Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the ACCO Brands 4Q 2022 Earnings Conference Call. My name is Emily, and I’ll be coordinating today’s call. [Operator Instructions] I would now turn the call over to ACCO Brands’ Senior Director of Investor Relations, Chris McGinnis. Please go ahead, Chris.

Chris McGinnis

Good morning and welcome to ACCO Brands fourth quarter 2022 conference call. Senior Investor McGinnis, Chris is Director Relations. of This

Deb are Chairman Brands Chief and on Officer; Tom the Executive Financial Elisman, today call and Operating Chief ACCO Speaking Officer. Chief President Boris Officer President and Executive O’Connor, Vice Tedford, and Corporation; of

these non-cash measures slides section that we of exclude Slides earnings accompany a amounts, reflect may results the PowerA we fair and the do restructuring non-GAAP the adjusted Adjusted and measures items non-GAAP results adjusted are release Relations reconcile in most and non-recurring refer integration, call. and have forward-looking When amortization, speaking costs, other certain to this the of and been earn-out inherent measures contingent to and impairment to that accobrands.com. comparable posted about transaction, change measures. and directly in difficulty of rate. call other and forecasting our value the an the Investor consideration the GAAP this Schedules to charge of Due adjusted goodwill financial accompany our results, reconciliation tax not a quantifying results. to related in the

beliefs Forward-looking the available call based statements and are on the are made made. based assumptions statements to on during management time the of at the information us

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

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

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

to Boris the call Elisman. Now over I’ll turn

Boris Elisman

us. Thank everyone. you, Thank and Chris morning you for good joining

few years that have want fundamentals right actions economic strategy grow maintain and XXXX, our and continue consumer-centric or I XXXX slowdown current to the achieve are we as geographically deliver past our and and believe market talk over priorities business improves. the be I us The to and diverse about our of to taken team growth in the economy the the sales have and transformative intact performance XXXX. weather to helped more in solid we share revenue we Before organic of for comparable sustained say record brands key many

the XXXX EMEA had demand. two pre-pandemic of the summer products to office as rates the as customers product us halves. business was and tracking of in began with of our trend dampened consumer The the and a strong season, strong for Ukraine, rebounded tale for growth as half and began surety important year change In sales business computer volume We and in segment, to in North in for we the back-to-school first war high turn year. EMEA America. above crisis the the inflation, levels levels through of energy ‘XX occupancy of

actions In quarter, lower the quarter our slowdown. reducing to they the the from on pulling America, year. overall throughout America impacts orders take about fourth became third continued an on These that the top began into North retailers of And North were stance the levels in leading concerned an inventory first in impending segment. demand half to aggressive forward economic of

sales reduced volume the All of back in XXXX. our factors half of these

and raw which numerous trend to similar for XXXX increases as actions, goods included pricing our Profit XXXX, throughout finished of year. materials, in outpaced followed a throughout continued price the transportation, rate inflation increase aggressive the and

direct with managing office been active limited labor We freezes, spending, discretionary the year. cost closely flexing and front, hiring our have SG&A volume cost headcount structure the on implementing throughout

expand and and margin intended operating focused reducing restructuring in to activities actioned EMEA, America QX, efficiency additional costs. on we and In initiatives cost through savings North improving

believe We rates better position seeing of freight with increase our product ocean that the price inflation our X margins in pricing us of deflation moderating expand including cost and rates and January in rate actions, we’re lessening to Importantly, costs. in inflation combined other XXXX.

are the by saw margin January. we While a in X gross month a or not does quarter improvements year, encouraged make we

the by when retailers activities reflected engage XX% category year. The gaming consoles market were number semiconductor our sales production. market to throughout gaming largely accessories XXXX, softened shortages inventory down the more industry, to As rest of reopening accessories destocking. and experiential activities, spend due the as on XXXX demand comparison with faced for a gaming of also and in In both which the and pandemic, gaming gaming a challenges of in-home the for entertainment experienced XXXX, the of difficult video aggressive XXXX, limited consumers many

to to and the and share plans continue promotional our accelerate to and long-term some market improve due temporarily leading we new and console believe supply challenges, position and hold as lost we opportunity segments. growth chip our lack quarter our and in third-party continue and season. our expect these we accessories, of the holiday the we semiconductor stabilize year expand market fourth and industry accessories availability for gaming the assortment a the executing competitive to backdrop for growth share XXXX, in are gaming to in production International very EMEA improves. product Despite product In While progresses

has game sales new the coming In and which XXXX, to gaming gamer associated in historically of addition, engagement greater accessories. there spurred titles are market several

