- Reported net sales of $494 million, with gross margin expanding
450 basis points
- Operating income of $55 million, flat to prior year; adjusted
operating income of $66 million grew 14% year over year
- EPS of $0.27; adjusted EPS of $0.38, above Company's
outlook
- Net operating cash outflow improved $59 million year to date
driven by improved working capital management
- Maintains full year 2023 adjusted EPS outlook of $1.08 to
$1.12
- Raises full year 2023 free cash flow outlook to at least $110
million
- Lowered end of year consolidated leverage ratio outlook
ACCO Brands Corporation (NYSE: ACCO) today announced its second
quarter and first six-month results for the period ended June 30,
2023.
"Our top priority entering 2023 was to restore our margin
profile, and I'm pleased to report that we have made great progress
on that front in the first half. Second quarter and year-to-date
gross margin expanded 450 and 360 basis points, respectively, due
to greater traction from our pricing, productivity and
restructuring initiatives. This has yielded much better than
expected adjusted EPS. The higher operating profits experienced
through the first six months give us confidence in our full year
2023 outlook for adjusted EPS and free cash flow. While we are
pleased with the strong start of the year, we are more cautious on
the second half demand environment. With improved working capital
management, we are well positioned to end the year with a lower
leverage ratio than previously expected. We remain committed to
supporting our quarterly dividend and reducing debt with our strong
cash flow" said Boris Elisman, Chairman and Chief Executive Officer
of ACCO Brands.
"Our results reflect the resilience of our brands and the
transformative actions undertaken to expand our product categories,
broaden our geographic reach, bring innovative new consumer-centric
products to market and streamline our cost structure. We remain
confident that our strategy has us positioned to deliver
sustainable organic growth as global economies improve," concluded
Mr. Elisman.
Second Quarter Results
Net sales declined 5.3 percent to $493.6 million from $521.0
million in 2022. Adverse foreign exchange reduced sales by $0.8
million, or 0.2 percent. Comparable sales fell 5.1 percent. Both
reported and comparable sales declines were due to reduced volume,
reflecting a more challenging macroeconomic environment, especially
in our EMEA segment, and weaker global sales of computer
accessories.
Operating income was $55.2 million versus $55.4 million in 2022.
In 2022, operating income benefitted from income related to a
change in the value of the PowerA contingent earnout of $9.4
million, partially offset by $1.9 million in restructuring charges.
Adjusted operating income increased 14 percent to $66.2 million
from $58.1 million in the prior year. This increase reflects
improved gross margin from the effect of cumulative global pricing
and cost reduction actions, partially offset by negative fixed cost
leverage and higher SG&A expense primarily due to an increase
in incentive compensation.
The Company reported net income of $26.4 million, or $0.27 per
share, compared with prior year net income of $39.4 million, or
$0.40 per share. Reported net income in 2023 reflects higher
interest, tax and non-operating pension expenses. Reported net
income in 2022 benefited from the items noted above in operating
income. Adjusted net income was $36.5 million, or $0.38 per share,
compared with $36.0 million, or $0.37 per share in 2022. Adjusted
net income reflects the increase in adjusted operating income,
partially offset by higher interest and non-operating pension
expenses.
Business Segment Results
ACCO Brands North America – Second quarter segment net sales of
$292.6 million decreased 4.6 percent versus the prior year. Adverse
foreign exchange reduced sales by 0.5 percent. Comparable sales of
$294.2 million were down 4.1 percent. Both decreases reflect softer
demand from business and retail customers due to a weaker
macroeconomic environment and lower volumes for computer
accessories. These factors more than offset stronger pricing, and
volume growth in gaming accessories. Timing for some back-to-school
sales was earlier than anticipated.
Second quarter operating income in North America was $55.1
million versus $50.7 million a year earlier, and adjusted operating
income was $60.7 million compared to $57.2 million a year ago. Both
increases reflect the benefit of pricing and cost actions and
favorable mix, which more than offset the impact of lower sales and
negative fixed cost leverage.
ACCO Brands EMEA - Second quarter segment net sales of $125.7
million decreased 8.8 percent versus the prior year. Favorable
foreign exchange increased sales by 0.3 percent. Comparable sales
of $125.3 million decreased 9.1 percent versus the prior-year
period. Both reported and comparable sales declines reflect reduced
demand due to a weaker environment in the region and lower volumes
for technology accessories. This more than offset the effect of
cumulative pricing actions.
Second quarter operating income in EMEA was $5.7 million versus
a loss of $1.5 million a year earlier, and adjusted operating
income was $9.5 million compared to $2.1 million a year ago. The
increases in both reported operating income and adjusted operating
income reflect improved gross margins from the cumulative effect of
price increases and cost savings actions more than offsetting
negative fixed cost leverage.
