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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form |
10-Q |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended September 30, 2023
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number 001-08454
ACCO Brands Corporation |
(Exact Name of Registrant as Specified in Its Charter) |
Delaware |
36-2704017 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
Four Corporate Drive
Lake Zurich, Illinois 60047
(Address of Registrant’s Principal Executive Office, Including Zip Code)
(847) 541-9500
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
ACCO |
NYSE |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☒ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of October 26, 2023, the registrant had outstanding 94,925,652 shares of Common Stock.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.
Some of the factors that could affect our results or cause our plans, actions and results to differ materially from those expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and from time to time in our other Securities and Exchange Commission (the "SEC") filings.
Website Access to Securities and Exchange Commission Reports
The Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through its website its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the SEC.
2
TABLE OF CONTENTS
3
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
|
|
September 30, |
|
|
December 31, |
|
||
(in millions) |
|
(unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
$ |
|
73.7 |
|
$ |
|
62.2 |
|
Accounts receivable, net |
|
|
351.7 |
|
|
|
384.1 |
|
Inventories |
|
|
368.5 |
|
|
|
395.2 |
|
Other current assets |
|
|
41.1 |
|
|
|
40.8 |
|
Total current assets |
|
|
835.0 |
|
|
|
882.3 |
|
Total property, plant and equipment |
|
|
585.7 |
|
|
|
589.2 |
|
Less: accumulated depreciation |
|
|
(417.5 |
) |
|
|
(404.1 |
) |
Property, plant and equipment, net |
|
|
168.2 |
|
|
|
185.1 |
|
Right of use asset, leases |
|
|
86.4 |
|
|
|
88.8 |
|
Deferred income taxes |
|
|
92.5 |
|
|
|
99.7 |
|
Goodwill |
|
|
664.8 |
|
|
|
671.5 |
|
Identifiable intangibles, net |
|
|
814.4 |
|
|
|
847.0 |
|
Other non-current assets |
|
|
22.4 |
|
|
|
20.3 |
|
Total assets |
$ |
|
2,683.7 |
|
$ |
|
2,794.7 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Notes payable |
$ |
|
2.9 |
|
$ |
|
10.3 |
|
Current portion of long-term debt |
|
|
67.2 |
|
|
|
49.7 |
|
Accounts payable |
|
|
173.0 |
|
|
|
239.5 |
|
Accrued compensation |
|
|
47.1 |
|
|
|
38.3 |
|
Accrued customer program liabilities |
|
|
97.0 |
|
|
|
103.3 |
|
Lease liabilities |
|
|
19.2 |
|
|
|
21.2 |
|
Other current liabilities |
|
|
112.5 |
|
|
|
126.7 |
|
Total current liabilities |
|
|
518.9 |
|
|
|
589.0 |
|
Long-term debt, net |
|
|
892.2 |
|
|
|
936.5 |
|
Long-term lease liabilities |
|
|
73.9 |
|
|
|
75.2 |
|
Deferred income taxes |
|
|
134.0 |
|
|
|
144.1 |
|
Pension and post-retirement benefit obligations |
|
|
140.3 |
|
|
|
155.5 |
|
Other non-current liabilities |
|
|
86.4 |
|
|
|
84.3 |
|
Total liabilities |
|
|
1,845.7 |
|
|
|
1,984.6 |
|
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock |
|
|
1.0 |
|
|
|
1.0 |
|
Treasury stock |
|
|
(45.1 |
) |
|
|
(43.4 |
) |
Paid-in capital |
|
|
1,908.5 |
|
|
|
1,897.2 |
|
Accumulated other comprehensive loss |
|
|
(537.5 |
) |
|
|
(540.3 |
) |
Accumulated deficit |
|
|
(488.9 |
) |
|
|
(504.4 |
) |
Total stockholders' equity |
|
|
838.0 |
|
|
|
810.1 |
|
Total liabilities and stockholders' equity |
$ |
|
2,683.7 |
|
$ |
|
2,794.7 |
|
See Notes to Condensed Consolidated Financial Statements (Unaudited).
4
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Income (Loss)
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions, except per share data) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net sales |
$ |
|
448.0 |
|
$ |
|
485.6 |
|
$ |
|
1,344.2 |
|
$ |
|
1,448.2 |
|
Cost of products sold |
|
|
303.2 |
|
|
|
348.2 |
|
|
|
915.9 |
|
|
|
1,041.2 |
|
Gross profit |
|
|
144.8 |
|
|
|
137.4 |
|
|
|
428.3 |
|
|
|
407.0 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses |
|
|
98.8 |
|
|
|
93.9 |
|
|
|
291.8 |
|
|
|
284.3 |
|
Amortization of intangibles |
|
|
10.8 |
|
|
|
9.9 |
|
|
|
32.7 |
|
|
|
31.5 |
|
Restructuring charges |
|
|
3.0 |
|
|
|
0.1 |
|
|
|
6.3 |
|
|
|
2.3 |
|
Goodwill impairment |
|
|
— |
|
|
|
98.7 |
|
|
|
— |
|
|
|
98.7 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(2.2 |
) |
|
|
— |
|
|
|
(9.0 |
) |
Total operating costs and expenses |
|
|
112.6 |
|
|
|
200.4 |
|
|
|
330.8 |
|
|
|
407.8 |
|
Operating income (loss) |
|
|
32.2 |
|
|
|
(63.0 |
) |
|
|
97.5 |
|
|
|
(0.8 |
) |
Non-operating expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
15.6 |
|
|
|
12.1 |
|
|
|
45.0 |
|
|
|
32.6 |
|
Interest income |
|
|
(1.6 |
) |
|
|
(2.6 |
) |
|
|
(6.2 |
) |
|
|
(6.2 |
) |
Non-operating pension expense (income) |
|
|
0.2 |
|
|
|
(0.5 |
) |
|
|
0.5 |
|
|
|
(3.2 |
) |
Other income, net |
|
|
(3.6 |
) |
|
|
(7.4 |
) |
|
|
(2.1 |
) |
|
|
(10.2 |
) |
Income (loss) before income tax |
|
|
21.6 |
|
|
|
(64.6 |
) |
|
|
60.3 |
|
|
|
(13.8 |
) |
Income tax expense |
|
|
6.7 |
|
|
|
4.1 |
|
|
|
22.7 |
|
|
|
18.2 |
|
Net income (loss) |
$ |
|
14.9 |
|
$ |
|
(68.7 |
) |
$ |
|
37.6 |
|
$ |
|
(32.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic income (loss) per share |
$ |
|
0.16 |
|
$ |
|
(0.73 |
) |
$ |
|
0.40 |
|
$ |
|
(0.33 |
) |
Diluted income (loss) per share |
$ |
|
0.15 |
|
$ |
|
(0.73 |
) |
$ |
|
0.39 |
|
$ |
|
(0.33 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
95.4 |
|
|
|
94.5 |
|
|
|
95.2 |
|
|
|
95.6 |
|
Diluted |
|
|
96.7 |
|
|
|
94.5 |
|
|
|
96.8 |
|
|
|
95.6 |
|
See Notes to Condensed Consolidated Financial Statements (Unaudited).
5
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net income (loss) |
$ |
|
14.9 |
|
$ |
|
(68.7 |
) |
$ |
|
37.6 |
|
$ |
|
(32.0 |
) |
Other comprehensive (loss) income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrealized loss on derivative instruments, net of tax expense of $(0.3) and $(0.4) and $(0.2) and $(1.3), respectively |
|
|
0.7 |
|
|
|
0.9 |
|
|
|
0.4 |
|
|
|
3.4 |
|
Foreign currency translation adjustments, net of tax (expense) benefit of $(0.4) and $1.1 and $(0.2) and $3.2, respectively |
|
|
(7.0 |
) |
|
|
(28.1 |
) |
|
|
0.2 |
|
|
|
(50.0 |
) |
Recognition of deferred pension and other post-retirement items, net of tax expense of $(1.2) and $(3.3) and $(0.6) and $(8.2), respectively |
|
|
4.5 |
|
|
|
10.9 |
|
|
|
2.2 |
|
|
|
26.5 |
|
Other comprehensive (loss) income, net of tax: |
|
|
(1.8 |
) |
|
|
(16.3 |
) |
|
|
2.8 |
|
|
|
(20.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income (loss) |
$ |
|
13.1 |
|
$ |
|
(85.0 |
) |
$ |
|
40.4 |
|
$ |
|
(52.1 |
) |
See Notes to Condensed Consolidated Financial Statements (Unaudited).
6
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
Nine Months Ended September 30, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net income (loss) |
$ |
|
37.6 |
|
$ |
|
(32.0 |
) |
Payments of contingent consideration |
|
|
— |
|
|
|
(9.2 |
) |
Loss on disposal of assets |
|
|
(0.3 |
) |
|
|
(0.1 |
) |
Change in fair value of contingent liability |
|
|
— |
|
|
|
(9.0 |
) |
Depreciation |
|
|
25.2 |
|
|
|
28.6 |
|
Amortization of debt issuance costs |
|
|
2.3 |
|
|
|
2.0 |
|
Amortization of intangibles |
|
|
32.7 |
|
|
|
31.5 |
|
Stock-based compensation |
|
|
10.4 |
|
|
|
7.8 |
|
Non-cash charge for goodwill impairment |
|
|
— |
|
|
|
98.7 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
30.9 |
|
|
|
48.8 |
|
Inventories |
|
|
35.5 |
|
|
|
(20.9 |
) |
Other assets |
|
|
(5.4 |
) |
|
|
(20.1 |
) |
Accounts payable |
|
|
(72.8 |
) |
|
|
(80.8 |
) |
Accrued expenses and other liabilities |
|
|
(17.8 |
) |
|
|
(47.2 |
) |
Accrued income taxes |
|
|
(7.6 |
) |
|
|
(7.7 |
) |
Net cash provided (used) by operating activities |
|
|
70.7 |
|
|
|
(9.6 |
) |
Investing activities |
|
|
|
|
|
|
||
Additions to property, plant and equipment |
|
|
(9.7 |
) |
|
|
(11.8 |
) |
Proceeds from the disposition of assets |
|
|
2.2 |
|
|
|
0.2 |
|
Net cash used by investing activities |
|
|
(7.5 |
) |
|
|
(11.6 |
) |
Financing activities |
|
|
|
|
|
|
||
Proceeds from long-term borrowings |
|
|
121.9 |
|
|
|
218.0 |
|
Repayments of long-term debt |
|
|
(145.4 |
) |
|
|
(95.2 |
) |
Repayments of notes payable, net |
|
|
(7.3 |
) |
|
|
(7.6 |
) |
Dividends paid |
|
|
(21.4 |
) |
|
|
(21.5 |
) |
Payments of contingent consideration |
|
|
— |
|
|
|
(17.8 |
) |
Repurchases of common stock |
|
|
— |
|
|
|
(19.4 |
) |
Payments related to tax withholding for stock-based compensation |
|
|
(1.7 |
) |
|
|
(2.5 |
) |
Proceeds from the exercise of stock options |
|
|
— |
|
|
|
4.3 |
|
Net cash (used) provided by financing activities |
|
|
(53.9 |
) |
|
|
58.3 |
|
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
2.2 |
|
|
|
(0.3 |
) |
Net increase in cash and cash equivalents |
|
|
11.5 |
|
|
|
36.8 |
|
Cash and cash equivalents |
|
|
|
|
|
|
||
Beginning of the period |
|
|
62.2 |
|
|
|
41.2 |
|
End of the period |
$ |
|
73.7 |
|
$ |
|
78.0 |
|
Cash paid during the year for: |
|
|
|
|
|
|
||
Interest |
$ |
|
48.7 |
|
$ |
|
35.7 |
|
Income taxes |
$ |
|
30.2 |
|
$ |
|
25.9 |
|
See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
ACCO Brands Corporation and Subsidiaries
Consolidated Statement of Stockholders' Equity
(Unaudited)
|
|
Common Stock |
|
|
|
Treasury Stock |
|
Accumulated Other |
|
|
|
|
||||
(in millions) |
|
Shares |
|
Value |
|
Paid-in Capital |
|
Shares |
|
Value |
|
Comprehensive (Loss) Income |
|
Accumulated Deficit |
|
Total |
Balance at December 31, 2022 |
|
98.9 |
$ |
1.0 |
$ |
1,897.2 |
|
4.6 |
$ |
(43.4) |
$ |
(540.3) |
$ |
(504.4) |
$ |
810.1 |
Net loss |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(3.7) |
|
(3.7) |
Loss on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(0.9) |
|
— |
|
(0.9) |
Translation impact, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
8.9 |
|
— |
|
8.9 |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1.5) |
|
— |
|
(1.5) |
Stock-based compensation |
|
— |
|
— |
|
6.2 |
|
— |
|
— |
|
— |
|
(0.6) |
|
5.6 |
Common stock issued, net of shares withheld for employee taxes |
|
0.9 |
|
— |
|
— |
|
0.3 |
|
(1.7) |
|
— |
|
— |
|
(1.7) |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.1) |
|
(7.1) |
Other |
|
— |
|
— |
|
(0.1) |
|
— |
|
0.1 |
|
— |
|
0.1 |
|
0.1 |
Balance at March 31, 2023 |
|
99.8 |
$ |
1.0 |
$ |
1,903.3 |
|
4.9 |
$ |
(45.0) |
$ |
(533.8) |
$ |
(515.7) |
$ |
809.8 |
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
26.4 |
|
26.4 |
Gain on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
0.6 |
|
— |
|
0.6 |
Translation impact, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1.7) |
|
— |
|
(1.7) |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(0.8) |
|
— |
|
(0.8) |
Stock-based compensation |
|
— |
|
— |
|
3.4 |
|
— |
|
— |
|
— |
|
(0.1) |
|
3.3 |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.1) |
|
(7.1) |
Other |
|
— |
|
— |
|
0.1 |
|
— |
|
— |
|
— |
|
(0.2) |
|
(0.1) |
Balance at June 30, 2023 |
|
99.8 |
$ |
1.0 |
$ |
1,906.8 |
|
4.9 |
$ |
(45.0) |
$ |
(535.7) |
$ |
(496.7) |
$ |
830.4 |
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
14.9 |
|
14.9 |
Gain on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
0.7 |
|
— |
|
0.7 |
Translation impact |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.0) |
|
— |
|
(7.0) |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4.5 |
|
— |
|
4.5 |
Stock-based compensation |
|
— |
|
— |
|
1.7 |
|
— |
|
— |
|
— |
|
(0.2) |
|
1.5 |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.2) |
|
(7.2) |
Other |
|
— |
|
— |
|
— |
|
— |
|
(0.1) |
|
— |
|
0.3 |
|
0.2 |
Balance at September 30, 2023 |
|
99.8 |
$ |
1.0 |
$ |
1,908.5 |
|
4.9 |
$ |
(45.1) |
$ |
(537.5) |
$ |
(488.9) |
$ |
838.0 |
See Notes to Condensed Consolidated Financial Statements (Unaudited).
