ACCO Brands Corporation (NYSE: ABD), a world leader in select
categories of branded office products, today reported its first
quarter results for the period ended March 31, 2011.
“We remain on track to meet our financial objectives for the
year,” said Robert J. Keller, chairman and chief executive officer.
“In the first quarter, we made significant investments designed to
help grow our customers’ businesses and to rationalize our European
operations. Both will pay dividends as 2011 progresses.”
First Quarter Results
Net sales were essentially flat at $310.3 million, compared to
$310.8 million in the prior-year quarter. Volume decreased 4%.
First quarter loss from continuing operations was $8.1 million, or
$0.15 per diluted share, compared to a loss of $4.5 million, or
$0.09 per diluted share, in the prior-year quarter. Using a
normalized effective tax rate of 30%, the adjusted loss from
continuing operations was $2.3 million, or $(0.04) per share,
including $3.9 million of severance and related costs associated
with the rationalization of the company’s European operations,
compared to $1.6 million, or $0.03 per share in the prior-year
period.
Reported first quarter operating income decreased to $14.7
million, from $21.6 million in the prior-year quarter. In addition
to the rationalization costs in Europe, the decline in operating
profit was principally due to lower volume. EBITDA decreased to
$25.5 million, from EBITDA of $33.1 million in the prior year. The
company ended the quarter, the seasonal low point of its cash flow
cycle, with $19.9 million of cash and no borrowings on its
revolving credit facility.
Business Segment Highlights
ACCO Brands Americas
ACCO Brands Americas first quarter net sales decreased 4% to
$152.2 million, from $158.6 million in the prior-year quarter.
Volume declined 7%, primarily due to certain customers reducing
inventory and purchasing below their point of sale levels. Pricing
and foreign currency translation each impacted sales favorably by
1%.
ACCO Brands Americas first quarter operating income was $5.5
million, compared to $8.3 million in the prior-year quarter.
Operating margin decreased to 3.6% from 5.2% primarily due to
deleveraging from lower sales volume and higher go-to-market and
promotional spending.
ACCO Brands International
ACCO Brands International net sales increased 4% to $116.8
million, compared to $112.5 million in the prior-year quarter.
Foreign currency translation impacted sales favorably by 5%. Volume
decreased 2% due to inventory reductions by certain customers.
ACCO Brands International reported operating income of $5.5
million, compared to $10.2 million in the prior-year quarter.
Operating margin declined to 4.7% from 9.1% primarily due to $3.9
million of severance and related costs associated with the
rationalization of its European operations, sales mix and the flow
through of increased commodity costs.
Computer Products Group
Computer Products net sales increased 4% to $41.3 million,
compared to $39.7 million in the prior-year quarter. Volume
increased 1% due to new products and growth in the U.S. Pricing and
product mix impacted sales favorably by 2% and foreign currency
translation had a favorable impact of 1%.
Computer Products operating income was $9.3 million, compared to
$8.1 million in the prior-year quarter. Operating margin expanded
to 22.5% from 20.4% due to lower selling, general and
administrative expenses.
Business Outlook
The company believes that the business environment will continue
to be challenging; however, it still expects 2011 sales to increase
between 2-4% before the effects of foreign currency.
Primarily in the first half of 2011, the company anticipates
incurring approximately $6 million of cash costs related to the
rationalization of its European operations, which is expected to
result in approximately $5 million in annualized cost savings in
2011, and approximately $6.5 million in annualized savings when
fully realized.
Based on expected improvements in gross margin, which will be
partially offset by an increase in selling, general and
administrative expenses, the company continues to expect to grow
diluted earnings per share between 20% and 30% on a normalized tax
rate basis.
Targeted free cash flow, after interest, taxes and capital
expenditures, is expected to be approximately $50-60 million.
Webcast
At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will
host a conference call to discuss the company’s results. The call
will be broadcast live via webcast. The webcast can be accessed
through the Investor Relations section of www.accobrands.com. The
webcast will be in listen-only mode and will be available for
replay for one month following the event.
