ACCO Brands Corporation (NYSE:ACCO) Q1 2025 Earnings Call Transcript

ACCO Brands Corporation (NYSE:ACCO) Q1 2025 Earnings Call Transcript May 2, 2025

Operator: Hello, everybody and welcome to the ACCO Brands First Quarter 2025. My name is Elliot and I’ll be your coordinator today. [Operator Instructions] I will now hand over to Chris McGinnis, Senior Director of Investor Relations. Please go ahead.

Christopher McGinnis: Good morning. And welcome to the ACCO Brands first quarter 2025 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today is Tom Tedford, President and Chief Executive Officer of ACCO Brands Corporation. Tom will provide an overview of our first quarter results and provide an update on our 2025 priorities. Also speaking today is Deb O’Connor, Executive Vice President and Chief Financial Officer, who will provide greater detail on our first quarter results and second quarter outlook. We will then open the line for questions. 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 and intangible asset impairment charges and other non-recurring items and unusual tax items and include adjustments to reflect the estimated annual tax rate on quarterly earnings. 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 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 this call are based on the beliefs and assumptions of management based on information available to us at the time the statements are made.

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 Tedford.

Thomas Tedford: Thank you, Chris. Good morning, everyone. And welcome to ACCO Brands’ first quarter 2025 earnings call. Last night we reported first quarter sales in line with our outlook and adjusted EPS above our outlook. A combination of favorable sales mix and our proactive approach to managing costs enable us to expand our gross margin by 60 basis points. Overall, demand trends were largely consistent with our expectations across most categories and geographies highlighted by growth in computer accessories and a return to growth in Brazil. We made progress on our $100 million multiyear cost reduction program, realizing $7 million of additional savings in the first quarter. During the quarter, we repurchased $15 million in stock and close on a small acquisition.

We ended the quarter with a leverage ratio of 3.65 times which is well below our covenant of 4.5 times. Before I review in more detail our first quarter results, let me give you an update on the actions the company is taking in response to the recently announced US tariffs. Over the last five years, we have lessened our dependency on China. We have had a China plus one approach that today enables us to react quickly to the changing tariff landscape. This strategy has diversified our supplier base by establishing outsourced manufacturing in other countries besides China. However, we are similar to other companies and continue to purchase a meaningful amount of goods globally from China as it has been the cheapest source of high-quality manufactured products.

Our relationships with these manufacturing partners are strong, and we have collaborated with them to accelerate US production into other countries and out of China. We are confident in our ability to move most of these purchases in the next few months. We are also evaluating our manufacturing network to utilize existing capacity where it makes economic sense. We are temporarily investing in inventory, utilizing the 90-day pause on reciprocal tariffs outside of China to mitigate current year financial impacts in the US. In addition to our work to optimize the supply chain supporting the US, we are implementing price increases in North America. We have communicated two increases with customers and depending on the ultimate tariff resolution, we will adjust price as appropriate.

It is difficult to gauge the demand impact from these pricing actions due to the uncertainties related to inflation, consumer confidence and business spending. I do want to remind everyone that about 60% of our business is outside the United States which is much less impacted by the current tariff situation. Through the strength of our brands and management team, we are confident in our ability to navigate through these uncertainties. Our teams are focused on mitigating the cost due to the global trade dynamics and positioning our brands to better serve our customers and take share in this disruptive time. Now let me highlight our first quarter results. As a reminder, the first quarter is seasonally our smallest in terms of sales and profitability.

First quarter comparable sales were down 8%. The demand environment was challenging throughout the quarter, but consistent with our planning assumptions, impacted by soft consumer and business demand. In the Americas, sales were favorably impacted by early purchases of back-to-school products in the US and growth in Brazil, but were more than offset by weakness in all other categories. Forecasting for this year’s upcoming back-to-school season in North America is challenging due to the uncertainty surrounding tariffs. Our prior expectation was for the categories we compete in to be down low single digits. Following the tariff announcements by the US government, our customers have slowed purchases and there remains a lot of uncertainty about how the tariffs will impact the consumer.

