ACCO Acco Brands Corporation

• 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

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.

     

ACCO Brands Corporation and Subsidiaries Condensed Consolidated Balance Sheets 

 

 

 

September 30,

2024

 

December 31,

2023

(in millions)

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

102.0

 

 

$

66.4

 

Accounts receivable, net

 

 

325.7

 

 

 

430.7

 

Inventories

 

 

324.8

 

 

 

327.5

 

Other current assets

 

 

41.5

 

 

 

30.8

 

Total current assets

 

 

794.0

 

 

 

855.4

 

Total property, plant and equipment

 

 

577.6

 

 

 

599.6

 

Less: accumulated depreciation

 

 

(423.9

)

 

 

(429.5

)

Property, plant and equipment, net

 

 

153.7

 

 

 

170.1

 

Right of use asset, leases

 

 

86.3

 

 

 

91.0

 

Deferred income taxes

 

 

102.7

 

 

 

104.7

 

Goodwill

 

 

459.0

 

 

 

590.0

 

Identifiable intangibles, net

 

 

740.9

 

 

 

815.7

 

Other non-current assets

 

 

20.9

 

 

 

17.9

 

Total assets

 

$

2,357.5

 

 

$

2,644.8

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Notes payable

 

$

7.9

 

 

$

0.2

 

Current portion of long-term debt

 

 

51.3

 

 

 

36.5

 

Accounts payable

 

 

182.4

 

 

 

183.7

 

Accrued compensation

 

 

42.4

 

 

 

53.3

 

Accrued customer program liabilities

 

 

77.4

 

 

 

104.0

 

Lease liabilities

 

 

22.3

 

 

 

20.5

 

Other current liabilities

 

 

114.0

 

 

 

143.8

 

Total current liabilities

 

 

497.7

 

 

 

542.0

 

Long-term debt, net

 

 

849.8

 

 

 

882.2

 

Long-term lease liabilities

 

 

71.3

 

 

 

76.8

 

Deferred income taxes

 

 

118.1

 

 

 

125.6

 

Pension and post-retirement benefit obligations

 

 

143.9

 

 

 

157.6

 

Other non-current liabilities

 

 

61.2

 

 

 

73.6

 

Total liabilities

 

 

1,742.0

 

 

 

1,857.8

 

Stockholders' equity:

 

 

 

 

 

 

Common stock

 

 

1.0

 

 

 

1.0

 

Treasury stock

 

 

(47.0

)

 

 

(45.1

)

Paid-in capital

 

 

1,911.1

 

 

 

1,913.4

 

Accumulated other comprehensive loss

 

 

(548.9

)

 

 

(526.3

)

Accumulated deficit

 

 

(700.7

)

 

 

(556.0

)

Total stockholders' equity

 

 

615.5

 

 

 

787.0

 

Total liabilities and stockholders' equity

 

$

2,357.5

 

 

$

2,644.8

 

       

ACCO Brands Corporation and Subsidiaries Consolidated Statements of Income (Loss) (Unaudited) 

 

 

 

Three Months Ended

September 30,

 

 

 

Nine Months Ended

September 30,

 

 

(in millions, except per share data)

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% Change

Net sales

 

$

420.9

 

 

$

448.0

 

 

(6.0)%

 

$

1,218.1

 

 

$

1,344.2

 

 

(9.4)%

Cost of products sold

 

 

284.0

 

 

 

303.2

 

 

(6.3)%

 

 

818.2

 

 

 

915.9

 

 

(10.7)%

Gross profit

 

 

136.9

 

 

 

144.8

 

 

(5.5)%

 

 

399.9

 

 

 

428.3

 

 

(6.6)%

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

92.2

 

 

 

98.8

 

 

(6.7)%

 

 

274.4

 

 

 

291.8

 

 

(6.0)%

Amortization of intangibles

 

 

11.7

 

 

 

10.8

 

 

8.3 %

 

 

33.2

 

 

 

32.7

 

 

1.5 %

Restructuring

 

 

6.7

 

 

 

3.0

 

 

123.3 %

 

 

6.1

 

 

 

6.3

 

 

(3.2)%

Impairment of goodwill and intangible assets

 

 

—

 

 

 

—

 

 

NM

 

 

165.2

 

 

 

—

 

 

NM

Total operating costs and expenses

 