Non-GAAP Financial Measures
“Adjusted” results exclude all unusual tax items. Adjusted
supplemental EBITDA from continuing operations excludes other
non-operating items, including other income/expense and stock-based
compensation expense. Adjusted results and supplemental EBITDA from
continuing operations are non-GAAP measures. There could be
limitations associated with the use of non-GAAP financial measures
as compared to the use of the most directly comparable GAAP
financial measure. Management uses the adjusted measures to
determine the returns generated by its operating segments and to
evaluate and identify cost-reduction initiatives. Management
believes these measures provide investors with helpful supplemental
information regarding the underlying performance of the company
from year to year. These measures may be inconsistent with measures
presented by other companies.
About ACCO Brands Corporation
ACCO Brands Corporation is a world leader in select categories
of branded office products. Its industry-leading brands include
Day-Timer®, Swingline®, Kensington®, Quartet®, GBC®, Rexel, NOBO,
and Wilson Jones®, among others. Under the GBC brand, the company
is also a leader in the professional print finishing market.
Forward-Looking Statements
This press release contains statements which may constitute
"forward-looking" statements as that term is defined in the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks
and uncertainties, are made as of the date hereof and the company
assumes no obligation to update them. ACCO Brands' ability to
predict results or the actual effect of future plans or strategies
is inherently uncertain. Because actual results may differ from
those predicted by such forward-looking statements, you should not
place undue reliance on them when deciding to buy, sell or hold the
company’s securities. Among the factors that could cause our plans,
actions and results to differ materially from current expectations
are: fluctuations in the cost and availability of raw materials;
competition within the markets in which the company operates; the
effects of both general and extraordinary economic, political and
social conditions, including continued volatility and disruption in
the capital and credit markets; the effect of consolidation in the
office products industry; the liquidity and solvency of our major
customers; our continued ability to access the capital and credit
markets; the dependence of the company on certain suppliers of
manufactured products; the risk that targeted cost savings and
synergies from previous business combinations may not be fully
realized or take longer to realize than expected; future goodwill
and/or impairment charges; foreign exchange rate fluctuations; the
development, introduction and acceptance of new products; the
degree to which higher raw material costs, and freight and
distribution costs, can be passed on to customers through selling
price increases and the effect on sales volumes as a result
thereof; increases in health care, pension and other employee
welfare costs; as well as other risks and uncertainties detailed in
the company’s Annual Report on Form 10-K for the year ended
December 31, 2010, under Item 1A, “Risk Factors,” and in the
company's other SEC filings.
ACCO Brands Corporation Consolidated
Statements of Operations and Reconciliation of Adjusted
Results (Unaudited) (In millions of dollars, except per
share data) Three Months Ended March 31,
2011 2010 % Change
Net sales
$ 310.3 $ 310.8 (0
)% Cost of products sold
216.2
