Investor Presentation - February 2019 - Investor Relations
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Investor Presentation February 2019
Forward-Looking Statements
Statements contained in this presentation, other than statements of historical fact, particularly those anticipating future financial performance,
business prospects, growth, operating strategies and similar matters are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements, which are generally identifiable by the use of the words "will," "believe," "expect," "intend,"
"anticipate," "estimate," "forecast," "project," "plan," and similar expressions, are subject to certain risks and uncertainties, are made as of the date
hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such
forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the company’s securities.
Our 2019 guidance is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation,
assumptions regarding the timing, cost and synergies expected from integration of acquisitions; impact of changes in U.S. tax laws and trade policies;
changes in the macro environment; fluctuations in foreign currency rates and share count; changes in the competitive landscape, including ongoing
uncertainties driven by the consolidation in the traditional office products channels, and consumer behavior; as well as other factors described below.
Among the factors that could cause actual results to differ materially from our forward-looking statements are: a relatively limited number of large
customers account for a significant percentage of our sales; risks associated with foreign currency fluctuations; challenges related to the highly
competitive business environments in which we operate, including ongoing uncertainties driven by the consolidation in the traditional office products
channels; risks associated with shifts in the channels of distribution for our products; our ability to develop and market innovative products that meet
consumer demands; our ability to grow profitably through acquisitions and expand our product assortment into new and adjacent categories; our
ability to successfully integrate acquisitions and achieve the financial and other results anticipated at the time of acquisition, including synergies; the
failure, inadequacy or interruption of our information technology systems or supporting infrastructure; risks associated with a cybersecurity incident or
information security breach; our ability to successfully expand our business in emerging markets which generally expose us to greater financial,
operational, regulatory and compliance and other risks; risks associated with raw material, labor and transportation availability and cost fluctuations;
the effects of the U.S. Tax Cuts and Jobs Act; risks associated with changes to U.S. government policies, including increased import tariffs and other
changes in trade relations and policies; the impact of litigation or other legal proceedings; consumer spending decisions during periods of economic
uncertainty or weakness; the risks associated with outsourcing production of certain of our products, our information technology systems and other
administrative functions; the continued decline in the use of certain of our products; risks associated with seasonality; our failure to comply with
applicable laws, rules and regulations and self-regulatory requirements and the costs of compliance; the sufficiency of investment returns on pension
assets and risks related to actuarial assumptions; any impairment of our intangible assets; risks associated with our indebtedness, including our debt
service obligations, limitations imposed by restrictive covenants and our ability to comply with financial ratios and tests; the bankruptcy or financial
instability of our customers and suppliers; our failure to comply with customer contracts; our ability to secure, protect and maintain our intellectual
property rights; product liability claims or regulatory actions; our ability to attract and retain key employees; the volatility of our stock price; material
disruptions at one of our or our suppliers' major manufacturing or distribution facilities resulting from circumstances outside our control; and other
risks and uncertainties described in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2017, in
"Part II, Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 and in other reports we file with the
SEC.
2 ACCO Brands Investor Presentation
Reg. G – Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures, including comparable net sales, adjusted gross profit, adjusted gross profit
margin, adjusted selling, general and administrative expenses, adjusted selling, general and administrative expense margin, adjusted operating
income, adjusted operating income margin, adjusted net income, adjusted net income per share, adjusted earnings before interest, taxes,
depreciation and amortization ("EBITDA"), free cash flow, free cash flow yield, net leverage ratio, and normalized tax rate. We have included a
description of each of these measures and a reconciliation to the most directly comparable GAAP financial measure in the tables attached to this
presentation and on page 4 in the case of free cash flow yield. We sometimes refer to comparable net sales as comparable sales, adjusted
gross profit margin as adjusted gross margin, adjusted operating income margin as adjusted operating margin and adjusted net income per
share as adjusted earnings per share.
We use the non-GAAP financial measures both in the internal evaluation and management of our business and to explain our results to
stockholders and the investment community. Senior management’s incentive compensation is derived, in part, using certain of these measures.
We believe these measures provide management and investors with a more complete understanding of our underlying operational results and
trends, facilitate meaningful comparisons and enhance an overall understanding of our past financial performance and our future prospects. The
non-GAAP results are an indication of our baseline performance before gains, losses or other charges that we considered to be outside our core
operating results.
The non-GAAP financial measures exclude certain items that may have a material impact upon our reported financial results such as unusual
income tax items, restructuring and integration charges, acquisition-related expenses, the impact of foreign currency fluctuation and acquisitions,
and other one-time or non-recurring items. These measures should not be considered in isolation or as a substitute for, or superior to, the
directly comparable GAAP financial measures and should be read in connection with the company’s financial statements presented in
accordance with GAAP.
This presentation also provides forward-looking non-GAAP adjusted earnings per share, free cash flow, normalized tax rate and net leverage
ratio. We do not provide a reconciliation of forward-looking adjusted earnings per share, free cash flow, normalized tax rate or net leverage ratio
to GAAP because the GAAP financial measure is not accessible on a forward-looking basis and reconciling information is not available without
unreasonable effort due to the inherent difficulty of forecasting and quantifying certain amounts that are necessary for such a reconciliation,
including adjustments that could be made for restructuring, integration and acquisition-related expenses, the variability of our tax rate and the
impact of foreign currency fluctuation and acquisitions, and other charges reflected in our historical numbers. The probable significance of each
of these items is high and, based on historical experience, could be material.
