This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands Corporation. Tom will provide an overview our first quarter results provide an update on our 2025 priorities. Also speaking today is Deb O'Connor, Executive Vice President and Chief Financial Officer who will provide greater detail on our first quarter results and second quarter outlook. We will then open the lines for questions. 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 and restructuring costs noncash goodwill and intangible asset impairment charges, and other non recurring items and unusual tax items and include adjustments to reflect estimated annual tax rate on a 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. To the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward looking non GAAP 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 statements are made.

Our forward looking statements are subject to risks and uncertainties and our actual results could differ material. Please refer to our earnings release and SEC filings for an explanation of certain risks factors and assumptions. Our forward looking statements are made as of today, we assume no obligation to update them going forward. Now I will turn the call over to Tom Tethford. Thank you, Chris. Good morning, everyone, and welcome to ACCO Brands first quarter twenty twenty five earnings call. Last night, we reported first quarter sales in line with our outlook and adjusted EPS above our outlook. A combination of favorable sales mix and our proactive approach to managing costs enable us to expand our gross margin by 60 basis points.

Overall demand trends were largely with our expectations across most categories and geographies. Highlighted by growth in computer accessories and a return to growth in Brazil. We made progress on our $100,000,000 multi year cost reduction program realizing $7,000,000 of additional savings in the first quarter. During the quarter, we repurchased $15,000,000 in stock and closed on a small acquisition. We ended the quarter with a leverage ratio of 3.65 times which is well below our covenant of 4.5 times. Before I review in more detail our first quarter results, let me give you an update on the actions the company is taking in response to the recently announced U. S. Tariffs. Over the last five years, have lessened our dependency on China. We have had a China plus one approach that today enables us to react quickly to the changing tariff landscape. This strategy has diversified our supplier base by establishing outsourced manufacturing in other countries besides China. However, we are similar to other companies and continue to purchase a meaningful amount of goods globally from China, as it has been the cheapest source of high quality manufactured products.

Our relationships with these manufacturing partners are strong. And we have collaborated with them to accelerate U. S. Production into other countries and out of China. We are confident in our ability to move of these purchases in the next few months. We are also evaluating our manufacturing network to utilize existing capacity where it makes economic sense. We are temporarily investing in inventory utilizing the ninety day pause on reciprocal tariffs outside of China to mitigate current year financial impacts in The U. S. In addition to our work to optimize the supply chain supporting The U. S, we are implementing price increases in North America. We have communicated two increases with customers and depending on the ultimate tariff resolution we will adjust price as appropriate. It is difficult to gauge the demand impact from these pricing actions due to the uncertainties related to inflation, consumer confidence, and business spending. I do want to remind everyone that about 60% of our business is outside The United States. Which is much less impacted by the current tariff situation. Through the strength of our brands, and management team, we are confident in our ability to navigate through these uncertainties. Our teams are focused on mitigating the cost due to the global trade dynamics and positioning our brands to better serve our customers and take share in this disruptive time.

Now let me highlight our first quarter results. As a reminder, first quarter is seasonally our smallest in terms of sales and profitability. First quarter comparable sales were down 8%. The demand environment was challenging throughout the quarter but consistent with our planning assumptions. Impacted by soft consumer and business demand. In The Americas, sales were favorably impacted by early purchases of back to school products in The US, and growth in Brazil. But were more than offset by weakness in all other categories. Forecasting for this year's upcoming back to school season in North America is challenging due to the uncertainty surrounding tariffs. Our prior expectation was for the categories we compete in to be down low single digits. Following the tariff announcements, by the U. S. Government, our customers have slowed purchases and there remains a lot of uncertainty about how the tariffs will impact the consumer. Retailers are responding by being more cautious with inventories but we are in close contact with them we prepare for this important time of year. Going into this season, our team won several new placements with retailers and as we have previously mentioned, have expanded distribution with alternative channels. [indiscernible] Brazil did return to volume growth as it ended its back to school season in Q1 due to the strength of its premium notebooks and products with popular licenses.

