ACCO - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the First Quarter 2021 ACCO Brands Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Christine Hanneman, Senior Director of Investor Relations. Thank you. ahead. go Please

Christine Hanneman

is Welcome This conference Senior of Director Good ACCO Christine Brands Relations. to earnings first Investor morning. Hanneman, quarter call. XXXX

President accompany of results, Relations the amortization Boris we President results of restructuring Neal may other the and on to today Investor adjusted Officer. and have about Vice Chairman, accobrands.com. Chief section nonrecurring Adjusted Slides been integration, When results Financial measures. adjusted these that first an rate. GAAP directly assets. other of to the quantifying Speaking release exclude and Fenwick, Executive Executive call our Brands transaction, ACCO call Officer reflect adjusted Chief Corporation; this and Elisman, Please are non-GAAP press and speaking costs our results. non-cash and and forecasting Schedules change. of measures certain refer Due intangible results of the Beginning adjusted items this reconcile for further non-GAAP earnings in tax amortization release posted with we financial to measures slides in by report changed the non-GAAP do quarter measures, the see comparable we that accompany to and the this forward-looking and amounts, and call. a excluding calculate most are way difficulty and explaining we inherent of reconciliation our not

are pandemic the available and time made statements the made. statements during assumptions of information based the COVID-XX are on management at to on statements based Forward-looking the the including the of call, company, the impacts us on beliefs concerning

refer filings our could and explanation risk subject certain for differ of and earnings uncertainties, release Our materially. and our to SEC are actual assumptions. risks forward-looking factors these of an and results to Please statements

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

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

I Now call Elisman. over turn Boris the will to

Boris Elisman

particular, highlighting key few we'll the and bond X% everyone. questions. in in quarter were first quarter Overall, quarter pre-COVID-XX your against elements company me we the performed sales with very spend performance and performance. affected than mostly our continued you Even sales provide despite first-quarter the XXXX. I COVID-XX our of and in strength of sales last pleased follow on of Then, EMEA. results comparing the our PowerA Neal quarter, above on minutes joining more impressive, for first comments total the will us. better details year. Thank refinancing. will take our we our expected, debt The a additional morning, a X% Good next more growth quarter I'm bank and with

our better First-quarter profits expectations. also were than

as We have many EMEA been have seeing been three fully and past closed. offices never in for the a recovery quarters, schools reopening

which good recycle quiet, line stylish Cosy designed shredders, line also are had XX%, sales growth of organizational of investing functional, up at-home product and items, and our use which home-office our office PowerA. a e-tailers to we recycled servicing our comparable and Kensington TruSens computer supplies. good every We're EMEA the home sales sales of a with over great Our of three won and initiatives, Derwent Design Several and by tech growth the premium say from market and to share. for In reorienting Leitz saw products, Dot the specialists. customers, in in organic do-it-yourself driven and North were with proud job materials. is were good and art X% toward team America many products, Awards. EMEA's quarter, are Leitz of did tools, Cosy ranges taking air independents products purifiers, shredders, made growth in first with that also [indiscernible] quarter, products Red accessories, up

to are our the using of This education, retail that XX% for of because the in-person in second XXXX. to a and also schools a start is impact and is bode began overhang e-commerce K-XX an customers. there through March, the with good Excluding grew should but XX% semester. will Many U.S. work to their half of as demand PowerA, in many see schools have have hybrid from they more returned we change COVID-XX, fall our another This earlier declined improvement fully supplies have approach. inventory the for indicated school close as sign well sales to sales now customers

stock adequate We hand as to have inventory on to the needed. replenish rapidly able be

shifting Zealand, for the New Latin school segment, better, in improve, take a to products. Australia, strategy. segment of into given and a to Latin continue beginning see later performing but been and the We're and recovery in our and We'll it America. the in our to the more closures toward will focus confident business Turning by rollout office entire half hope in America, consumer-centric and Asia XXXX. We on improving growth second slow have profitability while sales to International vaccination a continuing

PowerA, from come will in sales such a comment organic on which will few generation. as growth acquisitions Our from I minutes, and

purifiers, remained home are entertained consumers, themselves technology, storage products or use, well and do-it-yourself home-office tools, about Kensington sold Derwent art focused all on home XXXX outfitted shredders, as throughout that accessories, usage concerned the manual and wellness. quarter. in and strong first their demand products for people organization supplies, TruSens home, at saw Our a computer air and home-offices,

from true XXXX remain in will this this lines expect performance and product continue. will solid believe We