 

110.6

 

 

 

112.6

 

 

(1.8)%

 

 

478.9

 

 

 

330.8

 

 

44.8 %

Operating income (loss)

 

 

26.3

 

 

 

32.2

 

 

(18.3)%

 

 

(79.0

)

 

 

97.5

 

 

NM

Non-operating expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

13.7

 

 

 

15.6

 

 

(12.2)%

 

 

40.8

 

 

 

45.0

 

 

(9.3)%

Interest income

 

 

(2.0

)

 

 

(1.6

)

 

25.0 %

 

 

(6.1

)

 

 

(6.2

)

 

(1.6)%

Non-operating pension expense

 

 

0.4

 

 

 

0.2

 

 

100.0 %

 

 

5.6

 

 

 

0.5

 

 

NM

Other expense (income), net

 

 

0.4

 

 

 

(3.6

)

 

NM

 

 

(0.4

)

 

 

(2.1

)

 

(81.0)%

Income (loss) before income tax

 

 

13.8

 

 

 

21.6

 

 

(36.1)%

 

 

(118.9

)

 

 

60.3

 

 

NM

Income tax expense

 

 

4.5

 

 

 

6.7

 

 

(32.8)%

 

 

3.3

 

 

 

22.7

 

 

(85.5)%

Net income (loss)

 

$

9.3

 

 

$

14.9

 

 

(37.6)%

 

$

(122.2

)

 

$

37.6

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share

 

$

0.10

 

 

$

0.16

 

 

(37.5)%

 

$

(1.27

)

 

$

0.40

 

 

NM

Diluted income (loss) per share

 

$

0.09

 

 

$

0.15

 

 

(40.0)%

 

$

(1.27

)

 

$

0.39

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

96.0

 

 

 

95.4

 

 

 

 

 

96.2

 

 

 

95.2

 

 

 

Diluted

 

 

97.5

 

 

 

96.7

 

 

 

 

 

96.2

 

 

 

96.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

 

 

2024

 

 

 

2023

 

 

 

 

 

2024

 

 

 

2023

 

 

 

Gross profit (Net sales, less Cost of products sold)

 

 

32.5

%

 

 

32.3

%

 

 

 

 

32.8

%

 

 

31.9

%

 

 

Selling, general and administrative expenses

 

 

21.9

%

 

 

22.1

%

 

 

 

 

22.5

%

 

 

21.7

%

 

 

Operating income (loss)

 

 

6.2

%

 

 

7.2

%

 

 

 

 

(6.5

)%

 

 

7.3

%

 

 

Income (loss) before income tax

 

 

3.3

%

 

 

4.8

%

 

 

 

 

(9.8

)%

 

 

4.5

%

 

 

Net income (loss)

 

 

2.2

%

 

 

3.3

%

 

 

 

 

(10.0

)%

 

 

2.8

%

 

 

Income tax rate

 

 

32.6

%

 

 

31.0

%

 

 

 

 

(2.8

)%

 

 

37.6

%

 

 

       

ACCO Brands Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) 

 

 

 

Nine Months Ended September 30,

(in millions)

 

2024

 

2023

Operating activities

 

 

 

 

 

 

Net (loss) income

 

$

(122.2

)

 

$

37.6

 

Loss (gain) on disposal of assets

 

 

0.2

 

 

 

(0.3

)

Depreciation

 

 

21.2

 

 

 

25.2

 

Amortization of debt issuance costs

 

 

2.2

 

 

 

2.3

 

Amortization of intangibles

 

 

33.2

 

 

 

32.7

 

Stock-based compensation

 

 

9.2

 

 

 

10.4

 

Non-cash charge for impairment of goodwill and intangible assets

 

 

165.2

 

 

 

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

88.5

 

 

 

30.9

 

Inventories

 

 

(3.1

)

 

 

35.5

 

Other assets

 

 

(7.6

)

 

 

(5.4

)

Accounts payable

 

 

1.3

 

 

 

(72.8

)

Accrued expenses and other liabilities

 

 

(63.5

)

 

 

(17.8

)

Accrued income taxes

 

 

(29.1

)

 

 

(7.6

)

Net cash provided by operating activities

 

 

95.5

 

 

 

70.7

 

Investing activities

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(8.6

)

 

 

(9.7

)

Proceeds from the disposition of assets

 

