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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

Takeaways

• Fiscal fourth-quarter revenue -- Reported sales decreased 4% and comparable sales declined 8%, reflecting ongoing demand headwinds.
• Gross profit and margins -- Gross profit was $144 million, down 7%, with a gross margin of 33.6%, representing a decline of 110 basis points due to lower volumes, reduced fixed cost absorption, and unfavorable product mix.
• SG&A expense -- Selling, general, and administrative expense was $84 million, a reduction of $7 million from the previous year, attributed to cost-cutting actions and lower incentive compensation.
• Adjusted operating income -- Adjusted operating income reached $60 million, with a 14% margin rate, down 30 basis points.
• Americas segment -- Comparable sales fell 5%, with technology accessories and planning products growing but offset by declines in core products and adverse product mix in Brazil; adjusted operating income rose modestly to $43 million, with the margin rate up 110 basis points to 17.7% due to savings and reduced compensation.
• International segment -- Comparable sales dropped 12% as soft demand in Europe and tough prior-year comps outweighed growth in Australia; adjusted operating income was $26 million with a 14.1% margin rate, both lower year over year due to volume declines.
• Cost reduction program -- Cost savings achieved totaled $35 million for the year, bringing the cumulative total to over $60 million since early 2024, on track to deliver $100 million by end of 2026.
• Adjusted free cash flow -- Full-year adjusted free cash flow reached $70 million, including $19 million from facility sales; cash flow was impacted by a decline in EBITDA and approximately $15 million higher tariff-related cash payments compared to prior year.
• Capital return to shareholders -- Returned $42 million through $27 million in dividends and $15 million in share repurchases.
• Liquidity and leverage -- Year-end revolver borrowing capacity stood at $292 million; consolidated leverage ratio finished at 4.1x.
• EPOS acquisition -- EPOS generated about $90 million revenue in 2025 (majority in Europe), is expected to deliver $15 million in annual cost synergies over 12-18 months, contribute approximately $80 million revenue in 2026 with low seasonality, and be slightly EBITDA accretive in its first year; $7 million in restructuring charges are anticipated in 2026 related to integration.
• Technology peripherals strategy -- Management stated approximately 25% of projected revenues now come from the technology peripherals portfolio, and stressed investments and pipeline expansion in this segment, especially through PowerA and Kensington brands.
• 2026 sales and earnings outlook -- Guidance calls for reported sales to be flat to up 3%, adjusted EPS between $0.84 and $0.89, and adjusted free cash flow of $75 million to $85 million (excluding asset sales); expects consolidated leverage ratio to decline to 3.7-3.9x.
• First-quarter 2026 outlook -- Management expects reported sales flat to up 3%, with an adjusted loss per share in the $0.06 to $0.03 range; noted prior year’s first quarter benefited from tariff-driven order timing and a one-time Kensington order.
• Foreign exchange benefit -- Estimated to provide about a 1.5% benefit to revenue in 2026.
• Segment expectations for 2026 -- Americas segment is projected to decline low single digits for the year and mid-single digits in the first quarter; International segment is expected to grow mid-single digits for the year and low double digits in the first quarter.
• Gross margin and price actions -- Modest gross margin expansion is anticipated in 2026, supported by footprint optimization and planned mid-single-digit price increases in the U.S. in April specifically to counteract tariff impacts.
• Back-to-school inventory positioning -- The company anticipates a return to normal retailer ordering patterns and early order indicators suggest sell-in volumes equal to or better than the prior year.

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Risks

• Gross margin declined 110 basis points in the quarter, attributed to lower volumes, reduced fixed cost absorption, and adverse product mix.
• International segment results faced ongoing soft demand in Europe and tough prior-year comparisons, leading to lower sales and operating income in the region.
• The EPOS business saw mid- to high single-digit revenue declines in 2025 due to disruption from its sales process, as stated by Tedford.
• Management indicated continued volatility in the macroeconomic environment and persistent external challenges that could impact demand in 2026.

Summary

ACCO Brands (ACCO 4.08%) executed a strategic shift toward technology peripherals, with the EPOS acquisition now expected to account for a quarter of company revenues and to deliver $15 million in annual cost synergies. Cost reductions yielded $35 million in annual savings, advancing toward a $100 million target, while SG&A expense fell $7 million year over year. Adjusted free cash flow dropped partly due to $15 million in higher tariff-related payments and lower EBITDA, but company liquidity improved with $292 million in revolver availability. Guidance reflects stabilization, calling for flat to 3% sales growth, a 1.5% foreign exchange tailwind, and EPS between $0.84 and $0.89 amid anticipated gross margin gains and normalized retailer order patterns.

• Thomas Tedford said, "We think the key highlights of the growth drivers are the better revenue performance drivers within the year, certainly EPOS being one of those," identifying technology peripherals and favorable foreign currency as primary contributors to the 2026 sales outlook.
• The $7 million in restructuring charges related to EPOS integration will be recorded in 2026, per Jagannath Bobji.
• The Americas and International segments are expected to show contrasting performance, with Americas down low single digits and International up mid-single digits for 2026.
• Leadership intends to address adverse product mix in Brazil and maintain expense discipline while focusing on repositioning products in challenged markets.

Industry glossary

• EPOS: A premium audio solutions business recently acquired by ACCO Brands, focused on unified communications and enterprise accessories.
• Kensington: An ACCO Brands business specializing in computer accessories, including security locks, docking stations, and audio products.
• PowerA: ACCO Brands’ gaming accessories business, closely linked to Nintendo console product launches.

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.

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.