Acco Brands Corporation

Hello, everyone, and welcome to the Atto Brands Third Quarter 2025 Earnings Conference Call. My name is Ezra, and I will be your coordinator today. If you would like to ask a question, press star followed by one on your telephone keypad. If you change your mind, press star followed by two. We will be taking questions at the end of the presentation. I will now hand over to Chris McGuinness, Director of Investor Relations, to begin. Please go ahead.

Chris McGuinness, Good morning and welcome to ECHO brands third quarter 2025 conference call this is Chris mcginnis senior director of investor relations. Chris McGuinness, Speaking on the call today is Tom Tedford President and Chief Executive Officer of ECHO brands corporation time will provide an overview of our third quarter results and provide an update on our 2025 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 our outlook for the full year. 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 the 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'll turn the call over to Tom Tafford.

Thank you, Chris. Good morning, everyone, and welcome to ACCO Brands' third quarter 2025 earnings call. Last night, we reported third quarter sales that were slightly below our third quarter outlook. However, our improved operating structure enabled us to meet our adjusted EPS outlook and improve gross margins by 50 basis points. Sales in the quarter were challenged by softer demand globally and trade down in some of our categories. The slower implementation of tariff-related price increases and the timing of forecasted revenue that moved out of the third quarter give us confidence we will see an improvement in the fourth quarter. 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. That brings the cumulative program total to approximately $50 million. We remain highly focused on managing all global spending to preserve profitability and cash flow. I am pleased with our team's work to mitigate the impact of incremental US tariffs on our business. We believe we are well positioned to support our customers with our balanced and cost-competitive supply chain. We have implemented most of our price increases. However, the timing of those increases has lagged, impacting our outlook sales in the third quarter. We will see greater benefits from our pricing strategies in the fourth quarter. We closely monitor evolving trade policies and will take appropriate action, if needed, to mitigate the impact on ACCO Brands. Moving to our third quarter results. In the Americas segment, sales for the back to school season in the US and Canada finished in line with our expectations, down mid single digits. The decline was partially due to purchasing decisions by customers in response to tariffs early in the back to school season. Retailers continue to tightly manage inventory, resulting in minimal replenishment for the season. Our leading student note-taking brands, Five Star and Mead, grew market share in the season, highlighting the strength of our brands and the value they offer the consumer. In Latin America, sales were weaker than expected due to a constrained consumer as trade-down was prevalent in the quarter. In Brazil, we began shipping the important stocking orders for their back-to-school season at the end of the third quarter. although softer than expected as customers delayed making purchasing decisions. We remain cautiously optimistic about our expanded product offering and the back to school season in Brazil. In Mexico, sales trends improved during the quarter across most categories. In the international segment, demand was mixed with Europe being soft, partially offset by increases in Australia and Asia. In our office categories, while sales declined, we maintained our market position across the segment. Transitioning to our global technology businesses, Kensington computer accessory sales declined modestly in the quarter, reflecting delayed business spending. In the fourth quarter, we expect a return to growth driven by new product launches and a more robust end-user pipeline. In gaming accessories, PowerA sales declined in the quarter due to a combination of reduced demand for legacy consoles and timing for Nintendo Switch 2 accessories. We expect solid growth in the fourth quarter for the gaming accessories category. We are well positioned for the important holiday season as PowerA is the first officially licensed Nintendo Switch 2 wireless controller in the market. Over the next 12 months, we have an impressive pipeline of innovative new products across multiple categories, many of which will have exclusive IP. Our product roadmap is strong and will give us momentum as we go into Q4 and next year. Turning to our office essentials and learning and creative categories, global demand continues to be challenged. We have good syndication of our product assortment, however, the lower rate of sales is due to reduced demand in our core categories. We continue to refine our new product development approach to enhance our category positions, expand our assortment, and enter faster growing adjacencies like ergonomics and hybrid work offerings. We are optimistic this will improve revenue trends in the future. Let me highlight some of our new products that have been recently introduced. In EMEA, we are actively broadening our portfolio of lights-branded ergonomic and hybrid work solutions. Our innovative offerings have received multiple design awards and represent an area of strong sales growth for our European business. We are now evaluating expansion beyond EMEA and have high expectations for our enhanced ergonomic product portfolio. In the U.S., we have introduced the West Village line by Mead. West Village offers premium products at accessible price points designed to appeal to today's value-conscious consumers. The product portfolio features a selection of notebooks, time management products, and more, all of which have been positively received by our retail partners through GAINS syndication. Finally, we have successfully integrated the Bureau seeding acquisition and are evaluating geographic expansion opportunities beyond Australia and New Zealand. This is an exciting category and serves as a platform to expand into new geographies, as well as new product categories such as gaming seeding. As I conclude my remarks, we continue to monitor the evolving external dynamics that impact demand for our products. We remain committed to pivoting our business to higher growth categories while streamlining operations, optimizing our cost structure, and inorganically enhancing our product portfolio. I am confident our team and our strategy will better position ACCO Brands for profitable, sustainable growth. Before I hand the call over to Deb, I would like to thank the employees of ACCO Brands for their tireless efforts in support of our strategy. I am proud of our team and the work we are doing to transform our company. I will come back to answer your questions. Deb?