215.6 0 % Gross profit
94.1
95.2 (1 )% Operating costs and
expenses: Advertising, selling, general and administrative expenses
77.8 71.9 8 % Amortization of
intangibles
1.7 1.8 (6 )% Restructuring
income
(0.1 ) (0.1 )
0 % Total operating costs and expenses
79.4 73.6 8 %
Operating income
14.7 21.6 (32
)% Non-operating expense (income): Interest expense
19.3 19.5 (1 )% Equity in earnings of
joint ventures
(1.2 ) (1.2 ) 0
% Other expense (income), net
(0.1 )
1.0 NM Income (loss) from
continuing operations before income tax
(3.3 )
2.3 NM Income tax expense
4.8
6.8 (29 )% Loss from continuing
operations
(8.1 ) (4.5 ) (80
)% Income (loss) from discontinued operations, net of income
taxes
- (0.2 ) 100
% Net loss
$ (8.1 ) $
(4.7 ) (72 )% Per share: Basic
loss per share: Loss from continuing operations
$
(0.15 ) $ (0.08 ) (88
)% Income (loss) from discontinued operations
-
- NM Basic loss per share
$ (0.15
) $ (0.09 ) (67 )%
Diluted loss per share: Loss from continuing operations
$
(0.15 ) $ (0.08 ) (88
)% Income (loss) from discontinued operations
-
- NM Diluted loss per share
$ (0.15
) $ (0.09 ) (67 )%
Weighted average number of shares outstanding: Basic
55.0
54.6 Diluted
55.0 54.6
Reconciliation of
Reported Consolidated Results to Adjusted Results
Three Months Ended Three Months
Ended March 31, 2011 March 31, 2010
Tax Tax Adjustment Adjustment (in
millions, except per share data)
Reported (A)
Adjusted Reported (A) Adjusted Income
(loss) from continuing operations before income taxes
$
(3.3 ) $ - $ (3.3 )
$ 2.3 $ - $ 2.3
Income tax expense (benefit)
4.8 (5.8 )
(1.0 )
6.8 (6.1 ) 0.7
Income (loss) from continuing operations
$ (8.1
) $ 5.8 $ (2.3 )
$ (4.5 ) $ 6.1
$ 1.6 Diluted earnings per share: Income (loss) from
continuing operations
$ (0.15 ) $ (0.04 )
$ (0.08 ) $ 0.03 Weighted average
number of diluted shares outstanding
55.0 55.0
54.6
56.5
Note – “Adjusted” results are non-GAAP
measures. There could be limitations associated with the use of
non-GAAP financial measures as compared to the most directly
comparable GAAP financial measure. Management believes these
measures provide investors with helpful supplemental information
regarding the underlying performance of the Company from year to
year. These measures may be inconsistent with measures presented by
other companies.
Statistics (as a % of Net sales, except Income tax
rate) Three Months Ended March 31, 2011
2010 Reported Adjusted
Reported Adjusted Gross profit (Net sales,
less Cost of products sold) 30.3 % 30.6 %
Advertising, selling, general and administrative 25.1 % 23.1 %
Operating income 4.7 % 6.9 % Income (loss) from continuing
operations before income taxes (1.1 )% 0.7 % Net income (loss) (2.6
)% (0.7 )% (1.5 )% 0.5 % Income tax rate NM
30.0 % NM 30.0 %
(A) The Company has incurred significant operating losses in
several jurisdictions in prior periods. In accordance with GAAP,
tax valuation allowances have been recorded on certain of the
Company’s deferred tax assets. As a result, the operating results
in these locations have recorded no tax benefit or expense, which
results in a high effective tax rate for the current period.
Assuming all the locations become profitable in the future and
valuation allowances were reversed, the Company’s ongoing effective
tax rate would approximate 30%. This estimated long-term rate will
be subject to variations from the mix of earnings in the Company’s
operating jurisdictions.
Reconciliation of Net Income to Adjusted Supplemental EBITDA
from Continuing Operations (Unaudited) (In millions
