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ACCO BRANDS Corp (ACCO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $448.1M (-8.3% y/y) and GAAP EPS of $0.21; adjusted EPS was $0.39; management said results were in line with their outlook excluding a larger FX headwind, which reduced Q4 sales by ~$11.9M and lowered EPS by ~$0.02 versus their intra-quarter outlook .
  • Margins held up: Q4 gross margin was 34.7% (vs. 34.8% LY), adjusted operating margin 14.3% (+30 bps y/y), and adjusted EBITDA margin 16.4% (+30 bps y/y) as cost actions offset lower volume .
  • 2024 FCF was $132.3M and net debt fell by $94M (year-end leverage 3.4x); the board declared a $0.075 quarterly dividend and the company repurchased $15M of stock (2.9M shares) in 2024 .
  • 2025 guide: comparable sales down 1%–5%, adjusted EPS $1.00–$1.05, FCF $105–$115M, leverage 3.0x–3.3x; Q1 comparable sales down 5%–8% with adjusted LPS of ($0.03)–($0.05). FX is a notable headwind early in the year and tariffs introduce uncertainty; management expects margin expansion and similar EPS y/y despite softer sales .
  • Street estimates: S&P Global consensus could not be retrieved at this time due to an API rate limit; no beat/miss vs. consensus is shown. Values retrieved from S&P Global were unavailable.

What Went Well and What Went Wrong

  • What Went Well

    • Cost discipline and margin defense: Q4 adjusted operating margin rose to 14.3% (+30 bps y/y) and adjusted EBITDA margin to 16.4% (+30 bps y/y) despite lower sales, driven by restructuring and productivity actions; full-year gross margin expanded 70 bps .
    • Cash generation and deleveraging: 2024 FCF reached $132.3M and net debt declined by $94M, bringing consolidated leverage to 3.4x; they refinanced their credit facility with nearest maturity in 2029 .
    • Technology accessories growth and segment mix: Tech accessories grew in both segments in Q4; International adjusted operating margin improved 90 bps to 16.5% on pricing and cost actions .
    • Management quote: “We… increased our multi-year cost reduction program to $100 million of cumulative savings… These actions… led to improved gross margins, lower SG&A and strong free cash flow” .

  • What Went Wrong

    • Top-line pressure persists: Q4 sales fell 8.3% y/y (comparable -5.9%) on softer global demand for office-related categories and weaker back-to-school in Brazil; Americas revenue declined 11.8% y/y with ~2 pts from exiting lower-margin business .
    • FX headwinds: From outlook to quarter-end, currency movements reduced Q4 sales by ~$12M and EPS by ~$0.02; FX trimmed Q4 sales by 2.4% y/y overall .
    • Category and regional softness: Hybrid work and office demand remain muted; Brazil back-to-school was soft with consumer trade-down; management sees inventory conservatism by retailers persisting into 2025 .
    • Analyst concern: Tariffs and FX inject uncertainty; management is sending price-increase letters and adjusting sourcing but acknowledged the environment is volatile .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$488.6 $420.9 $448.1
GAAP Diluted EPS ($)$(0.62) $0.09 $0.21
Adjusted EPS ($)$0.39 $0.23 $0.39
Gross Margin (%)34.8% 32.5% 34.7%
Adjusted Operating Margin (%)14.0% 10.6% 14.3%
Adjusted EBITDA Margin (%)16.1% 12.6% 16.4%

Segment breakdown (Net Sales and Adjusted Operating Income)

Segment / MetricQ3 2024Q4 2024
Americas Net Sales ($M)$259.1 $251.3
Americas Adjusted Op Income ($M)$36.7 $41.6
Americas Adjusted Op Margin (%)14.2% 16.6%
International Net Sales ($M)$161.8 $196.8
International Adjusted Op Income ($M)$17.1 $32.4
International Adjusted Op Margin (%)10.6% 16.5%

KPIs and balance sheet/cash flow highlights

KPI2024 Result
Free Cash Flow ($M)$132.3
Net Operating Cash Flow ($M)$148.2
Net Debt Reduction ($M)$94
Consolidated Leverage Ratio (x)3.4x (12/31/24)
Cost Savings Realized in 2024 ($M)~25
Share Repurchases2.9M shares for $15.0M
Dividend (Declared Feb 14, 2025)$0.075 per share

