ACCO Brands Corporation (NYSE: ACCO), today reported its fourth
quarter and full year results for the period ended December 31,
2019.
Full Year
- Record net sales $1.96 billion, up 1 percent
- Comparable sales up 1 percent
- North America net sales up 3 percent
- EPS $1.06 versus $1.00 in prior year
- Record adjusted EPS $1.20 versus $1.14 in 2018
- Cash from operations $204 million; free cash flow $172
million
- Returned $89 million to shareholders through share repurchases
and dividends
- Repaid $71 million of debt
Fourth Quarter
- 4Q net sales $537.4 million, up 1.5 percent
- 4Q EPS $0.44 versus $0.34 in prior year
- Adjusted 4Q EPS $0.46 versus $0.41 in 2018
- Cash from operations $129 million; free cash flow $118
million
2020 Outlook
- Net sales (1) percent to 1 percent
- Adjusted EPS $1.20 to $1.30
- Free cash flow $165 million to $175 million
"I am very pleased with our results for the fourth quarter and
full year and want to congratulate ACCO Brands employees for
delivering record annual sales and adjusted EPS, and the second
highest free cash flow ever," said Boris Elisman, Chairman,
President and Chief Executive Officer of ACCO Brands. "Our company
enters a new decade as a growing, well-diversified, branded
consumer, school, and office products business with a track record
of product innovation, strong in-market execution, and efficient
operations. In 2020, we are expecting another year of strong
progress against our strategic imperatives," Elisman added.
Full Year 2019 Results
Net sales increased 0.7 percent to $1,955.7 million from
$1,941.2 million in 2018 driven by International acquisitions and
strong sales in North America, partially offset by negative foreign
exchange. Comparable sales increased 0.8 percent from higher sales
in North America driven by higher pricing to offset inflation and
tariffs.
Operating income was $196.2 million, an increase of $9.2
million, or 4.9 percent, from $187.0 million in 2018. Foreign
exchange reduced operating income $6.4 million, or 3.4 percent.
Adjusted operating income was $211.4 million, an increase of $8.0
million, or 3.9 percent, from $203.4 million in 2018. The increase
in both reported and adjusted operating income was a result of the
acquisition of Foroni, higher pricing, and cost savings. These
factors were partially offset by inflation and tariffs, unfavorable
product mix, adverse foreign exchange, and higher incentive
accruals.
Net income was $106.8 million, or $1.06 per share, including
$11.5 million of net charges. Net income in 2018 was $106.7
million, or $1.00 per share, which included $16.4 million of net
charges. Adjusted net income was $121.6 million, down slightly from
$122.0 million in 2018 largely from adverse foreign exchange.
Adjusted earnings per share were $1.20 in 2019 compared with $1.14
in 2018. Both reported and adjusted earnings per share benefited
from fewer outstanding shares.
2019 Business Segment Results
ACCO Brands North America - Sales of $966.8 million increased
2.8 percent from $940.7 million in 2018. Comparable sales increased
3.1 percent. The sales growth was driven by higher pricing that
offset the impact of inflation and tariffs, as well as a strong
back-to-school season. Operating income of $131.0 million increased
12.3 percent from $116.6 million in 2018. Adjusted operating income
of $136.6 million increased 11.2 percent from $122.8 million in
2018. Both increases were the result of higher sales and cost
savings, partially offset by higher incentive accruals.
ACCO Brands EMEA - Sales of $569.3 million decreased 5.9 percent
from $605.2 million in 2018, primarily due to adverse foreign
exchange that reduced sales 5.6 percent. Comparable sales decreased
0.3 percent. Results in 2018 benefited from strong demand for
shredders generated by Europe's new privacy law, making the 2019
sales comparison difficult. After a strong first quarter, demand
softened in the second and third quarters, returning to almost flat
in the fourth quarter. Operating income of $58.6 million decreased
1.3 percent from $59.4 million in 2018 due to higher input costs,
partially offset by lower restructuring charges and cost savings.
Adjusted operating income of $60.9 million decreased 9.6 percent
from $67.4 million due to lower sales, adverse foreign exchange,
and higher input costs.
ACCO Brands International - Sales of $419.6 million increased
6.1 percent from $395.3 million in 2018. The GOBA and Foroni
acquisitions added $54.2 million, or 13.7 percent, and adverse
foreign exchange reduced sales $18.9 million, or 4.8 percent.
Comparable sales decreased 2.8 percent as lost placements in
Australia and the exit of low-margin product lines in Asia offset
strong back-to-school growth in Brazil. Operating income of $48.5
million decreased 1.4 percent from $49.2 million in 2018 due to
lower sales, higher restructuring charges, and adverse foreign
exchange, partially offset by acquisitions. Adjusted operating
income of $52.8 million increased 4.1 percent from $50.7 million
due to acquisitions, partially offset by lower sales and profits in
Australia and Asia and adverse foreign exchange.
Fourth Quarter Results
Net sales of $537.4 million rose 1.5 percent from $529.3 million
in 2018, as acquisitions added $24.8 million, or 4.7 percent, and
adverse foreign exchange reduced sales $10.1 million, or 1.9
percent. Comparable sales decreased 1.3 percent as lower volume
more than offset higher pricing.