8
ACCO Brands Corporation and Subsidiaries
Consolidated Statement of Stockholders' Equity Continued
(Unaudited)
|
|
Common Stock |
|
|
|
Treasury Stock |
|
Accumulated Other |
|
|
|
|
||||
(in millions) |
|
Shares |
|
Value |
|
Paid-in Capital |
|
Shares |
|
Value |
|
Comprehensive (Loss) Income |
|
Accumulated Deficit |
|
Total |
Balance at December 31, 2021 |
|
100.1 |
$ |
1.0 |
$ |
1,902.2 |
|
4.3 |
$ |
(40.9) |
$ |
(535.5) |
$ |
(462.0) |
$ |
864.8 |
Net loss |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(2.7) |
|
(2.7) |
Loss on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1.4) |
|
— |
|
(1.4) |
Translation impact, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
15.3 |
|
— |
|
15.3 |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
4.8 |
|
— |
|
4.8 |
Stock-based compensation |
|
— |
|
— |
|
4.9 |
|
— |
|
— |
|
— |
|
(0.1) |
|
4.8 |
Common stock issued, net of shares withheld for employee taxes |
|
1.1 |
|
— |
|
4.3 |
|
0.1 |
|
(1.2) |
|
— |
|
— |
|
3.1 |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.3) |
|
(7.3) |
Other |
|
— |
|
— |
|
0.1 |
|
— |
|
— |
|
— |
|
— |
|
0.1 |
Balance at March 31, 2022 |
|
101.2 |
$ |
1.0 |
$ |
1,911.5 |
|
4.4 |
$ |
(42.1) |
$ |
(516.8) |
$ |
(472.1) |
$ |
881.5 |
Net income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
39.4 |
|
39.4 |
Gain on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
3.9 |
|
— |
|
3.9 |
Translation impact, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(37.2) |
|
— |
|
(37.2) |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
10.8 |
|
— |
|
10.8 |
Common stock repurchases |
|
(2.7) |
|
— |
|
(19.4) |
|
— |
|
— |
|
— |
|
— |
|
(19.4) |
Stock-based compensation |
|
— |
|
— |
|
2.6 |
|
— |
|
— |
|
— |
|
(0.2) |
|
2.4 |
Common stock issued, net of shares withheld for employee taxes |
|
0.3 |
|
— |
|
— |
|
0.2 |
|
(1.3) |
|
— |
|
— |
|
(1.3) |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.1) |
|
(7.1) |
Other |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(0.1) |
|
(0.1) |
Balance at June 30, 2022 |
|
98.8 |
$ |
1.0 |
$ |
1,894.7 |
|
4.6 |
$ |
(43.4) |
$ |
(539.3) |
$ |
(440.1) |
$ |
872.9 |
Net loss |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(68.7) |
|
(68.7) |
Gain on derivative financial instruments, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
0.9 |
|
— |
|
0.9 |
Translation impact |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(28.1) |
|
— |
|
(28.1) |
Pension and post-retirement adjustment, net of tax |
|
— |
|
— |
|
— |
|
— |
|
— |
|
10.9 |
|
— |
|
10.9 |
Stock-based compensation |
|
— |
|
— |
|
0.6 |
|
— |
|
— |
|
— |
|
— |
|
0.6 |
Common stock issued, net of shares withheld for employee taxes |
|
0.1 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Dividends declared, $0.075 per share |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(7.1) |
|
(7.1) |
Other |
|
— |
|
— |
|
(0.1) |
|
— |
|
— |
|
— |
|
— |
|
(0.1) |
Balance at September 30, 2022 |
|
98.9 |
$ |
1.0 |
$ |
1,895.2 |
|
4.6 |
$ |
(43.4) |
$ |
(555.6) |
$ |
(515.9) |
$ |
781.3 |
See Notes to Condensed Consolidated Financial Statements (Unaudited).
9
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
As used in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, the terms "ACCO Brands," "ACCO," the "Company," "we," "us," and "our" refer to ACCO Brands Corporation and its consolidated subsidiaries.
The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and notes contained in this Quarterly Report on Form 10-Q.
The condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the SEC. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Condensed Consolidated Balance Sheet as of September 30, 2023 and the related Consolidated Statements of Income (Loss), Consolidated Statements of Comprehensive Income (Loss), and Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2023 and 2022, and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 are unaudited. The December 31, 2022 Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all annual disclosures required by GAAP. The financial statements included herein were prepared by management and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of the results of operations and cash flows for the interim periods ended September 30, 2023 and 2022, and the financial position of the Company as of September 30, 2023. Interim results may not be indicative of results for a full year.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.
2. Recent Accounting Pronouncements and Adopted Accounting Standards
Recent Accounting Pronouncements
There are no recently issued accounting pronouncements that are expected to have an impact on the Company’s financial condition, results of operations or cash flow.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of LIBOR to an alternative reference rate. Effective in the fourth quarter of 2022, the Company adopted this standard. The adoption of this standard did not have a material impact on our consolidated financial statements.
There were no accounting standards that were adopted in the first nine months of 2023 that had a material effect on the Company’s financial condition, results of operations or cash flow.
10
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
3. Long-term Debt and Short-term Borrowings
Notes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as of September 30, 2023 and December 31, 2022:
(in millions) |
|
September 30, |
|
|
December 31, |
|
||
Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of 6.22% at September 30, 2023 and 3.90% at December 31, 2022) |
$ |
|
212.9 |
|
$ |
|
227.4 |
|
USD Senior Secured Term Loan A, due March 2026 (floating interest rate of 7.66% at September 30, 2023 and 6.40% at December 31, 2022) |
|
|
79.8 |
|
|
|
84.4 |
|
Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of 6.44% at September 30, 2023 and 5.30% at December 31, 2022) |
|
|
31.3 |
|
|
|
34.9 |
|
U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 7.59% at September 30, 2023 and 6.36% at December 31, 2022) |
|
|
49.9 |
|
|
|
58.6 |
|
Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of 6.42% at September 30, 2023 and 5.18% at December 31, 2022) |
|
|
17.7 |
|
|
|
14.2 |
|
Senior Unsecured Notes, due March 2029 (fixed interest rate of 4.25%) |
|
|
575.0 |
|
|
|
575.0 |
|
Other borrowings |
|
|
2.8 |
|
|
|
10.4 |
|
Total debt |
|
|
969.4 |
|
|
|
1,004.9 |
|
Less: |
|
|
|
|
|
|
||
Current portion |
|
|
70.1 |
|
|
|
60.0 |
|
Debt issuance costs, unamortized |
|
|
7.1 |
|
|
|
8.4 |
|
Long-term debt, net |
$ |
|
892.2 |
|
$ |
|
936.5 |
|
Credit Agreement
The Company is party to a Third Amended and Restated Credit Agreement (the "Credit Agreement"), dated as of January 27, 2017, among the Company, certain subsidiaries of the Company, Bank of America, N.A., as administrative agent, and the other agents and various lenders party thereto. The Credit Agreement, as amended, provides for a senior secured credit facility, which consists of a €300.0 million (US$320.8 million based on January 27, 2017, exchange rates) term loan facility, an A$80.0 million (US$60.4 million based on January 27, 2017, exchange rates) term loan facility, a US$100.0 million term loan facility, and a US$600.0 million multi-currency revolving credit facility (the "Revolving Facility").
From July 2018 to November 2022, the Company entered into six amendments (the "Amendments") to the Credit Agreement. The following are the key changes, among other things, to the Credit Agreement as a result of the Amendments:
Quarter Ended |
|
Maximum Consolidated Leverage Ratio |
December 2022 |
|
4.50:1.00 |
March 2023 |
|
5.00:1.00 |
June 2023 |
|
5.00:1.00 |
September 2023 |
|
4.75:1.00 |
December 2023 |
|
4.25:1.00 |
11
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The current maturity of the Credit Agreement is March 31, 2026 and the current pricing is as follows:
Consolidated Leverage Ratio |
|
Applicable Rate on Euro/AUD/CDN Dollar Loans |
|
Applicable Rate on Base Rate Loans |
|
Undrawn Fee |
> 4.50 to 1.00 |
|
2.50 % |
|
1.50 % |
|
0.500 % |
≤ 4.50 to 1.00 and > 4.00 to 1.00 |
|
2.25 % |
|
1.25 % |
|
0.375 % |
≤ 4.00 to 1.00 and > 3.50 to 1.00 |
|
2.00 % |
|
1.00 % |
|
0.350 % |
≤ 3.50 to 1.00 and > 3.00 to 1.00 |
|
1.75 % |
|
0.75 % |
|
0.300 % |
≤ 3.00 to 1.00 and > 2.00 to 1.00 |
|
1.50 % |
|
0.50 % |
|
0.250 % |
≤ 2.00 to 1.00 |
|
1.25 % |
|
0.25 % |
|
0.200 % |
As of September 30, 2023, there was $67.6 million in borrowings outstanding under the Revolving Facility. The remaining amount available for borrowings was $522.8 million (allowing for $9.6 million of letters of credit outstanding on that date).
As of September 30, 2023, our Consolidated Leverage Ratio was approximately 3.78 to 1.00 versus our maximum covenant of 4.75 to 1.00.
Senior Unsecured Notes
On March 15, 2021, the Company completed a private offering of $575.0 million in aggregate principal amount of 4.25 percent Senior Unsecured Notes (the "Notes") due March 2029. Interest on the Notes is payable semiannually on March 15 and September 15 of each year. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of the Company's existing and future U.S. subsidiaries, other than certain excluded subsidiaries.
Guarantees and Security
Generally, obligations under the Credit Agreement are guaranteed by certain of the Company’s existing and future subsidiaries, and are secured by substantially all of the Company’s and certain guarantor subsidiaries’ assets, subject to certain exclusions and limitations.
4. Leases
The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, as well as vehicles, forklifts and other equipment. The Company determines if an arrangement is a lease at inception. Leases are included in "Right of use asset, leases" ("ROU Assets"), and the current portion of the lease liability is included in "Lease liabilities" and the non-current portion is included in "Long-term lease liabilities" in the Condensed Consolidated Balance Sheets. The Company currently has an immaterial amount of financing leases and leases with terms of more than one month and less than 12 months. ROU Assets and Lease liabilities are recognized based on the present value of lease payments over the lease term. Because most of the Company’s leases do not provide an implicit rate of return, the Company uses its incremental collateralized borrowing rate, on a regional basis, in determining the present value of lease payments. The incremental borrowing rate is dependent upon the duration of the lease and has been segmented into three groups of time. All leases within the same region and the same group of time share the same incremental borrowing rate.
