ACCO - Earnings call transcript Q4 2024

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Operator

Hello, everyone, and thank you for joining the ACCO Brands 4Q and Full Year 2024 Earnings Call. My name is Marie, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Chris McGinnis, Senior Director of Investor Relations, to begin.

Christopher McGinnis

Good morning, and welcome to the ACCO Brands fourth quarter and full year 2024 conference call. This is Chris McGinnis, Senior Director of Investor Relations.

Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands Corporation. overview outline fourth our an year and provide and results XXXX will of quarter our full Tom priorities. on will Also Executive speaking provide and greater our who year for results the Vice O'Connor, quarter detail provide XXXX President and initial full today Chief Financial and is year our fourth Deb first full and outlook Officer, quarter.

rate reflect posted earnings. our Due of the this that to Adjusted accompany reconcile intangible the to the we are have non-cash forecasting we results other and annual items been and our measures and earnings quarterly We accobrands.com. When quantifying slides refer financial non-GAAP Slides this certain release amounts, forward-looking estimated section non-recurring goodwill charges measures of accompany Relations inherent about questions. other will directly unusual a tax to line Schedules reconciliation not call. these do then include adjusted the and Investor for and and results to in results, and open measures. to in comparable may non-GAAP exclude and speaking the restructuring the GAAP and items impairment tax difficulty call results. asset amortization costs, of adjusted most measures on that adjustments

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

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

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

Tom call over Now I will to Tedford. the turn

Thomas Tedford

outlook. our night, in year welcome million morning, earnings outlook, for year, Good We excluding Brands line expected reported the currency our cash than with EPS headwinds. everyone, of delivered sales full Chris. we ACCO foreign flow in XXXX to with line free $XXX adjusted you, greater Thank and year-end and call. Last

spot While successful cost operating outcomes of strategic a environment our team's Brands reset inventory as XX% timing the year both receivables am significant the by by and amount cash actions for capital the reduced in our and we aided in for was in and our Brazil, revenue management I flow levels structure ACCO collected our working sales. proud of the improved of XXXX, to execution a bright position remains future. Free cost challenging, initiatives of their better given

our and expand our dividend include year. flow allocation Our continuing cash our commitment the with has down while position net debt and The consistent improvement reduction balance financial in debt for allowed repurchases, debt program sheet to quarterly us support improved $XX share million to to capital repayment. to our

positioned to well. consider M&A accretive well are opportunities We as

dates facilities, maturity going addition, bank In to we our refinanced the credit extending year, out XXXX. during

delayered multi-year our $XX through our reduction brief structure rationalized transition decisive through a my This year to the simplified organization, management reduction At of program. and has introduction our implemented structure highlighting to objectives optimize cost we we Let the our a the program footprint a first strategy. of million me XXXX, year, facilities. progress beginning and and the global recap made the our reset actions of manufacturing cost against updated of

$XX approximately year, the program. During the realized savings we million in from

expanded XXXX uncertainties deliver have than savings continued year lower million proactive in were almost allowed and as headwinds program. XX prior improved points costs operating us our to year ago. SG&A Our to the the cost approach scope and of margins and expanded versus margins We cost basis management a gross anticipate $XX

profitability $XX program address are of to inherently XXXX, with and yet operating savings of model total protect have scale our increasing us ensure targeting now will by volumes. to target we essential challenging, enable are our by that nature We in million. Decisions end current $XXX an this million external the challenges,

leverage able our be improve cost both we this inorganic, profit outcomes, we and will organic As revenue structure optimized for to expansion.

Our priorities focused not cost have exclusively savings. on

product through excellence, other brand price promotional accretive includes acquisitions, development, work building and new sales and Our restoring growth initiatives.

benefits. longer take initiatives to revenue implement and However, realize the

Our teams product finding needs. understanding unmet consumer to solutions are solve on and focused insights innovative

category customers are markets. defending and our value We are partnering our our we with key for to them aggressively with unlock leading brands in leading positions

opportunities. We to customer customers, leading strengthened additional opened have has key to business which leaders closer positioned relationships, growth

our refocused introductions. have new product product improve have and rate efforts innovation and solid development and to We related foundation refreshed laid a new to our of

including launches refreshed across on and as will product have commercial XXXX, this categories, products. In XXXth several lamination entered in-line computer sustainable high-speed ergonomics, new exciting Staplers, successfully such our year build we line a we progress. of expanding of adjacent the are we new portfolio our continue celebrating We more to and categories Swingline of and solution,

We are committed to leading in investments our brands.