ACCO Brands International - Second quarter segment sales of
$75.3 million decreased 1.6 percent versus the prior year.
Favorable foreign exchange increased sales by 0.7 percent.
Comparable sales of $74.8 million decreased 2.3 percent versus the
year-ago period. Both sales decreases reflect lower volumes due to
weaker economies in Asia and Australia, mostly offset by growth in
Latin America.
Second quarter operating income in the International segment was
$6.7 million versus $6.3 million a year earlier, with the increase
due to lower restructuring expense. Adjusted operating income was
$8.3 million compared to $8.6 million a year ago.
Six Month Results
Net sales decreased 6.9 percent to $896.2 million from $962.6
million in 2022. Adverse foreign exchange reduced sales by $11.4
million, or 1.2 percent. Comparable sales decreased 5.7 percent.
Both reported and comparable sales declines reflect lower volume,
especially in EMEA and North America due to the challenging
macroeconomic environment, lower sales of technology accessories,
and the timing of back-to-school shipments and lower channel
inventory compared to a year ago. These more than offset the
benefit of price increases across all segments, and volume growth
in Latin America.
Operating income of $65.3 million compares to operating income
of $62.2 million in 2022, which included a benefit of $6.8 million
related to a change in the value of the PowerA contingent earnout.
Adjusted operating income of $90.5 million increased from $80.7
million last year. Both reported and adjusted operating income
increases reflect the benefit of global price increases and cost
reduction initiatives, partially offset by higher SG&A expense
primarily due to increased incentive compensation.
Net income was $22.7 million, or $0.23 per share, compared with
net income of $36.7 million, or $0.37 per share, in 2022. Reported
net income in 2023 reflects higher interest, tax and non-operating
pension expenses. Reported net income in 2022 benefitted from the
items noted above in operating income. Adjusted net income was
$45.0 million, compared with $46.4 million in 2022, and adjusted
earnings per share were $0.47 for both year periods. Adjusted net
income reflects the increase in adjusted operating income offset by
higher interest and non-operating pension expenses.
Capital Allocation and Dividend
Year to date, the Company improved its operating cash outflow by
$58.6 million to $39.3 million versus $97.9 million in the prior
year, driven primarily by improved working capital management.
Adjusted free cash flow improved by $50.1 million and was an
outflow of $45.4 million versus an outflow of $95.5 million a year
earlier. Adjusted free cash flow in 2022 excludes the contingent
earnout payment.
On August 1, 2023, ACCO Brands announced that its board of
directors declared a regular quarterly cash dividend of $0.075 per
share. The dividend will be paid on September 12, 2023, to
stockholders of record at the close of business on August 22,
2023.
Full Year 2023 and Third Quarter Outlook
The Company is updating its full year 2023 outlook and providing
a 3Q outlook. For the full year, reported sales are expected to be
down 1 percent to 3 percent, including a 1.5 percent positive
impact from foreign exchange. The Company is also maintaining its
full year adjusted EPS outlook to be in the range of $1.08 to
$1.12. Mid-teen growth in adjusted operating income is expected to
be partially offset by higher interest and non-cash non-operating
pension expenses. The Company is raising its 2023 free cash flow
outlook to at least $110 million and expects to end the year with a
consolidated leverage ratio of 3.3x to 3.5x, lower than previously
expected.
In the third quarter, reported sales are expected to be flat to
down 3 percent, which includes approximately a 4 percent positive
impact from foreign exchange. Adjusted EPS is expected to be in the
range of $0.21 to $0.24, which compares to $0.25 of adjusted EPS in
the prior-year third quarter.
Webcast
At 8:30 a.m. ET on August 9, 2023, ACCO Brands Corporation will
host a conference call to discuss the Company's second quarter 2023
results. The call will be broadcast live via webcast. The webcast
can be accessed through the Investor Relations section of
www.accobrands.com. The webcast will be in listen-only mode and
will be available for replay following the event.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People,
designs, manufactures and markets consumer and end-user products
that help people work, learn, play and thrive. Our widely
recognized brands include AT-A-GLANCE®, Five Star®, Kensington®,
Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More
information about ACCO Brands Corporation (NYSE: ACCO) can be found
at www.accobrands.com.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
generally accepted accounting principles (GAAP), we have provided
certain non-GAAP financial information in this earnings release to
aid investors in understanding the Company's performance. Each
non-GAAP financial measure is defined and reconciled to its most
directly comparable GAAP financial measure in the "About Non-GAAP
Financial Measures" section of this earnings release.
