Acco Brands NYSE: ACCO opened fiscal 2026 with first-quarter results that came in above management’s outlook on both sales and adjusted earnings per share, supported by foreign exchange tailwinds, earlier-than-expected back-to-school ordering, and a better-than-modeled contribution from the recently acquired EPOS business.
First-quarter performance tops outlook
President and CEO Tom Tedford said the company delivered “a strong start to the year,” noting that first-quarter consolidated sales grew 8% versus the prior year, “higher than our expectations,” driven by favorable comparable sales and “better first quarter performance from the EPOS acquisition.” He added that foreign exchange provided a “significant positive impact” on revenue during the quarter.
Deborah O’Connor, executive vice president and CFO, said reported sales rose 8% while comparable sales declined less than 3%. She attributed the improvement in comparable sales trends to “a better mix of product sales as well as back-to-school order timing earlier than anticipated.”
O’Connor reported first-quarter gross profit of $107 million, up 7% year over year, with gross margin of 31.1%, down 30 basis points. She said the margin rate decline was “attributable to lower-priced product mix.” Adjusted SG&A expense was $95 million, up modestly, driven largely by unfavorable FX and EPOS, “significantly offset by cost savings.” Adjusted operating income was $12 million, up $5 million from the prior year, reflecting cost savings partially offset by organic volume declines.
EPOS acquisition: integration, bargain purchase gain, and synergy targets
Management highlighted the closing of the EPOS acquisition during the first quarter as a key strategic move as ACCO shifts further into technology peripherals. Tedford said integration is on track, with expected 2026 sales of approximately $80 million over 11 months and a “modest contribution to profit.”
O’Connor provided additional detail on the transaction, describing a $38 million bargain purchase gain. She said the gain represented the purchase price compared with the preliminary fair market value of EPOS, “which is primarily from working capital.”
The company reiterated synergy expectations, with O’Connor stating ACCO remains on track to deliver $15 million in cost synergies in 12 to 18 months. The company recorded $7 million in restructuring charges “primarily related to this acquisition,” most of which will be paid within the next year. O’Connor also said the outlook assumes EPOS will carry a “slightly higher gross profit rate than our consolidated average” and be “neutral to adjusted EPS.”
In the Q&A, Tedford said the first-quarter EPOS outperformance versus internal expectations was largely due to initial conservatism. “We weren’t really sure,” he said, citing uncertainty around integration and limited visibility into the acquired business’ forecast, which led the company to “be careful with the numbers that we included in our models.”
Looking ahead, Tedford said ACCO sees growth opportunities by pairing EPOS products with the Kensington portfolio to provide “a one-stop solution for enterprise attachments when laptops and desktops are deployed,” leveraging shared routes to market globally. He declined to comment on EPOS’ prior performance under different ownership.
As part of the integration, Tedford said Jeppe Dalberg-Larsen, President of EPOS, will lead technology peripherals for ACCO Brands.
Segment trends: earlier back-to-school, Latin America improvement, and gaming headwinds
In the Americas segment, Tedford said sales growth was driven by currency translation, computer accessories, and EPOS. He added that computer accessories were strong, supported by new products and “a meaningful end user pipeline.” In North America, he said early purchases of back-to-school products were “better than anticipated,” and management expressed confidence in the season due to increased listings and the absence of tariff-related order cancellations that affected the prior year. Tedford said the company expects back-to-school sales to be “flat to up low single digits.”
O’Connor said Americas segment sales rose 3%, with comparable sales down 2%. She cited growth in computer accessories and Latin America, offset by declines in core office products. The segment delivered adjusted operating income of $13 million, up about $3 million, with margin improving 140 basis points to 7.2% on cost savings.
Tedford also pointed to improved performance in Latin America, attributing it to updated go-to-market strategies and new products. In response to analyst questions, he said the region remains constrained in Mexico and Brazil, but ACCO has adjusted assortment, go-to-market approaches, sales incentives, and pricing “where it was appropriate,” which he said better positioned the business for growth.
