Q4 2024 ACCO Brands Corp Earnings Call
Speaker Change: Welcome to the Integrated Research Forum at the Institute of Competitive Strategies.
Speaker Change: 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 and intangible asset impairment charges and other nonrecurring items, an unusual tax items and.
Speaker Change: Include adjustments to reflect the estimated annual tax rate on quarterly earnings.
Speaker Change: 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 will accompany this call.
Speaker Change: Due to the inherent difficulty in forecasting and quantifying certain amounts we do not reconcile our forward looking non-GAAP measures.
Speaker Change: Forward looking statements made during this call.
Speaker Change: Or based on the beliefs and assumptions of management based on information available to us at the time the statements are made.
Speaker Change: Our forward looking statements are subject to risks and uncertainties.
Speaker Change: And our actual results could differ materially.
Speaker Change: Please refer to our earnings release, and SEC filings for an explanation of certain risk factors and assumptions.
Speaker Change: 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 Thetford.
Tom Thetford: Thank you Chris Good morning, everyone and welcome to ACCO brands yearend 2024 earnings call.
Tom Thetford: Last night, we reported full year sales and adjusted EPS in line with our outlook, excluding greater than expected foreign currency headwinds.
Tom Thetford: We delivered free cash flow of $132 million for the year in line with our outlook.
Tom Thetford: While the operating environment remains challenging I am proud of our team's successful execution of our strategic initiatives to reset our cost structure and position ACCO brands for better revenue outcomes in the future.
Tom Thetford: Free cash flow was a bright spot in 2024 aided by both our cost actions and improved working capital management as.
Tom Thetford: As we reduced inventory levels by 17% for the year and collected a significant amount of receivables in Brazil, given the timing of their sales.
Tom Thetford: Our consistent cash flow and commitment to debt reduction has improved our financial position.
Tom Thetford: With net debt down $94 million for the year.
Tom Thetford: The improvement in our balance sheet allowed us to expand our capital allocation program to include share repurchases, while continuing to support our quarterly dividend and debt repayment.
Tom Thetford: We are well positioned to consider accretive M&A opportunities as well.
Tom Thetford: In addition, during the year, we refinanced our bank credit facilities, extending maturity dates going out to 2029.
Tom Thetford: Let me transition to a brief recap of the year highlighting the progress we made against my first year objectives, and our updated strategy.
Tom Thetford: At the beginning of 2024, we implemented decisive actions to reset and optimize our cost structure through.
Tom Thetford: Through the introduction of a $60 million multi year cost reduction program.
Tom Thetford: This program has simplified the organization de layered our management structure and rationalize our global footprint through a reduction of our manufacturing facilities.
Tom Thetford: During the year, we realized approximately $25 million in savings from the program.
Tom Thetford: Our proactive approach to cost management allowed us to deliver improved operating margins as gross margins expanded 70 basis points versus the prior year and SG&A costs were almost $30 million lower than a year ago.
Tom Thetford: We anticipate continued headwinds and uncertainties in 2025 and have expanded the scope of our cost savings program.
Tom Thetford: We are now targeting $100 million in total savings by the end of 2026, increasing our current program target by $40 million.
Tom Thetford: Decisions of this nature are inherently challenging yet essential to enable us to address external challenges.
Tom Thetford: Our profitability and ensure we have an operating model that will scale with volumes.
Tom Thetford: As we improve our revenue outcomes, both organic and inorganic we will be able to leverage this optimized cost structure for profit expansion.
Tom Thetford: Our priorities have not exclusively focused on cost savings.
Tom Thetford: Our work includes restoring sales growth through new product development accretive acquisitions price and promotional excellence brand building and other initiatives.
Tom Thetford: However, revenue initiatives take longer to implement and realize the benefits.
Tom Thetford: Our teams are focused on understanding consumer insights and finding innovative product solutions to solve unmet needs.
Tom Thetford: We are partnering with our customers to unlock value for them with our leading brands and we are aggressively defending leading category positions in our key markets.
