ACCO Raises Outlook After Strong Q2 Results

ACCO Raises Outlook After Strong Q2 Results

Price increases and good back-to-school (BTS) sell-in in North America helped ACCO Brands achieve record Q2 sales and adjusted earnings per share (EPS), and, as a result, the company raised its full-year outlook.

Sales for the quarter ended 30 June were $518.7 million, a reported year-on-year increase of 4%. After accounting for the 2.4% positive impact of acquisitions and negative currency of 2.8%, comparable sales increased 4.4% as pricing more than offset lower volumes.

Adjusted operating profit for the quarter was $61.5 million, 10.2% higher than in Q2 2018, while adjusted operating margin was up 70 basis points to 11.9%. Adjusted EBITDA was up 6.1% to $83.9 million while adjusted EPS was a Q2 record of $0.36.

“I am very pleased with our results in the quarter and year to date,” said CEO Boris Elisman. “We have managed the business well, and offset inflation and tariffs with pricing and tight expense management. Our strategy of diversifying into growing channels and geographies is working, and our focus on consumer-centric products and brands is paying off as evidenced by the strong sales and profit growth in North America where we are well positioned for a very good back-to-school season.”

ACCO raised its full-year outlook for sales and adjusted EPS. It is now forecasting 2019 sales to be flat, versus the previous outlook of -3% to flat, while its adjusted EPS range is now $1.15-$1.20, compared with the previous range of $1.10-$1.20.

Six-month results

H1 sales were $912.6 million, a year-on-year comparable increase of 2.2%. Comparable sales in North America increased 4.9%, were up 0.8% in EMEA and declined 2.8% in the International division.

Adjusted operating profit was $82.6 million versus $73.8 million last year, a 11.9% increase, while adjusted operating margin grew by 90 basis points to 9.1%.

Adjusted EBITDA increased by 4.7% year on year to $126.5 million, while adjusted EBITDA margin improved by 50 basis points to 13.9%.

Q2 business segment highlights:

North America

The 9.4% comparable sales increase (+$26.4 million) to $307.9 million was the main driver of ACCO’s strong Q2 performance. The revenue increase was due to pricing and, to a lesser extent, volume related to BTS shipments, and ACCO said it was positioned for a stronger BTS season in the region than last year.

Operating profit of $60.6 million increased 17.7% from the prior-year quarter primarily due to higher sales and cost-reduction initiatives, partially offset by inflation and tariffs. Adjusted operating profit of $60.4 million increased 13.7% from last year’s Q2.

EMEA

Sales of $128.3 million represented a comparable decline of 2.4%. The decrease was blamed on tough year-on-year comparisons due to last year’s uplift from the GDPR data implementation in Europe, and holiday timings. The company said EMEA was still “gaining share in a difficult market”.

Operating profit of $7.4 million was 11.9% lower due to lower sales, higher product-warranty and distribution expenses, and adverse foreign exchange, partially offset by lower integration and restructuring charges. Adjusted operating income of $7.4 million decreased 27.5% from the prior-year period.

International

Q2 sales were $82.5 million, with the GOBA acquisition in Mexico – which is performing ahead of expectations – adding 15.8% and adverse foreign exchange reducing sales by 5.2%. Comparable sales decreased 1.3% as strong growth in Brazil and Mexico was offset by a decline in Australia where ACCO said it was still feeling the effects of weak market demand and customer consolidation.

Operating income of $4.1 million increased 24.2%, driven by $1.7 million from the GOBA acquisition. Adjusted operating income of $4.4 million rose 22.2%. — (OPI)