Q4 2023 ACCO Brands Corp Earnings Call

Operator: Thank you all for joining. I would like to welcome you all to the ACCO Brands fourth quarter and full year 2023 earnings conference call. My name is Brika, and I will be your moderator for today.

Thank you for joining I would like to welcome you all to the ACCO brands.

Fourth quarter and full year 2023 earnings conference call.

My name is pretty clear and I will be your moderator F O J.

Operator: All lines are on mute for the presentation portion of the call. We'll have an opportunity for questions and answers at the end. If you would like to ask a question during this time, please press star followed by one on your touch screen. I would now like to turn the conference over to your host, Chris McGinnis, Senior Director of Investor Relations, to begin. So, Chris, please go ahead.

Ooh line on mute the presentation portion of the cool, what's the opportunity for questions and answers at the end.

If you would like to ask a question. During this time. Please press star followed by one when Youll touch van keypad.

I would now like to turn the conference over to your host Chris Mcginnis Senior director of Investor Relations to begin the Chris. Please go ahead.

Chris P. McGinnis: Good morning, and welcome to the ACCO Brands fourth quarter and full year 2023 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today is Tom Thetford, President and Chief Executive Officer of ACCO Brands Corporation. Tom will provide an overview of our fourth quarter and full year results and our 2024 priorities. Also speaking today is Deb O'Connor, Executive Vice President and Chief Financial Officer, who will provide greater detail on our fourth quarter and four-year results and our 2024 and first quarter outlook. We will then open the line for questions.

Good morning, and welcome to the ACCO brands fourth quarter and full year 2023 conference call.

This is Chris Mcginnis senior director of Investor Relations.

On the call today is contract for President and Chief Executive Officer of ACCO Brands Corporation.

We will provide an overview of our fourth quarter and full year results and our 2024 priorities.

Also speaking today as Deb Oconnor Executive Vice President and Chief Financial Officer, who will provide greater detail on our fourth quarter and full year results and our 2024 and first quarter outlook.

We will then open the line for questions.

Chris P. McGinnis: Slides that accompany this call have been posted to the investor relations section of accobrands.com. When speaking about our results, we may refer to adjusted results. Adjusted results exclude amortization and restructuring costs, non-cash goodwill impairment charges, the change in fair value of the contingent consideration related to the power rate earn out, and other non-recurring items and reflect an adjusted tax rate.

Slides that accompany this call have been posted to the Investor Relations section of ACCO Brands' Dot com.

When speaking about our results we may refer to adjusted results.

Adjusted results exclude amortization and restructuring costs noncash goodwill impairment charges the.

The change in fair value of the contingent consideration related to the power a earn out and other nonrecurring items and reflect an adjusted tax rate.

Chris P. McGinnis: Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures are in the earnings release and slides that accompany this call. However, due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our forward-looking non-GAAP measures. Forward-looking statements made during the calls are based on the belief and assumption of management based on the information available to us at the time the statements are made.

Schedules of adjusted results and other non-GAAP financial measures 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.

Due to the inherent difficulty in forecasting and quantifying certain amounts we do not reconcile our forward looking non-GAAP measures.

Forward looking statements made during the call are based on the beliefs and assumption of management based on information available to us at the time the statements are made.

Tom Tefft: Our forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain risk factors and assumptions. Our forward-looking statements are made as of today, and we assume no obligation to update them going forward. Now, I will turn the call over to Tom Tefft. Thank you, Chris.

Forward looking statements are subject to risks and uncertainties and our actual results could differ materially.

Please refer to our earnings release, and SEC filings for an explanation of certain risk factors and assumptions.

Our forward looking statements are made as of today and we assume no obligation to update them going forward now.

Now I will turn the call over to Tom to effort.

Thank you, Chris Good morning, everyone and welcome to our fourth quarter and full year 2023 call.

Tom Tefft: Good morning, everyone, and welcome to our fourth quarter and full year 2023 call. Last night, we reported fourth quarter and full year results, with reported sales, as well as adjusted EPS, and free cash flow, exceeding our full year outlook. The stronger finish allowed us to end the year with a lower consolidated net leverage ratio of 3.4 times, an improvement of 0.8 times compared to last year. These results reflect our team's strong execution against the priorities we laid out at the beginning of 2023.

Last night, we reported fourth quarter and full year results with reported sales as well as adjusted EPS and free cash flow exceeding our full year outlook.

The stronger finish allowed us to end the year with a lower consolidated net leverage ratio at three four times, an improvement of <unk> eight times compared to last year.

These results reflect our team's strong execution against the priorities, we laid out at the beginning of 2023.

Tom Tefft: Our top priority in 2023 was to restore our gross margin rate, which was challenged throughout 2022 due to the extreme levels of inflation. Through the cumulative effect of our pricing and cost actions, we successfully restored our gross margins to pre-pandemic levels, ending the year at a rate of 32.6 percent, a 420 basis point improvement compared to 2022. Additionally, as the demand environment remained challenging, we accelerated our efforts to rationalize our global footprint, announcing the closure of four facilities over the course of the year. We delivered $29 million in cost savings from our restructuring and productivity actions, slightly ahead of the target we set at the start of 2023.

Our top priority in 2023 was to restore our gross margin rates.

Which were challenged throughout 2022 due to the extreme levels of inflation.

He was a cumulative effect of our pricing and cost actions, we successfully restored our gross margins to pre pandemic levels.

Ending the year at a rate of 32, 6%.

A 420 basis point improvement compared to 2022.

Additionally, as the demand environment remained challenging we accelerated our efforts to rationalize our global footprint announcing the closure of four facilities over the course of the year.

We delivered $29 million in cost savings from our restructuring and productivity actions slightly ahead of the target we set at the start of 2023.

Tom Tefft: Our broad assortment of value-to-premium offerings allowed us to win in back-to-school, especially in a price-conscious environment. In addition, we gained market share during the U.S. back-to-school season in both dollars and units. We continue to invest in growth by supporting our key brands and bringing new and refreshed products to market. As I mentioned on our third quarter call, we are sharpening our focus on innovation and new product development. As a part of our restructuring, I have put leaders with the best track records in charge of these initiatives.

Our broad assortment of value to premium offerings allowed us to win in back to school, especially in a price conscious environment.

In addition, we gained market share during the U S back to school season in both dollars and units.

We continue to invest in growth by supporting our key brands and brought new and refreshed products to market.

As I mentioned on our third quarter call. We are sharpening our focus on innovation and new product development.

As a part of our restructuring.