TruSens business, we tap on and last our example, introduced purifiers additional introduction XXXX. in we grown has For air smart some year, product and $XX million this later introductions Late have from an for to year, line product in currently. XXXX

quarters. think some wellness in order we increased, ever business we significant received Kensington a which the competition our will computer be That While establish year, means have largest this over the has in Last position. time one category comparison we a had. can difficult year accessories

core order, products. new, expected as to the that excluding strongly introduce business will grow innovative to continue is However, we

quarter, to in station dock, the in Red efforts StudioDock well the connect strong the our iPad either first be landscape iPad is charging portrait the example, and Kensington or at and StudioDock docking Award, Kensington Dot as through introduced Pro Air. Apple a iPad the for magnetically won modes, an of as and tablets peripherals can host As Design Award Innovation that the quarter. options. A to the testament a CES attached to during first

to Turning now PowerA.

PowerA's new in good the XXXX of to expected The continues years week. XX% how mobile XX% console is is you by the integration in side, not increasing, per seems am PowerA's The time approximately XXXX, grow with a industry particularly shift. culture, XXXX. keeping in bt is on analysts video they people headphones, very four still worth a who now estimates with new generation on fourth year. and PowerA demand leading the gaming year, that For products, global this seven I having meshing controllers, may permanent difficulty strong fit accessories everyone late we those There quarter charging the up gaming is stations, Stanley spent of December amount gamers consumers the hours popular of the everyone be for are power with users during the believe that console in average pleased over Moreover, Morgan going. approximately are pandemic. Microsoft last grew a exhibit is Sony as to with growth transition, such market of that bought player gaming know, smoothly a with Market to the XXXX, Most results of and which and in supporting adding and launched trends. between Intelligence forecast controllers. on gaming and growth. terms Report gaming focused and

with increase its filling of pro was more exceptionally first-quarter XXXX strong, that So an forma on than PowerA PowerA's is sales. performance void. XXX%

of don't the we continue, to for expect year. sales the of While strong that rate we expect growth rest

will In rather grow fact, PowerA's sales initially projected. this now year we XX% we XX% the than think

and Another This our with our are and pandemic. sales throughout as such categories strategy our which school and resulted of technology top is Target, specialists. platforms customers, Amazon, our performed element growth continue such portfolio. more customers has in to with as parts successful independents aligned growing consumer XX% through our the are channels tech to mass of maintaining E-tail, our the shift shift while fastest-growing of sales merchants, presence direct-to-consumer and among shift, overall well represent five Walmart, in the Also now and and product our

the on, Moving levels year cost productivity to after normal reduction our pandemic. in program accelerated stake to due is last back

over opportunities, have savings productivity full-year the this to merit bonus expenses year, expect it year. Still, and $XX normalize I will increases million. so our We reinstated our for be SG&A

dividend payout least intend cash year and free is debt. Our our to We use reduce flow $XXX million. expected at the to cash this be to for to

done weak benefits declines, and commercial as or post-pandemic that job, We're not offsetting wellness we We're the play-from-home In We as business such this environment. and longer-term on a we portfolio. wide-format larger work, result. some the investments from a breadth learn, and adapted investments consumer products, office our video will channel have quickly we will channel, of I'm of some as summary, growth change accessories, customer, bit comment balance growth whiteboards, and large the computer on product our accessories and a take areas for in although includes line investments assuming gaming further geographic product area expect while have shift recovery. to This post-pandemic remain such way with product changing a partially our later. in reducing in expect good making and our behavior proud products, of success in products and elsewhere. a laminators one advantage and any dependent

that We growing, sound opportunities aggressively ahead. will as a to is financially the ready strong, pandemic Company the pursue from emerge

commentary, I'll Now, him your of answering will for turn call then a the our in Neal review to financial questions. other Neal? the and outlook, over I and segments, join

Neal Fenwick

morning, Good Boris. you, everyone. Thank

EMEA we mentioned, minimally last business impact initial year. our in saw hit of March only late Boris the As COVID-XX

COVID of So, last wasn't impacted this very a against that much. quarter impacted quarter one is the comparing

acquisition. pre-acquisition rose than declined of of mostly compared the we million. expected, approximately last much in coming sales, Our American first-quarter with segment, were stronger approximately year, PowerA's the sales $XX XX%. X% a million, result PowerA in sales as $XX sales and at Comparable this North

