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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.
☒ |
Accelerated filer |
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Non-accelerated filer |
☐ |
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 27, 2023, 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, operating strategies and similar matters, including without limitation, statements concerning the impacts of the COVID-19 pandemic on the Company's business, operations, results of operations, liquidity and financial condition, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.
Some of the factors that could affect our results or cause our plans, actions and results to differ materially from those expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and from time to time in our other Securities and Exchange Commission (the "SEC") filings.
Website Access to Securities and Exchange Commission Reports
The Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through its website its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the SEC.
2
TABLE OF CONTENTS
3
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
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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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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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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Notes payable |
$ |
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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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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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2023 |
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2022 |
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Net sales |
$ |
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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 charges |
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Change in fair value of contingent consideration |
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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 (income) |
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( |
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Other expense, net |
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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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( |
) |
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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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( |
) |
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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 Income
(Unaudited)
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Three Months Ended |
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(in millions) |
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2023 |
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2022 |
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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 loss on derivative instruments, net of tax benefit of $ |
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( |
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( |
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Foreign currency translation adjustments, net of tax benefit of $ |
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Recognition of deferred pension and other post-retirement items, net of tax benefit (expense) of $ |
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( |
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Other comprehensive income, net of tax |
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Comprehensive income |
$ |
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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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2023 |
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2022 |
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Operating activities |
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Net loss |
$ |
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( |
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$ |
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( |
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Loss on disposal of assets |
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Change in fair value of contingent liability |
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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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( |
) |
Accrued income taxes |
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( |
) |
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( |
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Net cash used by operating activities |
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( |
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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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( |
) |
Proceeds from the exercise of stock options |
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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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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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End of the period |
$ |
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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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Income taxes |
$ |
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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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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 |
Balance at December 31, 2022 |
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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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( |
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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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Balance at March 31, 2023 |
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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 |
Balance at December 31, 2021 |
|
$ |
$ |
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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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( |
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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( |
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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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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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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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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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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( |
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, 2022 |
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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, 2023, the terms "ACCO Brands," "ACCO," the "Company," "we," "us," and "our" refer to ACCO Brands Corporation and its consolidated subsidiaries.
The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and notes contained in this Quarterly Report on Form 10-Q.
The condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the SEC. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Condensed Consolidated Balance Sheet as of March 31, 2023 and the related Consolidated Statements of Loss, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2023 and 2022, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 are unaudited. The December 31, 2022 Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all annual disclosures required by GAAP. The financial statements included herein were prepared by management and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of the results of operations and cash flows for the interim periods ended March 31, 2023 and 2022, and the financial position of the Company as of March 31, 2023. Interim results may not be indicative of results for a full year.
The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Actual results could differ from those estimates.
2. Recent Accounting Pronouncements and Adopted Accounting Standards
Recent Accounting Pronouncements
There are no recently issued accounting pronouncements that are expected to have an impact on the Company’s financial condition, results of operations or cash flow.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying current GAAP to contracts, hedging relationships, and other transactions affected by the transition from the use of LIBOR to an alternative reference rate. Effective in the fourth quarter of 2022, the Company adopted this standard. The adoption of this standard did not have a material impact on our consolidated financial statements.
There were no accounting standards that were adopted in the first three months of 2023 that had a material effect on the Company’s financial condition, results of operations or cash flow.
9
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
3. Long-term Debt and Short-term Borrowings
Notes payable and long-term debt, listed in order of the priority of security interests in assets of the Company, consisted of the following as of March 31, 2023 and December 31, 2022:
(in millions) |
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March 31, |
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December 31, |
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Euro Senior Secured Term Loan A, due March 2026 (floating interest rate of |
$ |
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$ |
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USD Senior Secured Term Loan A, due March 2026 (floating interest rate of |
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Australian Dollar Senior Secured Term Loan A, due March 2026 (floating interest rate of |
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U.S. Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of |
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Australian Dollar Senior Secured Revolving Credit Facility, due March 2026 (floating interest rate of |
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Senior Unsecured Notes, due March 2029 (fixed interest rate of |
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Other borrowings |
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Total debt |
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Less: |
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Current portion |
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Debt issuance costs, unamortized |
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Long-term debt, net |
$ |
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$ |
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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
From July 2018 to November 2022, the Company entered into six amendments (the "Amendments") to the Credit Agreement. The following are the key changes, among other things, to the Credit Agreement as a result of the Amendments:
Quarter Ended |
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Maximum Consolidated Leverage Ratio |
December 2022 |
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March 2023 |
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June 2023 |
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September 2023 |
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December 2023 |
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10
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The current maturity of the Credit Agreement is
Consolidated Leverage Ratio |
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Applicable Rate on Euro/AUD/CDN Dollar Loans |
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Applicable Rate on Base Rate Loans |
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Undrawn Fee |
> 4.50 to 1.00 |
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≤ 4.50 to 1.00 and > 4.00 to 1.00 |
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≤ 4.00 to 1.00 and > 3.50 to 1.00 |
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|||
≤ 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, 2023, there was $
As of March 31, 2023, 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.