12
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The Company has lease agreements with lease and non-lease components, which are combined for accounting purposes for all classes of underlying assets except information technology equipment.
The components of lease expense were as follows:
|
|
Three months ended |
|
|
Nine Months Ended |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Operating lease cost |
$ |
|
7.3 |
|
$ |
|
7.0 |
|
$ |
|
21.4 |
|
$ |
|
22.5 |
|
Sublease income |
|
|
(0.6 |
) |
|
|
(0.7 |
) |
|
|
(1.9 |
) |
|
|
(1.9 |
) |
Total lease cost |
$ |
|
6.7 |
|
$ |
|
6.3 |
|
$ |
|
19.5 |
|
$ |
|
20.6 |
|
Other information related to leases was as follows:
|
|
Nine Months Ended |
|
|||||
(in millions, except lease term and discount rate) |
|
2023 |
|
|
2022 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
$ |
|
22.6 |
|
$ |
|
23.7 |
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
||
Operating leases |
$ |
|
14.7 |
|
$ |
|
7.8 |
|
|
|
|
|
|
|
|
||
Weighted average remaining lease term: |
|
|
|
|
|
|
||
Operating leases |
|
6.2 years |
|
|
|
|
||
|
|
|
|
|
|
|
||
Weighted average discount rate: |
|
|
|
|
|
|
||
Operating leases |
|
|
5.0 |
% |
|
|
|
|
Future minimum lease payments, net of sublease income, for all non-cancelable leases as of September 30, 2023, were as follows:
(in millions) |
|
Operating |
|
|
2023 |
$ |
|
5.4 |
|
2024 |
|
|
23.9 |
|
2025 |
|
|
21.4 |
|
2026 |
|
|
17.4 |
|
2027 |
|
|
12.7 |
|
2028 |
|
|
11.1 |
|
Thereafter |
|
|
25.0 |
|
Total minimum lease payments |
|
|
116.9 |
|
Less imputed interest |
|
|
23.8 |
|
Future minimum payments for leases, net of sublease rental income and imputed interest |
$ |
|
93.1 |
|
13
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
5. Pension and Other Retiree Benefits
The components of net periodic benefit (income) cost for pension and post-retirement plans for the three and nine months ended September 30, 2023 and 2022 were as follows:
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
Pension |
|
|
Post-retirement |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
|
|
||||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||
Service cost |
$ |
|
— |
|
$ |
|
— |
|
$ |
|
0.1 |
|
$ |
|
0.2 |
|
$ |
|
— |
|
$ |
|
— |
|
Interest cost |
|
|
2.0 |
|
|
|
1.2 |
|
|
|
5.1 |
|
|
|
2.3 |
|
|
|
— |
|
|
|
— |
|
Expected return on plan assets |
|
|
(3.0 |
) |
|
|
(2.7 |
) |
|
|
(5.5 |
) |
|
|
(4.2 |
) |
|
|
— |
|
|
|
— |
|
Amortization of net loss (gain) |
|
|
0.6 |
|
|
|
0.9 |
|
|
|
1.1 |
|
|
|
1.2 |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
Amortization of prior service cost |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
Special termination benefit(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
|
— |
|
Net periodic benefit (income) cost (2) |
$ |
|
(0.4 |
) |
$ |
|
(0.6 |
) |
$ |
|
0.9 |
|
$ |
|
0.4 |
|
$ |
|
(0.1 |
) |
$ |
|
(0.1 |
) |
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
Pension |
|
|
Post-retirement |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
|
|
||||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||
Service cost |
$ |
|
— |
|
$ |
|
— |
|
$ |
|
0.3 |
|
$ |
|
0.7 |
|
$ |
|
— |
|
$ |
|
— |
|
Interest cost |
|
|
6.0 |
|
|
|
3.6 |
|
|
|
15.0 |
|
|
|
7.2 |
|
|
|
— |
|
|
|
— |
|
Expected return on plan assets |
|
|
(9.0 |
) |
|
|
(8.1 |
) |
|
|
(16.2 |
) |
|
|
(13.3 |
) |
|
|
— |
|
|
|
— |
|
Amortization of net loss (gain) |
|
|
1.8 |
|
|
|
2.7 |
|
|
|
3.2 |
|
|
|
3.9 |
|
|
|
(0.3 |
) |
|
|
(0.3 |
) |
Amortization of prior service cost |
|
|
— |
|
|
|
— |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
— |
|
Special termination benefit(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
|
— |
|
Net periodic benefit (income) cost (2) |
$ |
|
(1.2 |
) |
$ |
|
(1.8 |
) |
$ |
|
2.6 |
|
$ |
|
(0.5 |
) |
$ |
|
(0.3 |
) |
$ |
|
(0.3 |
) |
We expect to contribute approximately $16.9 million to our defined benefit plans in 2023. For the nine months ended September 30, 2023, we have contributed $11.0 million to these plans.
6. Stock-Based Compensation
The following table summarizes our stock-based compensation expense (including stock options, restricted stock units ("RSUs") and performance stock units ("PSUs")) for the three and nine months ended September 30, 2023 and 2022:
|
|
Three months ended |
|
Nine Months Ended |
||||
(in millions) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Stock option compensation expense |
$ |
0.3 |
$ |
0.4 |
$ |
2.4 |
$ |
3.1 |
RSU compensation expense |
|
1.3 |
|
0.8 |
|
4.9 |
|
3.8 |
PSU compensation expense |
|
(0.1) |
|
(0.6) |
|
3.1 |
|
0.9 |
Total stock-based compensation expense |
$ |
1.5 |
$ |
0.6 |
$ |
10.4 |
$ |
7.8 |
We generally recognize compensation expense for stock-based awards ratably over the vesting period. During the third quarter of 2023, stock compensation grants were made consisting of 18,833 RSUs and 18,833 PSUs.
14
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table summarizes our unrecognized compensation expense and the weighted-average period over which the expense will be recognized as of September 30, 2023:
|
|
September 30, 2023 |
||
(in millions, except weighted average years) |
|
Unrecognized Compensation Expense |
|
Weighted Average Years Expense To Be Recognized Over |
Stock options |
|
$1.1 |
|
1.2 |
RSUs |
|
$9.1 |
|
2.2 |
PSUs |
|
$4.2 |
|
2.1 |
7. Inventories
The components of inventories were as follows:
(in millions) |
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||
Raw materials |
$ |
|
61.9 |
|
$ |
|
76.8 |
|
Work in process |
|
|
4.6 |
|
|
|
4.4 |
|
Finished goods |
|
|
302.0 |
|
|
|
314.0 |
|
Total inventories |
$ |
|
368.5 |
|
$ |
|
395.2 |
|
8. Goodwill and Identifiable Intangible Assets
Goodwill
We test goodwill for impairment at least annually as of our measurement date of May 31st and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred.
During the second quarter ended June 30, 2023, we performed a qualitative assessment of impairment for goodwill for each of our three reporting units. We considered events and circumstances that may affect the fair value of each reporting unit to determine whether it is necessary to perform the quantitative impairment test. We focused on events or circumstances that could affect the significant inputs, including, but not limited to, financial performance, such as negative or declining cash flows, a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods, competitive, economic, industry and market considerations, and other factors that have or could impact each of our reporting units.
The result of our qualitative assessment performed during the second quarter ended June 30, 2023, as of our measurement date of May 31, 2023, was that there were no triggering events that would make it more likely than not that an impairment loss to our goodwill has been incurred for any our three reporting units.
Changes in the net carrying amount of goodwill by segment were as follows:
(in millions) |
|
ACCO Brands North America |
|
|
ACCO Brands EMEA |
|
|
ACCO Brands International |
|
|
Total |
|
||||
Balance at December 31, |
$ |
|
348.0 |
|
$ |
|
145.6 |
|
$ |
|
177.9 |
|
$ |
|
671.5 |
|
Foreign currency translation |
|
|
— |
|
|
|
(7.5 |
) |
|
|
0.8 |
|
|
|
(6.7 |
) |
Balance at September 30, 2023 |
$ |
|
348.0 |
|
$ |
|
138.1 |
|
$ |
|
178.7 |
|
$ |
|
664.8 |
|
15
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Identifiable Intangible Assets
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of September 30, 2023 and December 31, 2022, were as follows:
|
|
September 30, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
(in millions) |
|
Gross Carrying Amounts |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
|
Gross Carrying Amounts |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
||||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade names(1) |
$ |
|
295.1 |
|
$ |
|
(44.5 |
) |
$ |
|
250.6 |
|
$ |
|
410.6 |
|
$ |
|
(44.5 |
) |
$ |
|
366.1 |
|
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade names |
|
|
485.5 |
|
|
|
(135.8 |
) |
|
|
349.7 |
|
|
|
369.7 |
|
|
|
(123.0 |
) |
|
|
246.7 |
|
Customer and contractual relationships |
|
|
354.9 |
|
|
|
(211.2 |
) |
|
|
143.7 |
|
|
|
356.9 |
|
|
|
(198.2 |
) |
|
|
158.7 |
|
Vendor relationships |
|
|
82.4 |
|
|
|
(15.3 |
) |
|
|
67.1 |
|
|
|
82.4 |
|
|
|
(11.2 |
) |
|
|
71.2 |
|
Patents |
|
|
7.9 |
|
|
|
(4.6 |
) |
|
|
3.3 |
|
|
|
8.1 |
|
|
|
(3.8 |
) |
|
|
4.3 |
|
Subtotal |
|
|
930.7 |
|
|
|
(366.9 |
) |
|
|
563.8 |
|
|
|
817.1 |
|
|
|
(336.2 |
) |
|
|
480.9 |
|
Total identifiable intangibles |
$ |
|
1,225.8 |
|
$ |
|
(411.4 |
) |
$ |
|
814.4 |
|
$ |
|
1,227.7 |
|
$ |
|
(380.7 |
) |
$ |
|
847.0 |
|
The Company's intangible amortization expense for the three and nine months ended September 30, 2023 was $10.8 million and $32.7 million, respectively, and $9.9 million and $31.5 million for the three and nine months ended September 30, 2022, respectively.
Estimated amortization expense for amortizable intangible assets, as of September 30, 2023, for the current year and the next five years is as follows:
(in millions) |
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
||||||
Estimated amortization expense(2) |
$ |
|
43.7 |
|
$ |
|
42.1 |
|
$ |
|
40.5 |
|
$ |
|
38.4 |
|
$ |
|
35.9 |
|
$ |
|
33.7 |
|
We test indefinite-lived intangibles for impairment at least annually as of our measurement date of May 31st and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a qualitative basis, for our indefinite-lived trade names in the second quarter of 2023 and concluded that no impairment loss had been incurred.
As of January 1, 2023, we changed the indefinite-lived Leitz® trade name to an amortizable intangible asset. The change was made as a result of decisions regarding the Company's future use of the trade name. The Company began amortizing the Leitz® trade name on a straight-line basis over a life of 30 years effective January 1, 2023.
16
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
9. Restructuring
The Company recorded $3.0 million and $6.3 million of restructuring expense for the three and nine months ended September 30, 2023, respectively, which was primarily related to severance costs in EMEA associated with our footprint rationalization program. For the three and nine months ended September 30, 2022, we recorded restructuring expense of $0.1 million and $2.3 million, respectively, which was primarily for severance costs related to cost reduction initiatives in our North America and EMEA segments.
The summary of the activity in the restructuring liability for the nine months ended September 30, 2023, was as follows:
|
|
Balance at |
|
|
|
|
|
Non-cash Items / |
|
Balance at |
(in millions) |
|
December 31, |
|
Provision |
|
Cash |
|
Currency |
|
September 30, |
Employee termination costs(1) |
$ |
8.7 |
$ |
4.9 |
$ |
(6.9) |
$ |
— |
$ |
6.7 |
Other(2) |
|
— |
|
1.4 |
|
(0.2) |
|
— |
|
1.2 |
Total restructuring liability |
$ |
8.7 |
$ |
6.3 |
$ |
(7.1) |
$ |
— |
$ |
7.9 |
The summary of the activity in the restructuring liability for the nine months ended September 30, 2022, was as follows:
|
|
Balance at |
|
|
|
|
|
Non-cash Items / |
|
Balance at |
(in millions) |
|
December 31, |
|
Provision |
|
Cash |
|
Currency |
|
September 30, |
Employee termination costs |
$ |
3.4 |
$ |
1.9 |
$ |
(3.4) |
$ |
(0.2) |
$ |
1.7 |
Termination of lease agreements |
|
1.1 |
|
— |
|
(0.9) |
|
— |
|
0.2 |
Other |
|
— |
|
0.4 |
|
(0.4) |
|
— |
|
— |
Total restructuring liability |
$ |
4.5 |
$ |
2.3 |
$ |
(4.7) |
$ |
(0.2) |
$ |
1.9 |
10. Income Taxes
For the three months ended September 30, 2023, we recorded income tax expense of $6.7 million on income before tax of $21.6 million. For the three months ended September 30, 2022, we recorded income tax expense of $4.1 million on loss before tax of $64.6 million. The $2.6 million increase in tax expense compared to the three months ended September 30, 2022 was primarily driven by an increase in tax expense for discrete tax items that include uncertain tax positions of $1.8 million, a change in valuation allowances of $0.7 million and a $4.0 million benefit due to the merger of our Brazilian entities that occurred in the three months ended September 30, 2022. This was partly offset by a tax benefit of $3.7 million due to a reduction in income before tax in the current quarter when excluding the non-cash goodwill impairment charge of $98.7 million from the prior year.