of dollars) Three Months Ended
March 31, 2011 2010 % Change Net loss $
(8.1 ) $ (4.7 ) (72 )% Discontinued operations - 0.2 (100 )% Income
taxes, impact of adjustments 5.8 6.1 (5
)%
Adjusted income (loss) from continuing operations (2.3 )
1.6 NM Interest expense, net 19.3 19.5 (1 )% Adjusted income tax
expense (benefit) (1.0 ) 0.7 NM Depreciation 7.1 7.7 (8 )%
Amortization of intangibles 1.7 1.8 (6 )% Other (income) expense,
net (0.1 ) 1.0 NM Stock-based compensation expense 0.8
0.8 0 %
Adjusted supplemental EBITDA from
continuing operations $ 25.5 $ 33.1 (23 )%
Adjusted supplemental EBITDA from continuing operations as a % of
Net Sales 8.2 % 10.6 %
ACCO Brands Corporation
Supplemental Business Segment Information (Unaudited)
(In millions of dollars) 2011 2010 Changes Net Sales
Net Sales Margin Net Sales OI OI Margin Net Sales
OI OI Margin $ % OI $ OI %
Points
Q1: ACCO Brands Americas $ 152.2 $ 5.5 3.6 % $
158.6 $ 8.3 5.2 % $ (6.4 ) (4 )% $ (2.8 ) (34 )% (160 ) ACCO Brands
International 116.8 5.5 4.7 % 112.5 10.2 9.1 % 4.3 4 % (4.7 ) (46
)% (440 ) Computer Products 41.3 9.3 22.5 % 39.7 8.1 20.4 % 1.6 4 %
1.2 15 % 210 Corporate - (5.6 ) - (5.0
) - (0.6 ) Total $ 310.3 $ 14.7 4.7 % $
310.8 $ 21.6 6.9 % $ (0.5 ) (0 )% $ (6.9 ) (32 )% (220 )
ACCO Brands Corporation
Supplemental Net Sales Growth Analysis (Unaudited)
Percent Change - Sales Net
Comparable Sales Currency Sales
Growth Translation Growth
Price Volume Q1 2011: ACCO
Brands Americas (4.0 %) 1.4 % (5.4 %) 1.1 % (6.5 %) ACCO Brands
International 3.8 % 5.3 % (1.5 %) 0.5 % (2.0 %) Computer Products
4.0 % 1.3 % 2.7 % 1.8 % 0.9 % Total (0.2 %) 2.8 % (3.0 %) 1.0 %
(4.0 %)
ACCO Brands Corporation Key Stats and
Ratios (Unaudited) (In millions of dollars)
Net Debt Calculation
March 31, 2011
December 31, 2010 Current debt obligations, including
current portion of long-term debt $ 0.2 $ 0.2
Long-term debt obligations 727.6 727.4
Total outstanding debt 727.8 727.6 Less: cash and cash equivalents
19.9 83.2 Net debt $ 707.9 $
644.4
Twelve Months Ended
Twelve Months Ended Leverage Ratio (Debt to EBITDA from
Continuing Operations)
March 31, 2011
March 31, 2010 Trailing twelve months (TTM) adjusted
supplemental EBITDA from Continuing Operations (A) $ 156.4 $ 155.9
Net debt $ 707.9 $ 713.8 Gross debt $ 727.8 $ 741.5 Total
Leverage (net debt divided by TTM adjusted supplemental EBITDA from
Continuing Operations) 4.5 4.6 Senior-Secured Leverage
(senior-secured debt [$454.6 million as of March 31, 2011 and
$470.2 million as of March 31, 2010] divided by TTM adjusted
supplemental EBITDA from Continuing Operations) 2.9 3.0
Twelve Months Ended
Twelve Months Ended Working Capital per Dollar Sales
Ratio (Working Capital to Sales) March 31, 2011
March 31, 2010 Current assets, excluding cash and
cash equivalents (B) $ 547.1 $ 480.0 Current liabilities, excluding
current debt obligations (C) 273.7 251.4
Net working capital $ 273.4 $ 228.6 Trailing twelve
months (TTM) net sales (A) $ 1,330.0 $ 1,289.9 Working
capital ratio (net working capital divided by TTM net sales) (A)
20.6 % 17.7 %
(A) Management believes these measures
provide investors with helpful supplemental information regarding
the underlying performance of the Company from year to year. These
measures may be inconsistent with similar measures presented by
other companies.
(B) Balance is comprised of receivables,
inventories, current deferred income taxes and other current
assets.
(C) Balance is comprised of accounts
payable, accrued compensation, accrued customer programs and other
current liabilities.
