- ACCO Brands' Long-Term Outlook Dims
May 4, 2026 · seekingalpha.com
ACCO Brands Corporation is downgraded to Sell with a $3.26 price target, reflecting debt concerns and macro headwinds. The recent EPOS acquisition expands ACCO's technology peripherals, but margin pressures from rising fuel and electricity costs persist. Leverage remains high at 4.11x net debt/aEBITDA, with $897mm debt and a significant 2029 maturity wall with limited cash and operational coverage.
- ACCO (ACCO) Q1 2026 Earnings Call Transcript
May 1, 2026
Image source: The Motley Fool.
DATE
Friday, May 1, 2026 at 8:30 a.m. ET
CALL PARTICIPANTS
President and Chief Executive Officer — Thomas Tedford Executive Vice President and Chief Financial Officer — Deborah O’Connor
Full Conference Call Transcript
Thomas Tedford: Thank you, Chris. Good morning, everyone, and thank you for joining us today for ACCO Brands first quarter earnings call. Last night, we reported first quarter results with sales and adjusted EPS above our outlook. We also reiterated full-year guidance. We are pleased with the strong start to the year, and the results indicate we are executing well on our key operational and strategic initiatives. First quarter consolidated sales grew 8%, higher than our expectations, driven by favorable comparable sales and better first quarter performance from the EPOS acquisition. Additionally, as expected, foreign exchange had a significant positive impact on revenue in the quarter.
In the Americas segment, sales growth was driven by favorable currency translation, computer accessories and the EPOS acquisition. Sales for computer accessories within the segment were strong, reflecting new products and a meaningful end-user pipeline. In North America, early purchases of back-to-school products were better than anticipated. While it is still early, we are confident in the upcoming back-to-school season due to increased listings and the absence of order cancellations due to tariffs in the prior year. For the season, we are expecting back-to-school sales to be flat to up low single digits. Sales of office products were down across the segment, but the rate of decline improved.
In Latin America, sales improved due to a combination of a change in go-to-market strategies and new products. Turning to the International segment. Sales growth of 15% was driven by favorable currency translation and the EPOS acquisition, which I'll discuss in more detail shortly. The rate of decline improved in the quarter, reflecting the positive impact of price, broad-based improvement in core category demand and favorable mix. Our overall strategy remains focused on expanding our product range in faster-growing categories with an emphasis on technology peripherals. Our target for 2026 is for peripherals to grow to represent 25% of the company's projected revenue. In support of our strategy, our acquisition of EPOS was completed in the first quarter.
We are excited about the potential of this addition to ACCO Brands. The integration is on track with expected 2026 sales of approximately $80 million over 11 months of the year and a modest contribution to profit. As a result of the acquisition, Jeppe Dalberg-Larsen, President of EPOS, will now lead Technology peripherals for ACCO Brands. Jeppe has over 20 years of experience leading technology peripheral businesses and is a strong operator who will drive our growth initiatives. This change in leadership is another step to better position ACCO Brands to execute on our strategy of expanding our global market shares and enhancing our product portfolio and technology peripherals through organic and inorganic initiatives in these large and growing categories.
Story Continues
Pivoting to gaming accessories. The global gaming market faced headwinds in the first quarter from broad industry challenges and softer consumer spending. Our PowerA brand is well positioned to capitalize on 2 significant catalysts that we believe will improve performance throughout the year. The continued adoption of Nintendo Switch 2 consoles by the consumer and the expected fourth quarter release of Grand Theft Auto 6. Additionally, our product pipeline is robust as we are expanding our gaming portfolio to include simulation as well as a revamped audio offering. Our leading product portfolio, the important work we do with OEMs and our strong channel partnerships give us confidence in the back half of the year.
In Computer accessories, the Americas delivered solid sales growth. In the International segment, sales were down versus the prior year as we comped a large government order in the U.K. in 2025. Normalized, computer accessory sales in the segment were up modestly year-over-year. We have an expansive range of new products and an improving pipeline throughout 2026 that will support our growth objectives. Transitioning to our cost optimization work, we continue to execute on our cost reduction and footprint optimization program. We remain on track to achieve the $100 million cost reduction target by the end of the year. Some of our projected savings, however, may be offset by rising costs due to the ongoing conflict in the Middle East.
We anticipate fuel costs and certain raw materials to increase globally with the impact weighted towards the back half of the year. The company is carefully monitoring the situation and has taken appropriate steps to mitigate these potential impacts. We have considered these developments in our guidance, however, recognize this is a dynamic situation that is evolving daily. While consumers and some customers may be more conservative in the near term due to economic uncertainties, our tight cost controls and growth initiatives give us confidence in the year. In summary, I am pleased with our first quarter results.
