loss)
Reported
Income
Adjusted
Income
(Loss)
Net Sales
Net Sales
Income
Income
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
$
%
(Loss) $
(Loss) %
Points
Q1:
ACCO Brands North America
$
176.7
$
5.2
$
5.7
$
10.9
6.2
%
$
208.5
$
13.9
$
5.9
$
19.8
9.5
%
$
(31.8
)
(15.3
)%
$
(8.9
)
(44.9
)%
(330
)
ACCO Brands EMEA
135.8
7.8
5.8
13.6
10.0
%
156.1
5.6
3.5
9.1
5.8
%
(20.3
)
(13.0
)%
4.5
49.5
%
420
ACCO Brands International
90.1
9.0
2.7
11.7
13.0
%
77.0
4.2
2.0
6.2
8.1
%
13.1
17.0
%
5.5
88.7
%
490
Corporate
—
(11.9
)
—
(11.9
)
—
(16.9
)
4.4
(12.5
)
—
0.6
Total
$
402.6
$
10.1
$
14.2
$
24.3
6.0
%
$
441.6
$
6.8
$
15.8
$
22.6
5.1
%
$
(39.0
)
(8.8
)%
$
1.7
7.5
%
90
Q2:
ACCO Brands North America
$
292.6
$
55.1
$
5.6
$
60.7
20.7
%
$
306.6
$
50.7
$
6.5
$
57.2
18.7
%
$
(14.0
)
(4.6
)%
$
3.5
6.1
%
200
ACCO Brands EMEA
125.7
5.7
3.8
9.5
7.6
%
137.9
(1.5
)
3.6
2.1
1.5
%
(12.2
)
(8.8
)%
7.4
NM
610
ACCO Brands International
75.3
6.7
1.6
8.3
11.0
%
76.5
6.3
2.3
8.6
11.2
%
(1.2
)
(1.6
)%
(0.3
)
(3.5
)%
(20
)
Corporate
—
(12.3
)
—
(12.3
)
—
(0.1
)
(9.7
)
(9.8
)
—
(2.5
)
Total
$
493.6
$
55.2
$
11.0
$
66.2
13.4
%
$
521.0
$
55.4
$
2.7
$
58.1
11.2
%
$
(27.4
)
(5.3
)%
$
8.1
13.9
%
220
Q3:
ACCO Brands North America
$
218.9
$
19.9
$
5.6
$
25.5
11.6
%
$
257.2
$
(78.4
)
$
104.2
$
25.8
10.0
%
$
(38.3
)
(14.9
)%
$
(0.3
)
(1.2
)%
160
ACCO Brands EMEA
126.6
6.9
6.7
13.6
10.7
%
130.3
4.9
2.5
7.4
5.7
%
(3.7
)
(2.8
)%
6.2
83.8
%
500
ACCO Brands International
102.5
16.4
1.5
17.9
17.5
%
98.1
17.3
1.9
19.2
19.6
%
4.4
4.5
%
(1.3
)
(6.8
)%
(210
)
Corporate
—
(11.0
)
—
(11.0
)
—
(6.8
)
(2.8
)
(9.6
)
—
(1.4
)
Total
$
448.0
$
32.2
$
13.8
$
46.0
10.3
%
$
485.6
$
(63.0
)
$
105.8
$
42.8
8.8
%
$
(37.6
)
(7.7
)%
$
3.2
7.5
%
150
Q4:
ACCO Brands North America
$
225.7
$
8.9
$
9.8
$
18.7
8.3
%
ACCO Brands EMEA
156.0
12.7
5.7
18.4
11.8
%
ACCO Brands International
117.7
22.7
1.6
24.3
20.6
%
Corporate
—
(8.7
)
(0.4
)
(9.1
)
Total
$
499.4
$
35.6
$
16.7
$
52.3
10.5
%
YTD:
ACCO Brands North America
$
688.2
$
80.2
$
16.9
$
97.1
14.1
%
$
998.0
$
(4.9
)
$
126.4
$
121.5
12.2
%
ACCO Brands EMEA
388.1
20.4
16.3
36.7
9.5
%
580.3
21.7
15.3
37.0
6.4
%
ACCO Brands International
267.9
32.1
5.8
37.9
14.1
%
369.3
50.5
7.8
58.3
15.8
%
Corporate
—
(35.2
)
—
(35.2
)
—
(32.5
)
(8.5
)
(41.0
)
Total
$
1,344.2
$
97.5
$
39.0
$
136.5
10.2
%
$
1,947.6
$
34.8
$
141.0
$
175.8
9.0
%
See “Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Income (Loss) to Adjusted EBITDA (Unaudited)” for further information regarding adjusted items.