Operating income was $68.1 million, an increase of $2.1 million,
or 3.2 percent, from $66.0 million in 2018 because of higher
pricing and cost savings, partially offset by higher charges,
adverse foreign exchange, and higher incentive accruals. Foreign
exchange reduced operating income $2.3 million, or 3.5 percent.
Adjusted operating income was $76.4 million, an increase of $6.3
million, or 9.0 percent, from $70.1 million in 2018. The increase
in adjusted operating income was a result of acquisitions, higher
pricing, and cost savings, which were partially offset by
inflation, adverse foreign exchange, and higher incentive
accruals.
Net income was $43.5 million, or $0.44 per share, including net
charges of $5.0 million. Net income in 2018 was $35.0 million, or
$0.34 per share, including $4.1 million of net charges and higher
taxes. Adjusted net income was $45.3 million, or $0.46 per share,
compared with $42.9 million, or $0.41 per share, in 2018. The
increase in both reported and adjusted net income was largely due
to higher operating income. Both reported and adjusted earnings per
share benefited from fewer outstanding shares.
Capital Allocation
For the full year, the company generated $203.9 million of net
cash from operating activities and $171.6 million of free cash
flow, including capital expenditures of $32.8 million. The company
repurchased 8.3 million shares for a net $65.0 million, and paid
$24.4 million in dividends.
In the fourth quarter, the company generated $128.8 million of
net cash from operating activities and $118.3 million of free cash
flow, including capital expenditures of $10.9 million. During the
quarter the company repaid $116 million of seasonal borrowings. The
company also repurchased 0.8 million shares for a net $7.0 million,
and paid $6.3 million in dividends.
The company expects to continue to generate strong annual cash
flow, and its capital allocation priorities remain funding
dividends, strategic acquisitions, debt reduction, and share
repurchases. The company ended the year with a net leverage ratio
of 2.7x and continues to target a long-term net leverage ratio in a
range of 2.0x-2.5x.
Outlook
The company is initiating an outlook for 2020 that includes an
adverse foreign exchange impact of 1 percent on sales and $0.03 on
adjusted EPS.
2020 Outlook
Net sales
(1) % to 1%
Adjusted EPS
$1.20 to $1.30
Free Cash Flow
$165 million to $175 million
Webcast
At 8:30 a.m. Eastern time on February 12, 2020, ACCO Brands
Corporation will host a conference call to discuss the company's
results. The call will be broadcast live via webcast. The webcast
can be accessed through the Investor Relations section of
www.accobrands.com. The webcast will
be in listen-only mode and will be available for replay following
the event.
About ACCO Brands Corporation
ACCO Brands Corporation is one of the world's largest designers,
marketers and manufacturers of branded academic, consumer and
business products. Our widely recognized brands include
AT-A-GLANCE®, Barrilito®, Derwent®, Esselte®, Five Star®, Foroni®,
GBC®, Hilroy®, Kensington®, Leitz®, Mead®, Quartet®, Rapid®,
Rexel®, Swingline®, Tilibra®, Wilson Jones®, and many others. Our
products are sold in more than 100 countries around the world. More
information about ACCO Brands, the Home of Great Brands Built by
Great People, can be found at www.accobrands.com.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
generally accepted accounting principles (GAAP), we have provided
certain non-GAAP financial information in this earnings release to
aid investors in understanding the Company's performance. Each
non-GAAP financial measure is defined and reconciled to its most
closely related GAAP financial measure in the "About Non-GAAP
Financial Measures" section at the end of this earnings
release.
Forward-Looking Statements
Statements contained in this press release, other than
statements of historical fact, particularly those anticipating
future financial performance, business prospects, growth, operating
strategies and similar matters are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. 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 2020 guidance is based on certain assumptions, which we
believe to be reasonable under the circumstances. These include,
without limitation, assumptions regarding the timing, cost and
synergies expected from integration of acquisitions; benefits from
restructuring activities; the impact of changes in U.S. tax laws
and trade policies; changes in the macro environment; fluctuations
in foreign currency and tax rates and share count; changes in the
competitive landscape, including ongoing uncertainties in the
traditional office products channels; as well as other factors
described below.
