ACCO - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the ACCO Brands First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference is being recorded. to President, host Investor like Jennifer today's now Vice Rice, Relations. would introduce for your conference, I

You may begin.

Jennifer Rice

Good morning, call. quarter XXXX and welcome to our first conference

GAAP President slides of accompany other of are the earnings morning's Chief current President Neal and non-GAAP rate of that on call transaction, Officer. are we in financing-related have year. Vice Elisman, certain and Speaking Slides quantifying Financial that and measures this today Fenwick, adjusted to of quarterly per share Executive comparable Executive results, to rate call accompany a forecasting reconciliation Brands to or ACCO results Chairman, our earnings Officer and call. the amounts, posted the Chief measures Corporation, this in in difficulty the been adjusted and and financial tax release Boris adjusted Adjusted normalized to When results. accobrands.com. these tax this to and Schedules the the Investor inherent speaking XX% integration, measures results and a apply do exclude may of directly costs most reconcile Relations not and Due refer restructuring guidance. section we

see press information, this For more release. morning's

SEC and risk call for Forward-looking could these and and our our an risks differ to of statements actual explanation certain factors materially. made certain filings the on are release press results during of based and uncertainties assumptions. Please refer

and them assume forward. going forward-looking made Our today's obligation no statements are update to of we as date

hold a prepared Q&A will session. Following our remarks, we

Elisman. call the over Now Boris it is turn to my pleasure to

Boris Elisman

income quarter good sales and off in that a that because historically, the is up year. and of lost solid foreign last money net year, you morning, start, up acquisition long scale. I'm everyone. of smallest Thank report got net pleased to from and and the of Esselte to a the we've QX lack sales due our from XX% of exchange, time with for the followed benefits Those year you, who've us know to Jennifer, quarter XXX%

much quarters, balance margins While it our growth now in closures, portfolio. declines more one in play and revenues a and destocking to store other most than inventory position of QX is QX of region with X still also incremental out saw acquisitions in We smaller business demonstrating our better mix recent from health offset margin make another. diversified to or product in due We're this sales solidly the the profitable, XXXX. and

with declines the significantly consistent listings the expectations, our profits, quarter earlier despite in the but and to out sales to higher America offsetting and sales segment key of of Easter were impact we grew our I'm the Esselte delivered going the sales month X%, because improvements largely EMEA negative extra Esselte sales new my the the up results profit European stripping products and and it quarter. because extra comparable quarter, at of by and drove in were Net results in overall our total segment up international. EMEA begin our with sales XX%, expected While EMEA in commentary North gains were of of and FX XX%. In improving gained holiday. the month Kensington currencies, mixed customers

Trends reductions incremental of stores and synergies. to expected, cost we are at integration well, sales grew to from and continue channels we benefiting point fourth Overall, sellout, super by the our to results. sales, reported year. bigger In America, during from the The point quarters. impact of in last our sales in traditional of and beginning larger also America quarters. trend season to see and Esselte channel North first business wholesalers. positive due manage synergies. transition as channels, net the inventory leverage I'm by We low the from We back-to-school a seasonality faster-growing very sales with a pleased European results, business, office digits, proceed still causes expect but the well, continues weight growth declined to we're XXX%, than growth seeing continued and our adjusted our or office single saw in over double-digit for reversing second of better where profit are the EMEA carry the our to UK mid-single in sales the North digits year. sales decline third low- where operating

we overall. We have mixed, when consistent down our back-to-school in with net season had with view International initial on prior good are were sales the X%. North Results orders year, they a and America segment

a While in the quarter. grew of good more season, on reduced Australia offset back-to-school and Brazil In sales a customers in both by was improvement and few countries, inventories declines back their Mexico. in large the than profits

performance. the Europe, in impacting As segment number work earlier days the further Easter International of in March, reduced

history, quarter, dividend $X.XX per our we the the at first quarterly distributed in During share.

repurchased on also at comments stock the We an guidance. My of are price shares average XXX,XXX $XX.XX. final first in quarter of

our XXXX growth year. a XX%, for of tax of normalized X% sales of our flow off share, approximately growth. cash sales, reaffirming $XXX rate to and have outlook and range $X.XX of review assuming flow are XX% we're cash a a We free annual expect million start growth of and summary, profit XX%. to to $X.XX the approximately for In adjusted to solid EPS We'll changed not continue per for

at Neal ask look Now you the detailed Neal? give a quarter. more to I'll

Neal Fenwick

Thank Good morning, everyone. you, Boris.

