ACCO Brands Corp (ACCO) Reports Q3 2023 Results: Gross Margin Expands by 400 Basis Points
ACCO Brands Corp (NYSE:ACCO) reports Q3 2023 net sales of $448 million, with gross margin expanding by 400 basis points.
Operating income stands at $32 million, while adjusted operating income grows by 8% to $46 million.
EPS is reported at $0.15, with adjusted EPS at $0.24, hitting the high end of the company's outlook.
Net operating cash flow improves by $80 million year to date, maintaining a full year 2023 free cash flow outlook of at least $110 million.
ACCO Brands Corp (NYSE:ACCO) released its financial results for the third quarter and nine months ending September 30, 2023, on November 2, 2023. The company reported significant gross margin improvement in the third quarter, expanding 400 basis points year over year. This improvement reflects the continued recovery of margin from pricing actions and cost savings from restructuring and footprint rationalization efforts. However, macroeconomic weakness and a stronger U.S. dollar led to lower than expected sales in the quarter.
Financial Highlights
ACCO Brands Corp (NYSE:ACCO) reported net sales of $448 million, a decline of 7.7% from $485.6 million in 2022. Operating income was $32.2 million, a significant improvement from an operating loss of $63.0 million in 2022. Adjusted operating income increased by 7.5% to $46.0 million, reflecting recovery of gross margin from global price increases and cost reduction actions.
The company reported net income of $14.9 million, or $0.15 per share, compared with a prior year net loss of $68.7 million, or ($0.73) per share. Adjusted net income was $23.1 million, or $0.24 per share, compared with $24.1 million, or $0.25 per share in 2022.
Business Segment Results
ACCO Brands North America reported a decrease in net sales by 14.9% versus the prior year. The EMEA segment reported a decrease in net sales by 2.8% versus the prior year. The International segment reported an increase in sales by 4.5% versus the prior year.
Nine Month Results
For the nine months ended September 30, 2023, net sales decreased by 7.2% to $1,344.2 million from $1,448.2 million in 2022. Operating income of $97.5 million compares to an operating loss of $0.8 million in 2022. Net income was $37.6 million, or $0.39 per share, compared with a net loss of $32.0 million, or ($0.33) per share, in 2022.
Capital Allocation and Dividend
Year to date, the company significantly improved its operating cash flow to $70.7 million versus a cash outflow of $9.6 million in the prior year. On October 27, 2023, ACCO Brands announced that its board of directors declared a regular quarterly cash dividend of $0.075 per share.
Updated Full Year 2023 Outlook
Reported sales for 2023 are now expected to be down 6 percent to 7 percent. The full year adjusted EPS outlook is now expected to be in the range of $1.03 to $1.07. The company is maintaining its 2023 free cash flow outlook to at least $110 million.
Explore the complete 8-K earnings release (here) from ACCO Brands Corp for further details.
This article first appeared on GuruFocus.