 

0.1

 

 

 

2.2

 

Net cash used by investing activities

 

 

(8.5

)

 

 

(7.5

)

Financing activities

 

 

 

 

 

 

Proceeds from long-term borrowings

 

 

96.1

 

 

 

121.9

 

Repayments of long-term debt

 

 

(117.2

)

 

 

(145.4

)

Borrowings (repayments) of notes payable, net

 

 

7.5

 

 

 

(7.3

)

Dividends paid

 

 

(21.5

)

 

 

(21.4

)

Repurchases of common stock

 

 

(12.5

)

 

 

—

 

Payments related to tax withholding for stock-based compensation

 

 

(1.9

)

 

 

(1.7

)

Net cash used by financing activities

 

 

(49.5

)

 

 

(53.9

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

(1.9

)

 

 

2.2

 

Net increase in cash and cash equivalents

 

 

35.6

 

 

 

11.5

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of the period

 

$

66.4

 

 

$

62.2

 

End of the period

 

$

102.0

 

 

$

73.7

 

       

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, the impact of foreign currency exchange rate fluctuations, unusual tax items, goodwill and indefinite lived trade name impairments and charges, and other non-recurring items that we consider to be outside of our core operations. On an interim basis, we also calculate adjusted income tax expense using our estimated annual income tax rate. 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 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 (loss) per diluted share excluding restructuring and goodwill and indefinite lived trade name impairment charges, the amortization of intangibles, non-recurring items, other income/expense, adjustments to reflect the estimated annual tax rate 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 (Benefit): Represents income tax expense (benefit) calculated using the estimated annual income tax rate and excludes the tax effect of the items that have been excluded from adjusted income (loss) before taxes, unusual income tax items such as the impact of tax audits and changes in laws, and other discrete tax items. We believe our adjusted income tax expense (benefit) is useful to investors because it reflects our income tax calculated using the estimated annual tax rate before 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, interest expense, net, other (income) expense, net, and income tax expense, restructuring and goodwill and indefinite lived trade name impairment charges, 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 other 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: Free cash flow represents cash flow from operating activities less cash used for additions to property, plant and equipment. We believe free cash flow is useful to investors because it measures our available cash flow for paying dividends, reducing debt, repurchasing shares and funding acquisitions.

Consolidated Leverage Ratio: Represents balance sheet debt plus unamortized debt origination costs and less any cash and cash equivalents divided by adjusted EBITDA.

We also provide forward-looking non-GAAP comparable sales, adjusted earnings per share, free cash flow, adjusted EBITDA 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, 2024 and 2023. 

 

 

 

Three Months Ended September 30, 2024

 

 

Operating

Income

 

% of Sales

 

Income before

Tax

 

% of Sales

 

Income Tax

Expense

 

Tax Rate

 

Net Income

 

% of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported GAAP

 

$26.3

 

6.2 %

 

$13.8

 

3.3 %

 

$4.5

 

32.6 %

 

$9.3

 

2.2 %

Reported GAAP diluted loss per share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.09

 

 

Restructuring

 

6.7

 

 

 

6.7

 

 

 

1.8

 

 

 

4.9

 

 

Amortization of intangibles

 

11.7

 

 

 

11.7

 

 

 

3.2

 

 

 

8.5

 

 

Discrete tax items and adjustments to annual tax rate

(A)

—

 

 

 

—

 

 

 

0.2

 

 

 

(0.2)

 

 

Adjusted Non-GAAP

 

$44.7

 

10.6 %

 

$32.2

 

7.7 %

 

$9.7

 

30.0 %

 

$22.5

 

5.3 %

Adjusted net income per diluted share (Adjusted EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023

 

 

Operating

Income

 

% of Sales

 

Income before

Tax

 

% of Sales

 

Income Tax

Expense

 

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

 

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

(C)

—

 

 

 

(1.3)

 

 

 

(0.4)

 

 

 

(0.9)

 

 

Discrete tax items and adjustments to annual tax rate

(A)

—

 

 

 

—

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

       

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, 2024 and 2023. 

