ACCO BRANDS CORPORATION LAKE ZURICH, Ill., Aug. 1, 2017 /PRNewswire/ -- ACCO Brands Corporation (NYSE: ACCO), one of the world's largest designers, marketers and manufacturers of branded academic, consumer and business products, today reported its second quarter results for the period ended June 30, 2017.
"Better-than-expected results in the second quarter were due to higher gross margin, as well as improved performance in certain international markets," said Boris Elisman, Chairman, President and Chief Executive Officer of ACCO Brands. "The strong results put us on track for the high end of our annual adjusted EPS guidance range."
Second Quarter Results
Net sales increased 19% to $490.0 million from $410.1 million in the prior-year quarter driven by acquisitions. Excluding the effects of the Esselte and Pelikan Artline acquisitions and foreign exchange, comparable sales declined 6%. Net income was $23.5 million, or $0.21 per share, and included $13.7 million of restructuring, integration and transaction charges, net of a gain related to the settlement of certain intercompany transactions. This compared to net income of $61.9 million, or $0.57 per share, in the prior-year quarter, which included a $35.2 million gain from the revaluation to fair value of the company's previously held equity investment in Pelikan Artline. Adjusted net income increased to $35.2 million, or $0.31 per share, from $28.4 million, or $0.26 per share, in the prior-year quarter. The increase in adjusted net income was primarily driven by acquisitions, higher gross margin and cost savings. During the quarter the company repurchased shares in the open market which reduced the fully diluted share count by 0.6 million.
Business Segment Highlights
ACCO Brands North America - Sales decreased 5% to $280.6 million from $295.4 million in the prior-year quarter. The Esselte acquisition added 1% to North America sales, or $3.8 million. Comparable sales decreased 6% primarily due to expected declines with office superstore customers, lower sales of commodity items, and the later timing of back-to-school orders compared to the prior-year period. Operating income decreased slightly to $52.5 million from $53.0 million in the prior-year quarter. Adjusted operating income increased slightly to $55.3 million from $54.1 million in the prior year due to improved gross margin.
ACCO Brands EMEA - Sales increased 211% to $128.5 million from $41.3 million in the prior-year quarter. The Esselte acquisition added $92.7 million, or 225%, and foreign exchange reduced sales by 5%. Comparable sales decreased $3.4 million, or 8%, due to share loss and lower volume primarily in the U.K. Operating income decreased to $0.7 million from $1.6 million in the prior-year quarter due to one-time charges. Adjusted operating income increased to $9.2 million from $1.6 million in the prior-year quarter primarily due to the acquisition.
ACCO Brands International - Sales increased 10% to $80.9 million from $73.4 million in the prior-year quarter. Acquisitions added 12%, or $9.1 million, and foreign exchange added 1%. Comparable sales declined $2.6 million, or 4%, primarily due to channel and economic softness in Australia. Operating income increased to $4.0 million from $3.1 million in the prior-year quarter and adjusted operating income increased to $7.9 million from $6.9 million in the prior-year quarter. The increases were primarily due to improved profitability in Brazil.
Six Month Results
Net sales increased 23% to $849.8 million from $688.2 million in the prior-year six-month period. Acquisitions contributed 29%. Comparable sales declined 5%, primarily due to declines at office superstore customers, lost listings and the timing of customer orders. Net income was $27.1 million, or $0.24 per share, compared to net income of $66.7 million, or $0.61 per share, in the prior-year period. The decrease was due to a $35.2 million gain from the revaluation to fair value of the company's previously held equity investment in Pelikan Artline in the prior year, as well as a higher effective tax rate. Adjusted net income increased 46% to $40.1 million, or $0.36 per share, from $27.5 million, or $0.25 per share, in the prior-year period. The improvement was primarily the result of acquisitions and gross margin expansion.
Business Outlook
The company reiterates its expectations for 2017 revenue and adjusted free cash flow, and expects to be at the high end of its adjusted EPS range of $1.07-$1.10. The company continues to expect 2017 sales to increase 22-26%, driven by the Esselte and Pelikan Artline acquisitions, and adjusted free cash flow of approximately $150 million.
Webcast
At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will host a conference call to discuss the company's results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations section of www.accobrands.com. The webcast will be in listen-only mode and will be available for replay for one month following the event.
