Acco Brands Corporation · NYSE:ACCO
Acco Brands — Q4 2022 Earnings Presentation
26 slides from Acco Brands's earnings presentation, Feb 24, 2023
Slide 1: ACCO Brands Full Year Conference Call
ACCO Brands Full Year Conference Call February 24, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained herein, 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, a
Slide 3: Reg. G – Non-GAAP Financial Measures
Reg. G – Non-GAAP Financial Measures We explain below how we calculate each of our 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
Slide 4: 2022 Key Messages
2022 Key Messages Fundamentals remain intact and we have the right business model and strategy Achieved full year comparable net trade sales growth of 1%. Comparable net trade sales increased 5% outside of gaming accessories Grew share in back-to-school season and business and computer accessory cat
Slide 5: 2023 Key Priorities
2023 Key Priorities 1). Restoring 2). Profitably 3). Invest in 4). Manage SG&A Gross Margin Manage Revenue Growth Spend Cumulative Impact of Price Complementary Assortment Prudent Management of Innovation Increases Targeting Value to Premium Headcount Price Points New Product Introductions Productiv
Slide 6: Cost Savings And Restructuring Actions
Cost Savings And Restructuring Actions ❑ Initiatives expected to improve operating efficiency and reduce costs ▪ Expect to realize vast majority in 2023 ❑ Actioned annual cost savings of $13 million, with significant restructuring initiatives ❑ Recorded restructuring charges of approximately $7 mill
Slide 7: Full Year 2022 Results Summary
Full Year 2022 Results Summary Comparisons Versus Prior Year • 5% impact from adverse FX of $94M • Grew sales for back-to-school, business and computer accessories products Sales down 4% to $1.95B • North America sales decline due to lower demand for gaming accessories and Comparable sales up 1% to
Slide 8: Full Year 2022 Segment Financial Metrics
Full Year 2022 Segment Financial Metrics Y/Y 2022 2021 $ in millions Change ACCO Brands North America Sales $998.0 $1042.4 (4.3%) Comparable Sales $1002.3 $1042.4 (3.9%) Adjusted Operating Income $121.5 $154.6 (21.4%) Adjusted Operating Margin 12.2% 14.8% (260 bps)* ACCO Brands EMEA Sales $580.3 $66
Slide 9: Full Year 2022 Segment Results Summary
Full Year 2022 Segment Results Summary Comparisons Versus Prior Year North America • Sales challenged due to inventory reduction by retailers in 2H on macroeconomic concerns • Gaming accessories sales declined due to inventory channel reduction, lower gaming accessory spending and semiconductor shor
Slide 10: 2022 Margin Reconciliation
2022 Margin Reconciliation 2022 Change vs. Items of Significant Impact on Adjusted Prior Year Bps Adjusted Results (non-GAAP) Adjusted Gross Profit $552.3M ($65.6M) Pricing/Product Cost (130) Volume/Mix (110) Gross Margin 28.4% (210) bps Cost Savings 60 One-off Items (30) Other 0 SG&A $376.5M ($13.5
Slide 11: Q4 2022 Results Summary
Q4 2022 Results Summary Comparisons Versus Prior Year • 4% impact from adverse FX of $26M • Demand impacted by macroeconomic slowdown Sales down 12% to $499.4M • North America sales decline due to lower demand for gaming accessories and inventory Comparable sales down 8% to $524.9M destocking by ret
Slide 12: 4Q 2022 Segment Financial Metrics
4Q 2022 Segment Financial Metrics $ in millions 4Q22 4Q21 Y/Y Change ACCO Brands North America Sales $225.7 $271.0 (16.7%) Comparable Sales $227.3 $271.0 (16.1%) Adjusted Operating Income $18.7 $41.9 (55.4%) Adjusted Operating Margin 8.3% 15.5% (720 bps)* ACCO Brands EMEA Sales $156.0 $187.9 (17.0%)
Slide 13: 4Q 2022 Segment Results Summary
4Q 2022 Segment Results Summary Comparisons Versus Prior Year North America • Sales challenged due by decreased consumer demand and inventory reduction by retailers • Gaming accessories sales declined due to lack of inventory replenishment, lower consumer demand and semiconductor shortages limiting
