UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
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
(Exact Name of Registrant as Specified in Its Charter) |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
(Address of Registrant’s Principal Executive Office, Including Zip Code)
(
(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 |
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.
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).
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 |
☐ |
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Non-accelerated filer |
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Smaller reporting company |
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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
As of April 25, 2024, the registrant had outstanding
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, strategies, business operations and similar matters, results of operations, liquidity, and financial condition an those related to cost reductions and anticipated pre-tax savings and restructuring costs 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. Forward-looking statements are subject to the occurrence of events outside the Company’s control and actual results and the timing of the events may differ materially from those suggested or implied by such forward-looking statements due to numerous factors that involve substantial known and unknown risk and uncertainties. Investors and others are cautioned not place undue reliance on forward-looking statements 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, 2023, as well as in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10Q 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
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March 31, |
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December 31, |
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(in millions) |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories |
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Other current assets |
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Total current assets |
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Total property, plant and equipment |
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Less: accumulated depreciation |
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( |
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Property, plant and equipment, net |
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Right of use asset, leases |
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Deferred income taxes |
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Goodwill |
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Identifiable intangibles, net |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Notes payable |
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$ |
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$ |
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Current portion of long-term debt |
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Accounts payable |
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Accrued compensation |
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Accrued customer program liabilities |
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Lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net |
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Long-term lease liabilities |
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Deferred income taxes |
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Pension and post-retirement benefit obligations |
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Other non-current liabilities |
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Total liabilities |
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Stockholders' equity: |
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Common stock |
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Treasury stock |
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( |
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( |
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Paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
4
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Loss
(Unaudited)
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Three Months Ended |
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(in millions, except per share data) |
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2024 |
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2023 |
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Net sales |
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$ |
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$ |
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Cost of products sold |
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Gross profit |
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Operating costs and expenses: |
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Selling, general and administrative expenses |
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Amortization of intangibles |
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Restructuring |
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( |
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Total operating costs and expenses |
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Operating income |
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Non-operating expense (income): |
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Interest expense |
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Interest income |
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( |
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( |
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Non-operating pension expense |
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Other (income) expense, net |
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( |
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Loss before income tax |
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( |
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( |
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Income tax expense |
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Net loss |
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$ |
( |
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$ |
( |
) |
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Per share: |
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Basic loss per share |
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$ |
( |
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$ |
( |
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Diluted loss per share |
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$ |
( |
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$ |
( |
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Weighted average number of shares outstanding: |
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Basic |
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Diluted |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
5
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income
(Unaudited)
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Three Months Ended |
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(in millions) |
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2024 |
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2023 |
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Net loss |
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$ |
( |
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$ |
( |
) |
Other comprehensive (loss) income, net of tax: |
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Unrealized gain (loss) on derivative instruments, net of tax (expense) benefit of $( |
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( |
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Foreign currency translation adjustments, net of tax benefit of |
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( |
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Recognition of deferred pension and other post-retirement items, net of tax (expense) benefit of $( |
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( |
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Other comprehensive (loss) income, net of tax: |
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( |
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Comprehensive (loss) income |
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$ |
( |
) |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
6
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31, |
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(in millions) |
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2024 |
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2023 |
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Operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Loss on disposal of assets |
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Depreciation |
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Amortization of debt issuance costs |
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Amortization of intangibles |
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Stock-based compensation |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
) |
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( |
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Other assets |
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( |
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Accounts payable |
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( |
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( |
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Accrued expenses and other liabilities |
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( |
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( |
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Accrued income taxes |
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( |
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( |
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Net cash provided (used) by operating activities |
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( |
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Investing activities |
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Additions to property, plant and equipment |
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( |
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( |
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Net cash used by investing activities |
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( |
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( |
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Financing activities |
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Proceeds from long-term borrowings |
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Repayments of long-term debt |
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( |
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( |
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Repayments of notes payable, net |
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( |
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( |
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Dividends paid |
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( |
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Payments related to tax withholding for stock-based compensation |
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( |
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( |
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Net cash provided by financing activities |
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Effect of foreign exchange rate changes on cash and cash equivalents |
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( |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents |
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Beginning of the period |
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$ |
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$ |
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End of the period |
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$ |
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$ |
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Cash paid during the year for: |
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Interest |
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$ |
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$ |
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Income taxes |
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$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements (Unaudited).
