ACCO Brands Corporation (NYSE: ACCO) today announced its first
quarter results for the period ended March 31, 2022.
- Net sales were $441.6 million, up 7.6 percent; comparable sales
were up 11.2 percent with all segments posting increases
- EPS was $(0.03) versus $(0.21) in 2021; adjusted EPS was $0.11,
up 10.0 percent
- Strong recovery in International segment, especially in Brazil
and Mexico
- Continued sales momentum in North America and EMEA
"We had an excellent first quarter, with sales and profits above
our expectations. Our performance is a result of the strategic
transformation of our Company towards sustainable comparable sales
growth and demonstrates the benefits of our geographic diversity
and balance, the strength of our brands, and skillful execution by
our employees. All segments delivered meaningful comparable sales
growth. These results give us strong momentum going into our very
important back-to-school season and reinforce our outlook for a
record year," said Boris Elisman, Chairman and Chief Executive
Officer of ACCO Brands.
First Quarter Results
Net sales increased 7.6 percent to $441.6 million from $410.5
million in 2021. Comparable sales increased 11.2 percent. Both
reported and comparable sales were driven by higher sales prices
and increased volume, primarily from strong demand for school
products, computer accessories, and business products. Adverse
foreign exchange reduced net sales $14.9 million, or 3.6
percent.
Operating income was $6.8 million versus an operating loss of
$1.1 million in 2021. The increase was a result of $6.5 million of
lower charges for the contingent consideration and inventory
step-up related to the PowerA acquisition, as well as $3.6 million
of lower restructuring costs. Adjusted operating income was $22.6
million compared with $24.6 million in the prior year as inflation
was not sufficiently offset with price increases, especially in
EMEA. Foreign exchange reduced operating income $1.2 million.
The Company reported a net loss of $2.7 million, or $(0.03) per
share, compared with a net loss of $20.4 million, or $(0.21) per
share, last year. The improvement was due to higher operating
income, $3.5 million of lower interest expense, and non-recurrence
of $12.0 million of other expense related to the debt refinancing
in 2021. Adjusted net income was $10.4 million compared with $10.0
million in 2021. Adjusted earnings per share were $0.11 compared
with $0.10 in 2021.
Business Segment Results
ACCO Brands North America - Sales and comparable sales of $208.5
million increased 10.4 percent from $188.8 million in 2021,
primarily due to higher prices and volume increases in school
products, computer accessories, and business products.
Operating income was $13.9 million versus an operating loss of
$0.7 million in 2021. Adjusted operating income of $19.8 million
increased from $11.2 million in 2021. Both increases primarily were
due to higher sales.
ACCO Brands EMEA - Sales of $156.1 million decreased 0.5 percent
from $156.9 million in 2021, primarily due to adverse foreign
exchange of $12.4 million, or 7.9 percent. Comparable sales of
$168.5 million increased 7.4 percent mainly due to price increases
and higher volume, primarily from computer accessories and business
products.
Operating income of $5.6 million decreased from $16.8 million in
2021 due to inflation that exceeded the benefit of price increases
and $0.8 million from unfavorable foreign exchange. Adjusted
operating income decreased to $9.1 million from $21.2 million in
2021 for the same reasons.
ACCO Brands International - Sales of $77.0 million increased
18.8 percent from $64.8 million in 2021 due to increased volume,
particularly in Brazil and Mexico from a return to in-person
education, and price increases. Adverse foreign exchange was $2.5
million. Comparable sales were $79.5 million, up 22.7 percent, for
the same reasons.
Operating income of $4.2 million increased from $0.6 million in
2021 due to higher sales, lower bad debt reserves, the benefit of
long-term cost reductions, and price increases, partially offset by
inflation. Adjusted operating income of $6.2 million increased from
$3.1 million due to those same factors. Foreign exchange reduced
operating income $0.4 million.
Capital Allocation and Dividend
For the quarter, the Company had $104.2 million of net cash
outflow from operating activities and used $107.6 million of free
cash flow, including capital expenditures of $3.4 million. The
Company paid $7.3 million in dividends.
On April 25, 2022, ACCO Brands' board of directors declared a
regular quarterly cash dividend of $0.075 per share. The dividend
will be paid on June 22, 2022, to stockholders of record as of the
close of business on May 27, 2022.