3 ACCO Brands Investor Presentation
Company Overview 4 ACCO Brands Investor Presentation
ACCO Brands at a Glance
Designer, marketer and manufacturer of recognized consumer and end-user
demanded brands used in businesses, schools, and homes
Founded HQ Products Sold in Employees
1903 Lake Zurich, IL 100+ Countries ~6,800
2018 Revenue 2018 Adj. Net Income 2018 Adj. EPS Dividend Yield2
$1.94B $122.0M $1.14 2.7%
2018 FCF 2018 FCF Yield1 2018 Adj. EBITDA 2018 Adj. Gross Margin
$160.9M 16.7% $291.6M 32.3%
2018 Revenue by Region 2018 Revenue by Category
2%
US School products
6% Storage & organization 6%
Europe 9% 7% 22%
Binding, laminating, shredding 9%
Aus./NZ 9% 42% Calendars & planning
Lat AM Stapling & punching 10%
White boards & easels 21%
Canada 10%
31% Computer accessories
APAC 14%
Writing, drawing & tools
1. Represents FCF divided by market capitalization. Operating cash flow yield is 20.2% ($195M, including $34M of cap ex / (107M shares x $9 stock
price). FCF yield is 16.7% ($161M FCF/ (107M shares x $9 stock price)).
5 ACCO Brands Investor Presentation
2. $0.24 dividend per share / $9 stock price
Diverse and Profitable Portfolio
More than 75% of our net sales come from brands that occupy the #1 or #2 positions
in the select product categories in which we compete
Product Category % Revenue Primary Brands
School products 22%
Storage & organization 21%
Binding, laminating, shredding 14%
Calendars & planning 10%
Stapling & punching 10%
White boards & easels 9%
Computer accessories 7%
Writing, drawing & tools 7%
6 2018 sales ACCO Brands Investor Presentation
Iconic Brands and Customers
We have increased our
Top 12 brands sales concentration in
represent $1.5B of growing channels Top 10 customers
sales (mass, e-tail and represent 40% of sales
independent dealers)
Mass merchandisers Improving industry
e-tailers and conditions coupled with
independent dealers our strategies create the
have been taking share potential for significant
from office superstores value creation
7 2018 sales ACCO Brands Investor Presentation
Broad Geographic Reach with Long-term Growth Opportunities
Our Global Reach (% of 2018 Revenue)
Flat to +2% EMEA
Revenue CAGR 2019-2021 31%
• We expect growth in faster
growing markets of 5%+ over
the next 3 years in aggregate
NA
48%
• We expect North America to be
flat to slightly down, with growth
originating from EMEA and
International regions
Revenue CAGR Estimate
2019-2021 INT’L
NA EMEA INT’L 20%
-2% – 0% 0% – 2% 3% – 5%
Segment Income (% of 2018 Adj. OI)
NA EMEA INT’L
51% 28% 21%
8 ACCO Brands Investor Presentation
Large Addressable Market – Focused on Geographic Reach
Emerging Markets
$60B • Brazil, Mexico, Asia, Chile
School & • Higher growth, fragmented routes to
Office Market market
(End-user prices)
• Strong brands
• Leverage cross-selling opportunities
• Stable end-user demand
• Scalability
$10.2B • Business capabilities
Market
Adjacencies
$5.5B
Addressable Mature Markets
Market
• U.S., Western Europe, Australia,
Canada, Japan
• Strong brands
$1.9B • Leading market position
2018
Sales • Low growth, highly concentrated
• Manage for enhanced profitability
9 *Source: NPD Inc., management estimates ACCO Brands Investor Presentation
We are Committed to Sustainability
Social Environmental Safety and
Responsibility Responsibility Compliance
We are committed to being Our commitment to By using environmentally
responsible local and environmental responsible materials and
global corporate citizens. sustainability is a driving producing products with
Our ethical vision extends force behind our products sustainable business
beyond compliance and and processes and reflects practices, we provide
builds on a fundamental a company built on people with solutions they
commitment to integrity, integrity, accountability, can feel good about.
embracing diversity, and stewardship.
teamwork, respect, and
acting responsibly in our
global community.
Progress made toward our goal
Donated ~$2M in cash and Reportable workplace
of zero waste with 89% of total
in-kind contributions to accidents have declined
waste recycled in 2017 in
charitable organizations in 2017 . nearly 60% since 2014
EMEA
10 ACCO Brands Investor PresentationStrategy 11 ACCO Brands Investor Presentation
Strengthen and Grow – Strategic Imperatives
Channel Category Country
Continuing investment in Focusing product assortment Managing each country with a
growing channels and in stable and growing tailored approach to
margin management of categories while de- maximize future growth
declining channels to fund emphasizing those in secular potential.
growth. declines. Expanding into
faster growing and more
profitable category niches.
Innovation Productivity Acquisitions
Increasing value-add in our Driving cost reduction Making of accretive
products, becoming more initiatives across the business acquisitions to shift portfolio
premium driven, expanding units and corporate functions to faster growing categories,
into new adjacent categories. to fund growth and protect geographies and consumer
profitability. oriented brands.