7
ACCO Brands Corporation and Subsidiaries
Consolidated Statement of Stockholders' Equity
(Unaudited)
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Accumulated Other |
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Common Stock |
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Paid-in |
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Treasury Stock |
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Comprehensive |
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Accumulated |
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(in millions) |
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Shares |
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Value |
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Capital |
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Shares |
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Value |
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Income (Loss) |
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Deficit |
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Total |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Gain on derivative financial instruments, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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Translation impact, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Pension and post-retirement adjustment, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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Common stock issued, net of shares withheld for employee taxes |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
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Dividends declared $ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Other |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Common Stock |
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Treasury Stock |
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Accumulated Other |
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(in millions) |
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Shares |
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Value |
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Paid-in Capital |
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Shares |
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Value |
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Comprehensive (Loss) Income |
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Accumulated Deficit |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Loss on derivative financial instruments, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Translation impact, net of tax |
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— |
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— |
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— |
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— |
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— |
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— |
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Pension and post-retirement adjustment, net of tax |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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Common stock issued, net of shares withheld for employee taxes |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
||
Dividends declared $ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Other |
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— |
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— |
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( |
) |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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|||||
See Notes to Condensed Consolidated Financial Statements (Unaudited).
8
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 March 31, 2024, 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, 2023.
The Condensed Consolidated Balance Sheet as of March 31, 2024 and the related Consolidated Statements of Loss, Consolidated Statements of Comprehensive (Loss) Income, and Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2024 and 2023, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 are unaudited. The December 31, 2023 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 March 31, 2024 and 2023, and the financial position of the Company as of March 31, 2024. Interim results may not be indicative of results for a full year.
Effective January 1, 2024, the Company reorganized its previously reported North America, EMEA and International operating segments into
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
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. This ASU is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. We are evaluating the effect this guidance will have on our segment disclosures.
9
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are evaluating the effect this guidance will have on our tax disclosures.
There were no other recently issued accounting standards that are expected to have an impact on the Company’s financial condition, results of operations or cash flow.
Recently Adopted Accounting Standards
There were no accounting standards that were adopted in the first three months of 2024 that had a material effect on the Company’s financial condition, results of operations or cash flow.
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 March 31, 2024 and December 31, 2023:
(in millions) |
|
March 31, |
|
|
December 31, |
|
||
Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of |
|
$ |
|
|
$ |
|
||
USD Senior Secured Term Loan A, due March 2026 (floating interest rate of |
|
|
|
|
|
|
||
Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of |
|
|
|
|
|
|
||
U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of |
|
|
|
|
|
|
||
Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of |
|
|
|
|
|
|
||
Senior Unsecured Notes, due March 2029 (fixed interest rate of |
|
|
|
|
|
|
||
Other borrowings |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Less: |
|
|
|
|
|
|
||
Current portion |
|
|
|
|
|
|
||
Debt issuance costs, unamortized |
|
|
|
|
|
|
||
Long-term debt, net |
|
$ |
|
|
$ |
|
||
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 €
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:
10
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Quarter Ended |
|
Maximum Consolidated Leverage Ratio |
December 2022 |
|
|
March 2023 |
|
|
June 2023 |
|
|
September 2023 |
|
|
December 2023 |
|
The current maturity of the Credit Agreement is
Consolidated Leverage Ratio |
|
Applicable Rate on Euro/AUD/CDN Dollar Loans |
|
Applicable Rate on Base Rate Loans |
|
Undrawn Fee |
> 4.50 to 1.00 |
|
|
|
|||
≤ 4.50 to 1.00 and > 4.00 to 1.00 |
|
|
|
|||
≤ 4.00 to 1.00 and > 3.50 to 1.00 |
|
|
|
|||
≤ 3.50 to 1.00 and > 3.00 to 1.00 |
|
|
|
|||
≤ 3.00 to 1.00 and > 2.00 to 1.00 |
|
|
|
|||
≤ 2.00 to 1.00 |
|
|
|
As of March 31, 2024, there was $
As of March 31, 2024, our Consolidated Leverage Ratio was approximately
Senior Unsecured Notes
On March 15, 2021, the Company completed a private offering of $
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.
11
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 components of lease expense were as follows:
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Sublease income |
|
|
( |
) |
|
|
( |
) |
Total lease cost |
|
$ |
|
|
$ |
|
||
Other information related to leases was as follows:
|
|
Three Months Ended |
|
|||||
(in millions, except lease term and discount rate) |
|
2024 |
|
|
2023 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
||
Operating leases |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Weighted average remaining lease term: |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|||
|
|
|
|
|
|
|
||
Weighted average discount rate: |
|
|
|
|
|
|
||
Operating leases |
|
|
% |
|
|
|
||
12
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Future minimum lease payments, net of sublease income, for all non-cancelable leases as of March 31, 2024, were as follows:
(in millions) |
|
Operating |
|
|
2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Thereafter |
|
|
|
|
Total minimum lease payments |
|
|
|
|
Less imputed interest |
|
|
|
|
Future minimum payments for leases, net of sublease rental income and imputed interest |
|
$ |
|
|
5. Pension and Other Retiree Benefits
The components of net periodic benefit (income) cost for pension and post-retirement plans for the three months ended March 31, 2024 and 2023 were as follows:
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
Pension |
|
|
Post-retirement |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
|
|
||||||||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Amortization of net loss (gain) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Amortization of prior service cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net periodic benefit (income) cost (1) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
We expect to contribute approximately $
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 months ended March 31, 2024 and 2023:
|
|
Three months ended |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Stock option compensation expense |
|
$ |
|
|
$ |
|
||
RSU compensation expense |
|
|
|
|
|
|
||
PSU compensation expense |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
We generally recognize compensation expense for stock-based awards ratably over the vesting period. During the first quarter of 2024, stock compensation grants were made consisting of
13
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 March 31, 2024:
|
|
March 31, 2024 |
||
(in millions, except weighted average years) |
|
Unrecognized Compensation Expense |
|
Weighted Average Years Expense To Be Recognized Over |
Stock options |
|
$ |
|
|
RSUs |
|
$ |
|
|
PSUs |
|
$ |
|
|
7. Inventories
The components of inventories were as follows:
(in millions) |
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventories |
|
$ |
|
|
$ |
|
||
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.