For the nine months ended September 30, 2023, we recorded income tax expense of $22.7 million on income before tax of $60.3 million. For the nine months ended September 30, 2022, we recorded income tax expense of $18.2 million on loss before tax of $13.8 million. The $4.5 million increase in tax expense compared to the nine months ended September 30, 2022 was primarily driven by an increase in tax expense for discrete tax items that include uncertain tax positions of $4.6 million, a change in valuation allowance of $0.7 million, withholding taxes of $1.4 million, a $4.0 million benefit due to the merger of our Brazilian entities in the prior year and a decrease in tax expense for discrete tax items that include changes to deferred taxes of $0.8 million that occurred in the nine months ended September 30, 2022. This was partly offset by a tax benefit of $5.4 million due to a reduction in income before tax in the current year when excluding the non-cash goodwill impairment charge of $98.7 million, from the prior year.
17
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The U.S. federal statute of limitations remains open for the years 2019 and forward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 2 to 6 years. Years still open to examination by foreign tax authorities in major jurisdictions include Australia (2018 forward), Brazil (2018 forward), Canada (2018 forward), Germany (2020 forward), Sweden (2021 forward) and the U.K. (2021 forward). We are currently under examination in certain foreign jurisdictions.
Brazil Tax Assessments
In connection with our May 1, 2012, acquisition of the Mead Consumer and Office Products business ("Mead C&OP"), we assumed all of the tax liabilities for the acquired foreign operations including its operating entity in Brazil ("ACCO Brazil"). In December of 2012, the Federal Revenue Department of the Ministry of Finance of Brazil ("FRD") issued a tax assessment against ACCO Brazil, challenging the tax deduction of goodwill from ACCO Brazil's taxable income for the year 2007 (the "First Assessment"). A second assessment challenging the deduction of goodwill from ACCO Brazil's taxable income for the years 2008, 2009 and 2010 was issued by FRD in October 2013 (the "Second Assessment" and together with the First Assessment, the "Brazil Tax Assessments").
The final administrative appeal of the Second Assessment was decided against the Company in 2017. In 2018, we challenged this decision to the first judicial level. In the fourth quarter of 2022, this case was decided against the Company by the first level judicial court. We have appealed this decision to the second judicial level. In the event we do not prevail at the judicial level, we will be required to pay an additional penalty representing attorneys' costs and fees; accordingly, in the first quarter of 2019, the Company recorded an additional reserve in the amount of $5.6 million. In connection with the judicial challenge, we were required to provide security to guarantee payment of the Second Assessment should we not prevail.
In the third quarter of 2020, the final administrative appeal of the First Assessment was decided against the Company, and we determined that we would challenge this decision. In 2022, we challenged this adverse decision in the tax authority's lawsuit at the judicial level seeking to collect the tax. In connection with the judicial challenge, we were required to provide security to guarantee payment of the First Assessment should we not prevail.
We believe we have meritorious defenses and intend to vigorously contest both of the Brazil Tax Assessments; however, there can be no assurances that we will ultimately prevail. The ultimate outcome will not be determined until the Brazilian judicial process is complete. It is possible we could have a final decision regarding the Second Assessment at any time in the next three years. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.
Because there is no settled legal precedent on which to base a definitive opinion as to whether we will ultimately prevail, we consider the outcome of these disputes to be uncertain. Since it is not more likely than not that we will prevail, in 2012, we recorded a reserve in the amount of $44.5 million (at December 31, 2012 exchange rates) in consideration of this contingency, of which $43.3 million was recorded as an adjustment to the purchase price and which included the 2007-2012 tax years plus penalties and interest through December 2012. Because the Brazilian courts have determined that we will have to pay the standard penalty of 75 percent if we do not prevail, we have used this assumption in the reserve calculation. We will continue to actively monitor administrative and judicial court decisions and evaluate their impact, if any, on our legal assessment of the ultimate outcome of our disputes. In addition, we will continue to accrue interest related to this contingency until such time as the outcome is known or until evidence is presented that we are more likely than not to prevail. During the nine months ended September 30, 2023 and 2022, we accrued additional interest as a charge to current income tax expense of $1.3 million and $1.4 million, respectively. At current exchange rates, our accrual through September 30, 2023, including tax, penalties and interest is $33.4 million (reported in "Other non-current liabilities").
18
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
During the third quarter of 2023, there was a change in Brazilian law which will allow the Company to seek cancellation of the 75 percent penalty that would be payable in the event we do not prevail in our actions challenging the Brazil Tax Assessments. The Company intends to initiate the administrative procedure to request the cancellation of the penalties as soon as possible.
11. Earnings per Share
Total outstanding shares as of September 30, 2023 and 2022, were 94.9 million and 94.3 million, respectively. Under our stock repurchase program, during each of the three and nine months ended September 30, 2023, we did not repurchase and retire any shares, and during the three and nine months ended September 30, 2022, we repurchased and retired zero and 2.7 million shares, respectively. For each of the nine months ended September 30, 2023 and 2022, we acquired 0.3 million related to tax withholding for share-based compensation.
The calculation of basic earnings per share of common stock is based on the weighted-average number of shares of common stock outstanding in the year, or period, over which they were outstanding. Our calculation of diluted earnings per share of common stock assumes that any shares of common stock outstanding were increased by shares that would be issued upon exercise of those stock awards for which the average market price for the period exceeds the exercise price less the shares that could have been purchased by the Company with the related proceeds, including compensation expense measured but not yet recognized.
Our weighted-average number of shares outstanding for the three and nine months ended September 30, 2023 and 2022 was as follows:
|
|
Three months ended September 30, |
|
Nine Months Ended September 30, |
||||
(in millions) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Weighted-average number of shares of common stock outstanding - basic |
|
95.4 |
|
94.5 |
|
95.2 |
|
95.6 |
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
Restricted stock units |
|
1.3 |
|
— |
|
1.6 |
|
— |
Weighted-average shares and assumed conversions - diluted(1) |
|
96.7 |
|
94.5 |
|
96.8 |
|
95.6 |
Awards of potentially dilutive shares of common stock, which have exercise prices that were higher than the average market price during the period, are not included in the computation of dilutive earnings per share as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2023, the number of anti-dilutive shares was approximately 10.4 million and 9.8 million, respectively. For each of the three and nine months ended September 30, 2022, the number of anti-dilutive shares was approximately 10.1 million and 9.0 million, respectively.
12. Derivative Financial Instruments
We are exposed to various market risks, including changes in foreign currency exchange rates and interest rate changes. We enter into financial instruments to manage and reduce the impact of these risks, not for trading or speculative purposes. The counterparties to these financial instruments are major financial institutions. We continually monitor our foreign currency exposures in order to maximize the overall effectiveness of our foreign currency hedge positions. Principal currencies hedged against the U.S. dollar include the Euro, Australian dollar, Canadian dollar, Swedish krona, British pound and Japanese yen. We are subject to credit risk, which relates to the ability of counterparties to meet their contractual payment obligations or the potential non-performance by counterparties to financial instrument contracts. Management continues to monitor the status of our counterparties and will take action, as appropriate, to further manage our counterparty credit risk.
19
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
There are no credit contingency features in our derivative financial instruments.
When hedge accounting is applicable, on the date we enter into a derivative, the derivative is designated as a hedge of the identified exposure. We measure the effectiveness of our hedging relationships both at hedge inception and on an ongoing basis.
Forward Currency Contracts
We enter into forward foreign currency contracts with third parties to reduce the effect of fluctuating foreign currencies, primarily on foreign denominated inventory purchases and intercompany loans. Our primary exposure to currency movements is in the Euro, the Swedish krona, the British pound, the Brazilian real, the Australian dollar, the Canadian dollar, and the Mexican peso.
Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and New Zealand, and are designated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated Other Comprehensive Income ("AOCI") until the contracts are settled and the underlying hedged transactions relating to inventory purchases are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line in the Consolidated Statements of Operations. As of September 30, 2023 and December 31, 2022, we had cash flow foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $77.9 million and $108.3 million, respectively, which were designated as hedges.
Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within "Other expense (income), net" in the Consolidated Statements of Operations and are largely offset by the change in the current translated value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, with some relating to intercompany loans which extend beyond September 2024. As of September 30, 2023 and December 31, 2022, we had foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $121.2 million and $79.5 million, respectively, which were not designated as hedges.
The following table summarizes the fair value of our derivative financial instruments as of September 30, 2023 and December 31, 2022:
|
|
Fair Value of Derivative Instruments |
||||||||||
|
|
Derivative Assets |
|
Derivative Liabilities |
||||||||
(in millions) |
|
Balance Sheet Location |
|
September 30, |
|
December 31, |
|
Balance Sheet Location |
|
September 30, |
|
December 31, |
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
Other current assets |
$ |
2.8 |
$ |
3.6 |
|
Other current liabilities |
$ |
0.1 |
$ |
1.9 |
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
|
Other current assets |
|
0.4 |
|
0.7 |
|
Other current liabilities |
|
0.1 |
|
0.7 |
Foreign exchange contracts |
|
Other non-current assets |
|
6.9 |
|
4.9 |
|
Other non-current liabilities |
|
6.9 |
|
4.9 |
Total derivatives |
|
|
$ |
10.1 |
$ |
9.2 |
|
|
$ |
7.1 |
$ |
7.5 |
20
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following tables summarize the pre-tax effect of our derivative financial instruments on the condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022:
|
|
The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements |
|
|||||||||||||||
|
|
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) |
|
|
Location of (Gain) Loss Reclassified from AOCI to Income |
|
Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion) |
|
||||||||||
|
|
Three months ended September 30, |
|
|
|
|
Three months ended September 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
$ |
|
1.5 |
|
$ |
|
5.7 |
|
|
Cost of products sold |
$ |
|
(0.6 |
) |
$ |
|
(4.3 |
) |
|
|
The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements |
|
|||||||||||||||
|
|
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) |
|
|
Location of (Gain) Loss Reclassified from AOCI to Income |
|
Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion) |
|
||||||||||
|
|
Nine months ended September 30, |
|
|
|
|
Nine months ended September 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
$ |
|
1.9 |
|
$ |
|
14.8 |
|
|
Cost of products sold |
$ |
|
(1.4 |
) |
$ |
|
(10.1 |
) |
|
|
The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of (Loss) Income |
|
|||||||||||||||
|
|
Location of (Gain) Loss Recognized in Income on Derivatives |
|
Amount of (Gain) Loss |
|
|
Amount of (Gain) Loss Recognized in Income |
|
||||||||||
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in millions) |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Foreign exchange contracts |
|
Other expense, net |
$ |
|
(3.1 |
) |
$ |
|
(2.6 |
) |
$ |
|
(0.1 |
) |
$ |
|
(6.3 |
) |
13. Fair Value of Financial Instruments
In establishing a fair value, there is a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The basis of the fair value measurement is categorized in three levels, in order of priority, as described below:
Level 1 |
Unadjusted quoted prices in active markets for identical assets or liabilities |
Level 2 |
Unadjusted quoted prices in active markets for similar assets or liabilities, or |
|
Unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or |
|
Inputs other than quoted prices that are observable for the asset or liability |
Level 3 |
Unobservable inputs for the asset or liability |
We utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
21
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
We have determined that our financial assets and liabilities described in "Note 12. Derivative Financial Instruments" are Level 2 in the fair value hierarchy. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022:
(in millions) |
|
September 30, |
|
|
December 31, |
|
||
Assets: |
|
|
|
|
|
|
||
Forward currency contracts |
$ |
|
10.1 |
|
$ |
|
9.2 |
|
Liabilities: |
|
|
|
|
|
|
||
Forward currency contracts |
$ |
|
7.1 |
|
$ |
|
7.5 |
|
Our forward currency contracts are included in "Other current assets," "Other current liabilities," "Other non-current assets," or "Other non-current liabilities." The forward foreign currency exchange contracts are primarily valued based on the foreign currency spot and forward rates quoted by banks or foreign currency dealers. As such, these derivative instruments are classified within Level 2.
