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ACCO BRANDS Corp (ACCO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $383.7M declined 8.8% YoY; adjusted EPS of $0.21 was in line with outlook as gross margin expanded 50 bps to 33.0% despite softer demand and tariff headwinds .
  • Versus S&P Global consensus, revenue missed ($383.7M vs $391.1M*) and adjusted EPS was a slight miss ($0.21 vs $0.22*); adjusted EBITDA missed ($45.8M vs $48.9M*) as volumes and tariff timing weighed on results (see Estimates Context) .
  • Full-year 2025 outlook reaffirmed: reported sales down 7.0%–8.5%, adjusted EPS $0.83–$0.90; adjusted free cash flow guided to $90–$100M (tightened from “~$100M” previously); year-end net leverage expected ~3.9x .
  • Management cited pricing implementation lag, order timing into Q4, and improving FX as fourth-quarter tailwinds; tech accessories (Kensington) and gaming (PowerA/Switch 2) expected to return to growth in Q4 .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded 50 bps YoY to 33.0% on cost savings and footprint actions, despite lower volume .
    • Americas adjusted op margin held 14.4% (up 20 bps) despite a 12.2% sales decline, reflecting cost control and pricing .
    • CEO on cost program progress: “realizing an additional $10 million in savings in the third quarter… cumulative… approximately $50 million” within the $100M plan .

  • What Went Wrong

    • Revenue and adjusted EBITDA missed consensus as softer global demand, tariff-related price implementation lag, and order timing pushed sales into Q4 .
    • Americas and International comparable sales declined 12.4% and 7.3%, respectively (FX +1.5% total), with Europe soft and Latin America constrained .
    • GAAP EPS fell to $0.04 from $0.09 YoY, with higher tax expense and lower volume deleverage; adjusted operating income declined to $39.2M from $44.7M .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$420.9 $317.4 $394.8 $383.7
GAAP Diluted EPS ($)$0.09 $(0.14) $0.31 $0.04
Adjusted EPS ($)$0.23 $(0.02) $0.28 $0.21
Gross Margin %32.5% 31.4% 32.9% 33.0%
Operating Income ($M)$26.3 $(6.7) $33.0 $26.0
Adjusted Operating Income ($M)$44.7 $6.9 $47.1 $39.2
Adjusted EBITDA ($M)$53.0 $20.9 $53.6 $45.8

Estimates vs. Actuals (Q3 2025)

MetricActualS&P Global ConsensusSurprise
Revenue ($M)$383.7 $391.1*-$7.4M (~-1.9%)
Adjusted EPS ($)$0.21 $0.22*-$0.01
Adjusted EBITDA ($M)$45.8 $48.9*-$3.1M
  • Values marked with * retrieved from S&P Global.

Segment Results (Q3)

SegmentNet Sales ($M) Q3’24Net Sales ($M) Q3’25Adj. Op Income ($M) Q3’24Adj. Op Income ($M) Q3’25Adj. Op Margin % Q3’24Adj. Op Margin % Q3’25
Americas259.1 227.6 36.7 32.7 14.2% 14.4%
International161.8 156.1 17.1 15.9 10.6% 10.2%

KPIs

KPIQ3 2025Prior/Context
Adjusted Free Cash Flow YTD ($M)$42.3 $86.9 YTD’24
Free Cash Flow – Q3 ($M)$66.0 $89.2 Q3’24
Consolidated Leverage Ratio4.1x (Sep 30) ~3.9x expected YE’25 (call)
Dividend Declared$0.075/shr (paid Dec 10; rec Nov 21) —
Net Debt ($M)$795.3 $812.4 Q3’24
Cash & Equivalents ($M)$82.5 $74.1 FY’24
Inventory ($M)$315.3 $270.4 FY’24

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Sales GrowthFY 2025Down 7.0%–8.5% Down 7.0%–8.5% Maintained
Adjusted EPSFY 2025$0.83–$0.90 $0.83–$0.90 Maintained
Adjusted Free Cash FlowFY 2025~ $100M (incl. $17M asset proceeds) $90–$100M (incl. $17M asset proceeds) Lowered (range introduced)
Net LeverageYE 2025—~3.9x New disclosure