year highlights Kensington, you business. sales. strength sales the accessories fueled we grew product Now let the our and the over XX% up straight X%, fifth growth for fourth me in products share by gaming computer accessories brands. America comparable from the expand bring enterprise market to as our increased with Outside of brand This quarter North year, our of Kensington full and is our for to XXXX. continue new was globally of some during XX%

introducing to new offering, and have of largely a to products, connectivity We security. continued host related enhance the

during the demonstrated the year. grew It high-volume During customers support the deliveries during for to engagement. Five U.S. brand was Star our XX% of the brand back-to-school and XXXX We of back-to-school largest season, points chain share the capabilities season. highly X second on-time strength seasonal our in the supply with gained and

exceptional and strong year, International organic towards bring in posting profit. for year America. sales Tilibra XX% segment Foroni and brands, to successes service behind operating and in-personal as Noble These growth Barrilito, operations, products others, growth. our Quartet, and to adjusted investing recovery our new commitment brands customer us had full from confidence innovative, market; delivered our faster our Our brand performances and that value-added comparable sales GBC, was company over and give in continues transforming is among market-leading the growth Latin This in fueled improvement XX% in Brazil an by education its

As we we four on look are to XXXX, focused key priorities.

laser-focused First, we restoring gross on are margin. our

recent our to if including year. mentioned As I earlier, raise multiple offset have of this warranted. rounds round to of X price we January on implemented inflation, And to have prices the we increases, most continue ability

million footprints program productivity manufacturing mostly in ongoing XXXX. This North in chain improve $XX delivered and to consolidate Our in and savings our actions included supply America. distribution COGS processes our

XX pressures and plan and to improve reduce the our we and product number SKUs distribution will capabilities last meaningfully gross the over inflationary margin. lower also specs the mitigate to for actions our We of sourcing cost. months have experienced These the manufacturing improve globally current we processes, reengineer offer simplify

We response in and environment evaluate to secular current including to trends. macroeconomic cost will consolidations continue additional measures, facilities reduction

what expected especially to be economic slow is line in priority second profitably manage the the top is to a and first Our environment, half.

brands, segment. Star the complementary products various value the position examples. profitable not Hilroy, a right customer brands have been price to occupy reach our price are and including for premium point and that we assortment Five We We and segments, to discounting to Five premium and have Lights Mead do for able points feature Historically, Star disciplined and with of and Esselte ensure brands, and value need brands. met that assortment with that offering we the in as

in the brands brands or Third, we continue growth their and Innovation to a and market ability and share leading been innovation, initiatives. of key development successes behind to will positions. our maintain new key product factor have grow product our invest

introductions product continue drive a will that our to of growth have XXXX. in We host new

Fourth, the plans. the SG&A will these expenses. improve we discretionary manage incentive to ‘XX Offsetting will our of be in to headcounts spend and management restoration annual of continue actions

fixed Brands over confident are in remain an interest outstanding conditions, we team current have to and to management not environment. immune for transformation XXXX economic well operating our maturities the experienced right is and long-term strategy no debt. We changes growth current our with rates While sustainable and in to low revenue of ACCO half debt drive until navigate the organic capitalized

consistent we’ll flow We cash debt continue and strong in to reductions payments dividend prioritize generate XXXX. and

earlier, mentioned expansion company. margin a the As for the top I priority is

Pricing goals. marketplace, value-added it something control costs will in and Our we be margin management established determine manage. of is be in will but successful expansion achieving how and the largely our cost can price will

Brands’ lead last capital Tom Operating current months. and President Chief I assets Officer, to for in of effort has have in asked and Tedford, Tom XX with XX to physical his years a been the Brands investments. improve our efficiency for ACCO role multiyear the ACCO

I to details of initiative. to over will with this now Tom turn the call share the you

Tom Tedford

everyone. and good Boris you, Thank morning

for and the and of chain of improving both sets, enhancing are through to on In reducing our reducing America, actions XXXX support while streamlining quarter margins all our supply product key sourcing continuing organization category-leading to and and operating XXXX, reduction we productivity fourth SKU levels America initiatives and EMEA, In reduction consolidation with seasonal simplifying intended focused automating our our and initiated initiatives. North actions on are SKU process. our efficiency, restructuring for service plans partners on retail we The EMEA customers. the through other redundancy are segments. During for of expand costs North and focused focused operations, sales support

the in realize from come in of to expect these actions, annual $XX which XXXX. majority million vast savings cost will We

manufacturing us will year. middle to of the multiyear year, journey We our distribution in and a the $X.X X per center are and million California, we our actions Last capabilities in in footprint. U.S. closed facilities save rebalanced These distribution rationalize

to our outsourced distribution the into shift at We our opportunities are looking and additional footprint in leverage existing more facilities. U.S.

