Q2 2020 ACCO Brands Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to cheat acute 2020, ACCO Brands Corporation earnings Conference call.
This time, but then I know listen only mode. I said, it's become presentation. There will be in question and answer session ask a question. During this session. You want me to press Star one on your telephone if you're quite anything and he's supposed stars yeah I.
I would now like turn the conference just because today Christine Hanneman senior director of Investor Relations. Please go ahead ma'am.
Good morning. This is Christine Hanneman senior director of Investor Relations.
Welcome to ACCO Brands' second quarter 2020 conference call.
Speaking on the call today, our board Ellison, Chairman, President and Chief Executive Officer, Tobacco Brands Corporation, and Neil Kinnock, Executive Vice President and Chief Financial Officer.
Slides that accompany this call had been posted to the Investor Relations section of ACCO brands Dot com.
Speaking about always though we may refer to adjusted results adjusted results exclude transaction integration and restructuring costs and just luck in adjusted tax rate.
Casuals of adjusted result, and other non-GAAP financial measure and a reconciliation of these measures to the most directly comparable GAAP measures are in the earnings release and slides that accompany this call.
Due to the inherent difficulty in forecasting a quantifying certain amount we do not reconcile a forward looking adjusted earnings per share free cash flow net leverage ratio or adjusted tax rate Guy.
Forward looking statements made during the call including statements concerning the impacts of the Kobin 19 pandemic on the company are based on the beliefs and assumptions of management based on information available to us at the trend statements are made.
All forward looking statements are subject to risks and uncertainties and our actual results could differ materially.
Among the factors that could cause results to differ materially from our forward looking statements is a scoping durations of coping 19 pandemic government actions and third party responses to it and the consequences for the global economy as well as the regional and local economies in which we operate uncertainties regarding how geography.
Distribution channel and consumer behavior will evolve overtime in response to the pandemic and its impact on our business operations results of operation financial condition and liquidity.
Please refer to our earnings release and FCC filings for an explanation of certain of these risk factors and assumptions are forward looking statements are made as of today and we assume no obligation to update then going forward.
Following our prepared remarks, we will hold acuity session now I will turn the call over to Boris Elisman.
Good morning, everyone. Thank you for joining us.
I will spend a few minutes for you in the second quarter results.
Most of my time will be used for an update on the impact of coal with 19 on all business.
Actions taken in response and implications for the second half.
Neil will follow me with what color in details on the second quarter and provide additional common.
<unk> cost reductions balance sheet and expected use of cash in 2020.
Then we'll take your questions.
Second quarter sales were down 29% to 367 million at the upper end of our guidance.
Our adjusted EPS was 12 cents.
And then secondly above our estimate largely from the aggressive cost reduction actions we took worldwide.
All things considered I'm pleased with our second quarter results.
Well every country ceiling economic effect from the pandemic.
[laughter] and all business in any one country depends on the range of Packers.
Including where it is in the reopening say.
General seasonality of the business government support general structure and others.
In general the U.S., EMEA, Australia, New Zealand and Asia did relatively well.
He has the quarter progressed businesses, we opened and government provided economic supports the consumers and enterprises.
Canada, and Latin America had a more difficult quarter either due to late on the opening in the case of Canada or lack of government supports in Latin America.
Each month of the quarter improved sequentially going every region come to life has continued that trend.
Our second quarter is always driven by our North America back to school seller.
Quarter I'll back to school results were as expected in the U.S. down modestly from last year was very strong performance.
I'm, especially pleased the sellers to large mass and accomplished customers.
Which were comparable to last year.
In addition, Oh, you less direct to consumer sales were up approximately 6%.
Several of our product categories and brands benefited from work from home distance learning focus on wellbeing and home leisure activities during the quarter.
We had strong sales growth intrusive air Purifiers, Durbin color pencil and Kensington computer accessories, especially laptop docking station.
Kensington branded products grew 28% in the quarter in Kansas is becoming a leading PC accessories partner for the major players in the PC ecosystem.
We also so good performance from five start noticing product in the U.S. and repeat do it yourself too in Europe.
Why some product categories and channels benefited from the current environment.
Those focused on businesses did not.