ACCO Brands Corporation and Subsidiaries
Supplemental Net Sales Change Analysis (Unaudited)
% Change – Net Sales
$ Change – Net Sales (in millions)
GAAP
Non-GAAP
GAAP
Non-GAAP
Comparable
Comparable
Net Sales
Currency
Net Sales
Net Sales
Currency
Net Sales
Comparable
Change
Translation
Change (A)
Change
Translation
Change (A)
Net Sales
Q1 2023:
ACCO Brands North America
(15.3)%
(0.7)%
(14.6)%
$(31.8)
$(1.5)
$(30.3)
$178.2
ACCO Brands EMEA
(13.0)%
(5.7)%
(7.3)%
(20.3)
(9.0)
(11.3)
144.8
ACCO Brands International
17.0 %
(0.2)%
17.2 %
13.1
(0.2)
13.3
90.3
Total
(8.8)%
(2.4)%
(6.4)%
$(39.0)
$(10.6)
$(28.4)
$413.2
Q2 2023:
ACCO Brands North America
(4.6)%
(0.5)%
(4.1)%
$(14.0)
$(1.6)
$(12.4)
$294.2
ACCO Brands EMEA
(8.8)%
0.3 %
(9.1)%
(12.2)
0.4
(12.6)
125.3
ACCO Brands International
(1.6)%
0.7 %
(2.3)%
(1.2)
0.5
(1.7)
74.8
Total
(5.3)%
(0.2)%
(5.1)%
$(27.4)
$(0.8)
$(26.6)
$494.4
Q3 2023:
ACCO Brands North America
(14.9)%
(0.3)%
(14.6)%
$(38.3)
$(0.7)
$(37.6)
$219.6
ACCO Brands EMEA
(2.8)%
5.4 %
(8.2)%
(3.7)
7.0
(10.7)
119.6
ACCO Brands International
4.5 %
4.3 %
0.2 %
4.4
4.2
0.2
98.3
Total
(7.7)%
2.2 %
(9.9)%
$(37.6)
$10.5
$(48.1)
$437.5
2023 YTD:
ACCO Brands North America
(10.9)%
(0.5)%
(10.4)%
$(84.1)
$(3.8)
$(80.3)
$692.0
ACCO Brands EMEA
(8.5)%
(0.4)%
(8.1)%
(36.2)
(1.6)
(34.6)
389.7
ACCO Brands International
6.5 %
1.8 %
4.7 %
16.3
4.5
11.8
263.4
Total
(7.2)%
(0.1)%
(7.1)%
$(104.0)
$(0.9)
$(103.1)
$1,345.1
(A) Comparable sales represents net sales excluding material acquisitions, if any, and with current-period foreign operation sales translated at the prior-year currency rates.
Christopher McGinnis Investor Relations (847) 796-4320
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.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , 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.
A Mixed Bag. ACCO’s 3Q23 results were a mixed bag. Global macroeconomic weakness, softer technology accessories product demand, and a stronger U.S. dollar negatively impacted 3Q23 top line. But gross margin improved by 400 basis points, reflecting the continued recovery of margin from pricing actions, as well as cost savings from the Company’s restructuring and footprint rationalization efforts.
3Q23 Results. Net sales for the quarter declined 7.7% to $448.0 million from $485.6 million last year. We had estimated sales of $475 million. Comparable sales fell 9.9%. Net income was $14.9 million, or $0.15 per share, compared to a net loss of $68.7 million, or $0.73, last year. Last year was impacted by a goodwill impairment charge, partially offset by higher restructuring and income tax expense in the current year. Adjusted net income was $23.1 million, or $0.24, compared to $24.1 million, or $0.25, last year.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
For more than 45 years, 1-800-Flowers.com has offered truly original floral arrangements, plants and unique gifts to celebrate birthdays, anniversaries, everyday occasions, and seasonal holidays, and to deliver comfort during times of grief. Backed by a caring team obsessed with service, 1-800-Flowers.com provides customers thoughtful ways to express themselves and connect with the most important people in their lives. 1-800-Flowers.com is part of the 1-800-FLOWERS.COM, Inc. family of brands. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS.
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Fiscal Q1 results better than expected. Total company revenues of $269.1 million, which declined 11.4% from a year earlier, beat our estimate of $249.9 million, driven by better results in each of its operating segments. The revenue decrease represented a significant moderation from the 17.9% decline in its fiscal Q4. The seasonal adj. EBITDA loss of $22.0 million was better than our loss estimate of $27.8 million.