Retailers are responding by being more cautious with inventories, but we are in close contact with them as we prepare for this important time of year. Going into this season, our team won several new placements with retailers and as we have previously mentioned, have expanded distribution with alternative channels. Brazil did return to volume growth as it ended its back-to-school season in Q1 due to the strength of its premium notebooks and products with popular licenses. We were encouraged by the start of the year in Brazil and are pleased with the work our team is doing to enhance the value we offer in our product portfolio. In the International segment, the bright spot was computer and gaming accessories which grew mid single digits in the quarter driven by a large B2B computer accessory sale and our international expansion in gaming.

Sales of office products remained sluggish in the segment across most markets. Our share is stable and we continue to be leaders in bringing innovative solutions to our customers. In 2025, we are introducing several exciting new products that support the hybrid work environment and our ergonomics product line. We also made a small acquisition in the Australia New Zealand markets that expands our product portfolio and gives us greater scale in that region. Now let me touch on our global technology accessories businesses, Kensington and PowerA. Kensington had a strong quarter with mid single digit growth. As expected, sales for our PowerA brand were down in the first quarter due to aging consoles and low consumer spending trends as well as the overall gaming accessories category being down almost 20%.

We are excited to support the Nintendo Switch 2 launch which is expected to be in June with several new licensed product. We expect gaming accessories sales to be down in the first half before rebounding later in the year as our new products gain traction in the market. Now let me touch on the progress we are making to improve our revenue trends. We continue to be energized by the response from our channel partners on our initiatives. I previously mentioned we are expanding our ergonomics line in the International segment which has been a highly successful endeavor for us in some of our EMEA markets. We are evaluating other countries and channels to introduce these innovative new products. In Brazil, we have repositioned key products with features and prices to meet a more constrained consumer as we aim to maintain our category leading position in student notetaking.

We are looking for additional opportunities to expand our share with existing and new channel partners through new product introductions and category leading service. We continue our strategic focus on optimizing our cost structure, realizing more than $7 million in savings in the quarter, building upon the $25 million of savings achieved in 2024. In response to the increased uncertainties, we are deferring most discretionary spending and pausing CapEx spend except for new product development and certain IT projects, until we have a firm understanding of the impact of tariffs on consumer and business spending. I am confident that we are taking the right actions to protect and reposition our business as we navigate this dynamic period. I will now hand it over to Deb and we’ll come back to answer your questions.

Deb?

Deborah O’Connor: Thank you, Tom and good morning, everyone. As Tom mentioned, first quarter sales were in line with our outlook and EPS was better than our outlook. In the first quarter the overall demand environment remained soft as discretionary spending by both consumer and business remained constrained due to the heightened uncertainty in the markets. Reported sales in the first quarter decreased approximately 12%. Comparable sales excluding foreign exchange were down 8% versus the prior year. The sales decline was due to lower volumes globally. Gross profit for the first quarter was $100 million, a decrease of 10% with the margin rate expanding 60 basis points. This improvement reflected a favorable mix of sales as well as cost savings from our footprint rationalization program.

SG&A expense of $93 million was down versus the prior year as cost reduction actions were partially offset by higher inflation and merit. Adjusted operating income for the first quarter was $7 million versus $16 million a year ago. Now let’s turn to our segment results for the first quarter. In the Americas segment sales declined 12%, and comparable sales declined 8%. This decline was due to lower sales of technology accessories and office products. Early back-to-school shipments were higher as certain customers took delivery earlier than last year. This shift will reduce second quarter sales. The Americas adjusted operating income margin for the first quarter decreased 40 basis points to 5.8% compared to the prior year as our higher gross margins and cost savings were more than offset by fixed cost deleveraging from lower volume.