4. Leases
The Company leases its corporate headquarters, various other facilities for distribution, manufacturing, and offices, as well as vehicles, forklifts and other equipment.
11
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
of time share the same incremental borrowing rate. The Company has lease agreements with lease and non-lease components, which are combined for accounting purposes for all classes of underlying assets except information technology equipment.
The components of lease expense were as follows:
|
|
Three Months Ended |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
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) |
|
2023 |
|
|
2022 |
|
||
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 |
|
|
% |
|
|
|
||
Future minimum lease payments, net of sublease income, for all non-cancelable leases as of March 31, 2023, were as follows:
(in millions) |
|
Operating |
|
|
2023 |
$ |
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
Thereafter |
|
|
|
|
Total minimum lease payments |
|
|
|
|
Less imputed interest |
|
|
|
|
Future minimum payments for leases, net of sublease rental income and imputed interest |
$ |
|
|
|
12
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
5. Pension and Other Retiree Benefits
The components of net periodic benefit (income) cost for pension and post-retirement plans for the three months ended March 31, 2023 and 2022 were as follows:
|
|
Three Months Ended March 31, |
|
|||||||||||||||||||||
|
|
Pension |
|
|
Post-retirement |
|
||||||||||||||||||
|
|
U.S. |
|
|
International |
|
|
|
|
|
|
|
||||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||
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, 2023 and 2022:
|
|
Three months ended |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
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 2023, stock compensation grants were made consisting of
The following table summarizes our unrecognized compensation expense and the weighted-average period over which the expense will be recognized as of March 31, 2023:
|
|
March 31, 2023 |
||
(in millions, except weighted average years) |
|
Unrecognized Compensation Expense |
|
Weighted Average Years Expense To Be Recognized Over |
Stock options |
|
$ |
|
|
RSUs |
|
$ |
|
|
PSUs |
|
$ |
|
|
13
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
7. Inventories
The components of inventories were as follows:
(in millions) |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
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. We did not identify a triggering event during the three months ended March 31, 2023, that would indicate it is more likely than not that an impairment loss has been incurred.
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 on 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.
Estimating the fair value of each reporting unit requires us to make assumptions and estimates regarding our future. We utilized a combination of both a 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 three reporting units.
Changes in the net carrying amount of goodwill by segment were as follows:
(in millions) |
|
ACCO Brands North America |
|
|
ACCO Brands EMEA |
|
|
ACCO Brands International |
|
|
Total |
|
||||
Balance at December 31, 2022 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Foreign currency translation |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Balance at March 31, 2023 |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
14
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Identifiable Intangible Assets
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2023 and December 31, 2022, were as follows:
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||||||||||
(in millions) |
|
Gross Carrying Amounts |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
|
Gross Carrying Amounts |
|
|
Accumulated Amortization |
|
|
Net Book Value |
|
||||||
Indefinite-lived intangible assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Trade names(1) |
$ |
|
|
$ |
|
( |
) |
$ |
|
|
$ |
|
|
$ |
|
( |
) |
$ |
|
|
||||
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, 2023 and 2022 was $
Estimated amortization expense for amortizable intangible assets, as of March 31, 2023, for the current year and the next five years is as follows:
(in millions) |
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
||||||
Estimated amortization expense(2) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
||||||
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 three months ended March 31, 2023, that would indicate it is more likely than not that an impairment loss has been incurred.
Estimating the fair value of each indefinite-lived intangible requires us to make assumptions and estimates regarding our future. We utilize a relief-from-royalty discounted cash flows approach to estimate fair values. Key inputs and assumptions involved include the estimated near-term revenue growth, long-term growth rate, royalty rate, and discount rate.
As of December 31, 2022, we changed the indefinite-lived Leitz® trade name to an amortizable intangible asset. The change was made as a result of decisions regarding the Company's future use of the trade name. The Company began amortizing the Leitz® trade name on a straight-line basis over a life of
15
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
9. Restructuring
The Company recorded $
The summary of the activity in the restructuring liability for the three months ended March 31, 2023, was as follows:
|
|
Balance at |
|
|
|
|
|
Non-cash Items / |
|
Balance at |
(in millions) |
|
December 31, |
|
Provision |
|
Cash |
|
Currency |
|
March 31, |
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, 2022, was as follows:
|
|
Balance at |
|
|
|
|
|
Non-cash Items / |
|
Balance at |
(in millions) |
|
December 31, |
|
Provision |
|
Cash |
|
Currency |
|
March 31, |
Employee termination costs |
$ |
$ |
$ |
( |
$ |
$ |
||||
Termination of lease agreements |
|
|
|
( |
|
|
||||
Total restructuring liability |
$ |
$ |
$ |
( |
$ |
$ |
10. Income Taxes
For the three months ended March 31, 2023, we recorded income tax expense of $
The U.S. federal statute of limitations remains open for the years
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").
16
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
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 in the next nine months to 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 $
11. Earnings per Share
Total outstanding shares as of March 31, 2023 and 2022, 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.