 

 

 

Nine Months Ended September 30, 2024

 

 

Operating

(Loss) Income

 

% of Sales

 

(Loss) Income

before Tax

 

% of Sales

 

Income Tax

Expense

 

Tax Rate

 

Net (Loss)

Income

 

% of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported GAAP

 

$(79.0)

 

(6.5)%

 

$(118.9)

 

(9.8)%

 

$3.3

 

(2.8)%

 

$(122.2)

 

(10.0)%

Reported GAAP diluted loss per share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

$(1.27)

 

 

Restructuring

 

6.1

 

 

 

6.1

 

 

 

1.6

 

 

 

4.5

 

 

Goodwill impairment charge

 

127.5

 

 

 

127.5

 

 

 

—

 

 

 

127.5

 

 

Intangible assets impairment charge

 

37.7

 

 

 

37.7

 

 

 

9.6

 

 

 

28.1

 

 

Amortization of intangibles

 

33.2

 

 

 

33.2

 

 

 

9.0

 

 

 

24.2

 

 

Pension settlement

(B)

—

 

 

 

4.4

 

 

 

1.1

 

 

 

3.3

 

 

Net operating tax gains and losses

(C)

—

 

 

 

(1.8)

 

 

 

(0.6)

 

 

 

(1.2)

 

 

Discrete tax items and adjustments to annual tax rate

(A)

—

 

 

 

—

 

 

 

2.5

 

 

 

(2.5)

 

 

Adjusted Non-GAAP

 

$125.5

 

10.3 %

 

$88.2

 

7.2 %

 

$26.5

 

30.0 %

 

$61.7

 

5.1 %

Adjusted net income per diluted share (Adjusted EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023

 

 

Operating

Income

 

% of Sales

 

Income (Loss)

before Tax

 

% of Sales

 

Income Tax

Expense

 

Tax Rate

 

Net (Loss)

Income

 

% of Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported GAAP

 

$97.5

 

7.3 %

 

$60.3

 

4.5 %

 

$22.7

 

37.6 %

 

$37.6

 

2.8 %

Reported GAAP diluted loss per share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

$0.39

 

 

Restructuring

 

6.3

 

 

 

6.3

 

 

 

1.6

 

 

 

4.7

 

 

Amortization of intangibles

 

32.7

 

 

 

32.7

 

 

 

8.6

 

 

 

24.1

 

 

Other asset write-off

(D)

—

 

 

 

1.1

 

 

 

0.3

 

 

 

0.8

 

 

Gain on sale of property

 

—

 

 

 

(1.5)

 

 

 

(0.5)

 

 

 

(1.0)

 

 

Operating tax gains

(C)

—

 

 

 

(1.3)

 

 

 

(0.4)

 

 

 

(0.9)

 

 

Discrete tax items and adjustments to annual tax rate

(A)

—

 

 

 

—

 

 

 

(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

 

 

     

Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Loss to Adjusted EBITDA (Unaudited)

   

A.

The income tax impact of discrete tax items. The Company adjusts its tax rate to 30.0% which represents its full year non-GAAP estimated annual tax rate as of September 30, 2024. The Company's full year non-GAAP estimated annual tax rate remains subject to variation from the mix of earnings across the Company's operating jurisdictions. 

B.

Settlement due to the wind-up of the ACCO Brands Canada Salaried and Hourly pension plans. 

C.

Represents certain indirect tax credits in Brazil. 

D.

Represents the write off of assets related to a capital project. 

       

ACCO Brands Corporation and Subsidiaries Reconciliation of Net (Loss) Income to Adjusted EBITDA (Unaudited) (In millions) 

 

The following table sets forth a reconciliation of net loss reported in accordance with GAAP to Adjusted EBITDA. 

 

 

 

Three months ended

September 30,

 

 

 

Nine months ended

September 30,

 

 

 

 

2024

 

2023

 

% Change

 

2024

 

2023

 

% Change

Net income (loss)

 

$9.3

 

$14.9

 

(37.6)%

 

$(122.2)

 

$37.6

 

NM

Stock-based compensation

 

1.6

 

1.5

 

6.7 %

 

9.2

 

10.4

 

(11.5)%

Depreciation

 

7.1

 

7.9

 

(10.1)%

 

21.2

 

25.2

 

(15.9)%

Amortization of intangibles

 

11.7

 

10.8

 

8.3 %

 

33.2

 

32.7

 

1.5 %

Restructuring

 

6.7

 

3.0

 

123.3 %

 

6.1

 

6.3

 