manufacturing ACCO project in recently from its Europe. a shipments in EMEA, the savings year And and facility approved will Continental another will consolidated to UK in UK consolidate a This we our third-party this in executed to Europe. move P&L closure facility with come XXXX. into the distribution Earlier In factory month, Brands be completed production warehouse. we this the

in opportunities after those analyzing we and and announce other manufacturing entities. with consolidation global other and relevant council the will made We distribution of works as get consultations decisions are process appropriate

our of looking lease millions save can while arrangements by office space commercial to Finally, are footage at opportunities workforce. expiration. here our believe reduce reducing maintaining upon the every are Hybrid square we we work stay, or improving we to productivity our and office

in as a recently space have approved profitability, smaller a will in the create Ultimately, come. office expect initiatives reduced efficiencies, UK We well move improve our enhance to office productivity, to and California, operating these growth we future initiatives. more fund as have with

your over will I it and hand back to will questions. now Deb? come to Deb answer

Deb O’Connor

morning, to and highlighted we When retailers Thank in with last especially cautious quarter destocking you, activity inventory good the North America. in everyone. and to spoke throughout by This November, significant replenishment. in fourth I actually approach accelerated quarter, Tom, you continued the their

$X.XX to the expenses We EPS some This macroeconomic outlook volume, non-operating environment a sales with sales our one-off lower demand. be at due our caused challenges. continued the and end expense decline seen of to low higher We guidance and in range. have also coupled reported below slowing these

currency quarter lower a volumes solid in headwind. almost fourth offsetting XXXX, the down Comparable segments, was The were as our growth EMEA foreign decline in sales was reported North In decreased due XX% our segment. sales International X% of and to America X%.

had this Boris With pull third full sales demand trends well stronger half, sales the due that as stronger mentioned, as As began X%. by we our first first the to year half comparable in retailers, softer forward up were quarter.

was In versus XXXX. $XX operating quarter, last the with $X.XX in compared was adjusted year. million $X.XX fourth EPS income Adjusted $XX million

the versus fourth adjusted year adjusted adjusted than year the was of quarter, $XXX million operating was reduction significant a year, $X.XX effect in inflation the contained. our sales our full million income as XXXX. the in In $X.XX decline earlier the and For versus EPS operating full was volume lagging income greater $XXX

progress will our costs the improve impact continue quarter first down, inflationary year. their beginning effect we expect lagging through come to but on we it profit XXXX, gross of P&L are While in the will as our to

inventory excessive also fixed sales some were favorable the decline one-off fines Canadian Given deleveraging in basis In a operating cost comparative point for in unfavorable release to quarter. amount impact related the our the tax one-off accounted consolidated lower the our catch-up, and demurrage, these fourth overall, total reserve of we of experienced operating quarter, last of margin for year. facilities. items, have a some XXX The there items

we mentioned earlier. in to of actions and response change number in the as Boris In restructuring reduction quarter the Tom both fourth cost the initiated macroeconomic environment, and a

For $X North approximately the quarter, million we restructuring for of EMEA booked operating America charges and segments. our

annual approximately be in $XX to We largely XXXX. recognized yield expect savings cost these will which actions from million,

incentive productivity ongoing mitigate expected $XX Our will savings savings million in collective merit in and the are another XXXX. increases compensation yield sum initiatives these reestablishment of The to of incremental help XXXX. of

development. sales initiatives, committed our We on continue also in are product marketing particularly in go-to-market to invest to spend and and

a $XX and and partially positive sales, lower result prior debt expenses adjusted expense. the SG&A by offset year quarter consistent SG&A $XX Full investment primarily FX, XX.X% of of in cost were our savings initiatives million go-to-market continued in bad million increased year. with as benefit were programs, compensation, incentive expenses the with of compared Fourth XXXX,

Now lower with Fourth the let’s due the our increased declines period. even results. in accessories, by retailers, our turn environment. a and levels demand you to gaming replenishment retailers to quarter These in inventory decrease In North comparable America XX% more of fourth creating we decreased a sales slowing products. volume their quarter, third actions for reduce in $XXX to was discussed to The began million. net headwind quarter, for that the inventory segment

in of and impacted quarter and X%, by not and cost stronger decreased in half the leverage first which decline year, decline full price specific were the brands was the many finished transportation Growth year. inbound volume in costs previously North Adjusted net offset income includes one-off mentioned down adjusted America due negatively basis was freight comparable in outbound higher of of margin our the fourth which negative materials, by sales to offset to operating the from were income the accessories. rate categories points commodity the increases. the and gaming by contributed of equivalent fixed the declines, goods fourth For operating items, cost that higher also XXX margin quarter.