17
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
The number of our weighted-average shares outstanding for the three months ended March 31, 2023 and 2022 was as follows:
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
Weighted-average number of shares of common stock outstanding - basic |
|
|
|
|
|
|
||
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, 2023 and 2022 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 in the Euro, the Swedish krona, the British pound, the Brazilian real, the Australian dollar, the Canadian dollar, and the Mexican peso.
Forward currency contracts are used to hedge foreign denominated inventory purchases for Europe, Australia, Canada, Japan and New Zealand, and are designated as cash flow hedges. Unrealized gains and losses on these contracts are deferred in Accumulated Other Comprehensive Income ("AOCI") until the contracts are settled and the underlying hedged transactions relating to inventory purchases are recognized, at which time the deferred gains or losses will be reported in the "Cost of products sold" line in the Consolidated Statements of Operations. As of March 31, 2023 and December 31, 2022, we had cash flow foreign exchange contracts outstanding with a U.S. dollar equivalent notional value of $
18
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
Forward currency contracts used to hedge foreign denominated intercompany loans are not designated as hedging instruments. Gains and losses on these derivative instruments are recognized within "Other expense (income), net" in the Consolidated Statements of Operations and are largely offset by the change in the current translated value of the hedged item. The periods of the forward foreign exchange contracts correspond to the periods of the hedged transactions, with some relating to intercompany loans which extend beyond March 2024. As of March 31, 2023 and December 31, 2022, 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, 2023 and December 31, 2022:
|
|
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, 2023 and 2022:
|
|
The Effect of Derivative Instruments in Cash Flow Hedging Relationships on the Consolidated Financial Statements |
|
|||||||||||||||
|
|
Amount of Gain (Loss) Recognized in AOCI (Effective Portion) |
|
|
Location of (Gain) Loss Reclassified from AOCI to Income |
|
Amount of (Gain) Loss Reclassified from AOCI to Income (Effective Portion) |
|
||||||||||
|
|
Three Months Ended March 31, |
|
|
|
|
Three Months Ended March 31, |
|
||||||||||
(in millions) |
|
2023 |
|
|
2022 |
|
|
|
|
2023 |
|
|
2022 |
|
||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts |
$ |
|
( |
) |
$ |
|
( |
) |
|
Cost of products sold |
$ |
|
( |
) |
$ |
|
( |
) |
|
|
The Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of (Loss) Income |
|
|||||||
|
|
Location of (Gain) Loss Recognized in Income on Derivatives |
|
Amount of (Gain) Loss Recognized in Income |
|
|||||
|
|
|
|
Three Months Ended |
|
|||||
(in millions) |
|
|
|
2023 |
|
|
2022 |
|
||
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 on those assumptions.
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, 2022 |
$ |
$ |
( |
$ |
( |
$ |
( |
|
Other comprehensive income (loss) before reclassifications, net of tax |
|
( |
|
|
( |
|
||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax |
|
( |
|
|
|
|||
Balance at March 31, 2023 |
$ |
$ |
( |
$ |
( |
$ |
( |
The reclassifications out of AOCI for the three months ended March 31, 2023 and 2022 were as follows:
(in millions) |
|
2023 |
|
2022 |
|
|
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 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.
Service or Extended Maintenance Agreements ("EMAs"). As of December 31, 2022, there was $
The following tables present our net sales disaggregated by regional geography(1), by reporting business segments and our net sales disaggregated by the timing of revenue recognition for the three months ended March 31, 2023 and 2022:
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
United States |
$ |
|
|
$ |
|
|
||
Canada |
|
|
|
|
|
|
||
ACCO Brands North America |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
ACCO Brands EMEA(2) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Australia/N.Z. |
|
|
|
|
|
|
||
Latin America |
|
|
|
|
|
|
||
Asia-Pacific |
|
|
|
|
|
|
||
ACCO Brands International |
|
|
|
|
|
|
||
Net sales |
$ |
|
|
$ |
|
|
||
(1) Net sales are attributed to geographic areas based on the location of the selling subsidiaries.