I am proud of our strong execution against our value-enhancing initiatives and the progress we are making on our strategy to transform ACCO Brands into a more focused, efficient and growth-oriented company. I will come back to answer your questions. Now let me turn the call over to Deb.
Deborah O?Connor: Thank you, Tom, and good morning, everyone. As Tom mentioned, first quarter sales and adjusted EPS were above outlook. Comparable sales improved with a better mix of product sales as well as back-to-school order timing earlier than anticipated. Reported sales in the first quarter increased 8% with comparable sales down less than 3%. Growth in the quarter was driven by FX and the EPOS acquisition. Comparable sales reflect growth in Latin America and computer accessories in the Americas as well as lower declines in several core categories. Gross profit for the first quarter was $107 million, an increase of 7%, with the margin rate of 31.1%, down 30 basis points.
The margin rate decline was attributable to lower priced product mix. Adjusted SG&A expense of $95 million is up modestly to the prior year, with the increase largely due to unfavorable FX and the EPOS acquisition, significantly offset by cost savings. Adjusted operating income for the first quarter was $12 million, up $5 million versus the prior year, reflecting cost savings somewhat mitigated by organic volume declines. Before turning to segment results, let me provide some detail on the bargain purchase gain related to our acquisition of EPOS. This $38 million gain represents the purchase price of EPOS compared to the preliminary fair market value of the business, which is primarily from working capital.
As Tom mentioned, the integration of EPOS is on track, and our outlook includes $80 million of 2026 sales with a slightly higher gross profit rate than our consolidated average and neutral to adjusted EPS. We remain on track to deliver the outlined $15 million in cost synergies in 12 to 18 months. We recorded $7 million in restructuring charges, primarily related to this acquisition, most of which will be paid out in the next year. Let's turn to our segment results for the first quarter. In the Americas segment, sales were up 3% with comparable sales down 2%. We had good growth in computer accessories and in Latin America, which was offset by our core office products.
The early purchase of back-to-school products was comparable to last year, and we expect the full season to be up modestly. The Americas adjusted operating income was $13 million in the first quarter, up approximately $3 million with the margin rate improving 140 basis points to 7.2%. The margin rate improvement was driven by cost savings. In the International segment for the first quarter, sales were up 15%, with comparable sales down approximately 3%. The improvement in the rate of the decline in comparable sales was driven by new products, and we also saw increased purchases of office products due to the lower year-end buying we highlighted in the fourth quarter.
International adjusted operating income was $11 million, with the margin rate at 6.7%, consistent to the prior year. Free cash flow in the quarter was $1.4 million, comparable to last year and in line with our plan. Inventory was up $67 million since the start of the year. $27 million of that increase was related to EPOS, while the remaining increase was attributable to seasonal inventory build and higher tariff costs. During the quarter, we returned $7 million to shareholders in the form of dividends. At quarter end, we had approximately $252 million available for borrowing under our revolver and finished the quarter with a consolidated leverage ratio of 4.1x. Now let's move to the outlook.
For 2026, we are reiterating our expectation for full year reported sales to be flat to up 3% and adjusted EPS to be within the range of $0.84 to $0.89. This outlook reflects a prudent sales expectation in the back half of the year given the global environment. We also anticipate cost increases in the near term, which we have considered in our guidance. Free cash flow is expected to be within the range of $75 million to $85 million, with approximately $25 million in restructuring payments and $15 million in CapEx. Lastly, we anticipate a consolidated leverage ratio within a range of 3.7x to 3.9x.
For the second quarter, we expect reported sales to be up within a range of 1% to 4% with a lesser benefit from FX. We expect adjusted earnings per share to be within the range of $0.24 to $0.28. While the current environment remains dynamic, we are confident in the future of our company. We have no debt maturities until 2029 and a long history of productivity savings and cost management. Our strategy pivot is an exciting opportunity for ACCO Brands to accelerate growth and potential value creation for our shareowners. Now let's move on to Q&A, where Tom and I will be happy to answer your questions. Operator?
Operator:[Operator Instructions] Your first question comes from the line of Greg Burns from Sidoti.
Gregory Burns: So with the guidance for the year, given the strong first quarter, why wasn't there more flow-through to the rest of the year? I know you talked about maybe some macro uncertainty, but why aren't we seeing maybe a little bit more of a flow-through for the balance of the year? And then how much FX and acquisition-related growth is baked into that flat to up 3% revenue for the year?
Deborah O?Connor: Greg, it's Deb. First of all, the first quarter for us is a pretty small quarter. As you know, we typically had the bulk of our profits come in 2Q through the rest of the year. So it's always a difficult quarter to gauge your full year on. We're pleased with how we ended the first quarter, obviously. But in this environment and with all the global uncertainty with the Mid East and everything else, we just prudently left our -- and reaffirmed our guidance for the full year. And that's where we sit. And if you look to the full year, we have about 5% still coming from the EPOS acquisition.