Among the factors that could cause actual results to differ
materially from our forward-looking statements are: a relatively
limited number of large customers account for a significant
percentage of our sales; risks associated with shifts in the
channels of distribution for our products; risks associated with
foreign currency fluctuations; challenges related to the highly
competitive business environments in which we operate, including
ongoing uncertainties in the traditional office products channels
driven by competition; our ability to develop and market innovative
products that meet consumer demands; our ability to grow profitably
through acquisitions and expand our product assortment into new and
adjacent categories; our ability to successfully integrate
acquisitions and achieve the financial and other results
anticipated at the time of acquisition, including synergies; risks
associated with the changes to U.S. trade policies and regulations,
including increased import tariffs and overall uncertainty
surrounding international trade relations; the failure, inadequacy
or interruption of our information technology systems or supporting
infrastructure; risks associated with a cybersecurity incident or
information security breach; our ability to successfully expand our
business in emerging markets which generally expose us to greater
financial, operational, regulatory and compliance and other risks;
the effects of the U.S. Tax Cuts and Jobs Act; the impact of
litigation or other legal proceedings; risks associated with
changes in the cost or availability of raw materials, labor,
transportation and other necessary supplies and services and the
cost of finished goods; issues that affect consumer spending
decisions during periods of economic uncertainty or weakness; the
risks associated with outsourcing production of certain of our
products, information systems and other administrative functions;
the continued decline in the use of certain of our products; risks
associated with seasonality; our failure to comply with applicable
laws, rules and regulations and self-regulatory requirements and
the costs of compliance; the sufficiency of investment returns on
pension assets and risks related to actuarial assumptions; any
impairment of our intangible assets; risks associated with our
indebtedness, including our debt service obligations, limitations
imposed by restrictive covenants and our ability to comply with
financial ratios and tests; the bankruptcy or financial instability
of our customers and suppliers; our ability to secure, protect and
maintain our intellectual property rights; product liability
claims, recalls or regulatory actions; our ability to attract and
retain key employees; the volatility of our stock price; material
disruptions of our or our suppliers' operations resulting from
circumstances outside our control, including the potential impact
of the coronavirus in China and elsewhere, 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, 2018,
and in other reports we file with the Securities and Exchange
Commission.
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
(unaudited)
(in millions)
December 31, 2019
December 31, 2018
Assets
Current assets:
Cash and cash equivalents
$
27.8
$
67.0
Accounts receivable, net
453.7
428.4
Inventories
283.3
340.6
Other current assets
41.2
44.2
Total current assets
806.0
880.2
Total property, plant and equipment
651.7
618.7
Less: accumulated depreciation
(384.6
)
(355.0
)
Property, plant and equipment, net
267.1
263.7
Right of use asset, leases
101.9
—
Deferred income taxes
119.0
115.1
Goodwill
718.6
708.9
Identifiable intangibles, net
758.6
787.0
Other non-current assets
17.4
31.5
Total assets
$
2,788.6
$
2,786.4
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable
$
3.7
$
—
Current portion of long-term debt
29.5
39.5
Accounts payable
245.7
274.6
Accrued compensation
48.5
41.6
Accrued customer program liabilities
99.7
114.5
Lease liabilities
21.8
—
Other current liabilities
139.9
129.0
Total current liabilities
588.8
599.2
Long-term debt, net
777.2
843.0
Long-term lease liabilities
89.8
11.0
Deferred income taxes
177.5
176.2
Pension and post-retirement benefit
obligations
283.2
257.2
Other non-current liabilities
98.4
110.1
Total liabilities
2,014.9
1,996.7
Stockholders' equity:
Common stock
1.0
1.1
Treasury stock
(38.2
)
(33.9
)
Paid-in capital
1,890.8
1,941.0
Accumulated other comprehensive loss
(505.7
)
(461.7
)
Accumulated deficit
(574.2
)
(656.8
)
Total stockholders' equity
773.7
789.7
Total liabilities and stockholders'
equity
$
2,788.6
$
2,786.4
ACCO Brands Corporation and
Subsidiaries
Consolidated Statements of
Income (Unaudited)
(In millions, except per share
data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
% Change
2019
2018
% Change
Net sales
$
537.4
$
529.3
1.5%
$
1,955.7
$
1,941.2
0.7%
Cost of products sold
351.4
352.2
(0.2)%
1,322.2
1,313.4
0.7%
Gross profit
186.0
177.1
5.0%
633.5
627.8
0.9%
Operating costs and expenses:
Selling, general and administrative
expenses
102.1
97.8
4.4%
389.9
392.4
(0.6)%
Amortization of intangibles
8.6
9.5
(9.5)%
35.4
36.7
(3.5)%
Restructuring charges
7.2
3.8
89.5%
12.0
11.7
2.6%
Total operating costs and expenses
117.9
111.1
6.1%
437.3
440.8
(0.8)%
Operating income
68.1
66.0
3.2%
196.2
187.0
4.9%
Non-operating expense (income):
Interest expense
9.6
10.3
(6.8)%
43.2
41.2
4.9%
Interest income
(0.3
)
(0.9
)
(66.7)%
(3.2
)
(4.4
)
(27.3)%
Non-operating pension income
(1.4
)
(2.2
)
(36.4)%
(5.5
)
(9.3
)
(40.9)%