Our commercial sales were down significantly because of lower demand as many offices in schools closed in March and April because of coal that 19.
And the pace of the openings has been very different geographically.
We have seen improved commercial sales in India in June and July, but not in North America.
Most of our production warehouse facilities have remained open during the quarter to meet customer demand as we were designated in a central business and most jurisdictions.
Although some facilities had reduced staff and hours.
Most of our office employees work from home during the second quarter has continued to do so now.
In February and March we took early action to protect the health and safety of our please.
And to aggressively reduced cost to protect our business in the near term.
Now that we have had more time to monitor and assess the situation.
I believe it the global economic effect from that then Dentek will continue for some time.
Therefore, when you can make more permanent and structural changes to our business to be successful in the changing world.
These changes include.
Additional cost reductions to offset lower demand.
More aggressive repositioning of our business towards stronger brands and more consumer centric product categories.
And accelerating investments in products and channels such as mass merchants.
Commerce and direct to consumer that are benefiting from the changing trends like walking in education from home buying online and greater focus on wells.
[noise]. This repositioning includes restructuring, which we initiated in North America in Mexico.
The $7 million in restructuring charges that we took in the quarter are expected to produce an annualized run rate savings of 11 million.
Part of which will be invested to support the brands categories in general, but I just discussed.
As we are making these changes and shifting from temporary the structural measures. We have also reinstated regular if we pay effective July one.
I want to thank our employees for their hard work in sacrifices during the quarter.
Very difficult conditions.
Neil will give you additional details on the cost reductions that we undertook in the quarter and that's still remain in place.
Well, we have seen our business improved month over month, they're still up a lot of uncertainty well when schools will be open offices little open.
And when the virus will be continued enough for a more normal economic activities to take place.
I'm confident we will withstand the current challenges.
Our management team has overcome difficult economic and industry conditions before.
We have made great strides over the years to create a more resilient and more profitable company.
I also believe we need to take advantage of the opportunities the current environment creates to accelerate our transition to be more brands and consumer centric company.
We are a large diversified global company with a strong balance sheet and will deliver consistent strong free cash flow.
Given our financial strength and the proactive steps, we've taken to reduce costs.
We expect to be able to maintain good liquidity as we managed to the current environment.
We have a long track record revolving and coming out better and stronger as a valued partner to our customers and consumers and I expect that to continue.
Now I will turn the call over to yield for review of the segments, our outlook and other financial commentary and then I'll rejoin them in answering your questions Neil.
Thank you bars and good morning, everyone.
Im going to discuss the impacts of pay with 19 throughout my comments those impacts include among others, the financial and operational effects on our company customers and end users of our products due to school and business closures work from home orders government orders and manufacturing destroy.
Fusion supply chain and also disruptions from take 19.
Our second quarter reported net sales decreased 29% due to lower demand from the impact of Kogut 19.
As expected April was our worst month. Since then we have seen good improvement in our sales in each month, including what we have seen thus far in July.
Second quarter net income was 5 million or six cents per share adjusted net income was 12 million and adjusted EPS was 12 cents.
In the quarter, we benefited one thing from a lower share count.
Adjusted EPS was better than our outlook based on our cost reduction efforts.
Our gross margin was 30% compared to 52% in 2019. The decrease was largely the result was unfavorable product mix.
Our fixed cost absorption and increased reserves for inventory, primarily because of lower demand from quite a bit 90 impact.
[noise] X gene I expenses was 77 million compared with 96 million last year as Tonight as a percentage of sales was 2.1% compared with 18% primarily because of lower net sales.
As we indicated in our first quarter earnings release, we took many cost reduction actions in response to page 19 and participated in government assistance programs, where we qualified in order to keep employees, rather than having to make layoffs or pay reductions.
We anticipated 20 million in cost savings in the second quarter.
We achieved 53 million of cost reductions from both short term on long term actions.
In the second quarter, we took a restructuring charge of 7 million to reposition both our North America and Mexico businesses.
Which includes podium head count reductions.
Those actions are expected to generate a savings run rate of 11 million on an annualized basis. Some of those savings will be reinvested in the business.
Reported operating income was 19 million compared with 61 million last year and operating margin was 5% versus 12%.
Our adjusted tax rate of 28%.