International segment sales increased 15%, driven by favorable FX and the EPOS acquisition, according to Tedford. He said the rate of decline improved due to the impact of pricing, “broad-based improvement in core category demand,” and favorable mix. O’Connor reported international comparable sales down about 3%, with improved trends helped by new products and increased purchases of office products following lower year-end buying that management had highlighted previously. International adjusted operating income was $11 million, with a 6.7% margin consistent with the prior year.
In gaming accessories, Tedford said the global gaming market faced headwinds in the first quarter from “broad industry challenges and softer consumer spending.” He said PowerA is positioned for what he described as two catalysts later in the year: continued adoption of Nintendo Switch 2 consoles and the expected fourth-quarter release of Grand Theft Auto VI. Tedford also cited a robust pipeline, including expansion into simulation products and a revamped audio offering. In Q&A, he added that weak holiday performance left retailers with inventory that created challenges in the first quarter, although he said the brand took share each month during the quarter.
Cost reduction efforts, cash flow, and balance sheet
Management reiterated progress on its cost reduction and footprint optimization program. Tedford said ACCO remains on track to achieve its $100 million cost reduction target by year-end, while noting some savings could be offset by rising costs tied to the ongoing Middle East conflict. He said the company anticipates higher fuel and certain raw material costs, with the impact “weighted towards the back half of the year,” and said the company has taken steps to mitigate potential impacts and incorporated its best estimates into guidance.
O’Connor reported free cash flow of $1.4 million for the quarter, comparable to last year and in line with the company’s plan. Inventory rose $67 million since the start of the year, including $27 million related to EPOS, with the remainder due to seasonal inventory build and higher tariff costs. The company paid $7 million in dividends during the quarter.
At quarter end, O’Connor said ACCO had about $252 million available under its revolver and a consolidated leverage ratio of 4.1 times. She added the company has no debt maturities until 2029.
Guidance reaffirmed amid uncertainty; EPOS and FX expected to support revenue
Despite the first-quarter outperformance, ACCO reiterated its full-year outlook. O’Connor said the company continues to expect 2026 reported sales to be flat to up 3% and adjusted EPS of $0.84 to $0.89. She said the outlook reflects “a prudent sales expectation in the back half of the year, given the global environment,” along with anticipated near-term cost increases.
For the second quarter, the company expects reported sales to increase 1% to 4% with a smaller benefit from foreign exchange, and adjusted EPS of $0.24 to $0.28.
In response to a question about why stronger first-quarter results did not flow through to raised full-year guidance, O’Connor emphasized that the first quarter is “a pretty small quarter” for ACCO and that, given global uncertainty, management “just prudently reaffirmed our guidance.” She also quantified contributions within the full-year sales view, saying EPOS represents “about 5%” of sales and foreign exchange about 1% for the year, compared with a 6% FX benefit in the first quarter.
O’Connor guided to full-year free cash flow of $75 million to $85 million, including about $25 million in restructuring payments and $15 million in capital expenditures. The company expects consolidated leverage to end the year between 3.7 and 3.9 times.
During the Q&A, O’Connor also discussed tariff-related claims, saying the company is “talking somewhere in kind of the $25 million range” but does “not expect anything in 2026,” adding that some claims are more complicated and may be received later.
Looking ahead, Tedford reiterated ACCO’s strategic emphasis on technology peripherals, stating the category includes Kensington, PowerA, LucidSound, and EPOS and spans both computer and gaming products. He said the company is targeting peripherals to represent 25% of projected 2026 revenue, citing large and growing total addressable markets where ACCO currently has relatively small share.
About Acco Brands NYSE: ACCO
Acco Brands Corporation is a global provider of branded office and school supplies, serving consumers, educational institutions and commercial customers. Headquartered in Lake Zurich, Illinois, the company designs, manufactures and distributes a wide range of products that enhance productivity and organization in work and learning environments.
The company's portfolio includes staplers, hole punches, binding and laminating systems, writing tools, binders, folders and desktop accessories under well-known names such as ACCO, Swingline, GBC, Kensington, Mead and Five Star.
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