(3.2)%

Impairment of goodwill and intangible assets

 

—

 

—

 

NM

 

165.2

 

—

 

NM

Pension Settlement

 

—

 

—

 

NM

 

4.4

 

—

 

NM

Interest expense, net

 

11.7

 

14.0

 

(16.4)%

 

34.7

 

38.8

 

(10.6)%

Other expense (income), net

 

0.4

 

(3.6)

 

NM

 

(0.4)

 

(2.1)

 

(81.0)%

Income tax expense

 

4.5

 

6.7

 

(32.8)%

 

3.3

 

22.7

 

(85.5)%

Adjusted EBITDA (non-GAAP)

 

$53.0

 

$55.2

 

(4.0)%

 

$154.7

 

$171.6

 

(9.8)%

Adjusted EBITDA as a % of Net Sales

 

12.6 %

 

12.3 %

 

 

 

12.7 %

 

12.8 %

 

 

     

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited) (In millions) 

 

The following table sets forth a reconciliation of net cash provided by operating activities reported in accordance with GAAP to Free Cash Flow. 

 

 

 

Three months ended

September 30, 2024

 

Three months ended

September 30, 2023

 

Nine months ended

September 30, 2024

 

Nine months ended

September 30, 2023

Net cash provided by operating activities

 

$92.9

 

$110.0

 

$95.5

 

$70.7

Net (used) provided by:

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(3.7)

 

(3.6)

 

(8.6)

 

(9.7)

Free Cash Flow (non-GAAP)

 

$89.2

 

$106.4

 

$86.9

 

$61.0

       

ACCO Brands Corporation and Subsidiaries Supplemental Business Segment Information and Reconciliation (Unaudited) (In millions) 

 

 

2024

 

2023

 

Changes

 

 

 

 

 

 

 

 

 

Adjusted

 

 

 

 

 

 

 

 

 

Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

 

 

 

Adjusted

 

Operating

 

 

 

Reported

 

 

 

Adjusted

 

Operating

 

 

 

 

 

Adjusted

 

Adjusted

 

 

 

 

 

Operating

 

 

 

Operating

 

Income

 

 

 

Operating

 

 

 

Operating

 

Income

 

 

 

 

 

Operating

 

Operating

 

Adjusted

 

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 Americas

$197.2

 

$6.1

 

$6.2

 

$12.3

 

6.2%

 

$230.0

 

$12.3

 

$6.4

 

$18.7

 

8.1%

 

$(32.8)

 

(14.3)%

 

$(6.4)

 

(34.2)%

 

(190)

ACCO Brands International

161.7

 

12.8

 

4.1

 

16.9

 

10.5%

 

172.6

 

9.7

 

7.8

 

17.5

 

10.1%

 

(10.9)

 

(6.3)%

 

(0.6)

 

(3.4)%

 

40

Corporate

—

 

(13.0)

 

—

 

(13.0)

 

 

 

—

 

(11.9)

 

—

 

(11.9)

 

 

 

—

 

 

 

(1.1)

 

 

 

 

Total

$358.9

 

$5.9

 

$10.3

 

$16.2

 

4.5%

 

$402.6

 

$10.1

 

$14.2

 

$24.3

 

6.0%

 

$(43.7)

 

(10.9)%

 

$(8.1)

 

(33.3)%

 

(150)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

$292.3

 

$(108.7)

 

$171.9

 

$63.2

 

21.6%

 

$336.4

 

$60.4

 

$6.4

 

$66.8

 

19.9%

 

$(44.1)

 

(13.1)%

 

$(3.6)

 

(5.4)%

 

170

ACCO Brands International

146.0

 

7.8

 

3.9

 

11.7

 

8.0%

 

157.2

 

7.1

 

4.6

 

11.7

 

7.4%

 

(11.2)

 

(7.1)%

 

—

 

 

 

60

Corporate

0.0

 

(10.3)

 

—

 

(10.3)

 

 

 

—

 

(12.3)

 

—

 

(12.3)

 

 

 

—

 

 

 

2.0

 

 

 

 

Total

$438.3

 

$(111.2)

 

$175.8

 

$64.6

 

14.7%

 

$493.6

 

$55.2

 

$11.0

 

$66.2

 

13.4%

 

$(55.3)

 

(11.2)%

 

$(1.6)

 

(2.4)%

 