either shares with share. many maintaining category or strong XXXX growing brands Our remained of our in

channel and resonate our fuel to also provide position, our gain consumers share Our brands These both opportunities. partners. with additional maintain investments while leadership the driving

the initiative accessories identifying business. more our planned have like within opportunities across other a gaming portfolio introductions We and are beyond console

new shared early you on our In channels success. the and channels with categories. success also XXXX, we various of across tested We products initial are distribution broadening and and expanding

enacted handling imported down improving sales to year-over-year will address the China. that but potential highly from low-to-mid global on a business year our be and impact the strong We of XXXX economies, a unpredictable. remains demand due near-term basis. I anticipate XXXX additional factors recent certain we the soft to single-digits, The demand to the also assumes products consumer remains on environment want dollar. volatile uncertainties tariffs, from tariffs U.S. throughout outlook in magnitude these impact how around Our are

of our have years, Chinese we a proactive Over the number imports. lessen to last on approach taken dependence

and impact tariffs. to We plans round potential the are in the with suppliers as latest enact of customers we our counter discussions from our U.S.

opportunities. flow, cash exploring are consistently growth improvement strong With and our actively the in we generate acquisition-based balance sheet the to ability

will approach to our with We have be M&A. and a prudent integrating long acquisitions history of we successfully

highly company. In aggressively have We and organic opportunities, I initiatives cash will managed and and inorganic structure ahead our flow. ACCO Brands. of the profitability about our leverage at remain excited us enhance accretive cost lower our we which structure will cost and closing, and synergistic strengthen so opportunities growth will that provide scale evaluate our our

Our environments, experienced leadership implementing team has ability shown its also navigate meaningful while dynamic to operating change.

Deb in maturities Brands. I for half will we Deb? balance your strong productivity debt position than with answer improve Our invest financial now put to no on as in to we'll sound hand back come it sheet more growth fixed questions. interest our low ACCO brighter XXXX rates until us future of debt and a for and and over

Deborah OConnor

Thank you, morning, Tom, everyone. and good

lower half the both exchange million Our sales This of first expected, the time fourth from EPS. the remained and $XX lower change trends constrained. Similar and the to soft the $X.XX an fourth business increase sales the resulted issued rates from year except year than the fourth fourth in in of results discretionary quarter quarter, overall spending third full end the the quarter, and considerably in impact by foreign our quarter to were were currency In of the remains demand of better unfavorable year. consumer as we environment as outlook rates. for quarter in

program. scope earlier, we fourth multi-year million mentioned and cost additional of savings $XX in charges our restructuring quarter, expand recorded size as of the Tom the As we

at felt prudent realize cost end volume put additional place in of environment, the Given additional uncertainty anticipate the declines in the million an $XX savings. and it to expected to plans $XXX million we bringing savings annualized savings, in the We to XXXX. cost cumulative

for foreign Now were more turning weakness volumes These fourth offset the exchange, our sales. excluding accessories quarter declines prior down gaming. the sales, international new due X% in versus to than technology year. growth sales sales was The to X%. lower in of execution from and Reported product Comparable strong decline introductions with continued Brazil. in globally decreased expansion

Turning to categories. office our product

the have in-office year, new rates office of and sell continues rates. low products consumption Although many occupancy we influenced by to past work habits over be hybrid stabilized

for in declines of categories volatility. us meaningful be expect of a several we very to of a moderate very solid These rate cash with margin year. the the margin quarter down and $XXX flows. Gross compared XXXX, last after remain year years decrease and profit During with prior million, and historical to trends fourth low-single-digits to these profile X% more the provide similar line strong was for

improved expanded actions. rate basis down but margin gross X%, full expense our million points. was XX for quarter for our rate prior margin the prior However, basis $XX and year, cost versus XX% the year a the strong due year, income points we reductions. XX SG&A the cost Adjusted reflecting operating of margin SG&A the down to reduction versus $XX rate was million, fourth

segment, dollar. Americas sales our quarter. the Now the expected results impact about segment larger due with a sales XX% exchange previously of decline lower accounted fourth Comparable to X%. the having foreign of for negative the of strengthening In declined the in the margin X% exit U.S. for quarter. business The than let's to declined turn

products had the lower declines adjusted partially and for our creative learning margin decreased offset the Americas as prior basis We categories. fourth income for compared operating XX in accessories. in quarter were costs. and to growth lower office-related to Brazil also than by for more volumes These sales our lower offset technology points XX.X% The year

Now our let's to turn International segment.