Now let’s turn to our International segment. For the first quarter, comparable sales declined 8% as the demand environment remained soft for our business essential categories. This was somewhat offset by growth in technology accessories driven by the large B2B sale that Tom mentioned. International adjusted operating income margin for the first quarter decreased to 6.7% due to volume declines and fixed cost deleveraging, as well as higher foreign exchange and inflation. In the quarter, we generated free cash flow of $3 million which was in line with our expectations. But as anticipated down to the prior year due to the timing and performance of our sales in Brazil for their back-to-school season. At quarter-end, we had almost $236 million available for borrowing under our revolver which is more than adequate for our needs.

We finished the quarter with a consolidated leverage ratio of 3.65 times, well below our 4.5 times covenant ratio. During the quarter, we returned $15 million to shareholders in the form of share repurchases, while also using $7 million to support our dividend. While we continue to believe a balanced capital allocation is appropriate, in the near term we will be focused on paying down debt. The dynamics of the changing tariff landscape have caused the current economic environment to be uncertain. Given this uncertainty, we are not providing full year guidance until we gain more clarity. Customer demand, price elasticity and various tariff scenarios, as well as the outcome of changing our sourcing locations, makes it difficult to predict our sales volume beyond the second quarter.

In certain circumstances we are seeing customers limit purchases as they lower inventory levels and in some cases are pausing purchases until there is greater clarity on tariffs and consumer demand. As Tom said, we are uniquely positioned to accelerate our sourcing to lower cost countries due to the initiatives put in place prior to the tariff announcements. By the end of 2025, there will remain an insignificant amount of high tariff China sourced product which will represent slow moving, low volume and secular declining categories. Given our broad and diverse product portfolio, we will take advantage of this opportunity to rationalize our SKUs and offer item substitutions for high-cost products. In addition, the teams have passed price and anticipate more pricing actions may be needed.

We are providing an outlook for the second quarter based on what we currently know. We have assumed that sales will be impacted by muted consumer and business demand. The second quarter will be impacted by changes in buying patterns for back-to-school. There were significant back-to-school purchases in the first quarter which were pulled forward in anticipation of the tariffs. We are also anticipating that orders may be delayed or canceled as customers wait to gain additional clarity on demand. For the second quarter, we expect reported sales to be down 8% to 12% with a lessening foreign exchange impact from the weakening of the US dollar. We anticipate adjusted EPS to be in the range of $0.28 to $0.32. Even though the current year poses challenges, we remain confident in the long-term future of our company and our ability to navigate this dynamic period.

We have a strong balance sheet with no debt maturities until 2029 and a long history of productivity gains and cost management. We continue to anticipate longer term that we can grow sales modestly from organic and inorganic initiatives with a target gross margin rate of 33% to 34% and consistent cash flow generation. Now let’s move on to Q&A, where Tom and I will be happy to take your questions. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions] First question comes from Joe Gomes with Noble Capital. Your line is open. Please go ahead.

Joe Gomes: Good morning.

Deborah O’Connor: Hey, Joe.

Thomas Tedford: Good morning, Joe.

Joe Gomes: So, first question I wanted to ask on that, the large B2B contract that you discussed, is that going to have any additional impact in say the second or third quarter or was that all complete in the first quarter? And I don’t know if you can give us any more color as to what that added. I think you said Kensington was up mid single digits. What would it have been if we didn’t get that one contract?

Thomas Tedford: Yeah. Good question, Joe. So, first of all, to answer the first part of your question, we will not see incremental impact to sales in the balance of the year. It was a one-time shipment that we realized in the first quarter. Had the one-time B2P order not been realized, the business would have been roughly flat. But as a reminder, we have significant one-time events with Kensington throughout the years, throughout the quarter. So, this isn’t a unique thing. It was just a bit bigger than what we typically get.

Joe Gomes: Right. Okay. Thank you for that. And you talked about internationally, you benefited from some price increases, and I don’t know if you give us any more detail or quantify what they were. And I know you just mentioned, I think you indicated two price increases here in the Americas. I don’t know if you can give us any more detail to those.

Thomas Tedford: Sure. So, for the International segment, roughly 2% was the price increase that was communicated to customers going into this year. That is likely going to be the only price actions we’ll take in most of those markets as we don’t anticipate further inflationary pressures to impact the business outside of the United States. Obviously, as you know, the US business is under some unique circumstances as we navigate the tariff environment. We have announced price increases already this year. We anticipate another price increase in response to the reciprocal tariffs to be implemented by July. So, there is a lot of price action happening across all of our categories in the US market.

