ACCO Brands Corporation Q1 FY2026 earnings call

First quarter consolidated sales grew 8% driven by favorable comparable sales and EPOS acquisition, with foreign exchange also positively impacting revenue. Americas segment sales growth driven by favorable currency translation, computer accessories, and EPOS acquisition. International segment sales growth due to favorable currency translation and EPOS acquisition. Acquisition of EPOS completed in first quarter, integration on track with expected 2026 sales of approx $80 million over 11 months and modest profit contribution. Gaming accessories: Global gaming market faced headwinds in Q1, but PowerA brand well positioned with catalysts like Nintendo Switch 2 consoles adoption and GTA 6 release, and robust product pipeline. Cost optimization work ongoing to achieve $100 million cost reduction target by end of year, though rising costs due to Middle East conflict may offset some savings.

Americas segment: Sales were up 3% with comparable sales down 2%. Good growth in computer accessories and Latin America, offset by core office products. Early purchase of back-to-school products was comparable to last year, expecting back-to-school sales to be flat to up low single digits. Americas adjusted operating income was $13 million in the first quarter, up approximately $3 million, with margin rate improving 140 basis points to 7.2%. International segment: Sales were up 15% with comparable sales down approximately 3%. Improvement in the rate of decline in comparable sales was driven by new products. International adjusted operating income was $11 million, with margin rate at 6.7%, consistent to prior year.

2026 full year reported sales expected to be flat to up 3%, adjusted EPS within 84-89 cents range. Free cash flow expected within 75-85 million range with approx $25 million in restructuring payments and $15 million in CapEx. Consolidated leverage ratio expected within 3.7-3.9 times. Second quarter reported sales expected to be up within 1-4% range, adjusted earnings per share within 24-28 cents range.

Rising costs due to Middle East conflict, including fuel costs and certain raw materials increasing globally, impact weighted towards back half of year; consumers and some customers may be more conservative in near term due to economic uncertainties; forward-looking statements subject to risks and uncertainties where actual results could differ materially from beliefs and assumptions of management.

Q: With the guidance for the year, given the strong first quarter, why wasn't there more flow through to the rest of the year?

A: First quarter is a small quarter, difficult to gauge full year on. In this environment with global uncertainty, prudently reaffirmed guidance. Full year has about 5% from EPOS acquisition, foreign exchange about 1% impact.

Q: Could you talk about the opportunities to expand EPOS brand globally?

A: Early in integration with EPOS, pleased with what's learned, growth synergies targeted. Complementary to Kensington business, opportunities to pair products for enterprise customers. Don't comment on historical performance of EPOS under different ownership.

Q: Just to follow up on EPOS, is there anything that drove segment outperforming expectations?

A: Uncertainty of acquired business, prudent to be careful with guidance assumptions initially, but optimistic about its contributions.

Q: Can you provide more color on the early back to school?

A: Early orders are strong, at or better than current forecast, feel good about season based on last year's performance.

Q: You mentioned growth in Latin America, can you comment on the shifted go-to-market strategy?

A: Implemented changes in product assortment, go-to-market strategies, incentive plans, and pricing in Latin America to better position product assortment for growth.

Q: On gaming accessories, any other challenges besides software consumer spending?

A: Sequencing of annual sales, holiday was weak for gaming in Q4 leaving inventory opportunities for retailers as challenge in Q1, but brand has taken share in first three months.

Q: Have you seen noticeable signs of softening demand yet?

A: Haven't to date, if there is a challenge with demand, won't be felt until later in the year.

Q: Do you have planned price increases in the pipeline?

A: Both, have some planned price increases going to market and will continue to monitor cost environment.

Q: Can you share the magnitude of tariff cash payments last year and allocation of refund?

A: Talked about claim in $25 million range, don't expect anything in 2026, some claims more complicated and anticipated to come in later.

Q: Any commentary about computer peripherals growing to 25%?

A: Technology peripherals consist of Kensington, PowerA, Lucid Sound, and Epos, large TAMs with relatively small shares, working hard to take market share globally.