12 ACCO Brands Investor PresentationProductivity Initiatives
GOAL
• Pass through commodity and tariff-driven cost increases
Reduce costs by 2%
• Optimize customer program spending
of COGS annually
Operational
• Continue footprint rationalization and insourcing initiatives and maintain gross
margin target range
• Generate incremental COGS savings through supply chain
of 33% to 34%
optimization
• Executing on synergy savings from acquisitions
• Improving productivity and efficiency of IT and Finance shared
services through centralization, standardization, improved Achieve SG&A as a
SG&A insourcing/outsourcing mix and automation % of sales of less
• Deployment of specialty tools and robotic process automation; than 19.5%
enables improved automation and reduced costs
13 ACCO Brands Investor PresentationContinuing To Execute Upon Our Cost Savings Track Record
2018 2019
$11M $40-$45M
$5M $5M
$13M $32M
$10M $6M $6M
$20-$25M ($21M)
$19M
Productivity Acquisition Total Productivity Acquisition U.S. Total
Savings Synergy Savings Synergy Cost
Savings Savings Reduction
(Esselte) (Esselte)
Savings will be largely reinvested back into the business
14 ACCO Brands Investor PresentationAdvancing Product Development and Innovation
Innovation focuses on generating new and exciting products in order to:
GROW IN MORE
Shift from office supplies business to consumer
1 ATTRACTIVE
products company by expanding in new categories
CATEGORIES
Counteract effects of private label with new products
COUNTERACT under Mead, Hilroy, Tilibra, and Esselte brands to
2 PRIVATE LABEL maintain long-term health of the Company and brand
relevance at competitive prices
Accelerate innovation in existing categories to drive
JUSTIFY PRICE
3 PREMIUMS
demand for products the consumer wants and justify
price premium vs. lower cost alternatives
15 ACCO Brands Investor Presentation1
Grow In More Attractive Categories
• Market Overview: Expand into fast growing wellness
category with a new range of air purifiers under the new
TruSensTM brand. Global market for residential & portable
air purifiers is estimated at $2B growing at 13% CAGR with
the North American market estimated at $500M and 12%
Experience the Difference
CAGR
• Consumer Insight: Indoor pollution is a growing
concern…consumers want to understand their air quality
and take control of the air they breathe
• Point of Difference: TruSensTM air purifiers respond to the
air you breathe utilizing proprietary features
• SensorPod™ − Designed to measure air quality
anywhere in the room and remotely drive and
optimize purifier output accordingly
• PureDirect™ − Proprietary dual air flow engineered
to improve delivery of purified air throughout entire
room – not just in vicinity of purifier
• DuPont® branded Filters − Combined with
Ultraviolet Lamp capture pollutants and destroy
germs and viruses that can build up on filters,
preventing re-circulation Global Launch − Q1 2019
16 16 ACCO Brands Investor Presentation2 Combating Private Label • The Mead® line is being expanded across our categories to satisfy the needs of value shoppers • The Mead® brand gives both independent dealers and retailers a trusted national brand to better compete against private label • We are adding 115 SKUs to the existing line of 85 items, creating a comprehensive value line across our categories 17 ACCO Brands Investor Presentation
3
Justify Price Premiums
• Leitz® is our largest global brand, covering multiple product
categories, representing $184M in 2018 sales
• In 2019, we are expanding the Leitz product offering to
include Leitz® IQ shredders, which are quieter, have a
modern design, and a wide range of models to choose from
• All models are built for premium performance with up to
4 hours continuous run time, micro shredding for increased
security, anti-jam technology, and simple state of the art
touch controls
• Kensington is a niche global brand in computer accessories
• In 2019 we are adding a docking station exclusively
designed for Surface Pro, certified by Microsoft
• Powerful Connectivity Experience with seamless
charging, syncing, locking, and creative engagement
via the touchscreen
• Articulating Hinge allows users to position the Surface
Pro at any angle
• Versatile Video Connections
18 ACCO Brands Investor PresentationMarketing and Demand Generation
2016 – 2018 2019 –2021
ACCO Sales by Channel: 2016-18 Actuals to 2021 Outlook CAGR CAGR
(Actual) (Forecast)
Independent/Wholesale/Tech(c) -2.8% 0 to 2%
Mass/Other Retail 1.4% 3 to 5%
ACCO Sales
OSS -6.6% -7 to -5%
D2C & D2B -6.7% 0 to 2%
E-Commerce 9.2% 11 to 13%
2016 2017(a) 2018(b) 2019 2020 2021
a) Pro-forma including January '17 impact of Esselte acquisition
b) Pro-forma including Barrilito data from January - June
Channel share is strategically shifting to growing platforms like e-tail;
deliberate move away from OSS will continue into future
19 *Source: company information and estimates ACCO Brands Investor PresentationAcquisitions Are Core to Our Growth Strategy
Strategic Focus Areas
Categories/ • Categories with proven growth potential
1. Geographies with • Geographies with demographic tailwinds
Opportunity for Growth • More focus on consumer-oriented brands and categories
• Acquired brands are market share leaders
Complementary
• Strong brand preference among end-user consumers
2. Brand
Attributes • Ability to extend existing or acquired brands across new categories
or geographies
Channel • Increased diversity of channels to market
3. Diversity • Increased access to end-user consumer
Financial Criteria