Forward-Looking Statements
Statements contained herein, other than statements of historical
fact, particularly those anticipating future financial performance,
business prospects, growth, strategies, business operations and
similar matters, results of operations, liquidity and financial
condition, are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. These
statements are based on the beliefs and assumptions of management
based on information available to us at the time such statements
are made. These statements, which are generally identifiable by the
use of the words “will,” “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “forecast,” “project,” “plan,” and
similar expressions, are subject to certain risks and
uncertainties, are made as of the date hereof, and we undertake no
duty or obligation to update them. Because actual results may
differ materially from those suggested or implied by such
forward-looking statements, you should not place undue reliance on
them when deciding whether to buy, sell or hold the Company’s
securities.
Our outlook is based on certain assumptions, which we believe to
be reasonable under the circumstances. These include, without
limitation, assumptions regarding the impact of the war in Ukraine;
the impact of inflation and global economic uncertainties,
fluctuations in foreign currency exchange rates and acquisitions;
and the other factors described below.
Among the factors that could cause our actual results to differ
materially from our forward-looking statements are: our ability to
successfully execute our restructuring plans and realize the
benefits of our productivity initiatives; our ability to obtain
additional price increases and realize longer-term cost reductions;
the ongoing impact of the COVID-19 pandemic; a relatively limited
number of large customers account for a significant percentage of
our sales; issues that influence customer and consumer
discretionary spending during periods of economic uncertainty or
weakness; risks associated with foreign currency exchange rate
fluctuations; challenges related to the highly competitive business
environment in which we operate; our ability to develop and market
innovative products that meet consumer demands and to expand into
new and adjacent product categories that are experiencing higher
growth rates; our ability to successfully expand our business in
emerging markets and the exposure to greater financial,
operational, regulatory, compliance and other risks in such
markets; the continued decline in the use of certain of our
products; risks associated with seasonality; the sufficiency of
investment returns on pension assets, risks related to actuarial
assumptions, changes in government regulations and changes in the
unfunded liabilities of a multi-employer pension plan; any
impairment of our intangible assets; our ability to secure, protect
and maintain our intellectual property rights, and our ability to
license rights from major gaming console makers and video game
publishers to support our gaming accessories business; continued
disruptions in the global supply chain; risks associated with
inflation and other changes in the cost or availability of raw
materials, transportation, labor, and other necessary supplies and
services and the cost of finished goods; risks associated with
outsourcing production of certain of our products, information
technology systems and other administrative functions; the failure,
inadequacy or interruption of our information technology systems or
its supporting infrastructure; risks associated with a
cybersecurity incident or information security breach, including
that related to a disclosure of personally identifiable
information; our ability to grow profitably through acquisitions;
our ability to successfully integrate acquisitions and achieve the
financial and other results anticipated at the time of acquisition,
including planned synergies; risks associated with our
indebtedness, including limitations imposed by restrictive
covenants, our debt service obligations, and our ability to comply
with financial ratios and tests; a change in or discontinuance of
our stock repurchase program or the payment of dividends; product
liability claims, recalls or regulatory actions; the impact of
litigation or other legal proceedings; our failure to comply with
applicable laws, rules and regulations and self-regulatory
requirements, the costs of compliance and the impact of changes in
such laws; our ability to attract and retain qualified personnel;
the volatility of our stock price; risks associated with
circumstances outside our control, including those caused by public
health crises, such as the occurrence of contagious diseases,
severe weather events, war, terrorism and other geopolitical
incidents; and other risks and uncertainties described in “Part I,
Item 1A. Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2022, and in other reports we file with the
Securities and Exchange Commission.