Yes, it's an hour anticipated, 31% right for the full year.
And reflects the impact of where we earned fee income.
The lower adjusted rate in this year second quarter versus last year reflects the difference in the geographic mix of earnings.
Now, let's turn to some details of our segment results.
Net sales in North America decreased 25%.
Solid back to school selling was more than offset by declines in the commercial office products part of the business largely reflected of quoted 19 impacts.
As well as timing for part of the Canadian back to school selling that move to July.
In the quarter, we saw strong sales growth in our Kensington computer accessories business and three cents air Purifiers.
North America operating income and operating margin declined as a result of the lower sales unfavorable mix and increased slow moving inventory reserves.
These factors were partially offset by cost reduction.
We will monitor fell out for back to school products in the third quarter.
We expect most students will go back to school in the fall.
There may be some variation in the timing of school openings versus normal or combinations of school and remote learning, but we expect most children will need to replenish their school supplies.
Now, let's turn to EMEA.
Net sales decreased 31% to 88 million.
From take good 19 impacts which began in mid March.
Europe was first area hit by the virus and has been earlier to recover.
We have now see three months of sequential improvement with stronger recovery in our sales of commercial office products than we have seen in North America.
EMEA posted a small adjusted operating loss as a result of the lower sales and higher bad debt reserves.
These were partially offset by cost savings.
Moving to the international segment.
Net sales in comparable sales declined significantly.
As of low demand from the impact of Coke at 19, especially in Latin America.
Mexico, and Brazil continued to be significantly impacted by trade with 19, whereas our businesses in Australia, and New Zealand in Asia recovered more each month as a second quarter progressed similar to what we saw in EMEA.
As the result of very low sales in the quarter. This segment posted an adjusted operating loss of 3 million.
Results for also hurt by adverse customer and product mix higher bad debt reserves and lower fixed cost absorption.
Mostly offset by cost reductions.
Peroni posted a loss of 2 million from the impact of Cobot 19, and it is also a seasonally low period for Brazil.
Let's move now to our balance sheet and cash flow.
In the second quarter, we used approximately 42 million in net cash from operating activities and had 44 million of free cash outflow.
Pay dividends of 6 million and Capex was only 2 million.
As we noted in our first quarter release.
The planned use of free cash flow for the remainder of Twentytwenty will be to fund our dividend and to reduce debt.
We do not plan to repurchase shares for the remainder of the year.
Our capex outlook to Twentytwenty is 20 million and we have spent 9 million year to date.
At quarter end reduced 257 million about 600 million revolving credit facility primarily to seasonal borrowings.
We also had 129 million in cash on hand.
The net leverage ratio was 3.48 times, which is well under our debt covenant.
Now, let's turn to our output.
It is difficult for cost in this environment because there are so many moving pieces. Thus we do not feel we know enough to give a full year outlook.
Second half demand is expected to continue to be down compared with last year, especially in the commercial office products area.
We have better visibility near term and our third quarter outlook is for sales decline in the range of 15% to 20%.
Third quarter adjusted EPS is expected to be in the range of 13 to 19 cents.
The third quarter outlook includes an adverse foreign exchange impact of 1% to 2% on sale and the negative one cents impact on adjusted EPS.
We expect our cost reduction actions combined with our normal productivity programs will deliver approximately 15 million in additional third quarter expense savings compared with last year.
Third quarter cost reductions in case, the benefits of recent restructuring decisions as well as actions, we took earlier this year, including lower incentive accruals.
Assignment of Twentytwenty Merit increases suspension of before one k. match furloughs temporary layoffs and reduced hours for reduce pay arrangements.
We have ceased foremost will travel and continue to postpone discretionary spending and some product development focused on commercial customers.
We feel confident that we can generate at least 120 million of operating cash flow for the full year.
Capex expected to be $20 million, we will generate at least 100 million in free cash flow.
We are experiencing an increased level of late payments from customers in certain areas and have increased our bad debt reserves by $4 million in the second quarter.
Our South American a Mexican customers along with a wholesaler insolvency in EMEA are the main concerns.
We are actively managing our receivables on will restrict our own sales to mitigate our risk if necessary.