(2)
|
|
Three Months Ended March 31, |
|
|||||
(in millions) |
|
2023 |
|
|
2022 |
|
||
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
The Company has
Operating Segment |
|
Geography |
|
Primary Brands |
|
Primary Products |
ACCO Brands North America |
|
United States and Canada |
|
PowerA®, Five Star®, AT-A-GLANCE®, Quartet®, Kensington®, Swingline®, GBC®, Mead®, Hilroy® |
|
Computer and gaming accessories, school products, planners, storage and organization, dry erase boards and accessories, laminating, stapling and punching products. |
|
|
|
|
|
|
|
ACCO Brands EMEA |
|
Europe, Middle East and Africa |
|
Leitz®, Rapid®, Kensington®, Esselte®, Rexel®, PowerA®, GBC®, NOBO®, Derwent® |
|
Storage and organization products (lever-arch binders, sheet protectors, indexes), computer and gaming accessories, stapling, punching, shredding, laminating, do-it-yourself tools, dry erase boards and writing and art products. |
|
|
|
|
|
|
|
ACCO Brands International |
|
Australia/N.Z., Latin America and Asia-Pacific |
|
Tilibra®, GBC®, Kensington®, Marbig®, Foroni®, Barrilito®, Artline®*, PowerA®, Spirax® *Australia/N.Z. only |
|
School notebooks, storage and organization products (binders, sheet protectors and indexes), computer and gaming accessories, laminating, shredding, writing and arts products, janitorial supplies, dry erase boards, and stapling and punching products. |
Customers
We distribute our products through a wide variety of channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, technology distributors, discount, drug/grocery and variety chains, warehouse clubs, hardware and specialty stores, independent office product dealers, office superstores, wholesalers, 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, 2023 and 2022 were as follows:
(in millions) |
|
2023 |
|
|
2022 |
|
||
ACCO Brands North America |
$ |
|
|
$ |
|
|
||
ACCO Brands EMEA |
|
|
|
|
|
|
||
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, 2023 and 2022 was as follows:
(in millions) |
|
2023 |
|
|
2022 |
|
||
ACCO Brands North America |
$ |
|
|
$ |
|
|
||
ACCO Brands EMEA |
|
|
|
|
|
|
||
ACCO Brands International |
|
|
|
|
|
|
||
Segment operating income |
|
|
|
|
|
|
||
Change in fair value of contingent consideration |
|
|
|
|
|
( |
) |
|
Corporate |
|
|
( |
) |
|
|
( |
) |
Operating income(1) |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Interest income |
|
|
( |
) |
|
|
( |
) |
Non-operating pension expense (income) |
|
|
|
|
|
( |
) |
|
Other expense, net |
|
|
|
|
|
|
||
Loss before income tax |
$ |
|
( |
) |
$ |
|
( |
) |
17. Commitments and Contingencies
Pending Litigation - Brazil Tax Assessments
In connection with our May 1, 2012, acquisition of the Mead C&OP business, we assumed all of the tax liabilities for the acquired foreign operations including ACCO Brazil. For further information, see "Note 10. Income Taxes - Brazil Tax Assessments" for details on tax assessments issued by the FRD against ACCO Brazil challenging the tax deduction of goodwill from ACCO Brazil's taxable income for the years 2007 through 2010. If the FRD's initial position is ultimately sustained, payment of the amount assessed would materially and adversely affect our cash flow in the year of settlement.
Brazil Tax Credits
In May 2021, the Supreme Court of Brazil issued its final ruling in a leading case related to the computation of certain indirect taxes which provides that the indirect tax base should not include the gross amount of the value-added tax known as “ICMS.” The Supreme Court further ruled that taxpayers can recognize future operating credits ("Tax Credits") for excess indirect tax payments from past periods due to the inclusion of ICMS in the indirect tax base to the extent the taxpayer had filed judicial challenges seeking to recover excess tax payments prior to March 15, 2017 and for any excess tax payments made after March 15, 2017.
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. Some of these cases have been finally decided in a court of law in favor of ACCO Brazil, while others are still pending. Finalization of the remaining legal actions ACCO Brazil has filed will result in additional Tax Credits of approximately $
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. We are required under the quota purchase
24
ACCO Brands Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
agreement to remit any recovered tax credits, less the applicable tax, to the former owners of Foroni to the extent they relate to a tax period prior to the acquisition date.
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, 2023 and 2022 should be read in conjunction with the unaudited condensed consolidated financial statements of ACCO Brands Corporation and the accompanying notes contained therein.
Overview of the Company
ACCO Brands is a leading global consumer, technology and business branded products company, providing well-known brands and innovative product solutions used in schools, homes and at work. Recently we have successfully increased the mix of our sales to higher growth product categories and sales channels, including retail and mass merchants, e-tailers, and technology specialists. We have an experienced management team with a proven ability to grow brands, integrate acquisitions, manage seasonal businesses, run lean organizations and navigate challenging environments. Our products are sold primarily in the U.S., Europe, Australia, Canada, Brazil and Mexico.
ACCO Brands has three operating business segments based in different geographic regions: North America, EMEA, and International. Each business segment designs, markets, sources, manufactures, and sells recognized consumer, technology and business branded products used in schools, homes and at work. Product designs are tailored to end-user preferences in each geographic region, and where possible, leverage common engineering, design, and sourcing.
Our product categories include gaming and computer accessories; storage and organization; notebooks; shredding; laminating and binding machines; stapling; punching; planners; dry erase boards; and do-it-yourself tools, among others. We distribute our products through a wide variety of channels to ensure that our products are readily and conveniently available for purchase by consumers and other end-users, wherever they prefer to shop. These channels include mass retailers, e-tailers, technology distributors, discount, drug/grocery and variety chains, warehouse clubs, hardware and specialty stores, independent office product dealers, office superstores, wholesalers, and contract stationers.
