ACCO BRANDS Corp [ACCO] Filings

10-Q 1 acco-20230630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form	10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-08454

ACCO Brands Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware

36-2704017

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification Number)

Four Corporate Drive

Lake Zurich, Illinois 60047

(Address of Registrant’s Principal Executive Office, Including Zip Code)

(847) 541-9500

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ACCO	NYSE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 31, 2023, the registrant had outstanding 94,917,374 shares of Common Stock.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, operating strategies and similar matters, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.

Some of the factors that could affect our results or cause our plans, actions and results to differ materially from those expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2022, as well as in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and from time to time in our other Securities and Exchange Commission (the "SEC") filings.

Website Access to Securities and Exchange Commission Reports

The Company’s Internet website can be found at www.accobrands.com. The Company makes available free of charge on or through its website its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as practicable after the Company files them with, or furnishes them to, the SEC.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets	4
Consolidated Statements of Income	5
Consolidated Statements of Comprehensive Income	6
Condensed Consolidated Statements of Cash Flows	7
Consolidated Statement of Stockholders’ Equity	8
Notes to Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	35
PART II — OTHER INFORMATION	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37
SIGNATURES	38

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


		June 30, 2023				December 31, 2022
(in millions)		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$		82.4		$		62.2
Accounts receivable, net			426.1				384.1
Inventories			398.0				395.2
Other current assets			47.6				40.8
Total current assets			954.1				882.3
Total property, plant and equipment			594.7				589.2
Less: accumulated depreciation			(417.3	)			(404.1	)
Property, plant and equipment, net			177.4				185.1
Right of use asset, leases			85.7				88.8
Deferred income taxes			97.7				99.7
Goodwill			662.0				671.5
Identifiable intangibles, net			833.2				847.0
Other non-current assets			15.7				20.3
Total assets	$		2,825.8		$		2,794.7
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable	$		7.9		$		10.3
Current portion of long-term debt			53.9				49.7
Accounts payable			194.6				239.5
Accrued compensation			41.3				38.3
Accrued customer program liabilities			100.0				103.3
Lease liabilities			20.4				21.2
Other current liabilities			115.9				126.7
Total current liabilities			534.0				589.0
Long-term debt, net			1,015.8				936.5
Long-term lease liabilities			72.3				75.2
Deferred income taxes			142.7				144.1
Pension and post-retirement benefit obligations			149.4				155.5
Other non-current liabilities			81.2				84.3
Total liabilities			1,995.4				1,984.6
Stockholders' equity:
Common stock			1.0				1.0
Treasury stock			(45.0	)			(43.4	)
Paid-in capital			1,906.8				1,897.2
Accumulated other comprehensive loss			(535.7	)			(540.3	)
Accumulated deficit			(496.7	)			(504.4	)
Total stockholders' equity			830.4				810.1
Total liabilities and stockholders' equity	$		2,825.8		$		2,794.7

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


		Three Months Ended June 30,								Six Months Ended June 30,
(in millions, except per share data)		2023				2022				2023				2022
Net sales	$		493.6		$		521.0		$		896.2		$		962.6
Cost of products sold			329.4				371.0				612.7				693.0
Gross profit			164.2				150.0				283.5				269.6
Operating costs and expenses:
Selling, general and administrative expenses			98.0				91.6				193.0				190.4
Amortization of intangibles			11.0				10.5				21.9				21.6
Restructuring charges			—				1.9				3.3				2.2
Change in fair value of contingent consideration			—				(9.4	)			—				(6.8	)
Total operating costs and expenses			109.0				94.6				218.2				207.4
Operating income			55.2				55.4				65.3				62.2
Non-operating expense (income):
Interest expense			15.5				10.8				29.4				20.5
Interest income			(2.2	)			(2.2	)			(4.6	)			(3.6	)
Non-operating pension expense (income)			0.2				(1.3	)			0.3				(2.7	)
Other (income) expense, net			(0.3	)			(3.7	)			1.5				(2.8	)
Income before income tax			42.0				51.8				38.7				50.8
Income tax expense			15.6				12.4				16.0				14.1
Net income	$		26.4		$		39.4		$		22.7		$		36.7

Per share:
Basic income per share	$		0.28		$		0.41		$		0.24		$		0.38
Diluted income per share	$		0.27		$		0.40		$		0.23		$		0.37