We were encouraged by the start of the year in Brazil and are pleased with the work our team is doing to enhance the value we offer in our product portfolio. In the International segment, the bright spot was computer and gaming accessories.

Which grew mid single digits in the quarter driven by a large B2B computer accessory sale our international expansion in gaming. Sales of office products remained sluggish in the segment across most markets.

Our share is stable and we continue to be leaders in bringing innovative solutions to our customers. In 2025, we are introducing several exciting new products that support the hybrid work environment and our ergonomics product line. We also made a small acquisition in the AustraliaNew Zealand markets that expands our product portfolio and gives us greater scale in that region. Now let me touch on our global technology accessories businesses. Kensington and PowerA. Kensington had a strong quarter with mid single digit growth As expected, sales for our Power A brand were down in the first quarter due to aging consoles and low consumer spending trends as well as the overall gaming accessories category being down almost 20%. We are excited to support the Nintendo Switch two launch which is expected to be in June. With several new licensed products. We expect gaming accessories sales to be down in the first half before rebounding later in the year as our new products gain traction in the market. Now let me touch on the progress we are making to improve our revenue trends. We continue to be energized by the response from our channel partners on our initiatives. I previously mentioned we are expanding our ergonomics line in the international segment.

Which has been a highly successful endeavor for us some of our EMEA markets. We are evaluating other countries and channels to introduce these innovative new products. In Brazil, we have repositioned key products with features and prices to meet a more constrained consumer, as we aim to maintain our category leading position student note taking. We are looking for additional opportunities to expand our share with existing and new channel partners through new product introductions and category leading service. We continue our strategic focus on optimizing our cost structure. Realizing more than $7,000,000 in savings in the quarter. Building upon the $25,000,000 of savings achieved in 2024. In response to the increased uncertainties, we are deferring most discretionary spending and pausing CapEx spend except for new product development and certain IT projects. Until we have a firm understanding of the impact of tariffs, on consumer and business spending. I'm confident we're taking the right actions to protect and reposition our business as we navigate this dynamic period. I will now hand it over to Deb and we'll come back to answer your questions. Deb?

Thank you, Tom, and good morning, everyone. As Tom mentioned, first quarter sales were in line with our outlook and EPS was better than our outlook. In the first quarter, the overall demand environment remained soft. As discretionary spending by both consumer and business remains constrained due to the heightened uncertainty in the market. Reported sales in the first quarter decreased approximately 12% Comparable sales excluding foreign exchange were down 8% versus the prior year. The sales decline was due to lower volumes globally. Gross profit for the first quarter was $100,000,000 a decrease of 10% with the margin rate expanding 60 basis points.

This improvement reflected a favorable mix of sales as well as cost savings from our footprint rationalization program. SG and A expense of $93,000,000 was down versus the prior year as cost reduction actions were partially offset by higher inflation and merit.

Adjusted operating income for the first quarter was $7,000,000 versus $16,000,000 a year ago. Now let's turn to our segment results for the first quarter. In The Americas segment, sales declined 12% and comparable sales declined 8%. This decline was due to lower sales of technology accessories and office products. Early back to school shipments were higher as certain customers took delivery earlier than last year. This shift will reduce second quarter sales. The Americas adjusted operating income margin for the first quarter decreased 40 basis points to 5.8% compared to the prior year. As our higher gross margins and cost savings were more than offset by fixed cost deleveraging from lower volume. Now let's turn to our International segment. For the first quarter, comparable sales declined 8% as the demand environment remained soft for our business essential categories. This was somewhat offset by growth in technology accessories driven by the large B2B sale that Tom mentioned. International adjusted operating income margin for the first quarter decreased to 6.7% due to volume declines and fixed cost deleveraging as well as higher foreign exchange and inflation. In the quarter, we generated free cash flow of $3,000,000 which was in line with our expectation but as anticipated down to the prior year due to the timing and performance of our sales in Brazil for their back to school season.