Returns > WACC Achievable Cost Accretive to Cash Flow
• Consolidating transactions to deliver
Synergies and EPS
+15% ROIC driven by synergies • Easily recognized cost synergies in • Accretive to EPS in 1-2 years
• New category/geography SG&A, footprint consolidation, • Consistent and predictable cash flow
transactions to deliver +10% ROIC and/or sourcing/manufacturing • Ability to pay down debt quickly and
• Predictable costs and timing to reload
realize synergies
20 ACCO Brands Investor PresentationRecent Acquisitions
PELIKAN ARTLINE ESSELTE GOBA INTERNACIONAL
(2016) (2017) (2018)
Leading distributor of academic, Leading European Premier marketer and seller of
consumer and business manufacturer and marketer of school and craft products in
products in Australia and office and consumer Mexico
New Zealand products Key brand: Barrilito
Extended reach into Extended into school and
Expanded channel and
consumer and school craft categories, diversified
geographic presence
categories, adds scale customer base
• $104M cash transaction • $327M cash transaction • $38M net cash transaction
• ~4.1x (6.1x pre-synergies) for • ~4.0x (5.6x pre-synergies) for • ~6.0x for incremental $6M of
incremental $25M annual Adj. incremental $83M of annual Adj. Adj. EBITDA
EBITDA, incl. $8M of synergies EBITDA, incl. $23M of synergies
• Modest EPS accretion
• Immediately accretive to EPS • ~$55M incremental FCF in Yr. 3
Note: Adjusted EBITDA and free cash flow of acquired company based on IFRS, not U.S. GAAP, and excluding charges
21 ACCO Brands Investor PresentationWe Are Executing Our Strategy
Expanding our
• Acquisitions of Esselte, Pelikan Artline, GOBA
global footprint
Growing our portfolio • Esselte: Leitz® staplers, laminators, notebooks, Rapid® DIY tools
of consumer • Pelikan Artline: Artline® pens and markers
brands • GOBA: Barrilito® school and craft products
Increasing our presence
in growing channels and • Investing in growing channels of mass and e-tail
diversifying customer • Acquisitions have diversified customer base in Europe and Mexico
base
• Raised synergies from Esselte to $32M, up from $23M by the end
Achieving significant of 2019
cost synergies and • Targeting $40-45M of savings in 2019: $20-25M of annual
productivities savings productivity improvements, $11M of savings in 2019 from recent
actions in North America, and $10M of remaining synergies
• Significant FCF generation
Focusing on shareholder • Dividend added to capital allocation strategy in 2018
returns • Balance between dividend, debt reduction, share repurchases, and
acquisitions
22 ACCO Brands Investor PresentationNorth America Overview 23 ACCO Brands Investor Presentation
Segment Overview – North America
Manage the transition from office-centric business to consumer-centric
business, while driving for margin expansion
2018 Key Statistics Description Primary Brands
Designs, sources,
Revenue $941M
manufactures, and
distributes school
Revenue CAGR notebooks, calendars,
-2% - 0%
(2018-2021) whiteboards, storage and
organization products
% of Total
48% stapling, punching,
Revenue laminating, binding,
% of Total Adj. shredding products, and
Operating 51% computer accessories
Income among others, which are
primarily used in schools,
Regions U.S.
Served Canada
homes, and businesses
24 ACCO Brands Investor PresentationHistorical Financial Performance – North America
($M)
Revenue Comparable Sales
$1,025.7 $1,016.1 $999.0
$940.7
-3.2%
-5.9%
2015 2016 2017 2018 2017 2018
Fx N/A N/A 0.2% --
Adjusted Operating Income Adjusted Operating Margin
$158.2 14.9% 15.8%
$149.8 $151.0 14.6%
13.1%
$122.8
2015 2016 2017 2018 2015 2016 2017 2018
25 ACCO Brands Investor PresentationKey Market Trends
• Prior to 2018, our U.S. business had four straight years of profit improvements with
moderate sales declines largely caused by the office superstore consolidation
• Growth in mass and e-tail channels largely offset office superstore retail and
distribution center closures
• We were able to drive significant profitability improvements in our US business
due to cost reductions and productivity improvements
• It is largely the U.S. improvements that drove organic profit improvements
in our total business prior to 2018
• We saw major increases in raw materials and logistics costs beginning in
the spring of 2018, with paper, steel, transportation, and fuel up double digits
from 2017 levels
• We expect the U.S. channel environment to remain difficult, with declines at
wholesalers and superstores, but their decline is expected to be mitigated by
26
growth in mass, e-tail, and tech channels ACCO Brands Investor PresentationStrategic Focus in North America
01 02 03 04
Defend the core, Offer direct sales Computer accessories, US is an attractive
manage channel shift, and fulfillment as under our Kensington market for premium
broaden channel alternatives to retail brand, is a significant products; plan to
participation and or wholesale, enabled growth driver in the increase/refine our
maintain share with by a common ERP. U.S. We plan to go-to-market
traditional We will offer our accelerate docking investments to
customers, expand products directly to station and accelerate sales. US
distribution in value end-users and to ergonomic sales is the primary market
channels, leverage independent dealers at through expanded for the wellness
attractive vertical competitive prices VAR and direct category. We plan to
markets, and distribution create a $10M
reallocate investments direct/e-tail business
to accelerate growth in TruSensTM air
purifiers by 2021