ACCO Brands Corporation Reconciliation of
Net Income (Loss) to Adjusted Supplemental EBITDA from Continuing
Operations (Unaudited) (In millions of dollars)
Three
Months Ended June 30, September 30,
December 31, March 31, Trailing 2010
2010 2010 2011 Twelve
Months Net sales $ 316.5 $ 330.7
$ 372.5 $ 310.3 $ 1,330.0
Net income (loss) $ 4.9 $ 5.4 $ 6.8 $ (8.1 ) $ 9.0
Discontinued operations 0.3 - (1.4 ) - (1.1 ) Income taxes, impact
of adjustments - 4.3
8.7 5.8 18.8
Adjusted income (loss) from continuing operations 5.2
9.7 14.1 (2.3 ) 26.7 Interest expense, net 19.7 19.6 19.4
19.3 78.0 Adjusted income tax expense (benefit) 2.2 4.1 6.1 (1.0 )
11.4 Depreciation expense 7.3 7.6 7.0 7.1 29.0 Amortization of
intangibles 1.7 1.7 1.7 1.7 6.8 Other (income) expense, net 0.3 0.1
- (0.1 ) 0.3 Stock-based compensation expense 1.6
0.1 1.7
0.8 4.2 Adjusted supplemental
EBITDA from continuing operations $ 38.0 $
42.9 $ 50.0 $ 25.5 $ 156.4
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets March
31, December 31, 2011 2010 (in millions of
dollars)
(unaudited) Assets Current assets: Cash and cash
equivalents $ 19.9 $ 83.2 Accounts receivable, net 274.5 283.2
Inventories 226.0 216.1 Deferred income taxes 12.7 12.9 Other
current assets 33.9 25.3 Total current
assets 567.0 620.7 Total property, plant and equipment 486.2
475.4 Accumulated depreciation (323.6 ) (311.9 )
Property, plant and equipment, net 162.6 163.5 Deferred income
taxes 11.2 10.6 Goodwill 147.4 144.4 Identifiable intangibles, net
137.7 138.2 Other assets 68.3 72.2
Total assets $ 1,094.2 $ 1,149.6 Liabilities
and Stockholders' Deficit Current liabilities: Current portion of
long-term debt $ 0.2 $ 0.2 Accounts payable 102.5 114.8 Accrued
compensation 21.0 26.1 Accrued customer program liabilities 56.5
72.8 Accrued interest 4.6 22.0 Other current liabilities 87.5 90.5
Liabilities of discontinued operations held for sale 1.6
1.5 Total current liabilities 273.9 327.9
Long-term debt 727.6 727.4 Deferred income taxes 83.4 81.5
Pension and post retirement benefit obligations 68.1 74.9 Other
non-current liabilities 18.2 17.7 Total
liabilities 1,171.2 1,229.4
Stockholders' deficit: Common stock 0.6 0.6 Treasury stock (1.7 )
(1.5 ) Paid-in capital 1,402.0 1,401.1
Accumulated other comprehensive loss
(75.9 ) (86.1 ) Accumulated deficit (1,402.0 )
(1,393.9 ) Total stockholders' deficit (77.0 ) (79.8
) Total liabilities and stockholders' deficit $ 1,094.2 $
1,149.6
ACCO Brands Corporation and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited) Three Months Ended
March 31, (in millions of dollars)
2011
2010 Operating activities Net loss $
(8.1 ) $ (4.7 ) Gain on sale of assets - (0.1 ) Depreciation 7.1
7.7 Amortization of debt issuance costs and bond discount 1.6 1.6
Amortization of intangibles 1.7 1.8 Stock-based compensation 0.8
0.8 Changes in balance sheet items: Accounts receivable 15.0 17.3
Inventories (6.5 ) 3.3 Other assets (8.5 ) (9.5 ) Accounts payable
(14.3 ) (0.9 ) Accrued expenses and other liabilities (52.0 ) (45.1
) Accrued income taxes (0.6 ) (0.6 ) Equity in earnings of joint
ventures, net of dividends received 3.8 1.4
Net cash used by operating activities (60.0 ) (27.0 )
Investing activities Additions to property, plant and
equipment (3.5 ) (2.3 ) Assets acquired (1.5 ) (0.8 ) Proceeds from
the sale of discontinued operations - 0.3 Proceeds from the
disposition of assets 0.1 0.2 Other 0.3 -
Net cash used by investing activities (4.6 ) (2.6 )
Financing activities Repayments of long-term debt - (0.1 )
Borrowings of short term debt, net - 15.5 Cost of debt issuance -
(0.5 ) Other (0.2 ) (0.1 ) Net cash provided (used)
by financing activities (0.2 ) 14.8 Effect of foreign exchange rate
changes on cash 1.5 (1.1 ) Net decrease in
cash and cash equivalents (63.3 ) (15.9 )
Cash and cash
equivalents Beginning of period 83.2 43.6
End of period $ 19.9 $ 27.7
Acco (NYSE:ABD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Acco (NYSE:ABD)
Historical Stock Chart
From Jul 2023 to Jul 2024