Full Year 2022 Outlook
"Our momentum from 2021 carried through the first quarter. We
expect a strong back-to-school sell-in in the second quarter and
continued good execution as we deal with ongoing inflation and
supply chain issues. We expect to have another year of record
sales, record adjusted earnings per share, and significant free
cash flow growth," concluded Elisman.
The Company is adjusting its full year outlook to reflect first
quarter results, improved business expectations, and a more
negative foreign exchange impact.
Current
Prior
Comparable Net Sales Growth
3.5% to 8.5%
2.0% to 7.0%
FX Impact on Net Sales (1)
(2.5)%
(1.0)%
Reported Net Sales Growth
1.0% to 6.0%
1.0% to 6.0%
Comparable Adjusted EPS
$1.52 to $1.62
$1.50 to $1.60
FX impact on Adjusted EPS (1)
$(0.04)
$(0.02)
Adjusted EPS
$1.48 to $1.58
$1.48 to $1.58
Free Cash Flow (2)
$165M
$165M
Adjusted Tax Rate
Approximately 29%
Approximately 29%
Bank Net Leverage
Less than 3.0x
Less than 3.0x
(1) Based on spot rates as of
4/15/2022
(2) FCF approximately $165M (approximately
$190M cash from operations minus $25M capex)
Webcast
At 8:30 a.m. EDT on April 27, 2022, ACCO Brands Corporation will
host a conference call to discuss the Company's first quarter 2022
results. The call will be broadcast live via webcast. The webcast
can be accessed through the Investor Relations section of
www.accobrands.com. The webcast will be in listen-only mode and
will be available for replay following the event.
About ACCO Brands Corporation
ACCO Brands Corporation is one of the world's largest designers,
marketers and manufacturers of branded academic, consumer and
business products. Our widely recognized brands include
AT-A-GLANCE®, Esselte®, Five Star®, GBC®, Kensington®, Leitz®,
Mead®, PowerA®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra®, and
many others. Our products are sold in more than 100 countries
around the world. More information about ACCO Brands, the Home of
Great Brands Built by Great People, can be found at
www.accobrands.com.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with
generally accepted accounting principles (GAAP), we have provided
certain non-GAAP financial information in this earnings release to
aid investors in understanding the Company's performance. Each
non-GAAP financial measure is defined and reconciled to its most
closely related GAAP financial measure in the "About Non-GAAP
Financial Measures" section of this earnings release.
Forward-Looking Statements
Statements contained in this earnings release, other than
statements of historical fact, particularly those anticipating
future financial performance, business prospects, growth,
strategies, business operations and similar matters, results of
operations, liquidity and financial condition, are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on the beliefs and
assumptions of management based on information available to us at
the time such statements are made. These statements, which are
generally identifiable by the use of the words “will,” “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “forecast,”
“project,” “plan,” and similar expressions, are subject to certain
risks and uncertainties, are made as of the date hereof, and we
undertake no duty or obligation to update them. Because actual
results may differ materially from those suggested or implied by
such forward-looking statements, you should not place undue
reliance on them when deciding whether to buy, sell or hold the
company’s securities.
Our outlook is based on certain assumptions, which we believe to
be reasonable under the circumstances. These include, without
limitation, assumptions regarding both the near-term and long-term
impact of the COVID-19 pandemic; changes in the competitive
landscape, including ongoing uncertainties in the traditional
office products channels; as well as the impact of fluctuations in
foreign currency and acquisitions and the other factors described
below.