Leaders with the best track records in charge of these initiatives.

Tom Tefft: Lastly, we manage our SG&A expenses and inventory well, as we remained laser focused on controlling costs and prudently managing headcount. For the year, we reduced inventory by 17%, or almost $68 million, versus the prior year. Before touching on our 2024 priorities, let me discuss our comparable sales results for the full year, which were down 6.5% from the prior year, reflecting soft demand in many of our categories. Our two global technology businesses, Kensington and PowerA, were also challenged by category-specific factors. Globally, lower IT spend and PC purchasing continue to impact sales of our Kensington-branded computer accessories in the fourth quarter and was a significant headwind for the full year. One of our largest product categories is Universal DocuStation.

Lastly, we managed our SG&A expenses and inventory well.

As we remained laser focused on controlling costs and prudently managing head count.

For the year, we reduced inventory by 17% or almost $68 million versus the prior year.

Before touching on our 2024 priorities, let me discuss our comparable sales results for the full year, which were down six 5% from the prior year.

Reflecting soft demand in many of our categories.

Our two global technology businesses Kensington empower a were also challenged by category specific factors.

Globally, lower it spend and PC purchasing continued to impact sales of our Kensington branded computer accessories in the fourth quarter.

And was a significant headwind for the full year.

One of our largest product categories is universal docking stations.

Tom Tefft: Over the last year, the docking station market has changed considerably. Two consecutive years of disruption in the PC market led to an oversupply of products, as well as significant competitive discounts. While PC sales are expected to rebound late in 2024, we anticipate that the demand for third-party docking stations will remain soft, with partial recovery beginning late in 2024 and full recovery in 2025. Regarding our PowerA branded gaming accessories category, the recovery in third-party gaming accessories was uneven throughout 2023, due to lower consumer demand and industry-specific competitive dynamics. Earlier this week, we announced a licensing agreement with Epic Games, the maker of Fortnite, one of the most popular video game franchises, and we are excited about this opportunity.

Over the last year, the docking station market has changed considerably.

Two consecutive years of disruption in the PC market.

Its an oversupply of product as well as significant competitive discounting.

While PC sales are expected to rebound late in 2024, we anticipate that demand for third party docking stations will remain soft with partial recovery beginning late in 2024 and full recovery in 2025.

Regarding our power <unk> branded gaming accessories category recovery in third party gaming accessories was uneven throughout 2023.

Due to lower consumer demand and industry specific competitive dynamics.

Earlier this week, we announced the licensing agreement with epic games to make her a fortnight.

One of the most popular video game franchises and we are excited about this opportunity.

Tom Tefft: In addition, in 2023, we will make considerable progress on our international expansion efforts. We recently announced licensing agreements to sell PowerA accessories in Japan with both Nintendo and Sony. The Japanese market represents a significant gamer base for consoles and a growth opportunity for PowerA. In the near term, the agreements will be small on a revenue basis, but we expect, as we strengthen these partnerships, they will provide revenue growth long-term. On a segment basis, we finish the year strong in our international segment, with revenue at 5% in 2023 on a comparable basis, led by the Recovery of Back-to-School Sales in Latin America and EMEA. However, the demand environment remained muted, reflecting the economic and inflationary pressure. North America was also affected by the macroeconomic environment as retailers continued to manage inventory tightly and to POS, which was down.

In addition in 2023, we made considerable progress on our international expansion efforts.

We recently announced licensing agreements to sell power accessories in Japan, with both Nintendo and Sony.

The Japanese market represents a significant gamer base for consoles and a growth opportunity for power.

Near term the agreements will be small on a revenue basis, but we expect as we strengthen these partnerships.

We will provide revenue growth long term.

On a segment basis, we finished the year strong and our international segment.

With revenue up 5% in 2023 on a comparable basis.

Led by the recovery of back to school sales in Latin America.

In EMEA, the demand environment remained muted, reflecting the economic and inflationary pressures.

North America was also affected by the macroeconomic environment as retailers continue to manage inventory tightly and to pass which was down.

Tom Tefft: Our commercial channel sales were lower than anticipated because of the lack of white-collar workers returning to in-office work; office occupancy rates have stabilized at 40 to 50 percent of pre-pandemic levels in the U.S. We do not expect tailwinds from a material improvement in office occupancy rates going forward. Now, I'd like to highlight the actions we are taking in 2024 as we reposition the company for long-term, sustainable, profitable I have been in the CEO role for four months, and we are acting quickly to implement changes to reset our cost structure and expand our growth prospects. In late January, we announced a multi-year cost restructuring program targeting at least $60 million. The program will simplify and delay the company's operating structure while reducing costs.

Our commercial channel sales were lower than anticipated because of the lack of white collar workers returning to end office work.

Office occupancy rates have stabilized at $40 to 50% of pre pandemic levels in the U S.

We do not expect tailwind from a material improvement in office occupancy rates going forward.

Now I'd like to highlight the actions we are taking in 2024 as we reposition the company for long term sustainable profitable growth.

I have been in the CEO role for four months and we are acting quickly to implement changes to reset our cost structure and expand our growth prospects.

In late January we announced a multiyear cost restructuring program targeting at least $60 million.

The program will simplify and de layer, the company's operating structure, while reducing costs.

Tom Tefft: We also accelerated work on our Global Footprint Rationalization Program, announcing the closure of our Sydney, New York manufacturing facility. In 2023, we announced a total of four facility closures and continue to review our footprint with the goal of improving our profitability and asset utilization. Given our global scale, we are also identifying ways to better leverage our sourcing capabilities. We recently consolidated our supply chain to operate globally under one leader.

We also accelerated work on our global footprint rationalization program.

Announcing the closure of our Sydney, and New York manufacturing facility.

In 2023, we announced a total of four facility closures and continue to review our footprint with the goal of improving our profitability and asset utilization.

Given our global scale, we are also identifying ways to better leverage our sourcing capabilities.

We recently consolidated our supply chain to operate globally under one leader.

Tom Tefft: This will reduce supply chain complexity, leverage best practices, deliver cost savings, and better meet our customers' needs. As a result of our restructuring program, key business leaders will be closer to commercial activity. This will allow them to engage with our customers more frequently and focus on opportunities to gain incremental market share, drive innovation, ideation, and execution of new and refreshed products and channel expansion while supporting our category-leading brand. Additionally, our cost actions will provide important resources to invest in and grow. We are looking to improve the pace of new and refreshed product introduction. We see opportunities across our portfolio to bring new products to market, which will help reinvigorate our growth profile. There is a pipeline of projects to bring products to market that we are excited about.