Compared as XXXX and purifiers, lines remained retail sales commercial customers our to and BXB TruSens were drove continued sales of computer most such and work We strong and and Kensington accessories, growth that comparable sales PowerA, to X%. and Sales air and commercial on declined product XX%, channels to are to weak down do-it-yourself, play-from-home, the excluding also supplies. focus decline. mass in see sales

XX%, sales X%. hand, while e-commerce On the through sales other rose rose channels tech-specialist

result the $XX EPS North of lower or last $XX year. for income share acquisition, that million accruals per interest year-over-year with logistics incentive cost $X.XX was per First-quarter reduction $X.XX share expense was higher associated adjusted net International, benefiting in versus and our mainly EMEA. is profits in efforts The better and volume expense, higher million America the and decline or and

also debt refinancing, Our to of was of purchase reported other expense and negatively PowerA earn-out to $X by the bank profit the the $XX portion related and price. due impacted bond million million

restructuring increase $X million $X In charges, million addition, in million and $X pension we million charges, had of are step acquisition-related. and in up $X that amortization inventory curtailment charges,

PowerA over and You two targets equal profit two years sales certain may though earn-out next the met. is the in recall, are payable if installments

our such, income earn-out and any change the the of statement. reflect we must quarter, in an fair as As recognize value expense every

in result two-year We period forecast charges for we will as PowerA. expect that results throughout this [Indecipherable] strong earn-out the

booked for This loss higher in expense, we charges with the total resulted along which the operating a noted, million Company. small a quarter $X reported previously

with than cost driver the in some compared basis margin input the fourth logistics gross The expense, adjusted increases impacting costs. ocean inflation are much freight, Our domestic gross XX% in the The versus margin we margin XX% was experienced main points XX and that our quarter. purchase less approximately pressure XXXX. freight and year, down was in and last our with

primarily $XX higher accruals, with inventory positive efforts. foreign of were offset million and margins. charges, incentive obsolete PowerA's last of side, savings, the of year, and were accretive million which reduction $X because $XX expenses partially million low-cost $X SG&A PowerA million, expense, exchange, compared by lower On cost

the year the of offset business. business sales versus rest lower year The our approximately million, last declines percent the PowerA's rest last largely was the million compared the was as eliminated of pandemic. against year, all in with to sales due flat accruals primarily last largely margin of approximately to offsetting business. operating and Adjusted in in contribution roughly X% the that with $XX adjusted due income first were able incentive leverage to last year. we X% $XX recall SG&A operating may the core You almost PowerA our was because a we XX%, quarter expenses

Our XX.X%. was adjusted tax quarter rate for the

segment sales Now, million. let's our to decreased of $XXX turn to America net Comparable some XX% results. details in to North

Some because of conversion, is continue of go of because COVID as America channel openings. commercial of the well from or channel closed remain quarter of benefited inventory in offices advance the North almost pre-buying sales limited million IT Lower XXXX many as April, as decline system to some live concerns. first build last impact $X had our

strong. quarter reopening from our year's As inventory encouraged some last We're season. last during usual amount helping for are Boris schools of we in-person is learning. was overhang see to see mentioned, back-to-school of the sell-in likely This second than less absorb sell-in customers' as to more our to

inventory will sell school did purchased of closures. expect our customers major through to year last work because but We the they continue not

are as replenishment. the them with service in second need our products may prepared to branded We well half

For America we in anticipate the a sales overall business, increase the quarter. North second

previously the First result last The to year. was quarter experienced adjusted PowerA. margin, a in related sales margin cost business, was impacted lower operating decline with margin Also, we of million, costs, a last $XX that offset partial even as year. operating Adjusted our slightly with reductions. was from higher compared X% logistics excluding from up X.X% particularly primarily income mentioned,

Now, let's turn to EMEA.