Inventory should now continue to decrease as we shift the remainder of North America back to school products and continue to rightsize, our non seasonal inventory for the anticipated lower demand environment.
Now, let's move to culinary first and I will be happy to take your questions.
Operator.
Thank you actually reminder to ask a question you will need to press star one on your telephone.
Switching to your question comes to time key.
Please limit yourself to one question and then return to the kill if you have additional question.
And our first question comes from Chris Mcginnis that Sidoti and company. Your line is now open.
Good morning, Thanks for taking my questions and nice quarter.
Good morning, Christopher if we could just.
Obviously, some pretty strong results just can you be to start for the conversations you're having on the sell through I know, it's obviously very early for maybe some the retailers you're talking with your expectation of how you see that playing out.
See strong selling books.
And then sell throughs imports.
Yes, Chris.
If your question is particularly to back to school sell through it's really too early.
To to have any information on that back to school.
Sell through is just beginning and.
We are now where retail partners expected to be.
Later this year given the uncertainty in school openings.
So we don't have enough information on that our general sell through.
Which we which we track on regular basis.
It's consistent with the comments that that Neil made there seem pretty good sell through in large mass and very good sell through ecommerce channels and were seeing.
Lower sell through a declining sell through in the from the commercial channels that go back to school is still to early.
Okay.
And then just is obviously it will be more extended but just with Brazil and kind of what's happening there the back to school in Q4 is pretty important for you is maybe comment on what you're hearing there in terms of demand.
Yes, Q2 is that.
Typically very low seasonal quarter for us in Brazil normally we shipped some of the.
Back to school inventory into the channel in Q2.
This year, we did not do that and hence you we saw a fairly rapid decline in sales in Q2, we are going to do that in Q3.
And then we're going to gauge.
The feedback from the channels and their confidence in this years back to school to seaborne needs. During Q4, So Q3 is going be pretty important for or Brazil, where.
Optimistic.
The school schedules have come out which is a good sign. So there is some certainty that we and our customers now when schools will be reopening.
In Brazil, but.
But.
Again, we'll have to monitor sales and would have to see what happens in Q3.
No I appreciate that and then just one quick ones or excuse me, we talk about the just from a commercial side of the business.
From U.S. sounds a little bit more.
A lot more reason some euro for any indication of that comes back or how that playing out and maybe just how much was that down in the quarter feel much.
You know the commercial side of the business in North America was down roughly 50%.
So as North America was down 25, so you can see how much better the retail in back to school there to offset the commercial in Europe. The commercial side was a lot better.
In Europe, we're also seeing very good improvement month over month.
The reason behind it is that Europeans are going back to the office is obviously very open that people are going back to work in the offices.
In North America.
Even though businesses have reopened most people I still working from home. So until we really see a movement from home into the office, we're not expecting significant improvement in the commercial sales in North America.
Great.
Thanks for the info and good luck in Q3, and thanks again for taking my question.
Thank you Chris.
Thank you and next question comes from Kevin. Thank you with Barrington Research. Your line is now open.
Good morning.
In one and Kevin.
I wanted to talk about.
The cost savings actions, you're taking with regard to.
Making permanent structural changes.
In reaction to the pandemic. It can you just kinda talk about what led to your decision there what how much you expected demand environment to change longer term on the that led to the decision.
It's kind of the trends do you expect work from home to continue more permanently et cetera.
Yes, I'm not sure Kevin that we're ready to to quantify that except for it we do expect that the recovery is gonna be slow.
We do expect that.
Sales will be down certainly this year given that we already had 29% decline in Q2, and we're expecting another 15% to 20%.
In Q3.
And we'll see it is uncertain how things will recover in 2021, but just given the economic impact and the expected.
Slow recovery.
We need to take some struck make some structural changes to the business because the revenue is going to be down that much lower and it starts it does start with.
North America in Mexico, because we have a more challenging channel structure in Mexico, and North America, where very concentrated sales.
In in those two regions, so when needed to just rightsize the businesses.
In the decision thank you too.
I don't think this is the end that I think we're going to see how business evolves and will.
We make an additional decisions on.
Reducing cost for for the next several months, we'll see what happens in.
Brazil as we discussed.
And.
Like it will make some additional tweaks in North America as well.
