ACCO - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the ACCO Brands Second Quarter 2018 Earnings 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] I will now like to turn the call over to Jennifer Rice, Vice President, Investor Relations. Please go ahead.

Jennifer Rice

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

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

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

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

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

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

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

Boris Elisman

QX. school into sales America, our a well as shift our QX view. we the executed broader season. acquired That begin with year's quarter still total last as in I'll The sales craft count. commentary channels significantly Mexico, penetration North e-tail those sales in These and to to rate leading year. and footprint expected alternative second away versus retailers modest such due to comparable growth and Adjusted benefited brands, comparable company which $X.XX primarily and increase share continued in pleased the brands a Mexico as up America. distribution will two mentioned Overall color our declines Europe, and sales. channels, channels sales this from sales and share QX products strategy, and GOBA's season regions existing retail, with and comparable and super our slightly. in taking basis. Jennifer, performance to with doubles pleased I'm in EMEA channels prior offset contributed wholesalers X% our really nice up pleased office mass decline be XX% XXXX. growth job were last These synergies. initial with macro well GOBA EPS quarter distribution sales with tax in XX% QX e-commerce independents. X% Internacional, in my International. and reported office Mexico in mass we categories, and our from earnings distributor particularly I our We're QX some you, and increased growth I'm on focus to we customers. morning, started lower in despite with add everyone. product America industry throughout traditional Last are with from revenues In were last to X% where a was per North complement and against to Reported I'm shipments that QX X% wholesalers. Thank American back-to-school is good Barrilito, e-tail and And Great $X.XX. up mass QX. especially partially on were have with to offset well challenges. X%, North there. our share on We a teams integration our will comparable increased year. done shipments sales our and continuing to by the stores back-to-school up our executing growing sales from year, Their accelerating channels from North

and were North American partially XX% well channels continue key Star, for XX% mass Mead and BTS were versus These office of Five as North due decline from Our brands declines by unusually XX% wholesalers. last to in gross it in and raw up and XX%, e-tail initiated a directly more OSS respectively. XX%, and expected, in Hilroy to margin them were a was up high product us. Growth and adverse cables to dealers to and their approximately in gross rather revise less trend year bought business up programs expensive out and buy dollar us sales higher as margins wholesalers due quarter sales were growth America QX, than and docks. to dealer Kensington mix, We as prior OSS North in from down and wholesalers, through stores America wholesale. to like would versus directly more Independent as inventory. take and material easier strategies, continue make were security to sales close X% channel offset this costs. notebook stores comp difficult have to less the

the offset the price in implementation accelerate and in second expect next paper due U.S. early half X and to year of on tariffs the costs. U.S., increase to of and another We uncoated cost October one plan inflation rising rising the cost in to a

macro In are from expanding. are assets another North cost-saving protect we marketing of flexing grew industry and reallocating to to and revenues. facilities across to successfully the profitability, business customers. meet with EMEA consolidating and sales we channels track accelerating those ongoing challenges a our X% have in to that and great aligning declining manufacturing sales further U.S., expenses Historically, and America, Comparable distribution addition, strong record quarter. most in initiatives the gains had

were synergies Rexel, with Rapid with XX%, XX%, Kensington in respectively in up Europe continental products sales good positive especially growth Europe. strong legacy see and which our to were Tools the continuing are X% quarter. of We Sales and brands in

pressures expanded significant and in and Europe improved acquisition due seeing inflationary We are productivity. margins gross to synergies not

our We integrated easier bill all year. single to in have remainder of continue Brands. business to will making with of distribution with business with believe products a centers one do with and ACCO it and I'm order ship strong now our performance for the combined EMEA pleased the invoice, very

is continue International the remember mixed, in that this revenue results Our smallest QX segment. be for quarter to but

QX sales still to some Brazil Asia. improvements Australia in We're and versus sales While QX, X% organic GOBA second Australia quarter both and improved in another increasing Mexico declines the sales I and the in from good but the more to growth continued to and sequential trajectory in outlook offset On challenges in QX, X% adding than half. sales. X% with in growth Mexico our year our growth, expect now guidance. for

earnings quarter adjusted sales share $XXX and our have the year maintaining free on to and are activities reduction a offset flow $X.XX in should We meaningful increases at Strong per million. fourth for foreign impact not and approximately marketplace $X.XX us and price should EMEA, to over to for GOBA earnings channel expected outlook will in half term. first cost shareholders a XXXX. cash expectations better from of the businesses tariffs commercial for mix, the exchange negative our balance the from second and deliver success environment. costs America enable a value pressures in commodity Overall, headwinds and our the U.S., long North half geographies in