Other (income) expense, net
(1.9
)
—
NM
(1.8
)
1.6
NM
Income before income tax
62.1
58.8
5.6%
163.5
157.9
3.5%
Income tax expense
18.6
23.8
(21.8)%
56.7
51.2
10.7%
Net income
$
43.5
$
35.0
24.3%
$
106.8
$
106.7
0.1%
Per share:
Basic income per share
$
0.45
$
0.34
32.4%
$
1.07
$
1.02
4.9%
Diluted income per share
$
0.44
$
0.34
29.4%
$
1.06
$
1.00
6.0%
Weighted average number of shares
outstanding:
Basic
96.8
102.7
99.5
104.8
Diluted
98.3
104.0
101.0
107.0
Dividends per common share
$
0.065
$
0.060
$
0.245
$
0.240
Statistics (as a % of Net sales, except
Income tax rate)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Gross profit (Net sales, less Cost of
products sold)
34.6
%
33.5
%
32.4
%
32.3
%
Selling, general and administrative
expenses
19.0
%
18.5
%
19.9
%
20.2
%
Operating income
12.7
%
12.5
%
10.0
%
9.6
%
Income before income tax
11.6
%
11.1
%
8.4
%
8.1
%
Net income
8.1
%
6.6
%
5.5
%
5.5
%
Income tax rate
30.0
%
40.5
%
34.7
%
32.4
%
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Twelve Months Ended December
31,
(in millions)
2019
2018
Operating activities
Net income
$
106.8
$
106.7
Amortization of inventory step-up
0.9
0.1
Loss on disposal of assets
0.7
0.2
Deferred income tax expense
8.7
22.7
Depreciation
34.9
34.0
Amortization of debt issuance costs
2.3
2.1
Amortization of intangibles
35.4
36.7
Stock-based compensation
10.1
8.8
Loss on debt extinguishment
0.2
0.3
Changes in balance sheet items:
Accounts receivable
(14.8
)
46.0
Inventories
71.4
(92.9
)
Other assets
(0.4
)
5.5
Accounts payable
(32.8
)
101.0
Accrued expenses and other liabilities
(26.7
)
(72.5
)
Accrued income taxes
7.2
(3.9
)
Net cash provided by operating
activities
203.9
194.8
Investing activities
Additions to property, plant and
equipment
(32.8
)
(34.1
)
Proceeds from the disposition of
assets
0.5
0.2
Cost of acquisitions, net of cash
acquired
(42.1
)
(38.0
)
Other assets acquired
(5.2
)
—
Net cash used by investing activities
(79.6
)
(71.9
)
Financing activities
Proceeds from long-term borrowings
325.8
225.3
Repayments of long-term debt
(387.9
)
(249.5
)
Repayments of notes payable, net
(8.5
)
—
Payments for debt issuance costs
(3.4
)
(0.6
)
Dividends paid
(24.4
)
(25.1
)
Repurchases of common stock
(65.0
)
(75.0
)
Payments related to tax withholding for
stock-based compensation
(4.2
)
(7.5
)
Proceeds from the exercise of stock
options
4.2
6.8
Net cash used financing activities
(163.4
)
(125.6
)
Effect of foreign exchange rate changes on
cash and cash equivalents
(0.1
)
(7.2
)
Net decrease in cash and cash
equivalents
(39.2
)
(9.9
)
Cash and cash equivalents
Beginning of the period
67.0
76.9
End of the period
$
27.8
$
67.0
About Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. We
explain below how we calculate and use each of these non-GAAP
financial measures and a reconciliation of our current period and
historical non-GAAP financial measures to the most directly
comparable GAAP financial measures follows.
We use our non-GAAP financial measures both to explain our
results to stockholders and the investment community and in the
internal evaluation and management of our business. We believe our
non-GAAP financial measures provide management and investors with a
more complete understanding of our underlying operational results
and trends, facilitate meaningful period-to-period comparisons and
enhance an overall understanding of our past, and future, financial
performance.
Our non-GAAP financial measures exclude certain items that may
have a material impact upon our reported financial results such as
restructuring charges, transaction and integration expenses
associated with acquisitions, the impact of foreign currency
fluctuation and acquisitions, unusual tax items and other
non-recurring items that we consider to be outside of our core
operations. These measures should not be considered in isolation or
as a substitute for, or superior to, the directly comparable GAAP
financial measures and should be read in connection with the
company’s financial statements presented in accordance with
GAAP.
Our non-GAAP financial measures include the following:
Comparable Net Sales:
Represents net sales excluding the impact of acquisitions with
current-period foreign operation sales translated at prior-year
currency rates. We believe comparable net sales are useful to
investors and management because they reflect underlying sales and
sales trends without the effect of acquisitions and fluctuations in
foreign exchange rates and facilitate meaningful period-to-period
comparisons. We sometimes refer to comparable net sales as
comparable sales.
Adjusted Gross Profit:
Represents gross profit excluding the effect of the amortization of
the step-up in inventory from acquisitions. We believe adjusted
gross profit is useful to investors and management because it
reflects underlying gross profit without the effect of inventory
adjustments resulting from acquisitions that we consider to be
outside our core operations and facilitates meaningful
period-to-period comparisons.
Adjusted Selling, General and
Administrative (SG&A) Expenses: Represents selling,
general and administrative expenses excluding transaction and
integration expenses related to our acquisitions. We believe
adjusted SG&A expenses are useful to investors and management
because they reflect underlying SG&A expenses without the
effect of expenses related to acquiring and integrating
acquisitions that we consider to be outside our core operations and
facilitate meaningful period-to-period comparisons.
