Wednesday, July 29, 2020

ACCO Brands Corporation (ACCO)

Cost Cutting Efforts Result in Above Expected 2Q EPS but Business Conditions Remain Challenging

ACCO Brands Corporation designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products primarily in the United States, Canada, Northern Europe, Brazil, Australia, and Mexico. It operates through three segments: ACCO Brands North America, ACCO Brands EMEA, and ACCO Brands International. The company offers office products, such as stapling, binding and laminating equipment, and related consumable supplies, as well as shredders and whiteboards; and academic products, including notebooks, folders, decorative calendars, and stationery products. It also provides private label products, as well as business machine maintenance and repair services. The company offers its business, academic, and calendar product lines under the Artline, AT-A-GLANCE, Derwent, Esselte, Five Star, GBC, Hilroy, Leitz, Marbig, Mead, NOBO, Quartet, Rapid, Rexel, Swingline, Tilibra, Wilson Jones, and other brand names. In addition, it designs, sources, distributes, markets, and sells accessories for laptop and desktop computers, and tablets comprising security products; input devices, such as presenters, mice, and trackballs; ergonomic aids, including foot and wrist rests; docking stations; and other personal computers and tablet accessories under the Kensington, Microsaver, and ClickSafe brand names. The company sells its products to consumers and commercial end-users primarily through resellers, including traditional office supply resellers, wholesalers, mass merchandisers, and retailers, as well as directly to consumers through on-line and direct mail. ACCO Brands Corporation is headquartered in Lake Zurich, Illinois.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

2Q20 Results. Revenue of $366.9 million declined 29.3% y-o-y with comp sales off 28.3%. GAAP net income totaled $5.4 million, or $0.06 per share, compared to $35.9 million, or $0.35, last year. Adjusted net income was $11.6 million, or $0.12 per share, versus $36.3 million, or $0.36 per share, in 2Q19. Quarterly results were negatively impacted by the COVID crisis and $6.5 million of restructuring costs.. Results came in at the lower end of management's guidance of a 25%-40% sales decline and above the guided adjusted EPS of a loss of $0.05 to a positive $0.07. We had forecast revenue at $363 million, net income of $0.02, and adjusted net income of $0.04.

Cost Reductions. Savings from cost reductions reduced 2Q expenses by some $33 million, which drove the positive earnings in the face of the revenue decline. Further actions to focus the business on faster growing categories and channels will result in an expected additional ...

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report.  NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.