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

Neal Fenwick

everyone. Thank morning, you, Boris. Good

or driven increase increased driven X%, Second income $XX.X FX. quarter Adjusted increased driven Net due profit. rate last and modestly charges shares in lower the per $X.XX The period. net compared America. North the was of and sales increase current to $XX.X lower to EPS The million prior $XX.X in tax was This $X.XX lower in and gross $X.XX by to primarily $XX.X year quarter, primarily primarily million the to by compared up million was was in Comparable year. was the was or outstanding. share. prior $X.XX in by year. Europe sales growth due the the net decline Adjusted from income year, million lower income

at share. quarter the shares an repurchased price million $XX.XX During of stock per average we X.X of

as drove the for was gross points margin a X, by XXX second gross in unusually basis Increased points decline specifics. points. as all year-over-year. commodity further declined a costs, gross it basis compared an Reported fuel Looking of adjusted than year negative high basis and ago. more Slide margin, margin XXX and mix Product the at detailed quarter on paper, steel to accounted reduction XX and namely customer

lower before Cost the synergies higher and sales Adjusted a quarter. price SG&A with cost a gross expect rapidly points in compensation and incentive XXX costs margin and can be to down there offset the to dollars percent We as basis and costs. but pricing reductions cost in by synergy savings. will was improved reductions, to both savings lag up to expense, due catch these rising increases

expanding ACCO margins volume Turning an be the The and which quarter strong and adjusted costs year margin base. margin in incurred mix were releases. were overview North were synergies. America prior was and basis. to of certain basis increase product slightly and increased a up where primarily cost X%. after implemented quarter. back-to-school season. driven customer to gross and increases we primarily our legacy favorable due the on for increased the Esselte operating quarter, impacted shipments will to a October sales of America, on products comparison to In our reserve had operating year. distribution the to income due to mix They sales by EMEA of higher EMEA ahead in to compared both higher back-to-school In customer that income comparable adjusted and the increased segments Margins prior a very were comparable X% the increased X% North segment, price down by also increased due

major customer in Europe income margin. adjusted again where sales decreased environment gross decline Mexico we largely now consolidated a and sales and and to International our large our complete comparable large The economic primarily customers are inventory. Australia activities growth saw lower in one is have systems ACCO in Brazil decreased IT Asia. the Our transition, reducing decline are as or operating was in International due basis. been Otherwise and margin has and where and we integration X%, on X% centers. distribution weaker in

had now balance We for support cash American to sheet. build the outflow quarter the our cash flow of expected seasonal back-to-school. in inventory Turning to North the and

value prior flow delta the free than Our the six inflow year. FX to million is of the which reduced month seasonal Brazil. of $XX in million translation lower due $XX capital cash working is

opposite we as of second the in expect half capital invest Brazil. effect the in working year We the in

of view delta quarters. and due our higher free We the timing the are third and flow XXXX our is generation items year of million forecast. to full strongest approximately not expect cash Both $X do fourth our with and cash $XXX CapEx Another still spend. restructuring of related in impact million

quarter the unsecured share $XX of of cash and for repurchases notes used $XX we senior million at par. X.XX% million for our During repurchases

we was as Our revolver on the to end higher cash in borrowed at GOBA the than positioned quarter closing $XX of it the Mexico million balance of fund July the normal and acquisition. X our

of increased acquisitions unsecured terms of to facility stock to size In the notes. incremental availability $XXX and of pursue million to $XXX for and recently by allow million our revolver, more we repurchases our the

Finally, guidance. comments our about some additional

third margin we to be increases. expect reductions quarter margin higher expect quarter lower and lower. and to quarter year-over-year the quarter gross In fourth a year-over-year year-over-year, the overall to price in sequentially but second and the the comparable to due overall gross both third cost margin gross in America expect North We we be

benefit QX foreign and FX Also, reduction $X.XX to SG&A in full For sales year-to-date, we the and the quarter, be is last synergies. margin initiatives $X.XX of due we likely XX% benefit lower of of than U.S. be to a and be expect in the the negative year QX. range but cost a and desired to currency due current to still in total percent year, our XX%, gross dollar to expect as strength to was

expected total to previous opposed in EPS, negative to and is year the the as revenue on impact of positive. For be now slightly assumption our

Page will As several and included questions. Q&A happy XX. I'll where on found my conclude usual, Boris your modeling remarks Operator? and deck, slide we on in With I assumptions to our those be to move that, have take can be

Operator

[Operator Bill from Chappell with SunTrust. Instructions] Our first is question

line open. now Your is

Bill Chappell

Thanks, good morning.