This will reduce supply chain complexity leverage best practices deliver cost savings and better meet our customers' needs.

As a result of our restructuring program key business leaders will be closer to commercial activities.

This will allow them to engage with our customers more frequently and focus on opportunities to gain incremental market share.

Drive innovation ideation, and execution of new and refreshed products and channel expansion, while supporting our category leading brands.

Additionally, our cost actions will provide important resources to invest in growth.

We are looking to improve the cadence of new and refreshed product introductions, we see opportunities across our portfolio to bring new products to market, which will help reinvigorate our growth profile.

There is a pipeline of projects to bring products to market that we're excited about.

Tom Tefft: Before I turn the call over to Deb, I want to close by emphasizing how excited I am about the opportunity we have at ACCO Brands as we reposition the company for long-term, sustainable, profitable growth. I am confident our actions will improve our potential for sales growth and strengthen our future profits and cash flows. Our portfolio is geographically diverse, with iconic brands that resonate with local consumers.

Before I turn the call over to Deb I want to close by emphasizing emphasizing how excited I am about the opportunity we have at ACCO brands as we reposition the company for long term sustainable profitable growth.

I am confident our actions will improve our potential for sales growth and strengthen our future profits and cash flows.

Our portfolio is geographically diverse with iconic brands that resonate with local consumers.

Tom Tefft: We deliver unmatched customer service and sell our products in over 100 countries. Our products range from value to premium price points, which appeal to the vast needs of today's consumers. This broad assortment allows our retail customers to win in key seasonal sets, which has strengthened these important relationships and made ACCO Brands a trusted supplier.

We deliver unmatched customer service and sell our products in over 100 countries.

Our products range from value to premium price points, which appeal to the vast needs of today's consumers.

This broad assortment allows our retail customers to win in key seasonal sets.

Which has strengthened these important relationships and made ACCO brands a trusted supplier.

Tom Tefft: Over the years, we have also reduced our dependence on commercial channels in mature markets and have repositioned the company around key retailers. While we have expanded our portfolio beyond traditional commercial products, they remain an important part of the portfolio, generating significant cash flow to reinvest for future growth. We have always been a consistent generator of strong, free cash flow and will continue to prioritize dividend payments and reduce debt.

Over the years, we have also reduced our dependence on commercial channels and mature market and have repositioned the company around key retailers.

While we have expanded our portfolio beyond traditional commercial products. They remain an important part of the portfolio generating significant cash flow to reinvest for future growth.

We have always been a consistent generator of strong free cash flow and we'll continue to prioritize dividend payments and reduce debt.

Deb O'Connor: Our balance sheet is strong, with no debt maturities until 2026 and low fixed interest rates on over half of our outstanding debt. Lastly, we have an experienced leadership team with a deep knowledge of the categories we compete in and strong customer relationships. They have the experience to execute on the actions we are taking, and I am confident we will successfully position ACCO Brands to deliver long-term, sustainable, profitable growth. I will now hand it over to Deb, and we'll come back to answer your questions. Thank you, Tom, and good morning, everyone.

Our balance sheet is strong with no debt maturities until 2026, and low fixed interest rates on over half of our outstanding debt.

Lastly, we have an experienced leadership team with a deep knowledge of the categories, we compete in and strong customer relationships.

Have the experience to execute on the actions, we are taking and I am confident we will successfully positioned ACCO brands to deliver long term sustainable profitable growth.

I will now hand, it over to Deb and we'll come back to answer your questions.

Thank you Pam and good morning, everyone.

Deb O'Connor: When we last spoke in November, we highlighted a slow demand environment due to the current macroeconomic backdrop. While this continued in the fourth quarter, we were able to report sales ahead of our outlook. And we did benefit slightly from favorable foreign currency exchange. We continue to make great progress in recovering our lost margin from the extreme inflation that challenged the company's margin profile in 2022. Our gross margin profile significantly improved in the fourth quarter and full year, and we managed costs well, which allowed us to deliver adjusted EPS and cash flow above our outlook. I want to provide more detail on the cost reduction program. As Tom discussed earlier, the program is targeting at least $60 million in pre-tax annual savings at the completion of the program in late 2026.

When we last spoke in November we highlighted a slow demand environment due to the current macroeconomic backdrop.

This continued in the fourth quarter, we were able to report sales ahead of our outlook and.

And we did benefit slightly from favorable foreign currency exchange.

We continue to make great progress in recovering our lost margin from the extreme inflation that challenged the company's margin profile in 2022.

Our gross margin profile significantly improved in the fourth quarter and full year, and we managed cost well, which allowed us to deliver adjusted EPS and cash flow above our outlook.

I wanted to provide more detail on the cost reduction program.

As Tom discussed earlier, the program is targeting at least $60 million in pretax annual savings at the completion of the program in late 2026.

Deb O'Connor: In the fourth quarter, we recognized restructuring charges of $21 million related to the program, largely in our North America sector. Total cash expenditures are expected to be $18 million in 2024. We expect to realize over $20 million of cost savings in 2024, specifically from this program.

In the fourth quarter, we recognized restructuring charges of $21 million related to the program largely in our North America segment.

Total cash expenditures are expected to be $18 million in 2024.

We expect to realize over $20 million of cost savings in 2024, specifically from this program.

Deb O'Connor: These savings will help offset merit and overall inflation, stabilizing profitability in a challenging sales environment. In 2025 and 2026, we expect a greater benefit to both profits and cash flows while positioning the company for growth. We are also moving from three operating segments to two, and we'll begin reporting under the New America and international segments, beginning with the first quarter of twenty-two. In addition, in the fourth quarter, we took a non-cash goodwill impairment charge of $90 million.

These savings will help offset merit and overall inflation stabilizing profitability in a challenging sales environment.

In 2025, and 2026, we expect a greater benefit to both profits and cash flows while positioning the company for growth.

We are also moving from three operating segments to two.

We will begin reporting under the new Americas and international segments, beginning with the first quarter of 2024.

In addition in the fourth quarter, we took a noncash goodwill impairment charge of $90 million.

The charge is reflected in our North America segment, which carries a significant amount of goodwill from previous acquisitions.

Deb O'Connor: The charge is reflected in our North America segment, which carries a significant amount of goodwill from previous acquisitions. It also reflects the market challenges that have impacted the North America segment over the past few years. Now turning to sales, reported sales in the fourth quarter of 2023 decreased two and a half percent versus the prior year. Tapable sales excluding foreign exchange were down 5% versus the prior year. The sales decline was due to lower volumes in North American EMEA, more than offsetting global price increases and growth in the international sector.