Joe Gomes: Okay. Thank you. Thank you. Tom, you mentioned the acquisition. I’m assuming it was relatively small, since you didn’t really speak a little bit much about it. I was just wondering if you could give us a little more color about that acquisition, what it was. I know you mentioned Australia and New Zealand, but kind of sizing and where that you think that’s going to benefit the company.

Thomas Tedford: Yeah. So, our team has done some nice strategic work, particularly in Australia, looking at categories that they believe are growing and we are either under indexed or have no presence in. And so, this opportunity came about through some strategic work that they had done, and we acquired the business to enter a category which is ergonomic seating and business seating, so chairs and other types of seating accessories in the market. So, we’re excited about that. I think the Australian team’s done a nice job of integrating, and we’re looking now at what we can do to potentially expand the offering into other markets. That likely won’t be near term as we want to make sure we stabilize and take advantage of all the opportunities in Australia and New Zealand. But long-term, we see that as an opportunity to expand into that category in other markets globally.

Joe Gomes: Okay, great. Thanks. I’ll get back in queue.

Thomas Tedford: Okay. Joe, thank you.

Operator: We now turn to Greg Burns with Sidoti. Your line is open. Please go ahead.

Greg Burns: Okay. Just to, I guess, follow up on the acquisition front. I know that was a small deal, Given the demand environment, what’s your appetite still for acquisitions and maybe what is the funnel of opportunities look like for you?

Thomas Tedford: Yeah. Greg, so obviously that’s a good question. We still believe that acquisitions will be a part of our future strategy. I will say that we’ll probably be more cautious in the near term until we get a better understanding of all that is going to happen as a result of the trade dynamics that we’re currently navigating through. But to reiterate, long-term, we still think that that’s an important part of our strategy.

Greg Burns: Okay. And then in terms of some of the new product development that you mentioned, do you — maybe what is the timing of the introduction of some of these new products? When do you expect to start to see revenue flowing from them? And do you have a target on how much growth or x-percent of revenue you’d like to generate from new products in any given year?

Thomas Tedford: Yeah. So, let me take the first part of the question first. We have in our business plan for 2025 revenue from new products in most of our markets. So, they are hitting the shelves literally as we speak. Our probably most notable line is going to be products that are going to be supporting the Switch 2.0 launch in June. So, those products are starting to leave factory and should be in market and on shelf in time to support the launch in June. But we have product that will be launching throughout the year in most of our markets, both for retail and commercial customers. So that work is robust. I think our pipeline has improved quite significantly over the last couple of years, particularly in our Kensington business, where the expectation is going to be almost 2x of new product, not revenue, but new product coming out of their product pipeline.

So, good progress being made really across the business on new product development. And yes, we do have a target. We’re working with an outside consultant to refine how we think about NPD and how we think about product vitality on a move forward basis. I don’t believe we’re ready to publicly talk about that at the moment, but we will be at some point in the near future. But that is a part of our business, a part of our business planning. We build in revenue from new products annually and we anticipate that to grow moving forward.

Greg Burns: Okay. And then lastly, I just wanted to understand the dynamic in the first quarter. I know on a consolidated level you hit your number or we’re in line from a revenue perspective, but it feels like maybe the — by segment it shaped up different than you were looking for with a little bit of pull forward. And I guess based up by my model, the International is a little bit lighter than we were looking for. So, maybe if you could just talk about some of the segment dynamics and how they shaped up versus maybe what the expectations were going in.

Thomas Tedford: Yeah. International got off to a bit of a slow start this year, predominantly driven by our business in EMEA. And what we’re seeing there is really driven by two factors. One, at the end of 2024, we had certain customers to decide to chase rebate targets. So, they pulled in some inventory, pulled in some purchases from the first part of this year, which obviously impacted sales in January and February. And two, in Germany, we’re seeing a bit of softness in our categories. And I think those two factors really were the drivers of soft performance in Q1 in the International segment. The rest of the markets, I think performed close enough to our expectations. But those two factors were really the key drivers in International.