At quarter end, we had almost $236,000,000 available for borrowing under our revolver. Which is more than adequate for our needs. We finished the quarter with a consolidated leverage ratio of 3.65 times well below our 4.5 times covenant ratio. During the quarter, returned $15,000,000 to shareholders the form of share repurchases while also using $7,000,000 to support our dividend. While we continue to believe a balanced capital allocation is appropriate, in the near term, we will be focused on paying down debt. The dynamics of the changing tariff landscape have caused the current economic environment to be uncertain. Given this uncertainty, we are not providing full year guidance until we gain more clarity. Customer demand, price elasticity, and various tariff scenarios as well as the outcome of changing our sourcing locations makes it difficult to predict our sales volume beyond the second quarter. In certain circumstances, we are seeing customers limit purchases as they lower inventory levels and in some cases are pausing purchases until there is greater clarity on tariffs and consumer demand. As Tom said, we are uniquely positioned to accelerate our sourcing to lower cost countries due to the initiatives put in place prior to the tariff announcement.

By the end of twenty twenty five, there will remain an insignificant amount of high tariff China sourced product which will represent slow moving, low volume and secular declining categories. Given our broad and diverse product portfolio, we will take advantage of this opportunity to rationalize our SKUs and offer item substitutions for high cost products. In addition, the teams have passed price and anticipate more pricing actions may be needed. We are providing an outlook for the second quarter based on what we currently know. We have assumed that sales will be impacted by muted consumer and business demand. The second quarter will be impacted by changes in buying patterns for back to school. There were significant back to school purchases in the first quarter which were pulled forward in anticipation of the tariffs. Are also anticipating that orders may be delayed or canceled as customers wait to gain additional clarity on demand. For the second quarter, expect reported sales to be down 8% to 12%, with a less than a foreign exchange impact from the weakening of the U. S. Dollar. We anticipate adjusted EPS to be in the range of $0.28 to $0.32 Even though the current year poses challenges, we remain confident in the long term future of our company and our ability to navigate this dynamic period.

We have a strong balance sheet, with no debt maturities until 2029 and a long history of productivity gains and cost management. We continue to anticipate longer term that we can grow sales modestly from organic and inorganic initiatives with a target gross margin rate of 33% to 34% and consistent cash flow generation. Now let's move on to Q and A where Tom and I will be happy to take your questions. Operator?

Thank you. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Joe Gomez with NOBLE Capital. Your line is open. Please go ahead.

Good morning.

Hey, Joe. Good morning, Joe.

So first question I wanted to ask on the the the large b to b contract that you you discussed is that gonna have any additional impact in, say, the second or third quarters? Or is that all complete in the first quarter? And I don't know if you can give us any more color as to what that added. I think you said Kensington was up mid single digits. You know, what would have been if we didn't get that one contract?

Yeah.

Good question, Joe. So first of all, to answer the first part of your question, we will not see incremental impact to sales in the balance of the year. It was a one time shipment that we realized in the first quarter. Had the one time B2P order not been realized the business would have been roughly flat. But as a reminder, we have significant one time events with Kensington throughout the years, throughout the quarter. So this isn't a unique thing. It was just a bit bigger than what we typically get.

Right. Okay.

Thank you for that. And you talked about internationally You [indiscernible] price increases And I don't if you give us any more detail or quantify what they were. And and I know you just mentioned I think you've indicated two price increases here in The Americas. I don't if you can give us any more detail to those. Sure. So for the International segment, roughly 2% was the price increase. That was communicated to customers. Going into this year. [indiscernible] is likely going to be the only price actions we'll take most of those markets as we don't anticipate further inflationary pressures to impact the business outside of The United States. Obviously, as you know, The U. S. Business is under some unique circumstances as we navigate the tariff environment We have announced price increases already this year. We anticipate another price increase in response to the reciprocal tariffs. To be implemented by July. So there is a lot of price action happening across all of our categories. In The U. S. Market.

Okay. Thank you.