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
June 30, 2023
December 31, 2022
(in millions)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$82.4
62.2
Accounts receivable, net
426.1
384.1
Inventories
398.0
395.2
Other current assets
47.6
40.8
Total current assets
954.1
882.3
Total property, plant and equipment
594.7
589.2
Less: accumulated depreciation
(417.3
)
(404.1
)
Property, plant and equipment, net
177.4
185.1
Right of use asset, leases
85.7
88.8
Deferred income taxes
97.7
99.7
Goodwill
662.0
671.5
Identifiable intangibles, net
833.2
847.0
Other non-current assets
15.7
20.3
Total assets
$2,825.8
$2,794.7
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable
$7.9
$10.3
Current portion of long-term debt
53.9
49.7
Accounts payable
194.6
239.5
Accrued compensation
41.3
38.3
Accrued customer program liabilities
100.0
103.3
Lease liabilities
20.4
21.2
Other current liabilities
115.9
126.7
Total current liabilities
534.0
589.0
Long-term debt, net
1,015.8
936.5
Long-term lease liabilities
72.3
75.2
Deferred income taxes
142.7
144.1
Pension and post-retirement benefit
obligations
149.4
155.5
Other non-current liabilities
81.2
84.3
Total liabilities
1,995.4
1,984.6
Stockholders' equity:
Common stock
1.0
1.0
Treasury stock
(45.0
)
(43.4
)
Paid-in capital
1,906.8
1,897.2
Accumulated other comprehensive loss
(535.7
)
(540.3
)
Accumulated deficit
(496.7
)
(504.4
)
Total stockholders' equity
830.4
810.1
Total liabilities and stockholders'
equity
$2,825.8
$2,794.7
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of
Income (Unaudited)
(In millions, except per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
%
Change
2023
2022
%
Change
Net sales
$493.6
$521.0
(5.3
)%
$896.2
$962.6
(6.9
)%
Cost of products sold
329.4
371.0
(11.2
)%
612.7
693.0
(11.6
)%
Gross profit
164.2
150.0
9.5
%
283.5
269.6
5.2
%
Operating costs and expenses:
Selling, general and administrative
expenses
98.0
91.6
7.0
%
193.0
190.4
1.4
%
Amortization of intangibles
11.0
10.5
4.8
%
21.9
21.6
1.4
%
Restructuring charges
—
1.9
(100.0
)%
3.3
2.2
50.0
%
Change in fair value of contingent
consideration
—
(9.4
)
NM
—
(6.8
)
NM
Total operating costs and expenses
109.0
94.6
15.2
%
218.2
207.4
5.2
%
Operating income
55.2
55.4
(0.4
)%
65.3
62.2
5.0
%
Non-operating expense (income):
Interest expense
15.5
10.8
43.5
%
29.4
20.5
43.4
%
Interest income
(2.2
)
(2.2
)
—
%
(4.6
)
(3.6
)
(27.8
)%
Non-operating pension expense (income)
0.2
(1.3
)
NM
0.3
(2.7
)
NM
Other (income) expense, net
(0.3
)
(3.7
)
91.9
%
1.5
(2.8
)
NM
Income before income tax
42.0
51.8
(18.9
)%
38.7
50.8
(23.8
)%
Income tax expense
15.6
12.4
25.8
%
16.0
14.1
13.5
%
Net income
$26.4
$39.4
(33.0
)%
$22.7
$36.7
(38.1
)%
Per share:
Basic income per share
$0.28
$0.41
(31.7
)%
$0.24
$0.38
(36.8
)%
Diluted income per share
$0.27
$0.40
(32.5
)%
$0.23
$0.37
(37.8
)%
Weighted average number of shares
outstanding:
Basic
95.4
96.2
95.1
96.2
Diluted
96.3
97.4
96.7
98.0
Cash dividends declared per common
share
$0.075
$0.075
$0.150
$0.150
Statistics (as a % of Net sales, except
Income tax rate)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Gross profit (Net sales, less Cost of
products sold)
33.3
%
28.8
%
31.6
%
28.0
%
Selling, general and administrative
expenses
19.9
%
17.6
%
21.5
%
19.8
%
Operating income
11.2
%
10.6
%
7.3
%
6.5
%
Income before income tax
8.5
%
9.9
%
4.3
%
5.3
%
Net income
5.3
%
7.6
%
2.5
%
3.8
%
Income tax rate
37.1
%
23.9
%
41.3
%
27.8
%
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Six Months Ended June
30,
(in millions)
2023
2022
Operating activities
Net income
$22.7
$36.7
Payments of contingent consideration
—
(9.2
)
Loss on disposal of assets
1.2
(0.2
)
Change in fair value of contingent
liability
—
(6.8
)
Depreciation
17.3
19.6
Amortization of debt issuance costs
1.5
1.4
Amortization of intangibles
21.9
21.6
Stock-based compensation
8.9
7.2
Changes in operating assets and
liabilities:
Accounts receivable
(33.4
)
(12.4
)
Inventories
10.1
(51.4
)
Other assets
(9.0
)
(18.7
)
Accounts payable
(55.1
)
(47.2
)
Accrued expenses and other liabilities
(19.1
)
(34.8
)
Accrued income taxes
(6.3
)
(3.7
)
Net cash used by operating activities
(39.3
)
(97.9
)
Investing activities
Additions to property, plant and
equipment
(6.1
)
(7.0
)
Proceeds from the disposition of
assets
—
0.2
Net cash used by investing activities
(6.1
)
(6.8
)
Financing activities
Proceeds from long-term borrowings
107.9
218.0
Repayments of long-term debt
(28.2
)
(25.6
)
Repayments of notes payable, net
(2.4
)
11.3
Dividends paid
(14.2
)
(14.4
)
Payments of contingent consideration
—
(17.8
)
Repurchases of common stock
—
(19.4
)
Payments related to tax withholding for
stock-based compensation
(1.7
)
(2.5
)
Proceeds from the exercise of stock
options
—
4.3
Net cash provided by financing
activities
61.4
153.9
Effect of foreign exchange rate changes on
cash and cash equivalents
4.2
1.3
Net increase in cash and cash
equivalents
20.2
50.5
Cash and cash equivalents
Beginning of the period
62.2
41.2
End of the period
$82.4
$91.7
About Non-GAAP Financial Measures
We explain below how we calculate each of our non-GAAP financial
measures and a reconciliation of our current period and historical
non-GAAP financial measures to the most directly comparable GAAP
financial measures follows.
