ACCO Brands Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

abd-20200930

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 September 30, 2020


☐			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	☐ (Do not check if a smaller reporting company)	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 October 22, 2020, the registrant had outstanding 94,496,837 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, 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.

Our outlook is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding both the near-term and long-term impact of the COVID-19 pandemic on the economy and our business, our customers and the end-users of our products, and other changes in the macro environment; changes in the competitive landscape, including ongoing uncertainties in the traditional office products channels; as well as the impact of fluctuations in foreign currency and acquisitions and the other factors described below.

Among the factors that could cause our actual results to differ materially from our forward-looking statements are: the scope and duration of the COVID-19 pandemic, government actions and other third-party responses to it and the consequences for the global economy, as well as the regional and local economies in which we operate, uncertainties regarding when the risks of the pandemic will subside and how geographies, distribution channels and consumer behaviors will evolve over time in response to the pandemic, and its impact on our business, operations, results of operations and financial condition, including, among others, manufacturing, distribution and supply chain disruptions, reduced demand for our products and services, and the financial condition of our suppliers and customers, including their ability to fund their operations and pay their invoices. Additionally, many of the other risk factors affecting us are currently elevated by, and likely will continue to be elevated by, the COVID-19 pandemic.

Other factors that could affect our results or cause plans, actions and results to differ materially from current expectations 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, 2019, in "Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and the discussion under the heading "COVID-19 Impact" as well as the financial statement line item discussions set forth in "Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q 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

ITEM 1. FINANCIAL STATEMENTS

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30, 2020		December 31, 2019
(in millions)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	85.8	$	27.8
Accounts receivable, net	343.7		453.7
Inventories	300.5		283.3
Other current assets	35.0		41.2
Total current assets	765.0		806.0
Total property, plant and equipment	641.8		651.7
Less: accumulated depreciation	(402.0)		(384.6)
Property, plant and equipment, net	239.8		267.1
Right of use asset, leases	87.0		101.9
Deferred income taxes	117.3		119.0
Goodwill	723.4		718.6
Identifiable intangibles, net	726.8		758.6
Other non-current assets	36.5		17.4
Total assets	$	2,695.8	$	2,788.6
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable	$	5.8	$	3.7
Current portion of long-term debt	30.0		29.5
Accounts payable	171.4		245.7
Accrued compensation	41.9		48.5
Accrued customer program liabilities	76.9		99.7
Lease liabilities	20.1		21.8
Other current liabilities	124.2		139.9
Total current liabilities	470.3		588.8
Long-term debt, net	876.3		777.2
Long-term lease liabilities	76.4		89.8
Deferred income taxes	170.7		177.5
Pension and post-retirement benefit obligations	268.7		283.2
Other non-current liabilities	108.2		98.4
Total liabilities	1,970.6		2,014.9
Stockholders' equity:
Common stock	1.0		1.0
Treasury stock	(39.9)		(38.2)
Paid-in capital	1,878.9		1,890.8
Accumulated other comprehensive loss	(554.2)		(505.7)
Accumulated deficit	(560.6)		(574.2)
Total stockholders' equity	725.2		773.7
Total liabilities and stockholders' equity	$	2,695.8	$	2,788.6

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Income

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2020		2019		2020		2019
Net sales	$	444.1	$	505.7	$	1,195.1	$	1,418.3
Cost of products sold	317.0		349.8		845.8		970.8
Gross profit	127.1		155.9		349.3		447.5
Operating costs and expenses:
Selling, general and administrative expenses	84.4		96.4		247.7		287.8
Amortization of intangibles	7.9		8.6		24.1		26.8
Restructuring charges	0.5		2.1		7.3		4.8

Total operating costs and expenses	92.8		107.1		279.1		319.4
Operating income	34.3		48.8		70.2		128.1
Non-operating expense (income):
Interest expense	10.2		11.5		28.7		33.6
Interest income	(0.2)		(0.7)		(0.8)		(2.9)

Non-operating pension income	(1.4)		(1.3)		(4.4)		(4.1)
Other expense (income), net	0.1		(0.9)		0.8		0.1
Income before income tax	25.6		40.2		45.9		101.4
Income tax expense	6.8		12.2		13.7		38.1


Net income	$	18.8	$	28.0	$	32.2	$	63.3

Per share:



