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Jun 30, 2023
ACCO Brands Q2 2023 Earnings Report
Reported a decrease in net sales, but gross margin expanded due to pricing, productivity, and restructuring initiatives, resulting in better than expected adjusted EPS. Cautious on second half demand environment, but well positioned to end the year with a lower leverage ratio.
Key Takeaways
ACCO Brands reported a decrease in net sales but an increase in adjusted operating income due to improved gross margin. The company maintains its full-year adjusted EPS outlook and raises its free cash flow guidance.
Net sales of $494 million; gross margin expanding 450 basis points.
Operating income of $55 million, flat to prior year; adjusted operating income of $66 million grew 14% year over year.
EPS of $0.27; adjusted EPS of $0.38, above Company's outlook.
Raises full year 2023 free cash flow outlook to at least $110 million.
Forward Guidance
The company is updating its full year 2023 outlook and providing a 3Q outlook.
Positive Outlook
- Maintaining full year adjusted EPS outlook of $1.08 to $1.12.
- Mid-teen growth in adjusted operating income is expected.
- Raising 2023 free cash flow outlook to at least $110 million.
- Expects to end the year with a consolidated leverage ratio of 3.3x to 3.5x, lower than previously expected.
- Third quarter includes approximately a 4 percent positive impact from foreign exchange.
Challenges Ahead
- Reported sales are expected to be down 1 percent to 3 percent for the full year.
- Third quarter adjusted EPS is expected to be in the range of $0.21 to $0.24, compared to $0.25 in the prior-year third quarter.
- Full year reported sales are expected to be down 1 percent to 3 percent.
- Adjusted EPS is expected to be in the range of $0.21 to $0.24 for Q3.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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