and offset refinanced from for actions. We points than We and $XXX net year. of declined finished $XX borrowing reflects environment from XX $XXX for margin ratio. which essential in million, X% lower Brazil ended are $XXX needs. We our Xx than the consolidated pricing below fourth under to with our adjusted soft a improvement year This of operating collections This the demand available X.Xx, categories. basis last receivable increased well nearest rate of our of our strong our million somewhat the with term, income downsized flow At both adjusted our X.Xx. still $XXX we same year technology quarter income more to This a to income For with covenant revolver, quarter, the we Remember, cash to debt extending reduction operating by fourth adjusted Longer growth inventory we the our million million, sales for recently leverage cost timing time the million. sales $XXX facility in year. lower their ratio while had in maturity was comparable targeting margin slightly. the adequate our Xx year as due this year-end, million for finished of free International accessories. is revolver with we the and XX.X% XXXX. operating of up was credit business to remains total almost ratio

drive to flow use through This repurchases approach. accretion dividends, We our balanced our continue strategic a through M&A capital is shareholder to to designed share strategy, deploying free cash reduction, by value enhance will whether value debt to shareholders. or

During while to to the year, form million in returned share shareholders the support $XX $XX our million of we using repurchases, also dividend.

move year let's outlook Now full the XXXX. for to

X%. and we is sales year-over-year unexpected Barring reflecting environment given demand currency for year, progress weakening sales decline effects full the throughout It to expect expect to the environment. For X% a uncertainties, as we of demand. improve to additional comparable consistent a year, forecast we of tariffs, foreign do more adverse to potential consumer challenging exchange these trends some the

For we to a expect $X share. be $X.XX range adjusted EPS full the in year, of to per

is pressures. expected compared by to year XX%. from are $X.XX be inflationary full year other which be merit expected to margins to adjusted incentive improve will is The expect and savings XXXX. We be per to comparable actions $XX increases gross and amortization as rate the Intangible costs offset in equates tax SG&A cost expense to to for our prior the million, year compensation approximately share.

we within million. cash of flow, be free to a $XXX to expecting For million are $XXX range

high Brazil, more Over cash levels. years capital, few some of the expect collections disruptions capital reduce we flow last Brazil chain unusually and historical year, ago. improved significant In had X similar from the has flows, the improvement. efforts inventory in benefited to after strong we years, Last reflecting collection our driving but XXXX, working for normalized the cash supply to working a

ratio XXXX end to of consolidated to with expect X.Xx. a We approximately leverage Xx

our first the relatively historically, quarters. Given sales, to compared product is of small other timing the quarter

a We down comparable are sales headwind. X% to significant X% exchange forecasting be adverse foreign to with

loss the We to share within for a our of $X.XX $X.XX be expect per quarter. to range

quarter of always bottom-line. is our sales, is in quarter smallest impacting which terms our first The

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

Operator

Joe from is Gomes first Our NOBLE Capital. question of

Joseph Gomes

want on to of focus the big I real kind moving about trends. Tom, picture improving here. So talked start primary forward you sales out about

in to different in spades your #X building, past brand things you is brands market some already. haven't you have What guys acquisitions, share going development, that past sales is the of you new the brands, foresee in change And this time done product you that of X all the in mentioned, that are done that trajectory? the in

Thomas Tedford

a great It's Yes. Joe. question,

me answer information with to let So sharing my I'm at best time. this it do comfortable

So majority path our it's categories that of gains. apparent through growth share to the to is we're that in the now, us competing

strategy, to so while execute. a a And that difficult is one that's

many existing too have We categories. headwinds of too our many in

we'll initiatives, adjacencies focus in of product the changes businesses, recognized our heard growth sales of greater of me in greater And remarks, in categories you opportunities, emphasis categories. number expanding a beyond remarks continue creative with to the in have at going all European our this that that we're into learning that in gaming, along believe and with allude success and so it line. We to that and started get to office we're things my early opening year to Ergonomics right? had we company as forward. my technology looking in looking near And And the we We prepared inorganic moving business. console our the at to impact on such and adjacent particularly accessories, with with profile

Joseph Gomes

previously, Okay. you side, And the about you on gaming some talked partnerships. had had

I with much And and really Nintendo if a think was give one Games, getting little could us for those. distribution Epic anything you maybe into one heard Sony. about haven't on I another efforts. update those wondering Japan was

