Acco Brands (ACCO -8.40%), a leading supplier of office products and consumer goods, reported its second quarter 2025 earnings on July 31, 2025. The main news from the release was that GAAP revenue reached $394.8 million, just above analyst estimates, while adjusted EPS came in at $0.28, narrowly missing non-GAAP EPS expectations by $0.01. The period saw significant declines in key profit metrics, driven by soft demand and tariff-related disruptions in the Americas. Overall, the quarter aligned with management’s cautious outlook, showing some areas of operational progress but reflecting broader demand and profitability challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.28 | $0.29 | $0.37 | (24.3%) |
| Revenue (GAAP) | $394.8 million | $389.8 million | $438.3 million | (9.9%) |
| Adjusted Operating Income | $47.1 million | $64.6 million | (27.1%) | |
| Adjusted EBITDA (Non-GAAP) | $53.6 million | $73.4 million | (27.0%) | |
| Adjusted Free Cash Flow (Non-GAAP) | $(27.0) million | $(28.2) million | -4.3% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Acco Brands sells branded products such as notebooks, folders, desk organizers, and technology accessories for home, office, and educational use. Its portfolio includes leading brands like AT-A-GLANCE planners and Five Star school supplies. The company is present worldwide, with a notable presence in both North America and international markets, and derives about three-quarters of its revenue from top-tier brands in their categories.
Its recent focus areas center on brand leadership, new product development, cost control, and operational efficiency. Key to future performance are strategic initiatives in innovation, supply chain flexibility, and prudent capital allocation. It also targets value creation through disciplined acquisitions and optimizing its seasonal cash flow, with a strong emphasis on new product launches and margin improvement programs.
Quarter in Review: Revenue, Margins, and Operations
GAAP revenue reached $394.8 million, representing a 9.9% drop compared to the same period last year. The shortfall was most pronounced in the Americas segment, where GAAP net sales declined 15.0% to $248.5 million due to newly announced tariffs and weaker demand in consumer and business categories. International segment GAAP net sales were nearly flat at $146.3 million, with a 3.9% favorable currency effect masking a comparable sales decline. Growth in gaming accessories helped offset some of the broader declines, while the acquisition of Buro Seating contributed to international stability.
As GAAP gross profit decreased 15.0% year over year, the gross margin fell to 32.9%, down from 34.8% a year ago, highlighting the impact of lower volumes and reduced fixed-cost absorption. Adjusted operating income dropped 27% to $47.1 million from $64.6 million in Q2 2024. The decline in adjusted operating income was linked to lower sales and reduced absorption of fixed costs, with only partial offset from the company’s cost reduction efforts and lower incentive compensation.
The Americas saw a sharper margin decline, with adjusted operating income margin falling from 21.6% to 17.4%. By contrast, the International segment saw a minor improvement in adjusted operating income margin due to pricing actions, cost savings, and lower incentive expenses. The company's multi-year cost reduction program, now totaling over $40 million in cumulative savings, delivered another $7 million in Q1 2025, helping to cushion some of the operational drag but not fully closing the profitability gap.
Acco Brands continued progress in shifting supply sourcing for US sales away from China in response to changing tariffs, focusing efforts on building inventory and adjusting pricing in North America. The company executed two rounds of price increases in this region during Q1 and Q2 2025 to support gross margins, though top-line weakness still led to negative operating leverage. In international markets, a roughly 2% price increase took effect going into 2025, expected to be the only change for this year outside the United States.
Products, Dividends, and One-Time Events
Within its product range, technology accessories continued to provide pockets of growth. The Kensington product line, which includes business and desktop ergonomics accessories, benefited from a large B2B sales contract in Q1 2025. In the gaming category, PowerA accessories, such as game controllers and protective cases, are pegged for renewed momentum aligned with new platform launches like the upcoming Switch 2.0 console.
Dividend payments continued as scheduled. The quarterly dividend was set at $0.075 per share, unchanged from prior periods. Year-to-date, the company returned $13.5 million to shareholders via dividends and repurchased 3.2 million shares, reflecting a balanced but cautious approach to capital allocation. Cost structures and supply chain adjustments remained at the forefront due to tariff actions.
Cash flow remained pressured, with adjusted free cash flow showing a negative outflow for the first six months of 2025. Inventory built up, as the company engaged in pre-buying to hedge against tariff effects and supply interruptions, leverage was 4.3 times adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) as of June 30, 2025. Asset sales and supply chain moves increased the company’s cash position despite cash flow outflows and an overall profit decline.
The company’s only notable acquisition in Q1 2025 expanded its offering into ergonomic seating in the Australia and New Zealand markets. The deal was small in scale and aimed at incremental expansion, rather than a transformative shift in the business.
Outlook and Investor Considerations
Looking forward, management maintained a cautious financial stance for the rest of fiscal 2025. For Q3 2025, the company expects reported net sales to decline by 5.0% to 8.0% versus the previous year, with adjusted EPS projected in the $0.21 to $0.24 range. Full-year 2025 guidance calls for a 7.0% to 8.5% decline in reported net sales and adjusted EPS between $0.83 and $0.90. The company expects adjusted free cash flow for FY2025 to reach approximately $100 million, including proceeds from asset sales.
Company leadership cited economic uncertainty, evolving trade policies, and ongoing weakness in discretionary consumer and business spending as reasons for maintaining a cautious outlook. The outlook also depends heavily on a successful second half of 2025, as much of the year’s expected adjusted free cash flow and potential sales stabilization will need to materialize during this period. Management indicated that innovation and product launches—especially in technology/gaming accessories and ergonomic solutions—will be important for driving any improvement.
The quarterly dividend was maintained at $0.075 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
