Acco Brands Corporation

If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I would now like to hand over to Chris McGinnis, Senior Director of Investor Relations. Please go ahead.

Good morning, and welcome to the ACCO Brands third quarter 2024 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands Corporation. Tom will provide an overview of our third quarter results and update you on our 2024 priorities. Also speaking today is Deb O'Connor, Executive Vice President and Chief Financial Officer, who will provide greater detail on our third quarter results and update you on our outlook for full year 2024. We will then open the line for questions. Slides that accompany this call have been posted to the investor relations section of accobrands.com. When speaking about our results, We may refer to adjusted results. Adjusted results exclude amortization and restructuring costs, non-cash goodwill and intangible asset impairment charges, and other non-recurring items and unusual tax items, and include adjustments to reflect the estimated annual tax rate on quarterly earnings. 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 their earnings release and slides that accompany this call. Due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking non-GAAP measures. Forward-looking statements made during the call are based on the beliefs and assumptions of management based on information available to us at the time the statements are made. Our forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain risk factors and assumptions. Our forward-looking statements are made as of today, and we assume no obligation to update them going forward. Now, I will turn the call over to Tom Thetford.

Thank you, Chris. Good morning, everyone, and welcome to ACCO Brands' third quarter 2024 earnings call. Last night, we reported third quarter results with our revenue and adjusted EPS in line with our outlook. As expected, we are seeing improvement in our revenue trends compared to the first half of the year, as the top line impact from the exit of low margin business in North America lessened in the quarter. Our team continued to make solid progress on our multi-year cost reduction program, and we are on track to realize over $20 million in savings this year. This program includes our footprint rationalization and other supply chain initiatives, which are a key part of our strategy to enhance operational efficiency and drive long-term profitability. Our focus on operational excellence is yielding tangible results. with improved service levels to our customers, lower inventories, and a smaller operational footprint. We remain dedicated to optimizing our cost structure as we adjust to the demand realities of our categories. Further reductions are under consideration. We are committed to a balanced approach to capital allocation. In the quarter, we paid our quarterly dividend, which is currently yielding 6%, and repurchased more than 2 million shares of ACCO Brands stock. We reduced debt and have an improving balance sheet. We ended the quarter with a leverage ratio 3.5 times down from the same period last year. I am also pleased to announce that we successfully refinanced our credit facilities, extending the maturity date from 2026 to 2029, providing us with financial flexibility. Deb will provide additional details on the refinancing in her prepared remarks. Now I will provide more details regarding our third quarter revenue performance. In the Americas segment, the rate of the revenue decline improved in the third quarter, which benefited from the reduced impact of low margin business exits, as well as stabilizing trends across several categories. The growth in technology accessories was offset by lower demand for back-to-school categories in Latin America. In North America, our back-to-school season was down year over year, with the all-important student note-taking category in line with industry expectations. While sell-through of our branded note-taking products at the retail level was good, indicating strong consumer demand, we didn't see the anticipated replenishment orders from our customers. Retailers took a more conservative approach than last year to inventory levels. They decided to sell through our products and not restock, leading to lower than expected sales for the season. However, the solid sell-through in Five Star and Mead enabled us to sustain our position as the branded leader in the category. This year's performance sets us up well for next year's important back-to-school season. In Brazil, our next largest back-to-school market Sales to date have been softer than anticipated. The back to school selling season, which runs from the fourth quarter and into the first quarter, has experienced later customer orders versus the prior year. As the season progresses, we're closely monitoring consumer behavior and market trends. We still expect our brands to perform well, but are tempering expectations based on the slower start to the season. Turning to the international segment, the pace of revenue decline also improved. Sales were positively impacted by growth in our technology accessories categories. In our office product lines, we have launched several new ergonomic and business machine products that have helped mitigate sales declines in other categories. EMEA and Asia had particularly good quarters, driven by new product introductions and improved customer engagement. Our technology accessories categories, including computer and gaming accessories, performed well this quarter. Both experienced growth in the third quarter across each of our segments. This is the second consecutive quarter of growth in computer accessories, which can be attributed to an improving demand environment, as well as new product launches. In gaming accessories, growth was fueled by the successful rollout of new products, as well as our international expansion efforts. I am optimistic about the continued improvement in revenue trends. We have gained valuable insights from the back to school season in North America this year, particularly around customers cutting replenishment orders to better control their inventory levels. We will be collaborating closely with our customers to ensure initial buy decisions are adequate to capitalize on critical seasonal sales opportunities. Additionally, we experimented with broadening our back-to-school offerings and non-traditional channels this past year with promising results. We plan to increase our presence in these channels while aiming for further distribution gains across all channels and categories. And finally, our robust cash flow and strengthened balance sheet offer us a solid foundation to invest in and support our leading brands while positioning us to evaluate accretive M&A. As I conclude, I'm excited about the opportunities ahead of us at Akko Brands and I'm confident in the actions we are taking to reset our cost structure and improve future revenue trends. Globally, our category shares are strong. Our brand awareness remains high with the consumer and our brands are valued by our customers. Our experienced leadership team has shown its ability to navigate dynamic operating environments. Our strong balance sheet with no debt maturities until 2029 and low fixed interest rates on more than half of our debt put us in a sound financial position as we invest in growth and improve productivity for a brighter future for ACCO Brands. I will now hand it over to Deb and we'll come back to answer your questions. Deb?