So very consistently throughout all the quarters next year. Foreign exchange is about 1%. So this first quarter had 6%. Future quarters have anywhere from 1% to kind of flattish. So we end the year with about a 1% impact.
Gregory Burns: Okay. Great. And then in terms of EPOS could you talk about the opportunities to expand that brand globally, the timing of maybe some of the initiatives you have around that? And also, can you just help us better understand EPOS' position or position within the prior ownership? Like why wasn't the brand more successful in kind of growing into new markets?
Thomas Tedford: Yes. Greg, this is Tom. Let me address the first part of your question initially, and then we can get into the second piece to the extent that we can. We are early in the integration process with EPOS. We're very pleased with what we've learned so far, and we certainly have growth synergies that we have targeted as a part of the acquisition thesis. We believe it's very complementary to our Kensington business. We recognize that it's a different product category. However, it likely goes through the same routes to market globally.
And we think there's opportunities as we look ahead to pair the product along with our robust Kensington portfolio to offer a one-stop solution for enterprise attachments when laptops and desktops are deployed. So we think there's some significant opportunities as we look ahead to drive growth. Clearly, we're focused at the moment on integration and delivering the synergies while maintaining the growth initiatives that we have in both businesses. I don't want to comment on the historical performance of EPOS. It was under different ownership. I don't know if it was a highly strategic element of the Demant business, and I don't want to speculate as to why they struggled.
I just want to reiterate to you that we feel very confident in the business and the products and frankly, the leadership of the team. And that's why we've announced a change in leadership and a change in focus with our organizational structure, and we have Jeppe leading it. So we're optimistic about the future. We're excited about the brand, and we look forward to positive business results from EPOS this year and beyond.
Operator: Your next question comes from the line of Joe Gomes from NOBLE Capital.
Joseph Gomes: Congrats on the quarter. So this is a follow up on EPOS. I don't know is there anything that you could point out that drove the segment outperforming expectations? Or did you just kind of go in with low expectations? I don't know if there's anything you can point out there, provide a little more color on that EPOS outperforming.
Thomas Tedford: Yes. That's a good question, Joe. Candidly, we weren't really sure the uncertainty of an acquired business and the potential disruptions in integration. We just found it prudent to be careful with our guidance assumptions for the business. We're learning about it more and more. As I said earlier, we're very optimistic about its contributions to our business this year and beyond. But candidly, it was just our lack of really visibility into their forecast given what we knew, we thought it was a prudent thing to do to be careful with the numbers that we included in our models.
Joseph Gomes: Okay. And then maybe I don't know if you could provide any more color on the early back-to-school. It sounds like it's performing a little bit better than maybe people had initially anticipated. I don't know if you can talk about inventories and what your customers are saying to you, kind of feedback you're getting from them on the whole back-to-school program.
Thomas Tedford: Okay. Yes, it's early, Joe, obviously. We're in the process of shipping early orders, which predominantly are direct import orders from Asia. As we spoke in our prepared remarks, we believe the season is going to be up modestly. We feel good about our brands based on their performance last year in which ACCO Brands' portfolio of brands took market share in the U.S. and in Canada. So we're optimistic about the season. We have good line of sight to the initial orders. They're at or better than our current forecast. So early indications are strong, and we hope that the sell-through isn't impacted by some of the uncertainties and potential inflation based on the conflict in the Middle East.
But given what we know today, we feel very good about back-to-school this year.
Operator: Your next question comes from the line of Kevin Steinke from Barrington Research.
Kevin Steinke: You mentioned that you saw growth in Latin America. And I know that region was a bit more challenged last year. You talked about consumers trading down, product choices, et cetera. But you mentioned that, I think in your prepared remarks that you shifted your go-to-market strategy. So maybe can you comment on that a little bit more? And did that contribute to the growth you saw in the first quarter?
Thomas Tedford: Yes, Kevin, good question. Latin America was a good performing part of our business in the first quarter this year. And you're right, we managed it well. We implemented changes to meet the consumer where they are. We recognize that it's a constrained environment in both Mexico and Brazil. We've adjusted our product assortment. We've adjusted our go-to-market strategies, our incentive plans for our sales reps, and we've adjusted pricing where it was appropriate. So the combination of the strategies that we deployed in the market at the back half of last year have better positioned our product assortment for growth.
And we'll continue to refine it as things continue to change, but we feel really good about where we are today in Latin America.
Kevin Steinke: Okay. Great. And just following up on gaming accessories. You talked about the expectation of a stronger second half of 2026 and the reasons why it makes sense. You did mention some industry challenges currently. Is that just related to softer consumer spending? Or is there anything else that you would mention in terms of just the challenges you mentioned for the industry?
