Company Exceeds Full Year 2023
Outlook
Full Year
- Reported net sales of $1.833 billion, with gross margin
expanding 420 basis points
- Operating income of $45 million; adjusted operating income grew
17% to $205 million
- Loss per share of $(0.23); adjusted EPS of $1.09, above the
Company's outlook
- Net operating cash flow improved $51 million, generated
adjusted free cash flow of $118 million
- Reduced total debt by $88 million with a consolidated net
leverage ratio of 3.4x at year-end
ACCO Brands Corporation (NYSE: ACCO) today reported financial
results for the fourth quarter and fiscal year ended December 31,
2023.
"I am pleased to report that our fourth quarter financial
performance, including our reported net sales and adjusted EPS and
free cash flow, was better than expected. During the year, we
successfully executed against our 2023 priorities and implemented
our previously announced restructuring plans, which enabled us to
significantly expand our gross margin, deliver strong free cash
flow, and reduce our consolidated net leverage ratio to 3.4x at the
end of 2023. We believe our achievement of these results against a
challenging demand environment is a testament to the solid
execution of our team and our geographically diverse portfolio of
leading brands. The restoration of our gross margins and improved
cash flows enables us to make investments that position the Company
for long-term growth," stated ACCO Brands' President and Chief
Executive Officer, Tom Tedford.
Fourth Quarter Results
Net sales declined 2.2 percent to $488.6 million from $499.4
million in 2022. Comparable sales fell 4.6 percent, as favorable
foreign exchange increased sales by $12.2 million, or 2.4 percent.
Both reported and comparable sales declines reflect softer demand
due to a weaker macroeconomic environment, which has also led to
lower global demand for our technology accessories. These factors
more than offset growth in our International segment, driven by the
recovery of back-to-school sales in Latin America.
Operating loss was $52.8 million versus operating income of
$35.6 million in 2022, primarily due to a non-cash goodwill
impairment charge of $89.5 million related to the North America
segment. In 2023, we recognized restructuring charges of $20.9
million, compared to $7.3 million in the prior-year period, with
the increase related to our continuing footprint rationalization
and cost reduction programs. Adjusted operating income increased
30.6 percent to $68.3 million from $52.3 million in the prior-year
period. This increase reflects recovery of gross margin from the
effect of cumulative global price increases and cost reduction
actions, as well as moderating input costs. This was partially
offset by higher SG&A expense, primarily due to an increase in
incentive compensation compared to the prior year.
The Company reported a net loss of $59.4 million, or $(0.62) per
share, compared with prior-year net income of $18.8 million, or
$0.20 per share. The net loss is primarily due to the non-cash
goodwill impairment charge of $89.5 million, with no associated tax
benefit, as well as the higher restructuring charges noted above.
In addition, there was a favorable change in discrete tax items of
$21.8 million, largely related to recent tax legislation in both
Brazil and the United States. Adjusted net income was $37.5
million, or $0.39 per share, compared with $30.5 million, or $0.32
per share in 2022. The increase in adjusted net income was due to
the items noted above in adjusted operating income, partially
offset by higher interest and non-operating pension expenses.
Full Year Results
Net sales decreased 5.9 percent to $1.83 billion from $1.95
billion in 2022. Favorable foreign exchange increased sales by
$11.3 million, or 0.6 percent. Comparable sales decreased 6.5
percent. Both reported and comparable sales declines reflect the
challenging macroeconomic environment, especially in North America
and EMEA, and lower than anticipated return to office trends, as
well as tight inventory management by our customers in North
America. Sales of technology accessories were most negatively
impacted. This more than offset the benefit of cumulative price
increases across all segments, and volume growth in Latin
America.
Operating income was $44.7 million compared to $34.8 million in
2022. The increase in operating income is primarily due to a lower
non-cash goodwill impairment charge of $89.5 million versus the
$98.7 million recorded in 2022. In 2023, we recorded restructuring
charges of $27.2 million compared to $9.6 million in 2022, with the
increase related to our continuing footprint rationalization and
cost reduction programs. 2022 includes a benefit related to the
change in value of the PowerA contingent earnout of $9.0 million,
which did not repeat in 2023. Adjusted operating income increased
to $204.8 million from $175.8 million in 2022. Both reported and
adjusted operating income increases reflect the benefit of
cumulative global price increases and cost reduction initiatives,
partially offset by negative fixed cost leverage and higher
SG&A expense, primarily due to increased incentive
compensation.