About ACCO Brands Corporation
ACCO Brands Corporation is one of the world's largest designers, marketers and manufacturers of branded academic, consumer and business products. Our widely recognized brands include Artline®, AT-A-GLANCE®, Derwent®, Esselte®, Five Star®, GBC®, Hilroy®, Kensington®, Leitz®, Mead®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra®, Wilson Jones®, and many others. Our products are sold in more than 100 countries around the world. More information about ACCO Brands, the Home of Great Brands Built by Great People, can be found at www.accobrands.com.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented in accordance with generally accepted accounting principles in the U.S. ("GAAP"), in this earnings release, we provide investors with certain non-GAAP financial measures, including adjusted operating income, adjusted earnings per share, adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), free cash flow, adjusted free cash flow, effective tax rate and comparable net sales at constant currency. See our Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited), Reconciliation of Net Income to Adjusted EBITDA (Unaudited), Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow (Unaudited), Supplemental Business Segment Information and Reconciliation (Unaudited) and our Supplemental Net Sales Change Analysis (Unaudited), for a description of each of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measure for each of the periods presented herein.
We believe these non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with our historical operating results. Adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of our underlying operational results and trends. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among the primary indicators management uses as a basis for our planning and forecasting of future periods and senior management's incentive compensation is derived, in part, using certain of these non-GAAP financial measures.
There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results such as unusual income tax items, restructuring and integration charges, acquisition-related expenses, goodwill or other asset impairment charges, foreign currency fluctuation, and other one-time or non-recurring items. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the tables accompanying this press release.
The Company provides forward-looking financial information on a non-GAAP basis for adjusted earnings per share, adjusted free cash flow and effective tax rate. However, the Company does not provide a reconciliation of forward-looking adjusted earnings per share or effective tax rate to GAAP because the GAAP financial measure is not accessible on a forward-looking basis and reconciling information is not available without unreasonable effort due to the inherent difficulty of forecasting and quantifying certain amounts that are necessary for such a reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, the variability of our effective tax rate and other charges reflected in our historical numbers. The probable significance of each of these items is high and, based on historical experience, could be material.
Forward-Looking Statements
This press release contains statements which may be "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks and uncertainties, are made as of the date hereof and we undertake no obligation to update them. In particular, our business outlook is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding changes in the macro environment, fluctuations in foreign currency rates, changes in the competitive landscape and consumer behavior and the effect of consolidation in the office products industry, as well as other factors described below.
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those predicted by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Company's securities.
Among the factors that could affect our results or cause our plans, actions and results to differ materially from current expectations are: the concentration of our business with a relatively limited number of large and sophisticated customers; changes in our customers' business models and the consolidation of our customers; risks associated with foreign currency fluctuations; shifts in the channels of distribution of our products; challenges related to the highly competitive business environments in which we operate, including, low barriers to entry, customers who have the ability to source their own private label products, limited retail space, competitors' strong brands, competition from imports from a range of countries, including countries with lower production costs, competitors' ability to source lower-cost products in local currencies, and competition from a wide range of products and services, including electronic, digital and web-based products that can render obsolete or less desirable some of our products; our ability to develop and market innovative products that meet end-user demands; business, commercial and consumer spending decisions during periods of economic uncertainty or weakness; the failure, inadequacy or interruption of our information technology systems or supporting infrastructure or a cybersecurity incident or information security breach; risks associated with the changes to current U.S. government policies, including changes in trade relations and policies and/or changes to U.S. tax laws; our ability to successfully expand our business in emerging markets which generally involves more financial, operational, legal and compliance risks and creates more exposure to economic volatility, unstable political conditions and civil unrest; our ability to grow profitably through acquisitions; our ability to realize the synergies, growth opportunities and other potential benefits of the Pelikan Artline and Esselte acquisitions and successfully integrate Pelikan Artline and Esselte with our existing operations; our ability to successfully compete in a rapidly changing and highly competitive computer products market; the impact of litigation or other legal proceedings; the risks associated with outsourcing production of certain of our products, information systems and other administrative functions; the continued decline in the use of certain of our products; risks associated with seasonality and raw material, labor and transportation cost fluctuations; increased cost of compliance with environmental, product safety and other laws; the impact of pension costs; any impairment of our goodwill or other intangible assets; risks associated with our indebtedness, including our debt service obligations, limitations imposed by restrictive covenants and our ability to comply with financial ratios and tests; our failure to comply with customer contracts; the insolvency, bankruptcy or financial instability of our customers and suppliers; our ability to secure, protect and maintain our intellectual property rights; product liability claims or regulatory actions; our ability to attract and retain key employees; the volatility of our stock price; material disruptions at one of our or our suppliers' major manufacturing or distribution facilities resulting from circumstances outside our control; and other risks and uncertainties described in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016 and in other reports we file with the SEC.
