ACCO Brands Reports Third Quarter Results

ACCO Brands Corporation announced its third quarter results for the period ended September 30, 2022. Highlights from the report are as follows:

• Achieved solid North America back-to-school sell through; Five Star® outperformed the market
• Net sales declined 7.8% to $485.6 million from $526.7 million in 2021
• Comparable sales fell 2.1%
• Implemented multiple cost and pricing actions to improve margin profile
• Generated $88 million in cash from operations; adjusted free cash flow of $84 million
• Increased financial flexibility with a new bank amendment
• Declared $0.075 quarterly dividend

“Our third quarter results were in line with our October 13^th update. During the quarter, our North America segment had strong sell-through in back-to-school, office and technology categories; however, these improvements were more than offset by retailers’ more cautious approach to inventory replenishment. In Europe, the current energy crisis and significant inflation have created a more challenging macroeconomic environment, impacting sales and profits in our EMEA segment. Our International segment delivered excellent results with double digit growth in sales and profits. To offset the near-term macroeconomic challenges, we have implemented cost savings and pricing actions,” said Boris Elisman, chairman and chief executive officer of ACCO Brands.

ACCO Brands North America

Sales of $257.2 million decreased 10.5% from $287.5 million in 2021 and comparable sales declined 10.0% to $258.5 million. The decreases in both were primarily due to lower volumes related to inventory destocking by retailers and lower sales of gaming accessories, partially offset by price increases and higher sales of computer accessories.

Operating loss was $78.4 million versus operating income of $34.6 million in 2021. The loss is primarily due to the $98.7 million non-cash goodwill impairment charge. Adjusted operating income of $25.8 million decreased from $41.6 million in 2021. The decreases in operating income and adjusted operating income reflect the impact of lower sales and gross margins from higher inflation on purchased finished goods and transportation, and increased go-to-market expense to support back-to-school sell-through.

Reaffirming Full Year 2022 Outlook

The full year outlook reflects a moderating demand environment for the remainder of the year, continuing cost inflation, and adverse foreign currency exchange. However, the Company anticipates sequential gross margin improvement in the fourth quarter, as its pricing and cost reduction actions further mitigate the impact of cumulative inflationary cost increases. The full year impact of foreign currency translation is expected to reduce net sales by 4.5% and adjusted EPS by $0.05.

Source: ACCO Brands