It reflects the market challenges that have impacted this segment over the past few years.

Now turning to sales.

<unk> sales in the fourth quarter of 2023 decreased two 5% versus the prior year.

Comparable sales, excluding foreign exchange were down 5% versus the prior year.

The sales decline was due to lower volumes in North America, and EMEA more than offsetting global price increases and growth in the international segment.

The decline largely reflects a more challenging macroeconomic environment, especially relating to a computer accessories offering.

Gross profit for the fourth quarter was $170 million, an increase of 17% despite lower sales.

Deb O'Connor: The declines largely reflect a more challenging macroeconomic environment, especially relating to our computer accessories offering. However, growth profit for the fourth quarter was $170 million, an increase of 17% despite lower sales, as growth margin improved 570 basis points from the cumulative effect of our pricing and cost reduction actions and moderating input costs. Adjusted FG&A expense of $102 million was up from $93 million in the fourth quarter; adjusted FG&A as a percent of sales increased to 20.8% due to the lower level of sales. However, strong cost controls were more than offset by loading back in a normalized level of incentive compensation expense. Adjusted operating income for the fourth quarter was $68 million, up 31% compared with $52 million last quarter.

Gross margin improved 570 basis points from the cumulative effect of our pricing and cost reduction actions and moderating input costs.

Adjusted SG&A expense of $102 million was up from $93 million in the fourth quarter.

Adjusted SG&A as a percent of sales increased to 28% due to the lower level of sales.

Strong cost controls were more than offset by loading back in a normalized level of incentive compensation expense.

Adjusted operating income for the fourth quarter was $68 million up 31% compared with the $52 million last year.

Adjusted EPS was <unk> 39 per share versus <unk> 32 per share in 2022.

Our growth in adjusted operating income was somewhat offset by increases in interest and nonoperating pension expenses.

Deb O'Connor: Adjusted EPS was $0.39 per share versus $0.32 per share in 2022 as our growth in adjusted operating income was somewhat offset by increases in interest and non-operating pension expense. Now, let's turn to our segment results. I will highlight the full-year results as quarterly trends were similar throughout the course of the year.

Now, let's turn to our segment results.

We'll highlight our full year results as quarterly trends were similar throughout the course of the year.

In North America reported and comparable sales both declined 11% as volume declines more than offset accumulative pricing actions.

Deb O'Connor: In North America, reported and comparable sales both declined 11% as volume declined more than offset our Cumulative Pricing Act. Sales for the full year were impacted by lower business and consumer demand. Much of the decline was related to our computer accessories offering, as IT spending was constricted throughout the year, especially for PCs. However, outside of computer accessories, the product category declines were left. Sales of our products were also challenged by a lower than anticipated return to office trend, and retailers continue to manage their inventory tightly, replenishing only the POS. In our gaming accessories category, demand was uneven throughout the year and saw a decline for the full year due to weaker consumer spending trends and increased competition. North America's adjusted operating income margin for the full year increased 160 basis points to 13.8% from the prior year, with adjusted operating income growing 1% despite the sales decline. The increase in both was due to the cumulative effect of our pricing and cost actions. Now let's turn to EMEA. For the full year, reported sales declined 6%, and comparable sales were down 7% due to volume declines.

Sales for the full year were impacted by lower business and consumer demand.

The decline was related to our computer accessories offering as it spending was constricted throughout the year, especially for PC.

Outside of computer accessories, the product category declines were less.

Sales of our products were also challenged by lower than anticipated return to office trend.

And retailers continue to manage their inventory tightly replenishing only to Pos.

In our gaming accessories category demand was uneven throughout the year and saw a decline for the full year due to weaker consumer spending trends and increased competition.

North America adjusted operating income margin for the full year increased to 160 basis points to 13, 8% from the prior year with adjusted operating income growing 1%. Despite the sales decline.

The increase in bulk was due to the cumulative effect of our pricing and cost actions.

Now, let's turn to EMEA.

Full year reported sales declined 6% and comparable sales were down 7% due to volume declines.

Lower sales of technology accessories were the main driver of the decline largely due to weaker IP in gaming spend.

Demand for our commercial products remained challenged due to the economic environment.

EMEA adjusted operating income margin for the full year increased 500 basis points to 11, 4% with adjusted operating income growing almost 70% for the full year.

Deb O'Connor: Lower sales of technology accessories were the main driver of the decline, largely due to weaker IT and gaming services. Demand for our commercial products remains challenged due to the economic environment. EMEA's adjusted operating income margin for the full year increased 500 basis points to 11.4%, with adjusted operating income growing almost 70% for the full year. The improvement in adjusted operating income was due to our pricing and cost reduction actions, as well as moderating input costs. Our pricing actions lagged the impact of extreme inflation last year, but this year, we have successfully recovered most of our margins. Moving to the international segment, for the full year, reported sales increased 8%, and capital sales increased 5%.

The improvement in adjusted operating income was due to our pricing and cost reduction actions as well as moderating input costs.

Our pricing actions lagged the impact of extreme inflation last year, but this year, we have successfully recovered most of our margin.

Moving to the international segment for the full year reported sales increased 8% and comparable sales increased 5%.

The growth in both reflect price increases and volume growth in Latin America as back to school continued its recovery.

These were partially offset by reduced demand for technology accessories, and lower overall demand due to weaker economy in Australia and Asia.

For the full year the international segment posted an adjusted operating margin of 17, 1% an increase of 130 basis points.

Deb O'Connor: The growth in both reflected price increases and volume growth in Latin America as back-to-school continued its recovery. However, these were partially offset by reduced demand for technology accessories and lower overall demand due to weaker economies in Australia and Asia. For the full year, the international segment posted an adjusted operating margin of 17.1 percent, an increase of 130 basis points, and an adjusted operating income of $68 million, an increase of $17.

And adjusted operating income of $68 million, an increase of 17%.

The improvements were due to pricing and cost actions, which more than offset higher go to market spending and increased people costs and incentive compensation.

Switching to cash flow and balance sheet items as we have previously discussed due to our seasonality. We generally use cash in the first half of the year and generate significant cash flow in the second half of the year.

In 2023, adjusted free cash flow was $118 million versus $78 million in 2022.