down For the full year, was adjusted operating income XX%.

down to the offsetting to let’s Net to current EMEA. and Comparable million, for of sales FX. increases. down XX% XX% million, due demand Now to to was $XXX turn continue were quarter sales environment. energy significant $XXX the decline price were to due challenging that Europe, declines crisis our X% mainly In volume inflation create a

the While inflation in has region, shown of low. consumer sentiment early signs remains moderating

For comparable the of were only sales sales stoppage down Russia. full impact to of the year, the including net X%,

margin from moderating behind quarter, points our In the margin EMEA that year. income and prior due was rate quarter adjusted third the lower improved a rate operating XXX basis the posted and increases Sequentially, fourth pricing to inflation.

inflation was the We overall inflationary further challenged Adjusted our mitigate to income to forward. by volumes, operating which led costs. increase price deleveraging impact fixed going lower increases and of cost these expect January of sales

operating full XXX decline compared rate of basis basis income decline the year actions taking margin that the year, fact fourth point points was was $XX million, supporting adjusted down For quarter, XX%. in a pricing the to the are Full hold. XXX

capital by net to with throughout in-person segment and in increased sales returned Moving as both X% businesses sales was work. in increases strong schools strong rose Growth the Brazil sales and been XXXX. International very XX% and was quarter volume the fourth This Growth education to has and segment. X%. year Net comparable growth in growth. driven the price

result XX% as margin operating with sales. income of income basis segment fourth XXX rate International Full higher points. the over The adjusted operating posted grew the improving a year in quarter higher

cash Switching flow sheet balance items. to and

full generated of receipts. shortfall of year, outlook EBITDA For the greater inventory lower our $XX a the to $XX of free inventory adjusted to the flow, given $XXX million proportion million we in cash below paid due timing with our million, and

should it in this provide As XXXX. normalizes, a timing tailwind

XXXX. the position working the was us This cycle normal X% $XX in despite or for good full higher For puts inflation. million a inventory capital in year, a down

in inventory levels proactively our demand given the are environment managing and We trends. uncertainty the

a ended we fund facility. than cash million, our X.Xx. had we the targeting on $XX to year and dividends X.Xx. leverage free term, of of EBITDA $XX was to the are still million $XX We to This At of lower We ratio million with credit consolidated remaining flow our free due cash flow. availability higher expected earn-out X a paid revolving $XXX utilized of of and million repurchased shares. we $XXX contingent million year-end, Longer

impacted debt earnings fixed our half not by in shown slides, is more increases. than interest our of and rate As

until maturities no have We XXXX.

Turning to for and are full we both first quarter year providing XXXX. outlook, our guidance

saw XXXX strong the XXXX with sales economic retailers sales half in continued mitigate and sales first These the created early the XXXX. in than are teams growth decline third In sales a we first XXXX, first growth pressures. the XXXX, conditions shipments in proactively beginning of had down a and reduce higher the quarter second half as and of quarterly the back-to-school as year-end. Our demand. should which in Therefore, and quarter year half first rate inventory inflation North the we of will their global We worsening half in differently of XXXX. America economy through projecting we quarter replenishment. to particular, inventory reversed expect year-over-year improved first be half demand our in second In of and trend good trends

to net compared down growth X% flat Our in XXXX outlook sales to for XXXX. comparable for to be is sales

We fully be with the pricing year improved for down volume the to decline. offsetting expect or partially

neutral. be to expected is rates current at exchange Foreign

related decline XX%, on America to higher the for of outlook, and quarter X% first of the sales a North shipments comparable would back-to-school demand end At we quarter the to expect economic primarily X% up to basis. due sales due to environment. later XXXX, to first the For our be X-year comparable

be with EPS pension is $X.XX adjusted pension $X.XX to EPS non-cash with year $X to Full costs lower partially operating to and $X interest deleveraging income, reflecting in higher expenses. and million. interest cost to X% income, adjusted $X.XX, higher quarter increase to X% of along double-digit $X.XX low approaching of non-operating non-operating to non-cash projected offset expected First is million higher by growth adjusted operating expenses fixed

similar within be rate, increase target the long-term gross margin year, our XX%. to XX% our we range margins full For a expect continue we XXXX and to to to and

reduced cost to incentive XXXX. In overall our increases higher expect income our adjusted our we total, points. as improvement restoration annual and margin we fourth our approach SG&A in in restructuring levels have from rate structure While merit expense, quarter basis the lead actions, XXX well to of will spending as operating compensation go-to-marketing in

approximately be rate $X.XX amortization of $XX EPS. is equates which Intangible adjusted XX%. to The expected tax is for full to adjusted to the approximately be year estimated million,

adjusted CapEx We expect to free our $XX million. after $XXX cash least be million of at flow