As of January 1, 2024, the Company reorganized its previously reported North America, EMEA and International operating segments into
We determined that the Americas and International also represent our reporting units for goodwill impairment testing purposes. We identified the reorganization as a triggering event and performed a quantitative assessment of impairment for goodwill for each of our
Estimating the fair value of each reporting unit requires us to make assumptions and estimates regarding our future. We utilized a combination of discounted cash flows and market approach. The financial projections used in the valuation models reflected management's assumptions regarding revenue growth rates, economic and market trends, cost structure, discount rate, and other expectations about the anticipated short-term and long-term operating results for each of our two reporting units.
We believe the assumptions used in our goodwill impairment analysis are appropriate and result in reasonable estimates of the implied fair value of each reporting unit. However, given the economic environment and the uncertainties regarding the impact of our business, there can be no assurance that our estimates and assumptions, made for purposes of our goodwill impairment testing, will prove to be an accurate prediction of the future. If our assumptions regarding future performance are not achieved, we may be required to record additional goodwill impairment charges in future periods.
14
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
We have reclassified our goodwill by segment for the period presented below to reflect the change in operating segments.
(in millions) |
|
ACCO Brands Americas |
|
|
ACCO Brands International |
|
|
Total |
|
|||
Balance at December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Foreign currency translation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Identifiable Intangible Assets
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2024 and December 31, 2023, were as follows:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||
(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) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade names |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Customer and contractual relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Vendor relationships |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Patents |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Subtotal |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total identifiable intangibles |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The Company's intangible amortization expense for the three months ended March 31, 2024 and 2023 was $
Estimated amortization expense for amortizable intangible assets, as of March 31, 2024, for the current year and the next five years is as follows:
(in millions) |
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
||||||
Estimated amortization expense(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
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 did not identify a triggering event during the quarter ended March 31, 2024, that would indicate it is more likely than not that an impairment loss has been incurred.
15
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
9. Restructuring
The Company recorded a $
The summary of the activity in the restructuring liability for the three months ended March 31, 2024, was as follows:
(in millions) |
|
Balance at December 31, 2023 |
|
|
Provision |
|
|
Cash Expenditures |
|
Non-cash Items/Currency Change |
|
|
Balance at March 31, 2024 |
|
|||||
Employee termination costs(1) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
||
Other(2) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||
Total restructuring liability |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
$ |
( |
) |
|
$ |
|
||
The summary of the activity in the restructuring liability for the three months ended March 31, 2023, was as follows:
(in millions) |
|
Balance at December 31, 2022 |
|
|
Provision |
|
|
Cash Expenditures |
|
|
Non-cash Items/Currency Change |
|
|
Balance at March 31, 2023 |
|
|||||
Employee termination costs |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total restructuring liability |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||||
10. Income Taxes
For the three months ended March 31, 2024, we recorded income tax expense of $
The U.S. federal statute of limitations remains open for the years 2020 and forward. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from
Organisation for Economic Co-operation and Development (“OECD”) Global Anti-Base Erosion Model Rules (Pillar Two)
Legislatures and taxing authorities in many jurisdictions in which we operate may enact changes to, or seek to enforce, novel interpretations of their tax rules. These changes may include modifications that can be temporary or permanent. For example, the Organisation for Economic Cooperation and Development (the "OECD"), the European Union and other countries (including countries in which we operate) have committed to enacting substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed. In particular, the OECD's Pillar Two initiative introduces a
16
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 $
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 $
During the third quarter of 2023, there was a change in Brazilian law which allowed us to seek a cancellation of the
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 three months ended March 31, 2024 and 2023, we accrued additional interest as a charge to current income tax expense of $
17
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
11. Earnings per Share
Total outstanding shares as of March 31, 2024 and 2023, were
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 months ended March 31, 2024 and 2023 was as follows:
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Weighted-average number of shares of common stock outstanding - basic |
|
|
|
|
|
|
||
Effect of dilutive securities: |
|
|
|
|
|
|
||
Stock options |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Weighted-average shares and assumed conversions - diluted(1) |
|
|
|
|
|
|
||