Net loss was $21.8 million, or $(0.23) per share, compared with
a net loss of $13.2 million, or $(0.14) per share, in 2022. The net
losses were primarily related to the items noted above in operating
income. In 2023, there was a significant increase in discrete tax
benefits largely related to recent tax legislation in both Brazil
and the United States, partially offset by reduced operating tax
gains. Adjusted net income was $105.6 million compared with $101.0
million in 2022, and adjusted earnings per share were $1.09 per
share compared with $1.04 per share in 2022. The increase in
adjusted net income was due to the items noted above in adjusted
operating income, partially offset by higher interest and
non-operating pension expenses.
Capital Allocation and Dividend
For the full year, the Company significantly improved its
operating cash flow to $128.7 million versus $77.6 million in the
prior year, driven primarily by improved profits and working
capital. Adjusted free cash flow in 2023 improved by $40.0 million
to $117.5 million versus $77.5 million in 2022. Adjusted free cash
flow in 2022 excludes the contingent earnout payment. The Company's
consolidated leverage ratio as of December 31, 2023 was 3.4x.
On February 16, 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 March 27, 2024 to stockholders
of record at the close of business on March 15, 2024.
Restructuring and Cost Savings Program
On January 30, 2024, the Company announced a multi-year
restructuring and cost savings program, with anticipated annualized
pre-tax cost savings of at least $60 million. The program
incorporates initiatives to simplify and delayer the Company's
operating structure and reduce costs through headcount reductions,
supply chain optimization, global footprint rationalization, and
better leveraging the Company's sourcing capabilities. As a result
of these actions, the Company will improve its speed of execution
and bring key leaders closer to customers.
In connection with the program, the Company recognized pre-tax
restructuring charges of $20.9 million in the fourth quarter of
2023, related to costs associated with the headcount reductions, as
well as the closing of its Sidney, NY manufacturing facility. This
was the fourth facility closure announced in 2023.
New Operating Segments
As previously announced, the Company will be implementing a new
operating model, consolidating its three reportable segments into
two reportable segments. The Americas reporting segment will
include the U.S., Canada, Brazil, Mexico and Chile and the
International reporting segment will include EMEA, Australia, New
Zealand, and Asia. The Company will report on this basis for the
fiscal year commencing January 1, 2024.
Business Segment Results
ACCO Brands North America – For the full year, North America net
sales of $887.2 million decreased 11.1 percent from $998.0 million
in 2022, and comparable sales declined 10.7 percent. Fourth quarter
segment net sales of $199.0 million and comparable sales of $199.1
million both decreased 11.8 percent versus the prior year. Both
full-year and fourth quarter reported and comparable sales
decreases reflect softer demand due to a weaker macroeconomic
environment, lower than anticipated return to office trends and
retailers maintaining lower inventory levels, which resulted in
lower demand for technology accessories and office products. This
more than offset the benefit of cumulative pricing actions.
In North America, full year operating loss was $5.9 million
versus an operating loss of $4.9 million in 2022. In 2023, we
recorded a $89.5 million non-cash goodwill impairment charge
compared to the $98.7 million recorded in the prior year. In 2023,
restructuring charges were $16.7 million, an increase from the $5.3
million in 2022, largely related to our cost reduction and
productivity programs. Adjusted operating income was $122.4
million, up from $121.5 million in the prior year, as benefits of
the cumulative effect of pricing and cost actions, were largely
offset by lower volume and negative fixed cost leverage.
ACCO Brands EMEA - Full year net sales in the EMEA segment of
$547.2 million decreased 5.7 percent from $580.3 million in 2022.
Favorable foreign exchange increased sales by 1.0 percent.
Comparable sales declined 6.7 percent. Fourth quarter segment net
sales of $159.1 million increased 2.0 percent versus the prior
year's net sales of $156.0 million. Favorable foreign exchange
increased sales by 4.6 percent for the quarter. Comparable sales of
$152.0 million decreased 2.6 percent versus the prior-year period
as volume declines moderated sequentially in the quarter. Both full
year and fourth quarter comparable sales declines reflect reduced
demand, especially for technology accessories, due to a weaker
macroeconomic environment. This more than offset the benefit of
cumulative pricing actions.
The EMEA segment posted full-year operating income of $38.7
million compared with operating income of $21.7 million in 2022. In
2023, we recorded restructuring charges of $8.9 million versus $3.4
million in 2022, with the increase related to our ongoing footprint
rationalization and cost reduction programs. Adjusted operating
income was $62.5 million, up from $37.0 million in 2022. The
increases in both reported operating income and adjusted operating
income reflect recovery of gross margins from price increases and
cost savings actions, more than offsetting negative fixed cost
leverage and higher incentive compensation.
