Acco Brands Corporation · NYSE:ACCO
Acco Brands — FY2020 Earnings Presentation
22 slides from Acco Brands's earnings presentation, Feb 17, 2021
Slide 1: ACCO Brands 4Q/FY 2020 Earnings Conference Call
ACCO Brands 4Q/FY 2020 Earnings Conference Call February 17, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this presentation, other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters, including without limitation, statements concerning the
Slide 3: Reg. G – Non-GAAP Financial Measures
Reg. G – Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. We explain how we calculate and use each of these non-GAAP measures and provide a reconciliation of our current period and historical non-GAAP financial measures to the most directly comparable GAAP financia
Slide 4: 2020 Results Summary
2020 Results Summary • COVID-19 impacted all segments • PowerA added $8M • Strong growth in Kensington® computer accessories, TruSens® air Sales down 15% to $1.66B purifiers, Leitz® shredders, and Derwent® art supplies were offset Comparable sales down 16% to $1.65B by declines in school and commerc
Slide 5: 2020 Segment Results Summary
2020 Segment Results Summary • Commercial office products sales down significantly from COVID- 19 impacts; weak back-to-school sell-out due to mostly remote learning; partially offset by strong growth in computer accessories North America sales down 15% • Operating/adjusted operating income down fro
Slide 6: 2020 Segment Results
2020 Segment Results Y/Y Segment Financial Metrics FY20 FY19 $ in millions Change ACCO Brands North America Sales $822.1 $966.8 (15.0)% Comparable Sales (15.5)% 3.1% Adjusted Operating Income $90.8 $136.6 (33.5)% Adjusted Operating Margin 11.0% 14.1% (310) bps ACCO Brands EMEA Sales $523.9 $569.3 (8
Slide 7: 2020 Margin Reconciliation
2020 Margin Reconciliation FY 2020 Change vs. Items of Significant Impact Adjusted Prior Year Bps on Adjusted Results (non-GAAP) Adjusted Gross Profit $492.4 $(142.0) Adverse mix (net of price/cost) (290) Acquisition (30) Gross Margin 29.7% (270) bps Net cost reductions 30 FX 20 SG&A $331.9 $(55.7)
Slide 8: 4Q 2020 Results Summary
4Q 2020 Results Summary • Lower demand due to COVID-19 impacts • PowerA added $8M Sales down 14% to $460M • Strong growth in Kensington®, TruSens®, Derwent® products Comparable sales down 16% to $451M offset by declines in school and commercial products • Relatively flat in EMEA • North America comm
Slide 9: 4Q 2020 Segment Results Summary
4Q 2020 Segment Results Summary • Sales down due to COVID-19 impacts; significant declines in commercial office products sales as offices remain closed; weak North America sales down 19% back-to-school sell-out due to mostly remote learning Comparable sales down 21% • Operating/adjusted operating in
Slide 10: 4Q Segment Results
4Q Segment Results Y/Y Segment Financial Metrics 4Q20 4Q19 $ in millions Change ACCO Brands North America Sales $184.1 $226.1 (18.6)% Comparable Sales (21.3)% (1.2)% Adjusted Operating Income $17.6 $32.4 (45.7)% Adjusted Operating Margin 9.6% 14.3% (470) bps ACCO Brands EMEA Sales $171.7 $161.4 6.4%
Slide 11: 4Q 2020 Margin Reconciliation
4Q 2020 Margin Reconciliation 4Q 2020 Change vs. Items of Significant Impact Adjusted Prior Year Bps on Adjusted Results (non-GAAP) Adjusted Gross Profit $143.1 $(43.6) Adverse mix (net of price/cost) (410) Acquisition (20) Gross Margin 31.1% (360) bps Net cost reductions (20) Other 60 FX 30 SG&A $8
Slide 12: 2020 Cash Flow
2020 Cash Flow 2020 2019 Change $ in millions* 4Q20 3Q20 2Q20 1Q20 YTD YTD vs 2019 Adjusted EBITDA 71 56 47 37 211 297 (86) Interest (15) (4) (14) (3) (36) (42) 6 Taxes (12) (6) (4) (10) (32) (42) 10 Capital expenditures (4) (3) (2) (7) (16) (33) 17 Working capital and other 67 52 (65) (41) 13 24 (1
Slide 13: Capital Structure
Capital Structure Capital structure as of December 31, 2020 No maturities until 2024 ($ in millions) Facility Balance1 Interest Rate Methodology Rate $600M multicurrency revolver2 333 LIBOR + 250 bps, 50 bps unused 3.43% USD Term Loan A 93 U.S. LIBOR4 + 250 bps 3.50% EUR Term Loan A 287 Euro LIB
Slide 14: Executing On Capital Allocation Strategy
Executing On Capital Allocation Strategy • Disciplined capital allocation strategy • Near-term plan to deploy FCF to fund dividend and reduce debt Capital • Long-term plan to deploy FCF to fund dividend, reduce debt, Allocation repurchase shares, and make acquisitions • FY 2020 pro forma bank net le
Slide 15: 1Q 2021 Outlook
1Q 2021 Outlook Beginning with the first quarter of 2021, the Company is changing the way it calculates and reports its adjusted Non-GAAP results by excluding non-cash amortization of acquisition-related intangible assets. As a result of its acquisition strategy, the Company has a large amount of
Slide 16: About Non-GAAP Financial Measures
About Non-GAAP Financial Measures Our non-GAAP financial measures include the following: Comparable Net Sales: Represents net sales excluding the impact of acquisitions with current-period foreign operation sales translated at prior-year currency rates. We believe comparable net sales are useful to
Slide 17: Reconciliation of GAAP to Adjusted Non-GAAP Information (Twelve Months)
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 recs of ce st of reported in ‘with GAAP to. Non-GAAP Information for the twelve months ended December 31, 2020 and 2019.
Slide 18: Reconciliation of GAAP to Adjusted Non-GAAP Information (Three Months)
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 ar fion of Cc St of fi Teported in accordance with GAAP to adjusted Non-GAAP Information for the three months ended Decemb
Slide 19: Notes to Reconciliation of GAAP to Adjusted Non-GAAP Information
on Notes to Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited) Represents the amortization of step-up in the value of inventory associated with the following acquisitions: Cumberland asset acquisition and Industria Grafica Foroni Ltda. ("Foroni"). Represents transaction and integrat
Slide 20: Reconciliation of Net Income to Adjusted EBITDA
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 ‘Twelve Months December 31, Ended December 31, 20
Slide 21: Supplemental Business Segment Information and Reconciliation
ACCO Brands Corporation and Subsidiaries Supplemental Business Segment Information and Reconciliation (Unaudited) (In millions) 2020 2019 ‘Changes ‘Adjusted ‘Adjusted Reported Adjusted — Operating Reported Adjusted —— Operating Adjusted — Adjusted Operating. Operating Income Operating ‘Operating Inc
Slide 22: Supplemental Net Sales Change Analysis
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 NetSales | Currency ‘Net Sales | Comparable Change | Translation Acqui