Okay, Great and then.
You mentioned.
The need to accelerate.
Your continued transition to more consumer focus brand focused company.
Maybe any thoughts on how are you plan to go about that and how acquisitions might.
Play into that continued transition.
Sure Let me just make some comments on.
The organic initiatives, we talked about certain categories benefiting from current trends and we believe that they will continue to.
Could benefit.
From the changing consumer preferences are changing channel preferences.
And that those categories include wellness and our true sense air Purifiers as well as other products will introduce under the two cents brand.
Arts and crafts, including our Durbin Carl color pencils.
Computer accessories, especially docking station without Kensington brand.
And.
School product that they are fairly well, so we'll be continuing to emphasize notating and five star.
So we will we will.
Reprioritize, our investments to strengthen those categories and brands and expand expanded offerings in those brands.
If you look at channels we've seen.
Very rapid shift from brick and mortar to online both E commerce sales as well as our own direct to consumer sales, where we have that available. So we will be reinvesting or adding investments to those areas those will come from lower investments in the declining channel.
In all of that was obviously supported by the additional productivity and.
Cost reduction efforts that were going to make throughout the business.
If you look at the inorganic growth.
We will we are continuing to be on the look out for.
Shareholder accretive.
Acquisitions.
But given the reduction in the business given the increase.
In leverage that we're going to see this year as result of that certainly the bar for any acquisitions is higher we will be more judicious, but if something.
Pops up that can move us in the direction of.
Stronger brands more E commerce or more direct to consumer.
And can increase the growth of the business then we will certainly take a look at it but again I think we will be more more judicious.
In the near term.
Okay. That's very helpful. And then this Leslie I wanted to ask about true since the air purifier or product lines, specifically, maybe you know obviously, it's been doing well in this person current environment. So.
I was it tracking relative to your initial expectations.
What's the longer term outlook that you see for that product line, maybe relative to what you thought initially.
It's certainly doing a lot better than we thought we sold more in the first six months to them in the whole lot all of last year and we could have sold more if we have more product was still chasing.
Supply.
On that product line.
So we're very bullish on this we have a lot more product coming in and the second half of the year, we're going to be expanding the category to have.
Other products and two cents brand I certainly do expect that over the next couple of years, so be a multi 10 multi tens of millions.
Product line for Us and those are the types of products that I think we'll move our company forward and will get us closer to the.
Closer to the consumer.
Okay, great. Thanks for the updated.
Thanks, and congratulations on the good results in a difficult environment.
Thank you Kevin.
Thank you Sir our next question comes from Joe Commensurate notebook capital. Your line is now open.
Good morning.
Good morning gout.
I was just wondering if you might be able to kind of it.
Give us a little.
Update.
Or insight into the channels you talked about some of the faster growing one so during the quarter. You know if you could kind of quantify what shape the size of the channel.
Our business that came through the channels on the you know.
Between office Superstores independent the mass E com.
What what amount of revenues are are the various channels accounted for in the quarter.
I'm not sure I have that information.
Ill, let me just talk Directionally.
Back to school season, so in North America.
The majority of our sales were made through.
The big retailers and be bigger commerce players.
And as I mentioned in my prepared remarks, those did well.
Down a little bit.
To a very.
Strong performance last year.
And our commercial channels.
In North America, we saw big decline.
It was driven by basically mandated business closures in April and then very slow recovery after that.
In EMEA, the commercial channels are doing well.
And as Neil as Neal mentioned, we've seen strong recovery our business in EMEA is mostly commercial does vary.
Little retail.
In EMEA so the recovery in EMEA has been driven by the commercial channels and by the way that has continued into July.
If you look at.
Australia.
Perform as they are similar to EMEA has been a fairly good recovery.
In Australia, and it's been fairly broad including.
Retail and commercial channels and.
Latin America.
Things are very very slow.
Due to seasonality as well as.
You know, there's there's just lack of.
Any kind of government support either to the consumers onto businesses.
During during this pandemic so things are very very slow to recover.
Okay. Thanks, Thanks for that insight.
I'm talking about the back to school others.
Kind of split into two one you had the K through 12, then you have the college do you guys have any.