Among the factors that could cause our actual results to differ
materially from our forward-looking statements are: the ongoing
impact of the COVID-19 pandemic; a relatively limited number of
large customers account for a significant percentage of our sales;
issues that influence customer and consumer discretionary spending
during periods of economic uncertainty or weakness; risks
associated with foreign currency fluctuations; challenges related
to the highly competitive business environment in which we operate;
our ability to develop and market innovative products that meet
consumer demands and to expand into new and adjacent product
categories that are experiencing higher growth rates; our ability
to successfully expand our business in emerging markets and the
exposure to greater financial, operational, regulatory, compliance
and other risks in such markets; the continued decline in the use
of certain of our products; risks associated with seasonality; the
sufficiency of investment returns on pension assets, risks related
to actuarial assumptions, changes in government regulations and
changes in the unfunded liabilities of a multi-employer pension
plan; any impairment of our intangible assets; our ability to
secure, protect and maintain our intellectual property rights, and
our ability to license rights from major gaming console makers and
video game publishers to support our gaming business; continued
disruptions in the global supply chain; risks associated with
changes in the cost or availability of raw materials,
transportation, labor, and other necessary supplies and services
and the cost of finished goods; the continued global shortage of
microchips which are needed in our gaming and computer accessories
businesses; risks associated with outsourcing production of certain
of our products, information technology systems and other
administrative functions; the failure, inadequacy or interruption
of our information technology systems or its supporting
infrastructure; risks associated with a cybersecurity incident or
information security breach, including that related to a disclosure
of personally identifiable information; our ability to grow
profitably through acquisitions; our ability to successfully
integrate acquisitions and achieve the financial and other results
anticipated at the time of acquisition, including planned
synergies; risks associated with our indebtedness, including
limitations imposed by restrictive covenants, our debt service
obligations, and our ability to comply with financial ratios and
tests; a change in or discontinuance of our stock repurchase
program or the payment of dividends; product liability claims,
recalls or regulatory actions; the impact of litigation or other
legal proceedings; our failure to comply with applicable laws,
rules and regulations and self-regulatory requirements, the costs
of compliance and the impact of changes in such laws; our ability
to attract and retain qualified personnel; the volatility of our
stock price; risks associated with circumstances outside our
control, including those caused by public health crises, such as
the occurrence of contagious diseases like COVID-19, severe weather
events, war, terrorism and other geopolitical incidents; and other
risks and uncertainties described in “Part I, Item 1A. Risk
Factors” in our Annual Report on Form 10-K for the year ended
December 31, 2021, and in other reports we file with the Securities
and Exchange Commission (“SEC”).
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
March 31, 2022
December 31, 2021
(in millions)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
91.3
$
41.2
Accounts receivable, net
341.7
416.1
Inventories
471.4
428.0
Other current assets
50.6
39.6
Total current assets
955.0
924.9
Total property, plant and equipment
612.3
656.4
Less: accumulated depreciation
(401.7
)
(441.8
)
Property, plant and equipment, net
210.6
214.6
Right of use asset, leases
104.3
105.2
Deferred income taxes
113.0
115.9
Goodwill
798.9
802.5
Identifiable intangibles, net
896.1
902.2
Other non-current assets
22.6
26.0
Total assets
$
3,100.5
$
3,091.3
Liabilities and Stockholders'
Equity
Current liabilities:
Notes payable
$
4.0
$
9.4
Current portion of long-term debt
40.8
33.6
Accounts payable
223.2
308.2
Accrued compensation
36.9
56.9
Accrued customer program liabilities
75.8
101.4
Lease liabilities
24.1
24.4
Current portion of contingent
consideration
38.9
24.8
Other current liabilities