The fair values of cash and cash equivalents, notes payable to banks, accounts receivable and accounts payable approximate carrying amounts due principally to their short maturities. The carrying amount of total debt was $969.4 million and $1,004.9 million and the estimated fair value of total debt was $871.7 million and $910.0 million at September 30, 2023 and December 31, 2022, respectively. The fair values are determined from quoted market prices, where available, and from using current interest rates based on credit ratings and the remaining terms of maturity.
Nonrecurring Fair Value Measurements
On a nonrecurring basis, we remeasure the fair value of the goodwill of our reporting units and our trade name indefinite-lived intangibles if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The fair value of our reporting units and trade names are considered Level 3 measurements. Level 3 measurements require significant unobservable inputs that are reflected in our assumptions. See "Note 8. Goodwill and Identifiable Intangible Assets" for more information.
14. Accumulated Other Comprehensive Income (Loss)
AOCI is defined as net income (loss) and other changes in stockholders’ equity from transactions and other events from sources other than stockholders. The components of, and changes in, AOCI were as follows:
(in millions) |
|
Derivative Financial Instruments |
|
Foreign Currency Adjustments |
|
Unrecognized Pension and Other Post-retirement Benefit Costs |
|
Accumulated Other Comprehensive Income (Loss) |
Balance at December 31, |
$ |
1.1 |
$ |
(380.1) |
$ |
(161.3) |
$ |
(540.3) |
Other comprehensive income (loss) before reclassifications, net of tax |
|
1.4 |
|
0.2 |
|
(1.3) |
|
0.3 |
Amounts reclassified from accumulated other comprehensive income (loss), net of tax |
|
(1.0) |
|
— |
|
3.5 |
|
2.5 |
Balance at September 30, 2023 |
$ |
1.5 |
$ |
(379.9) |
$ |
(159.1) |
$ |
(537.5) |
22
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The reclassifications out of AOCI for the three and nine months ended September 30, 2023 and 2022 were as follows:
|
|
Three months ended |
|
Nine months ended |
|
|
||||
(in millions) |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Income (Loss) Components |
|
Amount Reclassified from |
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) |
|
Location on Income Statement |
||||
Gain (loss) on cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts |
$ |
0.6 |
$ |
4.3 |
$ |
1.4 |
$ |
10.1 |
|
Cost of products sold |
Tax expense |
|
(0.2) |
|
(1.2) |
|
(0.4) |
|
(3.0) |
|
Income tax expense |
Net of tax |
$ |
0.4 |
$ |
3.1 |
$ |
1.0 |
$ |
7.1 |
|
|
Defined benefit plan items: |
|
|
|
|
|
|
|
|
|
|
Amortization of actuarial loss(1) |
$ |
(1.6) |
$ |
(2.0) |
$ |
(4.7) |
$ |
(6.3) |
|
|
Amortization of prior service cost(1) |
|
(0.1) |
|
(0.1) |
|
(0.3) |
|
(0.2) |
|
|
Total before tax |
|
(1.7) |
|
(2.1) |
|
(5.0) |
|
(6.5) |
|
|
Tax benefit |
|
0.6 |
|
0.5 |
|
1.5 |
|
1.5 |
|
Income tax expense |
Net of tax |
$ |
(1.1) |
$ |
(1.6) |
$ |
(3.5) |
$ |
(5.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period, net of tax |
$ |
(0.7) |
$ |
1.5 |
$ |
(2.5) |
$ |
2.1 |
|
|
15. Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount reflective of the consideration we expect to receive in exchange for those goods or services. Taxes we collect concurrent with revenue producing activities are excluded from revenue. Incidental items incurred that are immaterial in the context of the contract are expensed.
At the inception of each contract, the Company assesses the products and services promised and identifies each distinct performance obligation. To identify the performance obligations, the Company considers all products and services promised regardless of whether they are explicitly stated or implied within the contract or by standard business practices.
Freight and distribution activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations. The Company has chosen to account for shipping and handling activities as a fulfillment activity, and therefore accrues the expense of freight and distribution in "Cost of products sold" when products are shipped.
As of December 31, 2022, there was $2.8 million of unearned revenue associated with outstanding service or extended maintenance agreements ("EMAs"), primarily reported in "Other current liabilities." During the three and nine months ended September 30, 2023, $0.4 million and $2.1 million of the unearned revenue was earned and recognized, respectively. As of September 30, 2023, the amount of unearned revenue from EMAs was $3.1 million. We expect to earn and recognize approximately $2.6 million of the unearned amount in the next 12 months and $0.5 million in periods beyond the next 12 months.
23
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following tables present our net sales disaggregated by regional geography, by reporting business segments and our net sales disaggregated by the timing of revenue recognition for the three and nine months ended September 30, 2023 and 2022:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||
United States |
$ |
|
193.6 |
|
$ |
|
221.8 |
|
$ |
|
609.6 |
|
$ |
|
684.7 |
|
Canada |
|
|
25.3 |
|
|
|
35.4 |
|
|
|
78.6 |
|
|
|
87.6 |
|
ACCO Brands North America |
|
|
218.9 |
|
|
|
257.2 |
|
|
|
688.2 |
|
|
|
772.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
ACCO Brands EMEA(1) |
|
|
126.6 |
|
|
|
130.3 |
|
|
|
388.1 |
|
|
|
424.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Australia/N.Z. |
|
|
29.7 |
|
|
|
32.8 |
|
|
|
82.1 |
|
|
|
89.0 |
|
Latin America |
|
|
64.2 |
|
|
|
53.6 |
|
|
|
159.1 |
|
|
|
124.5 |
|
Asia-Pacific |
|
|
8.6 |
|
|
|
11.7 |
|
|
|
26.7 |
|
|
|
38.1 |
|
ACCO Brands International |
|
|
102.5 |
|
|
|
98.1 |
|
|
|
267.9 |
|
|
|
251.6 |
|
Net sales(2) |
$ |
|
448.0 |
|
$ |
|
485.6 |
|
$ |
|
1,344.2 |
|
$ |
|
1,448.2 |
|
(1) ACCO Brands EMEA is comprised largely of Europe, but also includes export sales to the Middle East and Africa.
(2) Net sales are attributed to geographic areas based on the location of the selling subsidiaries.
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||
Product and services transferred at a point in time |
$ |
|
439.8 |
|
$ |
|
473.6 |
|
$ |
|
1,313.2 |
|
$ |
|
1,411.3 |
|
Product and services transferred over time |
|
|
8.2 |
|
|
|
12.0 |
|
|
|
31.0 |
|
|
|
36.9 |
|
Net sales |
$ |
|
448.0 |
|
$ |
|
485.6 |
|
$ |
|
1,344.2 |
|
$ |
|
1,448.2 |
|
24
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
16. Information on Business Segments
The Company has three operating business segments, each of which is comprised of different geographic regions. The Company's three segments are as follows:
Operating Segment |
|
Geography |
|
Primary Brands |
|
Primary Products |
ACCO Brands North America |
|
United States and Canada |
|
PowerA®, Five Star®, AT-A-GLANCE®, Quartet®, Kensington®, Swingline®, GBC®, Mead®, Hilroy® |
|
Computer and gaming accessories, school products, planners, storage and organization, dry erase boards and accessories, laminating, stapling and punching products. |
|
|
|
|
|
|
|
ACCO Brands EMEA |
|
Europe, Middle East and Africa |
|
Leitz®, Rapid®, Kensington®, Esselte®, Rexel®, PowerA®, GBC®, NOBO®, Derwent® |
|
Storage and organization products (lever-arch binders, sheet protectors, indexes), computer and gaming accessories, stapling, punching, shredding, laminating, do-it-yourself tools, dry erase boards and writing and art products. |
|
|
|
|
|
|
|
ACCO Brands International |
|
Australia/N.Z., Latin America and Asia-Pacific |
|
Tilibra®, GBC®, Kensington®, Marbig®, Foroni®, Barrilito®, Artline®*, PowerA®, Spirax® *Australia/N.Z. only |
|
School notebooks, storage and organization products (binders, sheet protectors and indexes), computer and gaming accessories, laminating, shredding, writing and arts products, janitorial supplies, dry erase boards, stapling and punching products. |
Customers
We distribute our products through a wide variety of channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, technology distributors, discount, drug/grocery and variety chains, warehouse clubs, hardware and specialty stores, independent office product dealers, office superstores, wholesalers, and contract stationers. We also sell directly through e-commerce sites and our direct sales organization.
25
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Net sales by reportable business segment for the three and nine months ended September 30, 2023 and 2022 were as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
ACCO Brands North America |
$ |
|
218.9 |
|
$ |
|
257.2 |
|
$ |
|
688.2 |
|
$ |
|
772.3 |
|
ACCO Brands EMEA |
|
|
126.6 |
|
|
|
130.3 |
|
|
|
388.1 |
|
|
|
424.3 |
|
ACCO Brands International |
|
|
102.5 |
|
|
|
98.1 |
|
|
|
267.9 |
|
|
|
251.6 |
|
Net sales |
$ |
|
448.0 |
|
$ |
|
485.6 |
|
$ |
|
1,344.2 |
|
$ |
|
1,448.2 |
|
Operating income (loss) by business segment for the three and nine months ended September 30, 2023 and 2022 was as follows:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
ACCO Brands North America |
$ |
|
19.9 |
|
$ |
|
(78.4 |
) |
$ |
|
80.2 |
|
$ |
|
(13.8 |
) |
ACCO Brands EMEA |
|
|
6.9 |
|
|
|
4.9 |
|
|
|
20.4 |
|
|
|
9.0 |
|
ACCO Brands International |
|
|
16.4 |
|
|
|
17.3 |
|
|
|
32.1 |
|
|
|
27.8 |
|
Segment operating income (loss) |
|
|
43.2 |
|
|
|
(56.2 |
) |
|
|
132.7 |
|
|
|
23.0 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
2.2 |
|
|
|
— |
|
|
|
9.0 |
|
Corporate |
|
|
(11.0 |
) |
|
|
(9.0 |
) |
|
|
(35.2 |
) |
|
|
(32.8 |
) |
Operating income (loss)(1) |
|
|
32.2 |
|
|
|
(63.0 |
) |
|
|
97.5 |
|
|
|
(0.8 |
) |
Interest expense |
|
|
15.6 |
|
|
|
12.1 |
|
|
|
45.0 |
|
|
|
32.6 |
|
Interest income |
|
|
(1.6 |
) |
|
|
(2.6 |
) |
|
|
(6.2 |
) |
|
|
(6.2 |
) |
Non-operating pension expense (income) |
|
|
0.2 |
|
|
|
(0.5 |
) |
|
|
0.5 |
|
|
|
(3.2 |
) |
Other income, net |
|
|
(3.6 |
) |
|
|
(7.4 |
) |
|
|
(2.1 |
) |
|
|
(10.2 |
) |
Income (loss) before income tax |
$ |
|
21.6 |
|
$ |
|
(64.6 |
) |
$ |
|
60.3 |
|
$ |
|
(13.8 |
) |
17. Commitments and Contingencies
Pending Litigation - Brazil Tax Assessments
In connection with our May 1, 2012, acquisition of the Mead C&OP business, we assumed all of the tax liabilities for the acquired foreign operations including ACCO Brazil. For further information, see "Note 10. Income Taxes - Brazil Tax Assessments" for details on tax assessments issued by the FRD against ACCO Brazil challenging the tax deduction of goodwill from ACCO Brazil's taxable income for the years 2007 through 2010. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.
Brazil Tax Credits
In May 2021, the Supreme Court of Brazil issued its final ruling in a leading case related to the computation of certain indirect taxes which provides that the indirect tax base should not include the gross amount of the value-added tax known as “ICMS.” The Supreme Court further ruled that taxpayers can recognize future operating credits ("Tax Credits") for excess indirect tax payments from past periods due to the inclusion of ICMS in the indirect tax base to the extent the taxpayer had filed judicial challenges seeking to recover excess tax payments prior to March 15, 2017 and for any excess tax payments made after March 15, 2017.
26
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
ACCO Brazil filed legal actions requesting recovery of these excess tax payments by way of future Tax Credits covering various time periods prior to March 15, 2017. All of these cases have been finally decided in a court of law in favor of ACCO Brazil. ACCO Brazil is in the process of taking the necessary administrative steps which will allow it to benefit from additional Tax Credits of approximately $1.7 million. Once these steps are finalized, we will be able to record the gain. The Tax Credits will be utilized against future tax obligations.
