ACCO Brands ACCO Brands ACCO Brands ACCO Brands

Corporation Corporation
Second Quarter 2013 Earnings Conference Call
July 31, 2013
Forward-Looking Statements & Reg. G
Forward-Looking Statements
This presentation contains statements which may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are subject to certain risks and uncertainties, are made as of the date hereof and we undertake no obligation to
update them. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Because actual results may differ from those
predicted by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the Companys securities.
Among the factors that could affect our results or cause our plans actions and results to differ materially from current expectations are: the concentration of our Among the factors that could affect our results or cause our plans, actions and results to differ materially from current expectations are: the concentration of our
business with a relatively limited number of customers, and the impact of a loss or bankruptcy of a major customer or a substantial reduction in orders from a
major customer; the further consolidation of the office products industry and further consolidation of our customers; decisions made by our large and
sophisticated customers, including decisions to expand the sourcing of their own private label products; decisions by our competitors, including taking
advantage of low entry barriers to expand their introduction and production of competing products; decisions made by end-users of our products, such as
whether to purchase substitute or alternative products, including electronic versions of our time management and planning products; our ability to meet the
competitive challenges faced by our Computer Products business which is characterized by rapid change, including changes in technology, short product life
cycles and is dependent on the introduction of third party manufacturers of new equipment to drive demand in its accessories business; commercial and cycles and is dependent on the introduction of third party manufacturers of new equipment to drive demand in its accessories business; commercial and
consumer spending decisions during periods of economic uncertainty; the continued integration of Mead C&OP with our business, operations and culture, and
the ability to realize cost synergies, growth opportunities and other potential benefits of the merger within the time frame currently contemplated; our ability to
successfully expand our business in developing and emerging markets; litigation or legal proceedings other than claims, lawsuits and actions incidental to our
business; the risks associated with outsourcing production of certain of our products to suppliers in China and other Asia-Pacific countries; the development,
introduction and acceptance of new products in the office and school products markets, and the decline in the use of paper-based dated time management and
productivity tools; material disruptions at one of our or our suppliers' major manufacturing or distribution facilities; material failure, inadequacy or interruption of
our information technology systems; the risks associated with seasonality; foreign currency and interest rate fluctuations; our ability to secure, protect and our information technology systems; the risks associated with seasonality; foreign currency and interest rate fluctuations; our ability to secure, protect and
maintain rights to intellectual property; retention of key employees; risks associated with our substantial indebtedness; and other risks and uncertainties
described under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2012, and in other reports we file with the
SEC.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented on a GAAP basis in this earnings release, we provide investors with certain non-GAAP measures,
including adjusted, adjusted pro forma, and adjusted supplemental EBITDA financial measures. We believe these non-GAAP financial measures are
appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future, as well as to facilitate comparisons with
our historical operating results. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete
understanding of our underlying operational results and trends. For example, the non-GAAP results are an indication of our baseline performance before gains,
losses or other charges that are considered by management to be outside our core operating results. In addition, these non-GAAP financial measures are among
the primary indicators management uses as a basis for our planning and forecasting of future periods.
There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted
accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value
because they exclude certain items that may have a material impact upon our reported financial results. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with generally accepted accounting
principles in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial
measures as provided in the Form 8-K and press release dated July 31, 2013.
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Q2 Highlights and Outlook
Pleased with integration progress, on track to deliver $20 million of net cost
synergies in 2013 and now $25 million of productivity improvements
Gaining momentum in school and office products; early traction on revenue
synergy opportunities
Strong cash flow generation
Marketplace remains challenging, particularly for Computer Products
2013 Outlook 2013 Outlook
Expect pro forma sales to decline 3-6%
Lower than previous range due to volume softness
Expect adjusted EPS of $0.90-$0.95
Earnings improvement driven by cost synergies and productivity improvements
Lower than previous range due to softness in Computer Products
Free cash flow generation of $150 million
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Second Quarter 2013 Financial Summary
Pro forma sales declined nearly 6%
Decline was driven by lower volume, primarily in North America, due, in part, to the exit of low- y , p y , , p ,
margin sales as well as general softness, and continued declines in Computer Products
Europe stabilized, sales flat
Adjusted EPS of $0.19 compared to a adjusted Pro Forma $0.18 in the prior-year
quarter
Cost synergies and productivity savings offset lower sales volumes and higher tax rate
Strong profit improvement in North America Strong profit improvement in North America
Strong profit improvement in Europe
Lower profit in Computer Products
Results are presented on an Adjusted Pro Forma basis Refer to the 8-K furnished to the SEC on July 31 2013 and the press release dated July 31 2013 for a
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Results are presented on an Adjusted Pro Forma basis. Refer to the 8 K furnished to the SEC on July 31, 2013 and the press release dated July 31, 2013 for a
reconciliation of Non-GAAP results to GAAP.
Q2 2013 Pro Forma Margin Reconciliation
$MM Q2 2013
Change
It f Si ifi t I t b $MM Q2 2013 vs.
Q2 2012
Items of Significant Impact bps
Gross Profit $137.1 $(3.1) Cost savings / Synergies 220
One-off Items (20)
Gross Margin 31.1%
110 bps
favorable
Mix / Deleveraging / Reserves (100)
FX 10
Adjusted SG&A $85.2 $(2.8) Cost savings / Synergies (150)
One-off Items (40)
Adjusted SG&A Margin 19.4%
60 bps
adverse
Sales deleveraging / Incentive Comp 260
FX (10) FX (10)
Adjusted Operating Income
Margin
(includes Amortization, 1.4% of Sales
in 2013, 10 bps favorable vs. 2012 )
10.4%
70 bps
favorable
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Six Month 2013 Pro Forma Margin Reconciliation
$MM 6 mo 2013
Change vs.
6mo 2012
Items of Significant Impact bps
6mo 2012
Gross Profit $233.8 $(18.9) Cost savings / Synergies 210
Product costs, net of price 20
Gross Margin 29.5%
30 bps
favorable
Mix / Deleveraging / Reserves (140)
One-off Items (70)
FX 10
Adjusted SG&A $173.6 $(7.9) Cost savings / Synergies (160)
Sales Deleveraging / Incentive Comp 260
Adjusted SG&A Margin 21.9%
90 bps
adverse
FX (10)
Adjusted Operating Income
Margin
(includes Amortization, 1.6% of Sales
in 2013, 10 bps adverse vs. 2012 )
6.0%
70 bps
adverse
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Pro Forma Modeling Assumptions
($ in MM, adjusted pro forma basis)
2012 Actual 2013 Estimate
(1)
Capital Expenditures $34 $36
(3)
Cash Restructuring $10 $30
Cash Interest, net $64 $50
Book Interest
(2)
$69 $54
Net Working Capital Source Source
Depreciation $40 $39
Amortization $27 $25 $ $
Amortization of Stock Comp Expense $10 $16
Cash Taxes $34 $38
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Effective Tax Rate 30% 35%
Diluted Shares 115 116
1. Directional information for modeling purposes only.
2. Excludes accelerated amortization expense.
3. Cash basis; excludes $9MM of leasehold improvements provided by landlord.
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