growth, art sequential sales. Kensington work-from-home Leitz's seeing air accessories, EMEA to Derwent our organization PowerA quarter, EMEA were increased do-it-yourself by higher of an to first approximately even EMEA personal Adjusted tools, expense, year-over-year weeks $XXX contributed supplies. versus line had to XX% was due million. third logistics last just TruSens some primarily sales million and comparable XX%, in in operating COVID gross costs. offset storage year's year. incentive quarter $X the million improvement EMEA the and increased Reductions $XX showed impact. commercial of products, and together with XXXX, computer strong and sales profit pressure margin from purifiers, offset consecutive $XX also this quarter quarter shredders higher new is sales million net two growth we and margin posted versus This For in which partially operating adjusted are that though X% of last

perform well EMEA the during quarter. to expect to second We continue

impact segment. the lower International Comparable significantly Moving declined because to the of from sales demand of COVID-XX.

declined, down only markets trends continue both Australia While sequentially, Asia all to sales X%. and improve,

Brazil in down to current with However, compared next Mexico was several million adjusted the continue impacted this and and months. many severely will as for closed. that remain be expectation countries continue $X schools in COVID-XX by sales increased operating low more were than International worse income The remained cost is both XX% as situation offices with of also improved reserves Brazil result $X million, to but Mexico. only sales, a last the fixed debt reduced primarily lower Latin in total, which absorption due Collections but America in in last volume. year. $XXX,XXX year, Bad versus high,

the $XX includes flow. quarter, million free and we use $XX now operations our move $X cash CapEx. of which sheet Let's the first from million, outflow In of balance had cash million flow cash and of of to

$XX has As used organically. their by was we payables after business the working also purchase for and expected, transaction, capital rebuilding the acquisition did PowerA the in not grown closed, receivables million or since

use million. than this $X cash million quarter CapEx of in our year PowerA, exclude $X paid you first year and dividends. was by last we $XX If was the million lower in

to including $XX $X Our CapEx PowerA. million for XXXX outlook million, related is approximately

our Longer-term, the plan acquired we to As to acquisitions. fund we repurchase in PowerA free term, to our our reduce use make dividend, dividend to increased reduce near fund flow cash debt. and our to debt, cash we reduce and our use plan we and noted when shares, debt, --

debt. we the During million bank at The issued quarter, refinanced $XXX and X.XX%. our bonds of company eight-year bond

The to refinancing It amended for to million We agreement this March the also quarter, end acquisition expense revolving of also million $X favorable At outstanding in had $XX had and interest balance funds cash-on-hand. XXXX. of more $XXX and our our maturity a of extend and bank appropriately on pricing our will in debt. $XXX year. credit short-term save the long with the the facility we PowerA million balance better million lock

ratio be is same. forma pro approximately leverage in times, Even line expected anticipate bank in quarter, to we ratio with X.X it net be purchase was borrowings after Our of to leverage PowerA. which seasonal where the second the our the with we

free we our year quarter, this our it to where ratio and majority X.X leverage reduce should PowerA. use was cash and is as prior lower continued purchasing the EBITDA will to flow this year-end in to with debt, reduce improvement which approximately saw We of we times, debt

Given steps liquidity as reduce we taken we've our current financial be maintain costs, strength and manage to we the through expect the to able good proactive environment. to

turn to forecast to in longer-term continues this environment there is COVID-XX. be let's Now, due uncertainty because our to much outlook. still It difficult to

impacts are to We we mass roll will out, in XXXX. see of as from through reduced particularly half continuing vaccinations and continue year second the this COVID, that hopeful

second the performance by comparisons. strong anticipate the we have easier and quarter, business rest PowerA of For will another our

continue. expect looking growth for are recovery segments to all three as we organic We in the

million. outlook second between to $XX is $XXX the million, entire million to PowerA sales Our with $XXX Company million for contributing be quarter between to for $XX

basis. of We adjusted adjusted second on quarter, outlook represents pre-tax on our of foreign earnings amortization per of our which favorable approximately expected sales on excluded based $X.XX anticipate impact $X.XX be share, the $X.XX intangible new approximately and adjusted in earnings, definition Second-quarter million exchange EPS. on EPS $XX a adjusted will XX% to be amortization X% to in excluding are XX%. to The the includes range of

benefit XXXX. compensation We took and reductions we have the in reinstated

stronger support growth demand. are more planning to anticipated initiatives We an in second-half invest also to

spending all in XXXX. with SG&A will our such, XXXX increase quarters As in compared

generate $XX million expected approximately With million, we cash flow full CapEx our to at least the with outlook, expect expect productivity confident generate year. we cash of year, free $XXX level our million-plus We savings for flow. deliver at will the programs respect that approximately normal more and million flow feel a to for cash $XX of of be $XXX full can in to operating we least