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
----------
(in millions of dollars) June 30, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents $102.2 $42.9
Accounts receivable, net 419.0 391.0
Inventories 332.4 210.0
Other current assets 60.8 26.8
---- ----
Total current assets 914.4 670.7
Total property, plant and
equipment 632.5 528.0
Less: accumulated depreciation (350.3) (329.6)
------ ------
Property, plant and equipment,
net 282.2 198.4
Deferred income taxes 138.8 27.3
Goodwill 687.3 587.1
Identifiable intangibles, net 841.9 565.7
Other non-current assets 18.7 15.3
---- ----
Total assets $2,883.3 $2,064.5
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ - $63.7
Current portion of long-term
debt 29.1 4.8
Accounts payable 229.0 135.1
Accrued compensation 40.8 42.8
Accrued customer program
liabilities 102.1 94.0
Accrued interest 2.1 1.3
Other current liabilities 106.9 64.7
----- ----
Total current liabilities 510.0 406.4
Long-term debt, net 1,067.2 627.7
Deferred income taxes 240.9 146.7
Pension and post-retirement
benefit obligations 265.9 98.0
Other non-current liabilities 82.3 77.0
---- ----
Total liabilities 2,166.3 1,355.8
------- -------
Stockholders' equity:
Common stock 1.1 1.1
Treasury stock (26.3) (17.0)
Paid-in capital 2,018.8 2,015.7
Accumulated other
comprehensive loss (432.9) (419.4)
Accumulated deficit (843.7) (871.7)
------ ------
Total stockholders' equity 717.0 708.7
----- -----
Total liabilities and
stockholders' equity $2,883.3 $2,064.5
======== ========
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
(In millions of dollars, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Net sales $490.0 $410.1 19% $849.8 $688.2 23%
Cost of products
sold 321.5 275.3 17% 570.5 471.0 21%
----- ----- ----- -----
Gross profit 168.5 134.8 25% 279.3 217.2 29%
Operating costs and expenses:
Advertising,
selling, general
and administrative
expenses 101.8 79.6 28% 193.8 150.8 29%
Amortization of
intangibles 9.0 5.4 67% 17.0 10.1 68%
Restructuring
charges 12.3 4.4 180% 13.8 4.4 214%
Total operating
costs and expenses 123.1 89.4 38% 224.6 165.3 36%
----- ---- ----- -----
Operating income 45.4 45.4 -% 54.7 51.9 5%
Non-operating expense (income):
Interest expense 10.8 12.8 (16)% 20.6 23.5 (12)%
Interest income (2.0) (1.9) 5% (3.3) (3.3) -%
Equity in earnings
of joint-venture - (0.8) NM - (2.1) NM
Other income, net (1.5) (36.6) (96)% (0.8) (35.5) (98)%
---- ----- ---- -----
Income before
income tax 38.1 71.9 (47)% 38.2 69.3 (45)%
Income tax expense 14.6 10.0 46% 11.1 2.6 327%
Net income $23.5 $61.9 (62)% $27.1 $66.7 (59)%
===== ===== ===== =====
Per share:
Basic income per
share $0.21 $0.58 (64)% $0.25 $0.63 (60)%
Diluted income per
share $0.21 $0.57 (63)% $0.24 $0.61 (61)%
Weighted average number of shares
outstanding:
Basic 109.5 107.1 108.9 106.6
Diluted 111.9 109.0 112.1 108.6
Statistics (as a % of Net sales,
except Income tax rate)
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 2017 2016
---- ---- ---- ----
Gross profit (Net
sales, less Cost
of products sold) 34.4% 32.9% 32.9% 31.6%
Advertising,
selling, general
and administrative 20.8% 19.4% 22.8% 21.9%
Operating income 9.3% 11.1% 6.4% 7.5%
Income before
income tax 7.8% 17.5% 4.5% 10.1%
Net income 4.8% 15.1% 3.2% 9.7%
Income tax rate 38.3% 13.9% 29.1% 3.8%
--------------- ---- ---- ---- ---
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
(in millions of dollars) 2017 2016
---- ----
Operating activities
Net income $27.1 $66.7
