• Free Cash Flow: $132 million for the year.
• Net Debt Reduction: $94 million decrease for the year.
• Cost Savings: $25 million realized from a $60 million multi-year cost reduction program.
• Gross Margin Expansion: 70 basis points increase versus the prior year.
• SG&A Expense Reduction: $30 million lower than the previous year.
• Fourth Quarter Sales Decline: 8% reported sales decrease; 6% decline excluding foreign exchange.
• Fourth Quarter Gross Profit: $156 million, a 9% decrease compared to the prior year.
• Fourth Quarter Adjusted Operating Income: $64 million, down 6% with a 30 basis points margin improvement.
• Americas Segment Sales Decline: 12% decrease; 8% decline excluding foreign exchange.
• International Segment Sales Decline: 3% comparable sales decline.
• Full Year 2025 Sales Outlook: Expected decline of 1% to 5%.
• Full Year 2025 Adjusted EPS Outlook: $1 to $1.05 per share.
• Full Year 2025 Free Cash Flow Outlook: $105 million to $115 million.
• First Quarter 2025 Sales Outlook: Expected decline of 5% to 8%.
• First Quarter 2025 Loss Per Share Outlook: Expected loss of $0.03 to $0.05 per share.

• Warning! GuruFocus has detected 7 Warning Signs with ACCO.

Release Date: February 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ACCO Brands Corp (NYSE:ACCO) delivered free cash flow of $132 million for the year, aligning with their outlook.
• The company successfully reduced inventory levels by 17% and collected significant receivables in Brazil, improving working capital management.
• Net debt was reduced by $94 million, enhancing the company's financial position.
• ACCO Brands Corp (NYSE:ACCO) expanded its capital allocation program to include share repurchases while maintaining dividend support and debt repayment.
• The company implemented a $60 million multi-year cost reduction program, realizing $25 million in savings and improving operating margins.

Negative Points

• ACCO Brands Corp (NYSE:ACCO) faced greater than expected foreign currency headwinds, impacting sales and EPS.
• The demand environment remained soft, with discretionary spending by consumers and businesses constrained.
• Reported sales in the fourth quarter decreased by 8%, with comparable sales down 6% due to lower volumes globally.
• The company anticipates continued headwinds and uncertainties in 2025, including potential tariffs and a strong US dollar.
• Sales in the Americas segment declined 12%, with foreign exchange having a larger negative impact than expected.

Q & A Highlights

Q: What is ACCO Brands' strategy to improve sales trends, given that many of their brands already hold top market positions? A: Thomas Tedford, President and CEO, explained that the path to growth is through share gains in existing categories and expanding into adjacent categories. They have seen early success with initiatives like ergonomics and plan to focus on technology accessories, learning and creative, and office product categories. Inorganic opportunities are also being considered to change the company's growth profile.

Q: Can you provide an update on ACCO Brands' gaming partnerships and international expansion efforts? A: Thomas Tedford noted that gaming was strong in 2024, driven by new product introductions and international expansion, particularly in Japan. They anticipate some headwinds in 2025 due to Nintendo's next-gen Switch, but the licensing work has opened new market opportunities.

Q: What is the outlook for retailers' inventory positions for the upcoming back-to-school season? A: Thomas Tedford mentioned that while it's early to predict, they expect US retailers to remain conservative with inventory, similar to the previous year, aiming to come out of the season with clean inventory levels.

Q: How will the $75 million in cost savings over the next two years be realized? A: Deborah O'Connor, CFO, stated that they expect $40 million in savings next year, with the remainder in 2026. The savings will come from footprint rationalization and SG&A reductions.

Q: What is ACCO Brands' approach to M&A opportunities, and how does it affect leverage? A: Thomas Tedford emphasized a focus on low-risk, highly accretive M&A opportunities that provide quick payback. Deborah O'Connor added that they are mindful of maintaining a comfortable leverage ratio, aiming for acquisitions that do not significantly increase leverage.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.