Overview of Performance
During the first quarter, our net sales decreased $39.0 million, or 8.8 percent, including 2.4 percent from adverse foreign exchange, compared with the prior year's first quarter. Comparable net sales decreased 6.4 percent. Price increases added 9.1 percent while volume declined 15.5 percent. Our EMEA and North America segments reported sales declines of 13.0 percent and 15.3 percent, respectively. This decline was partially offset by 17.0 percent sales growth in our International segment.
In the first quarter, we reported operating income of $10.1 million, a $3.3 million increase, compared with operating income of $6.8 million in the prior year's first quarter. The increase in operating income reflects the impact of our cumulative global price increases and lower SG&A expense, which more than offset lower sales volume and adverse foreign exchange. Gross margin increased 250 basis points primarily due to cumulative global price increases, cost reduction actions within our North America and EMEA segments and improved cost leverage from volume growth within our International segment.
Our operating cash flow for the first three months was a use of cash of $23.2 million, compared to cash used of $104.2 million in the prior year due to improved working capital, primarily related to less cash used for payables, lower inventory purchases, and lower payments for incentive compensation. Our operating cash flow is seasonal with a historic pattern of outflow in the first half followed by strong inflows in both quarters of the second half. We anticipate the same seasonal cash flow pattern to repeat again this year.
We continue to see volatility in most foreign currencies against the U.S. dollar, which affected the sales, profitability and cash flow of our foreign operations which transact business in their local currency. During the first quarter, our EMEA segment was most negatively impacted. We expect foreign currency fluctuations to continue to impact our results.
26
Consolidated Results of Operations for the Three Months Ended March 31, 2023 and 2022
|
|
Three Months Ended |
|
Amount of Change |
|
||||
(in millions, except per share data) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
402.6 |
$ |
441.6 |
$ |
(39.0) |
|
(8.8)% |
|
Cost of products sold |
|
283.3 |
|
322.0 |
|
(38.7) |
|
(12.0)% |
|
Gross profit |
|
119.3 |
|
119.6 |
|
(0.3) |
|
(0.3)% |
|
Gross profit margin |
|
29.6 % |
|
27.1 % |
|
|
|
2.5 |
pts |
Selling, general and administrative expenses |
|
95.0 |
|
98.8 |
|
(3.8) |
|
(3.8)% |
|
SG&A% to net sales |
|
23.6 % |
|
22.4 % |
|
|
|
1.2 |
pts |
Amortization of intangibles |
|
10.9 |
|
11.1 |
|
(0.2) |
|
(1.8)% |
|
Restructuring charges |
|
3.3 |
|
0.3 |
|
3.0 |
|
NM |
|
Change in fair value of contingent consideration |
|
— |
|
2.6 |
|
(2.6) |
|
NM |
|
Operating income |
|
10.1 |
|
6.8 |
|
3.3 |
|
48.5 % |
|
Operating (loss) income margin |
|
2.5 % |
|
1.5 % |
|
|
|
1.0 |
pts |
Interest expense |
|
13.9 |
|
9.7 |
|
4.2 |
|
43.3 % |
|
Interest income |
|
(2.4) |
|
(1.4) |
|
(1.0) |
|
71.4 % |
|
Non-operating pension expense (income) |
|
0.1 |
|
(1.4) |
|
1.5 |
|
NM |
|
Other expense, net |
|
1.8 |
|
0.9 |
|
0.9 |
|
100.0 % |
|
Loss before income tax |
|
(3.3) |
|
(1.0) |
|
(2.3) |
|
NM |
|
Income tax expense |
|
0.4 |
|
1.7 |
|
(1.3) |
|
(76.5)% |
|
Effective tax rate |
|
(12.1)% |
|
(170.0)% |
|
|
|
157.9 |
pts |
Net loss |
|
(3.7) |
|
(2.7) |
|
(1.0) |
|
(37.0)% |
|
Weighted average number of diluted shares outstanding: |
|
94.9 |
|
96.2 |
|
(1.3) |
|
(1.3)% |
|
Diluted loss per share |
$ |
(0.04) |
$ |
(0.03) |
$ |
(0.01) |
|
(33.3)% |
|
Comparable net sales (Non-GAAP)(1) |
$ |
413.2 |
$ |
441.6 |
$ |
(28.4) |
|
(6.4)% |
|
Net Sales
For the three months ended March 31, 2023, net sales decreased $39.0 million, or 8.8 percent, including $10.6 million, or 2.4 percent, from adverse foreign exchange. Comparable net sales decreased 6.4 percent. The sales decline was driven by lower volume, which was down 15.5 percent, reflecting lower demand due to the challenging macroeconomic conditions, the return of typical seasonality in back-to-school purchasing by retailers in North America and weaker sales of technology accessories, partially offset by higher prices which added 9.1 percent. These sales declines more than offset cumulative global price increases and volume growth within our International segment.
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, 2023, cost of products sold decreased $38.7 million, or 12.0 percent, primarily due to lower net sales, global cost reduction actions and favorable foreign exchange, partially offset by lagging inflation. Foreign exchange reduced cost of products sold by $7.6 million, or 2.4 percent.