Thomas Tedford

good question. another Joe, Yes,

performance And right? were that So see Japan a year, really gaming in expansion. introductions product until the the of good didn't was the in effective so our XXXX. international new and for drivers in execution We us late strong had QX. And

of efforts. to in whether were in saw by premature that by success, expansion year talk were enabled but I throughout a And our we late long-term XXXX. international with the those licenses we the about our encouraged number what it's that's think and secured certainly year we

talked this, discussing So that while for done their like early particularly we've we've in have we on to calls. Nintendo moving doors has previous Switch. expect about to headwinds XXXX, We next-gen markets demand work been us enabled the as do some which anticipate licensing is of open I in Japan, that our in current and new it they the for support driven international what was expansion, in the products back of which about to we previously Nintendo half once and products going talked the by But be see first launch. weak really happens year, XXXX and on strong are half calls. we'll was

Joseph Gomes

then one I if Okay, great. more, And may.

last positions One do it's throughout normal. think of I of year. inventory than kind about will you're year talked days as of the very their early less holding you this retailers But taking was And to things retailers them the and give back-to-school and -- there your us talk for today, what inventory about inventory know a you sitting on view front? the

Thomas Tedford

Yes.

As you early. said, it's

America, but again approach. XXXX clean of in U.S. will don't season hold in be coming fairly their in to North the of lot standard we conservative high BTS terms They'll that leading insights retailers of an we from with out us the inventory do have on perspective. So a a anticipate

So any or I anticipate headwinds frankly. don't tailwinds,

it will with be North we last think what year I America. saw consistent in

Operator

We question Burns of Sidoti. from Greg have a

Gregory Burns

going the is should that of years, The the about ratable year? be in savings, this over remainder or to we weighted 'XX over Is next the expect period in? to that? you think $XX of timing modeling what get the next cadence the million or back-end the X cost How X-year of kind that or that

Deborah OConnor

million next number range Yes. remainder of million, of in 'XX. $XX that then this and in kind We're the gave year's -- year next year thinking $XX we

Gregory Burns

going opportunities, M&A? categories the getting when might more preference be is like adjacent market? look at you focused new or those of in it And you Okay. M&A look at is kind gaming you to a your whole into near something What when acquisition do

Thomas Tedford

you take premature want associated and highly to in bit probably opportunities looking what is sure make that about but you low relatively the doing M&A term But it's specifically, relatively it, M&A risk. that accretive, risk Greg, at are inherently but we're wish. wording as anything Yes. near-term. can that a with we to has talk low-risk we

Deborah OConnor

Yes, leverage keep that comfortable. we something us so where pretty quickly that payback we're a gives ratio

Gregory Burns

Okay.

So sheet to wouldn't up you balance the any looking lever is be necessarily these than it transactions? currently more one of with

Deborah OConnor

our good I but ratio mean, as that we acquisitions we're up can. poppy of have acquisitions very for payback looking keeping cognizant kind of as it bit, a little and we're leverage and low

Gregory Burns

seen weak change and first seen the in there then the for any quarter improvement was in back-to-school have change the like And to Have any last Okay. start I this the there? you any know or you Brazil, quarter? there. outlook season

Thomas Tedford

Yes, Greg.

So in the really Brazil, up wrapping back-to-school season. we're

trends sell-out getting in points So we QX, seeing right? of trends Brazil. obviously down. as trading little seen but modestly that our But business, modestly we from talk for improved we consumers to improvement what a the also believe The very some insights product. about to improving are to are we we're But we're things Certainly, in early -- from it. seeing react there. price modestly publicly us competitive need it's a saw We've

are insights them leading market the take position positions. in and season from that in the for back-to-school our make looking our sure at to actively this and to year's possible plans category putting so XXXX And to share best teams we're and defend react

Operator

Kevin [Operator Instructions] Steinke question of We from Research. Barrington a have

Kevin Steinke

outlook terms guess, the quarter full question, I in year the and sales XXXX. both first starting housekeeping Just with of the off, a just more for of

any building talking that be kind in about? the sort that You of -- that sales. to into -- or sales currency addition that talked of you're that comparable is ranges you comparable impact would are about Does

Deborah OConnor

Yes, Kevin.

anticipating end quarter a FX in FX we're But facing headwind the kind off it's the tapers the strong does X% X% year. of but like without is on FX. pretty and comparable the headwind to comparable we FX, So to then be and exclude the first as we're that it

Kevin Steinke

helpful. That's Okay.

about us possibilities variances thinking just walk that potentially to we through all could scenario so through just tariffs, when And account of can front? happen think you're or and on maybe you for the through some going the that planning

Thomas Tedford

a good is working Yes, actively speak. our team Obviously, Kevin, one it's that we as question.