Thomas Tedford: Yes. We believe it's largely related to a softer consumer. In the first quarter, if you think about the sequencing of our annual sales, a lot of it is reliant upon holiday and holiday was relatively weak for gaming in Q4, which left some inventory opportunities for retailers, which presented some challenges for us in Q1. But what I do feel good about is our brand. Our brand has taken share each month in the first 3 months of the quarter. We think we're well positioned as we discussed in our prepared remarks for the balance of the year. And candidly, we're excited about our new product assortment.
So we think a lot of good things are in store for PowerA in 2026.
Kevin Steinke: Okay. Understood. And as you mentioned, you're kind of factoring the potential for a softening in customer demand. Given the macroeconomic uncertainties, which makes sense to be prudent. But have you actually seen any noticeable signs of softening demand yet? Or is that just at this point, just trying to be cautious given the environment?
Operator: Yes. We haven't to date. We think if there is a challenge with demand, it won't be felt until later in the year. And as Deb mentioned in her prepared remarks, we have seen some early indications of some cost increases, predominantly driven by fuel. And we are taking the necessary steps internally to protect profitability and to position ourselves to deliver the year based on what we see today. But from a demand perspective, we have not seen pressures on demand yet.
Kevin Steinke: Okay. So have you -- do you have planned price increases in the pipeline currently or just kind of monitoring the situation on the cost front?
Thomas Tedford: Yes, a good question. It's actually both. We do have some planned price increases that we are going to market in different geographies across the globe, and we'll continue to monitor the cost environment, and we'll take actions if necessary.
Operator: Your next question comes from the line of William Reuter from Bank of America.
William Reuter: My first one, clearly, you guys had some tariff cash payments last year. Can you share with us the magnitude of those? And in the event that you do get a refund, I guess, have you applied for refunds? And if you do get that, how would you allocate that cash?
Deborah O?Connor: Yes. So -- we have talked in the past about our claim and how we have put it forth and that we feel very comfortable with the amount. And we're talking somewhere in kind of the $25 million range. We don't expect anything in 2026, and we'll watch it as it goes.
William Reuter: Okay. And then on that, not expecting anything in '26, is that based upon the status of your claim, whether it was liquidated or not liquidated and the timing of what that may be? Because I think that there are a lot of signs that indicate some refunds may be paid this year. So is it just conservatism on your part or based upon the unique attributes of your claim, you just know it won't be this year?
Deborah O?Connor: Yes. It's interesting. I would say maybe a little bit of both. But to be paid this year, there's a lot that has to happen at the government and different places like that. So who knows, to your point. And then we do have some claims that are a little more complicated that we anticipate coming in later.
William Reuter: Got it. That's helpful. And then as you see things now, I know that you manufacture a portion of your products and you also have third parties that manufacture others. Is there any sort of a sense for what the headwind based upon current oil prices may be this year in the back half?
Thomas Tedford: We've built our best thinking into our current guidance. That may be why you don't see us taking guidance up for the full year based on the over delivery in Q1. We've done our best to project what we think the impacts are going to be. But as you know, this has been a dynamic situation. We're optimistic that it ends relatively soon, but we've taken into account a prolonged disruption based on the conflict in the Middle East in our guidance.
William Reuter: Got it. And then just lastly for me. Is there anything -- any commentary about this computer peripherals growing to 25%? I'm not even sure what products you're including in that. But any comments about the competitive dynamics of those categories? It would seem to me you may be going up against some big companies, but I'm certainly not a tech analyst. So anything you could share? That's it.
Thomas Tedford: Yes, happy to. So technology peripherals, let's start there. It consists of our brands, Kensington, PowerA, LucidSound and EPOS. So it's not just computer accessories, it's computer and gaming products that we sell globally. We think those are large TAMs, growing TAMs and TAMs in which we have relatively small shares in. And so we think the dynamics for future growth are very positive. And we're working hard to position our brands to take market share in each market that we compete in globally.
Operator: At this time, there are no further questions. I will now turn the call over to Tom Tedford for closing remarks.
Thomas Tedford: Thank you, everyone, for joining us. We are pleased with our first quarter results and expect the combination of the EPOS acquisition, momentum from growth initiatives and positive foreign exchange to drive revenue improvement in 2026. Our commitment to operational excellence through continued cost management and productivity programs position us to deliver improved profits and cash flow. With our optimized operational structure and momentum with leading brands, we have a strong platform to generate consistent free cash flow while strategically repositioning ACCO Brands towards faster-growing technology peripheral categories. I want to thank our dedicated team and recognize their efforts and congratulate them on a strong first quarter. We appreciate your interest in ACCO Brands.
I look forward to talking with you when we report our second quarter results in July.
Operator: This concludes today's call. Thank you all for attending. You may now disconnect.
