ACCO Brands Corporation Reports Fourth Quarter 2014 Results

LAKE ZURICH, Ill., Feb. 11, 2015 /PRNewswire/ -- ACCO Brands Corporation (NYSE: ACCO), a world leader in branded school, office and consumer products, today reported its fourth quarter results for the period ended December 31, 2014.

"I am pleased with our performance in the fourth quarter and for the year.  We delivered strong annual earnings improvement, generated $146 million of free cash flow, initiated a share buyback program and further reduced our leverage," said Boris Elisman, president and chief executive officer, ACCO Brands.  "In 2015, while facing challenging currency headwinds, we are well positioned to again generate strong free cash flow supported by productivity improvements and sustained market share gains."

Fourth Quarter Results

Net sales decreased 9% to $459.9 million from $503.7 million in the prior-year quarter. On a constant currency basis, sales decreased 5%.  Net income was $43.9 million, or $0.38 per share,  compared to net income of $50.2 million, or $0.43 per share, in the prior-year quarter.  Adjusted net income decreased 7% to $41.5 million, or $0.36 per share, from $44.8 million, or $0.39 per share, in the prior-year quarter.  The decrease is the result of unfavorable foreign exchange and lower sales which were partially offset by cost savings and productivity improvements. The current-year quarter included a $0.02 negative impact from foreign exchange.

Business Segment Highlights

ACCO Brands North America - Sales decreased 6% to $253.5 million from $269.6 million in the prior-year quarter.  On a constant currency basis, sales decreased 5% driven primarily by declines with a large customer that recently merged.  Operating income was $42.7 million compared to $36.6 million in the prior-year quarter.  Adjusted operating income decreased 1% to $46.0 million from $46.3 million in the prior-year quarter, primarily due to the decline in sales which was partially offset by cost savings and productivity improvements.

ACCO Brands International - Sales decreased 9% to $170.6 million from $188.3 million in the prior-year quarter.  On a constant currency basis, sales decreased 1%, primarily due to declines in Europe.  Operating income was $31.0 million compared to $34.2 million in the prior-year quarter.  Adjusted operating income decreased 11% to $31.5 million from $35.4 million in the prior-year quarter, primarily due to the negative effects of foreign exchange and lower sales.

Computer Products - Sales decreased 22% to $35.8 million, from $45.8 million in the prior-year quarter, due to lower tablet accessory sales resulting from our de-emphasis of commoditized products.  On a constant currency basis, sales decreased 18%.  Operating income decreased to $3.2 million from $4.6 million in the prior-year quarter.  Adjusted operating income was $3.1 million compared to $5.4 million in the prior-year quarter.  The decline was due to lower sales and foreign exchange.

Twelve Month Results

Net sales decreased 4% to $1,689.2 million from $1,765.1 million in the prior year.  On a constant currency basis sales decreased 2% primarily due to declines with a large customer that recently merged.  Net income was $91.6 million, or $0.79 per share.  This compared to net income of $77.1 million, or $0.67 per share, in the prior-year period. Adjusted net income increased 6% to $93.1 million, or $0.80 per share, from $87.7 million, or $0.76 per share, in the prior-year period.  The improvement primarily was the result of cost savings, productivity improvements and lower interest expense.   The current year included a $0.03 negative impact from foreign exchange.  The company generated $145.9 million of free cash flow in the year, of which $120.1 million was used to reduce debt and $21.9 million was used to repurchase 3.1 million shares of its common stock.

Business Outlook

The company expects 2015 sales to decline in the mid-single digits, before the negative effects of foreign currency.  However, assuming current foreign currency rates, the company expects sales to decline in the high-single or low-double digits.  The company expects 2015 adjusted earnings per share of $0.78-$0.82 before the negative effects of currency, but including the negative effects of foreign currency of approximately $0.08, adjusted earnings per share are expected to be $0.70-$0.74. The company expects free cash flow of approximately $140 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.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented on a GAAP basis in this earnings release, we provide investors with certain non-GAAP financial measures, including "adjusted" financial measures, earnings before interest, taxes and depreciation ("EBITDA"), free cash flow and net sales at constant currency. See our Supplemental Reconciliations of Adjusted Results, Supplemental Reconciliations of Operating Income to Adjusted EBITDA from Continuing Operations, Supplemental Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow, Supplemental Business Segment Information and Reconciliation and our Supplemental Net Sales Change Analysis, 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.

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 tax items, restructuring and integration charges, goodwill or other intangible 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 generally accepted accounting principles in the United States.  Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

About ACCO Brands Corporation

ACCO Brands Corporation is one of the world's largest suppliers of branded school, office and consumer products and print finishing solutions.  Our widely recognized brands include AT-A-GLANCE®, Day-Timer®, Five Star®, GBC®, Hilroy®, Kensington®, Marbig, Mead®, NOBO, Quartet®, Rexel, Swingline®, Tilibra®, Wilson Jones® and many others.  We design, market and sell products in more than 100 countries around the world.  More information about ACCO Brands can be found at www.accobrands.com.

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 and 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, and the impact of the loss or bankruptcy of a major customer or a substantial reduction in business from a major customer due to their loss of market share or otherwise; the consolidation of our customers, including the merger of Office Depot and OfficeMax in late 2013 and the recently announced acquisition of Office Depot by Staples; challenges related to the highly competitive business segments in which we operate, including, without limitation, decisions made by our major customers to expand the sourcing of their own private label products or otherwise change product assortments, decisions by our competitors to take advantage of low entry barriers to expand their production or lower prices, and decisions made by end-users of our products to purchase lowered-priced, substitute or alternative products; our ability to anticipate the changing needs of our customers and end-users in a market where many of our product categories are affected by continuous improvements in technology and shortened product life cycles and others are experiencing secular declines; our ability to meet the competitive challenges faced by our Computer Products business which is characterized by rapid change, including changes in technology, short product life cycles and a dependency on the introduction by third party manufacturers of new equipment to drive demand for the accessories it sells; commercial and consumer spending decisions during periods of economic uncertainty or weakness; our ability to realize the sales synergies, growth opportunities and other potential benefits of the acquisition of the Mead Consumer and Office Products business; our ability to successfully expand our business in new, developing and emerging markets and sales channels which could create exposure to unstable political conditions, civil unrest or economic uncertainty; any material failure, inadequacy or interruption in our information technology systems; our failure to remediate the material weakness in our information technology general controls; regulatory requirements, litigation, regulatory actions or other legal proceedings; the risks associated with outsourcing production of certain of our products to suppliers in China and other Asia-Pacific countries; the decline in the use of paper-based dated time management and productivity tools; material disruptions at one of our or our suppliers' major manufacturing or distribution facilities; risks associated with our substantial indebtedness, including limitations imposed by restrictive covenants and our ability to comply with financial ratios and tests; risks associated with seasonality, and foreign currency, interest rate and raw material and labor cost fluctuations; the impact of pension costs; any impairment of our goodwill or other intangible assets; our ability to secure, protect and maintain our intellectual property rights; our ability to retain key employees; 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, 2013 and in other reports we file with the SEC.

SOURCE ACCO Brands Corporation

Related Links

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