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 months ended March 31, 2024 and 2023, the number of anti-dilutive shares was approximately
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. 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
18
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 (Loss) ("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 Loss. As of March 31, 2024 and December 31, 2023, we had cash flow foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $
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 (income) expense, net" in the Consolidated Statements of Loss 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 March 2025. As of March 31, 2024 and December 31, 2023, we had foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $
The following table summarizes the fair value of our derivative financial instruments as of March 31, 2024 and December 31, 2023:
|
|
Fair Value of Derivative Instruments |
|
|||||||||||||||||
|
|
Derivative Assets |
|
|
Derivative Liabilities |
|
||||||||||||||
(in millions) |
|
Balance Sheet Location |
|
March 31, |
|
|
December 31, |
|
|
Balance Sheet Location |
|
March 31, |
|
|
December 31, |
|
||||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
|
Other current assets |
|
$ |
|
|
$ |
|
|
Other current liabilities |
|
$ |
|
|
$ |
|
||||
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
|
Other current assets |
|
|
|
|
|
|
|
Other current liabilities |
|
|
|
|
|
|
||||
Foreign exchange contracts |
|
Other non-current assets |
|
|
|
|
|
|
|
Other non-current liabilities |
|
|
|
|
|
|
||||
Total derivatives |
|
|
|
$ |
|
|
$ |
|
|
|
|
$ |
|
|
$ |
|
||||
19
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 months ended March 31, 2024 and 2023:
|
|
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 March 31, |
|
|
|
|
Three months ended March 31, |
|
||||||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
|
|
2024 |
|
|
2023 |
|
||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
|
$ |
|
|
$ |
( |
) |
|
Cost of products sold |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Financial Statements |
|
|||||||
|
|
Location of (Gain) Loss Recognized in Income on Derivatives |
|
Amount of (Gain) Loss Recognized in Income |
|
|||||
|
|
|
|
Three months ended March 31, |
|
|||||
(in millions) |
|
|
|
2024 |
|
|
2023 |
|
||
Foreign exchange contracts |
|
|
$ |
|
|
$ |
|
|||
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.
We have determined that our financial assets and liabilities described in "Note 12. Derivative Financial Instruments" are Level 2 in the fair value hierarchy.
(in millions) |
|
March 31, |
|
|
December 31, |
|
||
Assets: |
|
|
|
|
|
|
||
Forward currency contracts |
|
$ |
|
|
$ |
|
||
Liabilities: |
|
|
|
|
|
|
||
Forward currency contracts |
|
$ |
|
|
$ |
|
||
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.
20
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 $
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.
(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, 2023 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive (loss) income before reclassifications, net of tax |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balance at March 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The reclassifications out of AOCI for the three months ended March 31, 2024 and 2023 were as follows:
|
|
Three months ended March 31, |
|
|
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Details about Accumulated Other Comprehensive Income (Loss) Components |
|
Amount Reclassified from Accumulated Other Comprehensive Income (Loss) |
|
|
Location on Income Statement |
|||||
Gain (loss) on cash flow hedges: |
|
|
|
|
|
|
|
|
||
Foreign exchange contracts |
|
$ |
|
|
$ |
|
|
Cost of products sold |
||
Tax expense |
|
|
( |
) |
|
|
( |
) |
|
Income tax expense |
Net of tax |
|
$ |
|
|
$ |
|
|
|
||
Defined benefit plan items: |
|
|
|
|
|
|
|
|
||
Amortization of net actuarial loss(1) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Amortization of prior service cost(1) |
|
|
|
|
|
( |
) |
|
|
|
Total before tax |
|
|
( |
) |
|
|
( |
) |
|
|
Tax benefit |
|
|
|
|
|
|
|
Income tax expense |
||
Net of tax |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Total reclassifications for the period, net of tax |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
21
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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, 2023, there was $
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 months ended March 31, 2024 and 2023:
|
|
Three months ended March 31, |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
United States |
|
$ |
|
|
$ |
|
||
Canada |
|
|
|
|
|
|
||
Latin America |
|
|
|
|
|
|
||
ACCO Brands Americas |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
EMEA(1) |
|
|
|
|
|
|
||
Australia/N.Z. |
|
|
|
|
|
|
||
Asia |
|
|
|
|
|
|
||
ACCO Brands International |
|
|
|
|
|
|
||
Net sales(2) |
|
$ |
|
|
$ |
|
||
(1) 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 March 31, |
|
|||||
(in millions) |
|
2024 |
|
|
2023 |
|
||
Product and services transferred at a point in time |
|
$ |
|
|
$ |
|
||
Product and services transferred over time |
|
|
|
|
|
|
||
Net sales |
|
$ |
|
|
$ |
|
||
22
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
16. Information on Business Segments
Effective January 1, 2024, the Company reorganized its previously reported North America, EMEA and International operating segments into
The Company's
Operating Segment |
|
Geography |
|
Primary Brands |
|
Primary Products |
ACCO Brands Americas |
|
United States, Canada and Latin America |
|
Five Star®, PowerA®, Tilibra®, AT-A-GLANCE®, Kensington®, Quartet®, GBC®, Mead®, Swingline®, Barrilito®, Foroni® and Hilroy® |
|
Note taking products, computer and gaming accessories; planners; workspace machines, tools and essentials and dry erase boards and accessories. |
|
|
|
|
|
|
|
ACCO Brands International |
|
EMEA, Australia/N.Z., and Asia |
|
Leitz®, Rapid®, Kensington®, Esselte®, Rexel®, PowerA®, GBC®, NOBO®, Franken®, Derwent®, Marbig®, Artline®* and Spirax® *Australia/N.Z. only |
|
Filing and organization products; workspace machines, tools and essentials; computer and gaming accessories; dry erase boards and accessories; and writing and art 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.