Basic income per share	$	0.20	$	0.29	$	0.34	$	0.63



Diluted income per share	$	0.20	$	0.28	$	0.34	$	0.62

Weighted average number of shares outstanding:
Basic	94.5		97.6		95.0		100.4
Diluted	95.6		98.9		96.2		101.9

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Net income	$	18.8	$	28.0	$	32.2	$	63.3
Other comprehensive (loss) income, net of tax:
Unrealized (loss) income on derivative instruments, net of tax benefit (expense) of $0.2 and $(0.6) and $0.3 and $0.4, respectively	(0.6)		1.4		(0.6)		(0.9)

Foreign currency translation adjustments, net of tax benefit of $0.1 and $0.9 and $1.1 and $0.5, respectively	3.6		(25.1)		(53.7)		(22.4)

Recognition of deferred pension and other post-retirement items, net of tax benefit (expense) of $1.2 and $(1.2) and $(1.7) and $(1.9), respectively	(4.0)		4.2		5.8		6.6
Other comprehensive (loss) income, net of tax	(1.0)		(19.5)		(48.5)		(16.7)

Comprehensive income (loss)	$	17.8	$	8.5	$	(16.3)	$	46.6

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(in millions)	2020		2019
Operating activities
Net income	$	32.2	$	63.3

Amortization of inventory step-up	—		0.2


Depreciation	28.2		26.3
Other non-cash items	0.5		0.2
Amortization of debt issuance costs	1.7		1.7
Amortization of intangibles	24.1		26.8
Stock-based compensation	5.2		6.3
Loss on debt extinguishment	—		0.3

Changes in balance sheet items:
Accounts receivable	78.7		54.0
Inventories	(28.4)		34.8
Other assets	(1.0)		(2.6)
Accounts payable	(67.1)		(102.1)
Accrued expenses and other liabilities	(47.3)		(40.8)
Accrued income taxes	(5.0)		6.7
Net cash provided by operating activities	21.8		75.1
Investing activities
Additions to property, plant and equipment	(11.8)		(21.9)


Proceeds from the disposition of assets	—		0.1
Cost of acquisitions, net of cash acquired	0.6		(42.1)
Other assets acquired	—		(5.2)
Net cash used by investing activities	(11.2)		(69.1)
Financing activities
Proceeds from long-term borrowings	231.5		325.9
Repayments of long-term debt	(146.4)		(272.0)
Proceeds/repayments of notes payable, net	2.5		(8.6)
Payments for debt issuance costs	(1.6)		(3.3)
Dividends paid	(18.4)		(18.1)
Repurchases of common stock	(18.9)		(56.8)
Payments related to tax withholding for stock-based compensation	(1.8)		(4.3)

Proceeds from the exercise of stock options	1.7		3.1
Net cash provided (used) by financing activities	48.6		(34.1)
Effect of foreign exchange rate changes on cash and cash equivalents	(1.2)		(1.2)
Net increase (decrease) in cash and cash equivalents	58.0		(29.3)
Cash and cash equivalents
Beginning of the period	27.8		67.0
End of the period	$	85.8	$	37.7
Cash paid during the year for:
Interest	$	21.4	$	27.6
Income taxes	$	20.1	$	38.6

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

(Unaudited)


(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
Balance at December 31, 2019	$	1.0	$	1,890.8	$	(505.7)	$	(38.2)	$	(574.2)	$	773.7
Net income	—		—		—		—		8.0		8.0
Gain on derivative financial instruments, net of tax	—		—		2.4		—		—		2.4
Translation impact, net of tax	—		—		(49.7)		—		—		(49.7)
Pension and post-retirement adjustment, net of tax	—		—		7.9		—		—		7.9
Common stock repurchases	—		(18.9)		—		—		—		(18.9)
Stock-based compensation	—		0.9		—		—		—		0.9
Common stock issued, net of shares withheld for employee taxes	—		1.5		—		(1.7)		—		(0.2)
Dividends declared, $.065 per share	—		—		—		—		(6.2)		(6.2)

Balance at March 31, 2020	1.0		1,874.3		(545.1)		(39.9)		(572.4)		717.9
Net income	—		—		—		—		5.4		5.4
Loss on derivative financial instruments, net of tax	—		—		(2.4)		—		—		(2.4)
Translation impact, net of tax	—		—		(7.6)		—		—		(7.6)
Pension and post-retirement adjustment, net of tax	—		—		1.9		—		—		1.9