Gain on revaluation of previously held joint-venture
equity interest - (35.2)
Amortization of inventory step-up 0.9 0.2
Loss on disposal of assets - 0.2
Depreciation 17.8 15.5
Amortization of debt issuance costs 1.9 1.8
Amortization of intangibles 17.0 10.1
Stock-based compensation 7.8 7.9
Equity in earnings of joint-venture, net of dividends
received - (1.6)
Changes in balance sheet items:
Accounts receivable 51.2 60.6
Inventories (75.0) (70.7)
Other assets (13.7) (8.7)
Accounts payable 40.2 24.4
Accrued expenses and other liabilities (58.5) (65.4)
Accrued income taxes (8.8) (4.1)
---- ----
Net cash provided by operating activities 7.9 1.7
Investing activities
Additions to property, plant and equipment (13.0) (6.9)
Proceeds from the disposition of assets 0.2 0.1
Cost of acquisitions, net of cash acquired (292.6) (85.4)
Net cash used by investing activities (305.4) (92.2)
Financing activities
Proceeds from long-term borrowings 473.8 187.4
Repayments of long-term debt (104.8) (90.3)
Borrowings of notes payable, net - 32.8
Payments for debt issuance costs (3.5) (0.8)
Repurchases of common stock (6.0) -
Payments related to tax withholding for stock-based
compensation (9.2) (5.0)
Proceeds from the exercise of stock options 2.8 1.6
--- ---
Net cash provided by financing activities 353.1 125.7
Effect of foreign exchange rate changes on cash and
cash equivalents 3.7 5.6
--- ---
Net increase in cash and cash equivalents 59.3 40.8
Cash and cash equivalents
Beginning of the period 42.9 55.4
---- ----
End of the period $102.2 $96.2
====== =====
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions of dollars, except per share data)
Three Months Ended June 30, 2017 Three Months Ended June 30, 2016
Reported % of Adjusted Adjusted % of Reported % of Adjusted Adjusted % of % Change
GAAP Sales Items Non-GAAP Sales GAAP Sales Items Non-GAAP Sales Adjusted
---- ----- ----- -------- ----- ---- ----- ----- -------- ----- --------
Gross profit $168.5 34.4% $ - $168.5 34.4% $134.8 32.9% $0.2 (A.1) $135.0 32.9% 25%
Advertising,
selling, general
and administrative
expenses $101.8 20.8% $(3.7) (A.2) $98.1 20.0% $79.6 19.4% $(3.1) (A.2) $76.5 18.7% 28%
Restructuring
charges 12.3 (12.3) (A.3) - 4.4 (4.4) (A.3) - NM
Operating income 45.4 9.3% 16.0 61.4 12.5% 45.4 11.1% 7.7 53.1 12.9% 16%
Interest expense 10.8 - 10.8 12.8 (0.9) (A.4) 11.9 (9)%
Other (income)
expense, net (1.5) 2.3 (A.5) 0.8 (36.6) 36.8 (A.6) 0.2 300%
Income before
income tax 38.1 7.8% 13.7 51.8 10.6% 71.9 17.5% (28.2) 43.7 10.7% 19%
Income tax expense 14.6 2.0 (A.7) 16.6 10.0 5.3 (A.7) 15.3 8%
Income tax rate 38.3% 32.0% 13.9% 35.0%
Net income $23.5 4.8% $11.7 $35.2 7.2% $61.9 15.1% $(33.5) $28.4 6.9% 24%
Diluted income per
share $0.21 $0.10 $0.31 $0.57 $(0.31) $0.26 19%
Weighted average
number of shares
outstanding: 111.9 111.9 109.0 109.0
Six Months Ended June 30, 2017 Six Months Ended June 30, 2016
Reported % of Adjusted Adjusted % of Reported % of Adjusted Adjusted % of % Change
GAAP Sales Items Non-GAAP Sales GAAP Sales Items Non-GAAP Sales Adjusted
---- ----- ----- -------- ----- ---- ----- ----- -------- ----- --------
Gross profit $279.3 32.9% $0.9 (A.1) $280.2 33.0% $217.2 31.6% $0.2 (A.1) $217.4 31.6% 29%
Advertising,
selling, general
and administrative
expenses 193.8 22.8% (8.1) (A.2) 185.7 21.9% 150.8 21.9% (3.7) (A.2) 147.1 21.4% 26%
Restructuring
charges 13.8 (13.8) (A.3) - 4.4 (4.4) (A.3) - NM
Operating income 54.7 6.4% 22.8 77.5 9.1% 51.9 7.5% 8.3 60.2 8.7% 29%