125.2
149.9
Total current liabilities
568.9
708.6
Long-term debt, net
1,109.2
954.1
Long-term lease liabilities
88.4
89.0
Deferred income taxes
142.9
145.2
Pension and post-retirement benefit
obligations
211.2
222.3
Contingent consideration
0.5
12.0
Other non-current liabilities
97.9
95.3
Total liabilities
2,219.0
2,226.5
Stockholders' equity:
Common stock
1.0
1.0
Treasury stock
(42.1
)
(40.9
)
Paid-in capital
1,911.5
1,902.2
Accumulated other comprehensive loss
(516.8
)
(535.5
)
Accumulated deficit
(472.1
)
(462.0
)
Total stockholders' equity
881.5
864.8
Total liabilities and stockholders'
equity
$
3,100.5
$
3,091.3
ACCO Brands Corporation and
Subsidiaries
Consolidated Statements of
Operations (Unaudited)
(In millions, except per share
data)
Three Months Ended March
31,
2022
2021
% Change
Net sales
$
441.6
$
410.5
7.6%
Cost of products sold
322.0
295.0
9.2%
Gross profit
119.6
115.5
3.5%
Operating costs and expenses:
Selling, general and administrative
expenses
98.8
94.0
5.1%
Amortization of intangibles
11.1
12.0
(7.5)%
Restructuring charges
0.3
3.9
(92.3)%
Change in fair value of contingent
consideration
2.6
6.7
NM
Total operating costs and expenses
112.8
116.6
(3.3)%
Operating income (loss)
6.8
(1.1
)
NM
Non-operating expense (income):
Interest expense
9.7
13.2
(26.5)%
Interest income
(1.4
)
(0.1
)
NM
Non-operating pension income
(1.4
)
(0.8
)
75.0%
Other expense, net
0.9
12.9
(93.0)%
Loss before income tax
(1.0
)
(26.3
)
96.2%
Income tax expense (benefit)
1.7
(5.9
)
NM
Net loss
$
(2.7
)
$
(20.4
)
86.8%
Per share:
Basic income per share
$
(0.03
)
$
(0.21
)
85.7%
Diluted income per share
$
(0.03
)
$
(0.21
)
85.7%
Weighted average number of shares
outstanding:
Basic
96.2
95.1
Diluted
96.2
95.1
Cash dividends declared per common
share
$
0.075
$
0.065
Statistics (as a % of Net sales, except
Income tax rate)
Three Months Ended March
31,
2022
2021
Gross profit (Net sales, less Cost of
products sold)
27.1
%
28.1
%
Selling, general and administrative
expenses
22.4
%
22.9
%
Operating income (loss)
1.5
%
(0.3
)%
Loss before income tax
(0.2
)%
(6.4
)%
Net loss
(0.6
)%
(5.0
)%
Income tax rate
(170.0
)%
22.4
%
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended March
31,
(in millions)
2022
2021
Operating activities
Net loss
$
(2.7
)
$
(20.4
)
Amortization of inventory step-up
—
2.4
Change in fair value of contingent
liability
2.6
6.7
Depreciation
9.9
9.6
Amortization of debt issuance costs
0.7
0.8
Amortization of intangibles
11.1
12.0
Stock-based compensation
4.9
4.8
Loss on debt extinguishment
—
3.7
Changes in balance sheet items:
Accounts receivable
84.1
34.4
Inventories
(37.3
)
(54.4
)
Other assets
(7.6
)
(13.3
)
Accounts payable
(87.5
)
11.3
Accrued expenses and other liabilities
(76.5
)
(27.9
)
Accrued income taxes
(5.9
)
(12.1
)
Net cash used by operating activities
(104.2
)
(42.4
)
Investing activities
Additions to property, plant and
equipment
(3.4
)
(3.8
)
Cost of acquisitions, net of cash
acquired
—
18.2
Net cash (used) provided by investing
activities
(3.4
)
14.4
Financing activities
Proceeds from long-term borrowings
168.0
595.8
Repayments of long-term debt
(5.0
)
(509.0
)
(Repayments) proceeds of notes payable,
net
(5.3
)
6.2
Payment for debt premium
—
(9.8
)
Payments for debt issuance costs
—
(9.7
)
Dividends paid
(7.3
)
(6.2
)
Payments related to tax withholding for
stock-based compensation
(1.2
)
(0.9
)
Proceeds from the exercise of stock
options
4.3
1.9
Net cash provided by financing
activities
153.5
68.3
Effect of foreign exchange rate changes on
cash and cash equivalents
4.2
(1.8
)
Net increase in cash and cash
equivalents
50.1
38.5
Cash and cash equivalents
Beginning of the period
41.2
36.6
End of the period
$
91.3
$
75.1
About Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. We
explain below how we calculate and use each of these non-GAAP
financial measures and a reconciliation of our current period and
historical non-GAAP financial measures to the most directly
comparable GAAP financial measures follows.
We use our non-GAAP financial measures both to explain our
results to stockholders and the investment community and in the
internal evaluation and management of our business. We believe our
non-GAAP financial measures provide management and investors with a
more complete understanding of our underlying operational results
and trends, facilitate meaningful period-to-period comparisons and
enhance an overall understanding of our past and future financial
performance.