ACCO Brands International - International segment net sales of
$398.4 million for the full year increased 7.9 percent from $369.3
million in 2022. Favorable foreign exchange increased sales by 2.6
percent. Comparable sales were $388.7 million, up 5.3 percent
versus the prior year. Fourth quarter segment net sales of $130.5
million increased 10.9 percent versus the prior year's net sales of
$117.7 million. Favorable foreign exchange increased sales by 4.4
percent for the quarter. Comparable sales were $125.3 million an
increase of 6.5 percent versus the year-ago period. Both full year
and fourth quarter reported and comparable sales increases reflect
stronger pricing and volume growth in Latin America, more than
offsetting the impact of weaker economic conditions in Australia
and Asia and overall lower demand for technology accessories.
Operating income for the full year was $60.7 million, an
increase from $50.5 million in 2022. Adjusted operating income of
$68.1 million increased from $58.3 million in the prior year. The
increase in both operating and adjusted operating income were
primarily due to the cumulative benefit of pricing and cost
actions, somewhat offset by higher go-to-market spending, people
costs and incentive compensation.
2024 Outlook
"We are taking actions to reposition the company for long-term,
sustainable, profitable growth. In January, we announced a
multi-year restructuring and cost savings program, to reset our
cost structure. The program is expected to deliver at least $60
million in annual cost savings once fully implemented and will
better leverage our global platform and leading brands. We continue
to focus on our margin profile by exiting low margin business and
better leveraging our sourcing and supply chain infrastructure.
These actions will enable us to accelerate investments in new
product development, innovation, and other growth initiatives,
while increasing our profitability and cash flow, leading to
improved shareholder value," concluded Mr. Tedford.
For the full year, we expect reported sales to be down in the
range of 2.0% to 5.0%. The Company's sales outlook reflects the
uncertain demand environment for its categories. Full year adjusted
EPS is expected to be within a range of $1.07 to $1.11. The Company
expects 2024 free cash flow to grow to at least $120 million and to
end the year with a consolidated leverage ratio of approximately
3.0x to 3.2x.
In the first quarter, we expect reported sales to be down in the
range of 6.5% to 8.0% and adjusted EPS within a range of $0.01 to
$0.04. Seasonally, sales can shift between first and second quarter
due to the timing of back-to-school shipments in North America.
Webcast
At 8:30 a.m. ET on February 23, 2024, ACCO Brands Corporation
will host a conference call to discuss the Company's fourth quarter
and full year 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, 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: our ability to
successfully execute our restructuring and cost savings plans and
realize the anticipated benefits of these plans and our other
ongoing 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
(unaudited)
December 31, 2023
December 31, 2022
(in millions)
Assets
Current assets:
Cash and cash equivalents
$
66.4
$
62.2
Accounts receivable, net
430.7
384.1
Inventories
327.5
395.2
Other current assets
30.8
40.8
Total current assets
855.4
882.3
Total property, plant and equipment
599.6
589.2
Less: accumulated depreciation
(429.5
)
(404.1
)
Property, plant and equipment, net
170.1
185.1
Right of use asset, leases
91.0
88.8
Deferred income taxes
104.7
99.7
Goodwill
590.0
671.5
Identifiable intangibles, net
815.7
847.0
Other non-current assets
17.9
20.3
Total assets
$
2,644.8
$
2,794.7
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable
$
0.2
$
10.3
Current portion of long-term debt
36.5
49.7
Accounts payable
183.7
239.5
Accrued compensation
53.3
38.3
Accrued customer program liabilities
104.0
103.3
Lease liabilities
20.5
21.2
Other current liabilities
143.8
126.7
Total current liabilities
542.0
589.0
Long-term debt, net
882.2
936.5
Long-term lease liabilities
76.8
75.2
Deferred income taxes
125.6
144.1
Pension and post-retirement benefit
obligations
157.6
155.5
Other non-current liabilities
73.6
84.3
Total liabilities
1,857.8