Gross Profit
For the three months ended March 31, 2023, gross profit decreased $0.3 million, or 0.3 percent. The reduction in gross profit includes adverse foreign exchange of $3.0 million, or 2.5 percent. Gross profit margin increased 250 basis points primarily due to the cumulative effect of global price increases and global cost reduction actions, as well as improved cost leverage from volume growth within our International segment.
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, 2023, SG&A decreased $3.8 million, or 3.8 percent, primarily due to the favorable impact of foreign exchange which reduced SG&A by $2.4 million, or 2.4 percent. Excluding foreign exchange, expenses were down due to strong cost controls. SG&A as a percentage of net sales increased due to lower sales.
Restructuring Charges
For the three months ended March 31, 2023, restructuring expense increased $3.0 million compared to prior year. Cost reduction programs primarily related to severance costs in EMEA and International.
Change in Fair Value of Contingent Consideration
The prior period benefited from a $2.6 million reversal of accruals related to the change in fair value of the contingent consideration related to the PowerA earnout.
Operating Income
For the three months ended March 31, 2023, operating income was $10.1 million compared to $6.8 million in the prior year. The increase of $3.3 million reflects the impact of cumulative global price increases, and lower SG&A expense, partly offset by higher restructuring charges. Adverse foreign exchange reduced operating income by $0.2 million.
Interest Expense
For the three months ended March 31, 2023, the increase in interest expense of $4.2 million was primarily due to higher interest rates versus the prior year. Our variable debt weighted average interest rate increased to 6.19 percent from 2.05 percent in the prior year.
Income Tax Expense
For the three months ended March 31, 2023, we recorded income tax expense of $0.4 million on a loss before taxes of $3.3 million. This compared with an income tax expense of $1.7 million on a loss before taxes of $1.0 million for the three months ended March 31, 2022.
See "Note 10. Income Taxes" for more information.
Net Loss/Diluted Loss per Share
For the three months ended March 31, 2023, net loss was $3.7 million compared to $2.7 million in the prior year, due primarily to higher interest and non-operating pension costs.
28
Segment Net Sales and Operating Income for the Three Months Ended March 31, 2023 and 2022
ACCO Brands North America
|
|
Three Months Ended |
|
Amount of Change |
|
||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
176.7 |
$ |
208.5 |
$ |
(31.8) |
|
(15.3)% |
|
Segment operating income⁽¹⁾ |
|
5.2 |
|
13.9 |
|
(8.7) |
|
(62.6)% |
|
Segment operating income margin |
|
2.9 % |
|
6.7 % |
|
|
|
(3.8) |
pts |
Comparable net sales (Non-GAAP)⁽²⁾ |
$ |
178.2 |
$ |
208.5 |
$ |
(30.3) |
|
(14.6)% |
|
For the three months ended March 31, 2023, net sales decreased $31.8 million, or 15.3 percent. Sales price increases added $8.8 million, or 4.2 percent, and were more than offset by decreased volume of $39.2 million, or 18.8 percent. The volume decline is due to a weaker macroeconomic environment, lower early back-to-school purchases by retailers and lower demand for technology accessories. In 2022, due to supply chain concerns retailers purchased back-to-school product earlier in the year than is typical to ensure product availability for the selling season, which did not occur at the same level in 2023.
For the three months ended March 31, 2023, operating income was $5.2 million compared to $13.9 million in the prior year. The decreases in operating income and operating margin primarily reflect the impact of lower sales volume, the lagging effect of inflation, and negative fixed cost leverage.
ACCO Brands EMEA
|
|
Three Months Ended |
|
Amount of Change |
|
||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
135.8 |
$ |
156.1 |
$ |
(20.3) |
|
(13.0)% |
|
Segment operating income⁽¹⁾ |
|
7.8 |
|
5.6 |
|
2.2 |
|
39.3 % |
|
Segment operating income margin |
|
5.7% |
|
3.6% |
|
|
|
2.1 |
pts |
Comparable net sales (Non-GAAP)⁽²⁾ |
$ |
144.8 |
$ |
156.1 |
$ |
(11.3) |
|
(7.3)% |
|
For the three months ended March 31, 2023, net sales decreased $20.3 million, or 13.0 percent, including $9.0 million, or 5.7 percent of adverse foreign exchange. Comparable net sales decreased mainly due to lower volume of $33.0 million, or 21.1 percent, partly offset by price increases which added $21.7 million, or 13.9 percent. The lower volume was primarily driven by reduced demand due to a weaker macroeconomic environment and lower demand for technology accessories.
For the three months ended March 31, 2023, operating income increased $2.2 million, or 39.3 percent, which includes $0.3 million, or 6.1 percent, of adverse foreign exchange. Operating income and operating margin increased primarily due to the cumulative effect of price increases and cost saving actions, more than offsetting negative fixed cost leverage and higher costs of certain goods.