First of currency was million $X.XX and restructuring $X.XX Australia $X.XX share in America, primarily per sales quarter. of expected North lesser mainly $XX.X from charges. to prior sales net year million XX%, quarter in declines a or extent, from and constant up Net in and Mexico. income declines X%, to the month $X.X included or share, per and was per million income share extra integration the Adjusted $X.X due increased Esselte. Comparable decreased at

SG&A improvement is but detailed of synergy basis improved as a by was charges and and X expenses basis in excluding basis excluding XXX acquisition, Page XX margin exchange. the by savings. improvement SG&A savings, Gross in specifics. charges. XX margin foreign points, reported lower sales were points improved our was cost basis was by slide charges. and SG&A lower a The at up driven primarily to on due in gross including cost the to as acquisition quarter on deck adjusted points and percent Looking sales, XX The and points to as to well the due basis

at an some were lost The on our our decreased inventory sales basis for mostly trends commodity a our products. Turning customers placements, quarter. X%, In of Point but than sales for X%, certain the low-margin decreased and to categories are which better North comparable due to overview reductions segment, segments $XXX up America sales sales our sales measured quarter. January. the the of primarily lower month in increased lower reported operating to EMEA segment over last and their extra margin to North gross XX% January Esselte America In caused income and X% million segment, results. million a in the and decline was of margin as of $XX added

or sales January of X% of currency, for comparable increased month the and the million. Esselte $X.X effect Excluding

in sales synergies improvement an positive base Esselte and business customers. with seen ACCO have We

income International timing the had Esselte X% earlier $X less in lower due by operating However, primarily due ACCO days and sales lower and and the income declines reductions to XX% systems in sales decreased and million the X% share income working optimize holiday legacy in due and later to warehouse operating increase both inventory EMEA increased. increased combined and or margin Brazil Easter Australia sales timing distribution due and gross and reduced million. March to associated as synergies, customer the International margin million higher and operations or $XX we improved also Strong selling Easter some decreased Mexico in affected was offset loss. acquisition $X are selling growth for costs in decreased to in days Australia. consolidation of comparable to and the of The both operating in The to costs segment. part, temporary this was sales, month. and sequentially distribution Australia. with

sheet. million positive the timing Easter our cycles. flow year had of month-end We and adjusted versus flow now generation affected in cash quarter. cash during The payment cash Turning free of $XX million quarter customer's the certain $XX to balance and prior flow

we will for to be QX For expect flow approximately million. again, outflow of Once quarters. cash $XXX back-to-school cash cash the main our buildup generation fourth season. as XXXX, expect free year, we a working it still due capital American North and third last quarter, the in was seasonal

in $XX year. approximately of million payments didn't tax we second U.S. the In prior have quarter will in that the addition, make we

are for cash much Our spans third similar have But generate outflows for very to either EMEA as and business or land still our North early that this quarters guidance the and last we season more commented for year, late on just exactly but initial orders in year. cash back-to-school back-to-school and for significant restructuring. Boris reminder, America year how sales to June already second will of it's will a July. difficult the forecast our

to certain included be I'll questions. move my deck assumptions X. slide your our remarks to in happy have conclude and we page will always, Boris take Q&A, Operator? I that, on As on and With where

Operator

And our from first Financial. Instructions] BWS from [Operator is question Khorsand Hamed

now is now me. is line Hamed, Pardon open. line Your your open.

Hamed Khorsand

hear me? you Can

Boris Elisman

Yes.

Hamed Khorsand

retailer of or bit And Can loss in the competitive, All is little talk at just really the right. shelves share level? the downsizing commentary? general about this a you if this is

Boris Elisman

meant profit as if customers' lose win we some Really our win what we we is year, some make comment, it, of money. and by that that don't commodity we talked business opportunistic. incremental And about if want we business last to to try Hamed, it, can with we we losing viewed

to that in to go-forward year. end it that. going basis. the is QX, year-over-year the this tail QX on due a last so So in should business issue We not lost still be had we We're anniversary that declines of

Hamed Khorsand

of the this sales as is far goes, as it synergy brand-new the placements concerned as product is then as as because And acquisition? far you is the for Esselte all

Boris Elisman

Yes, venues customers of as new products new our legacy the to Esselte sales sell for place customers of the and new distribution both the selling ACCO opening were it's because all allow our shipment in to up basically year one new centers the it's are deliver earlier in relationships we us that, our we and that new up ACCO. able products, Continental the and We really due to the through of products for one have to a opened legacy result legacy that consolidated acquisition. order Europe. channels, us force And

seeing are in we So that QX.

