Acco Brands Corporation · NYSE:ACCO
Acco Brands — Q4 2023 Earnings Presentation
26 slides from Acco Brands's earnings presentation, Feb 23, 2024
Slide 1: ACCO Brands 4Q Earnings Conference Call
ACCO Brands | 4Q Earnings Conference Call | February 23, 2024
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 An explanation of 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 can be found at the end of this presentation.
Slide 4: 2023 Key Takeaways
2023 Tet Key Takeaways • Reported net sales, adjusted EPS and cash flow above outlook • Comparable sales down to prior year due to weaker global demand and lower global sales of technology accessories • Gross margin expansion of 420 basis points on pricing and cost actions • Adjusted operating incom
Slide 5: Executed Well on 2023 Key Priorities
Executed Well on 2023 Key Priorities Restoring Profitably Manage SG&A Invest In Gross Manage Spend and Growth Margin Revenue Inventory • Cumulative Impact of • Support Long-Term • Complementary Price Increases That Innovation • Prudent Management Assortments Lagged Inflation of Headcount • Targeting
Slide 6: 2024 Key Messages
2024 Key Messages • Taking actions to reposition the company for long-term, sustainable profitable growth • Near-term, macroeconomic backdrop remains muted in first half 2024 • Announced $60 million, multi-year restructuring and cost savings program o Simplifies and delayers the operating structure
Slide 7: Full Year 2023 Results Summary
Full Year 2023 Results Summary Comparison Versus Prior Year SALES • Volume impacted by global macroeconomic weakness, contributing to lower global IT spending versus the prior year, and lower than anticipated return-to-office trends down 6% to $1,833M; • In addition, North America sales decline due
Slide 8: Full Year 2023 Segment Financial Metrics
Full Year 2023 Segment Financial Metrics Y/Y $ in millions 2023 2022 Change ACCO Brands North America Sales $887.2 $998.0 (11.1%) Comparable Sales $891.1 $998.0 (10.7%) Adjusted Operating Income $122.4 $121.5 0.7% Adjusted Operating Margin 13.8% 12.2% 160 bps ACCO Brands EMEA Sales $547.2 $580.3 (5.
Slide 9: Full Year 2023 Segment Results Summary
Full Year 2023 Segment Results Summary Comparison Versus Prior Year North EMEA International America • Lower sales due to a weaker • Technology accessories • Net sales increased as back- demand environment and decline reflecting industry to-school sales recover in tight inventory management wide tre
Slide 10: Full Year 2023 Margin Reconciliation
Full Year 2023 Margin Reconciliation Full Change vs. Items of Significant Year Prior Year Impact on Adjusted Bps 2023 Adjusted Results (non-GAAP) Gross Profit $598.3M $46.0M Pricing/Product Cost 360 Cost Savings 90 Gross Margin 32.6% +420 Bps Volume (80) FX/Other 50 SG&A $393.5M $17.0M Cost Savings
Slide 11: 4Q 2023 Results Summary
4Q 2023 Results Summary Comparison Versus Prior Year • 2.5% positive impact from favorable FX of $12M SALES • Volume impacted by global macroeconomic weakness, contributing to lower global IT spending versus the prior year, and lower than anticipated return-to-office trends down 2% to $488.6M; • Nor
Slide 12: 4Q 2023 Segment Financial Metrics
4Q 2023 Segment Financial Metrics Y/Y $ in millions 4Q23 4Q22 Change ACCO Brands North America Sales $199.0 $225.7 (11.8%) Comparable Sales $199.1 $225.7 (11.8%) Adjusted Operating Income $25.3 $18.7 35.3% Adjusted Operating Margin 12.7% 8.3% 440 bps ACCO Brands EMEA Sales $159.1 $156.0 2.0% Compara
Slide 13: 4Q 2023 Segment Results Summary
4Q 2023 Segment Results Summary Comparison Versus Prior Year North EMEA International America • Technology accessories • Technology accessories • Net sales increased as back- decline reflecting industry decline reflecting industry to-school sales recover in wide trends wide trends Latin America • We
Slide 14: 4Q 2023 Margin Reconciliation
4Q 2023 Margin Reconciliation Change vs. Items of Significant 4Q Prior Year Impact on Adjusted Bps 2023 Adjusted (non-GAAP) Results Gross Profit $170.0M $24.7M Pricing/Product Cost 510 Cost Savings 90 Gross Margin 34.8% +570 Bps Volume (30) SG&A $101.7M $8.7M Cost Savings (50) Sales Deleverage 90 SG
Slide 15: Adjusted Free Cash Flow
Adjusted Free Cash Flow Change vs $ in millions* 2023 2022 2022 Net cash provided by operations 129 78 51 Additions to PP&E (14) (17) 3 Add back contingent consideration payment in -- 9 (9) operating activities Proceeds from disposition of assets 3 7 (4) Adjusted free cash flow 118 78 41 Dividends p
Slide 16: Capital Structure
Capital Structure ($ in millions) Facility Balance1 Interest Rate Methodology Rate $600M multicurrency revolver 22 SOFR + CSA3 + 200 bps, 35 bps unused 6.75% USD Term Loan A 78 SOFR + CSA3 + 200 bps 7.50% EUR Term Loan A 218 EURIBOR + 200 bps 5.93% AUD Term Loan A 33 Australian BBSR + 200 bps 6.42%
Slide 17: Full Year 2024 Outlook
Full Year 2024 Outlook Guidance FY2024 Reported Net Sales Growth (2.0%) to (5.0%) Reported Net Sales* $1.740 to $1.788 billion FX Impact on Sales* Approximately 0.5% Comparable Sales Growth (2.5%) to (5.5%) Adjusted EPS Reported $1.07 to $1.11 Free Cash Flow At Least $120 million Adjusted Tax Rate A
Slide 18: 1Q 2024 Outlook
1Q 2024 Outlook Guidance 1Q 2024 Reported Net Sales Growth (6.5%) to (8.0%) Reported Net Sales* $370 to $377 million FX Impact on Sales* 1.0% Comparable Sales Growth (7.5%) to (9.0%) Adjusted EPS Reported $0.01 to $0.04 *Translation impact based on spot rates as of 12/31/2023 Notes: Comparable Sales
Slide 19: Executing On Capital Allocation Strategy
Executing On Capital Allocation Strategy Shareholder Capital Allocation Debt Reduction Returns Disciplined capital allocation Announced $0.075 per share Reduced debt by $88 million in strategy with a long-term more quarterly dividend on 2023 balanced view February 16th Adjusted Free Cash Flow 4Q 202
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, if any, with current-period foreign operation sales translated at prior-year currency rates. We believe comparable sales are
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 (Loss) Income information reported in accorda
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 (Loss) Income information reported in accordan
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 De
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. The income tax impact of the non-GAAP adjustments and other discrete tax items including the effects of recent tax legislation in both Brazil and the Unite
Slide 25: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries ‘Supplemental Business Segment Information and Reconciliation (Unaudited) (In millions) 202 Changes ‘Adjusted Adjusted ‘ tk o Adsl Adjusted fen Operating Operating “Tacome Operating Operating Adted (Cos) Reported “Tneome® —Adjuted “Tres
Slide 26: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries ‘Supplemental Net Sales Change Analysis (Unaudited) ‘S Change - Net Sales (in millions) ‘GAAP ‘GAAP Non-GAAP |Comparable Sales [Net Sales Change! Change (A) _|Comparable Sales! QI 2023: ACCO Brands North America (153)% (30.3) $178.2 ACCO