Deb O'Connor: The improvements were due to pricing and cost actions, which more than offset higher go-to-market spending and increased people costs and incentive compensation. Switching to cash flow and balance sheet items, as we have previously discussed, due to our seasonality, we generally use cash in the first half of the year and generate significant cash flow in the second half of the year. In 2023, adjusted free cash flow was $118 million versus $78 million in 2022. The $40 million improvement was driven by improved working capital management as we lowered inventory by 17% and had a lower prior year incentive payout. We ended the quarter with a consolidated leverage ratio of 3.4 times, down from 4.2 times at the end of 22, and well below our 4.25 times covenant ratio. However, longer term, we are still targeting a ratio of two to two and a half times. At year end, we had $566 million of remaining availability on our $600 million revolving credit facility.

The $40 million improvement was driven by improved working capital management, as we lowered inventory by 17% and had lower prior year incentive payouts.

We ended the quarter with a consolidated leverage ratio of three four times down from the four two times at the end of 'twenty, two and well below our four and a quarter times covenant ratio.

Longer term, we are still targeting a ratio of two to two five times.

At year end, we had $566 million of remaining availability on our $600 million revolving credit facility as shown on our earnings slides more than half of our debt is at a fixed interest rate of 4.25% and does not mature until 2029.

We ended the year with total gross debt of $926 million $88 million lower than the same time last year and our cash balance was $66 million.

Turning to 2024, we are anticipating softer sales given economic indications of muted consumer demand and the uncertainty of business spending.

In addition industry expectations for our back to school products are to be down modestly.

Deb O'Connor: As shown on our earnings slide, more than half of our debt is at a fixed interest rate of 4.25% and does not mature until 2029. We ended the year with total growth debt of $926 million, $88 million lower than the same time last year, and our cash balance was $66 million. Turning to 2024, we are anticipating softer sales given economic indications of muted consumer demand and the uncertainty of business spending. In addition, industry expectations for our back-to-school products are to be down-modified. While Tom spoke earlier about our expectation of an extended recovery in our Kensington-branded computer accessories, we also believe that PowerA will continue to recover at a slower, more gradual pace.

While Tom spoke earlier about our expectation of an extended recovery in our Kensington branded computer accessories.

We also believe that power will continue to recover at a chap year slower pace.

We expect demand for our gaming accessories to remain muted as consoles approach at the end of their product lifecycle.

At the beginning of the year, we made decisions to optimize our product portfolio by exiting low margin business and strategically reducing distribution in certain channels.

These actions were primarily in our North American segment.

Our full year outlook calls for demand trends to improve in the second half of 2024, as the economic environment improves and technology spend rebounds.

Therefore, we are providing an outlook of reported sales to be within a range of down two to down 5% for the full year.

Deb O'Connor: We expect demand for our gaming accessories to remain muted as consoles approach the end of their product life cycle. At the beginning of the year, we made decisions to optimize our product portfolio by exiting low-margin businesses and strategically reducing distribution in certain channels. These actions were primarily in their North American segment. Our full year outlook calls for demand trends to improve in the second half of 2024 as the economic environment improves and technology spend rebounds. Therefore, we are providing an outlook for reported sales to be within a range of down 2 to down 5% for the full year. We do expect 2024 to be a reset year, as we believe the actions we are currently undertaking, when implemented, will better position us to deliver longer-term growth.

We do expect 2020 for it to be a reset year as we believe the actions. We are currently undertaken when implemented will better position us to deliver longer term growth.

For the full year, we expect adjusted EPS to be comparable to 2023 and are guiding to a range of $1 seven to $1 11 per share.

We expect full year gross margins to be flat to modestly improved compared to 2023.

SG&A costs will be consistent or slightly down to the prior year as savings from our cost actions are somewhat offset by inflationary pressures related to labor and other costs.

The adjusted tax rate is expected to be approximately 29% and.

Intangibles amortization for the full year is estimated to be $42 million.

Which equates to approximately <unk> 30 of adjusted EPS.

Deb O'Connor: For the full year, we expect adjusted EPS to be comparable to 2023 and are guiding to a range of $1.07 to $1.11 per share. We expect full year growth margins to be flat to modestly improved compared to 2023. SG&A costs will be consistent or slightly down from the prior year as savings from our cost actions are somewhat offset by inflationary pressures related to labor and other costs. The adjusted tax rate is expected to be approximately 29 percent. Intangible amortization for the full year is estimated to be $42 million, which equates to approximately 30 cents of adjusted EPS.

We expect our free cash flow to be at least $120 million after capex of $15 million.

Looking at cash uses in 2024, we expect to continue to prioritize dividends and debt reduction and expect to end 2024 with a consolidated leverage leverage ratio of approximately three to three two times.

As typical our first quarter has the lowest level of sales and EPS compared to the other quarters.

There is also more sales variability in the first and second quarter, given the timing of shipments for back to school.

The portfolio optimization in North America that I discussed earlier will disproportionately impact the first and second quarters.

Deb O'Connor: We expect our free cash flow to be at least $120 million after the cap excess of $15 million. Looking at cash uses in 2024, we expect to continue to prioritize dividends and debt reduction and expect to end 2024 with a consolidated leverage ratio of approximately 3 to 3.2 times. As typical, our first quarter has the lowest level of sales and EPF compared to the other quarters. There is also more sales variability in the first and second quarters, given the timing of shipments for back-to-school. The portfolio optimization in North America that I discussed earlier will disproportionately impact the first and second quarters. Therefore, we expect reported sales to be down 6.5% to down 8% in the first quarter.

Therefore, we expect reported sales to be down six five to down 8% in the first quarter.

In addition, due to a change phasing of our incentive compensation expense.

Our SG&A will be higher in the first half of 2024 versus the prior year.

While this change will reduce first half EPS.

The difference will be made up entirely in the back half of the year.

Our first quarter outlook is for adjusted EPS to be in a range of <unk>.

<unk> per share.

Now, let's move on to Q&A, where Tom and I will be happy to take your questions.

Operator.

Thank you.

You would like to ask a question. Please press star followed by one on your telephone keypad.

If you change your mind anytime I would like to remove your question speak. Please press Star then Kay.

We have our first question from Greg Burns of today TNK you.

You May proceed with your question.

Good morning.

The goodwill impairment was that tied to any one.

Deb O'Connor: In addition, due to a changed phasing of our incentive compensation expense, our SG&A will be higher in the first half of 2024 versus the prior year. While this change will reduce first-half EPS, the difference will be made up entirely in the back half of the year. Our first quarter outlook is for adjusted EPS to be in a range of $0.01 to $0.04 per share. Now, let's move on to Q&A, where Tom and I will be happy to take your questions. Operator.

Acquisition in particular or was it just.

Broad based across the portfolio of acquisitions you've done.