Tom Thetford: We are positioned to key business leaders closer to customers.
Tom Thetford: Leading to strengthened customer relationships, which has opened additional growth opportunities.
Tom Thetford: We have refocused our efforts related to innovation and new product development and have laid a solid foundation to improve our rate of new and refreshed product introductions.
Tom Thetford: We have several exciting new and refreshed product launches across our portfolio of categories, including celebrating the 100th year of swing line staplers.
Tom Thetford: A new high speed in line commercial lamination solution and we are expanding our line of more sustainable computer products.
Tom Thetford: In 2024, we successfully entered adjacent categories, such as ergonomics, and we will continue to build on this progress.
Tom Thetford: We are committed to investments in our leading brands our category shares remained strong in 2024 with many of our brands either maintaining or growing share.
Tom Thetford: Our brands resonate with both consumers and our channel partners. These.
Tom Thetford: These investments provide the fuel to maintain our leadership position, while also driving additional share gain opportunities.
Tom Thetford: We are identifying more opportunities across the portfolio and have other introductions planned like at beyond console initiative within our gaming accessories business.
Tom Thetford: We also shared with you the early success of broadening distribution across channels and categories. In 2024, we tested various products and new channels and are expanding on our initial success.
Tom Thetford: Our near term 2025 outlook assumes the demand environment remains highly volatile due to uncertainties around global economies potential additional tariffs soft consumer demand and a strong U S dollar.
Tom Thetford: The magnitude of impact from these factors on our business remains unpredictable.
Tom Thetford: We anticipate 2025 sales to be down in the low to mid single digits, but improving throughout the year on a year over year basis.
Tom Thetford: I also want to address how we are handling the recent enacted tariffs that will impact <unk>.
Tom Thetford: Certain products imported from China.
Tom Thetford: Over the last number of years, we have taken a proactive approach to lessen our dependence on Chinese imports.
Tom Thetford: We're in discussions with our customers and suppliers as we enact our plans to counter the potential impact from the latest round of U S tariffs.
Tom Thetford: With the improvement in the balance sheet and our ability to consistently generate strong cash flow. We are actively exploring acquisition based growth opportunities.
Tom Thetford: We have a long history of successfully integrating acquisitions and we'll be prudent with our approach to M&A.
Tom Thetford: We will evaluate highly synergistic and accretive opportunities, which will leverage our lower cost structure and provides scale and strengthen our company.
Tom Thetford: In closing we have aggressively managed our cost structure, so that our organic and inorganic growth initiatives will enhance our profitability and cash flow.
Tom Thetford: I remain excited about the opportunities ahead of us at <unk> brands, our experienced leadership team has shown its ability to navigate dynamic operating environments, while also implementing meaningful change.
Tom Thetford: Our strong balance sheet with no debt maturities until 2029, and low fixed interest rates on more than half of our debt put us in sound financial position as we invest in growth and improved productivity for a brighter future for ACCO brands.
Tom Thetford: I will now hand, it over to Deb and we'll come back to answer your questions Deb.
Thank you Tom and good morning, everyone, our fourth quarter and full year results were as expected except for an increase in the impact from unfavorable foreign currency exchange rates.
Tom Thetford: This change in rates from the time, we issued our fourth quarter outlook to the end of the year resulted in $12 million of lower sales and two of a lower EPS.
Tom Thetford: In the fourth quarter, the overall demand environment remains soft as discretionary spending by both consumer and business remains constrained.
Similar to the third quarter sales trends in the fourth quarter were considerably better than the first half of the year.
Tom Thetford: As Tom mentioned earlier in the fourth quarter, we recorded additional restructuring charges of $11 million.
Tom Thetford: As we expand the scope and size of our multiyear cost savings program.
Tom Thetford: Given the volume declines and uncertainty in the environment.
Tom Thetford: We felt it prudent to put plans in place to realize additional savings.
Tom Thetford: We anticipate an additional $40 million in cost savings, bringing the expected cumulative annualized cost savings to $100 million at the end of 2026.