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ACCO (ACCO) Q1 2026 Earnings Call Transcript was originally published by The Motley Fool
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- ACCO Brands Corporation (ACCO) Q1 2026 Earnings Call Transcript
May 1, 2026 · seekingalpha.com
ACCO Brands Corporation (ACCO) Q1 2026 Earnings Call Transcript
- Acco Brands (ACCO) Beats Q1 Earnings and Revenue Estimates
Apr 30, 2026 · zacks.com
Acco Brands (ACCO) came out with quarterly earnings of $0.02 per share, beating the Zacks Consensus Estimate of a loss of $0.05 per share. This compares to a loss of $0.02 per share a year ago.
- ACCO Brands Reports First Quarter Results
Apr 30, 2026 · businesswire.com
LAKE ZURICH, Ill.--(BUSINESS WIRE)--ACCO Brands Reports First Quarter Results.
- ACCO BRANDS REPORTS FIRST QUARTER RESULTS
Apr 30, 2026
LAKE ZURICH, ILL.--(BUSINESS WIRE)--ACCO BRANDS REPORTS FIRST QUARTER RESULTS.
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- ACCO Brands Corporation Declares Quarterly Dividend
Apr 24, 2026 · businesswire.com
LAKE ZURICH, Ill.--(BUSINESS WIRE)--ACCO Brands Corporation Declares Quarterly Dividend.
- ACCO BRANDS CORPORATION DECLARES QUARTERLY DIVIDEND
Apr 24, 2026
LAKE ZURICH, ILL.--(BUSINESS WIRE)--ACCO BRANDS CORPORATION DECLARES QUARTERLY DIVIDEND.
- ACCO (ACCO) Q4 2025 Earnings Call Transcript
Apr 22, 2026
Image source: The Motley Fool.
Date
Monday, March 9, 2026 at 8:30 a.m. ET
Call participants
President and Chief Executive Officer — Thomas Tedford Senior Vice President, Global Financial Planning and Analysis and Treasurer — Jagannath Bobji
Full Conference Call Transcript
Christopher McGinnis: Thank you. Good morning, and welcome to the ACCO Brands conference call to review our fourth quarter and full year 2025 results. Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands; and Jagannath Bobji, Senior Vice President, Global Financial Planning and Analysis and Treasurer; Deb O'Connor, Executive Vice President and Chief Financial Officer; will not be joined today due to a personal matter, but is expected to return in a few weeks. 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, restructuring costs, noncash goodwill, intangible asset impairment charges and other nonrecurring 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 financial 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 Tedford.
Thomas Tedford: Thank you, Chris. Good morning, everyone, and thank you for joining us today for ACCO Brands fourth quarter and full year 2025 earnings call. This morning, we reported full year 2025 sales and adjusted EPS in line with our outlook. I'm pleased with how our team executed while navigating significant disruptions throughout 2025. Despite continued demand challenges globally and tariff-related disruptions in the U.S., ACCO Brands maintained or grew its market position in most categories, demonstrating the resilience and strength of our brand portfolio. We continue to invest in higher growth categories as we reposition the company for improved revenue performance. We have refined the company's strategy to focus on the growing technology peripherals market.
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The acquisition of EPOS represents a strategic move and broadens our technology peripherals portfolio, which now represents approximately 25% of the company's projected revenues. The EPOS line of premium audio solutions strengthens our enterprise computer accessories business with key third-party certifications across unified communications platforms. The acquisition aligns well with our strategy of targeting value-enhancing transactions and is complementary to our Kensington business. Our teams have proven their ability to realize cost synergies from acquisitions. We expect to realize $15 million in annual cost synergies from this transaction. We are pleased with early integration efforts and are excited about adding this growth category to our portfolio.
Our expected solid cash flow and improving leverage will allow for a more aggressive inorganic growth approach. An accomplishment I am proud of in 2025 was our team's quick response to U.S. tariffs and trade disruptions. Our proactive China plus 1 strategy prevented significant disruptions to our business. We have a flexible supply chain that enables competitive costs, value-added products and provides category-leading service levels to our customers. We continued the solid implementation of our multiyear cost reduction program, delivering $35 million of savings in 2025 bringing the cumulative total to over $60 million since its inception in early 2024 and are on track to deliver $100 million in savings by the end of 2026.
In the fourth quarter, revenue trends improved sequentially in the Americas segment, led by impressive growth in our technology accessories categories. The PowerA brand performed well during the fourth quarter, with sales strengthened by our leading new product offering supporting the Nintendo Switch 2.0 launch and holiday retail placements. Kensington also had a good quarter in the segment driven by a strong pipeline and new product introductions. The International segment faced challenges from continued weakness in EMEA, which was partially offset by growth in Australia. Results were challenged in Europe due to difficult comparable sales comps to Q4 of 2024 and lower demand of traditional business essentials.