Boris Elisman

Bill. morning Good

Bill Chappell

overall guess, was was I the I really just of, Boris kind America the outlook bit Hey in just kind I especially better share first reflecting a to market? kind is gains the, Or of of understand of, North – trying forward? a ahead sent for mean, the there benefit this stuff pull for maybe mean of of quarter. this growth a timing maybe for U.S. shipments? And good and little market

Boris Elisman

to our POS You to do sellout measure Bill. POS. know going believe until We there see earlier not we that on next tell, back-to-school August. you is We out. starting QX we're throughout but really maybe hard QX it back-to-school And week success some shipments in was see after of how to to compared year, give it's until turns answer hard factual or pull-in some for last and a

Bill Chappell

easier for you year. it. kind Is comparison last and guess, buying Got North much of that that But with the did I Did forward they channel. right? the it then XQ, actually, OSS America have a just destocking

XQ. to should Is right? So trend bit a we that go favorable it little be more as

Boris Elisman

really continues defocus from OSS. Not supplies. and to to OSS stores office with close continues

there's in are OSS, I is mass and performance don't trend with continued certainly on a a we in anticipate change And I share in but trend where e-tail. They not think OSS. change in good see more So back-to-school. may taking there,

Bill Chappell

terms the top add to anything it EPS might and this a have then of of Got you it's said or line? it GOBA, just does X% this, not year in

Boris Elisman

about it stronger marginal. season there. rest. a really then company $XX the will to is in X% missed year, some of public take be bit top do We compliance Yeah, accounting of pretty taxes the accretion EPS invest And the the We selling this and then little line will and amortization have much purchase million. and

much expect million $X So GOBA – in terms but EBITDA EPS. associated incremental not with this EBITDA year, in around of we

Bill Chappell

mix quarter Maybe, and in a last to help And Neal, just the me. issue understand, me little can I'm for one the you if I more the trying up bit on mix was or do with year what were did that this and more last both to have year then the it comping against? it to guess, have it did you do with

Neal Fenwick

Interestingly enough, both years.

understand high the to on And gross to to way mix. margin right inventory. product we less And customer is last and mix, particularly a the the had year actual mix releases, reserve was customer weekly that had added also think and I product we had margin, reverse. both we take. we reserve round-offs in We rich less had had rich this year, which

it's So little are odd. years both a

Bill Chappell

long-term it's mix? on not just to something margins And be clear. terms to That's that is specific a in kind of of XQ, pressure

Neal Fenwick

Yes.

the out as expect margins, be expecting shipped material a the issue is weaker recovery margins specific I it's for drag in we a think was out on in QX we would nature have guidance that And that which in what I bit anticipate. to of raw rising QX QX. I thing we pointed a gave to mean, margin of I The that costs, will gross an more is was is which why QX. on where of QX of QX.

Bill Chappell

Thanks much. so Perfect.

Boris Elisman

Bill. Thanks,

Operator

Kevin from question Steinke with is next Research. Our Barrington

Your is open. line now

Kevin Steinke

Good morning.

color bit you little you into how In tariffs, of trends a there. seeing that on the fuel Obviously, you're you also guess, in paper, higher mentioned you any material just impacting the of the seeing that's that so the the you're can cost, terms material on more up and of more is costs anymore delve to market just obviously of so, mentioned terms in higher – drivers color that? I

Boris Elisman

and $XXX in potentially paper. billion be prior is are $XX It's Kevin. then tranche implemented that high still Sure. tariffs. billion year. We later the mentioned, remains this the compared that to to of that due both the It's It's the year. be put place, other from initial remaining $XX billion aluminum will things the you increases steel, that on tariffs paper to it very saw And

the in of at million year. look all-in the about the million half in you of there year. And we amounts, first expect was half pressure the $X to $X another of million If the second $X

Kevin Steinke

the in That's cost second to million for $X million all-in $X material pressures the half?

Boris Elisman

and go next up If That year next right. price that early that's are implemented, need as number increase we all will to why do year well. is the another tariffs

Kevin Steinke

talk Australia more you can and a Okay, little about bit Mexico.