Adjusted Operating Income/Adjusted
Income Before Taxes/Adjusted Net Income/Adjusted Net Income Per
Diluted Share: Represents operating income, income
before taxes, net income, and net income per diluted share
excluding restructuring charges, the amortization of the step-up in
value of inventory, transaction and integration expenses associated
with acquisitions, non-recurring items in interest expense or other
income/expense such as expenses associated with debt refinancings
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.
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, 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 acquisitions,
restructuring charges, expenses associated with debt refinancings
and other non-recurring items. We believe adjusted EBITDA is useful
to investors because it reflects our underlying cash profitability
and adjusts for certain non-cash charges, and items that we
consider to be outside our core operations and facilitates
meaningful period-to-period comparisons.
Free Cash Flow: Represents
cash flow from operating activities less cash used for additions to
property, plant and equipment, plus cash proceeds from the
disposition of assets. We believe free cash flow is useful to
investors because it measures our available cash flow for paying
dividends, funding strategic acquisitions, reducing debt, and
repurchasing shares.
Net Leverage Ratio:
Represents total debt, less debt origination costs and cash and
cash equivalents divided by Adjusted EBTIDA. We believe that net
leverage ratio is useful to investors since the company has the
ability to, and may decide to use a portion of its cash and cash
equivalents to retire debt.
This earnings release also provides forward-looking non-GAAP
adjusted earnings per share, free cash flow, net leverage ratio and
adjusted tax rate. We do not provide a reconciliation of
forward-looking adjusted earnings per share, free cash flow, net
leverage ratio or adjusted tax rate to GAAP because the GAAP
financial measure is not accessible on a forward-looking basis and
reconciling information is not available without unreasonable
effort due to the inherent difficulty of forecasting and
quantifying certain amounts that are necessary for such a
reconciliation, including adjustments that could be made for
restructuring, integration and acquisition-related expenses, the
variability of our tax rate and the impact of foreign currency
fluctuation and acquisitions, and other charges reflected in our
historical numbers. The probable significance of each of these
items is high and, based on historical experience, could be
material.
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
information reported in accordance with GAAP to adjusted Non-GAAP
Information for the twelve months ended December 31, 2019 and
2018.
Twelve Months Ended December
31, 2019
Gross Profit
% of Sales
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (G)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
633.5
32.4
%
$
389.9
19.9
%
$
196.2
10.0
%
$
163.5
8.4
%
$
56.7
34.7
%
$
106.8
5.5
%
Reported GAAP diluted income per share
(EPS)
$
1.06
Inventory step-up amortization
(A)
0.9
—
0.9
0.9
0.3
0.6
Transaction and integration expenses
(B)
—
(2.3
)
2.3
2.3
0.8
1.5
Restructuring charges
—
—
12.0
12.0
3.1
8.9
Refinancing costs
(C)
—
—
—
0.3
0.1
0.2
Operating tax gains
(D)
—
—
—
(4.0
)
(1.6
)
(2.4
)
Brazil tax adjustment
(G)
—
—
—
—
(5.6
)
5.6
Other discrete tax items
(G)
—
—
—
—
(0.4
)
0.4
Adjusted Non-GAAP
$
634.4
32.4
%
$
387.6
19.8
%
$
211.4
10.8
%
$
175.0
8.9
%
$
53.4
30.5
%
$
121.6
6.2
%
Adjusted diluted income per share
(Adjusted EPS)
$
1.20
Twelve Months Ended December
31, 2018
Gross Profit
% of Sales
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (G)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
627.8
32.3
%
$
392.4
20.2
%
$
187.0
9.6
%
$
157.9
8.1
%
$
51.2
32.4
%
$
106.7
5.5
%
Reported GAAP diluted income per share
(EPS)
$
1.00
Inventory step-up amortization
(A)
0.1
—
0.1
0.1
—
0.1
Transaction and integration expenses
(B)
—
(4.6
)
4.6
4.6
1.0
3.6
Restructuring charges
(C)
—
—
11.7
11.7
2.9
8.8
Forward points
(E)
—
—
—
(0.6
)
0.2
(0.8
)
Pension gain
(F)
—
—
—
0.6
(0.2
)
0.8
Adjust tax rate to normalized rate
(G)
—
—
—
—
(2.8
)
2.8
Adjusted Non-GAAP
$
627.9
32.3
%
$
387.8
20.0
%
$
203.4
10.5
%
$
174.3
9.0
%
$
52.3
30.0
%
$
122.0
6.3
%
Adjusted diluted income per share
(Adjusted EPS)
$
1.14
See "Notes for Reconciliation of
GAAP to Adjusted Non-GAAP Information (Unaudited)" for further
information regarding adjusted items on page 12.
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
information reported in accordance with GAAP to adjusted Non-GAAP
Information for the three months ended December 31, 2019 and
2018.