Tom Thetford: Now turning to sales reported sales in the fourth quarter decreased 8%.
Tom Thetford: Comparable sales, excluding foreign exchange were down 6% versus the prior year.
Tom Thetford: The sales decline was due to lower volumes globally with continued weakness in Brazil.
Tom Thetford: These declines more than offset growth and technology accessories from new product introductions and strong execution of our international expansion for gaming.
Tom Thetford: Turning to our office product categories, Although office occupancy rates have stabilized over the past year consumption of many products. We sell continues to be influenced by new hybrid work habits and low in office right.
Tom Thetford: During 2025, we expect these declines to moderate and be more in line with historical trends of down low single digits. After several years of volatility.
Tom Thetford: These categories remain very meaningful for us and provide a very solid margin profile and strong cash flows.
Tom Thetford: Gross profit for the fourth quarter was $156 million.
Tom Thetford: A decrease of 9% compared to the prior year with the margin rates similar to last year.
Tom Thetford: However for the full year, we expanded our margin rate 70 basis points.
Tom Thetford: SG&A expense of $91 million was down 10% versus the prior year due to our cost reduction actions.
Tom Thetford: Adjusted operating income for the fourth quarter was $64 million down, 6%, but the margin rate improved 30 basis points versus the prior year, reflecting a strong gross margin rate and SG&A cost reductions.
Tom Thetford: Now, let's turn to our segment results for the fourth quarter.
Tom Thetford: In the Americas segment sales declined 12% with foreign exchange, having a larger negative impact than previously expected due to the strengthening of the U S. Dollar.
Tom Thetford: Comparable sales declined 8%.
Tom Thetford: The exit of lower margin business accounted for about 2% of the decline in the quarter.
Tom Thetford: We also had lower sales for our learning and creative products in Brazil, and for our office related categories.
Tom Thetford: These declines were partially offset by growth and technology accessories.
Tom Thetford: The Americas adjusted operating income margin for the fourth quarter decreased 80 basis points to 16, 6% compared to the prior year as lower volumes more than offset lower costs.
Tom Thetford: Now, let's turn to our international segment for the fourth quarter comparable sales declined 3% as the demand environment remains soft for our business essential categories.
This was somewhat offset by growth and technology accessories.
Tom Thetford: International adjusted operating income margin for the fourth quarter increased 90 basis points to 16, 5%.
Tom Thetford: With adjusted operating income up slightly.
Tom Thetford: This improvement in adjusted operating income margin rate was due to both our pricing and cost reduction actions.
Tom Thetford: We finished the year with free cash flow of $132 million. This reflects lower inventory and strong collections of receivable in Brazil from the timing of their sales this year.
Tom Thetford: We ended the year with total net debt of $766 million $94 million lower than the same time last year.
Tom Thetford: Remember, we recently refinanced our credit facility and we downsized our revolver to $468 million from $600 million.
Tom Thetford: While extending our nearest maturity to 2029.
Tom Thetford: At year end, we had almost $330 million available for borrowing under our revolver, which is more than adequate to Friday.
Tom Thetford: We finished the year with a consolidated leverage ratio of three four times well below our four times covenant ratio.
Tom Thetford: Longer term, we are still targeting a ratio of two to two five times.
Tom Thetford: We will continue to use our free cash flow to enhance shareholder value by deploying capital through a balanced approach.
Tom Thetford: This strategy, whether through debt reduction dividends share repurchases or strategic M&A is designed to drive value accretion to our shareholders.
Tom Thetford: During the year, we returned $15 million to shareholders in the form of share repurchases, while also using $28 million to support our dividend.
Tom Thetford: Now, let's move to the full year outlook for 2025.
Tom Thetford: For the full year, we expect comparable sales to decline 1% to 5%.
It is a challenging environment to forecast given the potential for additional tariffs adverse foreign currency exchange and weakening consumer demand.
Tom Thetford: Barring unexpected effects of some of these uncertainties, we do expect year over year sales trend to improve as we progress throughout the year, reflecting a more consistent demand environment.