Our non-GAAP financial measures exclude certain items that may
have a material impact upon our reported financial results such as
restructuring charges, transaction and integration expenses
associated with material acquisitions, the impact of foreign
currency fluctuation and acquisitions, unusual tax items and other
non-recurring items that we consider to be outside of our core
operations. These measures should not be considered in isolation or
as a substitute for, or superior to, the directly comparable GAAP
financial measures and should be read in connection with the
Company’s financial statements presented in accordance with
GAAP.
Our non-GAAP financial measures include the following:
Comparable Net Sales:
Represents net sales excluding the impact of material acquisitions
with current-period foreign operation sales translated at
prior-year currency rates. We believe comparable net sales are
useful to investors and management because they reflect underlying
sales and sales trends without the effect of acquisitions and
fluctuations in foreign exchange rates and facilitate meaningful
period-to-period comparisons. We sometimes refer to comparable net
sales as comparable sales.
Adjusted Gross Profit:
Represents gross profit excluding the effect of the amortization of
the step-up in inventory from material acquisitions. We believe
adjusted gross profit is useful to investors and management because
it reflects underlying gross profit without the effect of inventory
adjustments resulting from acquisitions that we consider to be
outside our core operations and facilitates meaningful
period-to-period comparisons.
Adjusted Selling, General and
Administrative (SG&A) Expenses: Represents selling,
general and administrative expenses excluding transaction and
integration expenses related to our material acquisitions. We
believe adjusted SG&A expenses are useful to investors and
management because they reflect underlying SG&A expenses
without the effect of expenses related to acquiring and integrating
acquisitions that we consider to be outside our core operations and
facilitate meaningful period-to-period comparisons.
Adjusted Operating Income/Adjusted
Income Before Taxes/Adjusted Net Income/Adjusted Net Income Per
Diluted Share: Represents operating income, income
before taxes, net income, and net income per diluted share
excluding restructuring charges, the amortization of intangibles,
the amortization of the step-up in value of inventory, the change
in fair value of contingent consideration, transaction and
integration expenses associated with material acquisitions,
non-recurring items in interest expense or other income/expense
such as expenses associated with debt refinancing, a bond
redemption, or a pension curtailment, and other non-recurring items
as well as all unusual and discrete income tax adjustments,
including income tax related to the foregoing. We believe these
adjusted non-GAAP financial measures are useful to investors and
management because they reflect our underlying operating
performance before items that we consider to be outside our core
operations and facilitate meaningful period-to-period comparisons.
Senior management’s incentive compensation is derived, in part,
using adjusted operating income and adjusted net income per diluted
share, which is derived from adjusted net income. We sometimes
refer to adjusted net income per diluted share as adjusted earnings
per share.
Comparable Adjusted Net Income Per
Diluted Share: Represents adjusted net income per
diluted share excluding the incremental current year impact of
foreign exchange. We sometimes refer to comparable adjusted net
income per diluted share as comparable adjusted earnings per
share.
Adjusted Income Tax
Expense/Rate: Represents income tax expense/rate
excluding the tax effect of the items that have been excluded from
adjusted income before taxes, unusual income tax items such as the
impact of tax audits and changes in laws, significant reserves for
cash repatriation, excess tax benefits/losses, and other discrete
tax items. We believe our adjusted income tax expense/rate is
useful to investors because it reflects our baseline income tax
expense/rate before benefits/losses and other discrete items that
we consider to be outside our core operations and facilitates
meaningful period-to-period comparisons.
Adjusted EBITDA: Represents
net income excluding the effects of depreciation, stock-based
compensation expense, amortization of intangibles, the change in
fair value of contingent consideration, interest expense, net,
other (income) expense, net, and income tax expense, the
amortization of the step-up in value of inventory, transaction and
integration expenses associated with material acquisitions,
restructuring charges, non-recurring items in interest expense or
other income/expense such as expenses associated with debt
refinancing, a bond redemption, or a pension curtailment and other
non-recurring items. We believe adjusted EBITDA is useful to
investors because it reflects our underlying cash profitability and
adjusts for certain non-cash charges, and items that we consider to
be outside our core operations and facilitates meaningful
period-to-period comparisons.