million In contribute in $XX late from for of I of closing. substantial mentioned an We But received PowerA not from seller its price be acquired at cash delivered its normal $XX will expect structure we receivable PowerA impact agreement. minimal, we the cash capital if we in PowerA earlier, XXXX. need free working peak fund accounts when million flow level working to account of purchase December, of PowerA incremental also growth contribution. PowerA Thus, payable. acquisition will capital and XXXX As to in normalized normal without XXXX seasonal free due levels to $XX to the a the both this the absence cash adjustment year. flow in in and December free flow through million an anticipate any, we

where and happy let's take your questions. to move I Q&A, Now, to be Operator? will on Boris

Operator

first Your from Instructions] question with is Company. [Operator Chris Sidoti the line and of McGinnis

Chris McGinnis

Christine. how Hey. between and is talk from up EMEA PowerA? questions strength consoles, integration can and really EMEA, North then for and down Thanks. about, Obviously my new you the is the taking just growth break Good that a going? Can on and the just driven you America good maybe, with Can start Boris, just quarter. XXX%. we the morning, Neal, Thanks congrats of

Boris Elisman

the last factors. and Thanks, by in accelerated Chris, the multiple the by gaming is from thanks growth PowerA new Microsoft overall been growth Sony. released is introduction year consoles for that's of question. and driven There

of part it. that's So,

supply in decent of to has and availability. The reason, increasing our the PowerA suppliers And part so able job great job the and is managing competitors, as great done PowerA taking rather, availability all customers their to such of has Microsoft, servicing a including and Sony deliver done supply we third lead. first-tier their chain, the our share have can't just deliver customers some and to product primary are it when a team chip and second of availability, demand.

we reasons PowerA So for going during XXX% saw all quarter. those growth slightly of of the The over integration well. tremendous is multiple

completely focused We services by of questions, then to further plan on midst from are transition the and the Chris? I third with we could in right answer seller agreement is get your the growth. be quarter end and on our the it Did of all the systems, now. exclusively The

Chris McGinnis

can don't more Yes. I I break were just in the if you and or America North that, you one on maybe guess, just can EMEA, growth [indiscernible]? they that provide know just XXX% that,

Boris Elisman

in don't detail PowerA's with America. look, Yes, XX% is North have me. I business that

majority North So, definitely growth. the of America's driven the

EMEA relatively small Although, has well, done it's a number.

Chris McGinnis

you. back I in Thank jump appreciate I'll the it. queue.

Boris Elisman

Thanks, Chris.

Operator

with next is line Joe the Your of question Gomes from Nobel Capital.

Joe Gomes

Boris my Good and question. Congratulations quarter, Neal. morning, taking thanks and the on again, for

Boris Elisman

Joe. morning, Good

Joe Gomes

little So, I to PowerA. up wanted kind of here follow bit on a

we growth else and some even you of quarter PowerA there growth, the of gave already sales expectation you you from said more you million, stance what growth this that you. second increasing I are prevent here out XX% Are of for the of half to Thank then from PowerA conservative hit in at the of top XX% but really a end a if $XX You that guidance year? are the taking for look revenues there million for you PowerA if Neal, kind XX% to we greater that, on is of growth would just something mean putting or projected, the level, XX% at year. expectation fourth just $XX

Boris Elisman

Joe. Thanks,

there was home is at mind due couple The you half staying So, the do growth in it, there only to thing compares -- much get significant to difficult we as exceed people as gaming in strive number. keep The is and a more much will can. year have We'll we nothing things. artificial to that more. of last because second will certainly obviously. The in

long be consider demand that factor to fulfilled So to with lead times the one the out And lot factor more of there, that's supply. be There other can't a supply. just associated consider. because is but may

math I largely think correct. your So, is

and are optimistic, in is assuming half the we to of second the if then we there going a little of uncertainty for with we'll second some think supply better. are maybe, happen lot kind a what's constraints But do I half.

Joe Gomes

you. Thank

Boris Elisman

Thanks, Joe.

Operator

next Research. line of Kevin is question Your Barrington from Steinke the with

Kevin Steinke

morning. Good

Boris Elisman

Kevin morning, Good

Kevin Steinke

Yes.

talked they're reopened. sales of US office I XX% America fully in So, schools, of weak, past, office. reopening commercial North eventual now you've obviously, to you schools tied about of And return to also continuing think maybe in be the to some the but kind

or commercial any So, I'm there just if sales the wondering office glimmers hope in of are recovery in North America?