130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

$259.1

 

$25.9

 

$10.8

 

$36.7

 

14.2%

 

$284.4

 

$33.8

 

$6.2

 

$40.0

 

14.1%

 

$(25.3)

 

(8.9)%

 

$(3.3)

 

(8.2)%

 

10

ACCO Brands International

161.8

 

9.5

 

7.6

 

17.1

 

10.6%

 

163.6

 

9.4

 

7.6

 

17.0

 

10.4%

 

(1.8)

 

(1.1)%

 

0.1

 

0.6%

 

20

Corporate

—

 

(9.1)

 

—

 

(9.1)

 

 

 

—

 

(11.0)

 

—

 

(11.0)

 

 

 

—

 

 

 

1.9

 

 

 

 

Total

$420.9

 

$26.3

 

$18.4

 

$44.7

 

10.6%

 

$448.0

 

$32.2

 

$13.8

 

$46.0

 

10.3%

 

$(27.1)

 

(6.0)%

 

$(1.3)

 

(2.8)%

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YTD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

$748.6

 

$(76.7)

 

$188.9

 

$112.2

 

15.0%

 

$850.8

 

$106.5

 

$19.0

 

$125.5

 

14.8%

 

$(102.2)

 

(12.0)%

 

$(13.3)

 

(10.6)%

 

20

ACCO Brands International

469.5

 

30.1

 

15.6

 

45.7

 

9.7%

 

493.4

 

26.2

 

20.0

 

46.2

 

9.4%

 

(23.9)

 

(4.8)%

 

(0.5)

 

(1.1)%

 

30

Corporate

0.0

 

(32.4)

 

—

 

(32.4)

 

 

 

—

 

(35.2)

 

—

 

(35.2)

 

 

 

—

 

 

 

2.8

 

 

 

 

Total

$1,218.1

 

$(79.0)

 

$204.5

 

$125.5

 

10.3%

 

$1,344.2

 

$97.5

 

$39.0

 

$136.5

 

10.2%

 

$(126.1)

 

(9.4)%

 

$(11.0)

 

(8.1)%

 

10

 

See "Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales Change

 

Currency

Translation

 

Comparable Sales

Change (A)

 

Net Sales Change

 

Currency

Translation

 

Comparable Sales

Change (A)

 

Comparable Sales

Q1 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

 

(14.3)%

 

1.0 %

 

(15.3)%

 

$(32.8)

 

$2.4

 

$(35.2)

 

$194.8

ACCO Brands International

 

(6.3)%

 

(0.4)%

 

(5.9)%

 

(10.9)

 

(0.7)

 

(10.2)

 

162.4

Total

 

(10.9)%

 

0.4 %

 

(11.3)%

 

$(43.7)

 

$1.7

 

$(45.4)

 

$357.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

 

(13.1)%

 

(0.4)%

 

(12.7)%

 

$(44.1)

 

$(1.5)

 

$(42.6)

 

$293.8

ACCO Brands International

 

(7.1)%

 

(2.0)%

 

(5.1)%

 

(11.2)

 

(3.2)

 

(8.0)

 

149.2

Total

 

(11.2)%

 

(1.0)%

 

(10.2)%

 

$(55.3)

 

$(4.7)

 

$(50.6)

 

$443.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

 

(8.9)%

 

(2.3)%

 

(6.6)%

 

$(25.3)

 

$(6.4)

 

$(18.9)

 

$265.5

ACCO Brands International

 

(1.1)%

 

1.2 %

 

(2.3)%

 

(1.8)

 

2.0

 

(3.8)

 

159.8

Total

 

(6.0)%

 

(1.0)%

 

(5.0)%

 

$(27.1)

 

$(4.4)

 

$(22.7)

 

$425.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024 YTD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCO Brands Americas

 

(12.0)%

 

(0.6)%

 

(11.4)%

 

$(102.2)

 

$(5.5)

 

$(96.7)

 

$754.1

ACCO Brands International

 

(4.8)%

 

(0.4)%

 

(4.4)%

 

(23.9)

 

(1.9)

 

(22.0)

 

471.4

Total

 

(9.4)%

 

(0.6)%

 

(8.8)%

 

$(126.1)

 

$(7.4)

 

$(118.7)

 

$1,225.5

 

(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. 

   

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241031241755/en/

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