Free Cash Flow: Represents
cash flow from operating activities less cash used for additions to
property, plant and equipment, plus cash proceeds from the
disposition of assets. We believe free cash flow is useful to
investors because it measures our available cash flow for paying
dividends, funding strategic material acquisitions, reducing debt,
and repurchasing shares.
Net Leverage Ratio:
Represents balance sheet debt, plus debt origination costs and less
any cash and cash equivalents divided by adjusted EBITDA. We
believe that net leverage ratio is useful to investors since the
company has the ability to, and may decide to use a portion of its
cash and cash equivalents to retire debt.
This earnings release also provides forward-looking non-GAAP
comparable net sales, adjusted earnings per share, comparable
adjusted earnings per share, free cash flow, adjusted EBITDA, net
leverage ratio and adjusted tax rate. We do not provide a
reconciliation of forward-looking comparable net sales, adjusted
earnings per share, comparable adjusted earnings per share, free
cash flow, adjusted EBITDA, net leverage ratio or adjusted tax rate
to GAAP because the GAAP financial measure is not accessible on a
forward-looking basis and reconciling information is not available
without unreasonable effort due to the inherent difficulty of
forecasting and quantifying certain amounts that are necessary for
such a reconciliation, including adjustments that could be made for
restructuring, integration and acquisition-related expenses, the
variability of our tax rate and the impact of foreign currency
fluctuation and material acquisitions, and other charges reflected
in our historical numbers. The probable significance of each of
these items is high and, based on historical experience, could be
material.
ACCO Brands Corporation and
Subsidiaries
Reconciliation of GAAP to
Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share
data)
The following tables set forth a
reconciliation of certain Consolidated Statements of Income
information reported in accordance with GAAP to adjusted Non-GAAP
Information for the three months ended March 31, 2022 and 2021.
Three Months Ended March 31,
2022
SG&A
% of Sales
Operating Income
% of Sales
(Loss) Income before
Tax
% of Sales
Income Tax Expense (E)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
98.8
22.4
%
$
6.8
1.5
%
$
(1.0
)
(0.2
)%
$
1.7
(170.0
)%
$
(2.7
)
(0.6
)%
Reported GAAP diluted income per share
(EPS)
$
(0.03
)
Charge for Russia business
(A)
(1.8
)
1.8
1.8
0.4
1.4
Restructuring charges
—
0.3
0.3
0.1
0.2
Amortization of intangibles
—
11.1
11.1
3.0
8.1
Change in fair value of contingent
consideration
(B)
—
2.6
2.6
0.7
1.9
Operating tax gains
(H)
—
—
(0.1
)
—
(0.1
)
Other discrete tax items
(I)
—
—
—
(1.6
)
1.6
Adjusted Non-GAAP
$
97.0
22.0
%
$
22.6
5.1
%
$
14.7
3.3
%
$
4.3
29.0
%
$
10.4
2.4
%
Adjusted diluted income per share
(Adjusted EPS)
$
0.11
Three Months Ended March 31,
2021
Gross Profit
% of Sales
SG&A
% of Sales
Operating (Loss)
Income
% of Sales
Income before Tax
% of Sales
Income Tax (Benefit) Expense
(E)
Tax Rate
Net (Loss) Income
% of Sales
Reported GAAP
$
115.5
28.1
%
$
94.0
22.9
%
$
(1.1
)
(0.3
)%
$
(26.3
)
(6.4
)%
$
(5.9
)
22.4
%
$
(20.4
)
(5.0
)%
Reported GAAP diluted income per share
(EPS)
$
(0.21
)
Inventory step-up amortization
(C)
2.4
—
2.4
2.4
0.6
1.8
Transaction and integration expenses
(D)
—
(0.7
)
0.7
0.7
0.2
0.5
Restructuring charges
—
—
3.9
3.9
1.0
2.9
Amortization of intangibles
—
—
12.0
12.0
3.2
8.8
Change in fair value of contingent
consideration
(B)
—
—
6.7
6.7
1.7
5.0
Refinancing costs
(E)
—
—
—
3.7
1.0
2.7
Bond redemption
(F)
—
—
—
9.8
2.6
7.2
Pension curtailment
(G)
—
—
—
1.4
0.4
1.0
Operating tax gain
(H)
—
—
—
(0.2
)
—
(0.2
)
Other discrete tax items
(I)
—
—
—
—
(0.7
)
0.7
Adjusted Non-GAAP
$
117.9
28.7
%
$
93.3
22.7
%
$
24.6
6.0
%
$
14.1
3.4
%
$
4.1
29.1
%
$
10.0
2.4
%
Adjusted diluted income per share
(Adjusted EPS)
$
0.10
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
ACCO Brands Corporation and
Subsidiaries
Reconciliation of Net Income
to Adjusted EBITDA (Unaudited)
(In millions)
The following table sets forth a
reconciliation of net income reported in accordance with GAAP to
Adjusted EBITDA.