We use our non-GAAP financial measures both to explain our
results to stockholders and the investment community and in the
internal evaluation and management of our business. We believe our
non-GAAP financial measures provide management and investors with a
more complete understanding of our underlying operational results
and trends, facilitate meaningful period-to-period comparisons and
enhance an overall understanding of our past and future financial
performance.
Our non-GAAP financial measures exclude certain items that may
have a material impact upon our reported financial results such as
restructuring charges, transaction and integration expenses
associated with material acquisitions, the impact of foreign
currency exchange rate fluctuations and acquisitions, unusual tax
items, goodwill impairment charges, and other non-recurring items
that we consider to be outside of our core operations. These
measures should not be considered in isolation or as a substitute
for, or superior to, the directly comparable GAAP financial
measures and should be read in connection with the Company’s
financial statements presented in accordance with GAAP.
Our non-GAAP financial measures include the following:
Comparable Sales: Represents
net sales excluding the impact of material acquisitions, if any,
with current-period foreign operation sales translated at
prior-year currency rates. We believe comparable sales are useful
to investors and management because they reflect underlying sales
and sales trends without the effect of material acquisitions and
fluctuations in foreign exchange rates and facilitate meaningful
period-to-period comparisons. We sometimes refer to comparable
sales as comparable net sales.
Adjusted Selling, General and
Administrative (SG&A) Expenses: Represents selling,
general and administrative expenses excluding transaction and
integration expenses related to material acquisitions. We believe
adjusted SG&A expenses are useful to investors and management
because they reflect underlying SG&A expenses without the
effect of expenses related to acquiring and integrating
acquisitions that we consider to be outside our core operations and
facilitate meaningful period-to-period comparisons.
Adjusted Operating Income/Adjusted
Income Before Taxes/Adjusted Net Income/Adjusted Net Income Per
Diluted Share: Represents operating income, income
before taxes, net income, and net income per diluted share
excluding restructuring and goodwill impairment charges, the
amortization of intangibles, the amortization of the step-up in
value of inventory, the change in fair value of contingent
consideration, transaction and integration expenses associated with
material acquisitions, non-recurring items in interest expense or
other income/expense such as expenses associated with debt
refinancing, a bond redemption, or a pension curtailment, and other
non-recurring items as well as all unusual and discrete income tax
adjustments, including income tax related to the foregoing. We
believe these adjusted non-GAAP financial measures are useful to
investors and management because they reflect our underlying
operating performance before items that we consider to be outside
our core operations and facilitate meaningful period-to-period
comparisons. Senior management’s incentive compensation is derived,
in part, using adjusted operating income and adjusted net income
per diluted share, which is derived from adjusted net income. We
sometimes refer to adjusted net income per diluted share as
adjusted earnings per share or adjusted EPS.
Adjusted Income Tax
Expense/Rate: Represents income tax expense/rate
excluding the tax effect of the items that have been excluded from
adjusted income before taxes, unusual income tax items such as the
impact of tax audits and changes in laws, significant reserves for
cash repatriation, excess tax benefits/losses, and other discrete
tax items. We believe our adjusted income tax expense/rate is
useful to investors because it reflects our baseline income tax
expense/rate before benefits/losses and other discrete items that
we consider to be outside our core operations and facilitates
meaningful period-to-period comparisons.
Adjusted EBITDA: Represents
net income excluding the effects of depreciation, stock-based
compensation expense, amortization of intangibles, the change in
fair value of contingent consideration, interest expense, net,
other (income) expense, net, and income tax expense, the
amortization of the step-up in value of inventory, transaction and
integration expenses associated with material acquisitions,
restructuring and goodwill impairment charges, non-recurring items
in interest expense or other income/expense such as expenses
associated with debt refinancing, a bond redemption, or a pension
curtailment and other non-recurring items. We believe adjusted
EBITDA is useful to investors because it reflects our underlying
cash profitability and adjusts for certain non-cash charges, and
items that we consider to be outside our core operations and
facilitates meaningful period-to-period comparisons.
Free Cash Flow/Adjusted Free Cash
Flow: Free cash flow represents cash flow from operating
activities less cash used for additions to property, plant and
equipment. Adjusted free cash flow represents free cash flow, less
cash payments made for contingent earnouts, plus cash proceeds from
the disposition of assets. We believe free cash flow and adjusted
free cash flow are useful to investors because they measure our
available cash flow for paying dividends, funding strategic
material acquisitions, reducing debt, and repurchasing shares.