Earnings Call Themes & Trends

TopicQ1 2025 (May)Q2 2025 (Aug)Q3 2025 (Oct/Oct 31)Trend
Tariffs/macroLimited visibility; supplier management to mitigate tariffs Immediate disruption in April; trends improved sequentially Pricing implementation lag hurt Q3; expect better price realization in Q4 Stabilizing execution; demand still soft
Cost reduction programOngoing cost actions >$40M cumulative savings +$10M in Q3; ~$50M cumulative toward $100M plan Positive, ongoing
Tech accessories (Kensington)Growth in computer accessories New product pipeline H2 Q3 modest decline; Q4 growth expected on launches and robust end-user pipeline Inflecting positive in Q4
Gaming accessories (PowerA)—Growth in gaming accessories Q3 decline on legacy consoles/timing; Q4 growth with Switch 2; first licensed Switch 2 wireless controller Improving into holiday
Regional trends——Europe soft (Germany/UK/France); Brazil constrained, Mexico improved; Brazil BTS orders started late Mixed; LatAm cautious
Pricing——Mid-single-digit tariff-related price increases; timing shifted into Q4 Q4 tailwind

Management Commentary

  • “We delivered third quarter adjusted EPS in line with our outlook and expanded gross margin by 50 basis points… Sales were lower than expected… demand… remained soft globally.” — CEO Tom Tedford .
  • “We are making excellent progress on our $100 million multi-year cost reduction program, realizing an additional $10 million in savings in the third quarter… cumulative… approximately $50 million.” — CEO .
  • “We do expect sales trends to improve in the fourth quarter, led by positive foreign exchange and growth in the technology accessories categories… expect to see greater price realization in the fourth quarter to cover the incremental U.S. tariff costs.” — CFO Deb O’Connor .
  • “PowerA is the first officially licensed Nintendo Switch 2 wireless controller in the market.” — CEO .

Q&A Highlights

  • Q4 confidence drivers: price realization shifted from Q3, order timing into Q4, and a stronger Kensington/PowerA pipeline; tech accessories and Switch 2 support expected to drive growth .
  • Trade-down behavior: observed across geographies; portfolio breadth supports good/better/best but impacts top line and modestly profitability .
  • Pricing magnitude: mid-single-digit tariff-related increases negotiated with customers; more realized in Q4 .
  • Channel/vertical strategy: balanced channels with emphasis on e-commerce; pursuing end-user verticals (e.g., healthcare) to drive value .
  • Brazil back-to-school: season starting slow as expected; customers deferring purchases; modest improvement in recent weeks but cautious stance maintained .

Estimates Context

  • Q3 2025 results vs S&P Global consensus: revenue $383.7M vs $391.1M*, adjusted EPS $0.21 vs $0.22*, adjusted EBITDA $45.8M vs $48.9M*; small misses driven by volume softness, pricing timing, and tariff impacts .
  • Implications: Street models may need to lower near-term revenue and EBITDA for tariff timing/volume softness while maintaining FY EPS range given reiterated guidance and Q4 pricing tailwinds .
  • Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Execution offsets demand softness: Cost program drove 50 bps gross margin expansion and preserved mid-teens Americas margins despite double-digit sales declines .
  • Q4 setup improving: price realization catching up, FX tailwind, and category catalysts (Switch 2/Kensington launches) support sequential improvement; watch for delivery on these drivers .
  • Guidance intact (EPS/sales), FCF range tightened: FY sales/EPS reaffirmed; FCF now $90–$100M (from ~ $100M), signaling prudent conservatism amid tariff cash costs .
  • Balance sheet: quarter-end leverage at 4.1x with YE target ~3.9x; debt maturities pushed to 2029 reduces near-term refinancing risk .
  • Demand risk remains: Europe softness and Brazil caution persist; monitor sell-through and BTS in LatAm as potential swing factors .
  • Pricing discipline: mid-single-digit increases intended to offset tariffs; full realization in Q4 is key to margin trajectory .
  • Capital returns: dividend maintained at $0.075; repurchases were front-loaded in Q1; near term focus remains on deleveraging .