Looking ahead to 2026, we expect the combination of the EPOS acquisition, improved demand in many categories and favorable foreign exchange to drive revenue growth. In Technology accessories, we are excited about our pipeline of new products from Kensington as we expand our breadth of offering to support enterprise-level customers. PowerA is expected to benefit from the recent launch of Nintendo Switch 2.0 and an increase in new gaming titles in the marketplace in 2026, especially Grand Theft Auto 6 which is anticipated to be released late in the year. In Learning and Creative, our solid market share performance in North America during 2025 positions us well for the 2026 back-to-school season with initial orders indicating an improvement year-over-year.
Within Latin America, Brazil's 2025 results were lower than expected, resulting from adverse mix and market trade down due to lower-priced products. We are working to reposition our product offering to Brazilian consumers, reflecting the challenging consumer dynamics. Additionally, we are focused on managing the gross margin impact of the adverse product mix by addressing our cost structure. In our International segment, we expect the rate of decline to moderate in 2026 aided by execution on growth initiatives. We remain optimistic about the Bureau acquisition and are using acquired capabilities to expand into categories like ergonomic gaming chairs. In EMEA, we continue to focus on enhancing our ergonomic product offering, which is driving incremental sales and accretive gross margins.
We remain focused on improving revenue performance while maintaining expense discipline. We will closely manage expenses in 2026 and expect to deliver the balance of savings against our $100 million cost reduction program. Overall, we are expecting a better year on the demand front in 2026 with EPS and cash flow also expected to improve. While external challenges persist, I'm confident in our strategy and our team's ability to execute. We are building a more focused, efficient and growth-oriented company. Our transformation towards technology peripherals combined with our operational excellence and strong financial position creates multiple pathways for value creation. The foundation we have been building positions us well for profitable growth in the years ahead.
Before I hand the call over to J.B., I want to thank our employees for their dedication and resilience throughout a challenging year. I am proud of our team and the work we are doing to transform our company. I will come back to answer your questions. J.B.?
Jagannath Bobji: Thank you, Tom. Good morning, everyone. As Tom mentioned, fourth quarter sales and adjusted EPS were in line with outlook. Reported sales in the fourth quarter decreased 4% with comparable sales down 8%. While demand continued to be constrained by global macroeconomic factors, trends in the Americas segment improved sequentially led by growth in technology accessories and planning products. Gross profit for the fourth quarter was $144 million, a decrease of 7% with a margin rate of 33.6% down 110 basis points. The margin rate decline was attributable to lower volumes, reduced fixed cost absorption and unfavorable product mix.
SG&A expense of $84 million was down $7 million versus the prior year due to cost reduction actions and lower incentive compensation expense. Adjusted operating income for the fourth quarter was $60 million, with a margin rate of 14%, down 30 basis points. Now let's turn to our segment results for the fourth quarter. In the Americas segment, comparable sales declined 5%. We had good growth in our technology accessories categories and planning products which was more than offset by lower demand for core products as well unfavorable mix of lower priced products in Brazil. The Americas adjusted operating income was $43 million up modestly in the fourth quarter with a margin rate improving 110 basis points to 17.7%.
The margin rate improvement was driven by cost savings and lower incentive compensation. In the International segment, for the fourth quarter, comparable sales declined 12%. Sales were impacted by soft demand in Europe and the difficult Q4 2024 comparison due to non-repeats of year-end buying by certain customers. Backing this out, the comparable sales decline was similar to the third quarter. The decline in Europe was partially offset by growth in Australia. International adjusted operating income was $26 million with the margin rate at 14.1%, both down compared to the prior year. The decreases are due to the lower volumes, which more than offset the benefit of pricing and cost savings.
Adjusted free cash flow for the year was $70 million, this includes $19 million in cash proceeds from the sale of 3 owned facilities. Cash flow was lower in 2025 reflecting the EBITDA decline as well as tariff related cash payments, which were approximately $15 million higher than prior year. During the year, we returned $42 million to shareholders in the form of $27 million dividends and $15 million in share repurchases. At year-end, we had approximately $292 million available for borrowing under our revolver and we finished the quarter with a consolidated leverage ratio of 4.1x. Before turning to outlook, let me provide a little more detail on the EPOS acquisition.
EPOS generated sales of approximately $90 million in 2025 with the majority in Europe. We expect to realize $15 million in annual cost synergies as a result of the transaction over the next 12 to 18 months. Additionally, the acquisition will be slightly accretive to the EBITDA in the first year. We have identified synergy savings and are in the early stages of integrating and executing on these initiatives. We expect to record $7 million in restructuring charges related to these actions in 2026. Moving to the outlook for 2026, we expect full year sales growth as demand across most categories and geographies improve, the EPOS acquisition and the positive foreign currency translation.