Indústria Gráfica Foroni Ltda. ("Foroni"), in years prior to its acquisition by ACCO Brazil, also filed a legal action in Brazil to recover these excess indirect tax payments and this legal action has been finalized. Upon the expiration of the applicable statute of limitations, we are required under agreements with the former owners of the Foroni business to remit certain recovered tax credits, less the applicable tax and expenses, to the extent the tax credits relate to a tax period prior to the acquisition date.
For the each of the three and nine months ended September 30, 2023, we recorded Tax Credits of $1.3 million, which is included in "Other (income) expense, net," on our Consolidated Statements of Income (Loss).
Other Pending Litigation
We are party to various lawsuits and regulatory proceedings, primarily related to alleged patent infringement, as well as other claims incidental to our business. In addition, we may be unaware of third-party claims of intellectual property infringement relating to our technology, brands, or products, and we may face other claims related to business operations. Any litigation regarding patents or other intellectual property could be costly and time-consuming and might require us to pay monetary damages or enter into costly license agreements. We also may be subject to injunctions against development and sale of certain of our products.
It is the opinion of management that (other than the Brazil Tax Assessments) the ultimate resolution of currently outstanding matters will not have a material adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further, future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations and financial condition.
27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended September 30, 2023 and 2022 should be read in conjunction with the unaudited condensed consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein.
Overview of the Company
ACCO Brands is a leading global consumer, technology and business branded products company, providing well-known brands and innovative product solutions used in schools, homes and at work. Recently we have successfully increased the mix of our sales to higher growth product categories and sales channels, including retail and mass merchants, e-tailers, and technology specialists. We have an experienced management team with a proven ability to grow brands, integrate acquisitions, manage seasonal businesses, run lean organizations and navigate challenging environments. Our products are sold primarily in the U.S., Europe, Australia, Canada, Brazil and Mexico.
ACCO Brands has three operating business segments based in different geographic regions: North America, EMEA, and International. Each business segment designs, markets, sources, manufactures, and sells recognized consumer, technology and business branded products used in schools, homes and at work. Product designs are tailored to end-user preferences in each geographic region, and where possible, leverage common engineering, design, and sourcing.
Our product categories include gaming and computer accessories; storage and organization; notebooks; shredding; laminating and binding machines; stapling; punching; planners; dry erase boards; and do-it-yourself tools, among others. We distribute our products through a wide variety of channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, technology distributors, discount, drug/grocery and variety chains, warehouse clubs, hardware and specialty stores, independent office product dealers, office superstores, wholesalers, and contract stationers. We also sell directly through e-commerce sites and our direct sales organization.
Overview of Performance
The Company continues to be impacted by softening global demand, reflecting the weaker macroeconomic environment. Inflationary pressures and rising interest rates have reduced both business and consumer discretionary spending, especially business IT spending. Return to office trends have also stabilized, impacting year over year demand. In addition, major retailers in North America continued to focus on maintaining lower inventory levels. These collective global trends are expected to continue to impact our financial results through the remainder of the year.
During the third quarter, our net sales decreased $37.6 million, or 7.7 percent, compared to the prior year's third quarter. The decrease was due to reduced volumes reflecting the more challenging global macroeconomic environment, which led to lower global technology spending, and stabilization of return to office trends, partly offset by global price increases and favorable foreign exchange. Gross margin increased 400 basis points compared to the prior-year period, primarily due to cumulative global price increases and cost reduction actions.
We reported operating income of $32.2 million in the third quarter, compared to an operating loss of $63.0 million in the prior year's third quarter. Operating income increased due to a non-cash goodwill impairment charge of $98.7 million in the prior year which did not repeat and higher gross margin, partially offset by higher SG&A and restructuring expenses.
Our operating cash flow for the first nine months was cash provided of $70.7 million, compared to $9.6 million used in the prior year, primarily reflecting reductions in working capital investments. In addition, incentive compensation paid in 2023 was lower than in the prior year.
28
Our operating cash flow is seasonal with a historic pattern of cash outflows in the first half of the year, followed by strong inflows in the second half. We anticipate this pattern to continue for the remainder of 2023.
Consolidated Results of Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022
|
|
Three Months Ended |
|
Amount of Change |
|
|
Nine Months Ended |
|
Amount of Change |
|
||||||||
(in millions, except per share data) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
448.0 |
$ |
485.6 |
$ |
(37.6) |
|
(7.7)% |
|
$ |
1,344.2 |
$ |
1,448.2 |
$ |
(104.0) |
|
(7.2)% |
|
Cost of products sold |
|
303.2 |
|
348.2 |
|
(45.0) |
|
(12.9)% |
|
|
915.9 |
|
1,041.2 |
|
(125.3) |
|
(12.0)% |
|
Gross profit |
|
144.8 |
|
137.4 |
|
7.4 |
|
5.4 % |
|
|
428.3 |
|
407.0 |
|
21.3 |
|
5.2 % |
|
Gross profit margin |
|
32.3 % |
|
28.3 % |
|
|
|
4.0 |
pts |
|
31.9 % |
|
28.1 % |
|
|
|
3.8 |
pts |
Selling, general and administrative expenses |
|
98.8 |
|
93.9 |
|
4.9 |
|
5.2 % |
|
|
291.8 |
|
284.3 |
|
7.5 |
|
2.6 % |
|
SG&A% to net sales |
|
22.1 % |
|
19.3 % |
|
|
|
2.8 |
pts |
|
21.7 % |
|
19.6 % |
|
|
|
2.1 |
pts |
Amortization of intangibles |
|
10.8 |
|
9.9 |
|
0.9 |
|
9.1 % |
|
|
32.7 |
|
31.5 |
|
1.2 |
|
3.8 % |
|
Restructuring charges |
|
3.0 |
|
0.1 |
|
2.9 |
|
NM |
|
|
6.3 |
|
2.3 |
|
4.0 |
|
NM |
|
Goodwill impairment |
|
— |
|
98.7 |
|
(98.7) |
|
NM |
|
|
— |
|
98.7 |
|
(98.7) |
|
NM |
|
Change in fair value of contingent consideration |
|
— |
|
(2.2) |
|
2.2 |
|
NM |
|
|
— |
|
(9.0) |
|
9.0 |
|
NM |
|
Operating income (loss) |
|
32.2 |
|
(63.0) |
|
95.2 |
|
NM |
|
|
97.5 |
|
(0.8) |
|
98.3 |
|
NM |
|
Operating income (loss) margin |
|
7.2 % |
|
(13.0)% |
|
|
|
20.2 |
pts |
|
7.3 % |
|
(0.1)% |
|
|
|
7.4 |
pts |
Interest expense |
|
15.6 |
|
12.1 |
|
3.5 |
|
28.9 % |
|
|
45.0 |
|
32.6 |
|
12.4 |
|
38.0 % |
|
Interest income |
|
(1.6) |
|
(2.6) |
|
1.0 |
|
(38.5)% |
|
|
(6.2) |
|
(6.2) |
|
— |
|
NM |
|
Non-operating pension expense (income) |
|
0.2 |
|
(0.5) |
|
0.7 |
|
NM |
|
|
0.5 |
|
(3.2) |
|
3.7 |
|
NM |
|
Other income, net |
|
(3.6) |
|
(7.4) |
|
3.8 |
|
(51.4)% |
|
|
(2.1) |
|
(10.2) |
|
8.1 |
|
(79.4)% |
|
Income (loss) before income tax |
|
21.6 |
|
(64.6) |
|
86.2 |
|
NM |
|
|
60.3 |
|
(13.8) |
|
74.1 |
|
NM |
|
Income tax expense |
|
6.7 |
|
4.1 |
|
2.6 |
|
63.4 % |
|
|
22.7 |
|
18.2 |
|
4.5 |
|
24.7 % |
|
Effective tax rate |
|
31.0 % |
|
(6.3)% |
|
|
|
37.3 |
pts |
|
37.6 % |
|
(131.9)% |
|
|
|
169.5 |
pts |
Net income (loss) |
|
14.9 |
|
(68.7) |
|
83.6 |
|
NM |
|
|
37.6 |
|
(32.0) |
|
69.6 |
|
NM |
|
Weighted average number of diluted shares outstanding: |
|
96.7 |
|
94.5 |
|
2.2 |
|
2.3 % |
|
|
96.8 |
|
95.6 |
|
1.2 |
|
1.3 % |
|
Diluted income (loss) per share |
$ |
0.15 |
$ |
(0.73) |
$ |
0.88 |
|
NM |
|
$ |
0.39 |
$ |
(0.33) |
$ |
0.72 |
|
NM |
|
Comparable sales (Non-GAAP)(1) |
$ |
437.5 |
$ |
485.6 |
$ |
(48.1) |
|
(9.9)% |
|
$ |
1,345.1 |
$ |
1,448.2 |
$ |
(103.1) |
|
(7.1)% |
|
Net Sales
For the three months ended September 30, 2023, net sales decreased $37.6 million, or 7.7 percent. The sales decline was driven by lower volume, which was down 14.9 percent, reflecting lower demand due to the challenging macroeconomic environment and stabilizing return to office trends. Sales of technology accessories were most negatively impacted. The lower volume was partially offset by higher prices which added 5.0 percent and favorable foreign exchange which added 2.2 percent. Comparable net sales decreased 9.9 percent.
For the nine months ended September 30, 2023, net sales decreased $104.0 million, or 7.2 percent, including $0.9 million, or 0.1 percent, from adverse foreign exchange. Comparable net sales decreased 7.1 percent. The sales declines were driven by lower volume, which was down 14.5 percent, primarily in EMEA and North America, due to the challenging macroeconomic environment and stabilizing return to office trends. Sales of technology accessories were most negatively impacted. The volume decline more than offset the benefit of global price increases which added 7.3 percent.
Cost of Products Sold
Cost of products sold includes all manufacturing, product sourcing and distribution costs, including depreciation related to assets used in manufacturing; procurement and distribution processes; allocation of certain information technology costs supporting those processes; inbound and outbound freight; shipping and handling costs; purchasing costs associated with materials and packaging used in the production processes; and inventory valuation adjustments.
For the three months ended September 30, 2023, cost of products sold decreased $45.0 million, or 12.9 percent, primarily due to lower net sales and global cost reduction actions, partly offset by higher input costs. In addition, adverse foreign exchange increased cost of products sold by $6.5 million, or 1.9 percent.
29
For the nine months ended September 30, 2023, cost of products sold decreased $125.3 million, or 12.0 percent, primarily due to lower net sales and global cost reduction actions, partly offset by higher input costs. In addition, favorable foreign exchange reduced cost of products sold by $2.0 million, or 0.2 percent.
Gross Profit
For the three months ended September 30, 2023, gross profit increased $7.4 million, or 5.4 percent. Gross profit margin increased 400 basis points primarily due to the cumulative effect of global price increases, and cost reduction actions. In addition, favorable foreign exchange increased gross profit $4.0 million, or 2.9 percent.
For the nine months ended September 30, 2023, gross profit increased $21.3 million, or 5.2 percent. Gross profit margin increased 380 basis points primarily due to the cumulative effect of global price increases, and cost reduction actions. In addition, favorable foreign exchange increased gross profit by $1.1 million, or 0.3 percent.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") include advertising, marketing, selling (including commissions), research and development, customer service, depreciation related to assets outside the manufacturing and distribution processes, and all other general and administrative expenses outside the manufacturing and distribution functions (e.g., finance, human resources, information technology).
For the three months ended September 30, 2023, SG&A increased $4.9 million, or 5.2 percent, primarily due to higher people costs, including incentive compensation expense, as well as adverse foreign exchange which increased SG&A by $2.1 million or 2.2 percent. The increase was partially offset by the impact of cost reduction actions.
For the nine months ended September 30, 2023, SG&A increased $7.5 million, or 2.6 percent, primarily due to higher people costs, including incentive compensation expense, partially offset by the impact of cost reduction actions. In addition, favorable foreign exchange reduced SG&A by $0.5 million, or 0.2 percent.
Restructuring Charges
For the three months ended September 30, 2023, restructuring expense increased $2.9 million compared to prior year. Restructuring expense in the current quarter was primarily severance and other costs associated with our continued footprint rationalization.
For the nine months ended September 30, 2023, restructuring expense increased $4.0 million, compared to prior year. Restructuring expense in the current year was primarily related to severance and other costs associated with our continued footprint rationalization.