Three Months Ended March
31,
2022
2021
% Change
Net loss
$
(2.7
)
$
(20.4
)
86.8
%
Inventory step-up amortization
(C)
—
2.4
(100.0
)%
Transaction and integration expenses
(D)
—
0.7
(100.0
)%
Stock-based compensation
4.9
4.8
2.1
%
Depreciation
9.9
9.6
3.1
%
Charge for Russia business
(A)
1.8
—
NM
Amortization of intangibles
11.1
12.0
(7.5
)%
Restructuring charges
0.3
3.9
(92.3
)%
Change in fair value of contingent
consideration
(B)
2.6
6.7
(61.2
)%
Pension curtailment
(G)
—
1.4
(100.0
)%
Interest expense, net
8.3
13.1
(36.6
)%
Other expense, net
0.9
12.9
(93.0
)%
Income tax expense (benefit)
1.7
(5.9
)
NM
Adjusted EBITDA (non-GAAP)
$
38.8
$
41.2
(5.8
)%
Adjusted EBITDA as a % of Net Sales
8.8
%
10.0
%
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
Reconciliation of Net Cash
Used by Operating Activities to Free Cash Flow (Unaudited)
(In millions)
The following table sets forth a
reconciliation of net cash provided by operating activities
reported in accordance with GAAP to Free Cash Flow.
Three Months Ended March 31,
2022
Three Months Ended March 31,
2021
Net cash used by operating
activities
$
(104.2)
$
(42.4)
Net cash used by:
Additions to property, plant and
equipment
(3.4)
(3.8)
Free cash flow (non-GAAP)
$
(107.6)
$
(46.2)
Notes to Reconciliations of
GAAP to Adjusted Non-GAAP Information and Net Income to Adjusted
EBITDA (Unaudited)
A.
Represents charge to operating expense
related to our Russia business.
B.
Represents the change in fair value of the
contingent consideration for the PowerA acquisition. The change in
fair value of the contingent consideration is assessed every
quarter and is included as an expense in the consolidated
statements of income.
C.
Represents the amortization of step-up in
the value of inventory associated with the PowerA acquisition.
D.
Represents transaction and integration
expenses associated with our acquisitions.
E.
Represents the write-off of debt issuance
costs and other costs associated with the Company's 2021 debt
refinancing and discharge of its obligations on the senior
unsecured notes due in 2024.
F.
Represents a call premium on the 2021
redemption of the senior unsecured notes due in 2024.
G.
Represents a pension curtailment related
to a restructuring projects.
H.
Represents gain related to the release of
unneeded reserves for certain operating taxes.
I.
The adjustments to income tax expense
include the effects of the adjustments outlined above and discrete
tax adjustments.
