ACCO BRANDS Corp [ACCO] Filings

10-Q 1 acco-20240630.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, 2024


☐	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 25, 2024, the registrant had outstanding 95,797,838 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, strategies, business operations and similar matters, results of operations, liquidity, and financial condition and those related to cost reductions and anticipated pre-tax savings and restructuring costs are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend," "anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Forward-looking statements are subject to the occurrence of events outside the Company’s control and actual results and the timing of the events may differ materially from those suggested or implied by such forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. Investors and others are cautioned not place undue reliance on forward-looking statements when deciding whether to buy, sell or hold the Company's securities.

Some of the factors that could affect our results or cause our plans, actions and results to differ materially from those expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q are detailed in "Part I, Item 1. Business" and "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10Q and from time to time in our other Securities and Exchange Commission (the "SEC") filings.

Website Access to Securities and Exchange Commission Reports

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

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION	4
Item 1. Financial Statements	4
Condensed Consolidated Balance Sheets	4
Consolidated Statements of (Loss) Income	5
Consolidated Statements of Comprehensive (Loss) Income	6
Condensed Consolidated Statements of Cash Flows	7
Consolidated Statement of Stockholders’ Equity	8
Notes to Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36
PART II — OTHER INFORMATION	36
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3. Defaults Upon Senior Securities	37
Item 4. Mine Safety Disclosures	37
Item 5. Other Information	38
Item 6. Exhibits	38
SIGNATURES	39

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	June 30, 2024			December 31, 2023
(in millions)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	112.7		$	66.4
Accounts receivable, net		369.1			430.7
Inventories		330.0			327.5
Other current assets		46.6			30.8
Total current assets		858.4			855.4
Total property, plant and equipment		565.1			599.6
Less: accumulated depreciation		(411.3	)		(429.5	)
Property, plant and equipment, net		153.8			170.1
Right of use asset, leases		89.1			91.0
Deferred income taxes		97.6			104.7
Goodwill		451.3			590.0
Identifiable intangibles, net		743.7			815.7
Other non-current assets		19.5			17.9
Total assets	$	2,413.4		$	2,644.8
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable	$	13.9		$	0.2
Current portion of long-term debt		48.3			36.5
Accounts payable		174.5			183.7
Accrued compensation		38.7			53.3
Accrued customer program liabilities		84.8			104.0
Lease liabilities		20.4			20.5
Other current liabilities		103.7			143.8
Total current liabilities		484.3			542.0
Long-term debt, net		917.5			882.2
Long-term lease liabilities		75.1			76.8
Deferred income taxes		115.1			125.6
Pension and post-retirement benefit obligations		144.4			157.6
Other non-current liabilities		59.9			73.6
Total liabilities		1,796.3			1,857.8
Stockholders' equity:
Common stock		1.0			1.0
Treasury stock		(47.0	)		(45.1	)
Paid-in capital		1,921.7			1,913.4
Accumulated other comprehensive loss		(555.9	)		(526.3	)
Accumulated deficit		(702.7	)		(556.0	)
Total stockholders' equity		617.1			787.0
Total liabilities and stockholders' equity	$	2,413.4		$	2,644.8

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of (Loss) Income

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions, except per share data)	2024			2023			2024			2023
Net sales	$	438.3		$	493.6		$	797.2		$	896.2
Cost of products sold		285.7			329.4			534.2			612.7
Gross profit		152.6			164.2			263.0			283.5
Operating costs and expenses:
Selling, general and administrative expenses		88.0			98.0			182.2			193.0
Amortization of intangibles		10.9			11.0			21.5			21.9
Restructuring		(0.3	)		—			(0.6	)		3.3
Impairment of goodwill and intangible assets		165.2			—			165.2			—
Total operating costs and expenses		263.8			109.0			368.3			218.2
Operating (loss) income		(111.2	)		55.2			(105.3	)		65.3
Non-operating expense (income):
Interest expense		13.8			15.5			27.1			29.4
Interest income		(2.2	)		(2.2	)		(4.1	)		(4.6	)
Non-operating pension expense		4.8			0.2			5.2			0.3
Other (income) expense, net		(0.2	)		(0.3	)		(0.8	)		1.5
(Loss) income before income tax		(127.4	)		42.0			(132.7	)		38.7
Income tax (benefit) expense		(2.2	)		15.6			(1.2	)		16.0
Net (loss) income	$	(125.2	)	$	26.4		$	(131.5	)	$	22.7

