Research News and Market Data for ACCO
- Reported net sales of $421 million at the mid-point of outlook
- Earnings per share of $0.09; adjusted EPS of $0.23
- On track to achieve over $20 million in cost savings for the full year 2024 through a multi-year cost savings program
- Net operating cash flow improved by $25 million
- Reduced consolidated leverage ratio to 3.5x at quarter-end
- Maintaining 2024 outlook for sales, adjusted EPS and cash flow
- Refinanced the credit facilities, extending the maturity date to 2029
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today reported financial results for its third quarter and nine months ended September 30, 2024.
“We are pleased to report third quarter results that were in line with our expectations, with overall sales trends improving in the third quarter compared to the first half of the year. We continue to make progress on our cost reduction and infrastructure initiatives, which allowed us to deliver another quarter of improved gross margin and cash flow. Our robust cash flow enabled us to reduce debt and return capital to shareholders through dividends and share repurchases. We ended the quarter with a lower leverage ratio than the prior year and successfully refinanced our credit facilities. We now have no significant debt maturities until 2029,” stated ACCO Brands’ President and Chief Executive Officer, Tom Tedford.
“We’re advancing our strategy as we continue to improve our innovation and new product development processes, expand into new points of distribution and extend our product offering into adjacent categories. In addition, given our improved balance sheet and strong cash flow, we are able to consider potential acquisitions. These initiatives, combined with our $60 million multi-year cost reduction program, are strengthening our competitive position,” concluded Mr. Tedford.
Third Quarter Results
Net sales were $420.9 million, down 6.0 percent from $448.0 million in 2023. Adverse foreign exchange reduced sales by $4.4 million, or 1.0 percent. Comparable sales decreased 5.0 percent. Both reported and comparable sales declines reflect softer back-to-school purchases by our customers in Latin America and North America. Additionally, global demand was weaker for certain office-related products. The exit of lower margin business in North America accounted for approximately 2.0 percent of the decline. These declines were partially offset by growth in the technology accessories categories.
Operating income was $26.3 million versus operating income of $32.2 million in 2023. Restructuring expense was $6.7 million versus $3.0 million in the prior year. Adjusted operating income was $44.7 million, down from $46.0 million in 2023. Both reported and adjusted operating income declines reflect lower sales volume, which was partially offset by cost reduction initiatives and lower incentive compensation expense.
Net income was $9.3 million, or $0.09 per share, compared with prior-year net income of $14.9 million, or $0.15 per share, in 2023. Adjusted net income was $22.5 million compared with $23.1 million in 2023, and adjusted earnings per share were $0.23 per share compared to $0.24 per share in the prior year.
Business Segment Results
ACCO Brands Americas – Third quarter segment net sales of $259.1 million decreased 8.9 percent from $284.4 million in the prior year. Adverse foreign exchange, primarily in Brazil and Mexico, reduced sales by 2.3 percent. Comparable sales were $265.5 million, down 6.6 percent versus the prior year. Both reported and comparable sales decreases were attributable to moderating demand trends in Latin America and lower replenishment for back-to-school products in North America. The exit of lower margin business accounted for approximately 3.0 percent of the decline. These declines were partially offset by growth in the technology accessories categories.
Third quarter operating income was $25.9 million versus operating income of $33.8 million a year earlier. Restructuring expense was $3.4 million in 2024. Adjusted operating income was $36.7 million, down from $40.0 million in the prior year. Both reported and adjusted operating income declines reflect lower sales volume, partially offset by cost reduction initiatives and lower incentive compensation expense.
ACCO Brands International – Third quarter segment net sales of $161.8 million decreased 1.1 percent from $163.6 million in the prior year. Favorable foreign exchange increased sales by 1.2 percent. Comparable sales were $159.8 million, down 2.3 percent versus the prior year. Both reported and comparable sales declines reflect reduced demand for certain office products, partially offset by growth in the technology accessories categories and the benefit of price increases.
Third quarter operating income was $9.5 million, an increase from $9.4 million in the prior year, with adjusted operating income of $17.1 million compared with $17.0 million in the prior year. The improvement reflects the benefit of cost reduction actions offsetting the impact of lower sales volume.
Nine Month Results
Net sales were $1,218.1 million down 9.4 percent from $1,344.2 million in 2023. Adverse foreign exchange reduced sales by $7.4 million, or 0.6 percent. Comparable sales decreased 8.8 percent. Both reported and comparable sales declines reflect softer global consumer and business demand for certain product categories, and our exit of lower margin business in North America, which accounted for approximately 3.0 percent of the decline.
Operating loss was $79.0 million versus operating income of $97.5 million in 2023, primarily due to non-cash impairment charges of $165.2 million related to goodwill and intangible assets within the Americas segment. Adjusted operating income was $125.5 million, down from $136.5 million in 2023. Both reported and adjusted operating income (loss) declines reflect lower sales volume, partially offset by improved product mix, cost reduction initiatives and lower incentive compensation expense.
Net loss was $122.2 million, or $(1.27) per share, compared with a net income of $37.6 million, or $0.39 per share, in 2023, primarily due to the non-cash impairment charges of $165.2 million related to goodwill and intangible assets and changes in discrete tax items. Adjusted net income was $61.7 million compared with $68.1 million in 2023, and adjusted earnings per share were $0.63 per share compared with $0.70 per share in 2023.
Capital Allocation
Year to date, the Company improved its operating cash flow to $95.5 million versus a cash flow of $70.7 million in the prior year, driven primarily by working capital management. The Company’s consolidated leverage ratio as of September 30, 2024 was 3.5x down from 3.8x at the end of the prior-year third quarter.
In the third quarter, the Company repurchased 2.4 million shares for $12.5 million
On October 25, 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 December 11, 2024 to stockholders of record at the close of business on November 15, 2024. At the current stock price, on an annualized basis, our shareholders are receiving an approximate 6 percent yield on their investment.
Bank Refinancing
Effective October 30, 2024, the Company extended the maturity of its credit facilities to 2029.
Full Year 2024 Outlook
The Company is reaffirming its full year 2024 outlook. For the full year, the Company expects reported sales to be down in the range of 8.0% to 9.0%. Full year adjusted EPS is expected to be within a range of $1.04 to $1.09. The Company expects 2024 free cash flow of approximately $130 million with a consolidated leverage ratio decreasing to approximately 3.2x at year-end.
“As we approach year-end and look ahead to next year, our cost reduction actions should allow us the ability to maintain our solid margins, contain expenses and generate strong cash flow. I remain confident in our team’s ability to continue to successfully execute on our $60 million multi-year cost reduction program. The progress we have made reducing debt will enable us to invest in the future,” concluded Mr. Tedford.
Webcast
At 8:30 a.m. ET on November 1, 2024, ACCO Brands Corporation will host a conference call to discuss the Company’s third quarter 2024 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: a limited number of large customers account for a significant percentage of our sales; sales of our products are affected by general economic and business conditions globally and in the countries in which we operate; 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; the long-term impacts of the COVID-19 pandemic; 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; our ability to successfully execute our multi-year restructuring and cost savings program and realize the anticipated benefits; 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, and successfully integrate them; 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; the impact of additional tax liabilities stemming from our global operations and changes in tax laws, regulations and tax rates; 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 telecommunication failures, labor strikes, power and/or water shortages, 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, 2023, and in other reports we file with the Securities and Exchange Commission.
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