Boris Elisman

There of recovery. hope certainly glimmers are of

We dates companies in a in-person timeframe. returns back early are being definitely summer We hearing offices. enabled lot lot fully companies a be it go by will to for well. as schools back more scheduling think will fall And of the and

we as think are hearing seeing -- you be from that office issues, -- think a the everything recovery to different more to expect of us. than or And certainly, things US poised ahead a kind hold. marketplace we're and continue anticipate well, on upside of go offices there do based North they going a in especially, some us we is sales is the to do slightly we do be is But lot it's especially, going back customers, in-person hybrid definitely but our to there arrangement. to US, But think [Indecipherable] know, take today. currently. a more Canada So, America ahead and [Indecipherable] a is of We we back revert [Indecipherable] has

Kevin Steinke

thanks. question. for That's taking the Thanks Okay, helpful.

Neal Fenwick

Thank you.

Boris Elisman

Kevin. Thanks,

Operator

Barclays. Hale with the is question next line of Your Holden from

Hale Holden

for the two where in the investment I had you ones. I wondering, morning. if expected? capital if there be current quick are in PowerA, Neal, growth working to given you further quarter need is was Good or

Neal Fenwick

its QX, and our working were the some capital. that we're issues our in is: year, therefore, to that the chain. of are bring because products in in a to so we're in grows it seasonal seeing and of it's see answer also of as seasonally Hale, doing up sales Quick business supply to their one, strongest the an chip We going levels inventory best increase

reasons, are invest both working And so, for quite capital. happy PowerA's to we in

Hale Holden

there And sourcing is and maybe that your having, some chip your wondering that you there? to second were alluded actually the if is to competitors question was my I risk any of that issues is

Neal Fenwick

been PowerA our end we've obviously, growth for second why projecting improve. our supply expect of questions, much forecast It's and because will in modest half we to too the about improve,

Hale Holden

Great, you thank very much.

Boris Elisman

Thanks, Hale.

Operator

America. is from the question William Reuter of next of line Bank Your with

William Reuter

questions My raw of question morning. kind inflation. guess, as are, two-part inflation, shipping on material well as I Good

do due have guess, it across impact shipping? being And costs inflation of well how as of versus you going that's etc? some as dollar I estimate So, this aggregate an some maybe to switching, the of year hedging for contracting, Thanks. input much to of impact then, delayed or purchases

Neal Fenwick

Yes.

much To two you delays shipping and from One, things. we're And I think that have We the mentioned, building do rising delays. story be recognition bigger So, point that costs different seeing QX. saw live the of we're a inventory that a in have think purchasing builds seeing impacts. materials. view, we we raw point I contracts for from that's with time going to the in

necessary our the of an are runs what costs market that's as going raise on year And so, for impact And offset. up business commodities, [Speech us in is Overlap] quite significantly. they prices And to the both basic on. for we're see you those reasons, to increasing know, to

William Reuter

going I the of is or just in guess, the I see second quarter those and on of guess, will beyond? impacts the quarter we much that Yes. really see do you third expect to that that point,

Neal Fenwick

second cost third so then, and in beyond. see the the more P&L hit to start quarter much to going we're impacts in and the quarter, No,

William Reuter

Great. I'll pass it to others. Thank you.

Boris Elisman

Bill. And a little follow on just that to bit, up

we'll of to prices we also And we're we'll in going we countries. And be second the inflation. high, Neal in at April US the mentioned, have to also that again that of raised impact the increased if Neal second as be be go in As into insinuated, inflation that raising doing other continues the offset offset to in half looking to half, prices and as be inflation. some

William Reuter

you. Thank

Boris Elisman

Thanks, Bill.