Per share:
Basic (loss) income per share	$	(1.29	)	$	0.28		$	(1.37	)	$	0.24
Diluted (loss) income per share	$	(1.29	)	$	0.27		$	(1.37	)	$	0.23

Weighted average number of shares outstanding:
Basic		96.8			95.4			96.3			95.1
Diluted		96.8			96.3			96.3			96.7

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2024			2023			2024			2023
Net (loss) income	$	(125.2	)	$	26.4		$	(131.5	)	$	22.7
Other comprehensive (loss) income net of tax:
Unrealized gain (loss) on derivative instruments, net of tax benefit (expense) of zero and $(0.2) and $(0.2) and $0.1, respectively		0.1			0.6			0.6			(0.3	)
Foreign currency translation adjustments, net of tax (expense) benefit of $(0.5) and $0.1 and $(0.5) and $0.2, respectively		(15.3	)		(1.7	)		(36.5	)		7.2
Recognition of deferred pension and other post-retirement items, net of tax (expense) benefit of $(1.4) and $0.2 and $(2.1) and $0.6, respectively		3.9			(0.8	)		6.3			(2.3	)
Other comprehensive (loss) income net of tax:		(11.3	)		(1.9	)		(29.6	)		4.6

Comprehensive (loss) income	$	(136.5	)	$	24.5		$	(161.1	)	$	27.3

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)	2024			2023
Operating activities
Net (loss) income	$	(131.5	)	$	22.7
Loss on disposal of assets		0.2			1.2
Depreciation		14.1			17.3
Amortization of debt issuance costs		1.5			1.5
Amortization of intangibles		21.5			21.9
Stock-based compensation		7.6			8.9
Non-cash charge for impairment of goodwill and intangible assets		165.2			—
Changes in operating assets and liabilities:
Accounts receivable		43.7			(33.4	)
Inventories		(12.2	)		10.1
Other assets		(15.9	)		(9.0	)
Accounts payable		(4.6	)		(55.1	)
Accrued expenses and other liabilities		(58.5	)		(19.1	)
Accrued income taxes		(28.5	)		(6.3	)
Net cash provided (used) by operating activities		2.6			(39.3	)
Investing activities
Additions to property, plant and equipment		(4.9	)		(6.1	)
Proceeds from the disposition of assets		0.1			—
Net cash used by investing activities		(4.8	)		(6.1	)
Financing activities
Proceeds from long-term borrowings		92.0			107.9
Repayments of long-term debt		(38.1	)		(28.2	)
Borrowings (repayments) of notes payable, net		13.8			(2.4	)
Dividends paid		(14.3	)		(14.2	)
Payments related to tax withholding for stock-based compensation		(1.9	)		(1.7	)
Net cash provided by financing activities		51.5			61.4
Effect of foreign exchange rate changes on cash and cash equivalents		(3.0	)		4.2
Net increase in cash and cash equivalents		46.3			20.2
Cash and cash equivalents
Beginning of the period	$	66.4		$	62.2
End of the period	$	112.7		$	82.4
Cash paid during the year for:
Interest	$	24.9		$	30.3
Income taxes	$	27.2		$	22.1

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)