Hamed Khorsand

you Are quantify now, it... that right to able is or

Boris Elisman

very difficult. It's

quarters it a then on we'll better. Let able of to couple do maybe go something and more for be

Operator

question Sidoti McGinnis from Our from next & is Company. Chris

open. now is line Your

Chris McGinnis

customers maybe the business there? trends talk you're Can and and seeing you just the from about e-commerce maybe

Boris Elisman

North our Yes. business us. American year. doing Last of very this for e-commerce E-commerce well business around continues was to better it's do and year, it's XX% better,

also continuing the now, slowdown very So we results unabated seeing growth strong to well. there we're in pleased is, large getting seeing E-commerce less growth. e-commerce see fairly and with what's are growth. encouraging but is numbers developed I'm not internationally, we're to we're but a as

of a remarks, well. talked transition legacy So second fairly channels the third be channels we it's and and continuation And that in and significant of our it's prepared expect quarters. as newer we mass our more going from that we to really to e-commerce about in of said

Chris McGinnis

And are the that? little touch can Or, a that, traditional up still the, better follow bit Great. maybe to profile versus on just is just quickly you business? on margin

Boris Elisman

neutralize, over bit said, to still now, a better. I it's yes. as little Yes, time that's right it's little going a bit better but But still

Operator

Kevin Our is next from Steinke Barrington from Research. question

now is line Your open.

Kevin Steinke

an you sense Do Easter any your might have had that to that on you impact growth? Easter. had have how as nice really early growth the So despite early Europe of you mentioned much in

Boris Elisman

Neal of his XX% us is less for hard It's the which as there But that, mentioned were selling in Kevin. days month. to remarks, prepared March, quantify two in roughly

the around some the that of that in people quantify is calendar impacted just we additional is captured take and is was that that. But has month. of Easter And time off that Easter. can't not just What some that

Kevin Steinke

function what's ago being are UK on up. year there. in comparisons? you easier of Okay. that the And sales UK? see some of synergies Or a commentary starting talked And Is to about the just on going then you just kind in anymore

Boris Elisman

our has to really year. obviously, Well, ACCO a UK new that this Brands. our X that lot done business successful. easier very, growth, business as is basis the for events the engaging think months And several that the in team last had some our We've UK combined and the really a a pretty I double-digit the growth I attribute business of that very doing customer of team work customer the the down year. were first relaunching of comps was base job is, But good in much because on

Kevin Steinke

mentioned or reduced Anything is And Great. you Okay. prospect expand there. Mexico, to then what by you some it specific you see do as for customers Mexico out you inventory called the move on there, forward?

Boris Elisman

a Mexico little in of bit surprise a Yes, the was quarter.

in We a have The business well. in Mexico. We a doing very is Mexico strong had QX. very strong quite economy

some Mexico the inventory channel lot from that in carry expect at of in carrying I and of the implemented the want large the that do the do that of weeks reduced inventory in a this and as year. we remainder I in had And customer quarter. then policy, hangover Mexico. a to I of of think expect a was a to So do of the was QX new they the one-off the management in more customer that being end QX. well impact quarter have changed their just a an number

Kevin Steinke

of just the throughout talked And integration move that as just and Good. expect lastly, you kind we XXXX? move lessen about on Pelikan we higher there. cost ongoing Okay. still Should distribution some

Boris Elisman

I move think I as lessen and Absolutely. through year to you well, yes. should the it certainly as we expect

Operator

from Our next Bill SunTrust. question Chappell is from

Your line is now open.

Bill Chappell

merge to Richards combined as Boris, terms in us impact Whether the any you is? that business? you how just your Any of color And little your Are between a and the just, customer? S.P. merger can more Essendant? do much expect just give they they changes together? of

Boris Elisman

and Richards X% of basis, a than about smaller they S.P. is combined used global need dealers, directly not, customers, and also If independent serve They to of their deliveries, are them. multiple They they consolidating shipments and they buy the resellers. are to our Essendant vendors significantly Bill. be. buy provide shipping good on proposition pricing a role thanks, can sales smaller Yes, important If which good it an vendors. their to provide to value good which from from customers. from

those a take their I small result a our if think will out that will consolidation. just have merge, they're companies minor impact as on So that sales. do a because on certainly they One, expect inventory some But I it buy they'll quantities. larger and result us service from basis and level combined a lot buy two, the level as from they a customers of today, of the of pricing us get not or their combination, just will if in of of

important mitigate through an is something definitely are our that is work they could but So that this the team customer, we doing.