Tom Thetford: For the full year, we expect adjusted EPS to be in a range of $1 to $1 five per share.
Tom Thetford: We expect full year gross margin to improve compared to 2024.
Tom Thetford: SG&A costs will be comparable to the prior year as savings from our cost actions are offset by increases in merit and incentive compensation expense and other inflationary pressures.
Tom Thetford: The adjusted tax rate is expected to be approximately 30%.
Tom Thetford: Intangible amortization for the year is expected to be $45 million, which equates to <unk> 32 per share.
Tom Thetford: For free cash flow, we are expecting to be within a range of $105 million to $115 million.
Tom Thetford: Over the last two years cash flow has benefited from improved working capital, reflecting our significant efforts to reduce inventory after the supply chain disruptions a few years ago.
Tom Thetford: Last year, we had unusually high collections in Brazil, driving some of the working capital improvement.
Tom Thetford: In 2025, we expect strong cash flows, but normalized for the Brazil collection and more similar to historical levels.
Tom Thetford: We expect to end 2025, with a consolidated leverage ratio of approximately three to three three times.
Tom Thetford: Given the timing of our product sales historically, the first quarter is relatively small compared to other quarters.
Tom Thetford: We are forecasting comparable sales to be down 5% to 8% with adverse foreign exchange a significant headwind.
Tom Thetford: We expect our loss per share to be within a range of three to five for the quarter.
Tom Thetford: The first quarter is always our smallest quarter in terms of sales, which is impacting our bottom line.
Tom Thetford: Now, let's move on to Q&A, where Tom and I will be happy to take your questions.
Tom Thetford: Operator.
Speaker Change: Thank you Deb do ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed by two men for bank to ask your question. Please ensure that you have devices you did locally. Our first question is from Joe Gomes of Noble capital. Your line is open. Please go.
Tom Thetford: Ahead.
Joe Gomes: Good morning, Thank you for taking my questions.
Tom Thetford: Hello, Joe Good morning, Joe.
Speaker Change: So I wanted to kind of start up.
Speaker Change: We have big picture here.
Tom Thetford: Okay.
Tom Thetford: Tom talk about the <unk>.
Tom Thetford: Primary focus moving forward about improving sales trends and some of the things you mentioned, new product development acquisitions and brand building.
Speaker Change: All that you guys have done in spades in the past.
Tom Thetford: Brand 80, your brands are number one in market share.
Tom Thetford: Alrighty.
Speaker Change: What is different this time.
Speaker Change: That you haven't done in the past that you foresee that is going to change the sales trajectory.
Speaker Change: Yes.
Speaker Change: Great question, Joe So let me do my best to answer it with information I'm comfortable sharing at this time so.
Speaker Change: It's apparent to us that.
Speaker Change: The majority of the categories that we're competing in now.
Speaker Change: Our path to growth is through share gains and so while that is a strategy that is a difficult one to execute we have too many headwinds and to many of our existing categories and so you heard me allude to it in my opening remarks, my prepared remarks that we're looking at things such as expanding beyond console and Gaye.
Speaker Change: <unk> right, we recognize that we're going to have to get into adjacent categories and greater.
Speaker Change: Emphasis and with greater impact to the sales line. We started that this year with ergonomics and we had early success.
With a number of our initiatives, particularly in our European business and we will continue to focus on near Adjacencies.
Speaker Change: In all of our businesses technology accessories learning and creative in the office product categories, and we believe that along with looking at inorganic opportunities changes the growth of the.
Speaker Change: Growth profile of the company moving forward.
Speaker Change: Okay. Thank you thank you for that.
Speaker Change: On the gaming side.
Speaker Change: And you had talked about previously.
Had some partnerships I think walls with epic games and another one getting distribution in Japan for Nintendo and Sony and really haven't heard anything much about those efforts is wondering if you can give us maybe a little update on those.
Speaker Change: Yes, Joe another good question. So gaming for US was was good in 2024.
Speaker Change: And the drivers of the performance, where new product introductions and effective execution in our international expansion.