Stock-based compensation	—		2.6		—		—		(0.1)		2.5

Dividends declared, $.065 per share	—		—		—		—		(6.1)		(6.1)


Balance at June 30, 2020	1.0		1,876.9		(553.2)		(39.9)		(573.2)		711.6
Net income	—		—		—		—		18.8		18.8
Loss on derivative financial instruments, net of tax	—		—		(0.6)		—		—		(0.6)
Translation impact	—		—		3.6		—		—		3.6
Pension and post-retirement adjustment, net of tax	—		—		(4.0)		—		—		(4.0)

Stock-based compensation	—		1.9		—		—		(0.1)		1.8
Common stock issued, net of shares withheld for employee taxes	—		0.1		—		—		—		0.1
Dividends declared, $.065 per share	—		—		—		—		(6.1)		(6.1)


Balance at September 30, 2020	$	1.0	$	1,878.9	$	(554.2)	$	(39.9)	$	(560.6)	725.2

Shares of Capital Stock


	Common Stock	Treasury Stock	Net Shares
Shares at December 31, 2019	100,412,933	3,967,445	96,445,488
Common stock issued, net of shares withheld for employee taxes	898,664	206,243	692,421
Common stock repurchases	(2,690,292)	—	(2,690,292)
Shares at March 31, 2020	98,621,305	4,173,688	94,447,617
Common stock issued, net of shares withheld for employee taxes	26,957	12,427	14,530

Shares at June 30, 2020	98,648,262	4,186,115	94,462,147
Common stock issued, net of shares withheld for employee taxes	35,465	775	34,690

Shares at September 30, 2020	98,683,727	4,186,890	94,496,837

See Notes to Condensed Consolidated Financial Statements (Unaudited).

ACCO Brands Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity

Continued (Unaudited)


(in millions)	Common Stock		Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Accumulated Deficit		Total
December 31, 2018	$	1.1	$	1,941.0	$	(461.7)	$	(33.9)	$	(656.8)	$	789.7
Net loss	—		—		—		—		(0.6)		(0.6)
Loss on derivative financial instruments, net of tax	—		—		(1.1)		—		—		(1.1)
Translation impact, net of tax	—		—		(3.1)		—		—		(3.1)
Pension and post-retirement adjustment, net of tax	—		—		(1.1)		—		—		(1.1)
Common stock repurchases	—		(11.0)		—		—		—		(11.0)
Stock-based compensation	—		2.0		—		—		—		2.0
Common stock issued, net of shares withheld for employee taxes	—		—		—		(4.3)		—		(4.3)
Dividends declared, $.06 per share	—		—		—		—		(6.2)		(6.2)
Other	—		(0.1)		—		—		0.1		—
Cumulative effect due to the adoption of ASU 2016-02	—		—		—		—		0.5		0.5
Balance at March 31, 2019	1.1		1,931.9		(467.0)		(38.2)		(663.0)		764.8
Net income	—		—		—		—		35.9		35.9
Loss on derivative financial instruments, net of tax	—		—		(1.2)		—		—		(1.2)
Translation impact, net of tax	—		—		5.8		—		—		5.8
Pension and post-retirement adjustment, net of tax	—		—		3.5		—		—		3.5
Common stock repurchases	—		(28.3)		—		—		—		(28.3)
Stock-based compensation	—		3.6		—		—		(0.2)		3.4
Common stock issued, net of shares withheld for employee taxes	—		0.2		—		—		—		0.2
Dividends declared, $.06 per share	—		—		—		—		(6.0)		(6.0)
Other	(0.1)		0.1		—		—		(0.1)		(0.1)

Balance at June 30, 2019	1.0		1,907.5		(458.9)		(38.2)		(633.4)		778.0
Net income	—		—		—		—		28.0		28.0
Gain on derivative financial instruments, net of tax	—		—		1.4		—		—		1.4
Translation impact, net of tax	—		—		(25.1)		—		—		(25.1)
Pension and post-retirement adjustment, net of tax	—		—		4.2		—		—		4.2
Common stock repurchases	(0.1)		(17.6)		—		—		—		(17.7)
Stock-based compensation	—		1.0		—		—		(0.1)		0.9
Common stock issued, net of shares withheld for employee taxes	—		2.9		—		—		—		2.9
Dividends declared, $.06 per share	—		—		—		—		(5.9)		(5.9)
Other	0.1		—		—		—		0.1		0.2