balanced very know overly we been that I have think not reinforce that chain. which on the we've to thing has one first is China, imports a tariff the reacted We're we is supply enacted from to. dependent

is be of includes countries support supply globe Our chain supply also we helpful chain have that scenario. really enables across other to diverse. in competitive from a It which U.S., that this us the in perspective, origin the Asia local but manufacturing is

teams increase to intent our So have sent customers. our out letters price

So have where passing of I'm changing And globe. it's impact the chain cost and work And price. difficult actively know, working also we we supply the ensure managing pretty on comfortable the are pretty you we and tariffs as across But really sources competitive are. to that most it's along rapidly. our we're with

we get So company. that information, impact our with customers and the suppliers we work process to as internally the more we to mitigate our and

Kevin Steinke

you're of internally shaping a some acquisitions. and guess, up, opportunities, those I topics? for that pipeline the But about et extent talk been valuations, you're what doing pipeline comfortable can you done the while to is how it's to talking that cetera, about competition Okay. you've build since

Thomas Tedford

Yes.

to careful down we an leverage. have Inherently, quickly. talking anything with We're to approach. that our that we earlier, be to go very said as other a what we impact said, be it perspective. to specific about pay disciplined. I'm There want going acquisitions. do very leverage than it. balanced ensure pipeline careful doesn't we've We probably want to be will to I'm able be want We're that's already synergistic We're comfortable up I adverse Deb a it going what but -- from is going think uncomfortable to will it a right? take to bit, to -- be with relatively

put company, balanced too. criteria and a taking a to but relevant our opportunities, approach looking with a really that they out strategically Board to we've we're us. that meet laid better these and They also position us have a are in as financially as ensuring aligned at management So team

Operator

question from have Bank a from Reuter William We America. of

William Reuter

first break of My X the And million how largest and savings are that down or in will between 'XX, COGS? the there? on of maybe buckets $XX what SG&A X

Deborah OConnor

to our been -- lot we've going rationalization for announced We're a footprint talking closures. that we Yes. a that year about last of there's and couple

that COGS of be is all up number. in So to going our

weighted about side. when well So reductions COGS you probably talked have of it heavily get we've as as represents SG&A that kind as But you yes, the to more side, the to XX-XX, well. margin done, maybe you the that

William Reuter

the tone your a Is seen the quarter it that Got tone I discuss is in little opportunities? based am aggressive of based it's helpful. when more then optimistic. terms And or what on you different kind that? And like what been either the it reasons it. business? That's bit behaviors upon this in M&A little are in Is of and the a seems this reading I it, more something be correctly it challenges past? environment front, for the some of organic than you've upon may slightly guess, the aggressive terms maybe in

Deborah OConnor

strategically. talk and was it the is improving off interest kick me the interest rate. expense, just then more I'll -- in whole Tom let But Let environment

And a talking right, ago it year at or X.X ago, we all, weren't environment. about years so the given

some of So also changed. that I has think

X.X also years M&A closely with has day that right? as rates because that's The activity a opened to environment changing it But happen is ago. shapes it bit watching up. of we're what's up more far it, every would have as how going part than Now been and

Thomas Tedford

Deb Yes, well. it Bill, I said think

really our higher not presented to has in pursue actively as do a like in in mentioned, opportunities debt It's suggested debt it acquisitions. is high, rates as DNA. position I main our than our doing. think well. Deb interest we remarks tone the that's we've what get environment to think is change us as has consider feel relatively a did And to our that important in year M&A have history, ago, it today, gone as we it's of A opportunities. with opening pipeline, of a and long the with the improved, But We We just the just part environment. we're were down, all we

William Reuter

Got then it. willing delever a of from terms upon in leverage lastly, would be some for just and immediately high of acquisition do most And clearly, -- bring take then acquisitions How leverage to an time. period elevated you there?

Deborah OConnor

Yes.

I think been it's going to how to point we depend had could to on payback the acquisition it at there. right sort We're synergies We'll up PowerA not that and the after itself off look keep the around get it. let and come of of the the that going acquisition. we ourselves

Operator

have currently no further We questions.

Tom for remarks. So closing to hand I back Tedford will

Thomas Tedford

everyone, you, Thank us. joining for

on We strong our initiatives strategic pleased are with in execution our XXXX.

actions positive proactive growth. results yielding positioning Our are and us better for long-term

use and to a organic opportunities. revenue we will sheet which cash both generate balance in have invest consistent We flows, inorganic and strong

of that scale We We in will you M&A are report Brands cost actively will That quarter in look in forward first optimized highly interest pursuing leverage the synergistic, to levels when talking from and in higher structure. leaner and your provide future. appreciate we result with profitability ACCO our May. accretive our results

Operator

joining. for call. today's concludes Thank This you

lines. disconnect You may now your

ACCO Brands (ACCO) 21 Feb 252024 Q4 Earnings call transcript