XXXX, debt Looking continue expect reduction. at dividends cash uses in and to we to prioritize

where be move on and Operator? to questions, Tom Boris, will to them. let’s happy take Now I

Operator

from [Operator comes Our Burns question please with first Thank Instructions] Greg you. go Company. ahead. today Sidoti & Greg,

Greg Burns

Good morning.

Just they so it down I’m in down take to low. inventory assuming couple And how similar of historically, level can do next only only downturns, patterns? – cyclical other this – they the you right the now? quarters? can are they Because have What issues. regards destocking to take over how channel And inventories out does the play inventory in of seen

the So out we how this over quarters? you thinking are – issue how about couple should of next playing

Boris Elisman

low to less stocks levels. We last be of you until to inventory product bring The expect for of increased But improvement. destocking shelf. saw in our excludes Obviously, we question, not at see look low are the QX. now, back-to-school out additional on right we POS. it’ll just just second POS the few QX, what that see if replenishment will at Greg. products think pretty compared probably likely for and stocking macroeconomic pretty more Thanks channel the weeks saw improvements. part retailers Yes. what they We saw over they to of in But is just right now, on an We to are bringing will historically, levels because in inventory. buy replenish have to QX. for going up they inventory don’t back-to-school levels We

Greg Burns

the was lower little and guess then international year. growth of the great. the growth a I was in first rate for were what three Okay, And than the segment we for quarters the looking

led was to So there of markets slower the a there any in change bit little in maybe any particular growth? that

Boris Elisman

around were growth the was then some issues. the just they we Yes, compare year, XX% for And X%. and

continues but slower had growth outside Brazil Specifically, we of well, perform to Brazil.

due didn’t is that and macro in Mexico, to just shift. have of in And Some to actually product we Australia issues specifically. enough Asia

the quarter issue, make more was that first So of ‘XX. an to up we and inventory of expect that in

Greg Burns

Is in then of savings, should half loaded, the And that think realization year? the we timing? million terms back the in about the $XX of timing it that? the cost throughout how What’s of ratable

Deb O’Connor

actions pretty little Yes. some later it say, much I but year, year, throughout would the the goes there say is we’ve Greg. ratable. the pretty I’d a as loaded bit in it It’s of of instituted back-end

Greg Burns

Okay, thank you.

Boris Elisman

Thanks, Greg.

Operator

question Your Joe Capital. Gomes go comes with NOBLE Joe, please ahead. next from

Joe Gomes

my Good questions. taking morning. Thanks for

Boris Elisman

Good morning, Joe.

Joe Gomes

some kind impact gaming mentioned quarter? of reduced each size as the to You from sales impacted lower you in one volume. replenishment, were weaker what one the what each for quarter release, inventory the those that of Can of the of sales, was the in part up

Boris Elisman

you have one? that Will

Deb O’Connor

proportion it look, had smaller then would I you quarter. is big but the that be so in pretty the Well, impact into you think pretty of inventory it pervasive say gaming a lot North destocking customers. by of significant for total, a a the piece when of I the year, if And our XX% take account, declined would across many for was you looked as quarter, that America, a the

Boris Elisman

agree the Joe, I of the gaming so… biggest that, with is quarter would Yes, because year,

Deb O’Connor

higher were That’s expectations And right. it. for

Boris Elisman

destocking inventory Yes. in In QX, those decrease two and predominant sales, gaming. draw a

Joe Gomes

about looking the year. be for because for down Okay, in quarter, I to XX% previous the gaming you the were think

the a significant decline quarter. in that’s pretty So

so… And

Deb O’Connor

Can I?