Net sales by reportable business segment for the three months ended March 31, 2024 and 2023 were as follows:
(in millions) |
|
2024 |
|
|
2023 |
|
||
ACCO Brands Americas |
|
$ |
|
|
$ |
|
||
ACCO Brands International |
|
|
|
|
|
|
||
Net sales |
|
$ |
|
|
$ |
|
||
23
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Operating income by business segment for the three months ended March 31, 2024 and 2023 was as follows:
(in millions) |
|
2024 |
|
|
2023 |
|
||
ACCO Brands Americas |
|
$ |
|
|
$ |
|
||
ACCO Brands International |
|
|
|
|
|
|
||
Segment operating income |
|
|
|
|
|
|
||
Corporate |
|
|
( |
) |
|
|
( |
) |
Operating income(1) |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Interest income |
|
|
( |
) |
|
|
( |
) |
Non-operating pension expense |
|
|
|
|
|
|
||
Other (income) expense, net |
|
|
( |
) |
|
|
|
|
Loss before income tax |
|
$ |
( |
) |
|
$ |
( |
) |
The following table presents the measure of reportable business segment assets used by the Company’s CODM as of March 31, 2024 and December 31, 2023:
(in millions) |
|
2024 |
|
|
2023 |
|
||
ACCO Brands Americas(2) |
|
$ |
|
|
$ |
|
||
ACCO Brands International(2) |
|
|
|
|
|
|
||
Total segment assets |
|
|
|
|
|
|
||
Unallocated assets |
|
|
|
|
|
|
||
Corporate(2) |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
As a supplement to the presentation of reportable business segment assets presented above, the table below presents reportable business segment assets, including right of use asset, leases, the allocation of identifiable intangible assets and goodwill resulting from business combinations as of March 31, 2024 and December 31, 2023:
(in millions) |
|
2024 |
|
|
2023 |
|
||
ACCO Brands Americas(3) |
|
$ |
|
|
$ |
|
||
ACCO Brands International(3) |
|
|
|
|
|
|
||
Total segment assets |
|
|
|
|
|
|
||
Unallocated assets |
|
|
|
|
|
|
||
Corporate(3) |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
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
24
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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.
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. During the three months ended March 31, 2024, ACCO Brazil completed the necessary administrative steps which allowed it to benefit from additional Tax Credits and record a gain of $
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.
In September of 2021, the Supreme Court of Brazil issued its final ruling in a leading case which provides that corporate income tax (“IRPJ”) and social contribution on net income (“CSLL”) should not be levied on the Special System of Clearance and Custody (“SELIC”) interest rate received by taxpayers on the refund of overpaid taxes as in our Tax Credits. As of March 31, 2024, ACCO Brazil filed legal actions requesting recovery of these excess tax payments and completed the necessary administrative steps which allowed it to record an income tax benefit of $
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.
25
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 months ended March 31, 2024 and 2023 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. We have expanded into higher growth product categories, while increasing our sales mix to higher growth 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.
Effective January 1, 2024, the Company reorganized its previously reported North America, EMEA and International operating segments into two operating segments, Americas and International. Americas includes the U.S., Canada, Brazil, Mexico and Chile and International includes EMEA, Australia, New Zealand and Asia. This change will simplify and delayer the Company's operating structure and reduce costs through headcount reductions, supply change optimization, global footprint rationalization, and better leverage of our sourcing capabilities. Prior period results have been reclassified to reflect this change in our operating segments. 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 soft global demand, reflecting weak consumer and office spending due to inflationary pressures and rising interest rates, overall changes in the workplace environment as return to office trends have stabilized, and geopolitical uncertainties. We expect these collective global trends to continue to impact our financial results through the remainder of the year.