1,984.6
Stockholders' equity:
Common stock
1.0
1.0
Treasury stock
(45.1
)
(43.4
)
Paid-in capital
1,913.4
1,897.2
Accumulated other comprehensive loss
(526.3
)
(540.3
)
Accumulated deficit
(556.0
)
(504.4
)
Total stockholders' equity
787.0
810.1
Total liabilities and stockholders'
equity
$
2,644.8
$
2,794.7
ACCO Brands Corporation and
Subsidiaries
Consolidated Statements of
(Loss) Income (Unaudited)
Three Months Ended December
31,
Twelve Months Ended December
31,
(in millions, except per share
data)
2023
2022
% Change
2023
2022
% Change
Net sales
$
488.6
$
499.4
(2.2)%
$
1,832.8
$
1,947.6
(5.9)%
Cost of products sold
318.6
354.1
(10.0)%
1,234.5
1,395.3
(11.5)%
Gross profit
170.0
145.3
17.0 %
598.3
552.3
8.3 %
Operating costs and expenses:
Selling, general and administrative
expenses
101.7
92.4
10.1 %
393.5
376.7
4.5 %
Amortization of intangibles
10.7
10.0
7.0 %
43.4
41.5
4.6 %
Restructuring charges
20.9
7.3
NM
27.2
9.6
NM
Goodwill impairment
89.5
—
NM
89.5
98.7
(9.3)%
Change in fair value of contingent
consideration
—
—
NM
—
(9.0
)
(100.0)%
Total operating costs and expenses
222.8
109.7
103.1 %
553.6
517.5
7.0 %
Operating (loss) income
(52.8
)
35.6
NM
44.7
34.8
28.4 %
Non-operating expense (income):
Interest expense
13.6
13.0
4.6 %
58.6
45.6
28.5 %
Interest income
(0.9
)
(2.1
)
(57.1)%
(7.1
)
(8.3
)
(14.5)%
Non-operating pension expense (income)
1.3
(1.3
)
NM
1.8
(4.5
)
NM
Other expense (income), net
6.6
(2.7
)
NM
4.5
(12.9
)
NM
(Loss) income before income tax
(73.4
)
28.7
NM
(13.1
)
14.9
NM
Income tax (benefit) expense
(14.0
)
9.9
NM
8.7
28.1
(69.0)%
Net (loss) income
$
(59.4
)
$
18.8
NM
$
(21.8
)
$
(13.2
)
65.2 %
Per share:
Basic (loss) income per share
$
(0.62
)
$
0.20
NM
$
(0.23
)
$
(0.14
)
64.3 %
Diluted (loss) income per share
$
(0.62
)
$
0.20
NM
$
(0.23
)
$
(0.14
)
64.3 %
Weighted average number of shares
outstanding:
Basic
95.4
94.5
95.3
95.3
Diluted
95.4
95.7
95.3
95.3
Cash dividends declared per common
share
$
0.075
$
0.075
$
0.300
$
0.300
Statistics (as a % of Net sales, except
Income tax rate)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Gross profit (Net sales, less Cost of
products sold)
34.8
%
29.1
%
32.6
%
28.4
%
Selling, general and administrative
expenses
20.8
%
18.5
%
21.5
%
19.3
%
Operating (loss) income
(10.8
)%
7.1
%
2.4
%
1.8
%
(Loss) income before income tax
(15.0
)%
5.7
%
(0.7
)%
0.8
%
Net (loss) income
(12.2
)%
3.8
%
(1.2
)%
(0.7
)%
Income tax rate
19.1
%
34.5
%
(66.4
)%
188.6
%
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Year Ended December
31,
(in millions)
2023
2022
Operating activities
Net loss
$
(21.8
)
$
(13.2
)
Payments of contingent consideration
—
(9.2
)
Loss on disposal of assets
(0.3
)
(3.6
)
Deferred income tax (benefit) expense
(20.1
)
1.3
Change in fair value of contingent
liability
—
(9.0
)
Depreciation
32.7
37.9
Amortization of debt issuance costs
3.0
2.7
Amortization of intangibles
43.4
41.5
Stock-based compensation
14.8
9.5
Non-cash charge for goodwill
impairment
89.5
98.7
Changes in operating assets and
liabilities:
Accounts receivable
(38.6
)
31.6
Inventories
85.5
23.2
Other assets
5.9
0.4
Accounts payable
(68.0
)
(66.0
)
Accrued expenses and other liabilities
18.2
(57.5
)
Accrued income taxes
(15.5
)
(10.7
)
Net cash provided by operating
activities
128.7
77.6
Investing activities
Additions to property, plant and
equipment
(13.8
)
(16.5
)
Proceeds from the disposition of
assets
2.6
7.2
Net cash used by investing activities
(11.2
)
(9.3
)
Financing activities
Proceeds from long-term borrowings
121.9
236.7
Repayments of long-term debt
(199.2
)
(220.5
)
Repayments of notes payable, net
(10.2
)
0.7
Payments for debt issuance costs
—
(1.2
)
Dividends paid
(28.5
)
(28.6
)
Payments of contingent consideration
—
(17.8
)
Repurchases of common stock
—
(19.4
)
Payments related to tax withholding for
stock-based compensation
(1.7
)
(2.5
)
Proceeds from the exercise of stock
options
—
4.3
Net cash used by financing activities
(117.7
)
(48.3
)
Effect of foreign exchange rate changes on
cash and cash equivalents
4.4
1.0
Net increase in cash and cash
equivalents
4.2
21.0
Cash and cash equivalents
Beginning of the period
$
62.2
$
41.2
End of the period
$
66.4
$
62.2
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 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 non-recurring items.
