Consumables

ACCO Brands Corporation Reports Fourth Quarter 2013 Results

Thursday 13. February 2014 - ACCO Brands Corporation (NYSE: ACCO), a world leader in branded office products, today reported its fourth quarter results for the period ended December 31, 2013.

“As we reported in January, our quarterly and full-year results were in line with our overall expectations,” said Boris Elisman, president and chief executive officer, ACCO Brands. “Despite a challenging environment, we generated over $150 million in free cash flow, which was used to reduce our debt. Looking into 2014, we again expect strong free cash flow, underpinned by cost reduction actions and productivity improvements.”
Fourth Quarter Results
Net sales decreased 5% to $503.7 million, compared to $529.7 million in the prior-year quarter. On a constant currency basis, sales declined 2% driven primarily by lower volume and mix. Income from continuing operations was $50.3 million, or $0.43 per share, including pre-tax net charges of $11.0 million, primarily for restructuring costs. This compared to a loss of $15.1 million, or $0.13 per share, in the prior-year quarter, which included a significant tax adjustment. Adjusted income from continuing operations in the current quarter increased 6% to $44.9 million, or $0.39 per share, compared to $42.3 million, or $0.37 per share, in the prior-year quarter. The improvement was the result of cost synergies and productivity improvements, which were partially offset by lower sales and unfavorable foreign exchange.
Business Segment Highlights
ACCO Brands North America – Sales decreased 7% to $269.6 million from $290.3 million in the prior-year quarter. On a constant currency basis, sales decreased 6% driven by a decline in volume and mix, in part due to the exit from unprofitable sales. The decline was due to soft demand and lost placements. North America operating income was $36.6 million compared to $36.1 million in the prior-year quarter. North America adjusted operating income increased 10% to $46.3 million in the current quarter from $42.2 million in the prior-year quarter, and adjusted operating margin increased to 17.2% from 14.5% in the prior-year quarter. The increases in adjusted operating income and margin were primarily due to cost synergies and productivity improvements, which were partially offset by lower sales and unfavorable mix.
ACCO Brands International – Sales increased 1% to $188.3 million from $187.3 million in the prior-year quarter. On a constant currency basis, sales increased 7% due to higher prices and volume. International operating income was $34.2 million compared to $30.1 million in the prior-year quarter. International adjusted operating income increased 17% to $35.4 million, compared to adjusted operating income of $30.2 million in the prior-year quarter, and adjusted operating margin increased to 18.8% from 16.1% in the prior-year quarter. The increases in adjusted operating income and margin were largely due to sales growth as well as productivity improvements and lower pension costs.
Computer Products – Sales decreased 12% to $45.8 million, from $52.1 million in the prior-year quarter, due to lower volume and mix as well as price. Volume declines and lower average selling prices were driven by increased competition in the tablet and smart phone accessory space, as well as continued declines in laptop shipments, which impacted demand for security and PC accessories. Adjusted operating income was $5.4 million, compared to $10.7 million in the prior-year quarter, and adjusted operating margin decreased to 11.8% from 20.5% in the prior-year quarter. The decreases in adjusted operating income and margin were primarily due to lower sales.
Twelve Month Results
Net sales increased 0.4% to $1.77 billion, compared to $1.76 billion in the prior-year twelve-month period, due to the full-year impact of the merger with MeadWestvaco’s Consumer & Office Products business (“Mead C&OP”). Income from continuing operations was $77.3 million, or $0.67 per share, including pre-tax charges of $43.5 million primarily for restructuring costs, debt refinancing and IT integration costs. This compared to income from continuing operations of $117.0 million, or $1.22 per share, in the prior-year period, including a $145.1 million tax benefit, which was only partially offset by refinancing costs, merger-related costs and restructuring charges.
On a pro forma basis, including the results of Mead C&OP for all of 2012, sales decreased 7%, or 5% on a constant currency basis. The underlying decline was driven primarily by lower volume and mix in North America and Computer Products. Adjusted income from continuing operations was $87.9 million, or $0.76 per share, compared to adjusted pro forma income from continuing operations in the prior-year period of $93.7 million, or $0.82 per share. The decline in income was primarily driven by lower sales and unfavorable foreign exchange, partially offset by cost synergies and productivity improvements.
In 2013, the company reduced its debt by $151 million.
Business Outlook
The company expects 2014 sales to decline in the mid-single digits and adjusted earnings per share of $0.70-$0.76, both of which assume negative effects of foreign currency. The company expects free cash flow of approximately $140 million.