Acco Brands Corporation · NYSE:ACCO
Acco Brands — Q1 2023 Earnings Presentation
22 slides from Acco Brands's earnings presentation, May 5, 2023
Slide 1: ACCO Brands 1Q Earnings Conference Call
ACCO Brands 1Q Earnings Conference Call May 5, 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: 1Q 2023 Key Messages
1Q 2023 Key Messages Good start to the year with better-than-expected results Gross margin improved 250 basis points driven by cumulative benefits of global pricing and cost actions Adjusted operating income of $24 million grew 8% year-over-year North America sales declined due to difficult comparis
Slide 5: Executing on 2023 Key Priorities
Executing on 2023 Key Priorities 1). Restoring 2). Profitably 3). Invest in 4). Manage SG&A Gross Margin Manage Growth Spend and Inventory Revenue Cumulative Impact of Price Supporting Long-term Prudent Management of Headcount Increases Complementary Assortments Innovation Control Discretionary Spen
Slide 6: Innovation Awards and Recognition
Innovation Awards and Recognition ACCO Brands was recognized by Crain's as one of Chicago's Most Innovative Companies for two years in a row Numerous Awards, Including Kensington® Kensington® TruSens® Leitz® Surface Laptop Riser SD4845p Docking Station Performance Air Purifiers Ergonomic Solutions A
Slide 7: New Product Development and Partnerships
New Product Development and Partnerships • Super Mario Controller and Case • Rapid® Glue Gun BGX500 with Bosch Battery • Pokémon Sweet Friends Controller and Case Available • Rapid® BTX606 Staple Gun with Bosch Battery Exclusively at Target 7
Slide 8: 1Q 2023 Results Summary
1Q 2023 Results Summary Comparisons Versus Prior Year • 2.4% impact from adverse FX of $11 million • Volume impacted by macroeconomic slowdown Sales down 9% to $402.6M • North America sales decline due to prior year early purchases of back-to-school product from Comparable sales down 6% to $413.2M s
Slide 9: 1Q 2023 Segment Financial Metrics
1Q 2023 Segment Financial Metrics $ in millions 1Q23 1Q22 Y/Y Change ACCO Brands North America Sales $176.7 $208.5 (15.3%) Comparable Sales $178.2 $208.5 (14.6%) Adjusted Operating Income $10.9 $19.8 (45%) Adjusted Operating Margin 6.2% 9.5% (330 bps) ACCO Brands EMEA Sales $135.8 $156.1 (13.0%) Com
Slide 10: 1Q 2023 Segment Results Summary
1Q 2023 Segment Results Summary Comparisons Versus Prior Year North America • Lower sales due to weaker macroeconomic environment and prior year early purchases of back-to-school product by retailers that sought product surety in 2022, due to supply chain constraints • Technology accessories demand
Slide 11: 1Q 2023 Margin Reconciliation
1Q 2023 Margin Reconciliation Change vs. Prior Year Items of Significant Impact 1Q 2023 Bps Adjusted on Adjusted Results (non-GAAP) Gross Profit $119.3M ($0.3M) Pricing/Product Cost 220 Volume (170) Gross Margin 29.6% +250 Bps Cost Savings 80 Mix/FX 120 SG&A $95.0M ($2.0M) Cost Savings (60) FX -- SG
Slide 12: Free Cash Flow
Free Cash Flow Change vs $ in millions* 1Q 2023 1Q 2022 2022 Net cash provided by operations (23) (104) 81 Additions to PP&E (2) (3) 1 Free cash flow (Non-GAAP) (25) (108) 83 Dividends paid -- (7) 7 Net proceeds from exercise of stock options (2) 3 (5) Increase in debt 90 158 (68) Increase in cash o
Slide 13: Capital Structure
Capital Structure ❑ Capital structure as of March 31, 2023 ❑ Company had cash on hand of $127M ❑ No maturities until 2026 ❑ Interest is split 52/48 fixed and variable with weighted average rate of 5.17% ($ in millions) Facility Balance1 Interest Rate Methodology Rate $600M multicurrency revolver 169
Slide 14: Reiterate Full Year 2023 Outlook
Reiterate Full Year 2023 Outlook Guidance FY2023 Comparable Net Sales Growth 0.0% to (3.0%) FX Impact on Sales Approximately 0.0% Reported Net Sales Growth 0.0% to (3.0%) 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 t
Slide 15: 2Q 2023 Outlook
2Q 2023 Outlook Guidance 2Q 2023 Comparable Net Sales Growth (4.0%) to (7.0%) FX Impact on Sales 0.0% Reported Net Sales Growth (4.0%) to (7.0%) Reported Net Sales* $485 to $500 million Comparable Adj. EPS $0.29 to $0.32 FX Impact on Adj. EPS* $0.00 Adjusted EPS $0.29 to $0.32 *Based on spot rates a
Slide 16: Executing On Capital Allocation Strategy
Executing On Capital Allocation Strategy • Disciplined capital allocation strategy Capital • Free cash flow improved to ($25M) versus ($108M) a year ago Allocation • Announced $0.075 per share quarterly dividend on April 28 • 1Q 2023 consolidated leverage ratio 4.3x Debt • 2023 end of year leverage
Slide 17: 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 18: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corpor yn and Subsidiaries Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited) Gn millions, except per share data) The following tables set forth a reconciliation of certain Consolidated Statements of Loss information reported in accordance with GAAP
Slide 19: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries ‘Reconciliation of Net Loss to Adjusted EBITDA (Unaudited) (Gn millions) ‘The following table sets forth a reconciliation of net loss reported in accordance with GAAP to Adjusted EBITDA. ‘Three Months Ended March 31, 72028 72022 % Change
Slide 20: Reg G Reconciliations
Reg G Reconciliations Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Loss to Adjusted EBITDA (Unaudited) Represents the write off of assets related to a capital project ‘The adjustments to income tax expense include the effects of the adjustments outlined above and discret
Slide 21: Reg G Reconciliations
Reg G Reconciliations ACCO Brands Corporation and Subsidiaries ‘Supplemental Business Segment Information and Reconciliation (Unaudited) Qu niillions) 2023 2022 Changes ae Raed Reported Adjusted Operating Reported Adjusted Operating Adjused Adjwted Operating Opestnz Income Operating Oprsnnz Income O
Slide 22: 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 Non-GAAP ‘Comparable Comparable Net Sales Currency Net Sales Net Sales Currency Net Sales ‘Comparable ‘Change