During the first quarter, our net sales decreased $43.7 million, or 10.9 percent, compared to the prior year's first quarter. The decrease was due to reduced volumes due to softer global consumer and business demand for our office products and computer accessories, reduced back-to-school sales in Brazil, and from the exit of lower margin business in the U.S. and Canada, partly offset by the benefit of price increases and favorable foreign exchange. Gross margin increased 120 basis points compared to the prior-year period, primarily due to moderating input costs and the impact of cost reduction actions and price increases, partly offset by volume declines.
We reported operating income of $5.9 million in the first quarter, compared to $10.1 million in the prior year's first quarter. Operating income decreased primarily due to lower gross profit, partially offset by lower restructuring expenses.
26
Our operating cash flow for the first three months was cash provided of $28.2 million, compared to cash used of $23.2 million in the prior year, primarily reflecting reductions in working capital. Our seasonal operating cash flow has a historic pattern of strong inflows in the second half.
Consolidated Results of Operations for the Three Months Ended March 31, 2024 and 2023
|
|
Three Months Ended |
|
Amount of Change |
|||||
(in millions, except per share data) |
|
2024 |
|
2023 |
|
$ |
|
%/pts |
|
Net sales |
|
$358.9 |
|
$402.6 |
|
$(43.7) |
|
(10.9)% |
|
Cost of products sold |
|
248.5 |
|
283.3 |
|
(34.8) |
|
(12.3)% |
|
Gross profit |
|
110.4 |
|
119.3 |
|
(8.9) |
|
(7.5)% |
|
Gross profit margin |
|
30.8 % |
|
29.6 % |
|
|
|
1.2 |
pts |
Selling, general and administrative expenses |
|
94.2 |
|
95.0 |
|
(0.8) |
|
(0.8)% |
|
SG&A% to net sales |
|
26.2 % |
|
23.6 % |
|
|
|
2.6 |
pts |
Amortization of intangibles |
|
10.6 |
|
10.9 |
|
(0.3) |
|
(2.8)% |
|
Restructuring |
|
(0.3) |
|
3.3 |
|
(3.6) |
|
NM |
|
Operating income |
|
5.9 |
|
10.1 |
|
(4.2) |
|
(41.6)% |
|
Operating income margin |
|
1.6 % |
|
2.5 % |
|
|
|
(0.9) |
pts |
Interest expense |
|
13.3 |
|
13.9 |
|
(0.6) |
|
(4.3)% |
|
Interest income |
|
(1.9) |
|
(2.4) |
|
0.5 |
|
(20.8)% |
|
Non-operating pension expense |
|
0.4 |
|
0.1 |
|
0.3 |
|
NM |
|
Other (income) expense, net |
|
(0.6) |
|
1.8 |
|
(2.4) |
|
NM |
|
Loss before income tax |
|
(5.3) |
|
(3.3) |
|
(2.0) |
|
60.6 % |
|
Income tax expense |
|
1.0 |
|
0.4 |
|
0.6 |
|
NM |
|
Effective tax rate |
|
(18.9)% |
|
(12.1)% |
|
|
|
(6.8) |
pts |
Net loss |
|
(6.3) |
|
(3.7) |
|
(2.6) |
|
70.3 % |
|
Weighted average number of diluted shares outstanding: |
|
95.7 |
|
94.9 |
|
0.8 |
|
0.8 % |
|
Diluted loss per share |
|
$(0.07) |
|
$(0.04) |
|
$(0.03) |
|
75.0 % |
|
Comparable sales (Non-GAAP)(1) |
|
$357.2 |
|
$402.6 |
|
$(45.4) |
|
(11.3)% |
|
Net Sales
For the three months ended March 31, 2024, net sales decreased $43.7 million, or 10.9 percent, including $1.7 million, or 0.4 percent, from favorable foreign exchange. Comparable net sales decreased 11.3 percent. The sales declines were driven by lower volume, which was down 12.0 percent, primarily due to softer global consumer and business demand for our office products and computer accessories. Approximately 3.0 percent of our decline relates to lower back-to-school sales in Brazil and approximately 2.0 percent from the exit of lower margin business. The volume decline more than offset the benefit of price increases which added 0.7 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 March 31, 2024, cost of products sold decreased $34.8 million, or 12.3 percent, primarily due to lower net sales, moderating input costs and the impact of global cost reduction actions. Adverse foreign exchange increased cost of products sold by $1.0 million, or 0.4 percent.
Gross Profit
For the three months ended March 31, 2024, gross profit decreased $8.9 million, or 7.5 percent, primarily due to volume declines partly offset by lower cost of products sold. Favorable foreign exchange increased gross profit by $0.7 million, or 0.6 percent.
27
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 March 31, 2024, SG&A decreased $0.8 million, or 0.8 percent, primarily due to the impact of cost reduction actions, partly offset by people cost inflation and higher incentive compensation expense. Adverse foreign exchange increased SG&A by $0.5 million, or 0.5 percent.