We believe adjusted SG&A expenses are useful to investors and
management because they reflect underlying SG&A expenses
without the effect of expenses that we consider to be outside our
core operations and facilitate meaningful period-to-period
comparisons.
Adjusted Operating Income
(Loss)/Adjusted Income (Loss) Before Taxes/Adjusted Net Income
(Loss)/Adjusted Net Income (Loss) Per Diluted Share:
Represents operating income (loss), income (loss) before taxes, net
income (loss), and net income (loss) per diluted share excluding
restructuring and goodwill impairment charges, the amortization of
intangibles, the change in fair value of contingent consideration,
non-recurring items, other income/expense 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, restructuring
and goodwill 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/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 (Loss) Income information reported in
accordance with GAAP to Adjusted Non-GAAP Information for the three
months ended December 31, 2023 and 2022.
Three Months Ended December
31, 2023
Operating (Loss)
Income
% of Sales
(Loss) Income before
Tax
% of Sales
Income Tax (Benefit) Expense
(A)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
(52.8
)
(10.8
)%
$
(73.4
)
(15.0
)%
$
(14.0
)
19.1
%
$
(59.4
)
(12.2
)%
Reported GAAP diluted loss per share
(EPS)
$
(0.62
)
Restructuring charges
20.9
20.9
5.2
15.7
Goodwill impairment charge
89.5
89.5
—
89.5
Amortization of intangibles
10.7
10.7
3.0
7.7
Exit certain products in the wellness
category
(B)
—
5.1
1.3
3.8
Other discrete tax items
—
—
19.8
(19.8
)
Adjusted Non-GAAP
$
68.3
14.0
%
$
52.8
10.8
%
$
15.3
29.0
%
$
37.5
7.7
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.39
Three Months Ended December
31, 2022
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net Income
% of Sales
Reported GAAP
$
92.4
18.5
%
$
35.6
7.1
%
$
28.7
5.7
%
$
9.9
34.5
%
$
18.8
3.8
%
Reported GAAP diluted income per share
(EPS)
$
0.20
Release of charge for Russia business
0.6
(0.6
)
(0.6
)
(0.1
)
(0.5
)
Restructuring charges
—
7.3
7.3
1.9
5.4
Amortization of intangibles
—
10.0
10.0
2.6
7.4
Gain on sale of property
—
—
(3.5
)
(0.9
)
(2.6
)
Other discrete tax items
—
—
—
(2.0
)
2.0
Adjusted Non-GAAP
$
93.0
18.6
%
$
52.3
10.5
%
$
41.9
8.4
%
$
11.4
27.2
%
$
30.5
6.1
%
Adjusted net income per diluted share
(Adjusted EPS)
$
0.32
See "Notes to Reconciliations of GAAP to Adjusted Non-GAAP
Information and Net (Loss) 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 (Loss) Income information reported in
accordance with GAAP to Adjusted Non-GAAP Information for the
twelve months ended December 31, 2023 and 2022.