Operator

of from is question next KeyBanc Capital. line with Brad Your Thomas the

Brad Thomas

so bit and a you're late, little how about and back-to-school and could see give you so on covered US year? Neal on to XQ, of on XQ some you how if the -- this, split were between morning, a thinking Good little more Boris. I and want this first you color that touch I Hi. bit apologize unfolding if I but thinking in the about got

Boris Elisman

Sure.

me There pretty upfront materializes had very they XX% of in conservative were XXX% early about said, their break, some let some being we're August, orders how We And pretty that even demand where the schools the good with had the is supply -- buy in given And at We're we given we emerging XXX% go very there'll in back-to-school, about the early. US. optimistic chain, already that purchases. the going exactly made year year. in-person, in-person. when That So year and poor come With season earlier we've today length it's consensus back-to-school, seeing feel last last back-to-school. of situation supply when then the will start to just schools that uncertainty and but in July, retailers be chase start. in-person. very to fully given most that back-to-school back-to-school, the are with was being sell-in a good

American were sales remember, North last QX strong year. of quite in you If

standpoint will plus some of are more year. customers last So sales we have position -- from they been otherwise someone have sales conservative that weaker a that relative end overhang would from inventory the the just taking, that be because think will the will than in be

the probably, significantly. industry be The be despite will North some we QX some to we that, replenishment shifts, all sales growth probably expect XX% we traditionally think So, saw also, estimates year. from With also And as prior of there'll shift X% expect in of versus sell-up higher are in we to mentioned, And certainly from in QX than Neal year, more and to last last but up see. there'll that QX that these year. do we be anywhere QX. American

Brad Thomas

the just how you're if PowerA, you. on two-year Boris. very I the And for add about medium-term, us, bear product perhaps from Could a what's PowerA? And helpful, think on you about thoughts how very PowerA? to That's long-term new follow-up you three-year your certainly, latest to could business. exciting give you opportunity know, thinking Thank opportunity revenue a

Boris Elisman

roughly year, expect from this we PowerA. said, we Well, growth XX%

If look years the project gaming sales XX% the growth few forecasts analysts, from they industry. at industry the for a next you over

for I think over least think a will last don't the And a new grow the growth gives market. medium we as at also leg for a inorganic well. potential in unreasonable us us mentioned, that of quarters, inorganic expect that we we term, as standpoint, it's that to So, the couple with from

segment for So, invest we it rates exciting an continue at We're happy important grow seeing. think in looking hopefully, us. the and we've to to and to it's been that

Neal Fenwick

big Yes, the growth. that term, geographic industry of and a can we in top add the we expansion is longer piece do that see also to on

Brad Thomas

much. so you Thank Wonderful.

Boris Elisman

Brad. Thanks,

Operator

is next Karru Your Martinson question of the from line with Jefferies.

Karru Martinson

morning. Good

Just up on following that.

fund to are by on that? by -- to you about In leverage? you terms leg are how do the comfortable new back X.X of invest you to to year-end investments, that down in, Or the where your have thinking or get

Boris Elisman

To tuck-ins, million doing we long for I ratio. or comfortable more, we are have talking or times, say down level major, very But current small aligned tuck-ins would leverage to something a and But, at lower. small when that do are prudent. to strategically X.X least, as like get major to $XX they financially at Karru, to investment net as less. get of X.X times And about or million I'm $XX we'd the

Karru Martinson

I some guys investments, wondering than they're those issue size initiatives any the was and PowerA supply more other Okay. of Issues] there color half, funding behind, concerns? the what is And terms second you going growth the of in referenced for [Technical

Boris Elisman

North work-from-home, America. support generation product our to we in product art demand be the in will Yes, growth. And development And gaming, seeing all be in wellness, areas development support new term be and but accessories, also will our generation in. will the them the demand those that most video the to strong near supplies, of of are demand computer back-to-school support

the going to investments are go that's So in. where

Karru Martinson

you Thank it. guys. very much, Appreciate

Boris Elisman

Karru. Thanks,

Operator

next Financial. Your the from BWS line is Khorsand of question with Hamed

Hamed Khorsand

Hey, good morning.

normalcy back-to-school. to about you your habits as ask on schools purchasing? back the scale Are are into to to wanted seeing as up go changes gross session? the expectations margin And any side just on you are what and going start with I in the So you back these purchasing back-to-school regional

Boris Elisman

end-users it's in say the by Hamed, have. be demand service difficult increased inventory right will customers already now, for primarily because from the that us to the

yet. we So, significant come. haven't replenishment still cycle to seen That's a

difficult it's So, for on me a you to any color additional give regional basis.

your Beyond customers question, that, much in the up what second of pretty our sell-through overall, for we US. I'm sorry? are seeing was all And

Neal Fenwick

gross [Indiscernible] margin. Margin,

Hamed Khorsand

It was margin. gross

Boris Elisman

[ph] inventory as comment to question as increased tough inflation. expect in are freight we the a scale, are seeing of because hand, think we also But volume margin, on, to it's on inflation, will other the up. logistics gross we with an hourly -- continuing certainly -- absolute Yes, accruals well and inflation, released some expansion be goes would see raw and we materials plus seeing

It's until So, for more a we how color bit give additional will the us you other? each see those little difficult on quarter. to things offset in

Hamed Khorsand

you. Thank Okay.