Speaker Change: We didn't see that until late in the year right. So Japan had a really strong Q4, I think it's premature to talk about whether thats long term success.
Speaker Change: But we were certainly.
Speaker Change: Encouraged by what we saw late in the year with our international expansion efforts and those were enabled by a number of our licenses that we secured throughout the year and in 2023.
Speaker Change: So while we have been discussing this.
Speaker Change: The licensing work that we've done has enabled us to open doors in markets like Japan, which we've talked about on previous calls I do expect some headwinds in 2025, particularly early as Nintendo is moving to their nextgen a switch.
Speaker Change: We anticipate that demand for our current products for Nintendo support are going to be weak in the first half of the year.
Speaker Change: We'll see what happens in the back half once they launch, but 2024 was strong and it was really driven by new products and international expansion, which we've talked about previously on Hong calls.
Speaker Change: Okay, Great and then one more if I may.
Speaker Change: And one of the things you talked about throughout last year was retailers in their inventory positions.
Speaker Change: Then taking a.
Speaker Change: Holding less inventory than normal and I know, it's very early days to talk about back to school for this year.
Speaker Change: But as you're sitting there today.
Speaker Change: Give us your view of what you think the retailers will do on the inventory front.
Speaker Change: Yeah.
Speaker Change: As you said its early so we don't have a lot of it.
Speaker Change: Insights on VTS 2025 in North America, but we do anticipate that leading retailers in the U S will be conservative with their approach they will hold us.
Speaker Change: Again to a fairly high standard in terms of coming out of the season clean from an inventory perspective, so I don't anticipate any.
Speaker Change: Headwind or tailwind frankly, I think it will be consistent with what we saw.
Speaker Change: Last year.
Speaker Change: In North America.
Speaker Change: Great. Thanks, I'll get back in queue.
Speaker Change: Okay, Jeff Thank you.
Speaker Change: We have a question from Greg Burns of Sidoti. Please go ahead.
Speaker Change: Okay.
Speaker Change: Good morning.
Speaker Change: The remainder of the cost savings of $75 million that you expect to get over the next few years what is the.
Speaker Change: The timing or the cadence of that is that going to be kind of ratable over the next two year period or backend weighted in 26 of this year, how should we think about modeling that in.
Speaker Change: Yes.
Speaker Change: We're thinking.
Speaker Change: Next year, we gave this year's number of $25 million next year kind of in that $40 million range and then the remainder in 2006.
Speaker Change: Okay.
Speaker Change: And when you.
Speaker Change: Looking at M&A opportunities is it going to be more focused in those kind of near adjacent categories or might you do something.
Speaker Change: Like the gaming acquisition getting into a whole new market. What is your preference when you look at M&A.
Speaker Change: Yes, Greg, it's probably a bit.
Speaker Change: Premature to talk about anything specifically, but we want to make sure that.
Speaker Change: What we are doing.
As relatively low risk M&A inherently has risk associated with it but you can take that term and that wording as you wish.
Speaker Change: But we're looking at highly accretive relatively low risk M&A opportunities.
Speaker Change: In the near term.
Speaker Change: Something that gives us a payback pretty quickly so we keep that leverage ratio, where we're comfortable.
Speaker Change: Okay. So you wouldn't be necessarily looking to lever up the balance sheet anymore than it currently is.
Speaker Change: With one of these transactions.
Speaker Change: I mean acquisitions kind of pop up a little bit, but we're looking for acquisitions that have good payback and we're very cognizant of our leverage ratio and keeping it.
Speaker Change: As long as we can.
Okay. Thanks.
Speaker Change: And then in Brazil.
Speaker Change: Have you seen any change there I know like this last quarter and then it starts to the back to school season was weak there have you seen any improvement or.
Speaker Change: Any change in the.
Speaker Change: The outlook there for the first quarter.
Speaker Change: Yeah, Greg So in Brazil, we're really wrapping up the back to school season. So we're getting insights from sell out of our product.
Speaker Change: Certainly the trends, we believe improved modestly.