29
ACCO Brands International
|
|
Three Months Ended |
|
Amount of Change |
|
||||
(in millions) |
|
2023 |
|
2022 |
|
$ |
|
%/pts |
|
Net sales |
$ |
90.1 |
$ |
77.0 |
$ |
13.1 |
|
17.0 % |
|
Segment operating income⁽¹⁾ |
|
9.0 |
|
4.2 |
|
4.8 |
|
NM |
|
Segment operating income margin |
|
10.0% |
|
5.5% |
|
|
|
4.5 |
pts |
Comparable net sales (Non-GAAP)⁽²⁾ |
$ |
90.3 |
$ |
77.0 |
$ |
13.3 |
|
17.2 % |
|
For the three months ended March 31, 2023, net sales increased $13.1 million, or 17.0 percent, including adverse foreign exchange of $0.2 million, or 0.2 percent. Comparable net sales increased primarily due to price increases which added $9.7 million, or 12.6 percent, and volume growth of $3.6 million, or 4.7 percent. Volume growth was primarily driven by Mexico and Brazil which benefited from the improvement of both in-person education and return-to-work trends.
For the three months ended March 31, 2023, operating income increased $4.8 million, primarily due to higher sales and improved cost leverage. Foreign exchange increased operating income $0.3 million, or 6.4 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, 2023, there was $168.5 million in borrowings outstanding under the Revolving Facility ($18.4 million reported in "Current portion of long-term debt" and $150.1 million reported in "Long-term debt, net"), and the amount available for borrowings was $419.6 million (allowing for $11.9 million of letters of credit outstanding on that date). We had $127.1 million in cash on hand. We maintain adequate financing arrangements at market rates.
As of March 31, 2023, our Consolidated Leverage Ratio was approximately 4.30 to 1.00 versus our maximum covenant of 5.00 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 $524.4 million of debt outstanding as of March 31, 2023 under our senior secured credit facilities has a weighted average interest rate of 6.19 percent, and the $575.0 million outstanding principal amount of our senior unsecured notes due 2029 has a fixed interest rate of 4.25 percent.
Adequacy of Liquidity Sources
We believe that cash flow from operations, our current cash balance and other sources of liquidity, including borrowings available under our Revolving Facility, will be adequate to support our requirements for working capital, capital and restructuring expenditures and to service indebtedness for the foreseeable future.
Restructuring Activities
From time to time the Company may implement restructuring, realignment or cost-reduction plans and activities, including those related to integrating acquired businesses.
The restructuring provision was $3.3 million for the three months ended March 31, 2023, primarily related to the Company's cost reduction programs representing expected severance costs mainly in EMEA, related to our footprint rationalization, and
30
International. 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, 2023 and 2022
During the three months ended March 31, 2023, our cash and cash equivalents increased $64.9 million, as compared to an increase of $50.1 million in the first three months of the prior year. The increase in cash generated of $14.8 million was primarily due to timing of payments for inventory which reduced the use of cash for accounts payable by $49.5 million, decreased inventory purchases of $12.3 million, reduced incentive payments of $16.7 million, and more cash provided by accounts receivable of $4.5 million, which were partially offset by lower net borrowings of $67.8 million.
The following table summarizes our cash flows for the periods presented:
|
|
Three Months Ended March 31, |
||
(in millions) |
|
2023 |
|
2022 |
Net cash flow (used in) provided by: |
|
|
|
|
Operating activities |
$ |
(23.2) |
$ |
(104.2) |
Investing activities |
|
(2.0) |
|
(3.4) |
|
|
|
|
|
Net borrowings |
|
89.9 |
|
157.7 |
Dividends paid |
|
— |
|
(7.3) |
All other financing |
|
(1.7) |
|
3.1 |
Financing activities |
|
88.2 |
|
153.5 |
Effect of foreign exchange rate changes on cash and cash equivalents |
|
1.9 |
|
4.2 |
Net increase in cash and cash equivalents |
$ |
64.9 |
$ |
50.1 |
Cash Flow from Operating Activities
Operating activities used $23.2 million of cash during the first three months ended March 31, 2023 resulting from a net loss of $3.7 million, net cash outflows from changes in our operating assets and liabilities of $46.9 million, partly offset by non-cash add backs of $27.4 million consisting primarily of the amortization of intangibles, depreciation, and stock-based compensation expense. The net cash outflows from changes in our operating assets and liabilities were primarily due to $43.8 million of payments for interest, employee incentives, and taxes, as well as payments related to other current and non-current liabilities. These were partly offset by cash provided by trade working capital of $25.6 million consisting of changes in accounts payable, inventory, and accounts receivable.
Operating activities used $104.2 million of cash during the first three months ended March 31, 2022 resulting from a net loss of $2.7 million, net cash outflows from changes in our operating assets and liabilities of $130.7 million, partially offset by non-cash add backs of $29.2 million consisting primarily of the amortization of intangibles, depreciation, and stock-based compensation expense. The net cash outflows from changes in our operating assets and liabilities were primarily due to $52.5 million of payments for interest, employee incentives, and taxes, as well as payments related to other current and non-current liabilities. We also used cash to fund investments in trade working capital of $40.7 million consisting of changes in accounts payable, inventory, and accounts receivable.