Consolidated Leverage Ratio:
Represents balance sheet debt, plus debt origination costs and less
any cash and cash equivalents divided by adjusted EBITDA. We
believe that consolidated leverage ratio is useful to investors
since the company has the ability to, and may decide to use, a
portion of its cash and cash equivalents to retire debt.
We also provide forward-looking non-GAAP comparable sales,
adjusted earnings per share, free cash flow, adjusted free cash
flow, adjusted EBITDA, and adjusted tax rate, and historical and
forward-looking consolidated leverage ratio. We do not provide a
reconciliation of these forward-looking and historical non-GAAP
measures to GAAP because the GAAP financial measure is not
currently available and management cannot reliably predict all the
necessary components of such non-GAAP measures without unreasonable
effort or expense due to the inherent difficulty of forecasting and
quantifying certain amounts that are necessary for such a
reconciliation, including adjustments that could be made for
restructuring, integration and acquisition-related expenses, the
variability of our tax rate and the impact of foreign currency
fluctuation and material acquisitions, and other charges reflected
in our historical results. The probable significance of each of
these items is high and, based on historical experience, could be
material.
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 June 30, 2023 and 2022.
Three Months Ended June 30,
2023
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (I)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
55.2
11.2
%
$
42.0
8.5
%
$
15.6
37.1
%
$
26.4
5.3
%
Reported GAAP diluted income per share
(EPS)
$
0.27
Amortization of intangibles
11.0
11.0
2.9
8.1
Other discrete tax items
(A)
—
—
(2.0
)
2.0
Adjusted Non-GAAP
$
66.2
13.4
%
$
53.0
10.7
%
$
16.5
31.1
%
$
36.5
7.4
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.38
Three Months Ended June 30,
2022
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (I)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
91.6
17.6
%
$
55.4
10.6
%
$
51.8
9.9
%
$
12.4
23.9
%
$
39.4
7.6
%
Reported GAAP diluted income per share
(EPS)
$
0.40
Release of charge for Russia business
0.3
(0.3
)
(0.3
)
(0.1
)
(0.2
)
Restructuring charges
—
1.9
1.9
0.4
1.5
Amortization of intangibles
—
10.5
10.5
2.7
7.8
Change in fair value of contingent
consideration
(C)
—
(9.4
)
(9.4
)
(2.4
)
(7.0
)
Operating tax gains
(D)
—
—
(3.8
)
(1.3
)
(2.5
)
Other discrete tax items
(A)
—
—
—
3.0
(3.0
)
Adjusted Non-GAAP
$
91.9
17.6
%
$
58.1
11.2
%
$
50.7
9.7
%
$
14.7
29.0
%
$
36.0
6.9
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.37
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
ACCO Brands Corporation and
Subsidiaries
Reconciliation of GAAP to
Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share
data)
The following tables set forth a
reconciliation of certain Consolidated Statements of Income
information reported in accordance with GAAP to Adjusted Non-GAAP
Information for the six months ended June 30, 2023 and 2022
Six Months Ended June 30,
2023
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (I)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
65.3
7.3
%
$
38.7
4.3
%
$
16.0
41.3
%
$
22.7
2.5
%
Reported GAAP diluted income per share
(EPS)
$
0.23
Restructuring charges
3.3
3.3
0.9
2.4
Amortization of intangibles
21.9
21.9
5.8
16.1
Other asset write-off
(B)
—
1.1
0.3
0.8
Other discrete tax items
(A)
—
—
(3.0
)
3.0
Adjusted Non-GAAP
$
90.5
10.1
%
$
65.0
7.3
%
$
20.0
30.8
%
$
45.0
5.0
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.47
Six Months Ended June 30,
2022
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (I)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
190.4
19.8
%
$
62.2
6.5
%
$
50.8
5.3
%
$
14.1
27.8
%
$
36.7
3.8
%
Reported GAAP diluted income per share
(EPS)
$
0.37
Charge for Russia business
(1.5
)
1.5
1.5
0.3
1.2
Restructuring charges
—
2.2
2.2
0.5
1.7
Amortization of intangibles
—
21.6
21.6
5.7
15.9
Change in fair value of contingent
consideration
(C)
—
(6.8
)
(6.8
)
(1.7
)
(5.1
)
Operating tax gains
(D)
—
—
(3.9
)
(1.3
)
(2.6
)
Other discrete tax items
(A)
—
—
—
1.4
(1.4
)
Adjusted Non-GAAP
$
188.9
19.6
%
$
80.7
8.4
%
$
65.4
6.8
%
$
19.0
29.0
%
$
46.4
4.8
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.47
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
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.
