Acco Brands Corporation · NYSE:ACCO
Acco Brands — Q2 2020 Earnings Presentation
17 slides from Acco Brands's earnings presentation, Jul 29, 2020
Slide 1: ACCO Brands 2Q 2020 Earnings Conference Call
ACCO Brands 2Q 2020 Earnings Conference Call July 29, 2020
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: 2Q 2020 Earnings Summary
2Q 2020 Earnings Summary • Declines in all segments due to lower demand from COVID-19 Sales down 29% to $367M impacts • Adverse FX of $7M or 1.3% • Solid back-to-school sell-in in North America Operating income down 70% to $18.5M; • Declines due to lower sales, higher slow moving inventory and Adjus
Slide 5: 2Q 2020 Earnings Summary
2Q 2020 Earnings Summary • Solid back-to-school retail sell-in; commercial office products sales down significantly from COVID-19 impacts North America sales down 25% • Operating income/adjusted operating income down from lower Operating income down 38% sales, higher inventory reserves, unfavorable
Slide 6: Segment Results
Segment Results Y/Y Segment Financial Metrics 2Q20 2Q19 $ in millions Change ACCO Brands North America Sales $231.7 $307.9 (24.7)% Comparable Sales (24.5)% 9.4% Adjusted Operating Income $42.4 $60.4 (29.8)% Adjusted Operating Margin 18.3% 19.6% (130) bps ACCO Brands EMEA Sales $88.3 $128.3 (31.2)% C
Slide 7: 2Q 2020 Margin Reconciliation
2Q 2020 Margin Reconciliation 2Q 2020 Change vs. Items of Significant Impact on Adjusted Prior Year Bps Adjusted Results (non-GAAP) Adjusted Gross Profit $110.0 $(55.8) Adverse mix (net of price/cost) (200) Acquisition (50) Gross Margin 30.0% (200) bps Adverse sales leverage (50) Net cost reductions
Slide 8: 2020 Cash Flow
2020 Cash Flow Change vs $ in millions* 2Q20 1Q20 2020 YTD 2019YTD 2019 Adjusted EBITDA 47 37 84 127 (43) Interest (14) (3) (17) (21) 4 Taxes (4) (10) (14) (23) 9 Capital expenditures (2) (7) (9) (15) 6 Working capital and other (65) (41) (106) (179) 73 Pension (3) (6) (9) (12) 3 Cash restructuring
Slide 9: Capital Structure
Capital Structure Capital structure as of June 30, 2020 No maturities until 2024 ($ in millions) Facility Balance1 Interest Rate Methodology Rate $600M multicurrency revolver $ 244 LIBOR + 150 bps, 25 bps unused 2.93% USD Term Loan A $ 95 U.S. LIBOR3 + 150 bps 3.07% EUR Term Loan A $ 270 Euro LI
Slide 10: Executing On Capital Allocation Strategy
Executing On Capital Allocation Strategy Priorities • Disciplined capital allocation strategy • Expect to generate at least $100M in FCF in 2020 (at least $120M Capital cash from operations less $20M capex) Allocation • Deploying FCF in 2020 to debt reduction and dividends • Do not intend to repurch
Slide 11: 3Q 2020 Outlook
3Q 2020 Outlook Due to the uncertainty associated with the global economic disruption from the COVID-19 pandemic and related government and business measures, the company withdrew its annual guidance on April 13, 2020. The following outlook is for 3Q only. 3Q 2020 Outlook Net Sales1 (15)% to (20)%
Slide 12: 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 13: 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 a re of Ce St of Income ation reported in accordance with GAAP to adjusted Non-GAAP Information for the three months ended
Slide 14: Reconciliation of GAAP to Adjusted Non-GAAP Information (Six Months)
ACCO Brands Corporation and Subsidiaries Reconciliation of GAAP to Adjusted Non-CAAP Information (Unaudited) in millions, except per share data) ‘The following tables set fort a reconciliation of certain Consolidated Stazements of Income information reported in accordance with GAAP to adjusted Noa-G
Slide 15: Reconciliation of Net Income to Adjusted EBITDA
ACCO Brands Corporation and Subsidiaries Reconciliation of Net Income to Adjusted EBITDA (Unaudited) (dn niillions) ‘The following table sets forth a reconciliation of net income reported in accordance with GAAP to Adjusted EBITDA. ‘Three Months Ended ‘Six Months Ended Sune 30, Tune 30, 20202019 20:
Slide 16: Supplemental Business Segment Information and Reconciliation
ACCO Brands Corporation and Subsidiaries ‘Supplemental Business Segment Information and Reconciliation (Unaudited) a millions) 2010 Reported Adjusted Operating Operating Reported Income Adusted Tacome Magia NetSsles (Los) Tem Loss) %_ Paint Sims $ 68 $ 14 3% — 60) 165 «1902 @6.y% 70) 7.0 8600 «1D 9%
Slide 17: Supplemental Net Sales Change Analysis
Qi 2020: ACCO Brands North America ACCO Brands EMEA ACCO Brands International Total @ 2020: ACCO Brands North America ACCO Brands EMEA ACCO Brands International Total 2020 YTD: ACCO Brands North America ACCO Brands EMEA. ACCO Brands Intemational Total ACCO Brands Corporation and Subsidiaries ‘Supple