Three Months Ended December
31, 2019
Gross Profit
% of Sales
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (G)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
186.0
34.6
%
$
102.1
19.0
%
$
68.1
12.7
%
$
62.1
11.6
%
$
18.6
30.0
%
$
43.5
8.1
%
Reported GAAP diluted income per share
(EPS)
$
0.44
Inventory step-up amortization
(A)
0.7
—
0.7
0.7
0.3
0.4
Transaction and integration expenses
(B)
—
(0.4
)
0.4
0.4
0.3
0.1
Restructuring charges
—
—
7.2
7.2
1.8
5.4
Operating tax gains
(D)
—
—
—
(3.3
)
(1.6
)
(1.7
)
Other discrete tax items
(G)
—
—
—
—
2.4
(2.4
)
Adjusted Non-GAAP
$
186.7
34.7
%
$
101.7
18.9
%
$
76.4
14.2
%
$
67.1
12.5
%
$
21.8
32.5
%
$
45.3
8.4
%
Adjusted diluted income per share
(Adjusted EPS)
$
0.46
Three Months Ended December
31, 2018
Gross Profit
% of Sales
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (G)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
177.1
33.5
%
$
97.8
18.5
%
$
66.0
12.5
%
$
58.8
11.1
%
$
23.8
40.5
%
$
35.0
6.6
%
Reported GAAP diluted income per share
(EPS)
$
0.34
Inventory step-up amortization
(A)
0.1
—
0.1
0.1
—
0.1
Transaction and integration expenses
(B)
—
(0.2
)
0.2
0.2
—
0.2
Restructuring charges
—
—
3.8
3.8
0.9
2.9
Adjust tax rate to normalized rate
(G)
—
—
—
—
(4.7
)
4.7
Adjusted Non-GAAP
$
177.2
33.5
%
$
97.6
18.4
%
$
70.1
13.2
%
$
62.9
11.9
%
$
20.0
32.0
%
$
42.9
8.1
%
Adjusted diluted income per share
(Adjusted EPS)
$
0.41
See "Notes for Reconciliation of
GAAP to Adjusted Non-GAAP Information (Unaudited)" for further
information regarding adjusted items on page 12.
Notes to Reconciliation of
GAAP to Adjusted Non-GAAP Information (Unaudited)
A.
Represents the amortization of
step-up in the value of inventory associated with the following
acquisitions: Cumberland asset acquisition and Indústria Gráfica
Foroni Ltda. ("Foroni") in 2019 and GOBA Internacional, S.A. de
C.V. ("GOBA") in 2018.
B.
Represents transaction and
integration expenses associated with the acquisitions of GOBA,
Cumberland and Foroni in 2019, and Esselte Group Holdings AB
("Esselte") and GOBA in 2018.
C.
Represents the write-off of debt
issuance costs and other costs associated with the company's
refinancing in the second quarter of 2019.
D.
Represents the gain from the
release of unneeded reserves for certain operating taxes related to
a pre-acquisition period for GOBA in the third quarter of 2019 of
$0.7 million and the gain from certain Brazilian indirect tax
credits recognized in the fourth quarter of 2019 of $3.3
million.
E.
Represents the elimination of
forward points on a hedged intercompany loan for the GOBA
acquisition.
F.
Represents the elimination of a
pension curtailment gain related to a restructuring project for the
integration of Esselte.
G.
The adjustments to tax expense
include the effects of the adjustments outlined in items A - F
above in the amount of $0.8 million and discrete tax adjustments of
$2.4 million for a total of $3.2 million resulting in an adjusted
tax rate of 32.5% for the fourth quarter of 2019, and adjustments
in the amount of $2.7 million and discrete tax adjustments of
$(6.0) million (including a $5.6 million tax expense related to our
Brazilian tax reserve) for a total of $(3.3) million resulting in
an adjusted tax rate of 30.5% for the twelve months ended December
31, 2019. Adjusted income taxes in 2018 were recalculated at a
normalized tax rate of 30% (the company adjusted the rate in the
fourth quarter of 2018 to 30% from 29%, due to lower U.S. income;
the impact for the quarter and year-to-date was $1.8 million).
ACCO Brands Corporation and
Subsidiaries
Reconciliation of Net Income
to Adjusted EBITDA (Unaudited)
(In millions)
The following table sets forth a
reconciliation of net income reported in accordance with GAAP to
Adjusted EBITDA and Net Leverage Ratio.