– I challenges ongoing ongoing that you'll or as those eventually expect mean, some or you something see something cited eventually that issue to an guess, You you'll that Do is those past there? get you I there. customer anniversary that's

Boris Elisman

I in are customers two four is think Australian two that are merging issues, and customer there pairs, merging.

improve sales, will it top should have bottom to line and on line. on remainder So drag expect though. a consolidate the for I always drag year as it when does the they reduce The see inventories. a the of

making last we're integration inefficiencies Artline. optimizing our margin to in If year we expect progress went remember albeit And improvements you year, sales Pelikan in the in we the centers I XX after And top our good Australia. in distribution with operations of distribution. had our X, remainder for and from our after

Kevin Steinke

was The real again Europe. bright Okay. spot

continental you selling the ACCO more Esselte for further and sales as seeing You synergies – you just opportunities I mentioned as products combination move up mean from Europe. the legacy can into so synergies, forward? there sum you're

Boris Elisman

ACCO bright from Yes. customers then We've by one one ship spot. purchase purchase to Europe quarter our of We the easily it and we them easy enabling legacy it With do on sales us. business to Esselte. in both accelerated invoice would that truck all our order, with products, that our the with was and legacy makes bill growth one did QX. combined

As a result actually all accelerating momentum. increased that, and we saw of sales

nothing hope possible I will aware me So second that this there. I'm is continue gives and in that that the certainly momentum anticipate concern There of half.

Kevin Steinke

great. Okay,

I'm and doing just the of senior mentioned share there repurchase about talk lastly, Just more you just that. you thinking Can potentially of curious about notes repurchases? your versus

Boris Elisman

share prioritize we repurchases. of terms repurchases, obviously In share

$XX this As repurchasing see, can shares. you already million year we spent

bank the terms any notes, $XX at arbitrage. interest one year million of And under it's then, capped purchasing shares of indenture. just in our in are We

Kevin Steinke

great. very you Okay, much. Thank

Boris Elisman

Thanks Kevin.

Operator

is Our next Hamed Financial. with question from BWS Khorsand

is line now Your open.

Vahid Khorsand

Good morning. Hamed. in actually is This for Vahid calling

you going in The more bit what the Mexico? happened back first to a question questionnaire, but could little previous clarify

Boris Elisman

Yes. changing trying Mexico, that their do very In large there customer quickly. and very, that is is is to inventory management one policy

desiring inventory So they went short change inventory time. of carry from big very to to period in the a weeks carrying weeks of XX eight that's of and

now. that for done And So it. through right we're are process most going we of

POS The as of and which get the quarters. don't in still have been bit they that from in But very, they've has and of sellout still incurred the inventory, much We'll second very go don't good. QX. just pain reduced the a replenish little So to first we means QX is the sales. us,

Vahid Khorsand

you made comments does dealers Okay. and moving that impact your And then, independent and away had mix your about wholesalers. from product gross margin? them How

Boris Elisman

It to fairly the neutral two. between should be mix our

buying want buy because We are agnostic we more enable independent we where in that them from the want from to be allows e-tail want they marketplace. directly. the them market and place no a distribution us we compete from, but think to as from us the well, barriers we to that capability buy makes And as are do they to them from us dealers – to competitive but If to in them them can buy we both price for against buy through there sure make choose and want wholesale, OSS. to as well competitive

Vahid Khorsand

that you're charging wise would? the same wholesaler pricing So the them amount

Boris Elisman

that much wholesale of happened their products as yes, buy-in, For that would savings result. them be shifted. the dealers. not of than in the that, over longer truckloads now, used there do time period model They but and independent we is mix a buy we is very smaller has But is economic there similar. order different the price got What buy they same to the to a quantity, ask used very, bulk, in order to is quantities, model minimum of kind if – quantities

pricing structure is similar. the So fairly

Vahid Khorsand

back-to-school Okay. versus for are the this year? And anything different U.S., then last in you seeing year

Boris Elisman

beginning. It's three too XX-week early to We're We're back-to-school. of right week tell just now. a in

comments. for So make me any to specific early. premature it's very, very It's

But incremental It's going how too it's We mass placement look good. got compared early think comment All dollar back-to-school year. this good. or in to our placement is the accounts U.S. I in is last specifically better to than on comparable stores year. last the

Vahid Khorsand

very Okay, much. you thank

Boris Elisman

Thank you.

Operator

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

Your line is now open.

