ACCO Brands (ACCO) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales declined 11.2% year-over-year to $438.3 million, mainly due to soft demand and exit of lower margin business, partially offset by growth in computer accessories.

• Adjusted EPS was $0.37, exceeding outlook, while reported loss per share was $(1.29) due to $165.2 million in non-cash impairment charges.

• Gross margin improved by 150 basis points to 34.8% as a result of moderating product costs, improved mix, and cost savings.

• Cost reduction initiatives are on track to deliver over $20 million in 2024, supporting improved cash flow and lower leverage.

• Net debt position and leverage ratio improved year-over-year, with a consolidated leverage ratio of 3.7x at quarter end.

Financial highlights

• Q2 2024 net sales: $438.3 million, down 11.2% year-over-year; comparable sales down 10.2%.

• Q2 gross profit: $152.6 million (34.8% margin), up from 33.3% last year; SG&A expense fell 10% year-over-year.

• Q2 operating loss of $111.2 million due to $165.2 million impairment; adjusted operating income $64.6 million.

• Free cash flow improved by $43 million in the first half of 2024; free cash outflow of $2 million through June 30.

• Ended Q2 with $986 million in gross debt, $113 million in cash, and $501 million available on a $600 million revolver.

Outlook and guidance

• Full-year 2024 sales expected to decline 8%-9%; adjusted EPS forecasted at $1.04–$1.09 per share.

• Full-year gross margins expected to improve over 2023; SG&A costs to decrease year-over-year.

• Free cash flow outlook raised to approximately $130 million; year-end leverage ratio expected at 3.0x–3.2x.

• Q3 2024 sales expected to decline 5%-7%; adjusted EPS guidance of $0.21–$0.24 per share.

• Management expects continued impact from weak global demand, inflation, and high interest rates for the remainder of 2024.