Interest expense 20.6 - 20.6 23.5 (0.9) (A.4) 22.6 (9)%
Other (income)
expense, net (0.8) 2.0 (A.5) 1.2 (35.5) 36.2 (A.6) 0.7 71%
Income before
income tax 38.2 4.5% 20.8 59.0 6.9% 69.3 10.1% (27.0) 42.3 6.1% 39%
Income tax expense 11.1 7.8 (A.7) 18.9 2.6 12.2 (A.7) 14.8 28%
Income tax rate 29.1% 32.0% 3.8% 35.0%
Net income $27.1 3.2% $13.0 $40.1 4.7% $66.7 9.7% $(39.2) $27.5 4.0% 46%
Diluted income per
share $0.24 $0.12 $0.36 $0.61 $(0.36) $0.25 44%
Weighted average
number of shares
outstanding: 112.1 112.1 108.6 108.6
Notes for Reconciliation of GAAP to Adjusted Non-GAAP
Information (Unaudited)
A. "Adjusted"
results exclude
restructuring
charges,
amortization of
the step-up in
value of
finished goods,
transaction and
integration
expenses
associated with
the acquisitions
of Esselte Group
Holdings AB
("Esselte") and
Pelikan Artline,
other one-time
or non-
recurring items
and all unusual
income tax
items, including
income taxes
related to the
aforementioned
items; in
addition, income
taxes have been
recalculated at
a normalized
effective tax
rate of 32% for
2017 and 35% for
2016.
1. Represents the
adjustment
related to the
amortization of
step-up in the
value of
finished goods
inventory
associated with
the acquisition
of Esselte in
2017 and Pelikan
Artline in 2016.
2. Represents the
elimination of
transaction and
integration
expenses
associated with
the acquisitions
of Esselte and
Pelikan Artline.
An additional
$2.0 million in
Esselte
transaction
expenses that
were incurred in
the quarter
ended June 30,
2016, but not
previously
identified as
transaction-
related, have
been excluded
from the three
and six months
ended June 30,
2016.
3. Represents
restructuring
charges.
4. Represents a loan
breakage fee of
$0.5 million
incurred in the
acquisition of
Pelikan Artline
and the write-
off of debt
issuance costs
of $0.4 million
due to a debt
swap of part of
our USD term
loan for the new
Australian
dollar revolving
loan in the
second quarter
of 2016.
5. Represents the
foreign currency
gain of $2.3
million related
to the
settlement of
certain
intercompany
transactions in
the second
quarter of 2017
and the write-
off of $0.3
million in debt
issuance costs
and other costs
associated with
the Company's
refinancing in
the first
quarter of 2017.
6. Represents:
i. Fair value gain upon acquisition
of Pelikan Artline of $35.2
million and
ii. The foreign currency losses/
(gains), net related to the
settlement of certain
intercompany transactions.
7. Primarily
reflects the tax
effect of the
adjustments
outlined in
items A.1-6
above and
adjusts the
company's
effective tax
rate to a
normalized rate
of 32% for 2017
and 35% for
2016. The lower
normalized tax
rate for 2017 is
primarily due to
the acquisition
of Esselte. The
Company's
estimated long-
term rate
remains subject
to variations
from the mix of
earnings across
the Company's
operating
jurisdictions.
ACCO Brands Corporation and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA (Unaudited)
(In millions of dollars)
"Adjusted EBITDA" represents net income after adding back depreciation; stock-based compensation expense; amortization of intangibles; interest expense, net; other expense, net; and income tax benefit. Adjusted EBITDA also excludes the amortization of the step-up in value of finished
goods inventory, transaction and integration expenses and restructuring charges. The following table sets forth a reconciliation of reported net income in accordance with GAAP to Adjusted EBITDA.
