Acco Brands Corporation

and welcome to the first quarter 2019 ACCO Brands Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Jennifer Rice, Vice President of Investor Relations. You may begin.

Good morning, and welcome to our first quarter 2019 conference call. Speaking on the call today are Boris Ellisman, Chairman, President, and Chief Executive Officer of Acro Brands Corporation, and Neil Fenwick, Executive Vice President and Chief Financial Officer. Slides that accompany this call have been posted to the Investor Relations section of acrobrands.com. When speaking to quarterly results, we may refer to adjusted results. Adjusted results exclude transaction, integration, and restructuring costs, and reflect an adjusted tax rate. Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures are in this morning's earnings release and the slides that accompany this call. Due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking adjusted earnings per share, free cash flow, net leverage, or adjusted tax rate guidance. Forward-looking statements made during the call are based on certain risks and uncertainties and our actual results could differ materially. Please refer to our press release and SEC filings for an explanation of certain of these risk factors and assumptions. Our forward-looking statements are made as of today's date, and we assume no obligation to update them going forward. Following our prepared remarks, we will hold a Q&A session. Now, it is my pleasure to turn the call over to Boris Ellisman.

Good morning, everyone. I'm pleased to report that the year got off to a solid start with higher constant currency sales, stable comparable sales and improved margins, driven by great execution in North America, continued organic growth in EMEA, a good back-to-school in Brazil, and strong performance of the recently acquired Goba business in Mexico. We were disciplined in implementing price increases, which is enabling us to begin to recover the lost margin from inflation and tariffs. and we started to see some benefits from the additional cost reduction actions we began late last year. While Q1 is still our smallest quarter, this stronger start gives us confidence in meeting our goals for the year. I'm going to begin my segment commentary with North America. Sales in North America declined at a much lower rate than what we saw in the back half of 2018, down 3.1% on a reported basis, and 2.5% on a comparable basis. As orders in the wholesaler channel stabilized and we saw double-digit growth in Kensington computer products and modest organic growth in the Canadian market. The decline that we experienced was due to the timing of orders and the continued effect of the loss placement of certain calendar products last year. Overall, we continue to manage the channel transition well. Q1 is typically a challenging sales quarter in North America, and I'm very encouraged by our strong start. In the second and third quarters, the faster-growing channels, such as retail and mass merchants, carry a higher proportion of sales due to back-to-school shipments. Our initial view on our North America back-to-school season is that sales growth should be consistent with prior year. When we had a good back-to-school season overall, and grew sales 2%. In addition, we expect to shift back to school orders earlier this year. Overall for the year, we still expect North America sales to decline low single digits. Beyond sales, North America operating margin increased as new pricing started to recover higher product costs, and due to tight management of expenses, manufacturing and distribution efficiencies, and as the incremental cost reduction initiatives we put into place late last year and early this year began to take hold. Overall, I am pleased with the improved performance in our North America business and the execution by our team. Turning to EMEA, once again, this region delivered strong top and bottom line results. While reported sales declined 5% entirely due to currency, comparable sales increased 3.5% as we continue to see the positive sales effects of cross-selling legacy ACCO and Ascelti products due to new product launches. The sales and marketing teams have done a great job in this region. In addition to strong go-to-market execution, the operations teams in EMEA have continued to deliver. Excluding a $1.6 million adverse impact of foreign currency, EMEA's underlying operating income increased, driven by cost savings, and synergies. I remain very pleased with our European results. Results in the international segment were again mixed. We had a good quarter in Brazil, with growth in Telibre notebooks during a strong back-to-school season. We did well in Mexico, driven by the strong performance from the recently acquired Barelito business. The results in Brazil and Mexico were more than offset by the declines in Australia. The overall market in Australia is soft, and we continue to work through the impact of customer consolidation. In total, I am pleased with our start to the year. As we enter the early phases of the back-to-school season in North America, we have taken prudent steps beginning in Q4 of last year to pre-buy raw materials in certain inventory to secure availability and avoid further tariff and inflationary increases. We also began production of manufactured back-to-school products earlier to maximize our product availability during the peak season. These actions, in combination with anticipated earlier back-to-school shipments, had an impact on our operating cash flow this quarter and will continue to have some impact in the second quarter. This is consistent with our expectations as communicated on our call in February. For the full year, we'll continue to target 165 to 175 million of free cash flow. Now, I'll ask Neil to give you a more detailed look at the quarter. Neil?