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
% Change
2019
2018
% Change
Net income
$
43.5
$
35.0
24.3
%
$
106.8
$
106.7
0.1
%
Inventory step-up amortization
0.7
0.1
600.0
%
0.9
0.1
800.0
%
Transaction and integration expenses
0.4
0.2
100.0
%
2.3
4.6
(50.0
)%
Restructuring charges
7.2
3.8
89.5
%
12.0
11.7
2.6
%
Pension curtailment gain
—
—
NM
—
(0.6
)
(100.0
)%
Depreciation
8.6
8.5
1.2
%
34.9
34.0
2.6
%
Stock-based compensation
3.8
2.8
35.7
%
10.1
8.8
14.8
%
Amortization of intangibles
8.6
9.5
(9.5
)%
35.4
36.7
(3.5
)%
Interest expense, net
9.3
9.4
(1.1
)%
40.0
36.8
8.7
%
Other (income) expense, net
(1.9
)
—
NM
(1.8
)
1.6
NM
Income tax expense
18.6
23.8
(21.8
)%
56.7
51.2
10.7
%
Adjusted EBITDA (non-GAAP)
$
98.8
$
93.1
6.1
%
$
297.3
$
291.6
2.0
%
Adjusted EBITDA as a % of Net Sales
18.4
%
17.6
%
15.2
%
15.0
%
Net Leverage Ratio (Net Debt/Adjusted
EBITDA):
2019
2018
Total debt per balance sheet
$
810.4
$
882.5
Add debt origination costs
5.6
5.5
Less cash and cash equivalents
27.8
67.0
Net Debt (non-GAAP)
$
788.2
$
821.0
Net Leverage Ratio (non-GAAP)
2.7
2.8
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 December
31, 2019
Three Months Ended December
31, 2018
Twelve Months Ended December
31, 2019
Twelve Months Ended December
31, 2018
Net cash provided by operating
activities
$128.8
$110.1
$203.9
$194.8
Net cash (used) provided by:
Additions to property, plant and
equipment
(10.9)
(7.8)
(32.8)
(34.1)
Proceeds from the disposition of
assets
0.4
—
0.5
0.2
Free cash flow (non-GAAP)
$118.3
$102.3
$171.6
$160.9
ACCO Brands Corporation and
Subsidiaries
Supplemental Business Segment
Information and Reconciliation (Unaudited)
(In millions)
2019
2018
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) (A)
Margin (A)
Net Sales
(Loss)
Items
(Loss) (A)
Margin (A)
$
%
(Loss) $
(Loss) %
Points
Q1:
ACCO Brands North America
$
160.4
$
6.8
$
1.4
$
8.2
5.1%
$
165.6
$
2.9
$
1.8
$
4.7
2.8%
$
(5.2
)
(3.1)%
$
3.5
74.5%
230
ACCO Brands EMEA
146.5
15.9
0.2
16.1
11.0%
154.5
14.1
3.3
17.4
11.3%
(8.0
)
(5.2)%
(1.3
)
(7.5)%
(30)
ACCO Brands International
87.0
5.6
1.2
6.8
7.8%
85.7
5.8
0.8
6.6
7.7%
1.3
1.5%
0.2
3.0%
10
Corporate
—
(10.4
)
0.4
(10.0
)
—
(11.1
)
0.4
(10.7
)
—
0.7
Total
$
393.9
$
17.9
$
3.2
$
21.1
5.4%
$
405.8
$
11.7
$
6.3
$
18.0
4.4%
$
(11.9
)
(2.9)%
$
3.1
17.2%
100
Q2:
ACCO Brands North America
$
307.9
$
60.6
$
(0.2
)
$
60.4
19.6%
$
282.8
$
51.5
$
1.6
$
53.1
18.8%
$
25.1
8.9%
$
7.3
13.7%
80
ACCO Brands EMEA
128.3
7.4
—
7.4
5.8%
140.5
8.4
1.8
10.2
7.3%
(12.2
)
(8.7)%
(2.8
)
(27.5)%
(150)
ACCO Brands International
82.5
4.1
0.3
4.4
5.3%
75.5
3.3
0.3
3.6
4.8%
7.0
9.3%
0.8
22.2%
50
Corporate
—
(10.7
)
—
(10.7
)
—
(11.4
)
0.3
(11.1
)
—
0.4
Total
$
518.7
$
61.4
$
0.1
$
61.5
11.9%
$
498.8
$
51.8
$
4.0
$
55.8
11.2%
$
19.9
4.0%
$
5.7
10.2%
70
Q3:
ACCO Brands North America
$
272.4
$
33.7
$
1.9
$
35.6
13.1%
$
263.4
$
33.7
$
(0.3
)
$
33.4
12.7%
$
9.0
3.4%
$
2.2
6.6%
40
ACCO Brands EMEA
133.1
13.8
0.1
13.9
10.4%
143.1
14.6
2.2
16.8
11.7%
(10.0
)
(7.0)%
(2.9
)
(17.3)%
(130)
ACCO Brands International
100.2
10.8
0.3
11.1
11.1%
100.8
16.1
0.1
16.2
16.1%
(0.6
)
(0.6)%
(5.1
)
(31.5)%
(500)
Corporate
—
(9.5
)
1.3
(8.2
)
—
(6.9
)
—
(6.9
)
—
(1.3
)
Total
$
505.7
$
48.8
$