Bill Chappell

it in then And that pricing taking And freight little or of set Or in for of other commodities? thought costs is mean this of year? how you? midyear I Great. is for terms a and you bit, that affects rates, on pricing much there a touched terms pretty but also

Boris Elisman

are costs Yes, up. going

X. taking raw just some in more In of X, bit practice on of on on not just we do We a January And are throughout seeing little it commodities. also it do inflationary it's to other a We're midyear. we're January countries, are of to freight some trying the pressure, but but not year. to limited pricing and material the up countries,

of U.S., planning seeing are pressure. we're for inflationary where We an the in increase most

We are do U.S. increase price planning midyear in a to the

Bill Chappell

Got that's year? points the maybe you in, it. this top affect would And price reflected percentage a expect few in line

Boris Elisman

number, yes. is Everything guidance our in reflected

Bill Chappell

of placement category gains you kind of more expecting or the the been know back-to-school, look of growth I was, me, for few year Got good read, but it's, this riding from meaningful terms initial back-to-school? both year, any overall back-to-school back Are the just it. to of then couple last And have one months kind last away last in of in U.S. shared you seasons years a good we're it or as

Boris Elisman

much years Yes, and 'XX. 'XX last year, phenomenal in good. both 'XX very was where were pretty matched were we

orders We have for year, this preliminary back-to-school. this year's

early, but we orders, last to quite of back-to-school be these years. it's So expect similar to preliminary on the based couple 'XX

it's I tell. right early a So think upside, I'm but some be There now, bit too little encouraged. may to

Operator

Reuter Our of William Bank next is America. from from question

now Your open. line is

William Reuter

in Can volume globally are of expectation, guess, point? units your of that guess, this both in the categories terms for, consumption, serving and and the U.S. you terms at I about you in talk then, I

Boris Elisman

sales North units And our single that expectation to I little at if pricing bit digits is be will little are is a up demand roughly and Yes, emerging overall in America price mature And flat markets. look down and markets, offset. well. up as our look units mid-single digits going up if I at be expect I Western low to Europe, bit be to low a to or

emerging would digits. to So single the growth markets be up in mid- high overall

in we markets year, measuring we parts in a unit does of growth. in exact saw world. have the to last job trends growth example, emerging other unit where good similar We other are what measures team think Brazil. X% don't But the Brazil, very of For I our in saw

William Reuter

Okay. calls And I where impact seeing categories there products, are are which of but on introduction many compete asked the guess, AmazonBasics, been you of in then I know you past, in the of it's the there? new

Boris Elisman

Amazon has in They with countries in now. AmazonBasics. very our double-digit well. just assortment in big for been not small many They the have we're and categories customer of still a but from us, U.S. growth great as years ours small them, a for are seeing

meaningful We disruption or seen to assortment have result. not our our as sales a

focus other they continue will to offer to the our some they on going things think have categories, on in a but business. in I particular our things lot of I bigger think company

William Reuter

guess, share the for are about still of lastly, just repurchase I Okay. substantial you And thinking that have year? rest relatively you the then capability how authorization.

Boris Elisman

$XXX have the in share left million We authorization. repurchase

price our mentioned any as time the capital in plan not be allocation mentioned in we As or we we're we will we about balanced market before, the and be specific before, to shares. also the quarter, at if in we repurchased first remainder $XX.XX, mentioned, I'm of XXX,XXX as be will not. year. In repurchasing shares And sure we is I the the

Operator

Our Holden from next from Barclays. Hale question is

is Your now open. line

Hale Holden

two and clarifications. The more in Australia, inventory broad-based? had I destocking, that was Mexico is or only that

Boris Elisman

was office then in super destocking and and wholesalers Mexico, stores Inventory the U.S. Australia

Hale Holden

opportunity? days then simply of two quarter? the the that flow it. lost Got Easter in Or And second back from selling lost that is just the in does quarter,

Boris Elisman

It should flow back, yes.

Hale Holden

them any my of expectation some that of versus SKU on is pricing through? widen Okay. label now will partners that question increases, brand take might And is increases then and then the your last channel private pricing alongside the those how that retail pass providing. your potential your And thoughts you're on you offerings

Boris Elisman

costs up market. our go Yes, the commensurate of the with rest

as So expect are partners that take expect them in do see passing going and I will well. will through private label price channel in that change expect that through I products pass our they're competitive and just like I position I those those costs But a as the cost they result. up the the any do increases don't

Operator

no time, Chairman this back At I I'm call further turn remarks. to over showing would and to for the like CEO, closing questions. Elisman, Boris

Boris Elisman

summarize, you off report greater The of To forward is the our strength second that XXXX got confident that I'm we the balance year a ACCO off. earnings. pleased of our I quarter. and with after again look another start for be solid we're highlight operator. it to diversification year to Brands, the you. quarter provides Thank speaking and paying and the great you, with results European global Thank business our will

Operator

today's thank in gentlemen, participation for Ladies you and program. concludes This conference. your the

may disconnect. now You

ACCO Brands (ACCO) 1 May 182018 Q1 Earnings call transcript