												Accumulated Other
	Common Stock				Paid-in		Treasury Stock					Comprehensive			Accumulated
(in millions)	Shares		Value		Capital		Shares		Value			Income (Loss)			Deficit			Total
Balance at December 31, 2023		99.8	$	1.0	$	1,913.4		4.9	$	(45.1	)	$	(526.3	)	$	(556.0	)	$	787.0
Net loss		—		—		—		—		—			—			(6.3	)		(6.3	)
Gain on derivative financial instruments, net of tax		—		—		—		—		—			0.5			—			0.5
Translation impact, net of tax		—		—		—		—		—			(21.2	)		—			(21.2	)
Pension and post-retirement adjustment, net of tax		—		—		—		—		—			2.4			—			2.4
Stock-based compensation		—		—		5.4		—		—			—			(0.3	)		5.1
Common stock issued, net of shares withheld for employee taxes		1.1		—		—		0.3		(1.9	)		—			—			(1.9	)
Dividends declared $0.075 per share		—		—		—		—		—			—			(7.2	)		(7.2	)
Other		—		—		—		—		—			—			0.1			0.1
Balance at March 31, 2024		100.9	$	1.0	$	1,918.8		5.2	$	(47.0	)	$	(544.6	)	$	(569.7	)	$	758.5
Net loss		—		—		—		—		—			—			(125.2	)		(125.2	)
Gain on derivative financial instruments, net of tax		—		—		—		—		—			0.1			—			0.1
Translation impact, net of tax		—		—		—		—		—			(15.3	)		—			(15.3	)
Pension and post-retirement adjustment, net of tax		—		—		—		—		—			3.9			—			3.9
Stock-based compensation		—		—		2.9		—		—			—			(0.4	)		2.5
Common stock issued, net of shares withheld for employee taxes		0.1		—		—		—		—			—			—			—
Dividends declared, $0.075 per share		—		—		—		—		—			—			(7.1	)		(7.1	)
Other		—		—		—		—		—			—			(0.3	)		(0.3	)
Balance at June 30, 2024		101.0	$	1.0	$	1,921.7		5.2	$	(47.0	)	$	(555.9	)	$	(702.7	)	$	617.1

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity Continued

(Unaudited)


													Accumulated Other
	Common Stock				Paid-in			Treasury Stock					Comprehensive			Accumulated
(in millions)	Shares		Value		Capital			Shares		Value			Income (Loss)			Deficit			Total
Balance at December 31, 2022		98.9	$	1.0	$	1,897.2			4.6	$	(43.4	)	$	(540.3	)	$	(504.4	)	$	810.1
Net loss		—		—		—			—		—			—			(3.7	)		(3.7	)
Loss on derivative financial instruments, net of tax		—		—		—			—		—			(0.9	)		—			(0.9	)
Translation impact, net of tax		—		—		—			—		—			8.9			—			8.9
Pension and post-retirement adjustment, net of tax		—		—		—			—		—			(1.5	)		—			(1.5	)
Stock-based compensation		—		—		6.2			—		—			—			(0.6	)		5.6
Common stock issued, net of shares withheld for employee taxes		0.9		—		—			0.3		(1.7	)		—			—			(1.7	)
Dividends declared $0.075 per share		—		—		—			—		—			—			(7.1	)		(7.1	)
Other		—		—		(0.1	)		—		0.1			—			0.1			0.1
Balance at March 31, 2023		99.8	$	1.0	$	1,903.3			4.9	$	(45.0	)	$	(533.8	)	$	(515.7	)	$	809.8
Net income		—		—		—			—		—			—			26.4			26.4
Gain on derivative financial instruments, net of tax		—		—		—			—		—			0.6			—			0.6
Translation impact, net of tax		—		—		—			—		—			(1.7	)		—			(1.7	)
Pension and post-retirement adjustment, net of tax		—		—		—			—		—			(0.8	)		—			(0.8	)
Stock-based compensation		—		—		3.4			—		—			—			(0.1	)		3.3
Dividends declared, $0.075 per share		—		—		—			—		—			—			(7.1	)		(7.1	)
Other		—		—		0.1			—		—			—			(0.2	)		(0.1	)
Balance at June 30, 2023		99.8	$	1.0	$	1,906.8			4.9	$	(45.0	)	$	(535.7	)	$	(496.7	)	$	830.4

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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 June 30, 2024, the terms "ACCO Brands," "ACCO," the "Company," "we," "us," and "our" refer to ACCO Brands Corporation and its consolidated subsidiaries.

The management of ACCO Brands Corporation is responsible for the accuracy and internal consistency of the preparation of the condensed consolidated financial statements and notes contained in this Quarterly Report on Form 10-Q.

The condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the SEC. Although the Company believes the disclosures are adequate to make the information presented not misleading, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP") have been condensed or omitted pursuant to those rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The Condensed Consolidated Balance Sheet as of June 30, 2024 and the related Consolidated Statements of (Loss) Income, Consolidated Statements of Comprehensive (Loss) Income, and Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2024 and