Improving margin outlook still favorable. Gross margins in the latest quarter improved 450 basis points from 33.4% to 37.9% due to lower ocean freight costs, moderating commodity prices, and lower inventory write-offs. While ocean freight prices have returned to near pre-Covid levels, there is still significant margin expansion opportunities as commodity prices moderate. We anticipate that full fiscal year 2024 gross margins should improve from 37.5% in 2023 to 39.3% in 2024.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , 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.
3Q23 Results. Revenue of $246.7 million was down 1.9% y-o-y, and slightly below our $255 million estimate, mostly due to a COVID related backlog in Asia-Pacific last year that was not repeated this year. Adjusted EBITDA came in at $16.6 million, up 16.1% y-o-y, and in-line with our $17 million estimate. GAAP and adjusted net income was $7.3 million, or $0.22/sh, compared to GAAP $3.6 million, or $0.11/sh, and adjusted $5.1 million, or $0.15/sh, last year. We had forecast net income of $7.2 million, or $0.21/sh.
Segments. Vehicle Solutions revenue was $145.4 million compared to $154 million last year, while operating income was $10.9 million versus $9.6 million. Electrical Systems revenue was $53.9 million versus $46.1 million and operating income grew to $5.9 million from $5.2 million. Aftermarket revenue was $34.4 million, down from $37.1 million and operating income was $4.5 million compared to $5.0 million. Industrial Automation revenue was $13.0 million compared to $14.1 million and segment operating income was $0.7 million compared to an operating loss of $1.0 million last year.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
NEW YORK, Nov. 01, 2023 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with significant expertise in livestream shopping and social commerce, is pleased to announce that Noble Capital Markets has initiated company-sponsored equity research coverage on the Company. The full report by Noble Capital Markets Senior Research Analyst Michael Kupinski and Research Analyst Patrick McCann, as well as news and advanced market data on Xcel Brands, Inc., is available on Channelchek.
About Xcel Brands
Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, production, marketing, live streaming, social commerce and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as one thing. Xcel owns the Judith Ripka, Halston, LOGO by Lori Goldstein, and C. Wonder brands and a minority stake in the Isaac Mizrahi brand. It also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true modern consumer products sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retail, and e-commerce channels to be everywhere its customers shop. The company’s brands have generated in excess of $4 billion in retail sales via livestreaming in interactive television and digital channels alone. Headquartered in New York City, Xcel Brands is led by an executive team with significant live streaming, production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. www.xcelbrands.com
About Noble Capital Markets
Noble Capital Markets, Inc. was incorporated in 1984 as a full-service SEC / FINRA registered broker-dealer, dedicated exclusively to serving underfollowed small / microcap companies through investment banking, wealth management, trading & execution, and equity research activities. Over the past 37 years, Noble has raised billions of dollars for these companies and published more than 45,000 equity research reports. www.noblecapitalmarkets.com email: contact@noblecapitalmarkets.com
About Channelchek
Channelchek (.com) is a comprehensive investor-centric portal – featuring more than 6,000 emerging growth companies – that provides advanced market data, independent research, balanced news, video webcasts, exclusive c-suite interviews, and access to virtual road shows. The site is available to the public at every level without cost or obligation. Research on Channelchek is provided by Noble Capital Markets, Inc., an SEC / FINRA registered broker-dealer since 1984. www.channelchek.com email: contact@channelchek.com
FORT WAYNE, Ind., Nov. 01, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) (the “Company”) today announced that it plans to report results for the third quarter ended October 28, 2023 at 8:00 a.m. Eastern Time on Wednesday, December 6, 2023.
The Company will host a conference call to discuss its financial results at 9:30 a.m. Eastern Time that same day. A live webcast of the conference call will be available on the Investor Relations section of the Company’s website, www.verabradley.com. Alternatively, interested parties may dial into the call at (888) 204-4368, and enter the access code 7089328. A replay will be available shortly after the conclusion of the call and remain available through December 20, 2023. To access the recording, listeners should dial (844) 512-2921, and enter the access code 7089328.
ABOUT VERA BRADLEY, INC.
Vera Bradley, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally connected, and multi-generational female customer bases; alignment as causal, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.
Vera Bradley, based in Fort Wayne, Indiana, is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women unlike any other brand in the global marketplace.
In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida, based in La Jolla, California, is a digitally native, highly engaging lifestyle brand founded in 2010 by friends Paul Goodman and Griffin Thall. Pura Vida has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories. The Company acquired the remaining 25% of Pura Vida in January 2023.
The acclaimed culinary chef and Masters of Meat join forces to support military, veteran, and first responder personnel.