Joe Gomes

PowerA I’m at – sorry? looking You’re

Deb O’Connor

a season No, to I It’s for say that fourth just quarter. was go ahead. gaming strategy. for going big

Joe Gomes

Right.

longer-term you still So for I know it, some but I PowerA long-term bit on looking show on touched I little a growth. double-digit basis a mean maybe think to color Boris, your that you’re expanding on more. in of are what you’ve for mentioned are EMEA a you into give moving expectations what could Kind EMEA us ‘XX? And PowerA more into little –

Boris Elisman

Well, we back Overall, certainly in expect ‘XX, good. from supply industry expect growth and to of PowerA because was of It we loaded be in a QX pretty standpoint last year rebound. will compare half the just was good. demand plenty still and pretty

first comps ‘XX, will the still in the expect growth they So the despite PowerA but we quarter the be saw and International EMEA led overall will with North It in even we down growth going second of outside overall, our segments. and for difficult quarter, and being better, by starting be XX% Overall, get year. forward, America.

just will that continue So and accelerate.

and international. distribution customers take We places. to direct our with and Tom in PowerA product should international continued in people, streamline along that, to a are enable and in most EMEA both And that assortment segment hiring to PowerA EMEA growth broader referred

from expect segments. in other a we rebound acceleration in Nvidia including companies, from you gaming difficult other two yesterday, North America, has which those how In difficult year companies indicates North expect just ‘XX. in been saw very fact, what just public reporting from we America, a has in some XXXX. been And In

not performance, we institute. our saw with in we’re by what we while are unique gaming So disappointed

Joe Gomes

above given lot that. drive Okay, possibly, for would be of you. great results results you’ve mean detail What likely What happen And could help Thank things most thank for a your me. potentially could one I in the that last expectations? would that you mind, drive expectations? ‘XX. above for

Boris Elisman

Joe. back-to-school mean in things, ‘XX, if competitors. conservative if going of most good. unlike should have to season. good the being really then because retailers us. the chase of good during are definitely we inventory manufacturing, couple at is I is should for our a a us look load-ins season, be happening what’s that we That you probably Well, have with One and domestic benefit upfront we’re And if

be and they cannot. they able more So need than others plan it fulfill on, when product should we to

good second and us what’s the just first So in well. a the half guidance. economic season year, then that’s of everybody is expecting in in a recovery our And serve back-to-school will half strong a slowdown the

We expect and global overall. that anticipated, half. some keep should to our profit recovery We second wanted it in the benefit stronger than sales

Joe Gomes

Great. Appreciate it. Thanks guys.

Boris Elisman

Thanks Joe.

Operator

Barrington comes next Steinke please with Kevin Our Kevin, go Research. ahead. question from

Kevin Steinke

morning. Good

In terms X% in your are three you walk to expecting detail if XXXX, decline for would sales of the share on through expectations flat willing maybe any in you you that? could to just be segments,

Deb O’Connor

Yes.

international about and slightly, I like EMEA North the are fourth down thinking of think we America with that kind quarter. trending in mid-single digits

Boris Elisman

Growth.

Deb O’Connor

international growth. Growth,

Boris Elisman

America down North slightly. EMEA and And

Kevin Steinke

for. Okay. Well, understood. Thank you, let’s hope

plans you think year? for I as the seeing, increases price move are price are Do we you or January So, the increase. that headwinds Xst throughout all increase least there guess had additional you price that covers – at the currently inflationary known

Boris Elisman

they covers But as smaller are exchange North due and changes. now believe of inflation. only just our some rate as of do We seeing. be where that mostly foreign America should The that to exception inflation more the price to would have may increase increase all we now EMEA, the the far that cover countries

Deb O’Connor

need And covering think out we before, get bite I to throughout mentioned the we we year, really have a what that’s margin, have back. been of taken the have dollar and but the we

Kevin Steinke

need SKUs the plan that went be little Can Right. part necessarily underperforming or less aren’t conclusions of you maybe Understood. through those identified to the to have of you process? just and I bit about And relevant how SKUs? at or just talk kind assume portfolio, some that eliminate a arrived you

Tom Tedford

go SKU through look the managing question. one Kevin, analysis. the of And the we that will of those Tom has of this complexity accelerated SKUs. that Yes, the Yes, analysis demand is at fairly we profitability, each annually. those Tedford. take I SKUs, And robust segments a

So, in they actions. analysis should a result – reduction pretty should result of that number aggressive SKU

we those And And a what an if In done as ongoing and factories profit retire a look in are doing that analysis management. improvement of we what track and this going our is inventory of on at But we think future an we do, rationalization this. it part those well. minimum addition seriously to have as typically approach very products. record we turns really demand I looked at have to aggressively we make teams meet a strong take criteria, doesn’t on our

pressure to We are putting work XXXX. in more just the a little accelerate

Kevin Steinke

you. Thank Okay.