Thanks for that. You mentioned the acquisition. Assuming it was relatively small since you really speak a little bit much about it. I was just wondering if could give us a little more color about that acquisition, what it was. I know you mentioned Australia and New Zealand, you know, kind of sizing and and, you know, where that you think that's gonna benefit the company. Yeah. So our team has done some nice strategic work, particularly in Australia looking at categories that they believe are growing and we are either under indexed or have no presence in. And so this opportunity came about through some strategic work that they had done and we acquired the business to enter a category, which is ergonomic seating [indiscernible] business seating. So chairs, and other types of seating accessories. In the market. So we're excited about that. I think the Australian team has done a nice job of integrating and we're looking now at what we can do to potentially expand the offering into other markets. That likely won't be near term as we want to make sure we stabilize and take advantage of all the opportunities in Australia and New Zealand. But long term, we see that as an opportunity to expand into that category in other markets globally.

Okay. Great. Thanks for that. I'll get back in queue.

Okay, Joe.

Thank you.

We now turn to Greg Burns with Sidoti. Line is open. Please go ahead. Just, I guess, follow-up on the acquisition [indiscernible] I know that was a small deal, given the demand environment. What's your appetite still for acquisitions? And maybe what is the the funnel of opportunities look like for you?

Yes, Greg. So obviously, that's a good question. We still We still believe that acquisitions will be a part of our future strategy. I will say that we'll probably be a bit more cautious in the near term until we get a better understanding of all that is going to happen as a result of the trade dynamics that we're currently navigating through. But to reiterate long term, we still think that that's an important part of our strategy.

Okay. And then in terms of some of the new product development that you mentioned, Do you maybe what is the timing of the introduction of some of these new products? When do you expect to start to see your revenue flowing from them? And do you have a target on you know, how much growth or x percent of revenue you'd like to to generate from new products in any given year?

Yeah. So let me take the the first part of the question first. We have in our business plan for 2025 revenue from new products. In most of our markets. So they are hitting the shelves literally as we speak. Are probably most notable line is going to be products that are going to be supporting the Switch two point zero launch in June. So those products are starting to leave factory and should be in in market and on shelf in time to support the launch in June. But we have product that we'll be launching throughout the year in most of our markets both for retail and commercial customers. So that work is [indiscernible] I think our pipeline has improved quite significantly over the last couple of years. Particularly in our Kensington business where the expectation is going to be almost 2x of new product not revenue, but new product coming out of their product pipeline. So good progress being made really across the business on new product development. And yes, we do have a target We're working with an outside consultant to refine how we think about NPD and how we think about product vitality on a move forward basis.

Don't believe we're ready to publicly talk about that at the moment. But we will be at some point in the near future. But that is a part of our business, a part of our business planning. We've built in revenue from new products annually. We anticipate that to grow moving forward.

Okay. And then lastly, just wanted to understand the the dynamic in the first quarter. I know on a consolidated level, you kind of hit your number or in line from a revenue perspective, but it feels like maybe the by segment, shaped up different than you were looking for with a little bit of pull forward? And I guess based on my model, the international is a a little bit lighter than we were looking for. So maybe if you could just talk about some of the segment dynamics and how they shaped up versus maybe what the expectations were going in?

Yeah. International got off to a bit of a slow start this year. Predominantly driven by our business in EMEA. And what we're seeing there is really driven by two factors. One, at the end of twenty twenty four, we had certain customers to decide to chase rebate targets. So they pulled in some inventory, pulled in some purchases from the first part of this year, which obviously impacted sales in January and February. And two, in Germany, we're seeing a bit of softness in our categories. And I think those two factors really were the drivers of soft performance in Q1. In the International segment. The rest of the markets I think performed close enough to our expectations. But those two factors were really the key drivers in international.

Okay. And then looking forward, I guess, are are those dynamics have they normalized? Or where where are we at in terms of what you've you're seeing so far in the first part of this quarter?

Yeah. I mean, as you see, we've given our Q2 guidance It's close to the way we finished the first quarter.