Twelve Months Ended December
31, 2023
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
44.7
2.4
%
$
(13.1
)
(0.7
)%
$
8.7
(66.4
)%
$
(21.8
)
(1.2
)%
Reported GAAP diluted loss per share
(EPS)
$
(0.23
)
Restructuring charges
27.2
27.2
6.8
20.4
Goodwill impairment charge
89.5
89.5
—
89.5
Amortization of intangibles
43.4
43.4
11.6
31.8
Other asset write-off
—
1.1
0.3
0.8
Gain on sale of property
—
(1.5
)
(0.5
)
(1.0
)
Exit certain products in the wellness
category
(B)
—
5.1
1.3
3.8
Operating tax gains
(D)
—
(1.3
)
(0.4
)
(0.9
)
Other discrete tax items
—
—
17.0
(17.0
)
Adjusted Non-GAAP
$
204.8
11.2
%
$
150.4
8.2
%
$
44.8
29.8
%
$
105.6
5.8
%
Adjusted net income per diluted share
(Adjusted EPS)
$
1.09
Twelve Months Ended December
31, 2022
SG&A
% of Sales
Operating Income
% of Sales
Income before Tax
% of Sales
Income Tax Expense (A)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
376.7
19.3
%
$
34.8
1.8
%
$
14.9
0.8
%
$
28.1
188.6
%
$
(13.2
)
(0.7
)%
Reported GAAP diluted loss per share
(EPS)
$
(0.14
)
Charge for Russia business
(0.2
)
0.2
0.2
0.1
0.1
Restructuring charges
—
9.6
9.6
2.5
7.1
Goodwill impairment charge
—
98.7
98.7
—
98.7
Amortization of intangibles
—
41.5
41.5
10.9
30.6
Change in fair value of contingent
consideration
(C)
—
(9.0
)
(9.0
)
(2.3
)
(6.7
)
Gain on sale of property
—
—
(3.5
)
(0.9
)
(2.6
)
Operating tax gains
(D)
—
—
(11.2
)
(3.8
)
(7.4
)
Other discrete tax items
—
—
—
5.6
(5.6
)
Adjusted Non-GAAP
$
376.5
19.3
%
$
175.8
9.0
%
$
141.2
7.2
%
$
40.2
28.5
%
$
101.0
5.2
%
Adjusted net income per diluted share
(Adjusted EPS)
$
1.04
See "Notes to Reconciliations of GAAP to Adjusted Non-GAAP
Information and Net (Loss) Income to Adjusted EBITDA (Unaudited)"
for further information regarding adjusted items.
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)
income reported in accordance with GAAP to Adjusted EBITDA.
Three months ended December
31,
Year ended December
31,
2023
2022
% Change
2023
2022
% Change
Net (loss) income
$(59.4)
$18.8
NM
$(21.8)
$(13.2)
65.2 %
Stock-based compensation
4.4
1.7
NM
14.8
9.5
55.8 %
Depreciation
7.5
9.3
(19.4)%
32.7
37.9
(13.7)%
(Release) charge for Russia business
—
(0.6)
(100.0)%
—
0.2
(100.0)%
Amortization of intangibles
10.7
10.0
7.0 %
43.4
41.5
4.6 %
Restructuring charges
20.9
7.3
NM
27.2
9.6
NM
Goodwill impairment charge
89.5
—
NM
89.5
98.7
(9.3)%
Change in fair value of contingent
consideration
(C)
—
—
NM
—
(9.0)
(100.0)%
Interest expense, net
12.7
10.9
16.5 %
51.5
37.3
38.1 %
Other expense (income), net
6.6
(2.7)
NM
4.5
(12.9)
NM
Income tax (benefit) expense
(14.0)
9.9
NM
8.7
28.1
(69.0)%
Adjusted EBITDA (non-GAAP)
$78.9
$64.6
22.1 %
$250.5
$227.7
10.0 %
Adjusted EBITDA as a % of Net Sales
16.1 %
12.9 %
13.7 %
11.7 %
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net (Loss) Income to Adjusted
EBITDA (Unaudited)" for further information regarding adjusted
items.
Reconciliation of Net Cash Provided by
Operating Activities to Adjusted 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 Adjusted Free Cash Flow.
Three months ended December
31, 2023
Three months ended December
31, 2022
For the year ended December
31, 2023
For the year ended December
31, 2022
Net cash provided by operating
activities
$58.0
$87.2
$128.7
$77.6
Net (used) provided by:
Additions to property, plant and
equipment
(4.1)
(4.7)
(13.8)
(16.5)
Proceeds from the disposition of
assets
0.4
7.0
2.6
7.2
Payments of contingent consideration
—
—
—
9.2
Adjusted Free Cash Flow (non-GAAP)
$54.3
$89.5
$117.5
$77.5
Notes to Reconciliations of GAAP to Adjusted
Non-GAAP Information and Net (Loss) Income to Adjusted EBITDA
(Unaudited)
A. The income tax impact of the non-GAAP adjustments and other
discrete tax items, including the effects of recent tax legislation
in both Brazil and the United States.
B. Represents charges for the exit of certain products in the
wellness category.
C. Represents income from the change in fair value of the
contingent consideration for the PowerA acquisition.
D. Represents gains related to the release of reserves for
certain operating taxes.