27 ACCO Brands Investor PresentationEMEA Overview 28 ACCO Brands Investor Presentation
Segment Overview – EMEA
The Esselte acquisition enabled a market leading position with broad scale in
critical countries and a more diverse customer base, positioning us for
growth in EMEA
2018 Key Statistics Description Primary Brands
Designs, manufactures,
Revenue $605M
sources, and distributes
storage and organization
Revenue CAGR products, stapling,
0% - 2%
(2018-2021) punching, laminating,
binding, shredding
% of Total
31% products, do-it-yourself
Revenue tools, and computer
% of Total Adj. accessories among ®
Operating 28% others, which are primarily
Income used in businesses,
Europe homes, and schools
Regions
Middle East
Served
Africa
29 ACCO Brands Investor PresentationHistorical Financial Performance – EMEA
($M)
Revenue Comparable Sales
$605.2 1.6%
$542.8
$199.7 $171.8
2015 2016 2017 2018 -10.2%
Fx N/A N/A 0.5% 2.0% 2017 2018
Adjusted Operating Income Adjusted Operating Margin
11.1%
$67.4
9.1%
$49.5
5.5%
4.7%
$11.0 $8.0
2015 2016 2017 2018 2015 2016 2017 2018
30 ACCO Brands Investor PresentationKey Market Trends • Comparable sales were up ~2% in 2018, with broad growth of branded products, offsetting declines in private label sales and a significant customer insolvency • We had especially strong growth with Rexel® shredders, Kensington® computer accessories and Derwent art pencils • We have expanded catalog listings in EMEA for 2019, which we expect to drive continued positive sales momentum • We realized substantial cost synergies from the merger with Esselte, and margins for the year were up significantly 31 ACCO Brands Investor Presentation
Strategic Focus in EMEA
01 02 03 04 05
Defend the core, Leverage Continue to Enter and Leverage scale
be the partner of distribution, invest in growing increase for improved
choice, and relationships, and Kensington® volumes in profitability
category captain brand equity to computer adjacent
for all legacy grow business accessories, categories,
office categories machines, and Derwent art including
and accelerate visual supplies, and wellness, storage
growth at e-tail communications Rapid® Tools boxes, and
in continental notebooks
Europe
32 ACCO Brands Investor PresentationInternational Overview 33 ACCO Brands Investor Presentation
Segment Overview – International
Emerging markets present our best opportunity for growth; our strategies
within each country are tailored to country’s growing categories and channels
2018 Key Statistics Description Primary Brands
®
Designs, sources or
Revenue $395M manufactures and ®
distributes school
Revenue CAGR notebooks, calendars,
3% - 5%
(2018-2021) whiteboards, storage and
organization products,
% of Total
20% stapling, punching,
Revenue laminating, binding,
% of Total Adj. shredding products, ®
Operating 21% writing instruments and,
Income janitorial supplies among
Latin America others, which are primarily
Regions
Served
Australia used in schools, businesses,
Asia and homes ®
34 ACCO Brands Investor PresentationHistorical Financial Performance – International
($M)
Revenue Comparable Sales
2.6%
$407.0 $395.3
$369.2
$285.0
-2.5%
2015 2016 2017 2018
2017 2018
Fx N/A N/A 2.6% (5.4%)
Adjusted Operating Income Adjusted Operating Margin
$56.2 $57.1 15.2%
$50.7 14.0%
12.8%
10.2%
$29.1
2015 2016 2017 2018 2015 2016 2017 2018
35 ACCO Brands Investor PresentationKey Market Trends • Sequential comparable sales improvement every quarter throughout 2018 • Despite a difficult economy, sales in Brazil were up high single-digits. Sell-in for 2018-2019 back-to-school was very strong. Business confidence in the country has improved and GDP growth is forecasted to increase • Australia and Mexico had a challenging start to 2018 as customers reduced inventory and two customers merged • Very pleased with the initial 6 months of the GOBA acquisition and believe our combined Mexican business is positioned for strong growth in 2019 • Select investments to grow organically outside of our core regions in Asia are beginning to take hold • There is improving momentum within International, and altogether, we expect mid- single digit organic sales growth in 2019 36 ACCO Brands Investor Presentation
Strategic Focus in International
Australia/New Latin
Zealand Brazil America Asia
$169M sales in 2018 $108M sales in 2018 $70M sales in 2018 $48M sales in 2018
• Build branded • Drive core school • Leverage GOBA • Establish
offering to reclaim business, with acquisition to grow relationships with
share from private relevant licenses, in traditional key distributors and
label and design to grow channels e-tailers and set up
share local fulfillment in
• Drive demand on • Place emphasis on India
consumer-based • Expand offering sales beyond our
categories outside of school core categories • Grow sales of e-
categories (e.g., commerce,
• Drive growth in new computer products) Derwent, and
• Expand distribution
channels, especially Kensington products
e-tail and education
• Diversify channels • Leverage
global/regional • Expand distribution
products to expand in both categories
key assortment and countries
outside of our core
2019-2021 REVENUE CAGR
~ Flat High single-digits Mid single-digits High single-digits
37 ACCO Brands Investor PresentationFinancial Overview 38 ACCO Brands Investor Presentation
Key Messages
Strong balance
History of profit History of cost
sheet and targeted
improvement and reduction execution
net leverage to be
strong execution in with 2019 plan in
in the 2.0 – 2.5x
a consolidating place to save
range; currently
industry $40M - $45M
2.8x
Committed to
Strong M&A