Cash Flow from Investing Activities
Cash used by investing activities of $2.0 million during the first three months ended March 31, 2023, were due to capital expenditures.
Cash used by investing activities of $3.4 million during the first three months ended March 31, 2022, were due to capital expenditures.
31
Cash Flow from Financing Activities
Cash provided by financing activities during the first three months ended March 31, 2023, were primarily due to net borrowings 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.
Cash provided by financing activities during the first three months ended March 31, 2022, were primarily due to net borrowings of $157.7 million, partly offset by dividends paid of $7.3 million.
Supplemental Non-GAAP Financial Measure
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), we provide investors with certain non-GAAP financial measures, including comparable sales. Comparable sales represent net sales excluding the impact of material acquisitions 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 change as reported to non-GAAP comparable sales change:
|
Comparable Sales - Three Months Ended March 31, 2023 |
|||||
|
|
|
|
Non-GAAP |
||
|
|
GAAP |
|
Currency |
|
Comparable |
(in millions) |
|
Net Sales |
|
Translation |
|
Net Sales |
ACCO Brands North America |
$ |
176.7 |
$ |
(1.5) |
$ |
178.2 |
ACCO Brands EMEA |
|
135.8 |
|
(9.0) |
|
144.8 |
ACCO Brands International |
|
90.1 |
|
(0.2) |
|
90.3 |
Total |
$ |
402.6 |
$ |
(10.6) |
$ |
413.2 |
|
Amount of Change - Three Months Ended March 31, 2023 compared to the Three Months Ended March 31, 2022 |
|||||
|
$ Change - Net Sales |
|||||
|
|
|
|
Non-GAAP |
||
|
|
GAAP |
|
|
|
Comparable |
|
|
Net Sales |
|
Currency |
|
Net Sales |
(in millions) |
|
Change |
|
Translation |
|
Change |
ACCO Brands North America |
$ |
(31.8) |
$ |
(1.5) |
$ |
(30.3) |
ACCO Brands EMEA |
|
(20.3) |
|
(9.0) |
|
(11.3) |
ACCO Brands International |
|
13.1 |
|
(0.2) |
|
13.3 |
Total |
$ |
(39.0) |
$ |
(10.6) |
$ |
(28.4) |
|
% Change - Net Sales |
|||||
|
|
|
|
Non-GAAP |
||
|
|
GAAP |
|
|
|
Comparable |
|
|
Net Sales |
|
Currency |
|
Net Sales |
|
|
Change |
|
Translation |
|
Change |
ACCO Brands North America |
|
(15.3)% |
|
(0.7)% |
|
(14.6)% |
ACCO Brands EMEA |
|
(13.0)% |
|
(5.7)% |
|
(7.3)% |
ACCO Brands International |
|
17.0% |
|
(0.2)% |
|
17.2% |
Total |
|
(8.8)% |
|
(2.4)% |
|
(6.4)% |
32
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk" of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to Foreign Exchange Risk Management or Interest Rate Risk Management in the quarter ended March 31, 2023 or through the date of this report.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision of the Chief Executive Officer and the Chief Financial Officer, and with the participation of our Disclosure Committee, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 2023.
(b) Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims, lawsuits and pending actions against us incidental to our operations, including the income tax assessments against our Brazilian subsidiary, ACCO Brazil (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.
33
ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those disclosed in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Common Stock Purchases
The following table provides information about our purchases of equity securities during the quarter ended March 31, 2023:
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number of |
|
|
Approximate Dollar |
|
||||
January 1, 2023 to January 31, 2023 |
|
|
— |
|
$ |
|
— |
|
|
|
— |
|
$ |
|
105,645,579 |
|
February 1, 2023 to February 28, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579 |
|
March 1, 2023 to March 31, 2023 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105,645,579 |
|
Total |
|
|
— |
|
$ |
|
— |
|
|
|
— |
|
$ |
|
105,645,579 |
|
(1) The Company's Board of Directors has authorized the repurchase of up to $200 million in shares of its common stock.
The number of shares to be purchased, if any, and the timing of purchases will be based on the Company's stock price, leverage ratios, cash balances, general business and market conditions, and other factors, including alternative investment opportunities and working capital needs. The Company may repurchase its shares, from time to time, through a variety of methods, including open-market purchases, privately negotiated transactions and block trades or pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. Any stock repurchases will be subject to market conditions, SEC regulations and other considerations and may be commenced or suspended at any time or from time to time, without prior notice. Accordingly, there is no guarantee as to the number of shares, if any, that will be repurchased or the timing of such repurchases.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
34
ITEM 6. EXHIBITS
Exhibit Number |
|
Description of Exhibit |
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1 |
|
|
|
|
|
32.2 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
|
|
|
* |
|
Filed herewith. |
|
|
|
** |
|
Furnished herewith. |
35
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/ Boris Elisman |
Boris Elisman |
|
Chairman 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 5, 2023
36