Indication of what percent of Youre back to school sales kind of go to the K 12 versus the college in college seems to be.
One where there might be.
More leaning towards that online learning as opposed to going back to campus.
You're absolutely right with it we agree with you that Dana colleges will be likely more in a virtual world of many colleges will be more in a virtual world. We're spending of vacate or 12 will be or in a physical world a vast vast majority of our back to school sales.
His case or 12, and it's probably more like K through nine.
Ill begin today.
Later years on high school or in college, certainly a lot of.
Those kids are using digital learning tools for many many years now.
So it's really not that we've been selling our products. So that's why we believe that will be.
Affected to a lesser extent.
By some of these decisions by colleges to go virtual.
Because of the makeup of our sales.
Okay, great. Thanks for that Boris I appreciate it.
Thank you Joe.
Thank you Sir our next question comes from Brad Thomas with Keybanc Capital markets. Your line is now open.
Hey, Good morning, this is Andrew on for Brad.
I was wondering if you could provide an update on price now that we have a better idea.
Industry demand and increased carbonite seeing related costs.
Do you still see prices potentially increasing in the future given increased over 19 related cost across the industry.
Yes, I see prices increasing.
Starting starting early next year to cover the incremental cost associated with cover 19, absolutely I don't think it's going to be significant increase because.
There's been an impact on productivity, but it's not huge but certainly I do expect.
Low single digit.
Price increase.
To offset coated costs and then the typical price adjustments that we have to make to cover the foreign exchange rates. So that that's also going to come into play.
Okay understood.
Then you noted a negative impact to gross margin from product mix could you talk about what drove that shift in mix and how you expect us to evolve going forward.
The probably the biggest effect that we saw from products mixed is.
A lower sales security in Kensington, because people are not traveling people are going to the office. So there's a lesser they need.
To buy additional security locks.
And much higher sales of laptop docking stations.
To support the work from home.
Environments as well as we've won some not large out large bids with government with with laptop Bakken stations.
And security inherently has a much higher gross margin than last our docking station. So.
That has really affected the mix.
Of our Kensington business in Kensington is now a much bigger part of our business to the because the sales grew 28% was overall sales declined 29%. So that's probably the biggest effect that we had.
Right the product.
We'll also mentioned we took some additional charges.
Obsolete inventory just given the expected lower sales.
And obviously fixed cost absorption also hurt our gross margins a little there given the decline in sales.
Okay. Thank you I was helpful. That's all for me Thanks for US Thank you Andrew.
In Q I next question comes from Dell Chapur with Suntrust Robinson Humphrey. Your line is now open.
Hi, This is lucky on for Bill. Thanks for taking the question just a quick question on on Brazil, you mentioned that back to school in the U.S. you kind of expect that's being relatively normal maybe some changes here and there but.
When we think about the margin structure in Brazil, if that was too if the back to school season in Brazil was to get pushed back how do you see that impacting your margin structure.
Thank you.
Yeah, we don't really see the.
Back to school season in Brazil, being pushed back because vis vis the school schedules have been released so there's there's high confidence.
In the back to school season happening what may happen as the demand.
May go down so just the sales will go down and we are monitoring very quick that very carefully and depending on what we see at the end of Q3, we would be adjusting our.
Manufacturing and distribution headcount to support the peak of that fiscal shipments in Q4. So.
Certainly they had an impact our sales from a margin standpoint, I don't expect a huge impact because a lot of the cost for us our variables as long as we pay.
Careful attention to it which we plan to do I expect that margins to be.
Consistent with.
What we had in the prior year.
Understood. Thank you.
Thank you. Our next question comes from William merger with Bank of America. Your line is now open.
Hi. This is Marianne for buildings are taking your question. So first decisions regarding how schools will operate this year. So being finalized do you expect that parents will still be buying their children school supplies, even if they're learning from home and would you expect to surging demand asked more schools did return Q in person running after the holidays.
Yes, we do expect parents they buy in school supplies.
Even if they are.
Learning from home the quantity maybe different.
The next day difference by they certainly do expect.
Back to school.
Sales to happen regardless.
As far as.
Your question about resurging demand.
Yes.
Schools reopened.
It's kind of late for that I think the seasons pretty much baked.
People make their decisions.