Three months ended June
30,
Six months ended June
30,
2023
2022
% Change
2023
2022
% Change
Net income
$
26.4
$
39.4
(33.0
)%
$
22.7
$
36.7
(38.1
)%
Stock-based compensation
3.3
2.3
43.5
%
8.9
7.2
23.6
%
Depreciation
8.3
9.7
(14.4
)%
17.3
19.6
(11.7
)%
(Release) charge for Russia business
—
(0.3
)
100.0
%
—
1.5
(100.0
)%
Amortization of intangibles
11.0
10.5
4.8
%
21.9
21.6
1.4
%
Restructuring charges
—
1.9
(100.0
)%
3.3
2.2
50.0
%
Change in fair value of contingent
consideration
(C)
—
(9.4
)
100.0
%
—
(6.8
)
100.0
%
Interest expense, net
13.3
8.6
54.7
%
24.8
16.9
46.7
%
Other (income) expense, net
(0.3
)
(3.7
)
91.9
%
1.5
(2.8
)
NM
Income tax expense
15.6
12.4
25.8
%
16.0
14.1
13.5
%
Adjusted EBITDA (non-GAAP)
$
77.6
$
71.4
8.7
%
$
116.4
$
110.2
5.6
%
Adjusted EBITDA as a % of Net Sales
15.7
%
13.7
%
13.0
%
11.4
%
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
Reconciliation of Net Cash
(Used) Provided by Operating Activities to Adjusted Free Cash Flow
(Unaudited)
(In millions)
The following table sets forth a
reconciliation of net cash (used) provided by operating activities
reported in accordance with GAAP to Adjusted Free Cash Flow.
Three months ended June 30,
2023
Three months ended June 30,
2022
For the six months ended June
30, 2023
For the six months ended June
30, 2022
Net cash (used) provided by operating
activities
$
(16.1
)
$
6.3
$
(39.3
)
$
(97.9
)
Net (used) provided by:
Additions to property, plant and
equipment
(4.1
)
(3.6
)
(6.1
)
(7.0
)
Proceeds from the disposition of
assets
—
0.2
—
0.2
Payments of contingent consideration
—
9.2
—
9.2
Adjusted Free Cash Flow (non-GAAP)
$
(20.2
)
$
12.1
$
(45.4
)
$
(95.5
)
Notes to Reconciliations of
GAAP to Adjusted Non-GAAP Information and Net Income to Adjusted
EBITDA (Unaudited)
A.
The adjustments to income tax
expense include the effects of other adjustments and discrete tax
items.
B.
Represents the write off of
assets related to a capital project.
C.
Represents the change in fair
value of the contingent consideration for the PowerA acquisition,
which is included as expense/income in the consolidated statements
of income.
D.
Represents gains related to the
release of reserves for certain operating taxes.
ACCO Brands Corporation and
Subsidiaries
Supplemental Business Segment
Information and Reconciliation (Unaudited)
(In millions)
2023
2022
Changes
Adjusted
Adjusted
Reported
Adjusted
Operating
Reported
Adjusted
Operating
Adjusted
Adjusted
Operating
Operating
Income
Operating
Operating
Income
Operating
Operating
Reported
Income
Adjusted
Income
(Loss)
Reported
Income
Adjusted
Income
(Loss)
Net Sales
Net Sales
Income
Income
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
$
%
(Loss) $
(Loss) %
Points
Q1:
ACCO Brands North America
$
176.7
$
5.2
$
5.7
$
10.9
6.2
%
$
208.5
$
13.9
$
5.9
$
19.8
9.5
%
$
(31.8
)
(15.3
)%
$
(8.9
)
(44.9
)%
(330
)
ACCO Brands EMEA
135.8
7.8
5.8
13.6
10.0
%
156.1
5.6
3.5
9.1
5.8
%
(20.3
)
(13.0
)%
4.5
49.5
%
420
ACCO Brands International
90.1
9.0
2.7
11.7
13.0
%
77.0
