ACCO Brands Corporation (NYSE: ACCO) announced today an update
to the quarter ending September 30, 2022 and its full year 2022
outlook, reflecting a more challenging than anticipated operating
environment.
“Our North America segment saw better overall back-to-school
sell-through for the season, positive return to office trends and
improved brand positioning in the third quarter; however, these
improvements were more than offset by retailers’ more cautious
approach to inventory replenishment. In Europe, the current energy
crisis and persistent inflation has created a more challenging
macroeconomic environment, negatively impacting sales and profits
in our EMEA segment. These factors offset double-digit sales and
profit growth in our International segment,” said Boris Elisman,
ACCO Brands Chairman and Chief Executive Officer.
Due to the macroeconomic trends, we are providing a third
quarter outlook and lowering our full year 2022 outlook to properly
account for reduced channel inventory replenishment, a weaker
end-user demand environment, especially in Europe, continued high
inflation and adverse foreign exchange impacts. In addition,
current market capitalization has triggered a review of our
goodwill valuation and we expect to take a yet to be finalized
non-cash goodwill impairment charge in the third quarter.
Q3 2022
Outlook
Updated
Full Year 2022 Outlook
Previous
Full Year 2022 Outlook
Net Sales
$480-$490 million*
$1.940 to $1.980 billion*
$2.015-$2.055 billion
Comparable Sales Growth**
(3%) to (2%)
0.0% to 2.0%
4.0% to 6.0%
Adjusted EPS**
$0.23 to $0.25
$1.05 to $1.10
$1.39 to $1.44
Free Cash Flow**
$90 to $100 million
$135 to $150 million
*Based on spot rates as of 10/10/2022
** Non-GAAP financial measure
“While there are near-term macroeconomic challenges, the
strength of our balance sheet and our ability to generate robust
free cash flow will allow ACCO Brands to successfully navigate the
current economic uncertainty. We have taken immediate actions to
protect profitability and free cash flow by curtailing hiring,
reducing inventory, and limiting discretionary spending and capital
expenditures. In addition, we are reviewing incremental pricing
actions and cost reductions, including facility rationalization
projects. We have no debt maturities until 2026 and low annual
interest costs. Near-term capital allocation priorities are focused
on supporting our dividend and reducing debt. Our strategic
transformation plan to be more consumer, brand and technology
centric remains intact and we believe it will position us to
deliver sustainable organic revenue growth and margin expansion as
economies improve,” Elisman concluded.
Third Quarter Results Webcast
The Company will release its third quarter 2022 earnings after
the market close on November 7, 2022. The Company will host a
conference call and webcast to discuss the results on November 8,
2022 at 8:30 a.m. EST. The webcast can be accessed through the
Investor Relations section of www.accobrands.com and will be
available for replay.
About ACCO Brands Corporation
ACCO Brands, the Home of Great Brands Built by Great People,
designs, manufactures and markets consumer and end-user products
that help people work, learn, play and thrive. Our widely
recognized brands include AT-A-GLANCE®, Five Star®, Kensington®,
Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More
information about ACCO Brands Corporation (NYSE: ACCO) can be found
at www.accobrands.com.
Non-GAAP Financial Measures
We have provided certain non-GAAP financial information in this
press release to aid investors in understanding the Company’s
performance. Each non-GAAP financial measure is defined in the
“About Non-GAAP Financial Measures” section of this release.
Forward-Looking Statements
Statements contained in this press 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 the impact of the COVID-19
pandemic and the war in Ukraine; changes in the competitive
landscape, including ongoing uncertainties in the traditional
office products channels; as well as the impact of inflation,
fluctuations in foreign currency exchange rates 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: our ability to
improve profitability and free cash flow in the near-term by
curtailing hiring, reducing inventory and limiting discretionary
spending and capital expenditures; our ability to obtain additional
price increases and realize longer-term cost reductions; 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 exchange rate
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
About Non-GAAP Financial Measures
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 exchange rate fluctuations 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.
Our non-GAAP financial measures include the following:
Comparable 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 sales are useful to investors
and management because it reflects underlying sales and sales
trends without the effect of acquisitions and fluctuations in
foreign currency exchange rates and facilitate meaningful
period-to-period comparisons. We sometimes refer to comparable
sales as comparable net sales.
Adjusted EPS: Represents 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 adjusted EPS is useful to investors and management because
it reflects 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 EPS. We
sometimes refer to adjusted EPS as adjusted earnings per share or
adjusted net income per diluted share.
Free Cash Flow: Represents
cash flow from operating activities, excluding cash payments made
for contingent earnouts, 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.
This press release also provides forward-looking non-GAAP
comparable net sales, adjusted earnings per share, and free cash
flow. We do not provide a reconciliation of forward-looking
comparable net sales, adjusted EPS or free cash flow to GAAP
because the GAAP financial measure is not currently available and
management cannot reliably predict all of the necessary components
of such non-GAAP measures without unreasonable effort or expense
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, foreign currency exchange rate fluctuations and
material acquisitions, and other items reflected in our historical
results. The probable significance of each of these items is high
and, based on historical experience, could be material.
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version on businesswire.com: https://www.businesswire.com/news/home/20221013005393/en/
Christopher McGinnis Investor Relations (847) 796-4320
Julie McEwan Media Relations (937) 974-8162
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