Executive Summary
ACCO Brands reported QQ3 2024 revenue of $420.9 million, down 6% year over year and down 3.97% quarter over quarter, with a gross margin of 32.5% and an adjusted operating income of $45 million. Net income was $9.3 million and diluted EPS stood at approximately $0.10 for the quarter. Management emphasized the ongoing cost-reduction program, footprint rationalization, and supply-chain enhancements that are translating into improved service levels, lower inventories, and a smaller fixed footprint. The company also highlighted a refreshed liquidity position following the refinancing of its credit facilities to 2029, with revolver availability of $569 million, and a leveraged balance sheet improved to a 3.5x net debt/EBITDA ratio.
Strategically, North America Back-to-School dynamics remained challenging due to retailer conservatism and lighter replenishment orders, though sell-through of Five Star and Mead maintained brand leadership. International results benefited from Technology Accessories growth (including Kensington and PowerA adjacencies) and new ergonomic/business-machine product launches that helped offset declines in other office categories. The Q3 trend suggests a gradual stabilization, with Computers Accessories posting two consecutive quarters of growth and continued expansion in non-traditional channels.
Looking ahead, ACCO reiterated its full-year 2024 guidance: revenue down 8% to 9% and adjusted EPS of $1.04 to $1.09, with free cash flow around $130 million and a target leverage of ~3.2x by year-end. Management signaled a continued cost-optimization program into 2025, potential further efficiency opportunities beyond the normalized productivity program, and a disciplined, opportunistic stance on M&A aligned with shareholder value creation. The cash-rich, low-debt-light balance sheet, combined with improving gross margins and disciplined capital allocation, supports a constructive longer-term investment thesis, albeit with near-term revenue headwinds tied to secular shifts in office work patterns and the broader office-supplies cycle.
Key Performance Indicators
QoQ: -50.56% | YoY:-18.32%
QoQ: 107.43% | YoY:-37.58%
QoQ: 107.51% | YoY:-39.44%
Key Insights
Revenue: $420.9 million, YoY -6.05%, QoQ -3.97%
Gross Profit: $136.9 million, YoY -5.46%, QoQ -3.05%; Gross margin 32.53%
Operating Income: $26.3 million, YoY -18.32%, QoQ -50.56%; Operating margin 6.25%
EBITDA: $46.3 million; EBITDA margin ≈ 11.0%
Net Income: $9.3 million; Net income margin ≈ 2.21%
EPS (diluted): $0.095; Weighted average shares ≈ 97.5–96.0 million
Cash flow: Operating cash flow $93.0 million; Free cash flow $89.2 million; Net change in cash -$10.7 million; Cash at end o...
Financial Highlights
Revenue: $420.9 million, YoY -6.05%, QoQ -3.97%
Gross Profit: $136.9 million, YoY -5.46%, QoQ -3.05%; Gross margin 32.53%
Operating Income: $26.3 million, YoY -18.32%, QoQ -50.56%; Operating margin 6.25%
EBITDA: $46.3 million; EBITDA margin ≈ 11.0%
Net Income: $9.3 million; Net income margin ≈ 2.21%
EPS (diluted): $0.095; Weighted average shares ≈ 97.5–96.0 million
Cash flow: Operating cash flow $93.0 million; Free cash flow $89.2 million; Net change in cash -$10.7 million; Cash at end of period $102.0 million
Balance sheet: Total assets $2.3575 billion; Total debt $1.0026 billion; Net debt $0.9006 billion; Leverage 3.5x; Interest coverage ≈ 1.92x
Liquidity: Revolver availability $569 million; End-Q3 2024 liquidity remains strong; Capex: $3.7 million; Free cash flow yield and payout discipline maintained
Market multiples (as of QQ3 2024): P/E ≈ 14.1x; P/B ≈ 0.85x; P/S ≈ 1.25x; EV/EBITDA ≈ 30.8x; Dividend yield ≈ 1.37%
Key segment trends: Americas down 9% (FX-heavy), International down 2% with Technology Accessories growth; Kensington and business-machine categories driving stabilization.
Notes: YoY and QoQ comparisons reflect reported results; non-GAAP/adjusted measures discussed in the earnings call.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
420.90M |
-6.05% |
-3.97% |
| Gross Profit |
136.90M |
-5.46% |
-3.05% |
| Operating Income |
26.30M |
-18.32% |
-50.56% |
| Net Income |
9.30M |
-37.58% |
107.43% |
| EPS |
0.10 |
-39.44% |
107.51% |
Key Financial Ratios
operatingProfitMargin
6.25%
operatingCashFlowPerShare
$0.97
freeCashFlowPerShare
$0.93
dividendPayoutRatio
77.4%
Management Commentary
- Strategy and cost leadership: Management reiterated a multi-year cost-reduction program targeting over $20 million in savings for the year and ongoing productivity gains. Tom Tedford highlighted footprint rationalization and supply chain improvements as core levers to boost profitability while maintaining service levels.
- Revenue trajectory and mix: The company sees improving revenue trends after a difficult first half, driven by Technology Accessories growth and new ergonomic/products launches; North America Back-to-School weakness is viewed as a temporary mix shift rather than a structural decline. Management emphasized better sell-through in Five Star and Mead and a cautious approach to replenishment by retailers.
- Geography and product mix: Brazil and Latin America drag persists, though orders in Brazil shift later into Q4/Q1; International segments benefited from Technology Accessories and new office product launches; Kensington and PowerA expansions are central to product mix refresh.
- Cash flow and balance sheet: Refinancing of credit facilities to 2029 and reduced revolver fees improved liquidity; Q3 cash flow was robust with YTD free cash flow of $87 million and full-year guidance of around $130 million. Leverage declined to 3.5x year-over-year, with a plan to reach ~3.2x by year-end.
- M&A and capital allocation: Management signaled opportunistic M&A as part of a balanced capital-allocation framework and indicated potential 2025 cost-savings beyond the normalized productivity program, suggesting an agile approach to growth via acquisitions where value-creating opportunities appear.
"We are on track to realize over $20 million in savings this year. This program includes our footprint rationalization and other supply chain initiatives, which are a key part of our strategy to enhance operational efficiency and drive long-term profitability."
— Tom Tedford
"We successfully refinanced our credit facilities extending the maturity date from 2026 to 2029, providing us with financial flexibility. Deb will provide additional details on the refinancing in her prepared remarks."
— Deborah O'Connor
Forward Guidance
- 2024 guidance reaffirmed: Revenue down 8% to 9% and adjusted EPS between $1.04 and $1.09; gross margins to improve versus 2023; SG&A costs expected to be down vs 2023, with inflationary pressures partially offsetting cost actions.
- Balance sheet and cash flow: Free cash flow guidance maintained at roughly $130 million; consolidated leverage projected to land around 3.2x by year-end, the best since 2019; no debt maturities until 2029 provides financial flexibility.
- 2025 outlook and growth strategy: The company plans additional cost-savings beyond ongoing productivity initiatives in 2025 and is evaluating opportunities to optimize cost structure further. An external partner is assisting in NPD and go-to-market optimization across the portfolio to improve revenue outcomes; management views non-traditional channels and broader distribution as growth avenues with material but gradual top-line impact.
- Key risks to monitor: macro demand softness, FX headwinds, reformulations in Back-to-School channels, and the pace of recovery in North America consumer demand, as well as execution risk in cost-reduction and new product launches.