Operating Income
For the three months ended March 31, 2024, operating income decreased $4.2 million primarily due to a reduction in gross profit of $8.9 million, partially offset by lower restructuring charges of $3.6 million, lower SG&A of $0.8 million, and favorable foreign exchange of $0.2 million, or 2.0 percent.
Income Tax Expense
For the three months ended March 31, 2024, we recorded income tax expense of $1.0 million on a loss before tax of $5.3 million. This compared with an income tax expense of $0.4 million on a loss before taxes of $3.3 million for the three months ended March 31, 2023.
See "Note 10. Income Taxes" for more information.
Net Loss/Diluted Loss per Share
For the three months ended March 31, 2024, net loss was $6.3 million compared to a net loss of $3.7 million in the prior year. The increase in net loss is due to the items noted above.
28
Segment Net Sales and Operating Income (Loss) for the Three Months Ended March 31, 2024 and 2023
ACCO Brands Americas
|
|
Three Months Ended |
|
Amount of Change |
|||||
(in millions) |
|
2024 |
|
2023 |
|
$ |
|
%/pts |
|
Net sales |
|
$197.2 |
|
$230.0 |
|
$(32.8) |
|
(14.3)% |
|
Segment operating income⁽¹⁾ |
|
6.1 |
|
12.3 |
|
(6.2) |
|
(50.4)% |
|
Segment operating income margin |
|
3.1 % |
|
5.3 % |
|
|
|
(2.2) |
pts |
Comparable sales (Non-GAAP)⁽²⁾ |
|
$194.8 |
|
$230.0 |
|
$(35.2) |
|
(15.3)% |
|
For the three months ended March 31, 2024, net sales decreased $32.8 million, or 14.3 percent, as a result of lower volume of $33.6 million, or 14.6 percent. The volume decline was primarily due to softer consumer and business demand, particularly for office products and computer accessories. Approximately 5.0 percent of our decline relates to lower back-to-school sales in Brazil and approximately 4.0 percent from the exit of lower margin business. Favorable foreign exchange increased net sales $2.4 million or 1.0 percent.
For the three months ended March 31, 2024, operating income decreased $6.2 million, or 50.4 percent, due to the impact of lower sales volume and negative fixed cost leverage, partly offset by moderating input costs, and lower SG&A expense as a result of our cost reduction initiatives. Favorable foreign exchange increased operating income $0.5 million or 4.1 percent.
ACCO Brands International
|
|
Three Months Ended |
|
|
Amount of Change |
||||||||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
$ |
|
|
%/pts |
|
|
||||
Net sales |
|
$ |
161.7 |
|
|
$ |
172.6 |
|
|
$ |
(10.9 |
) |
|
|
(6.3 |
)% |
|
Segment operating income⁽¹⁾ |
|
|
12.8 |
|
|
|
9.7 |
|
|
|
3.1 |
|
|
|
32.0 |
% |
|
Segment operating income margin |
|
|
7.9 |
% |
|
|
5.6 |
% |
|
|
|
|
|
2.3 |
|
pts |
|
Comparable sales (Non-GAAP)⁽²⁾ |
|
$ |
162.4 |
|
|
$ |
172.6 |
|
|
$ |
(10.2 |
) |
|
|
(5.9 |
)% |
|
For the three months ended March 31, 2024, net sales decreased $10.9 million, or 6.3 percent, primarily due to lower volume of $14.8 million, or 8.6 percent, partly offset by price increases which added $4.7 million, or 2.7 percent. The lower volume reflects reduced consumer and business demand for our office and computer accessories categories. Adverse foreign exchange reduced net sales $0.7 million, or 0.4 percent.
For the three months ended March 31, 2024, operating income increased $3.1 million primarily due to lower restructuring of $3.4 million. Adverse foreign exchange reduced operating income $0.3 million, or 3.1 percent.
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 March 31, 2024, there was $71.3 million in borrowings outstanding under the Revolving Facility ($28.7 million reported in "Current portion of long-term debt" and $42.6 million reported in "Long-term debt, net"), and the amount available for borrowings was $517.6 million (allowing for $11.1 million of letters of credit outstanding on that date). We had $124.6 million in cash on hand. We maintain adequate financing arrangements at market rates.
29
As of March 31, 2024, our Consolidated Leverage Ratio was approximately 3.49 to 1.00 versus our maximum covenant of 4.25 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 $386.0 million of debt outstanding as of March 31, 2024 under our senior secured credit facilities had a weighted average interest rate of 7.07 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 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.