Lastly, back to wanted circle again, I just PowerA. to

sales supply mentioned some your You PowerA for as factors improving expectations the of in in one improvement ship XXXX. behind

availability So, into in availability therefore, are you improving gaming for console going seeing the – kind well? of consoles a ship meaningful and as improvement

Boris Elisman

We are.

We because process the to supply months. and see manufactured manufactured due are accessories. be the shipped of of seeing our we is and a a these the just gaming already Asia, of consoles, bit chips sale, It’s have there our improvement to we availability to that for and countries takes couple are need better that in delay little and chain a of on

we of better due a QX, chip our really, availability expect the products So, at availability. improvement the of end early in significant to QX,

Kevin Steinke

much you for questions. the taking Thank very Alright.

Boris Elisman

Kevin. Thanks

Operator

of comes ahead. next William Please go America. Reuter Bank The question from with

William Reuter

year. weakness Good morning. My first question for is on the the gaming

mentioned industry down. both You the was

of how it break you you others industry guys? product bit the of guess then And on how had was than chain you availability was you contributed difference if that had the much much you could losses, that to down the lost that? and specific try supply or firstly, between also to issues, share. little you was You and I and what also mentioned share then mentioned less that a

Boris Elisman

Yes.

the in other smaller very was we because we able it shifted loss, the didn’t have weren’t wireless because overall, category. particular share It to supply And the one was accessories to have demand of products had the large the consoles. share where for product. largely we We that share. market share On a

So, talked of share that’s of I and XX% our as drove such look are loss. what terms particular about our really if things, kind majority lack of just X% accessories. the the at for wireless the for And decline, industry-related of issues reasons then are what I chips about in

Deb O’Connor

retailers destocking – with as PowerA Yes. the well.

Boris Elisman

To industry. the

Deb O’Connor

agree. Exactly. I fully

William Reuter

retailer done about earlier gaming effort In do destocking. It’s Yes. at point? an you I is That that, destocking my that kind moves question. of this the talks think to second accessories, question believe

Boris Elisman

we there our for low. of business at I lower year. accessories gaming like see stock just like it low well. being have mean Again, as it this other and of just typically is the time higher stock school levels, It’s Yes. And products, for we season, fairly we the a lot but accessories of very a slow products, well. is gaming as for

So, situation the products. other it’s as same

William Reuter

are just for allocation, dividend. on to then And committed you mentioned Okay. capital lastly you the me

challenging Will this or talked moves assume should targets? those leverage You table off the about macro to you debt the share also reduction. closer repurchases that backdrop, consider are we given year, our until

Deb O’Connor

what I anything, down, need Never would that’s and ratio focused to are to I Yes. we leverage pay-down. but on get guess say focused never say we going really the are we on. debt to that be

William Reuter

Good to hear.

Thank Okay. That’s it. you.

Operator

The next go with please Barclays. question comes from Hale, ahead. Hale Holden

Hale Holden

Star. or brands Thank best made you. your around like better a Five overly brands morning. Boris, you Good comment discounting not and

wondering weaker that private was consumer versus the might for and And I you how So, you? room about fill how tier gap? below lower label think you that

Boris Elisman

multiple of benefit That’s the having Hale. brands, Yes.

price price been have been Mead’s And successfully. or price products, able points, of a we as points, addressing, to good point value saw position demand price things we for that historically, in historically, in points points. mentioned, Mead for our example, both So We brand. XXXX brand. premium good already that for price strong played school role as well better

the we should across segment consumer things applies what continue we targeting. the that on The in So, as thing are EMEA. position depending spectrum, same

of Lights, actually a are attractive kind consumers mainstream to of saw and points. of as growth value have with brand. We price is more which brand those ‘XX We in is more more premium Esselte, our which Esselte, more

this in through region, successful And we brands. pretty we multiple approach we in So, have economic slowdown. can tier much as believe be every we this have with our been successful. XXXX also I And go historically,

Hale Holden

to wondering guidance, was back-to-school if weaker consumer if I slight embedded for And something thinking sort happen? volume flat you the declines what on might was or of in was year there else that full were revenue

Boris Elisman

flattish less a back-to-school, chasing demand as assuming are the then load-ins, people this really bringing being by it forecast assumption And we upfront for is inventory aggressive includes now, driven being flattish they and in that Right fulfilled. see lower and back-to-school. NPD

Hale Holden

out. that turns So, we XQ, how won’t know really until

Boris Elisman

correct. is Yes. That

Deb O’Connor

right. That’s

Boris Elisman

We will us. be asking bear you with to

Hale Holden

are debt balance? to which floating were And I could you try you just about that potentially thinking rate was you take or debt at was obviously, amount. discount and thinking wondering accelerate trade-off I you two purchase the I the a bond on is or had which the And how can notional You about repayment, as one other have choices, question repayment, loan, right?