So we haven't seen really any drastic changes in in trend in Germany. And again, the rest of the markets in international are performing pretty consistent.

Yes. We do think that international performed a little bit better than the first quarter. Offset by some of the North America challenges.

Okay.

Alright. Great. Thank you.

Our next question comes from Kevin Steinke with Barrington Research. Your line is open. Please go ahead.

Thank you.

Just one of the start off by asking about the favorable sales mix in the first quarter that you mentioned helped gross margin. Was that the large Kensington sale? Or was there something else at play there?

No. I think, that was part of it, but we also had, a pull forward of some of our back to school, which is a bit more profitable that happened in the first quarter of this year. Just due to the timing of when it was purchased. That helped the North America side.

Okay. Thank you.

And you mentioned target gross margin of 33% to 34%. Now I think that's up from the prior target of 32% to 33%. So maybe if you can just talk about what's driving that increase to the the longer term gross margin target Yes. So we have been on a journey optimize our cost structure and to reduce our fixed cost. And as we realize those savings, that should positively impact gross margins. For the mid to long term.

Okay, great. And then know you said you'd be able to move purchasing or most purchasing out of China within the next few months. But could you just maybe give us ballpark on, like, you know, the size of purchasing out of China currently, maybe, I know, in terms of dollar amount of cost of products sold or or, you know, some other way maybe you could you know, quantify it.

Yeah. So just to make sure we're clear on the the the statement that we made, right, it's really moving products supporting The U. S. Business out of China. As a reminder and an important note, percent of our business roughly is outside of The United States and China is still a very viable option for the other markets. That aren't impacted by the current So the work that we're doing right now is really to optimize the supply chain supporting The U. S. Business. So by the end of the year, Kevin, we anticipate an insignificant amount of product supporting The U. S. Coming out of China. That work will be moved to either lower cost or lower tariff markets including markets like Vietnam or our own manufacturing assets likely in The Americas. So hopefully that adds a little bit more color, but it's important to note that the work that we do supporting the businesses outside The United States that is in China is not being resourced at the moment.

Okay. Got it.

And then lastly, you mentioned $7,000,000 of cost savings in the first quarter.

From the restructuring program. Is the target for 2025 still about $40,000,000 I believe that's what had talked about previously.

Yeah. That's right, Kevin. We're still targeting the 40,000,000. And the $7,000,000 was in the first quarter and it was nicely split between the COGS and SG and A. Okay. Great. That's helpful. Thanks for taking the questions. Thank you, Kevin.

We now turn to Hale Holzon with Barclays. Your line is open. Please go ahead. I had, I guess, two questions. The the pull forward in sales for U. S. Back to school, from 2Q into 1Q, how much of normal order flow for back to school would that be? Because it you know, there's typically a replenishment process and it it would be a couple months early. So just, you know, what were your big partners there are planning for? And if if you think there's a scenario where there's just a short we're just short product. In that channel.

And or how that would get filled. I know I know you're very cautious on on giving us, like, thoughts on what that looks like, but [indiscernible] conceptually, how would you walk through it?

Yeah. So, you know, the timing of back to school orders, both for the first and the second quarter often sit right on the quarter end And so this year, we saw a little bit more of an aggressive approach by a certain retailer to pull orders forward into Q1. In anticipation of avoiding the tariffs and potential supply chain disruptions due to the tariffs. And so it's not uncommon that we see this. So it's just a call out that we made because it did happen. Where we had orders that we had planned to happen in Q2. Move forward into Q1. So I think it's a relatively insignificant amount for the full season. Over the three quarters that we support back to school. So the second piece of your question, the answer would be, you know, we don't see an environment where retailers will be short on our inventory. We're well inventoried to support the season. And if they come in late with orders, we'll be prepared to assist them in replenishment to ensure that they're supporting their consumers. So I think we're we're uniquely positioned with a really balanced supply chain. [indiscernible] react quickly to increase demand or order shortages by our customers.