No Thats right, Greg establish hi, thanks for joining.

It was across the board.

Really we looked at goodwill on a segment basis and the cash flows given some of the forecasting challenges that we've had.

Warranted that review and once we get into it. Unfortunately, our WAC was higher given interest rates and things like that.

Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone. If you change your mind at any time and would like to remove the request to speak, please press star, then tap.

But it's broad based.

Okay.

And then when you look at the.

The outlook for technology spending what gives you.

Operator: We have our first question from Greg Barnes of Fiduciary. You may proceed. Good morning.

Confidence you see either stabilize or rebound as we go into the back half of this year.

Deb O'Connor: But the Goodwill impairment, was that tied to any one acquisition in particular, or was it just, you know, broad-based across the portfolio of acquisitions you've done? No, that's right, Greg. It's Deb.

Seeing anything in particular that gives you.

<unk>.

Confidence in that view.

Okay.

Yes, Greg Good morning, this is Tom.

Let me.

To give you a couple of insights or points of inside that may help address that question. So first of all yes, we are starting to see some signs of life within parts of our technology accessories business.

Deb O'Connor: Hi, thanks for joining us. It was across the board. Really, we look at Goodwill on a segment basis. And you know, the cash flows, given some of the forecasting challenges that we've had, just warranted that review. And once you get into it, unfortunately, our WAC was higher given interest rates and things like that. But it's broad based. Okay, and then when you look at the...

So that's the first reason for optimism.

Number two we're cycling through a fairly significant dip in a historically consistent industry alright.

Tom Tefft: The outlook for technology spending, what gives you confidence that you will see it either stabilize or rebound as we go into the back half of this year? Are you seeing anything in particular that gives you that confidence? Yeah, Greg. Good morning. This is Tom.

<unk> PC industry has.

Historically been kind of a 3% to 5% CAGR business and we saw that pretty significantly.

So history would tell you that.

That it will return and rebound in addition, you have.

Tom Tefft: Let me give you a couple of insights or points of view that may help address that question. So, first of all, yeah, we are starting to see some signs of life within parts of our technology accessories business. So, that's the first reason for optimism.

Computing Windows 11, you have a number of different other developments that are going to require.

New deployments of Pcs.

In the near term so a number of different factors give us confidence that it will return.

Tom Tefft: Number two, right, we're cycling through a fairly significant dip in a historically consistent industry, right? The laptop PC industry has historically been kind of a three to five percent Kager business, and we saw that dip pretty significantly. So history would tell you that it will return and rebound. In addition, you have AI computing, and Windows 11.

We're being cautious in our view.

And we think it likely has a late 2024 story before we get into.

More robust spend.

How much.

Is that business down.

For the peak maybe.

Absolute dollars of if you could give it or percentage wise.

Tom Tefft: You have a number of different developments that are going to require new deployments of PCs in the near term. So a number of different factors give us confidence that it will return. We are being cautious in our view, and we think it likely is a late 2024 story before we get into more robust spend. How much is that business down for the peak, maybe in absolute dollars if you give it, or percentage wise? Yeah, are you speaking specifically about computer accessories, Greg? Yeah, Kensington.

Yeah.

Speaking to the computer accessories, specifically Brad.

Yes, Ken Ken Yes Kensington.

Yes, we're down a good double digit in that.

And that category over the last year.

Okay.

Okay and then on the.

The gaming side.

What's the nature of your your partnership with Epic is it a global licensing agreement is it does.

Is it.

North America specific can you just give us some more details there and then when you look at the <unk>.

Tom Tefft: Yeah, we're down a good double digit in that category over the last couple of years. Okay, and then on the um... The gaming side... What's the nature of your partnership with EPIC? Is it a global licensing agreement?

The growth potential for power.

How much of that business.

This is levered to the switch I think theres, a new switch coming out from Nintendo and maybe also.

Tom Tefft: North America specific, can you just give us some more details there? And then when you look at the growth potential for PowerA, how much of that business is levered to the switch? I think there's a new switch coming out from Nintendo and maybe also, you know, we're starting, we're about three years past the pandemic now. Is there a potential replacement cycle with, you know, some of those, the, you know, that bubble of pandemic activity that happened a few years ago?

We're starting.

About three years past the pandemic now is there a potential replacement cycle with.

Some of those.

The bubble of pandemic activity that happened a few years ago. Thank you.

Sure so.

So first let me take the Fortnite question. It is a global license.

We just announced it so we're in the early stages of commercializing that in the markets in which we compete in.

Tom Tefft: Thank you. Sure. So first, let me take the Fortnite question. It is a global license.

And then in terms of.

Tom Tefft: We just announced it, so we're in the early stages of commercializing it in the markets in which we compete. And then, in terms of gaming in general, it is fairly cyclical, and it is tied to console launches. And, you know, our business is tied disproportionately to Xbox and Nintendo, Microsoft and Nintendo. We have not heard definitively when new console releases will hit the market, so it's difficult for us to comment specifically. But we do see rebounds, nice rebounds, and attach rates when new consoles are introduced.

Gaming in general it is fairly cyclical and it is tied.

Two console launches in our business.

As tied disproportionately to Xbox and Nintendo Microsoft and Nintendo.

We have not heard definitively when new console releases will.

Hit the market, so it's difficult for us to comment.

Specifically, but we do see rebounds nice rebounds in attach rates when new consoles are introduced and so that is definitely.

Tom Tefft: And so that is definitely an opportunity for us to expand sales when those consoles hit the market. So we're excited about that. We keep a close eye on it. But we don't have any definitive information definitively as to when the two companies, Xbox and Nintendo, will drop a new console. Okay, thank you. Thank you. We now have Joe Gomes' label.

The opportunity for us to expand sales.

Windows consoles hit the market. So we're excited about that we keep a close eye on it but we don't have any insights definitively as to when the two Xbox and Nintendo will drop new consoles.

Okay. Thank you.

Yeah.

Thank you.

We now have Joe.

They will come soon.

Operator: Good morning. Thanks for taking my questions. Just wanted to see if you could dive in a little bit more detail into what drove the better than expected top line. Sure, you know I think we saw a little bit of demand moderating in the fourth quarter throughout the organization, and I think as we look to the future, or, hopefully, that continues as we talked about the first and second quarter being a little bit more pressured but kind of longer term in the year reflecting more like that fourth quarter. Okay, and have you seen any significant or material switch to generic products from Branded? Joe, this is Tom.

Good morning, Thanks for taking my questions.