ACCO Brands Corporation and
Subsidiaries
Supplemental Business Segment
Information and Reconciliation (Unaudited)
(In millions)
2023
2022
Changes
Adjusted
Adjusted
Reported
Adjusted
Operating
Reported
Adjusted
Operating
Adjusted
Adjusted
Operating
Operating
Income
Operating
Operating
Income
Operating
Operating
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 North America
$
176.7
$
5.2
$
5.7
$
10.9
6.2
%
$
208.5
$
13.9
$
5.9
$
19.8
9.5
%
$
(31.8
)
(15.3
)%
$
(8.9
)
(44.9
)%
(330
)
ACCO Brands EMEA
135.8
7.8
5.8
13.6
10.0
%
156.1
5.6
3.5
9.1
5.8
%
(20.3
)
(13.0
)%
4.5
49.5
%
420
ACCO Brands International
90.1
9.0
2.7
11.7
13.0
%
77.0
4.2
2.0
6.2
8.1
%
13.1
17.0
%
5.5
88.7
%
490
Corporate
—
(11.9
)
—
(11.9
)
—
(16.9
)
4.4
(12.5
)
—
0.6
Total
$
402.6
$
10.1
$
14.2
$
24.3
6.0
%
$
441.6
$
6.8
$
15.8
$
22.6
5.1
%
$
(39.0
)
(8.8
)%
$
1.7
7.5
%
90
Q2:
ACCO Brands North America
$
292.6
$
55.1
$
5.6
$
60.7
20.7
%
$
306.6
$
50.7
$
6.5
$
57.2
18.7
%
$
(14.0
)
(4.6
)%
$
3.5
6.1
%
200
ACCO Brands EMEA
125.7
5.7
3.8
9.5
7.6
%
137.9
(1.5
)
3.6
2.1
1.5
%
(12.2
)
(8.8
)%
7.4
NM
610
ACCO Brands International
75.3
6.7
1.6
8.3
11.0
%
76.5
6.3
2.3
8.6
11.2
%
(1.2
)
(1.6
)%
(0.3
)
(3.5
)%
(20
)
Corporate
—
(12.3
)
—
(12.3
)
—
(0.1
)
(9.7
)
(9.8
)
—
(2.5
)
Total
$
493.6
$
55.2
$
11.0
$
66.2
13.4
%
$
521.0
$
55.4
$
2.7
$
58.1
11.2
%
$
(27.4
)
(5.3
)%
$
8.1
13.9
%
220
Q3:
ACCO Brands North America
$
218.9
$
19.9
$
5.6
$
25.5
11.6
%
$
257.2
$
(78.4
)
$
104.2
$
25.8
10.0
%
$
(38.3
)
(14.9
)%
$
(0.3
)
(1.2
)%
160
ACCO Brands EMEA
126.6
6.9
6.7
13.6
10.7
%
130.3
4.9
2.5
7.4
5.7
%
(3.7
)
(2.8
)%
6.2
83.8
%
500
ACCO Brands International
102.5
16.4
1.5
17.9
17.5
%
98.1
17.3
1.9
19.2
19.6
%
4.4
4.5
%
(1.3
)
(6.8
)%
(210
)
Corporate
—
(11.0
)
—
(11.0
)
—
(6.8
)
(2.8
)
(9.6
)
—
(1.4
)
Total
$
448.0
$
32.2
$
13.8
$
46.0
10.3
%
$
485.6
$
(63.0
)
$
105.8
$
42.8
8.8
%
$
(37.6
)
(7.7
)%
$
3.2
7.5
%
150
Q4:
ACCO Brands North America
$
199.0
$
(86.1
)
$
111.4
$
25.3
12.7
%
$
225.7
$
8.9
$
9.8
$
18.7
8.3
%
$
(26.7
)
(11.8
)%
$
6.6
35.3
%
440
ACCO Brands EMEA
159.1
18.3
7.5
25.8
16.2
%
156.0
12.7
5.7
18.4
11.8
%
3.1
2.0
%
7.4
40.2
%
440
ACCO Brands International
130.5
28.6
1.6
30.2
23.1
%
117.7
22.7
1.6
24.3
20.6
%
12.8
10.9
%
5.9
24.3
%
250
Corporate
—
(13.6
)
0.6
(13.0
)
—
(8.7
)
(0.4
)
(9.1
)
—
(3.9
)
Total
$
488.6
$
(52.8
)
$
121.1
$
68.3
14.0
%
$
499.4
$
35.6
$
16.7
$
52.3
10.5
%
$
(10.8
)
(2.2
)%
$
16.0
30.6
%
350
YTD:
ACCO Brands North America