In the May June timeframe about what they're going to bring in.
And given how short and PQI this season and.
I am doubtful that.
There will be a lot of replenishment, regardless because people are going to switch out their inventory for Halloween and Christmas season, and nobody will want to get stuck with additional inventory. So I think.
Maybe on the margin things well.
Potentially be a little bit better, especially through E commerce, but if you're talking about retail sales.
I think the seasons pretty much baked and I don't really expect much variability.
From a sales perspective, regardless of what happened during the the actual back to school.
Got it and then have you seen any meaningful changes in market share and if there's anything else notable that you're seeing some competitors touch on that.
We.
Don't have.
Mark third party market share information yet.
From NPD, which is what we use for the last we'll have that.
Probably next month for Q2, so no news to report there we have seen.
Some market share information and yet JFK in Europe.
And.
We're seeing.
[music].
Our brands benefiting in the tired environment, where that consumers are being more discriminatory in what they buy and value.
Seems to be carrying more happy with them they look to be buying more brands that are.
Focused on quality and longevity.
And good.
Value equations that we're seeing in Europe in any way of lower private label sales and higher branded sales and since we're a leader in all categories, we're benefiting from that.
Got it that's all for me thank you.
Thank you.
Thank you next question comes from Hamilton with Barclays. Your line is now open.
Thanks for taking the call add.
Two quick ones.
The $11 million and savings, but you're going to reinvest does that start to flow through the third quarter or is that more fourth quarter weighted when you start to zero.
That's an annualized impact so you could imagine you might get one quarter over in the third quarter.
Thank you.
And then you would also said that yet.
Inventory would be down because you guys are shipped in the back to school and the U.S.
There's no Arista inventory coming back to you could doesn't sell through correctly.
That's it.
[music].
Itself product.
Product. So it's really have no. We don't have any greater returns so what sold to sold.
Perfect. Thank you so much I appreciate it.
Thank you.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone.
Next question comes from that of course, and with VW as financial your line is not looking.
Hi, Good morning showed just wanted to ask you.
These restructurings we've undertaken business.
Are these permanent and its business changes.
Duties cost come back and have you adjusted the business, if and when business those normalized.
These are permanent changes.
So we hope we permanently.
Taking.
Headcount out, we probably combining businesses will coordinate reorganizing businesses.
If things are better than we think and they'll recover quicker than we think that we will adjust our investments in the future.
As we as we normally do this is nothing.
Nothing different.
We certainly go through.
A bunch of what absolutely make these changes these are.
Obviously very important changes not just for the business.
For our people do their careful analysis, and we have a lot of confidence that.
Well to manage the upside if that comes out.
Okay and then.
Was there any benefit from back to school and in the second quarter.
There was a lot of benefit from back to school selling in the second quarter.
The stores just get set in early July so we really don't see any.
Actual back to school sell out in the second quarter.
But.
Starting.
In late May and certainly through our June.
We shipped a lot of products.
To our.
Strategic customers for back to school.
And we saw a lot of benefit in the us.
For back to school sell in Q2.
And with discussion.
Killers, and the channels that you're selling into just similar to what you were describing earlier in your prepared remarks.
Back to school.
I'm not sure I understand it's.
I'm just.
From product standpoint, and what their purchasing and ticking on.
Out of the you're back to school shopping period.
Is it purely everything you've been selling as those five star in the.
Our products and so forth.
Yes, the exactly the.
Five stars are leading brand for back to school. So we saw strong.
Shipments of five star products.
And also you know a lower end of our swing line range low end of our Cat range also has some play and back to school will also sell some academic calendars.
And those get shipped up back to school by five stars really the majority of the business.
Okay. Thank you.
Thank you Havent.
Thank you I'm not showing any further questions at this time.
Turn the call back over to for US Allison for closing remarks.
Thank you Jill.
Thank you everybody equity interest in ACCO brands to summarize the ramifications were seeing from Cobot 19 are very disruptive to our business, but we are confident in our ability to withstand this crisis as result of the proactive initiatives that we have taken.
Looking longer term, we also remain confident about our future and our ability to continue to position the company for growth and strong returns for our shareholders have a great Dane will talk to you in a couple of months. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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