Change in Fair Value of Contingent Consideration
In the prior year, the change in the fair value of the contingent consideration from the PowerA earnout resulted in a benefit of $2.2 million and $9.0 million during the three and nine months ended September 30, 2022, respectively, that did not repeat.
Operating Income (Loss)
For the three months ended September 30, 2023, operating income was $32.2 million compared to an operating loss of $63.0 million in the prior year. The operating loss in the prior year was due to a non-cash goodwill impairment charge of $98.7 million, partly offset by a favorable change in fair value of contingent consideration. The current year operating income reflects higher gross profit, partially offset by higher restructuring charges and higher SG&A expense. Foreign exchange increased operating income $1.5 million, or 2.4 percent.
30
For the nine months ended September 30, 2023, operating income was $97.5 million compared to an operating loss of $0.8 million in the prior year. The operating loss in the prior year was primarily due to a non-cash goodwill impairment charge of $98.7 million, partly offset by a favorable change in fair value of contingent consideration. The current year operating income reflects higher gross profit, partially offset by higher restructuring charges and higher SG&A expense. Foreign exchange increased operating income $1.5 million.
Interest Expense
For the three and nine months ended September 30, 2023, interest expense increased $3.5 million and $12.4 million, respectively, primarily due to higher variable interest rates versus the prior year. The weighted average interest rate on $394.4 million of outstanding variable rate debt as of September 30, 2023, increased to 6.72 percent from 4.02 percent in the prior year. We expect higher interest expense to continue given the current interest rate environment.
Non-operating pension (expense) income
For the three months ended September 30, 2023, non-operating pension expense was $0.2 million compared to income of $0.5 million for the three months ended September 30, 2022. The increase in expense of $0.7 million was due to changes in assumptions used in our annual pension valuation, including higher interest rates.
For the nine months ended September 30, 2023, non-operating pension expense was $0.5 million compared to income of $3.2 million for the nine months ended September 30, 2022. The increase in expense of $3.7 million was due to changes in assumptions used in our annual pension valuation, including higher interest rates.
Income Tax Expense
For the three months ended September 30, 2023, our income tax expense was $6.7 million on income before tax of $21.6 million. This compared with an income tax expense of $4.1 million on a loss before taxes of $64.6 million for the three months ended September 30, 2022. The increase in income tax expense was primarily due to a decrease in the benefit from discrete tax items, excluding the non-deductible goodwill impairment charge in the prior year.
For the nine months ended September 30, 2023, we recorded income tax expense of $22.7 million on income before tax of $60.3 million. This compared with an income tax expense of $18.2 million on a loss before taxes of $13.8 million for the nine months ended September 30, 2022. The increase in income tax expense was primarily due to a decrease in the benefit from discrete tax items, excluding the non-deductible goodwill impairment charge in the prior year.
See "Note 10. Income Taxes" for more information.
Net Income (Loss)/Diluted Income (Loss) per Share
For the three months ended September 30, 2023, net income was $14.9 million compared to net loss of $68.7 million in the prior year. The increase in net income is due to the items noted above.
For the nine months ended September 30, 2023, net income was $37.6 million compared to net loss of $32.0 million in the prior year. The increase in net income is due to the items noted above.
31
Segment Net Sales and Operating Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022
ACCO Brands North America
|
|
Three Months Ended |
|
Amount of Change |
|
|
Nine Months Ended |
|
Amount of Change |
|
||||||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
218.9 |
$ |
257.2 |
$ |
(38.3) |
|
(14.9)% |
|
$ |
688.2 |
$ |
772.3 |
$ |
(84.1) |
|
(10.9)% |
|
Segment operating income (loss)⁽¹⁾ |
|
19.9 |
|
(78.4) |
|
98.3 |
|
NM |
|
|
80.2 |
|
(13.8) |
|
94.0 |
|
NM |
|
Segment operating income (loss) margin |
|
9.1% |
|
(30.5)% |
|
|
|
39.6 |
pts |
|
11.7 % |
|
(1.8)% |
|
|
|
13.5 |
pts |
Comparable sales (Non-GAAP)⁽²⁾ |
$ |
219.6 |
$ |
257.2 |
$ |
(37.6) |
|
(14.6)% |
|
$ |
692.0 |
$ |
772.3 |
$ |
(80.3) |
|
(10.4)% |
|
For the three months ended September 30, 2023, net sales decreased $38.3 million, or 14.9 percent. Price increases added $7.2 million, or 2.8 percent, which were more than offset by volume decreases of $44.7 million, or 17.4 percent. The volume decline was due to a weaker macroeconomic environment, stabilizing return to office trends and retailers maintaining lower inventory levels, which resulted in lower demand for technology accessories and office products. Adverse foreign exchange reduced net sales $0.7 million or 0.3 percent.
For the nine months ended September 30, 2023, net sales decreased $84.1 million, or 10.9 percent. Price increases added $35.6 million, or 4.6 percent, which were more than offset by volume decreases of $116.0 million, or 15.0 percent. The volume decline was due to a weaker macroeconomic environment, stabilizing return to office trends and retailers maintaining lower inventory levels, which resulted in lower demand for technology accessories and office products. Adverse foreign exchange reduced net sales $3.8 million or 0.5 percent.
For the three months ended September 30, 2023, operating income was $19.9 million compared to operating loss of $78.4 million in the prior year. The increase in operating income was due to a non-cash goodwill impairment charge in the prior year of $98.7 million which did not repeat.
For the nine months ended September 30, 2023, operating income was $80.2 million compared to operating loss of $13.8 million in the prior year. The increase in operating income was due to a non-cash goodwill impairment charge in the prior year of $98.7 million which did not repeat, partially offset by the impact of lower sales volume, negative fixed cost leverage and higher incentive compensation.
ACCO Brands EMEA
|
|
Three Months Ended |
|
Amount of Change |
|
|
Nine Months Ended |
|
Amount of Change |
|
||||||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
126.6 |
$ |
130.3 |
$ |
(3.7) |
|
(2.8)% |
|
$ |
388.1 |
$ |
424.3 |
$ |
(36.2) |
|
(8.5)% |
|
Segment operating income⁽¹⁾ |
|
6.9 |
|
4.9 |
|
2.0 |
|
40.8 % |
|
|
20.4 |
|
9.0 |
|
11.4 |
|
NM |
|
Segment operating income margin |
|
5.5 % |
|
3.8% |
|
|
|
1.7 |
pts |
|
5.3% |
|
2.1% |
|
|
|
3.2 |
pts |
Comparable sales (Non-GAAP)⁽²⁾ |
$ |
119.6 |
$ |
130.3 |
$ |
(10.7) |
|
(8.2)% |
|
$ |
389.7 |
$ |
424.3 |
$ |
(34.6) |
|
(8.1)% |
|
For the three months ended September 30, 2023, net sales decreased $3.7 million, or 2.8 percent. Favorable foreign exchange increased net sales $7.0 million, or 5.4 percent. Comparable sales decreased mainly due to lower volume of $22.7 million, or 17.4 percent, partly offset by price increases which added $11.9 million, or 9.1 percent. The lower volume reflects reduced demand, especially for technology accessories, due to a weaker macroeconomic environment.
32
For the nine months ended September 30, 2023, net sales decreased $36.2 million, or 8.5 percent, including $1.6 million, or 0.4 percent of adverse foreign exchange. Comparable sales decreased mainly due to lower volume of $83.8 million, or 19.8 percent, partly offset by price increases which added $49.1 million, or 11.6 percent. The lower volume reflects reduced demand, especially for technology accessories, due to a weaker macroeconomic environment.
For the three months ended September 30, 2023, operating income increased $2.0 million. Operating income increased primarily due to the cumulative effect of price increases and cost saving actions, which more than offset higher restructuring charges of $3.2 million, negative fixed cost leverage and higher incentive compensation. Favorable foreign exchange increased operating income $0.4 million, or 8.2 percent.
For the nine months ended September 30, 2023, operating income increased $11.4 million, primarily due to the cumulative effect of price increases and cost saving actions, which more than offset higher restructuring charges of $4.6 million, negative fixed cost leverage and higher incentive compensation. Favorable foreign exchange increased operating income $0.1 million, or 1.1 percent.
ACCO Brands International
|
|
Three Months Ended |
|
Amount of Change |
|
|
Nine Months Ended |
|
Amount of Change |
|
||||||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
102.5 |
$ |
98.1 |
$ |
4.4 |
|
4.5 % |
|
$ |
267.9 |
$ |
251.6 |
$ |
16.3 |
|
6.5 % |
|
Segment operating income⁽¹⁾ |
|
16.4 |
|
17.3 |
|
(0.9) |
|
(5.2)% |
|
|
32.1 |
|
27.8 |
|
4.3 |
|
15.5 % |
|
Segment operating income margin |
|
16.0% |
|
17.6% |
|
|
|
-1.6 |
pts |
|
12.0% |
|
11.0% |
|
|
|
1.0 |
pts |
Comparable sales (Non-GAAP)⁽²⁾ |
$ |
98.3 |
$ |
98.1 |
$ |
0.2 |
|
0.2 % |
|
$ |
263.4 |
$ |
251.6 |
$ |
11.8 |
|
4.7 % |
|
For the three months ended September 30, 2023, net sales increased $4.4 million, or 4.5 percent. Favorable foreign exchange increased net sales $4.2 million, or 4.3 percent. Comparable sales increased due to price increases of $5.0 million, or 5.1 percent, partly offset by lower volume of $4.9 million, or 5.0 percent. The lower volume reflects reduced demand due to a weaker macroeconomic environment in Asia and Australia, especially for technology accessories, partially offset by volume growth in Latin America.
For the nine months ended September 30, 2023, net sales increased $16.3 million, or 6.5 percent. Favorable foreign exchange increased net sales $4.5 million, or 1.8 percent. Comparable sales increased primarily due to price increases which added $21.6 million, or 8.6 percent, partly offset by lower volume of $9.7 million, or 3.9 percent. The lower volume reflects reduced demand due to a weaker macroeconomic environment in Asia and Australia, especially for technology accessories, partially offset by volume growth in Latin America.
For the three months ended September 30, 2023, operating income decreased $0.9 million. The decline in operating income reflects increased spending to support go-to-market strategies and a favorable reduction of our bad debt reserve during the prior year, which more than offset pricing and cost savings actions. Favorable foreign exchange increased operating income $1.1 million, or 6.4 percent.
For the nine months ended September 30, 2023, operating income increased $4.3 million primarily due to higher sales and improved cost leverage, partially offset by the non-repeat of a prior year benefit from reduced balance sheet reserves. Favorable foreign exchange increased operating income $1.8 million, or 6.5 percent.
33
Liquidity and Capital Resources
Our primary liquidity needs are to support our working capital requirements, service indebtedness and fund capital expenditures and dividends. Our principal sources of liquidity are cash flows from operating activities, cash and cash equivalents held, and seasonal borrowings under our $600 million multi-currency revolving credit facility (the "Revolving Facility"). As of September 30, 2023, there was $67.6 million in borrowings outstanding under the Revolving Facility ($39.1 million reported in "Current portion of long-term debt" and $28.5 million reported in "Long-term debt, net"), and the amount available for borrowings was $522.8 million (allowing for $9.6 million of letters of credit outstanding on that date). We had $73.7 million in cash on hand. We maintain adequate financing arrangements at market rates.
As of September 30, 2023, our Consolidated Leverage Ratio was approximately 3.78 to 1.00 versus our maximum covenant of 4.75 to 1.00. We have no debt maturities before March 2026.
Our near-term use of cash will be to fund our dividend and reduce debt. Our long-term strategy remains to deploy cash to fund dividends, reduce debt, make acquisitions and repurchase stock.
The $394.4 million of debt outstanding as of September 30, 2023 under our senior secured credit facilities had a weighted average interest rate of 6.72 percent, and the $575.0 million outstanding principal amount of our senior unsecured notes due 2029 had a fixed interest rate of 4.25 percent.
Adequacy of Liquidity Sources
We believe that cash flow from operations, our current cash balance and other sources of liquidity, including borrowings available under our Revolving Facility, will be adequate to support our requirements for working capital, capital and restructuring expenditures and to service indebtedness for the foreseeable future.
Restructuring Activities
From time to time the Company may implement restructuring, realignment or cost-reduction plans and activities, including those related to integrating acquired businesses.
The restructuring provision was $3.0 million and $6.3 million for the three and nine months ended September 30, 2023, respectively, primarily related to severance costs in EMEA associated with the Company's footprint rationalization program. For additional details, see "Note 9. Restructuring" to the condensed consolidated financial statements contained in "Part I, Item 1. Financial Information" of this Quarterly Report on Form 10-Q.