generating
capability with
shareholder return
capacity to grow
through executing
strategically
our strategy
39 ACCO Brands Investor PresentationHistorical Financial Performance
($B) Revenue Comparable Sales
$1.95 $1.94
$1.69
$1.51 $1.56
-1.0%
-2.3%
-3.3% -3.1%
-3.8%
2014 2015 2016 2017 2018
2014 2015 2016 2017 2018
($M)
Adjusted Operating Income/Margin Adjusted EPS
$1.19 $1.14
$222
$250
$203 19.0%
$175 $178 $0.80 $0.87
$0.78
$200 17.0%
$155 15.0%
$150
13.0%
$100 11.0%
11.4% 11.4%
10.4% 10.2% 10.5% 9.0%
$50
7.0%
$0 5.0%
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
40 *Not pro forma for acquisitions ACCO Brands Investor PresentationDebt Capital Structure
Balance1 Interest Rate
Facility ($M) Methodology Rate
($M) Net Debt
$500M $863
LIBOR+150 bps, 30 $821
multicurrency $181 3.76% $747
bps unused $674 $661
revolver
Euro LIBOR+150 bps
EUR Term Loan A $289 1.50%
(LIBOR floor 0%)
Australian BBSR+150
AUD Term Loan A $43 3.56%
bps
2014 2015 2016 2017 2018
Subtotal Senior
secured credit $513 Weighted average 2.47%
facilities Net Leverage Ratio
2.9x
Senior unsecured 2.8x 2.8x
$375 5.25% fixed 5.25%
notes 2.7x
Weighted average 2.5x
Total Debt $888 3.64%
interest rate
Debt largely consisting of
No significant debt 2014 2015 2016 2017 2018
variable rate foreign term
maturities until 2022
loans and credit facilities
1 As of December 31, 2018
41 ACCO Brands Investor PresentationHistorical Cash Flow & Leverage
($M)
Operating Cash Flow Free Cash Flow
$205 $178
$195
$172 $171 $167 $161
$150
$146 $147
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
2018 cash conversion rate Free cash flow yield of
of 182%1 16.7%2
1$195M OCF / Adj. Net Income of $107M
2Represents FCF divided by market capitalization. Operating cash flow yield is 20.2% ($195M, including $34M of cap ex / (107M shares x
42 $9 stock price). FCF yield is 16.7% ($161M FCF/ (107M shares x $9 stock price)). ACCO Brands Investor PresentationM&A Scorecard Against Acquisition Criteria
ADDED
CHANNEL/ SCALE/ ANNUALIZED ANNUALIZED EST.
KEY MARKET MARKET GLOBAL SALES EBITDA* SYNERGIES
YEAR BRANDS LEADER DIVERSITY PRESENCE ($M) ($M) ($M)
2012 $744 $152 $21
2016 $112 $17 $8
2017 $454 $60 $23
2018 $41 $6M NM
Volatile market
Consolidating global
environment can create
industry
attractive opportunities
Note: Sales and Adjusted EBITDA of acquired company based on IFRS, not U.S. GAAP, and excluding charges
43 ACCO Brands Investor Presentation2019 Guidance
As of 2/13/2019
Sales Growth -3% to 0%
Adj. EPS1 $1.10 – $1.20
Free Cash Flow $165M – $175M
1 Includes assumption for a $(0.03) Fx impact, based on recent spot rates, and a tax rate of 30-31%.
44 ACCO Brands Investor Presentation2019 Modeling Assumptions
$M 2018 Actual 2019 Estimate1
Capital Expenditures $34 $35
Cash Restructuring / Integration Expenses2 $21 $8
Cash Interest, net $33 $34
Book Interest Expense, net $37 $36
Net Working Capital Source $17 Source
Pension $21 $21
Depreciation $34 $35
Amortization $37 $35
Stock Comp Expense $9 $13
Cash Taxes $34 $48
Normalized Tax Rate 30% 30% – 31%
Diluted Shares (ex. future repurchases) 107 105
1 Assumptions based on foreign exchange spot rates as of 12/31/2018.
2 2018 includes $6M of cash costs for the Esselte acquisition and $15M of cash restructuring costs; 2019 includes cash restructuring costs of $8M.
45 ACCO Brands Investor PresentationInvest With Us as We Transform Our Company
Focused on More than 75% of net
Leading branded Scale, strategies and
increasing sales sales from brands that
supplier of consumer capabilities to
concentration to faster occupy the #1 and #2
and business significantly grow
growing, consumer positions within their
products sales and EPS
products categories respective product
categories
Strong cash flow
More globally Acquisitive company Potential for more
generation that
diversified business skilled at integrating significant value
supports growth,
46 creates more stable businesses and creation over the next
innovation, and
financial performance brands into portfolio several years
improved shareholder
returns
46 ACCO Brands Investor PresentationAppendix 47 ACCO Brands Investor Presentation
U.S. Customer Transition Update
Number of Stores: 2013-2018 Total Square Feet: 2013-2018
74.1M
3,408
55.0M
2,598
43.6M
1,893 -29%
-27%
1,378 31.1M
1,515 -19% 30.5M
1,220 -22% 23.9M
2013 2018 2013 2018
Source: Statista; IBISWorld
• Significant changes by these customers drive much of our comparable sales decline through 2014-2018
• Consolidation has resulted in a 24% decline in number of retail outlets and 26% decline in total retail square footage
among Office School Supplies (OSS) market leaders
• Most store closures were in the US
• International OSS assets were sold to private equity
• We expect sales from the US commercial channels to move from 40% of sales today to 36% of sales by 2021, while mass
and e-tail expands from 42% to 46%
• We believe we are near the peak of the U.S. commercial channel transition today
48 ACCO Brands Investor PresentationReg G Reconciliations 49 ACCO Brands Investor Presentation
Reg G Reconciliations
50
50Reg G Reconciliations
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51Reg G Reconciliations
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share data)
“Adjusted” results exclude all unusual tax items, restructuring, transaction and integration charges, costs associated with refinancing of the
Company's debt and debt repurchases, asset impairment charges, in order to provide a comparison of underlying results of operations and taxes
have been recalculated at normalized tax rates.