Speaker Change: From what we saw in Q4, but it's a little early for us to obviously publicly talk about it.
Speaker Change: But we are seeing modestly improvement modestly improving trends.
Speaker Change: Brazil.
Speaker Change: But we're also seeing some things that we need to react to as a business right.
Speaker Change: Price points are very competitive there and we've seen consumers trading down and so our teams are actively looking at the insights from this year's back to school season, and putting in plans to react to them for 2026 and make sure that we're in the best possible position to take market share and defend our leading category positions.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: We have a question from Kevin Stein key of Barrington Research. Please go ahead.
Kevin Stein: Good morning.
Kevin Stein: Starting off I guess with more of a housekeeping question just in terms of the.
Kevin Stein: Sales outlook for both the first quarter and the full year 2025.
Kevin Stein: You talked about comparable sales.
Kevin Stein: Does that are you building.
Kevin Stein: Any sort of.
Kevin Stein: Currency impact into that or is that.
Kevin Stein: Would that be in addition to the comparable sales.
Kevin Stein: Ranges that you're talking about.
Kevin Stein: Yes, Kevin.
Kevin Stein: Comparable is without FX.
Kevin Stein: And we're anticipating the FX headwind in the first quarter to be kind of 4% and then it tapers off to like 2% as we ended the year, but it's a pretty strong headwind that we're facing on the FX, but comparable does exclude the FX.
Speaker Change: Okay. Thank you that's helpful.
Kevin Stein: And so.
Kevin Stein: Lynn.
Speaker Change: When we think about tariffs can you just maybe just walk us through some of the <unk>.
Speaker Change: Scenario planning youre thinking through or going through to account for all of the variances in possibilities that could potentially.
Speaker Change: <unk> been on that front.
Kevin Stein: Yes, Kevin.
Kevin Stein: Good question, obviously, one that our team is actively working.
Kevin Stein: As we speak.
I think the first thing to reinforces we have a very balanced supply chain we're not.
Kevin Stein: Overly dependent on imports from China, which is the one tariff that we know has been enacted that we've reacted to.
Kevin Stein: Our supply chain is diverse.
Kevin Stein: Includes other countries of origin.
Kevin Stein: Asia that support the U S. But we also have local manufacturing really across the globe that enables us to be competitive from a supply chain perspective, which is which is helpful. In this scenario.
Kevin Stein: So our teams have set.
Price increase in tenant letters out to our customers.
Kevin Stein: So we are working on passing along the impact of tariffs and price.
Kevin Stein: We're also actively managing our supply chain to ensure that we have the most cost competitive.
Kevin Stein: Sources really across the globe and.
Kevin Stein: I'm pretty comfortable with with where we are.
Kevin Stein: But as you know it's difficult work and it's changing pretty rapidly so as we get more information.
Kevin Stein: Process that internally and we work with our customers and our suppliers to mitigate the impact to the company.
Kevin Stein: Okay. Thank you.
Speaker Change: Yes, I guess it's been.
Kevin Stein: A while since you.
So on acquisitions, but.
Kevin Stein: Can you talk about.
Kevin Stein: What you're doing internally to build that pipeline.
Kevin Stein: How the pipeline is shaping up.
Kevin Stein: Competition for opportunities valuations et cetera to the extent that you are.
Kevin Stein: Comfortable talking about some of those to those topics.
Kevin Stein: Yes, I think.
Kevin Stein: Our pipeline is.
Kevin Stein: I'm comfortable with it.
Kevin Stein: Probably uncomfortable talking about anything that's specific to it.
Kevin Stein: Other than what we've already said right there'll be synergistic acquisitions, we're going to take a very.
Kevin Stein: Balanced approach, we're going to be very disciplined we're going to ensure that it doesn't have an adverse impact to <unk>.
Kevin Stein: Leverage.
Speaker Change: We want to be careful as Deb said earlier, we want to be careful with what we do from a leverage perspective.