Slide 14: 4Q 2022 Margin Reconciliation
4Q 2022 Margin Reconciliation 4Q 2022 Change vs. Items of Significant Impact Adjusted Prior Year Bps on Adjusted Results (non-GAAP) Adjusted Gross Profit $145.3M ($32.8M) Pricing/Product Cost 30 Volume/Mix (230) Gross Margin 29.1% (210) Bps One-off Items (130) Cost Savings 90 Other 30 SG&A $93.0M ($
Slide 15: Adjusted Free Cash Flow
Adjusted Free Cash Flow Change vs $ in millions* 2022 2021 2021 Net cash provided by operations 78 160 (82) Additions to PP&E (17) (21) 4 Proceeds from disposition of assets 7 -- 7 Add back contingent consideration payment in operating activities 9 -- 9 Adjusted free cash flow (Non-GAAP) 78 138 (60)
Slide 16: Capital Structure
Capital Structure ❑ Capital structure as of December 31, 2022 ❑ No maturities until 2026 ❑ Interest is split 57/43 fixed and variable with weighted average rate of 4.53% ($ in millions) Facility Balance1 Interest Rate Methodology Rate $600M multicurrency revolver 73 SOFR + CSA3 + 200 bps, 35.0 bps u
Slide 17: Full Year 2023 Outlook
Full Year 2023 Outlook Guidance FY2023 Comparable Net Sales Growth (3.0%) to 0.0% FX Impact on Sales 0.0% Reported Net Sales Growth (3.0)% to 0.0% Reported Net Sales* $1.890 to $1.948 billion Comparable Adj. EPS $1.05 to $1.09 FX Impact on Adj. EPS* $0.03 Adjusted EPS $1.08 to $1.12 Adjusted Free Ca
Slide 18: 1Q 2023 Outlook
1Q 2023 Outlook Guidance 1Q 2023 Comparable Net Sales Growth (10.0%) to (7.0%) FX Impact on Sales (3.0%) Reported Net Sales Growth (13.0%) to (10.0%) Reported Net Sales* $384 to $397 million Comparable Adj. EPS $0.05 to $0.07 FX Impact on Adj. EPS* $0.00 Adjusted EPS $0.05 to $0.07 *Based on spot ra
Slide 19: Executing On Capital Allocation Strategy
Executing On Capital Allocation Strategy • Disciplined capital allocation strategy Capital • Generated $78M in adjusted free cash flow for the full year Allocation • Announced $0.075 per share quarterly dividend on February 17 Debt • 4Q 2022 consolidated leverage ratio 4.2x Reduction • Long-term con
Slide 20: About Non-GAAP Financial Measures
About Non-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
Slide 21: Reg G Reconciliations
Reg G Reconciliations 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 Operations information reported in accordance
Slide 22: Reg G Reconciliations
Reg G Reconciliations 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 Operations information reported in accordance
Slide 23: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries Reconciliation of Net (Loss) Income to Adjusted EBITDA (Unaudited) (In millions) “The following table sets forth a reconciliation of net (loss) income reported in accordance with GAAP to Adjusted EBITDA. ‘Three Months Ended ‘Year Ended.
Slide 24: Reg G Reconciliations
Reg G Reconciliations Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net (Loss) Income to Adjusted EBITDA (Unaudited) A. Represents an impact to operating expense related to our Russia business. B. Represents the change in fair value of the contingent consideration for the Pow
Slide 25: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries Supplemental Business Segment Information and Reconciliation (Unaudited) (In millions) 2022 2021 Changes “haoned “ast Reported ‘Adjusted Operating Reported Aduusted Operating ‘Adsted Adjusted Opera °, Operatis Operating Inceme Operating
Slide 26: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries Supplemental Net Sales Change Analysis (Unaudited) ‘% Change - Net Sales ‘S Change - Net Sales (in millions) ‘GAAP ‘Non-GAAP ‘GAAP ‘Comparable ‘Comparable Net Sales Curreney Net Salles Net Sales Currency Net Sales ‘Comparable Change ‘Tra