Plantation, Fla., Oct. 31, 2023 (GLOBE NEWSWIRE) — Smokey Bones today announces that world-class culinary personality and philanthropist, Chef Robert Irvine, will join the Masters of Meat to introduce a limited-time menu, Robert’s Ribfeast, starting on October 31, 2023. Fans are asked to bring their appetites to try this delicious new menu, which will benefit the Robert Irvine Foundation, dedicated to transforming the lives of service members, veterans, first responders and their families. Smokey Bones has committed to donate 10 percent of sales from “Robert’s Ribfeast” promotion, up to $100,000.
As a Smokey Bones fan and loyalist, particularly of its award-winning ribs, Chef Irvine is working with the brand to share good food with guests while supporting and showing appreciation for the country’s military and veterans. Robert’s Ribfeast includes:
Robert’s Ribfeast for One ($19.99): A half-rack of Smokey Bones’ signature house-smoked St. Louis ribs, two sides, a piece of garlic bread, and choice of appetizer or dessert.
Ribfeast for Two ($29.99): A full rack of St. Louis ribs, four sides, two pieces of garlic bread, and choice of appetizer or dessert.
“We are honored to partner with Chef Irvine, who shares our appreciation for not only our ribs but also for our active-duty military and veterans,” said Cole Robillard, Chief Marketing Officer at Smokey Bones. “Chef Irvine is a frequent guest at Smokey Bones and a natural fit for our brand as he has made a significant impact on both the restaurant industry and military community. We are excited to not only offer guests a terrific deal on his favorite meal, but to bring our communities together to support this important cause.”
Chef Irvine is an acclaimed chef, entrepreneur, and longtime philanthropic supporter of America’s military. He’s also the host of Food Network’s hit show “Restaurant: Impossible,” where he gives struggling restaurateurs a second chance to turn their lives and businesses around.
“We are thankful for the generosity of Smokey Bones in their efforts to support the Robert Irvine Foundation,” said Chef Irvine. “These funds will go towards our Food, Wellness, Community, and Financial-Support programs which impact thousands of service members, veterans and their families. We look forward to kicking off this partnership with the Masters of Meat in supporting America’s heroes.”
Robert’s Ribfeast will be available at all Smokey Bones locations until January 1, 2024, while supplies last.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Smokey Bones, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
About Smokey Bones
The ‘Masters of Meat,’ Smokey Bones is a full-service restaurant delivering great barbecue, award-winning ribs, crave-worthy cocktails and memorable moments in 61 locations across 16 states. Smokey Bones serves lunch, dinner, and late night every day. Smokey Bones also has a full bar featuring a variety of bourbons and whiskeys; a selection of domestic, import and local craft beers; and signature, handcrafted cocktails. Smokey Bones offers a 10 percent discount to active duty and veterans with ID.
About the Robert Irvine Foundation
The Robert Irvine Foundation was established by chef, entrepreneur and TV personality Robert Irvine. The Robert Irvine Foundation supports and strengthens the physical and mental well-being of our service members, veterans, first responders, and their families. They provide these heroes with life-changing opportunities that unlock the potential in their personal and professional lives through food, wellness, community, and financial support. For more information, please visit: www.robertirvinefoundation.org.
Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Initiating coverage with Outperform rating and $3.50 price target. Xcel Brands is a fashion apparel company, boasting several well-known and iconic brands, such as Isaac Mizrahi and Halston. In our view, the company is on the cusp of a new, profitable growth era, after its recent business model transformation to an asset-light, brand licensor.
Business model transformation. The new licensing business model is expected to significantly lower the company’s costs, eliminating warehousing and inventory costs as well as capital expenditure needs. We believe this repositioning of the business is a key catalyst for the company to swing towards positive cash flow generation later this year.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , 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.
3Q23 Results. FAT Brands reported 3Q23 revenue of $109.4 million, up 6% y-o-y from $103.2 million in the year ago quarter. System-wide sales growth was 0.8%. FAT reported adjusted EBITDA of $21.9 million in the quarter, compared to $24.6 million in 3Q22 (which included $7.2 million of tax credits). Net loss for the quarter was $26.5 million, or $1.59/sh, compared to a net loss of $25.1 million, or $1.52/sh last year. Adjusted net loss for the quarter was $18.9 million, or $1.14/sh, compared to a net loss of $17.9 million, or a loss of $1.08/sh, last year. We had projected revenue of $107 million and a net loss of $28.4 million, or a loss of $1.71/sh.
Ongoing Development. YTD, FAT has opened 96 restaurants, including 30 in 3Q. The Company expects to see 150 openings 2023. YTD, over 200 new franchise agreements have been signed, bringing the total pipeline to over 1,100 signed agreements. This pipeline will add some $60 million to adjusted EBITDA.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
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.