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 Three Months Ended March 31, 2024 and 2023
During the three months ended March 31, 2024, our cash and cash equivalents increased $58.2 million, as compared to an increase of $64.9 million in the first three months of the prior year. The following table summarizes our cash flows for the periods presented:
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
(in millions) |
|
2024 |
|
|
2023 |
|
|
Amount of Change |
|
|||
Net cash flow (used in) provided by: |
|
|
|
|
|
|
|
|
|
|||
Operating activities |
|
$ |
28.2 |
|
|
$ |
(23.2 |
) |
|
$ |
51.4 |
|
Investing activities |
|
|
(2.3 |
) |
|
|
(2.0 |
) |
|
|
(0.3 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Net (repayments) borrowings |
|
|
42.3 |
|
|
|
89.9 |
|
|
|
(47.6 |
) |
Dividends paid |
|
|
(7.2 |
) |
|
|
— |
|
|
|
(7.2 |
) |
All other financing |
|
|
(1.9 |
) |
|
|
(1.7 |
) |
|
|
(0.2 |
) |
Financing activities |
|
|
33.2 |
|
|
|
88.2 |
|
|
|
(55.0 |
) |
Effect of foreign exchange rate changes on cash and cash equivalents |
|
|
(0.9 |
) |
|
|
1.9 |
|
|
|
(2.8 |
) |
Net increase in cash and cash equivalents |
|
$ |
58.2 |
|
|
$ |
64.9 |
|
|
$ |
(6.7 |
) |
Cash Flow from Operating Activities
Cash provided by operating activities was $28.2 million during the three months ended March 31, 2024, which was driven by cash provided by trade working capital of $114.6 million, which includes accounts receivable, inventory and accounts payable. This was partially offset by cash payments for incentives, interest and taxes.
Cash used by operating activities was $23.2 million during the three months ended March 31, 2023, which was driven by cash payments for incentives, interest and taxes. These were partially offset by cash provided by trade working capital of $25.6 million, which includes accounts receivable, inventory and accounts payable.
30
Cash Flow from Investing Activities
Cash used by investing activities of $2.3 million during the three months ended March 31, 2024, was due to capital expenditures.
Cash used by investing activities of $2.0 million during the three months ended March 31, 2023, was due to capital expenditures.
Cash Flow from Financing Activities
Cash provided by financing activities of $33.2 million during the three months ended March 31, 2024, was primarily due to cash inflows from a net increase in debt of $42.3 million, partially offset by dividend payments of $7.2 million.
Cash provided by financing activities during the three months ended March 31, 2023, was primarily due to cash inflows from a net increase in debt of $89.9 million. Dividends for the first three months of the year were declared during the first quarter and were paid in the second quarter of 2023.
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. 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 as reported to non-GAAP comparable sales:
|
Comparable Sales - Three Months Ended March 31, 2024 |
|||
|
|
|
Non-GAAP |
|
|
|
|
|
|
(in millions) |
GAAP Net Sales |
|
Currency Translation |
Comparable Sales |
ACCO Brands Americas |
$197.2 |
|
$2.4 |
$194.8 |
ACCO Brands International |
161.7 |
|
(0.7) |
162.4 |
Total |
$358.9 |
|
$1.7 |
$357.2 |
|
Amount of Change - Three Months Ended March 31, 2024 compared to the Three Months Ended March 31, 2023 |
|||
|
$ Change - Net Sales |
|||
|
|
|
Non-GAAP |
|
|
|
|
|
|
(in millions) |
GAAP Net Sales Change |
|
Currency Translation |
Comparable Sales Change |
ACCO Brands Americas |
$(32.8) |
|
$2.4 |
$(35.2) |
ACCO Brands International |
(10.9) |
|
(0.7) |
(10.2) |
Total |
$(43.7) |
|
$1.7 |
$(45.4) |
31
|
% Change - Net Sales |
|||
|
|
|
Non-GAAP |
|
|
|
|
|
|
|
GAAP Net Sales Change |
|
Currency Translation |
Comparable Sales Change |
ACCO Brands Americas |
(14.3)% |
|
1.0% |
(15.3)% |
ACCO Brands International |
(6.3)% |
|
(0.4)% |
(5.9)% |
Total |
(10.9)% |
|
0.4% |
(11.3)% |
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, 2023. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended March 31, 2024 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 March 31, 2024.
(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 March 31, 2024 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.
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.
32
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, 2023.
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 March 31, 2024:
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of |
|
|
Approximate Dollar |
|
||||
January 1, 2024 to January 31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
105,645,579.0 |
|
February 1, 2024 to February 29, 2024 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579.0 |
|
March 1, 2024 to March 31, 2024 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579.0 |
|
Total |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
105,645,579.0 |
|
(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
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
33
ITEM 5. OTHER INFORMATION
During the three months ended March 31, 2024, 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
ITEM 6. EXHIBITS
Exhibit Number |
|
Description of Exhibit |
|
|
|
|
Employment Contract, dated January 29, 2024, between Mr. Cezary Monko and Esselte Polska Sp. z o o. (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Form 8-K filed with the SEC on January 30, 2024 (File No. 001-08454)) |
|
|
|
|
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 With Embedded Linkbase Documents |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
* |
|
Filed herewith. |
|
|
|
** |
|
Furnished herewith. |
34
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: May 3, 2024
35