2 0 16 2 0 15
R e po rt e d % of A djusted A djusted R e po rt e d % of A djusted A djusted %of
GA A P S a le s Items No n-GA A P % o f Sales GA A P S a le s Items No n-GA A P Sales
Gro ss pro fit $ 5 14 .9 3 3 .1 % 0.4 515.3 33.1% $ 4 7 8 .2 3 1.7 % - 478.2 31.7%
Selling, general and administrative expenses 3 2 8 .8 2 1.1 % (12.8) 316.0 20.3% 3 0 3 .9 2 0 .1 % - 303.9 20.1%
Restructuring charges (credits) 5 .4 $ (5.4) $ - ( 0 .4 ) $ 0.4 $ -
Operating inco me 15 9 .1 10 .2 % 18.6 177.7 11.4 % 15 5 .1 10 .3 % (0.4) 154.7 10.2 %
Interest expense 4 9 .3 (2.5) 46.8 4 4 .5 (0.1) 44.4
Other expense, net 1.4 - 1.4 2 .1 (1.9) 0.2
Inco me befo re inco me tax 12 5 .1 8 .0 % 21.1 146.2 9.4 % 13 1.4 8 .7 % 1.6 133.0 8.8 %
Inco me tax expense 2 9 .6 21.5 51.1 4 5 .5 1.1 46.6
Inco me tax rate 2 3 .7 % 35.0 % 3 4 .6 % 35.0 %
Net inco me $ 9 5 .5 6 .1 % $ (0.4) $ 95.1 6.1 % $ 8 5 .9 5 .7 % $ 0.5 $ 86.4 5.7 %
Diluted inco me per share $ 0 .8 7 $ (0.00) $ 0.87 $ 0 .7 8 $ 0.00 $ 0.78
Weighted average number o f shares o utstanding:
Diluted 10 9 .2 109.2 110 .6 110.6
During 2016, w e incurred $0.4 million related to amortization of step-up in value of finished goods inventory During 2015, w e w rote-off $2.0 million in debt issuance
associated w ith the acquisition of Pelikan Artline. During 2016, w e had $9.2 million and $3.6 million in costs and other costs associated w ith the Company's
transaction and integration charges associated w ith the acquisition of Esselte and Pelikan Artline, respectively. refinancing. Income tax expense adjustment primarily
During 2016, w e had $1.6 million of accelerated interest expense related to the refinancing of our Senior reflects the tax effect of the adjustments above and
Unsecured Notes, a loan breakage fee of $0.5 million incurred in the acquisition of Pelikan Artline and the w rite- adjusts the Company's effective tax rate to a normalized
off of debt issuance costs of $0.4 million due to a debt sw ap of part of our USD term loan for the new rate of 35%. The Company's estimated long-term rate is
Australian dollar revolving loan. Income tax expense adjustment primarily reflects the tax effect of the subject to variations from the mix of earnings across the
adjustments above and adjusts the Company's effective tax rate to a normalized rate of 35%. The Company's Company's operating jurisdictions.
estimated long-term rate is subject to variations from the mix of earnings across the Company's operating
jurisdictions.
52 ACCO Brands Investor PresentationReg G Reconciliations
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share data)
“Adjusted” results exclude all unusual tax items, restructuring, transaction and integration
charges, costs associated with refinancing of the Company's debt and debt repurchases,
asset impairment charges, in order to provide a comparison of underlying results of
operations and taxes have been recalculated at normalized tax rates.
2 0 14
R e po rt e d % of A djusted A djusted
GA A P S a le s Items No n-GA A P % o f Sales
Restructuring charges $ 5 .5 $ (5.5) $ -
Operating inco me 16 9 .8 10 .1 % 5.5 175.3 10.4 %
Interest expense, net 4 3 .9 (0.7) 43.2
Inco me fro m co ntinuing o peratio ns befo re inco me tax 13 7 .0 8 .1 % 6.2 143.2 8.5 %
Inco me tax expense 4 5 .4 4.7 50.1
Inco me tax rate 3 3 .1 % 35.0 %
Inco me fro m co ntinuing o peratio ns $ 9 1.6 5 .4 % $ 1.5 $ 93.1 5.5 %
Diluted inco me per share $ 0 .7 9 $ 0.01 $ 0.80
Weighted average number o f shares o utstanding:
Diluted 116 .3 116.3
During 2014, w e accelerated amortization of $0.7 million in debt issuance costs resulting from accelerated bank
debt repayments. Income tax expense adjustment primarily reflects the tax effect of the adjustments above and
adjusts the Company's effective tax rate to a normalized rate of 35%. The Company's estimated long-term rate
is subject to variations from the mix of earnings across the Company's operating jurisdictions.
