What Acco Brands (ACCO) Said on Its Q3 Earnings Call

Key Points

• Q3 sales met expectations, but comparable sales fell nearly 6%. Adjusted EPS benefited significantly from $21 million in tariff refunds, which added $0.11 per share; excluding the refunds, earnings were at the low end of guidance.
• Acco is expanding its Technology Peripherals platform through the Trust acquisition. Trust adds about $100 million in annual revenue, and the combined portfolio with Kensington, EPOS and PowerA is expected to approach $500 million in pro forma sales.
• Acco raised its 2026 outlook to 4%–6% reported sales growth, adjusted EPS of $0.98–$1.02 and approximately $100 million in free cash flow, while prioritizing debt reduction and targeting year-end leverage of about 3.5 times.

Acco Brands NYSE: ACCO said third-quarter sales met its outlook, while adjusted earnings per share exceeded expectations because of tariff refunds. The company also highlighted progress in building its Technology Peripherals platform through the October 1 acquisition of Trust, a European-focused computer and gaming accessories business.

President and Chief Executive Officer Tom Tedford said the company is pursuing three priorities: scaling Technology Peripherals, stabilizing its Learning & Creative and Workspace Solutions categories, and improving earnings and cash flow through cost management and debt reduction.

“Sales were in line with our outlook, underlying operating performance met our expectations, and adjusted EPS benefited from net tariff refunds,” Tedford said. He added that North American and Mexican back-to-school results were solid, while Workspace Solutions trends continued to stabilize.

Third-Quarter Results and Tariff Refund Impact

Reported sales declined 1% in the third quarter, while comparable sales fell nearly 6%, according to Executive Vice President and Chief Financial Officer Deb O’Connor. The comparable-sales decline was primarily driven by industry headwinds in Technology Peripherals, partly offset by contribution from the EPOS acquisition and favorable foreign exchange.

Adjusted gross profit increased 8% to $136 million, and adjusted gross margin rose 290 basis points to 35.9%. The company received $21 million in cash tariff refunds during the quarter, which increased gross margin by 520 basis points, lifted adjusted operating income by $15 million, and added $0.11 to adjusted EPS.

O’Connor said the company received nearly $5 million in additional tariff refunds during the week of the call, though those proceeds were not included in its outlook. Excluding the tariff-related benefit, management said adjusted EPS was at the low end of its guidance range amid continued soft market conditions, unfavorable product and customer mix, and lower organic volumes.

Adjusted SG&A expense was $89 million, modestly above the prior-year period, reflecting EPOS and higher incentive compensation. The company’s cost-savings program generated more than $10 million of savings in the quarter and more than $30 million year to date. Adjusted operating income increased to $48 million.

Segment Trends

In the Americas, reported sales fell 3% and comparable sales declined 6%, reflecting lower Technology Peripherals demand as well as customer timing and product mix. However, North American back-to-school sales increased by a mid-single-digit percentage for the full season, and the company said it gained share in note-taking products.

Tedford described the back-to-school season as “exceptional,” citing nearly 20% growth in Mexico and mid-single-digit growth in the U.S. and Canada. He said all of the company’s back-to-school brands grew and gained market share, while retailer inventory levels exiting the season were generally in line with expectations.

Americas adjusted operating income rose to $38 million, with adjusted operating margin expanding 290 basis points to 17.3%, including the tariff-refund benefit.

International reported sales increased 3%, but comparable sales declined 6%. EPOS contributed to reported growth, while lower Technology Peripherals sales weighed on comparable results. International adjusted operating income was $17 million, and margin was 10.6%, supported by pricing and cost reductions.

Workspace Solutions declined by a low-single-digit percentage globally, Tedford said, marking an improvement from prior trends. He pointed to new products, market-share efforts and demand in categories including ergonomics, wellness and lamination. The company’s Leitz brand in Europe was approximately flat year to date, according to Tedford.

Technology Peripherals Expansion

Trust generates about $100 million in annual revenue and sells computer and gaming accessories through retail, e-commerce and business-to-business channels in Europe and Latin America. Acco expects the acquisition to be modestly accretive to EPS in its first 12 months, aided by Trust’s seasonally strong fourth quarter, and anticipates $5 million to $8 million in cost synergies within the first 18 months after closing.

With Kensington, EPOS, PowerA and Trust, Acco said its Technology Peripherals portfolio is expected to approach $500 million in annual pro forma sales, representing roughly 30% of future sales. Tedford said the acquisitions broaden the company’s product categories, consumer-channel presence and geographic reach.

Technology Peripherals sales declined by a low-double-digit percentage globally during the quarter, with gaming and computer-accessory categories down at roughly similar rates. Tedford attributed gaming weakness to muted console demand and cautious discretionary spending, while computer-accessory performance was affected by global laptop sales that he said were down 20%.

Management said it is cautiously optimistic about the holiday selling season, citing new product placements, anticipated release of “Grand Theft Auto VI,” and continued adoption of Switch 2. Tedford said the company does not expect chip availability to disrupt its supply chain through the next several quarters and does not see a material quarterly earnings risk if the game release is delayed or underperforms expectations.

Cash Flow, Leverage and Outlook

Year-to-date free cash flow was $89 million, up $63 million from the prior year, including the $21 million tariff-refund benefit. Acco ended the quarter with $175 million in cash, including funds earmarked for the Trust purchase, and approximately $254 million of available revolver borrowing capacity. Its consolidated leverage ratio was 3.6 times, below its 4.25 times debt covenant.

The company returned $7 million to shareholders through dividends during the quarter. Management reiterated that debt reduction remains its primary capital-allocation focus in support of the dividend.

Acco raised its full-year 2026 outlook to incorporate tariff refunds and the Trust acquisition. The company now expects:

• Reported sales growth of 4% to 6%.
• Adjusted EPS of $0.98 to $1.02.
• Free cash flow of approximately $100 million.
• Year-end consolidated leverage of approximately 3.5 times.

Tedford said the company remains focused on integrating EPOS and Trust, delivering cost and synergy commitments, and reducing debt while repositioning the portfolio toward Technology Peripherals categories.

About Acco Brands (NYSE:ACCO)

ACCO Brands Corporation is a global manufacturer and marketer of consumer and office products. Its portfolio includes supplies and equipment used in workplaces, schools and homes, as well as products designed to support organization, productivity and personal technology.

The company's brands include Swingline, Kensington, Mead, Five Star, GBC, Quartet and Esselte. Its products include staplers, punches, shredders, laminators, binding systems, presentation supplies, notebooks, planners, backpacks, computer accessories and other workspace and school supplies.

ACCO Brands traces its history to the American Clip Company, founded in 1903.

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