Speaker Change: <unk> It will go up a bit, but we want to be able to pay that down relatively quickly. So we're really taking a balanced approach to looking at these opportunities ensuring that they are strategically relevant to us they've put us in a better position as a company, but also financially.
Speaker Change: Meet criteria that we've laid out and have aligned as a management team and with our board too.
Speaker Change: Okay.
Speaker Change: Okay, well, thank you for taking the questions I'll turn it back over.
Kevin Stein: Okay, Kevin Thank you.
Speaker Change: We have a question from William Reuter from Bank of America. Please go ahead.
Kevin Stein: Yes.
William Reuter: Good morning.
Speaker Change: My first of all on the $40 million of savings in 'twenty, five how would that break down between SG&A and Cogs and what are maybe one or two of the largest buckets there.
Speaker Change: Yes, we're going to there is a lot for our footprint rationalization that we've been talking about.
Speaker Change: And that we announced last year a couple of closures. So all of that is going to be up in our Cogs number. So when you get done you probably have.
50, 50, maybe more heavily weighted to the Cogs side the margin side, but.
Speaker Change: Yes, it represents that as well as.
Speaker Change: The SG&A reductions that we've talked to you about as well.
Speaker Change: Got it that's helpful and then.
Speaker Change: On the M&A front it seems like the tone is slightly different this quarter. When you discuss it maybe a little more either aggressive or optimistic.
Speaker Change: Is this something based upon what you've seen in the environment in terms of opportunities is it based upon some.
Speaker Change: Behaviors and challenges in terms of kind of your organic business.
Speaker Change: I guess am I reading it correctly that the tone may be a little bit more aggressive lymphoma path.
Speaker Change: Thank you for that.
Speaker Change: Let me just kick it off and then I'll, let Tom talk.
Speaker Change: More strategically, but the environment is was improving in the whole interest expense interest rates.
Speaker Change: And so.
Speaker Change: A year ago, or a year and a half ago, we werent talking about it at all given the environment.
Speaker Change: So I think some of that has also changed now we're watching it closely because that also is changing every day as far as what's going to happen with rates and how M&A activity.
Speaker Change: Takes up but that's part of it right. The environment has opened up a bit more than it would have been a year and a half ago.
Speaker Change: Yes, Bill I think <unk> said it well.
Speaker Change: We have a long history as we've suggested in our opening remarks of of acquisitions. It's a part of our DNA, we do it well.
Speaker Change: But I think the main change in tone is really just the environment a.
Deb: A year ago as Deb mentioned.
Deb: With interest rates relatively high with our debt higher than it is today and we just did not feel like we were in a position to actively pursue M&A opportunities and as our debt has gone down as an environment has improved.
Deb: It's important to consider.
Deb: All opportunities that get presented to us in the pipeline and that's what we're doing.
Deb: Got it and then just lastly in terms of.
Deb: Clearly most acquisition do bring some elevated leverage for a period upon how high would you be willing to take leverage.
Immediately upon acquisition and then Delever from there.
Deb: Yeah, I think it's going to depend on the acquisition itself and the payback and sort of how we look at the synergies that could come off of it.
Deb: We're not going to let ourselves get up to the point that we had been when after the <unk> acquisition.
Deb: We'll keep it we'll keep it around there.
Speaker Change: Got it alright, that's all for me. Thank you.
Speaker Change: Thank you currently have no further questions. So I'll hand back to Thomas for closing remarks.
Speaker Change: Thank you everyone for joining us we are pleased with our strong execution on our strategic initiatives in 2024.
Speaker Change: Proactive actions are yielding positive results and better positioning us for long term growth.
Speaker Change: We have a strong balance sheet and generate consistent cash flows, which we will use to invest in both organic and inorganic revenue office opportunities.
Speaker Change: We are actively pursuing highly synergistic accretive M&A that will provide scale and leverage from our leaner optimized cost structure that will result in higher levels of profitability in the future. We appreciate your interest in ACCO brands and look forward to talking with you. When we report our first quarter results in May.
Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.
Speaker Change: [music].
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Paul.
Speaker Change: Okay.