ACCO Brands Corp Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joe Gomes - NOBLE Capital Markets - Analyst : Good morning.

Question: Joe Gomes - NOBLE Capital Markets - Analyst : So the first question I wanted to ask on the large B2B contract that you discussed is whether you're going to have any additional impact in the second or third quarter? Or was 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. What would have been if we hadn't gotten that one contract?

Question: Joe Gomes - NOBLE Capital Markets - Analyst : And you talked about internationally, you benefited from some price increases. And I don't know if you could give us any more details or quantify what they were? And I know you just mentioned, I think you indicated 2 price increases here in the Americas. I don't know if you can give us any more details on those. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, ACCO.N - Q1 2025 ACCO Brands Corp Earnings Call

Question: Joe Gomes - NOBLE Capital Markets - Analyst : Okay. Thank you for that. And you mentioned the acquisition. I'm assuming it was relatively small since you didn't really speak much about it. I was just wondering if you could give us a little more color about that acquisition, what it was. I know you mentioned Australia and New Zealand, but sizing and where you think that's going to benefit the company?

Question: Joe Gomes - NOBLE Capital Markets - Analyst : Okay. Great. Thanks for that. I'll get back in queue.

Question: Gregory Burns - Sidoti & Co - Analyst : Okay. Just to, I guess, follow-up on the acquisition. I know that was a small deal. Given the demand environment, what's your appetite still for acquisitions? And maybe what the funnel of opportunities looks like for you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:30PM, ACCO.N - Q1 2025 ACCO Brands Corp Earnings Call

Question: Gregory Burns - Sidoti & Co - Analyst : And then in terms of some of the new product development that you mentioned, what is the timing of the introduction of some of these new products? When do you expect to start to see revenue flowing from them? And do you have a target on how much growth or X percent of revenue you'd like to generate from new products in any given year?

Question: Gregory Burns - Sidoti & Co - Analyst : And then lastly, I just wanted to understand the dynamic in the first quarter. I know on a consolidated level, you hit your number or were in line from a revenue perspective, but segment it shaped up differently than you were looking for with a little bit of pull forward. And I guess, based on my model, the international was 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?

Question: Gregory Burns - Sidoti & Co - Analyst : And then, looking forward, are those dynamics normalized? Or where are we at in terms of what you're seeing so far in the first part of this quarter?

Question: Gregory Burns - Sidoti & Co - Analyst : Okay. All right. Great. Thank you.

Question: Kevin Steinke - Barrington Research - Analyst : Thank you. I just wanted to 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?

Question: Kevin Steinke - Barrington Research - Analyst : Okay. Thank you. And you mentioned a 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 longer-term gross margin target?

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

Question: Kevin Steinke - Barrington Research - Analyst : Okay. Got it. And just lastly, you mentioned $7 million of cost savings in the first quarter from the restructuring program. Is the target for 2025 still about $40 million? I believe that's what you had talked about previously.

Question: Kevin Steinke - Barrington Research - Analyst : Okay. Great, that's helpful. Thanks for taking the questions.

Question: Hale Holden - Barclays Capital - Analyst : Hi. Good morning. I had, I guess, two questions. The pull forward in sales for US back-to-school from 2Q into 1Q, how much of normal order flow for back-to-school would that be? Because there's typically a replenishment process, and it would be a couple of months early. So curious what your big partners there are planning for? And if you think there's a scenario where we're just short product in that channel, and/or how that would get filled. I know you're very cautious about giving us thoughts on what that looks like, but conceptually, how would you walk through it?

Question: Hale Holden - Barclays Capital - Analyst : That's great. And then, I was wondering if the two price increases you've taken and the one that you've announced, if you'd be willing to share what the quantum is on that?

Question: Hale Holden - Barclays Capital - Analyst : So that depends on what happens on the 90-day expiration.

Question: Hale Holden - Barclays Capital - Analyst : Got it. All right. Thank you very much.

Question: William Reuter - BofA Global Research - Analyst : Good morning. I 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 is sourced in China and then sold in the US?

Question: William Reuter - BofA Global Research - Analyst : Coo. Thank you. I know that certain products, other Southeast countries have gotten pretty good at producing and are at least somewhat price competitive with China. I thought about a lot of computer accessory products, there were still pretty substantial price premiums if you went to Vietnam or other countries. Can you talk about when you move to those other countries, what types of price increases or cost increases you may be seeing?

Question: William Reuter - BofA Global Research - Analyst : Got it. And I apologize for a little bit revisiting Hale's question and I appreciate that the largest increase in prices will be the reciprocal tariffs. What you've put through thus far has been in the 10% range in the first round that's already been put in place, and then the subsequent one that you've communicated, but is not in place yet. Is that the context it's in?

Question: William Reuter - BofA Global Research - Analyst : Great. Thanks so much. That's all from me.