Balance at September 30, 2019	$	1.0	$	1,893.8	$	(478.4)	$	(38.2)	$	(611.3)	$	766.9

Shares of Capital Stock


	Common Stock	Treasury Stock	Net Shares
Shares at December 31, 2018	106,249,322	3,500,622	102,748,700
Common stock issued, net of shares withheld for employee taxes	1,437,021	458,987	978,034
Common stock repurchases	(1,260,163)	—	(1,260,163)
Shares at March 31, 2019	106,426,180	3,959,609	102,466,571
Common stock issued, net of shares withheld for employee taxes	44,180	7,836	36,344
Common stock repurchases	(3,443,904)	—	(3,443,904)
Shares at June 30, 2019	103,026,456	3,967,445	99,059,011

Price	9.82	EPS	1
Shares	102	P/E	10
MCap	1,001	P/FCF	13
Net Debt	876	EBIT	170
TEV	1,877	TEV/EBIT	11
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-10-28
10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-05-05
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-31
10-Q	2019-03-31	Filed 2019-05-02
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-10-30
10-Q	2018-06-30	Filed 2018-07-31
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-28
10-Q	2017-09-30	Filed 2017-11-01
10-Q	2017-06-30	Filed 2017-08-03
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-09-30	Filed 2016-10-26
10-Q	2016-06-30	Filed 2016-08-02
10-Q	2016-03-31	Filed 2016-04-27
10-K	2015-12-31	Filed 2016-02-24
10-Q	2015-09-30	Filed 2015-10-28
10-Q	2015-06-30	Filed 2015-07-29
10-Q	2015-03-31	Filed 2015-04-29
10-K	2014-12-31	Filed 2015-02-25
10-Q	2014-09-30	Filed 2014-10-29
10-Q	2014-06-30	Filed 2014-07-30
10-Q	2014-03-31	Filed 2014-04-30
10-K	2013-12-31	Filed 2014-02-25
10-Q	2013-09-30	Filed 2013-10-31
10-Q	2013-06-30	Filed 2013-08-06
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-10-31
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-10
10-K	2011-12-31	Filed 2012-02-23
10-Q	2011-09-30	Filed 2011-10-26
10-Q	2011-06-30	Filed 2011-07-27
10-Q	2011-03-31	Filed 2011-04-27
10-K	2010-12-31	Filed 2011-02-24
10-Q	2010-09-30	Filed 2010-10-27
10-Q	2010-06-30	Filed 2010-07-28
10-Q	2010-03-31	Filed 2010-05-07
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-11-10	Enter Agreement, Regulation FD, Exhibits
8-K	2020-10-27	Earnings, Exhibits
8-K	2020-08-27	Regulation FD, Exhibits
8-K	2020-07-28	Earnings, Exhibits
8-K	2020-06-02
8-K	2020-05-19
8-K	2020-05-01
8-K	2020-04-17
8-K	2020-04-12
8-K	2020-03-16
8-K	2020-03-02
8-K	2020-02-11
8-K	2019-10-29
8-K	2019-08-07
8-K	2019-08-05
8-K	2019-07-30
8-K	2019-05-23
8-K	2019-05-21
8-K	2019-05-02
8-K	2019-04-04
8-K	2019-02-13
8-K	2018-10-30
8-K	2018-10-16
8-K	2018-07-26
8-K	2018-05-15
8-K	2018-05-01
8-K	2018-03-26
8-K	2018-03-07
8-K	2018-02-14

EX-31.1	acco-2020xq3ex311.htm
EX-31.2	acco-2020xq3ex312.htm
EX-32.1	acco-2020xq3ex321.htm
EX-32.2	acco-2020xq3ex322.htm


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 (Loss )			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			31
Item 3. Quantitative and Qualitative Disclosures About Market Risk			43
Item 4. Controls and Procedures			44
PART II — OTHER INFORMATION			45
Item 1. Legal Proceedings			45
Item 1A. Risk Factors			45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			45
Item 3. Defaults Upon Senior Securities			46
Item 4. Mine Safety Disclosures			46
Item 5. Other Information			46
Item 6. Exhibits			47
SIGNATURES			48

ACCO 10Q Quarterly Report

ACCO Brands Earnings 2020-09-30