$
887.2
$
(5.9
)
$
128.3
$
122.4
13.8
%
$
998.0
$
(4.9
)
$
126.4
$
121.5
12.2
%
$
(110.8
)
(11.1
)%
$
0.9
0.7
%
160
ACCO Brands EMEA
547.2
38.7
23.8
62.5
11.4
%
580.3
21.7
15.3
37.0
6.4
%
(33.1
)
(5.7
)%
25.5
68.9
%
500
ACCO Brands International
398.4
60.7
7.4
68.1
17.1
%
369.3
50.5
7.8
58.3
15.8
%
29.1
7.9
%
9.8
16.8
%
130
Corporate
—
(48.8
)
0.6
(48.2
)
—
(32.5
)
(8.5
)
(41.0
)
—
(7.2
)
Total
$
1,832.8
$
44.7
$
160.1
$
204.8
11.2
%
$
1,947.6
$
34.8
$
141.0
$
175.8
9.0
%
$
(114.8
)
(5.9
)%
$
29.0
16.5
%
220
See "Notes to Reconciliations of GAAP to Adjusted Non-GAAP
Information and Net (Loss) Income 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 2023:
ACCO Brands North America
(15.3
)%
(0.7
)%
(14.6
)%
$
(31.8
)
$
(1.5
)
$
(30.3
)
$
178.2
ACCO Brands EMEA
(13.0
)%
(5.7
)%
(7.3
)%
(20.3
)
(9.0
)
(11.3
)
144.8
ACCO Brands International
17.0
%
(0.2
)%
17.2
%
13.1
(0.2
)
13.3
90.3
Total
(8.8
)%
(2.4
)%
(6.4
)%
$
(39.0
)
$
(10.6
)
$
(28.4
)
$
413.2
Q2 2023:
ACCO Brands North America
(4.6
)%
(0.5
)%
(4.1
)%
$
(14.0
)
$
(1.6
)
$
(12.4
)
$
294.2
ACCO Brands EMEA
(8.8
)%
0.3
%
(9.1
)%
(12.2
)
0.4
(12.6
)
125.3
ACCO Brands International
(1.6
)%
0.7
%
(2.3
)%
(1.2
)
0.5
(1.7
)
74.8
Total
(5.3
)%
(0.2
)%
(5.1
)%
$
(27.4
)
$
(0.8
)
$
(26.6
)
$
494.4
Q3 2023:
ACCO Brands North America
(14.9
)%
(0.3
)%
(14.6
)%
$
(38.3
)
$
(0.7
)
$
(37.6
)
$
219.6
ACCO Brands EMEA
(2.8
)%
5.4
%
(8.2
)%
(3.7
)
7.0
(10.7
)
119.6
ACCO Brands International
4.5
%
4.3
%
0.2
%
4.4
4.2
0.2
98.3
Total
(7.7
)%
2.2
%
(9.9
)%
$
(37.6
)
$
10.5
$
(48.1
)
$
437.5
Q4 2023:
ACCO Brands North America
(11.8
)%
—
%
(11.8
)%
$
(26.7
)
$
(0.1
)
$
(26.6
)
$
199.1
ACCO Brands EMEA
2.0
%
4.6
%
(2.6
)%
3.1
7.1
(4.0
)
152.0
ACCO Brands International
10.9
%
4.4
%
6.5
%
12.8
5.2
7.6
125.3
Total
(2.2
)%
2.4
%
(4.6
)%
$
(10.8
)
$
12.2
$
(23.0
)
$
476.4
2023 YTD:
ACCO Brands North America
(11.1
)%
(0.4
)%
(10.7
)%
$
(110.8
)
$
(3.9
)
$
(106.9
)
$
891.1
ACCO Brands EMEA
(5.7
)%
1.0
%
(6.7
)%
(33.1
)
5.5
(38.6
)
541.7
ACCO Brands International
7.9
%
2.6
%
5.3
%
29.1
9.7
19.4
388.7
Total
(5.9
)%
0.6
%
(6.5
)%
$
(114.8
)
$
11.3
$
(126.1
)
$
1,821.5
(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/20240222305864/en/
Christopher McGinnis Investor Relations (847) 796-4320
Kori Reed Media Relations (224) 501-0406
Grafico Azioni Acco Brands (NYSE:ACCO)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni Acco Brands (NYSE:ACCO)
Storico
Da Feb 2024 a Feb 2025