For the full year, we expect reported sales to be flat to up 3% and adjusted EPS to be within the range of $0.84 to $0.89. Free cash flow is expected to be within the range of $75 million to $85 million. Our free cash flow outlook does not include asset sales. Excluding asset sales from 2025, we expect cash flow to increase by more than 50% at the midpoint of our 2026 outlook. Lastly, we anticipate a consolidated leverage ratio within a range of 3.7 to 3.9x. For the first quarter, we expect reported sales to be within a range of flat to up 3% and an adjusted loss per share within the range of $0.06 to $0.03.
It is important to note that the first quarter of 2025 was positively impacted by higher-margin back-to-school business that was pulled forward due to tariffs in the U.S. and a onetime Kensington order in Europe. While the current environment remains volatile, we are confident in the future of the company, we have no debt maturities until 2029 and a long history of productivity savings and cost management. Our strategy pivot is an exciting opportunity for ACCO Brands to accelerate growth and potential value creation for our shareowners. Now let's move on to Q&A, where Tom and I will be happy to answer your questions. Operator?
Operator:[Operator Instructions] Our first question comes from Joe Gomes from NOBLE Capital.
Joseph Gomes: I wanted to start out, maybe get a little more color on the EPOS acquisition, you said it did $90 million of revenue in '25. How does that compare to '24? What kind of is the addressable market here? What kind of margins are we talking about in this business compared to the ACCO overall corporate margins. Any more color on that would be appreciated.
Thomas Tedford: Yes, Joe. So it's an attractive addressable market. We've sized it to about $1.7 billion and we believe that the market shares that EPOS has is around 5%. So there's some significant headroom for growth just from market share gains, but we also believe that the market is growing low single digits. The EPOS asset was for sale for some time. And so the business was a bit disrupted during that process. So its rate of decline was mid- to high single digits over the last year, but we think that, that is in large measure because of the disruptions caused by the process that they were going through.
So we anticipate that, that to be a growing business over time and are really excited to add it to our portfolio.
Joseph Gomes: Great. And then if you could talk a little bit on -- I know it's still early days, but kind of the back-to-school market. What do the inventory positions start looking like? Any color you can provide on that would be great.
Thomas Tedford: Yes, that's a good question, Joe. So in our prepared remarks, we discussed some of the timing shifts that we experienced last year as retailers moved orders into Q1 from Q2 to avoid tariff disruptions. We don't anticipate that to happen again this year. So we think we'll get back to a normal ordering pattern from our customers. We also know going into the year that our brands performed well in 2025 as noted in our prepared remarks. And that positions typically very well for the following back-to-school season. Our early order book, which is what we can react to given the data that we have now, it is strong.
So we're anticipating a sell-in of our product to be equal to or better than prior year, but the timing of it will be a little bit different because of disruptions that we experienced last year. So overall, we think EPS in North America is going to be solid. Our brands will perform well, and we're excited about the opportunities.
Operator: Our next question comes from Greg Burns from Sidoti Company.
Gregory Burns: Can you just maybe talk a little bit about the -- you mentioned the cost synergies with EPOS, but maybe some of the revenue synergy potential that you see with that business maybe either through geographic expansion or being able to leverage your distribution to amplify that company's growth?
Thomas Tedford: Yes, Greg. Good morning to you. That is really an exciting opportunity. As we said, they have relative market share of about 5% in a very significant and growing market. We believe that the complementary nature of the business with Kensington enables not only cost synergies but gross synergy opportunities. We have as you know, feet on the ground and significantly more markets than the legacy EPOS business has. So we have the opportunity to essentially add to the bag of our selling organization, the EPOS product portfolio. the Kensington business has been in audio for some time, but really at the value and the price spectrum and had very little features, right?
We were really a bid-oriented audio business within Kensington. EPOS has enabled us to expand to the upper price points with value-enhancing solutions. They have over 130 patents in their product portfolio in addition to all the certifications that we referenced in our materials. So it is a great opportunity for us to leverage for growth synergies. We don't have a number identified. We don't typically publish or speak publicly to a number, but we know that there is growth opportunities in the future between the combined Kensington and EPOS portfolios.
Gregory Burns: Okay. And then for the guidance, revenue guidance for this year, I guess, the implied organic decline, could you just maybe break that down of what you expect from the Americas versus international? And maybe within that, what are the relative rates of growth and maybe some of the growth areas like tech and gaming versus some of your more traditional -- the declines you're seeing in the more traditional office categories.
Thomas Tedford: Sure. So let's talk about Q1 and kind of the componentry of our outlook in Q1. So we expect the Americas segment to be down mid-single digits, and we expect international to be up low double digits in Q1. And as you're looking at the full year, we expect the Americas to be down low single digits, and we expect international to be up mid-single digits. So that's kind of the build, if you will, by segment of our Q1 and full year outlook. There's obviously a lot of things going on in the world right now that could potentially impact demand and we'll monitor those things closely and certainly keep everyone updated on our thinking as the year progresses.