ACCO Brands Corporation and
Subsidiaries
Supplemental Business Segment
Information and Reconciliation (Unaudited)
(In millions)
2022
2021
Changes
Adjusted
Adjusted
Reported
Adjusted
Operating
Reported
Adjusted
Operating
Adjusted
Adjusted
Operating
Operating
Income
Operating
Operating
Income
Operating
Operating
Reported
Income
Adjusted
Income
(Loss)
Reported
Income
Adjusted
Income
(Loss)
Net Sales
Net Sales
Income
Income
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
Net Sales
(Loss)
Items
(Loss)
Margin
$
%
(Loss) $
(Loss) %
Points
Q1:
ACCO Brands North America
$
208.5
$
13.9
$
5.9
$
19.8
9.5%
$
188.8
$
(0.7
)
$
11.9
$
11.2
5.9%
$
19.7
10.4%
$
8.6
76.8%
360
ACCO Brands EMEA
156.1
5.6
3.5
9.1
5.8%
156.9
16.8
4.4
21.2
13.5%
(0.8
)
(0.5)%
(12.1
)
(57.1)%
(770
)
ACCO Brands International
77.0
4.2
2.0
6.2
8.1%
64.8
0.6
2.5
3.1
4.8%
12.2
18.8%
3.1
100.0%
330
Corporate
—
(16.9
)
4.4
(12.5
)
—
(17.8
)
6.9
(10.9
)
—
(1.6
)
Total
$
441.6
$
6.8
$
15.8
$
22.6
5.1%
$
410.5
$
(1.1
)
$
25.7
$
24.6
6.0%
$
31.1
7.6%
$
(2.0
)
(8.1)%
(90
)
Q2:
ACCO Brands North America
$
295.1
$
53.8
$
6.1
$
59.9
20.3%
ACCO Brands EMEA
157.0
9.9
3.9
13.8
8.8%
ACCO Brands International
65.7
2.8
2.0
4.8
7.3%
Corporate
—
(16.6
)
5.3
(11.3
)
Total
$
517.8
$
49.9
$
17.3
$
67.2
13.0%
Q3:
ACCO Brands North America
$
287.5
$
34.6
$
7.0
$
41.6
14.5%
ACCO Brands EMEA
161.1
13.4
3.9
17.3
10.7%
ACCO Brands International
78.1
7.3
2.5
9.8
12.5%
Corporate
—
(16.7
)
5.0
(11.7
)
Total
$
526.7
$
38.6
$
18.4
$
57.0
10.8%
Q4:
ACCO Brands North America
$
271.0
$
34.2
$
7.7
$
41.9
15.5%
ACCO Brands EMEA
187.9
21.6
3.3
24.9
13.3%
ACCO Brands International
111.4
20.9
2.0
22.9
20.6%
Corporate
—
(13.1
)
2.5
(10.6
)
Total
$
570.3
$
63.6
$
15.5
$
79.1
13.9%
YTD:
ACCO Brands North America
$
208.5
$
13.9
$
5.9
$
19.8
9.5%
$
1,042.4
$
121.9
$
32.7
$
154.6
14.8%
ACCO Brands EMEA
156.1
5.6
3.5
9.1
5.8%
662.9
61.7
15.5
77.2
11.6%
ACCO Brands International
77.0
4.2
2.0
6.2
8.1%
320.0
31.6
9.0
40.6
12.7%
Corporate
—
(16.9
)
4.4
(12.5
)
—
(64.2
)
19.7
(44.5
)
Total
$
441.6
$
6.8
$
15.8
$
22.6
5.1%
$
2,025.3
$
151.0
$
76.9
$
227.9
11.3%
See "Notes to Reconciliations of GAAP to
Adjusted Non-GAAP Information and Net Income to Adjusted EBITDA
(Unaudited)" for further information regarding adjusted items.
ACCO Brands Corporation and
Subsidiaries
Supplemental Net Sales Change
Analysis (Unaudited)
% Change - Net Sales
$ Change - Net Sales (in
millions)
GAAP
Non-GAAP
GAAP
Non-GAAP
Comparable
Comparable
Net Sales
Currency
Net Sales
Net Sales
Currency
Net Sales
Comparable
Change
Translation
Change
Change
Translation
Change
Net Sales
Q1 2022:
ACCO Brands North America
10.4 %
— %
10.4 %
$
19.7
$
—
$
19.7
$
208.5
ACCO Brands EMEA
(0.5)%
(7.9)%
7.4 %
(0.8)
(12.4)
11.6
168.5
ACCO Brands International
18.8 %
(3.9)%
22.7 %
12.2
(2.5)
14.7
79.5
Total
7.6 %
(3.6)%
11.2 %
$
31.1
$
(14.9)
$
46.0
$
456.5
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220426006081/en/
Christine Hanneman Investor Relations (847) 796-4320
Julie McEwan Media Relations (937) 974-8162
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