53 ACCO Brands Investor PresentationReg G Reconciliations
54
54Reg G Reconciliations
55
55Reg G Reconciliations
ACCO Brands Corporation and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA and Net Leverage Ratio (Unaudited)
(In millions)
"Adjusted EBITDA" re pre sents ne t income after adding back depre ciation; stock-base d compensation e xpense;
amortization of intangibles; intere st expense, ne t; other expense (income), net; and income tax expense . Adjusted
EBITDA also excludes the amortization of the step-up in value of finishe d goods inventory, transaction, integration,
restructuring charges and a pension curtailme nt gain related to a re structuring project for the inte gration of Esselte
within the ACCO Brands EMEA segme nt. The following table sets forth a reconciliation of ne t income reported in
accordance with GAAP to Adjusted EBITDA. "Net Leverage Ratio" represe nts total debt less cash and cash equivalents
divided by adjusted EBTIDA.
Ye ar e nded December 31,
2014 2015 2016 2017 2018
Net income $ 91.6 $ 85.9 $ 95.5 $ 131.7 $ 106.7
Inventory step-up amortization — — 0.4 0.9 0.1
T ransaction and integration expenses — — 12.8 14.9 4.6
Restructuring charges (credits) 5.5 (0.4) 5.4 21.7 11.7
Pension curtailment gain — — — — (0.6)
Depreciation 35.3 32.4 30.4 35.6 34.0
Stock-based compensation 15.7 16.0 19.4 17.0 8.8
Amortization of intangibles 22.2 19.6 21.6 35.6 36.7
Interest expense, net 43.9 37.9 42.9 35.3 36.8
Other expense (income), net 0.8 2.1 1.4 (0.4) 1.6
Income tax expense 45.4 45.5 29.6 26.4 51.2
Adjusted EBIT DA (non-GAAP) $ 260.4 $ 239.0 $ 259.4 $ 318.7 $ 291.6
Net Leve rage Ratio (Net Debt/Adjusted EBITDA):
2014 2015 2016 2017 2018
Total debt (gross de bt) $ 800.6 $ 729.0 $ 703.5 $ 939.5 $ 888.0
Cash and cash equivalents 53.2 55.4 42.9 76.9 67.0
Net Debt (non-GAAP) $ 747.4 $ 673.6 $ 660.6 $ 862.6 $ 821.0
Net Leverage Ratio (non-GAAP) 2.9 2.8 2.5 2.7 2.8
56 ACCO Brands Investor PresentationReg G Reconciliations
ACCO Brands Corporation and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(In millions)
“Fre e Cash Flow” re pre sents cash flow from ope rating activitie s less additions to prope rty, plant and
e quipment, ne t of proce eds from the disposition of asse ts and othe r investing. The following table sets
forth a re conciliation of re ported net cash provided (used) by operating activities in accordance with
GAAP to Free Cash Flow.
Ye a r e n d e d D e c e m b e r 3 1,
2 0 14 2 0 15 2 0 16 2 0 17 2 0 18
N e t c a s h p ro v id e d b y o p e ra t in g a c t iv it ie s $ 17 1.7 $ 17 1.2 $ 16 7 .1 $ 2 0 4 .9 $ 19 4 .8
Ne t c a s h (us e d) pro vide d by:
Additio ns to pro pe rty, pla nt a nd e quipm e nt (29.6) (27.6) (18.5) (31.0) (34.1)
P ro c e e ds fro m the dis po s itio n o f a s s e ts 3.8 2.8 0.7 4.2 0.2
Othe r inve s ting — 0.2 0.2 — —
F re e c a s h flo w (no n-GAAP ) $ 145.9 $ 146.6 $ 149.5 $ 178.1 $ 160.9
57 ACCO Brands Investor PresentationReg G Reconciliations
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58Reg G Reconciliations
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59Reg G Reconciliations
ACCO Brands Corporation and Subsidiaries
Supplemental Net Sales Growth Analysis
(Unaudited)
% Change - Net S ales $ Change - Net S ales
GAAP Non-GAAP GAAP Non-GAAP
Ne t Sale s C urre ncy Comparable Ne t Sale s C urrency C omparable
Change Translation Acquisition C hange (A) Change Translation Acquisition C hange (A)
Year ended December 31, 2014 (4.3)% (2.0)% —% (2.3)% $ (75.9) $ (35.2) $ - $ (40.7)
Year ended December 31, 2015 (10.6)% (7.3)% —% (3.3)% (178.8) (123.9) - (54.9)
Year ended December 31, 2016 3.1 % (1.1)% 5.2 % (1.0)% 46.7 (16.9) 78.5 (14.9)
Year ended December 31, 2017 25.2 % 0.8 % 28.2 % (3.8)% 391.7 12.4 438.8 (59.5)
Year ended December 31, 2018 (0.4)% (0.6)% 3.3 % (3.1)% (7.6) (11.5) 63.9 (60.0)
(A) Comparable net sales represents net sales excluding acquisitions and with current-period foreign operation sales translated at prior-year
t
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