Three Months Ended Six Months Ended
June 30, June 30,
2017 2016 % Change 2017 2016 % Change
---- ---- -------- ---- ---- --------
Net income $23.5 $61.9 (62)% $27.1 $66.7 (59)%
Inventory step-up amortization - 0.2 (100)% 0.9 0.2 350%
Transaction and integration
expenses 3.7 3.1 19% 8.1 3.7 119%
Restructuring charges 12.3 4.4 180% 13.8 4.4 214%
Depreciation 8.8 7.7 14% 17.8 15.5 15%
Stock-based compensation 5.4 4.6 17% 7.8 7.9 (1)%
Amortization of intangibles 9.0 5.4 67% 17.0 10.1 68%
Interest expense, net 8.8 10.9 (19)% 17.3 20.2 (14)%
Other income, net (1.5) (36.6) (96)% (0.8) (35.5) (98)%
Income tax expense 14.6 10.0 46% 11.1 2.6 327%
----------
Adjusted EBITDA (non-GAAP) $84.6 $71.6 18% $120.1 $95.8 25%
===== ===== ====== =====
Adjusted EBITDA as a % of
Net Sales 17.3% 17.5% 14.1% 13.9%
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow (Unaudited)
(In millions of dollars)
"Free Cash Flow" represents cash flow from operating activities less cash used for additions to property, plant and equipment, plus cash proceeds from the disposition of assets and other investing activities. "Adjusted Free Cash Flow"
excludes accelerated interest payments related to the refinancing of our Senior Unsecured Notes in the fourth quarter of 2016 and transaction and integration expenses. The following table sets forth a reconciliation of reported net
cash provided by operating activities in accordance with GAAP to Free Cash Flow and Adjusted Free Cash Flow.
Six Months Ended Six Months Ended 2017 Guidance Twelve Months Ended
June 30, 2017 June 30, 2016 December 31, 2016
------------- ------------- -----------------
Net cash
provided by
operating
activities $7.9 $1.7 $177 $167.1
Net cash (used) provided by:
Additions to
property, plant
and equipment (13.0) (6.9) (35) (18.5)
Proceeds from
the disposition
of assets 0.2 0.1 2 0.7
Other - - - 0.2
Free cash flow
(non-GAAP) (4.9) (5.1) 144 149.5
---- ---- --- -----
Accelerated
interest
payments from
refinancing of
senior
unsecured notes - - - 6.5
Transaction and
integration
expenses -cash 5.9 - 6 11.6
--- --- --- ----
Adjusted free
cash flow (non-
GAAP) $1.0 $(5.1) $150 $167.6
==== ===== ==== ======
ACCO Brands Corporation and Subsidiaries
Supplemental Business Segment Information and Reconciliation (Unaudited)
(In millions of dollars)
2017 2016 Changes
Adjusted Adjusted
Reported Adjusted Operating Reported Adjusted Operating Adjusted Adjusted
Operating Operating Income Operating Operating Income Operating Operating
Reported Income Adjusted Income (Loss) Reported Income Adjusted Income (Loss) Net Sales Net Sales Income Income Margin
Net Sales (Loss) Items (Loss) (A) Margin (A) Net Sales (Loss) Items (Loss) (A) Margin (A) $ % (Loss) $ (Loss) % Points
--------- ----- ----- --------- --------- --------- ----- ----- --------- --------- --- --- -------- ------- ------
Q1:
ACCO Brands
North America $174.9 $6.6 $1.4 $8.0 4.6% $179.3 $10.0 $ - $10.0 5.6% $(4.4) (2)% $(2.0) (20)% (100)
ACCO Brands
EMEA 96.5 4.8 1.9 6.7 6.9% 38.9 0.2 - 0.2 0.5% 57.6 148% 6.5 NM 640
ACCO Brands
International 88.4 10.1 0.6 10.7 12.1% 59.9 5.6 - 5.6 9.3% 28.5 48% 5.1 91% 280
Corporate - (12.2) 2.9 (9.3) - (9.3) 0.6 (8.7) - (0.6)