Deb O’Connor

Yes.

to and rates bonds about with They I you the So we would think those right in the carry now. nice are have keep And to it. tell portfolio. that

but a So, consistently at us will it, look good we keeps it fixed rate. with

Hale Holden

Thank much. so Great. you

Boris Elisman

Thanks Hale.

Operator

Khorsand Hamed Financial. Hamed, please from go comes with question final Our ahead. BWS

Hamed Khorsand

are. Could good what little the thought more morning. their just about ordering insights back-to-school, bit usually mass habits Good to this a your delay merchant talk retailers pretty ordering? in you I Hi. you give

holding inventory off any of So, you nervous about they clarity, just are from any holding giving kind are giving you are just much so and just that order or they they year clarity? last still

Boris Elisman

No. they and They to have deciding pretty this environment. about concerned in are are clear bring macro year They the less don’t they just inventory. much as are

issues. more are they last And were loaded than year. So, concerned they supply because less than last year, they chain obviously, typical about loading in in

of So, forwards much QX there our much on will last we a pull happening because it’s is than substantial. that basis, Revenue lower year lot so lower. a were why is see. That’s guidance that not so guidance is last comparable year

is than be orders less lot of to bringing see a similar the last be So, in mentioned. year, that historically. will to I just their very what things due they will the timing we amount But

Hamed Khorsand

SKU strategy my being people the more How you back last you going strategy your of for And that work changes on to was consumer hybrid more Does reverting oriented? and in environment? question made office back just are incorporating Okay. a general. of to product other you are just mean the year

Tom Tedford

is behavior change work already in that Tedford. Yes. to And responded our have teams Tom Hamad, this very successfully.

Our product a we sales saw or their team more environment. fully in they remote solutions shifted Europe, in particular, of to hybrid as during work-from-home pandemic, growth the

quite that. has Kensington Our business responded with well

are remote for work, we hybrid balance brands work really So, nice between of solutions, a work, consumers. have on our already that focused the our and office across majority solutions implemented

Hamed Khorsand

is I high office work-from-home that the guess price kind are new what your as producing? pretty used years. you expectations you have supplies as the I am solutions tag to far your were to and recurring are What on of ask trying expectations several over

Tom Tedford

Yes.

we each the alluded brands supporting able we to with earlier have value I at are. category, point. to able think have to consumer have choose the we price are If and to that we Boris approach a meet have that the multiple they that have if portfolio where it meet also solutions and brands product, them. are purchase consumer a they solution, premium that they more we solutions for And the

to think the but consumer over a continue modestly to isn’t see ASP to shift that time, We declines. continue towards more offset units all business, sell we So, I profit our good solutions. just have different. mix significantly will that it But more will really of to profile

Boris Elisman

environment. bit little add just color Let a more on me here the

companies stay. are believe most or the and working in that actually hybrid remote. We very still we to few office, is quite a So, stable workplace environment with fully the see hybrid here

to office. seeing are the back positive We trickle a

it demand slow, it’s year office. the continuing but its more more in companies as started a presence and it So, ago, and continues

to lot able So, then the kind those We of and continue. to of as significant XXXX to retail and the talked environment, all seeing three in support supply about. hybrid that are our that we partners did focused it this And office the work product business-to-business in portfolio discussion environments. we portfolio my that our of a workers, both other inventory throughout is side, comment to can so back restructure office, than and that today, we in we our that a trickle are reductions just channel on have continued referred will XXXX return the more to meet in the is we business-to-business

sales is side. purely better than And inventory there better. is it are on retail the the consumer the certainly, So, doing there situation

Hamed Khorsand

Okay. Thank you. That’s helpful.

Boris Elisman

Thanks Hamed.

Operator

have We questions. further no

to team any the So, I for call the management will turn back remarks. concluding

Boris Elisman

difficult have environments you everybody thank and in in are your Previously, to ability economic confident challenges. managed well Emily current we in and interest Thanks our ACCO for Brands. navigate

on also have with as economies months strategy to positioned confident performance, financial to couple that sales first recover. We our talking continue in report deliver believe you. quarter a look results right are and compelling we We you growth, improved results. are and we to organic global market the forward of Thank well to

Operator

today. for may disconnect concludes Thank and your you now our call This us joining everyone you lines.

ACCO Brands (ACCO) 24 Feb 232022 Q4 Earnings call transcript