Cash Flow for the Nine Months Ended September 30, 2023 and 2022
During the nine months ended September 30, 2023, our cash and cash equivalents increased $11.5 million, as compared to an increase of $36.8 million in the first nine months of the prior year. The decrease in cash generated of $25.3 million was primarily due to a net change of $146.0 million from higher debt repayments and lower borrowings in the current year, partially offset by lower investments in trade working capital of $46.5 million, a $27.0 million contingent earnout payment and $19.4 million of share repurchases in the prior year both of which did not repeat, reduced annual incentive compensation payments of $16.7 million, and $2.2 million in proceeds from the sale of our Japan facility in the current year.
34
The following table summarizes our cash flows for the periods presented:
|
|
Nine Months Ended September 30, |
||
(in millions) |
|
2023 |
|
2022 |
Net cash flow (used in) provided by: |
|
|
|
|
Operating activities |
$ |
70.7 |
$ |
(9.6) |
Investing activities |
|
(7.5) |
|
(11.6) |
|
|
|
|
|
Net (repayments) borrowings |
|
(30.8) |
|
115.2 |
Dividends paid |
|
(21.4) |
|
(21.5) |
All other financing |
|
(1.7) |
|
(35.4) |
Financing activities |
|
(53.9) |
|
58.3 |
Effect of foreign exchange rate changes on cash and cash equivalents |
|
2.2 |
|
(0.3) |
Net increase in cash and cash equivalents |
$ |
11.5 |
$ |
36.8 |
Cash Flow from Operating Activities
Cash provided by operating activities was $70.7 million during the nine months ended September 30, 2023, which was driven by net income of $37.6 million and non-cash add backs of $70.3 million consisting primarily of the amortization of intangibles, depreciation, and stock-based compensation expense. Partially offsetting these are cash outflows from changes in our operating assets and liabilities of $37.2 million primarily due to cash used by trade working capital, consisting of changes in accounts payable, inventory, and accounts receivable and payments for interest, employee incentive compensation, and taxes, partially offset by changes related to other current and non-current liabilities.
Cash used by operating activities was $9.6 million during the nine months ended September 30, 2022. Net cash outflows were due to changes in our operating assets and liabilities of $127.9 million, a net loss of $32.0 million, and a $9.2 million contingent earnout payment, partly offset by non-cash add backs of $159.5 million consisting primarily of a $98.7 million goodwill impairment charge, the amortization of intangibles, depreciation, and stock-based compensation expense. The changes in our operating assets and liabilities were primarily due to cash used by trade working capital, consisting of changes in accounts payable, inventory, and accounts receivable and payments for interest, employee incentive compensation, and taxes, partially offset by changes related to other current and non-current liabilities.
Cash Flow from Investing Activities
Cash used by investing activities of $7.5 million during the nine months ended September 30, 2023, was due to capital expenditures of $9.7 million, partly offset by proceeds from the sale of our facility in Japan of $2.2 million.
Cash used by investing activities of $11.6 million during the nine months ended September 30, 2022, was primarily due to capital expenditures.
Cash Flow from Financing Activities
Cash used by financing activities of $53.9 million during the nine months ended September 30, 2023, was primarily due to net repayments of debt of $30.8 million and payment of dividends of $21.4 million.
Cash provided by financing activities of $58.3 million during the nine months ended September 30, 2022, was primarily due to net borrowings of $115.2 million, partly offset by a use of cash for share repurchases of $19.4 million, a $17.8 million contingent earnout payment, and dividends paid of $21.5 million.
Supplemental Non-GAAP Financial Measure
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with certain non-GAAP financial measures, including comparable sales. Comparable sales represent net sales excluding the impact of material acquisitions, if any, and with current-period foreign operation sales translated at prior-year currency rates.
35
We sometimes refer to comparable sales as comparable net sales.
We use comparable sales both to explain our results to stockholders and the investment community and in the internal evaluation and management of our business. We believe comparable sales provide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful period-to-period comparisons and enhance an overall understanding of our past and future financial performance. Comparable sales should not be considered in isolation or as a substitute for, or superior to, GAAP net sales and should be read in connection with the Company's financial statements presented in accordance with GAAP.
The following tables provide a reconciliation of GAAP net sales change as reported to non-GAAP comparable sales change:
|
Comparable Sales - Three Months Ended September 30, 2023 |
|
||||||||||
|
|
|
|
|
Non-GAAP |
|
||||||
|
|
|
|
|
Currency |
|
|
|
|
|||
(in millions) |
|
GAAP Net Sales |
|
|
Translation |
|
|
Comparable Sales |
|
|||
ACCO Brands North America |
$ |
|
218.9 |
|
$ |
|
(0.7 |
) |
$ |
|
219.6 |
|
ACCO Brands EMEA |
|
|
126.6 |
|
|
|
7.0 |
|
|
|
119.6 |
|
ACCO Brands International |
|
|
102.5 |
|
|
|
4.2 |
|
|
|
98.3 |
|
Total |
$ |
|
448.0 |
|
$ |
|
10.5 |
|
$ |
|
437.5 |
|
|
Amount of Change - Three Months Ended September 30, 2023 compared to the Three Months Ended September 30, 2022 |
|
||||||||||
|
$ Change - Net Sales |
|
||||||||||
|
|
|
|
|
Non-GAAP |
|
||||||
|
|
|
|
|
|
|
|
|
|
|||
|
|
GAAP Net Sales |
|
|
Currency |
|
|
Comparable Sales |
|
|||
(in millions) |
|
Change |
|
|
Translation |
|
|
Change |
|
|||
ACCO Brands North America |
$ |
|
(38.3 |
) |
$ |
|
(0.7 |
) |
$ |
|
(37.6 |
) |
ACCO Brands EMEA |
|
|
(3.7 |
) |
|
|
7.0 |
|
|
|
(10.7 |
) |
ACCO Brands International |
|
|
4.4 |
|
|
|
4.2 |
|
|
|
0.2 |
|
Total |
$ |
|
(37.6 |
) |
$ |
|
10.5 |
|
$ |
|
(48.1 |
) |
|
% Change - Net Sales |
|||||
|
|
|
|
Non-GAAP |
||
|
|
|
|
|
|
|
|
|
GAAP Net Sales |
|
Currency |
|
Comparable Sales |
|
|
Change |
|
Translation |
|
Change |
ACCO Brands North America |
|
(14.9)% |
|
(0.3)% |
|
(14.6)% |
ACCO Brands EMEA |
|
(2.8)% |
|
5.4% |
|
(8.2)% |
ACCO Brands International |
|
4.5% |
|
4.3% |
|
0.2% |
Total |
|
(7.7)% |
|
2.2% |
|
(9.9)% |
|
Comparable Sales - Nine Months Ended September 30, 2023 |
|||||
|
|
|
|
Non-GAAP |
||
|
|
|
|
Currency |
|
|
(in millions) |
|
GAAP Net Sales |
|
Translation |
|
Comparable Sales |
ACCO Brands North America |
$ |
688.2 |
$ |
(3.8) |
$ |
692.0 |
ACCO Brands EMEA |
|
388.1 |
|
(1.6) |
|
389.7 |
ACCO Brands International |
|
267.9 |
|
4.5 |
|
263.4 |
Total |
$ |
1,344.2 |
$ |
(0.9) |
$ |
1,345.1 |
36
|
Amount of Change - Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022 |
|||||
|
$ Change - Net Sales |
|||||
|
|
|
|
Non-GAAP |
||
|
|
|
|
|
|
|
|
|
GAAP Net Sales |
|
Currency |
|
Comparable Sales |
(in millions) |
|
Change |
|
Translation |
|
Change |
ACCO Brands North America |
$ |
(84.1) |
$ |
(3.8) |
$ |
(80.3) |
ACCO Brands EMEA |
|
(36.2) |
|
(1.6) |
|
(34.6) |
ACCO Brands International |
|
16.3 |
|
4.5 |
|
11.8 |
Total |
$ |
(104.0) |
$ |
(0.9) |
$ |
(103.1) |
|
% Change - Net Sales |
|||||
|
|
|
|
Non-GAAP |
||
|
|
|
|
|
|
|
|
|
GAAP Net Sales |
|
Currency |
|
Comparable Sales |
|
|
Change |
|
Translation |
|
Change |
ACCO Brands North America |
|
(10.9)% |
|
(0.5)% |
|
(10.4)% |
ACCO Brands EMEA |
|
(8.5)% |
|
(0.4)% |
|
(8.1)% |
ACCO Brands International |
|
6.5% |
|
1.8% |
|
4.7% |
Total |
|
(7.2)% |
|
(0.1)% |
|
(7.1)% |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended September 30, 2023 or through the date of this report.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision of the Chief Executive Officer and the Chief Financial Officer, and with the participation of our Disclosure Committee, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2023.
(b) Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims, lawsuits and pending actions against us incidental to our operations, including the income tax assessments against our Brazilian subsidiary, ACCO Brands Brasil Ltda. (the "Brazil Tax Assessments"), which is more fully described in "Part I, Item 1. Note 10. Income Taxes, Brazil Tax Assessments" to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.
37
It is the opinion of management that (other than the Brazil Tax Assessments) the ultimate resolution of currently outstanding matters will not have a material adverse effect on our financial condition, results of operations or cash flow. However, there is no assurance that we will ultimately be successful in our defense of any of these matters or that an adverse outcome in any matter will not affect our results of operations, financial condition or cash flow. Further, future claims, lawsuits and legal proceedings could materially and adversely affect our business, reputation, results of operations, and financial condition.
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Common Stock Purchases
The following table provides information about our purchases of equity securities during the quarter ended September 30, 2023:
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of |
|
|
Approximate Dollar |
|
||||
July 1, 2023 to July 31, 2023 |
|
|
— |
|
$ |
|
— |
|
|
|
— |
|
$ |
|
105,645,579 |
|
August 1, 2023 to August 31, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579 |
|
September 1, 2023 to September 30, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579 |
|
Total |
|
|
— |
|
$ |
|
— |
|
|
|
— |
|
$ |
|
105,645,579 |
|
(1) The Company's Board of Directors has authorized the repurchase of up to $200 million in shares of its common stock.
The number of shares to be purchased, if any, and the timing of purchases will be based on the Company's stock price, leverage ratios, cash balances, general business and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company may repurchase its shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades or pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Any stock repurchases will be subject to market conditions, SEC regulations and other considerations and may be commenced or suspended at any time or from time to time, without prior notice. Accordingly, there is no guarantee as to the number of shares, if any, that will be repurchased or the timing of such repurchases.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ITEM 4.
None.
38
MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the three months ended September 30, 2023, no director or officer of the Company who is required to file reports under Section 16 of the Exchange Act informed us that he or she adopted, materially modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6. EXHIBITS
|
Exhibit Number |
|
Description of Exhibit |
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1 |
|
|
|
|
|
32.2 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
* |
|
Filed herewith. |
|
|
|
** |
|
Furnished herewith. |
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
REGISTRANT: |
|
|
|
ACCO BRANDS CORPORATION |
|
|
|
By: |
/s/ Thomas W. Tedford |
Thomas W. Tedford |
|
|
President and Chief Executive Officer (principal executive officer) |
|
|
|
By: |
/s/ Deborah A. O'Connor |
Deborah A. O'Connor |
|
|
Executive Vice President and Chief Financial Officer (principal financial officer) |
|
|
|
By: |
/s/ James M. Dudek, Jr. |
James M. Dudek, Jr. |
|
|
Senior Vice President, Corporate Controller and Chief Accounting Officer (principal accounting officer) |
|
Date: November 3, 2023
40
Exhibit 31.1
CERTIFICATIONS
I, Thomas W. Tedford, certify that:
By: |
/s/ Thomas W. Tedford |
|
Thomas W. Tedford |
|
President and Chief Executive Officer |
Date: November 3, 2023
Exhibit 31.2
CERTIFICATIONS
I, Deborah A. O'Connor, certify that:
By: |
/s/ Deborah A. O'Connor |
|
Deborah A. O'Connor |
|
Executive Vice President and Chief Financial Officer |
Date: November 3, 2023
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
As adopted pursuant to
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ACCO Brands Corporation on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof, (the "Report"), I, Thomas W. Tedford, Chief Executive Officer of ACCO Brands Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
By: |
/s/ Thomas W. Tedford |
|
Thomas W. Tedford |
|
President and Chief Executive Officer |
Date: November 3, 2023
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
As adopted pursuant to
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ACCO Brands Corporation on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof, (the "Report"), I, Deborah A. O'Connor, Chief Financial Officer of ACCO Brands Corporation, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
By: |
/s/ Deborah A. O'Connor |
|
Deborah A. O'Connor |
|
Executive Vice President and Chief Financial Officer |
Date: November 3, 2023