--- ----- --- ---- --- ---- --- ---- --- ----
Total $359.8 $9.3 $6.8 $16.1 4.5% $278.1 $6.5 $0.6 $7.1 2.6% $81.7 29% $9.0 127% 190
====== ==== ==== ===== ====== ==== ==== ==== ===== ====
Q2:
ACCO Brands
North America $280.6 $52.5 $2.8 $55.3 19.7% $295.4 $53.0 $1.1 $54.1 18.3% $(14.8) (5)% $1.2 2% 140
ACCO Brands
EMEA 128.5 0.7 8.5 9.2 7.2% 41.3 1.6 - 1.6 3.9% 87.2 211% 7.6 475% 330
ACCO Brands
International 80.9 4.0 3.9 7.9 9.8% 73.4 3.1 3.8 6.9 9.4% 7.5 10% 1.0 14% 40
Corporate - (11.8) 0.8 (11.0) - (12.3) 2.8 (9.5) - (1.5)
--- ----- --- ----- --- ----- --- ---- --- ----
Total $490.0 $45.4 $16.0 $61.4 12.5% $410.1 $45.4 $7.7 $53.1 12.9% $79.9 19% $8.3 16% (40)
====== ===== ===== ===== ====== ===== ==== ===== ===== ====
Q3:
ACCO Brands North America $289.1 $49.6 $ - $49.6 17.2%
ACCO Brands EMEA 40.7 2.9 - 2.9 7.1%
ACCO Brands International 101.5 15.9 0.8 16.7 16.5%
Corporate - (12.7) 4.4 (8.3)
--- ----- --- ----
Total $431.3 $55.7 $5.2 $60.9 14.1%
====== ===== ==== =====
Q4:
ACCO Brands North America $252.3 $40.7 $0.1 $40.8 16.2%
ACCO Brands EMEA 50.9 7.9 - 7.9 15.5%
ACCO Brands International 134.4 24.8 2.2 27.0 20.1%
Corporate - (13.7) 2.8 (10.9)
--- ----- --- -----
Total $437.6 $59.7 $5.1 $64.8 14.8%
====== ===== ==== =====
YTD:
ACCO Brands
North America $455.5 $59.1 $4.2 $63.3 13.9% $1,016.1 $153.3 $1.2 $154.5 15.2%
ACCO Brands
EMEA 225.0 5.5 10.4 15.9 7.1% 171.8 12.6 - 12.6 7.3%
ACCO Brands
International 169.3 14.1 4.5 18.6 11.0% 369.2 49.4 6.8 56.2 15.2%
Corporate - (24.0) 3.7 (20.3) - (48.0) 10.6 (37.4)
--- ----- --- ----- --- ----- ---- -----
Total $849.8 $54.7 $22.8 $77.5 9.1% $1,557.1 $167.3 $18.6 $185.9 11.9%
====== ===== ===== ===== ======== ====== ===== ======
(A) See "Notes for
Reconciliation of GAAP to
Adjusted Non-GAAP Information
(Unaudited)" for a description of
adjusted items on page 10.
ACCO Brands Corporation and Subsidiaries
Supplemental Net Sales Change Analysis (Unaudited)
Percent Change - Sales
GAAP Non-GAAP
Comparable
Net Sales Currency Net Sales
Change Translation Acquisitions Change (A) Price $ Volume/Mix
------ ----------- ------------ --------- ----- ------------
Q1 2017:
ACCO Brands North America (2.5)% 0.3% 1.6% (4.4)% 1.7% (6.1)%
ACCO Brands EMEA 148.0% (5.4)% 165.8% (12.4)% 3.3% (15.7)%
ACCO Brands International 47.6% 6.0% 42.9% (1.3)% 3.2% (4.5)%
---- --- ---- ----- --- -----
Total 29.4% 0.8% 33.5% (4.9)% 2.2% (7.1)%
---- --- ---- ----- --- -----
Q2 2017:
ACCO Brands North America (5.0)% (0.5)% 1.3% (5.8)% (0.3)% (5.5)%
ACCO Brands EMEA 211.1% (5.1)% 224.5% (8.3)% 2.4% (10.7)%
ACCO Brands International 10.2% 1.4% 12.4% (3.6)% 0.7% (4.3)%
Total 19.5% (0.6)% 25.7% (5.6)% 0.1% (5.7)%
2017 YTD:
ACCO Brands North America (4.0)% (0.2)% 1.4% (5.2)% 0.4% (5.6)%
ACCO Brands EMEA 180.6% (5.2)% 196.0% (10.2)% 2.9% (13.1)%
ACCO Brands International 27.0% 3.5% 26.1% (2.6)% 1.8% (4.4)%
Total 23.5% (0.1)% 28.9% (5.3)% 1.0% (6.3)%
---- ----- ---- ----- --- -----
(A) Comparable net sales
excluding acquisitions and with
current period foreign
operation sales translated at
prior year currency rates.
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SOURCE ACCO Brands Corporation