That's that's great. And then I was wondering if the two price increases you've or the price increase taken and the one that you've announced if you'd be willing to share what the quantum is on that, Yes. So the big one, obviously, the one sitting in front of us as we react to reciprocal tariffs. We are working through that as we speak. We want to be a bit cautious in talking about that until we understand where the reciprocal tariffs ultimately end up. But what we can reinforce is that we're going to protect our gross margins through our pricing efforts and our resourcing efforts. And I think that's the important message to deliver. The exact percentage is still a bit in limbo. But we are absolutely going to protect our margins. Through this work.

So that sort of depends on what happens on the ninety day expiration? Which way we go?

Exactly. Exactly.

Got it.

Alright. Thank you very much.

Thank you.

Thank you.

We now turn to William Reuter with Bank of America. Your line is open. Please go ahead.

Good morning. Appreciate that 60% of your sales are outside of The US. Can you share with us at this point what percentage of your, cost of goods sold are sourced in China and then sold in The US?

You know, I think, the answer to that question is that we typically have sourced quite a bit from China because of its low cost, high quality aspect of it. As Tom said, we're currently moving a lot of the production out of China and into other countries in Asia so that by the time we get to the end of the year, we'll have an insignificant amount coming out of of China. So we're in the process of moving all of that. And so it's difficult to give any percentages before and after because there's so much work being done.

Hey, Bill. Just just another note on that. That point that I think is important that we haven't said is we are doing some pre buying ahead of tariffs to build up inventories in certain categories to mitigate any intermediate impact to our cost.

So we should have sufficient inventory from low tariff countries while we're transitioning. Production to other markets out of China. So I think we're uniquely positioned to navigate this challenge in 2025.

Cool. Thank you. I know that you know, certain products, other Southeast countries have gotten pretty good at producing and are, at least somewhat price competitive with China. I thought a lot of kind of computer accessory products there were still pretty substantial price premiums if you go to Vietnam or other countries. Can you talk about when you move to those other countries, what types of price increases you may or cost increases you may be seeing? Yeah. Yeah. There's a there's a modest cost increase as we move out of China to other countries. And obviously, we're doing things that make the most economic sense for the company. So if the benefit of moving which in most cases the benefit is far better than staying, for U. S. Production is there. We realize that, but any inflation from our baseline cost we're going to pass through in price. And so I want to reiterate our objective is support to support the long term 33% to 34% gross margin targets. While remaining competitive at shelf with the consumer or in business spend. So it's important to note that any increase in costs will be offset in price. The supply chain has evolved pretty significantly over the past last five years and so we have good alternatives outside of China.

In Southeast Asia, including Vietnam and Malaysia. And our Kensington business has been deploying the same strategy as the rest of our business in The U. S. China plus one. And so we have a good footprint We're well positioned to navigate these challenges. And I think as Deb said, by the end of the year, we're going to have an amount of our volume. Coming from China. Got it. And I apologize for a a little bit revisiting, Hale's question, but and I I appreciate that the largest increase in prices will be the reciprocal tariff. What you put through thus far has it been kind of like, in, like, the 10% range, in the first round that's already been put in place and then the the subsequent, one that you've communicated but is not in place yet?

That the contact system?

Yeah. So I would I would say the context on the first round is in the single digits. From a price increase and then our reciprocals will be up to 20% depending on where it ultimately ends. Great. Thanks so much. That's all for me.

Okay. Thank you.

We have no further questions. I'll now hand back to Tom Tedford for any final remarks.

You, everyone, for joining us. We are pleased to deliver first quarter sales in line with outlook. And loss per share better than our outlook. I am confident that our proactive actions are better positioning us for long term growth. We have a strong balance sheet and generate consistent cash flows. Which we will use to invest in both organic and inorganic revenue growth opportunities. We appreciate your interest in ACCO Brands and look forward to talking with you when we report our second quarter results in August.

Ladies and gentlemen, thanks call has now concluded. Like to thank you for your participation. May now disconnect your lines.