Chris McGinnis

Good quickly, sorry, questions. you expectations go apologize. margin. I gross for little thanks through again can a just my QX the guess, just It for for Neal, QX I taking on was bit and me, morning, the quick

Neal Fenwick

Well, we'll do.

quarter. North in gross the to America we be both company quarter, up third prior then second margin versus the expect the gross And quarter we down margin And gross to to in be the the overall, America. the and the margins gross margin we be versus areas, the the same for for the company. expect versus North in year. whole also prior So expect second within quarter whole for fourth year the both down that specifically, as But

Chris McGinnis

Thanks for cost where just just can you through you year can Okay, maybe for bit dollar amount little this have that. year I and what a you remind but about us savings, next know of you're And maybe great. expect at? a go talk then you lot maybe just and

Boris Elisman

On cost are target $XX That's side, for still shooting savings number. million annual the goal. we our the

that We that of for have those at $XX savings and lots on aimed us track we're generating million. are projects

well the that. some savings distribution done in we also, products And manufacturing Wisconsin manufacture are that there costs North that's of our and control those as include to our we're as and we've that U.S. in of In global facilities and America And to have in the savings of increasing in our going in U.S. some and distribute using organization North result span and some our across North to result closing specifically initiatives getting the and addition America. American for to combining us incremental include and that, a a chain organizations and existing try done North generate American reduce as synergies we supply facility

cost to we our try have projects different revenue. to align So many to

Chris McGinnis

then, And question. last just one Great.

did, comment I If maybe just apologies you can Thanks. growth quarter? I it. Just on you the on e-commerce missed in

Boris Elisman

e-commerce retail, I separately. continues e-commerce well E-commerce look do we were break Yes, up at they as mass out well. But both to didn't XX%. as if

that is We mentioned a ballpark well. I revenue. same ago, quarter American It to, XX% the of our North in as QX continue around was e-commerce in

well, grow continues continues share and the to overall to do take in marketplace. So

Chris McGinnis

Thanks taking luck in QX. questions and my for Great. good

Boris Elisman

Thanks Chris.

Operator

Joe NOBLE next from with Our Gomes Capital. question is

now is line Your open.

Joe Gomes

Good morning.

Boris Elisman

Good morning, Joe.

Joe Gomes

bit been already what had them positive maybe the can Asia? in of is asked. on little there Brazil results you a producing But Most touch and

Boris Elisman

In high Brazil, of last been for double in the low couple a have fairly growing economy. years, single digits, significantly we difficult digits

We have reduced points products. our the price of

of have doing the We reduced business in cost Brazil.

having are difficult times competitors more Our in a hard economy.

As able a continuing grow to beginning very, market share QX. our end is Brazil. low season. year-to-date in Brazil the good result, at well. gain of were Performance very we're high in business we and as And going in We're to to share. for be season our just We're the take

bright very, for continue. that Asia. to I If has been Brazil a look And story I very us. at So expect

have Asia, now well. We're beginning was in India. Japan, business. Brands we business beginning integrated grow Asia Asia, the to We're our in And grow. our to Esselte about to we're in with in is biggest which do business, beginning continues to $X which market and ACCO million grow China a

acceleration So of the of year the benefits in realized. as of get for combining the organizations of Asia, growth some the remainder I expect

Joe Gomes

talk acquisition And great. new can pipeline? on anything about you Okay, that the

Boris Elisman

beyond for that I are strategy, we any about, that acquisitive us very Nothing details. that give can important acquisitions for expect I you marketplace, in can't talk do growth but but will additional the our very, I be

Joe Gomes

you. Okay, thank

Boris Elisman

Joe. Thanks

Operator

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

now Your open. line is

William Reuter

guys. morning, Good

Boris Elisman

Bill. morning Good

William Reuter

really question the last acquisitions, mentioned, couldn't – about detail there. you much provide you Your

your on guess, did where You size credit integration are the of the revolving the again? facility to increase Esselte larger million. you're by point you ready I $XXX of with take at acquisitions the

Boris Elisman

probably yet. acquisitions, Europe larger for in ready are We not

of the second acquisition, other at half just be to if XXXX, Although will than Mexico, be the we will additional we look we ready I acquisitions. GOBA Europe but where in do parts done by of ready other world,

William Reuter

in up about then, currently the additional And think I leverage How that push to should of has target potentially probably in should Okay. range. Xx buying Xx think somewhere the X.Xx been context businesses, leverage I your which higher? or

Neal Fenwick

quite back-to-school remember year, should our the we funding goes quite that time it seasonal. of at the of do. And Bill, this to that is you because leverage high have

it see year we get be lower significantly at it was drop end third the And than into last fourth and it You'll quarter. the of will as this year.

be back heading would range. we our into So

Boris Elisman

in of the about that Xx end would go down then by still very Xx to talked up do year, Bill. do to the the and the back flex with range. to to X.Xx if range Yes. I little go be to to do we an that. we then expect And to acquisition a us we our comfortable acquisition, I'm bit X.Xx ability

Neal Fenwick

have increases mean add we a more that's as acquisitions, naturally understand our as I cash you so that flow tradeoff to and well.