But that's how we are thinking about the sales build for 2026, currently. We think the key highlights of the growth drivers are the better revenue performance drivers within the year, certainly EPOS being one of those. It's a business that we don't have for the full year in our numbers, but we have for the majority of the year. Last year, as we noted, they did roughly $90 million in revenue. So we anticipate that to be obviously a positive.
We believe FX will be a positive benefit in 2026 as well, and we expect better performance through our technology peripherals businesses, both PowerA and Kensington have new products that are being introduced and positive macro trends that should enable us to leverage for growth in the year. We have a good strong pipeline of new products coming out in [ 2025 ]. That also we've incorporated into our thinking. And then we have the Bureau acquisition in Australia as we continue to look to expand that geographically to other markets. So we have a number of different initiatives internally that we're using to build positive revenue momentum and we think 2026 should return to growth.
Operator: Our next question comes from Kevin Steinke from Barrington Research. Please go ahead.
Kevin Steinke: Good morning. I want to also ask a little bit more about EPOS. I know you said $90 million of revenue in 2025 and you'll have it for 11 months in 2026. Should we -- how should we think about the seasonality of that business? I'm just trying to think about how much revenue you're incorporating in your 2026 outlook from EPOS? If you think it will grow or if it's more kind of a back half weighted business or any other color you might provide.
Thomas Tedford: Sure, Kevin. Thanks for the question. So we believe in 2026, EPOS will contribute approximately $80 million of revenue. And on a monthly basis, the splits are fairly consistent. So we don't have huge seasonality swings from quarter-to-quarter or month-to-month that we've noted in the business. So it should be pretty consistent from quarter-to-quarter as you're thinking about your modeling.
Kevin Steinke: Okay. Great. That's helpful. And what are you incorporating into the 2026 outlook in terms of like a percentage point benefit from a foreign exchange?
Jagannath Bobji: Kevin, this is J.B. We are about -- we're looking at about 1.5% as a benefit from FX for the year. And as you know, that's a dynamic metric, things are changing every day, but that's what we have in the plan.
Kevin Steinke: Sounds good. That's helpful. And to the extent possible, could you maybe give us a sense to what you're thinking about for 2026 in terms of gross margin and also SG&A expense trends, should we see gross margins up a bit? Or how do you think SG&A expenses trend in relation to your cost savings plans, et cetera.
Thomas Tedford: Yes. So let me start with gross margins. We do anticipate in 2026 gross margin expansion. It's due to a number of factors. Operationally, we have been very disciplined in our footprint optimization work. So we should reap benefits of that continued work that we're doing throughout the globe. We've pushed through price increases in certain markets. We have more price increases in the U.S. planned for April of this year to offset the impacts of inflation due to tariffs and other inflationary drivers in the business. So we should see modest expansion of gross margins in 2026. SG&A, we have to hopefully pay out incentives in 2026.
So that will increase SG&A modestly in the year, but we continue to be very focused on cost discipline. We certainly don't want to spend ahead of revenue. So we'll monitor those spending initiatives very, very closely throughout the year.
Kevin Steinke: Great. And then you mentioned there price increase related to tariffs. How much -- did you get the full benefit of what you were expecting in the fourth quarter? And can you give us a sense as to the types of increases that will be going into a place initially in 2026?
Thomas Tedford: Yes. So I think we lagged a bit versus our expectations from pricing in 2026 -- or 2025, pardon me, in the U.S. In 2026, we have mid-single-digit price increases announced and expected to be implemented in April. We're hopeful that, that catches us up to kind of pre-tariff gross margins in the U.S. business, we'll monitor the situation. Obviously, that's dependent on mix. And if there's a need to adjust pricing further, we will both up or down. We'll monitor it closely as we have been for the last year.
Operator: We currently have no further questions. I'd like to hand back to Tom for some closing remarks.
Thomas Tedford: Thank you, everyone, for joining us. We expect the combination of the EPOS acquisition, stabilizing end markets and positive foreign exchange to drive revenue growth in 2026. Our commitment to operational excellence through continued cost management and productivity programs positions us to deliver improved profits and cash flow. With our optimized operational structure and our momentum with our leading brands, we have a strong platform to generate consistent free cash flow while strategically repositioning ACCO Brands towards faster-growing technology peripheral categories. We appreciate your interest in ACCO Brands. Deb, Chris and I look forward to talking to you when we report our first quarter in April.
Operator: This concludes today's call. We thank everyone for joining. You may now disconnect your lines.
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ACCO (ACCO) Q4 2025 Earnings Call Transcript was originally published by The Motley Fool
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