4.2
2.0
6.2
8.1
%
13.1
17.0
%
5.5
88.7
%
490
Corporate
—
(11.9
)
—
(11.9
)
—
(16.9
)
4.4
(12.5
)
—
0.6
Total
$
402.6
$
10.1
$
14.2
$
24.3
6.0
%
$
441.6
$
6.8
$
15.8
$
22.6
5.1
%
$
(39.0
)
(8.8
)%
$
1.7
7.5
%
90
Q2:
ACCO Brands North America
$
292.6
$
55.1
$
5.6
$
60.7
20.7
%
$
306.6
$
50.7
$
6.5
$
57.2
18.7
%
$
(14.0
)
(4.6
)%
$
3.5
6.1
%
200
ACCO Brands EMEA
125.7
5.7
3.8
9.5
7.6
%
137.9
(1.5
)
3.6
2.1
1.5
%
(12.2
)
(8.8
)%
7.4
NM
610
ACCO Brands International
75.3
6.7
1.6
8.3
11.0
%
76.5
6.3
2.3
8.6
11.2
%
(1.2
)
(1.6
)%
(0.3
)
(3.5
)%
(20
)
Corporate
—
(12.3
)
—
(12.3
)
—
(0.1
)
(9.7
)
(9.8
)
—
(2.5
)
Total
$
493.6
$
55.2
$
11.0
$
66.2
13.4
%
$
521.0
$
55.4
$
2.7
$
58.1
11.2
%
$
(27.4
)
(5.3
)%
$
8.1
13.9
%
220
Q3:
ACCO Brands North America
$
257.2
$
(78.4
)
$
104.2
$
25.8
10.0
%
ACCO Brands EMEA
130.3
4.9
2.5
7.4
5.7
%
ACCO Brands International
98.1
17.3
1.9
19.2
19.6
%
Corporate
—
(6.8
)
(2.8
)
(9.6
)
Total
$
485.6
$
(63.0
)
$
105.8
$
42.8
8.8
%
Q4:
ACCO Brands North America
$
225.7
$
8.9
$
9.8
$
18.7
8.3
%
ACCO Brands EMEA
156.0
12.7
5.7
18.4
11.8
%
ACCO Brands International
117.7
22.7
1.6
24.3
20.6
%
Corporate
—
(8.7
)
(0.4
)
(9.1
)
Total
$
499.4
$
35.6
$
16.7
$
52.3
10.5
%
YTD:
ACCO Brands North America
$
469.3
$
60.3
11.3
$
71.6
15.3
%
$
998.0
$
(4.9
)
$
126.4
$
121.5
12.2
%
ACCO Brands EMEA
261.5
13.5
9.6
23.1
8.8
%
580.3
21.7
15.3
37.0
6.4
%
ACCO Brands International
165.4
15.7
4.3
20.0
12.1
%
369.3
50.5
7.8
58.3
15.8
%
Corporate
—
(24.2
)
—
(24.2
)
—
(32.5
)
(8.5
)
(41.0
)
Total
$
896.2
$
65.3
$
25.2
$
90.5
10.1
%
$
1,947.6
$
34.8
$
141.0
$
175.8
9.0
%
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
Comparable
Comparable
Net Sales
Currency
Net Sales
Net Sales
Currency
Net Sales
Comparable
Change
Translation
Change (A)
Change
Translation
Change (A)
Net Sales
Q1 2023:
ACCO Brands North America
(15.3
)%
(0.7
)%
(14.6
)%
$
(31.8
)
$
(1.5
)
$
(30.3
)
$
178.2
ACCO Brands EMEA
(13.0
)%
(5.7
)%
(7.3
)%
(20.3
)
(9.0
)
(11.3
)
144.8
ACCO Brands International
17.0
%
(0.2
)%
17.2
%
13.1
(0.2
)
13.3
90.3
Total
(8.8
)%
(2.4
)%
(6.4
)%
(39.0
)
$
(10.6
)
$
(28.4
)
$
413.2
Q2 2023:
ACCO Brands North America
(4.6
)%
(0.5
)%
(4.1
)%
$
(14.0
)
$
(1.6
)
$
(12.4
)
$
294.2
ACCO Brands EMEA
(8.8
)%
0.3
%
(9.1
)%
(12.2
)
0.4
(12.6
)
125.3
ACCO Brands International
(1.6
)%
0.7
%
(2.3
)%
(1.2
)
0.5
(1.7
)
74.8
Total
(5.3
)%
(0.2
)%
(5.1
)%
$
(27.4
)
$
(0.8
)
$
(26.6
)
$
494.4
2023 YTD:
ACCO Brands North America
(8.9
)%
(0.6
)%
(8.3
)%
$
(45.8
)
$
(3.1
)
$
(42.7
)
$
472.4
ACCO Brands EMEA
(11.1
)%
(2.9
)%
(8.2
)%
(32.5
)
(8.6
)
(23.9
)
270.1
ACCO Brands International
7.8
%
0.2
%
7.6
%
11.9
0.3
11.6
165.1
Total
(6.9
)%
(1.2
)%
(5.7
)%
$
(66.4
)
$
(11.4
)
$
(55.0
)
$
907.6
(A) Comparable net sales represents net
sales excluding material acquisitions 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/20230808175118/en/
Christopher McGinnis Investor Relations (847) 796-4320
Lori Conley Media Relations (937) 495-4949
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