William Reuter

senior $XX unsecured materials, hear that And some it amount quarter? the in at your you down about by sense. million. in bonds bond I makes That prepared presentation looks remarks. the repurchases went like the then, when I of look your didn't capital do in Did the structure

Boris Elisman

of made bond We million $XX did. We par. repurchases at

William Reuter

determination I What you to you process guess, quarter? how repurchase the like was in guys there? the just then, Okay. how And – make did decision I guess, bonds the lastly, are

Boris Elisman

It's a issues. of combination

versus of also variable So that it's have, is to debt rate getting fixed time the arbitrage. interest we more it's the which level fix over skewed and

William Reuter

Great, you. Thank I’ll pass to others.

Boris Elisman

Bill. Thanks

Operator

Our Hale with next question Holden Barclays. from is

now is open. Your line

Hale Holden

repurchases taking given for couple that over bond of just of continue call. you it your quarters making sounded had potential next the kind open the thank comments, Neal, higher market opportunistically morning, my from I were revolver. like Is the to there some interpretation? Good two. right

Neal Fenwick

an It's thing, opportunistic yes.

Hale Holden

price any consumer? year. elasticity and that get risk accepted year the there was had second you're increases question be the or that next this the to on then volume that around And or the your Okay. that they'll the two doing expectation I by Is well could

Boris Elisman

be inexpensive. Remember very are will they our that very, still accepted. anticipate I products

will we everybody cents when about economy it's increase, and bit have that of tariffs overall a overall some commodity accepting to is who economy, if in it. I than talk dollars. a cost a the everybody is risk but think passing increases is increases risk typically So in price impact a just not lower price incurring overall, little on the and there that's But through

Hale Holden

on then Got – one kind sales this that channel? providing sorry, that new it. on quarter, or sales you're just product a down the is more, of margins different mix to push in a one that And dollar gross store

Boris Elisman

a incremental that we and marketplace. winning push in sales to sales be an that the We channel. in have It's growing there. It's is feel channel

doubled and for to just a it to prior thought. QX mix year, was our emphasis It driver. to to it year work than customer us.-- of sales It last the margins. area was that wasn't a in We've year. more profitably. and the an driver will compared product be contributor lower make the We have this continue through real versus The the And variance channel

Hale Holden

you very I much. appreciate Thank it.

Boris Elisman

Thank you.

Operator

Martinson is from question next Our Karru Jefferies. with

Your line is now open.

Karru Martinson

Good morning.

increases, pull Just the price some purchases into that upcoming does third forward quarter? with the

Boris Elisman

have by on weeks. yes. may, pull lot It Previously, of the we forwards behavior debates has – by it It's behavior, we you on an of judge Karru. past a a discussions couple if a We typically a really increase, do and When don't know. this. price impact future

Karru Martinson

you inflation, just was And in side? I what on transport the Okay. of terms wondering are cost seeing

Boris Elisman

lot due tariffs. both We're seeing not inflation. huge that, aluminum up. to up We're a more mitigate of due due trying in due steel, seeing and are driver Canada, bit but and the – to little to we're in a seeing a they're and paper, We're It's to costs fuel to Europe. that in U.S.

Karru Martinson

a of front, the acquisition of Okay. of out consolidation. ready goes so this consolidation just years And – kind acquisition, for is few entities then on industry or or through seem larger guys it like lastly larger there does a Are wave stated another there period every every you the you're coming?

Boris Elisman

is the there large say kind wouldn't see I indicates a that horizon anything that, that we of on any consolidation.

think is rather likely, be large. smaller I will series very, very acquisition continue something midsize it of than to more it a to

Karru Martinson

it. Thank very much, you Appreciate guys.

Boris Elisman

Karru. All right. Thank you,

Operator

for now I'm CEO, further Boris And Thank further back like showing the to you. no call Chairman Elisman, to I and turn any remarks. will questions.

Boris Elisman

Enjoy participating you. rest the October. you summer. will of us Thank of close, Thank like you, operator. And morning. your with To we thank in again to I'd speak this all for

Operator

today's and thank participating you in gentlemen, Ladies conference. for

great You may Everyone, disconnect. a now have day.

ACCO Brands (ACCO) 31 Jul 182018 Q2 Earnings call transcript