Weighted average number of shares outstanding:
Basic			95.4				96.2				95.1				96.2
Diluted			96.3				97.4				96.7				98.0

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended June 30,								Six Months Ended June 30,
(in millions)		2023				2022				2023				2022
Net income	$		26.4		$		39.4		$		22.7		$		36.7
Other comprehensive (loss) income, net of tax:
Unrealized loss on derivative instruments, net of tax (expense) benefit of $(0.2) and $(1.6) and $0.1 and $(0.9), respectively			0.6				3.9				(0.3	)			2.5
Foreign currency translation adjustments, net of tax benefit of $0.1 and $1.5 and $0.2 and $2.1, respectively			(1.7	)			(37.2	)			7.2				(21.9	)
Recognition of deferred pension and other post-retirement items, net of tax benefit (expense) of $0.2 and $(3.5) and $0.6 and $(4.9), respectively			(0.8	)			10.8				(2.3	)			15.6
Other comprehensive (loss) income, net of tax:			(1.9	)			(22.5	)			4.6				(3.8	)

Comprehensive income	$		24.5		$		16.9		$		27.3		$		32.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended June 30,
(in millions)		2023				2022
Operating activities
Net income	$		22.7		$		36.7
Payments of contingent consideration			—				(9.2	)
Loss on disposal of assets			1.2				(0.2	)
Change in fair value of contingent liability			—				(6.8	)
Depreciation			17.3				19.6
Amortization of debt issuance costs			1.5				1.4
Amortization of intangibles			21.9				21.6
Stock-based compensation			8.9				7.2
Changes in operating assets and liabilities:
Accounts receivable			(33.4	)			(12.4	)
Inventories			10.1				(51.4	)
Other assets			(9.0	)			(18.7	)
Accounts payable			(55.1	)			(47.2	)
Accrued expenses and other liabilities			(19.1	)			(34.8	)
Accrued income taxes			(6.3	)			(3.7	)
Net cash used by operating activities			(39.3	)			(97.9	)
Investing activities
Additions to property, plant and equipment			(6.1	)			(7.0	)
Proceeds from the disposition of assets			—				0.2
Net cash used by investing activities			(6.1	)			(6.8	)
Financing activities
Proceeds from long-term borrowings			107.9				218.0
Repayments of long-term debt			(28.2	)			(25.6	)
Repayments of notes payable, net			(2.4	)			11.3
Dividends paid			(14.2	)			(14.4	)
Payments of contingent consideration			—				(17.8	)
Repurchases of common stock			—				(19.4	)
Payments related to tax withholding for stock-based compensation			(1.7	)			(2.5	)
Proceeds from the exercise of stock options			—				4.3
Net cash provided by financing activities			61.4				153.9
Effect of foreign exchange rate changes on cash and cash equivalents			4.2				1.3
Net increase in cash and cash equivalents			20.2				50.5
Cash and cash equivalents
Beginning of the period			62.2				41.2
End of the period	$		82.4		$		91.7
Cash paid during the year for:
Interest	$		30.3		$		18.9
Income taxes	$		22.1		$		17.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)


	Common Stock					Treasury Stock				Accumulated Other
(in millions)	Shares		Value		Paid-in Capital	Shares		Value		Comprehensive (Loss) Income		Accumulated Deficit		Total
Balance at December 31, 2022	98.9	$	1.0	$	1,897.2	4.6	$	(43.4)	$	(540.3)	$	(504.4)	$	810.1
Net loss	—		—		—	—		—		—		(3.7)		(3.7)
Loss on derivative financial instruments, net of tax	—		—		—	—		—		(0.9)		—		(0.9)
Translation impact, net of tax	—		—		—	—		—		8.9		—		8.9
Pension and post-retirement adjustment, net of tax	—		—		—	—		—		(1.5)		—		(1.5)
Stock-based compensation	—		—		6.2	—		—		—		(0.6)		5.6
Common stock issued, net of shares withheld for employee taxes	0.9		—		—	0.3		(1.7)		—		—		(1.7)
Dividends declared, $0.075 per share	—		—		—	—		—		—		(7.1)		(7.1)
Other	—		—		(0.1)	—		0.1		—		0.1		0.1
Balance at March 31, 2023	99.8	$	1.0	$	1,903.3	4.9	$	(45.0)	$	(533.8)	$	(515.7)	$