3.6
$
52.4
10.4%
$
507.3
$
57.5
$
2.0
$
59.5
11.7%
$
(1.6
)
(0.3)%
$
(7.1
)
(11.9)%
(130)
Q4:
ACCO Brands North America
$
226.1
$
29.9
$
2.5
$
32.4
14.3%
$
228.9
$
28.5
$
3.1
$
31.6
13.8%
$
(2.8
)
(1.2)%
$
0.8
2.5%
50
ACCO Brands EMEA
161.4
21.5
2.0
23.5
14.6%
167.1
22.3
0.7
23.0
13.8%
(5.7
)
(3.4)%
0.5
2.2%
80
ACCO Brands International
149.9
28.0
2.5
30.5
20.3%
133.3
24.0
0.3
24.3
18.2%
16.6
12.5%
6.2
25.5%
210
Corporate
—
(11.3
)
1.3
(10.0
)
—
(8.8
)
—
(8.8
)
—
(1.2
)
Total
$
537.4
$
68.1
$
8.3
$
76.4
14.2%
$
529.3
$
66.0
$
4.1
$
70.1
13.2%
$
8.1
1.5%
$
6.3
9.0%
100
YTD:
ACCO Brands North America
$
966.8
$
131.0
$
5.6
$
136.6
14.1%
$
940.7
$
116.6
$
6.2
$
122.8
13.1%
$
26.1
2.8%
$
13.8
11.2%
100
ACCO Brands EMEA
569.3
58.6
2.3
60.9
10.7%
605.2
59.4
8.0
67.4
11.1%
(35.9
)
(5.9)%
(6.5
)
(9.6)%
(40)
ACCO Brands International
419.6
48.5
4.3
52.8
12.6%
395.3
49.2
1.5
50.7
12.8%
24.3
6.1%
2.1
4.1%
(20)
Corporate
—
(41.9
)
3.0
(38.9
)
—
(38.2
)
0.7
(37.5
)
—
(1.4
)
Total
$
1,955.7
$
196.2
$
15.2
$
211.4
10.8%
$
1,941.2
$
187.0
$
16.4
$
203.4
10.5%
$
14.5
0.7%
$
8.0
3.9%
30
(A) See "Notes for Reconciliation
of GAAP to Adjusted Non-GAAP Information (Unaudited)" for further
information regarding adjusted items on page 12.
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
Change
Translation
Acquisition
Change (A)
Change
Translation
Acquisition
Change (A)
Q1 2019:
ACCO Brands North America
(3.1)%
(0.6)%
—%
(2.5)%
$(5.2)
$(1.0)
$—
$(4.2)
ACCO Brands EMEA
(5.2)%
(8.7)%
—%
3.5%
(8.0)
(13.5)
—
5.5
ACCO Brands International
1.5%
(8.3)%
13.8%
(4.0)%
1.3
(7.1)
11.8
(3.4)
Total
(2.9)%
(5.3)%
2.9%
(0.5)%
$(11.9)
$(21.6)
$11.8
$(2.1)
Q2 2019:
ACCO Brands North America
8.9%
(0.5)%
—%
9.4%
$25.1
$(1.3)
$—
$26.4
ACCO Brands EMEA
(8.7)%
(6.3)%
—%
(2.4)%
(12.2)
(8.9)
—
(3.3)
ACCO Brands International
9.3%
(5.2)%
15.8%
(1.3)%
7.0
(3.9)
11.9
(1.0)
Total
4.0%
(2.8)%
2.4%
4.4%
$19.9
$(14.1)
$11.9
$22.1
Q3 2019:
ACCO Brands North America
3.4%
(0.1)%
—%
3.5%
$9.0
$(0.2)
$—
$9.2
ACCO Brands EMEA
(7.0)%
(4.7)%
—%
(2.3)%
(10.0)
(6.7)
—
(3.3)
ACCO Brands International
(0.6)%
(2.8)%
5.7%
(3.5)%
(0.6)
(2.8)
5.7
(3.5)
Total
(0.3)%
(1.9)%
1.1%
0.5%
$(1.6)
$(9.7)
$5.7
$2.4
Q4 2019:
ACCO Brands North America
(1.2)%
—%
—%
(1.2)%
$(2.8)
$—
$—
$(2.8)
ACCO Brands EMEA
(3.4)%
(3.0)%
—%
(0.4)%
(5.7)
(5.0)
—
(0.7)
ACCO Brands International
12.5%
(3.8)%
18.6%
(2.3)%
16.6
(5.1)
24.8
(3.1)
Total
1.5%
(1.9)%
4.7%
(1.3)%
$8.1
$(10.1)
$24.8
$(6.6)
2019 YTD:
ACCO Brands North America
2.8%
(0.3)%
—%
3.1%
$26.1
$(2.5)
$—
$28.6
ACCO Brands EMEA
(5.9)%
(5.6)%
—%
(0.3)%
(35.9)
(34.1)
—
(1.8)
ACCO Brands International
6.1%
(4.8)%
13.7%
(2.8)%
24.3
(18.9)
54.2
(11.0)
Total
0.7%
(2.9)%
2.8%
0.8%
$14.5
$(55.5)
$54.2
$15.8
(A) Comparable net sales
represents net sales excluding acquisitions and with current-period
foreign operation sales translated at prior-year currency
rates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200211006009/en/
For further information:
Christine Hanneman Investor Relations (847) 796-4320
Julie McEwan Media Relations (937) 974-8162
Acco Brands (NYSE:ACCO)
Gráfico Histórico do Ativo
De Mar 2024 até Abr 2024
Acco Brands (NYSE:ACCO)
Gráfico Histórico do Ativo
De Abr 2023 até Abr 2024