Just wanted to see if you could dive in a little bit more detail into what drove the better than expected fourth quarter top line.

Sure.

Think we saw a little bit of demand moderating in the fourth quarter.

Throughout the organization.

And I think as we look.

To the future. We're hopefully that continues as we talked about the first and second quarter being a little bit more pressured.

But kind of longer longer term in the year.

Reflecting more like that fourth quarter.

Okay have you seen.

Any.

Significant or material.

Switch.

To the generic products from branded.

Yeah.

Joe This is Tom so thank you for the question.

Tom Tefft: So thank you for the question. We watch market shares across all of our key categories quite closely, and we haven't seen any significant or material shifts in trend or market share. So that is something we pay very close attention to.

Watch market shares across all of our key categories.

Closely.

And we haven't seen any significant or material shifts in trend.

And market share.

So that is something we pay very close attention to.

Tom Tefft: And candidly, it's a big focus of ours in 2024 and beyond to take market share in each of our categories. But to answer the question specifically, we haven't seen a material shift or change in trend and market shares in these uncertain economic times. Our brands have held up quite well. Great. And one last one for me to get back in line.

And candidly, it's a big focus of ours in 2024 and beyond is to <unk>.

Market share in each of our categories, but to answer the question, specifically, we haven't seen a material shift or change in trend and market shares.

Uncertain economic times, our brands have held up quite well.

Okay, Great and one last one for me I'll get back in queue.

Tom Tefft: In the release, you talk about, you know, exiting low-margin business. And again, I wonder if you could give us a little more color on what specifically you are exiting. Yeah, another solid question, Joe. And thank you.

And then.

The release, you talked about exiting low margin businesses.

And again wondering if you could give us a little more color on what specifically are you exiting.

Yet another solid question, Joe and thank you so.

Tom Tefft: So the concentration of those business exits is predominantly in our US business. And there is a range that we have exited globally, and I'll talk about that in a moment. But it's predominantly a private label business, and it's predominantly around the back-to-school season.

The concentration of those business exits are predominantly in our U S business.

And there is a range that we have exited globally and I'll talk about that in a moment, but it's predominantly private label business and it's predominantly around the back to school season. So it's disproportionately impacting us in the first half of the year as Deb mentioned earlier.

Tom Tefft: So it's disproportionately impacting us in the first half of the year, as Deb mentioned earlier. And while we're exiting those businesses, it frees up, frankly, the capacity of our marketing team and our sales team to focus on more value-added revenue streams. And frankly, it's going to impact our gross margin in a positive way. So we view that net as a positive development, even though it does impact the top line in the short term. And then specifically on global product exits, we have exited certain products within our wellness category. And, you know, that was a category that was really impacted by the pandemic, where we saw a number of competitors, mostly from Asia, come into the market and really drive down the price points into the category that we just believed were unsustainable for us. And so we made a tough decision, but we believe it was the right business decision to exit certain categories in the wellness space globally. So those are the two primary drivers that impact that piece of the conversation. And we think they both better position us long term. Okay, great.

While we're exiting those businesses it frees up frankly capacity of our marketing team and our sales team to focus on more value added revenue streams and frankly, it is going to impact our gross margin in a positive way. So we view that net.

A positive development, even though it does impact the top line in the short term and then specifically to global product exits we have exited.

Certain products within our wellness category.

And.

That was a category that was really impacted by the pandemic, where we saw a number of competitors.

Mostly from Asia come into the market and really drive down the price points.

The category that we just believe were unsustainable for us and so we made a tough decision, but we believe the right business decision to exit certain categories in the wellness space globally. So those are the two primary drivers that impact that that piece of the conversation and we think they both better position us long term.

<unk>.

Okay, great. Thank you for taking the questions.

Operator: Thank you for taking the question. Thank you. We now have Liam Reuter from Bank of America. Good morning. First of all, you mentioned some increased competition in terms of gaming accessories. What's going on there?

Thank you.

We now have William Reuter with Bank of America.

Good morning.

So firstly you mentioned some increased competition in terms of gaming accessories, what's going on there isn't new entrants who are producing.

Tom Tefft: Is it new entrants who are producing products that are, you know, competing with your own? Or are the branded manufacturers making additional products that are somehow in competition with yours? Yeah, Bill, thank you for the question. So it's a bit of both.

Products that are competing with your own or are the branded manufacturers, making additional products that are somehow in competition with yours.

Yeah Bill. Thank you for the question so.

It's a bit of both.

Tom Tefft: It is some existing competitors getting a bit more aggressive in certain channels and with certain customers in certain markets, and it is some new entrants into certain markets. They're not new to the category globally, but they've entered into new countries as they've expanded their efforts. And so it's a combination of both of those factors that we are dealing with in the category at the moment. Is there new competition that is not necessarily the branded guys but more like yourself? Are they introducing products that have greater functionality? Or are they trying to introduce lower list prices? Are they being more promotional? What is their strategy? Yeah, it's really driven by promotions and some pricing actions to take peg space in retail. We're not seeing any new entrants globally into the competitive set.

It is.

Some existing competitors getting a bit more aggressive in certain channels and with certain customers.

In certain markets.

And it is some new entrants into search.

Certain markets Theyre, not new into the category globally, but they've entered into new countries.

As they've expanded their efforts and so it's a combination of both of those factors.

That we are.

Healing with in the category at the moment.

Is are the new competition is not necessarily the branded guys, but more like yourself are they.

Introducing products that have greater functionality or are they trying to either introduce lower list prices are there being more promotional.

What is their strategy.

Yes. It is.

It's.

<unk> driven on.

Promotions and some pricing actions to take peg space in retail.

We're not seeing globally, new entrants into.

The competitive set.

Tom Tefft: However, we are seeing some competitors act differently as they are likely trying to move through excess inventory and gain market share in a declining cycle of the category. So we have good plans in place. We think we're well positioned long term with our retail partners. We think our products add more value to the gaming experience. We think we're a better value for all of the consumers who choose PowerA.

However, we are seeing some competitors.

Differently.

As they are likely trying to move through excess inventory and gain market share in a declining.

Cycle of the category. So we have good plans in place, we think we're well positioned long term with our retail partners.

Our products add more value to the gaming experience.

I think we're a better value.

For all of the consumers who choose power a so we think we're well positioned long term, but we have seen some things that are a little bit different than what we've seen historically in the last 12 months.