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable Sales (y/y)Q1 2025N/ADown 5% to 8% Initial
Adjusted EPS/LPSQ1 2025N/A($0.03) to ($0.05) Initial
Comparable Sales (y/y)FY 2025N/ADown 1% to 5% Initial
Adjusted EPSFY 2025N/A$1.00 to $1.05 Initial
Free Cash Flow ($M)FY 2025N/A$105 to $115 Initial
Consolidated Leverage (x)FY 2025N/A3.0x to 3.3x Initial
Gross MarginFY 2025N/AImprove vs 2024 Initial
SG&AFY 2025N/AComparable to 2024 Initial
Adjusted Tax RateFY 2025N/A~30% Initial
Intangible AmortizationFY 2025N/A$45M ($0.32/sh) Initial
FX Headwind2025 cadenceN/A~4% headwind in Q1, tapering to ~2% by year-end (on reported) New color
Tariffs Approach2025N/APassing through via pricing; diversified sourcing; volatility acknowledged New color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Cost savings and marginsOn track for >$20M 2024; gross margin up; evaluating more actions Program expanded to $100M by 2026; ~$25M realized in 2024; Q4 adjusted OI margin +30 bps y/y Increasing ambition
FXGreater FX headwinds in H2’24 than expected Q4 FX cut sales by ~$12M and EPS by ~$0.02 vs outlook; 2025 FX headwind ~4% in Q1, tapering to ~2% Persistent headwind early 2025
Tariffs / MacroMacro softness in office categories Price letters to offset enacted China tariffs; diversified sourcing; uncertainty elevated Mitigation in progress
Office/hybrid work impactDemand below expectations; hybrid work suppressing categories Continues; office-related demand soft Structural headwind
Technology accessoriesKensington returned to growth; double-digit growth internationally Q2; continued growth Q3 Growth in Q4 across both segments Positive momentum
Gaming accessoriesQ2 choppy; expected H2 recovery, Asian expansion Q4 strong in Japan; H1’25 headwind as Nintendo transitions to next-gen Switch Near-term choppiness
Brazil back-to-schoolSofter, later sell-in; retailer conservatism Q4 weak; modestly improving trends, but consumer trade-down noted Cautiously improving
Capital allocation / M&AShift to balanced allocation; buybacks; tuck-in M&A framework Active pipeline pursuit; tone more constructive given rates, leverage; disciplined on leverage Optionality rising

Management Commentary

  • CEO (press release): “Fourth quarter sales and EPS were in line with our outlook, excluding the impact of greater foreign currency headwinds… we further increased our multi-year cost reduction program to $100 million… [driving] improved gross margins, lower SG&A and strong free cash flow” .
  • CEO (call): “Free cash flow was a bright spot in 2024… we reduced inventory levels by 17%… net debt down $94 million… we refinanced our bank credit facilities… to 2029” .
  • CEO (call): “We are actively exploring acquisition-based growth opportunities… highly synergistic and accretive… no debt maturities until 2029” .
  • CFO (call): “Change in [FX] rates… resulted in $12 million of lower sales and $0.02 of lower EPS [in Q4 vs outlook]… Q1 FX headwind ~4%, tapering to ~2% by year-end” .
  • CEO (call): “Teams have sent price increase intent letters… to counter the potential impact from the latest round of U.S. tariffs… diversified supply chain” .

Q&A Highlights

  • Cost savings cadence: ~$25M realized in 2024, ~+$40M expected in 2025, remainder in 2026 toward $100M target .
  • Gaming update: Strong Q4 in Japan; expecting H1’25 headwinds ahead of Nintendo’s next-gen Switch launch .
  • Brazil: Back-to-school trends modestly improved post-Q4; consumers trading down; pricing remains competitive .
  • Retailer behavior: Expect continued inventory conservatism in U.S. back-to-school; plan for clean seasonal exits .
  • M&A and leverage: Pursuing low-risk, highly accretive deals with quick paybacks; cautious on leverage and not returning to post-PowerA levels .

Estimates Context

  • Street consensus for Q4 2024 (revenue and EPS, with estimate counts) from S&P Global could not be retrieved due to an API rate limit at this time; we cannot show beat/miss vs. consensus. Values retrieved from S&P Global were unavailable.
  • Management stated Q4 sales and EPS were in line with the company’s outlook excluding higher FX headwinds, implying results tracked internal expectations rather than surprising positively/negatively vs plan .

Key Takeaways for Investors

  • Margin defense is working: Adjusted operating and EBITDA margins expanded y/y in Q4 despite revenue declines, underpinned by restructuring and pricing; the cost program has been lifted to $100M cumulative by 2026 .
  • 2025 setup: Management guides to down 1%–5% comparable sales but similar EPS ($1.00–$1.05) vs 2024 adjusted levels, signaling margin expansion and cost tailwinds offsetting volume softness; FX and tariffs are the swing factors .
  • Cash returns intact: FCF of $132.3M, leverage 3.4x, ongoing dividend ($0.075/qtr) and opportunistic buybacks support shareholder returns while preserving balance sheet flexibility .
  • Category mix: Technology accessories momentum (Kensington, ergonomics, business machines) and International margin gains partially offset structural pressure in traditional office categories .
  • Gaming cycle nuance: Near-term volatility (Nintendo transition H1’25) is balanced by international expansion (e.g., Japan) and new product/licensing; treat as choppy but strategic franchise .
  • Regional lens: Brazil/LATAM remain key to back-to-school outcomes; monitoring consumer trade-down and retailer ordering patterns into 2025 .
  • Optionality from M&A: With no maturities until 2029 and improving leverage, ACCO is evaluating accretive, synergistic tuck-ins—an upside lever if executed prudently .