Boris Elisman

Hamed. Thanks,

Operator

the line of next Carla JPMorgan. question from Your is Casella with

Carla Casella

more opportunities the on more come be as your M&A be has seeing it -- you if your might tax -- PowerA you're then, traditional the business? made made out there pandemic? versus interested we success change of wondering view the front front, M&A And out more I'm you in if the for on the any

Boris Elisman

certainly thanks no shortage in opportunities whole Yes, the question. There for M&A the is thing. of

the there, players of high. squeezed As but the strategically, relatively there last mentioned pandemic play are calls, things because some because we've there's valuations has in over the few also lots both earnings

people to the monetize So, want opportunity.

agency accretion to doesn't from [indiscernible] to has add, It thought for etc. for Overall, sense of for value change. be an looked distribution, make while. We has else our terms sense that us. -- a interested brands, company in shareholders. that would -- make the strategically a for strategy have What always financial interesting at We've our

So, our strategy changed. hasn't

in I as have previous As to do something big my deliver we mentioned well. to answer,

organic of and open definitely plenty financial opportunity, this hand to other growth we are on we are it. to balance business. acquisitions to the the of have but have do met. our lots And we have drive year in think We strategic criteria sheet We work if both

Carla Casella

Great. Thank you.

Boris Elisman

much. so Thanks

Operator

Capital. [Operator Nobel is line next of Instructions] with the question Gomes Joe Your from

Joe Gomes

that about the been previously of more on some maybe talked that? a bit you. us my thinking you little about give of can answered. a know, interest. introductions taking little the Boris, have area for insight looking potential more or questions Maybe of you you're follow-up. Thanks you at? here humidifiers Most in new I as But, could a bit Thank expand product

Boris Elisman

wellness line. the area, of expand the definitely looking to In we're Sure.

week. topics. a a of with hybrid they that's businesses, well, entering That's previously products to looking at. the more that delayed home our commercial We're the will You home of to the people those space, and products think focused situation the that a think pre-pandemic big We working Today, a a working the space, investment. return, will at as to about is office and from we back we're purification space we people largely investment. there need days few sustained working. another way mentioned something purifiers. one small definitely the are that We type the humidifier return talked a of area looking the of few also not area of in sensitivity in big a that as Work-from-home air on just world offices and think pandemic, go but consumer the air because for and is environments given week largely days

opportunity investments other need other in in mentioned for for expansion area as includes investments sustained in both solutions, work-at-home -- additional for console Neal shredding. huge introduction. home. a and don't range there's international break then basis. actually that there and that And gaming, that and products PowerA months [indiscernible] video a work to value storage for continued for gaming headsets, ecosystem, think support introduce mobile and expanding line. big well to the we And I as Certainly, be So, in including PCs that organizational we iPads. a We is Apple mentioned for the line for work-from-home docking global investments there introduced on think products that will EMEA, traditional products. and And of We few an big manual there's opportunity a also and and hit. introduce products a think Cosy after is which to

for So, to We have development. forward bringing there's in consumers. us to look invest roadmap those we shortage really a great and to not I of product a ideas our the think

Joe Gomes

Thank Boris. you,

Boris Elisman

Thanks, Joe.

Operator

will turn the no over call further remarks. questions. closing for to are There I Boris Elisman

Boris Elisman

the our of for and to EMEA and and Thanks. PowerA rest both interest your for very Company expect ACCO we're you optimistic Thank our of confident a We're in Natalia. To time. for to to the to XXXX. Brands. performance the future continue. Thanks, next in we'll growth, summarize, pleased returns of We growth day about recovery also throughout continued you and talk continue Have our remain improving ability shareholders. and great with position our

Operator

Brands This participation. concludes the earnings Thank first ACCO you for quarter your call. XXXX

disconnect. You may now

ACCO Brands (ACCO) 1 May 212021 Q1 Earnings call transcript