Tom Tefft: So we think we're well positioned long term, but we have seen some things that are a little bit different than what we've seen historically in the last 12 months. Okay, and then on the traditional office products or computer accessories businesses, how was POS in those categories in the fourth quarter? And if you could talk about how inventory levels are at retail? Due to the, you know, slowing sales, are they working to reduce their inventory such that what you're selling is actually below sell through? How do those two compare?

Okay, and then on the traditional office products or computer accessories.

This is how we're Pos in those categories in the fourth quarter and if you could talk about how inventory levels are at retail.

Due to this.

Slowing sales are they working to reduce their inventories such that your sell in is actually below sell through how does how do those two compare.

Tom Tefft: Okay, yeah, it's a good question, Neal. POS, as Deb mentioned earlier, moderated a bit in Q4, which was an encouraging development for the business, and I think that was reflected in our sales performance. We saw kind of mixed POS depending on the category, which isn't inconsistent with what we typically see, but we did see improvement in trends in a number of key business categories for us. The POS being down is reflected in our current inventory positions with our key customers. We track that information fairly closely, particularly here in the U.S., and our weeks of supply are pretty consistent year over year.

Okay.

It's a good question bill so.

POS as Deb mentioned earlier moderated a bit in Q4, which which was an encouraging development for.

For the business and I think that was reflected in our sales performance.

We saw kind of mixed.

Pos depending on the category, which isn't inconsistent with what we typically see but we did see improvement in trends in a number of key business categories for us.

POS being down is reflected in our current.

Inventory positions with our key customers.

We track that information fairly closely particularly here in the U S and our weeks of supply are pretty consistent year over year. However, they are buying to Pos with Pos being down obviously purchases are down as well.

Tom Tefft: However, they are buying to POS, with POS being down. Obviously, purchases are down as well. Great. I'll pass it on and follow up with Chris later.

Great.

I'll pass it on and follow up with Chris later, Thank you.

Operator: Thank you. Okay, thank you. Thank you. If you wish to ask further questions, please press star followed by 1 on your telephone keypad now. And we have the next question from Hale Holden of Barclays. Hey, good morning.

Okay. Thank you. Thank you.

If you wish to ask a question. Please press star followed by one on your kind of thank you Pat.

And we have the next question is from Hale Holden with Barclays.

Okay.

Hey, good morning.

Tom Tefft: Tom, that was a pretty full-throated kind of embrace of innovation. So I was wondering if you could give us some categories that you guys were focused on or how much you thought new products could move the needle. Yeah, Hale, it is a big emphasis of our senior leadership team at ACCO Brands to lean in more heavily than we have historically into product development and new product innovation. You know, we see opportunities for growth really in the entire portfolio. Now, the strategies that we're going to deploy are going to be a bit different. In categories that have some secular headwinds, it's going to be about market share gains. And so, what can we do? What can we introduce? The better position has to take market share.

Tom that was a pretty full throated kind of embrace of innovation.

So I was wondering if you could give us some categories that you guys are focused on or.

How much you thought.

New products can move the needle.

Yes.

Is a big emphasis of our senior leadership team.

Co brands leaning in more heavily than we have historically into product development and new product innovation.

We see opportunities for growth.

Really in the entire portfolio now the strategies that we're going to deploy youre going to be a bit different in categories that have some secular headwinds, it's going to be about market share gains and so what can we do what can we introduce to better position us to take market share and then in certain categories. Obviously, we're going to follow a form factor changes in <unk>.

Tom Tefft: And then in certain categories, obviously, we're going to follow form factor changes in computer accessories, for example, we'll follow console development and gaming, but we will lean in across each of them, and not the same way, right? We'll disproportionately distort resources and investments to where we believe the highest growth opportunities reside. So in the near term, we're clearly focused on computer accessories and gaming accessories. You know, those businesses provide us with long-term growth opportunities. And the reset that we've seen in the marketplace provides opportunities for us to lean in with some product options for consumers and businesses. That doesn't mean the rest of the portfolio will be starved; we'll absolutely invest in other categories. But those two categories will get distorted investments compared to others.

Peter accessories for example will follow console developments in gaming, but we will lean in across each of them and not the same right will disproportionately distort resources and investments to where we believe the highest growth opportunities reside so in the near term, we're clearly focused on computer accessories and game.

Accessories, those businesses provide us the long the long term growth opportunities and with the reset that we've seen in the marketplace provide opportunities for us to lean in with some product options.

For consumers and businesses that doesn't mean, the rest of the portfolio will be starved will absolutely invest in other categories, but those will those two.

Two categories will get distorted.

Investments compared to others.

Tom Tefft: Great. Thank you. And then, Deb, can you give me a sense of the dollar shift between first half and second half on incentive comp, is that stock-based comp or cash comp that's coming out of SG&A in terms of the swing. Sure. Yeah, it's a swing. I mean, we had a half-year plan historically that we aren't having anymore.

Great. Thank you and then can you.

Hi, I guess give us a sense of the dollar shift between first half and second half.

Incentive comp stock based comp or cash conference coming out of SG&A.

In terms of the swing there.

Yeah, it's the swing I mean, we had a half year plan.

Historically that we arent, having any more and so our whole way of looking at it incentive comp kind of takes us back to Hal most companies do it which is the pro rata way and it's probably a couple of cents shift out of the first half into the second.

Deb O'Connor: And so our whole way of looking at it, incentive comp, kind of takes us back to how most companies do it, which is the pro rata way. And it's probably a couple of cents shift out of the first half of the year. Thank you so much. I appreciate it, guys. Thank you. If you have any further questions, please press star followed by 1 on your telephone keypad. We have had no further questions, so I'd like to hand it back to Tom for any final comments. Thank you for your interest in ACCO Brands. We look forward to talking to you in a couple of months to report on our first quarter results. Thank you all for joining us. I can confirm that this does conclude today's ACCO Brands fourth quarter and full year 2023 earnings conference call. You may now disconnect your lines and please enjoy the rest of your day. IF YOU LIKED THIS VIDEO, PLEASE clap DOG TO LIKE THE VIDEO AND SUBSCRIBE TO MY CHANNEL!

Great. Thank you so much I appreciate it guys.

Thank you.

Do you have any further questions. Please press star followed by one on your kind of thing you kind of think keep asking.

We have had no further questions I would like to hand, it back to Tom Leighton that's funny.

Hmm.

Okay.

Thank you for your interest in ACCO brands.

Look forward to talking to you in a couple of months to report on our first quarter results.

Yes.

Thank you for joining I can confirm that does conclude today's <unk> fourth quarter and full year 2023 earnings Conference call. You May now disconnect your lines and please enjoy the rest of your day.

[music].

Okay.

Yes.

[music].