Greg Burns: Okay. And then looking forward, I guess, are those dynamics have they normalized or where are we at in terms of what you’re seeing so far in the first part of this quarter?

Thomas Tedford: Yeah. I mean, as you see, we’ve given our Q2 guidance. It’s close to the way we finished the first quarter. So, we haven’t seen really any drastic changes in trend in Germany. And again, the rest of the markets in international are performing pretty consistent.

Deborah O’Connor: Yeah. We do think that International perform a little bit better than the first quarter, offset by some of the North America challenges.

Greg Burns: Okay. All right. Great. Thank you.

Thomas Tedford: Thank you.

Operator: Our next question comes from Kevin Steinke with Barrington Research. Your line is open. Please go ahead.

Kevin Steinke: Thank you. Just wanted to start off by asking about the favorable sales mix in the first quarter that you mentioned helped gross margin. Was that the large Kensington sale, or was there something else at play there?

Deborah O’Connor: No, I think that was part of it. But we also had a pull forward of some of our back-to-school, which is a bit more profitable. That happened in the first quarter this year just due to the timing of when it was purchased. That helps the North America side.

Kevin Steinke: Okay. Thank you. And you mentioned a target gross margin of 33% to 34%. Now, I think that’s up from the prior target of 32% to 33%. So, maybe if you can just talk about what’s driving that increase to the longer term gross margin target.

Thomas Tedford: Yeah. So, we have been on a journey to optimize our cost structure and to reduce our fixed cost as we realize those savings that should positively impact gross margins for the mid to long-term.

Kevin Steinke: Okay, great. And then, I know you said you’d be able to move purchasing or most purchasing out of China within the next few months, but could you just maybe give us a ballpark on like, the size of purchasing out of China currently? Maybe, I don’t know, in terms of the dollar amount of cost of products sold or some other way, maybe you could quantify it.

Thomas Tedford: Yeah. So, just to make sure we’re clear on the statement that we made, right? It’s really — we’re moving products supporting the US business out of China. As a reminder, and of important note, 60% of our business roughly, is outside of the United States. And China is still a very viable option for the other markets that aren’t impacted by the current tariffs. So, the work that we’re doing right now is really to optimize the supply chain supporting the US business. So, by the end of the year, Kevin, we anticipate an insignificant amount of products supporting the US coming out of China, that work will be moved to either lower cost or lower tariff markets, including markets like Vietnam or our own manufacturing assets, likely in the Americas. So, hopefully that adds a little bit more color. But it’s important to note that the work that we do supporting the businesses outside the United States that is in China is not being resourced at the moment.

Kevin Steinke: Okay. Got it. And just lastly, you mentioned $7 million of cost savings in the first quarter from the restructuring program. Is the target for 2025 still about $40 million? I believe that’s what you had talked about previously.

Deborah O’Connor: Yeah. That’s right, Kevin. We’re still targeting the $40 million and the $7 million was in the first quarter and it was nicely split between the COGS and SG&A.

Kevin Steinke: Okay, great. That’s helpful. Thanks for taking the questions.

Thomas Tedford: Thank you, Kevin.

Operator: We now turn to Hale Holden with Barclays. Your line is open. Please go ahead.

Hale Holden: Hi. Good morning. I had, I guess, two questions. The pull forward in sales for US back-to-school from 2Q into 1Q. How much of normal order flow for back-to-school would that be? Because there’s typically a replenishment process and it would be a couple months early. So, what your big partners there are planning for. And if you think there’s a scenario where there’s just a short — we’re just short product in that channel and/or how that would get filled. I know you’re very cautious on giving us, like, thoughts on what that looks like. But conceptually, how would you walk through it?

Thomas Tedford: Yeah. So, the timing of back-to-school orders both for the first and the second quarter often sit right on the quarter-end. And so, this year we saw a little bit more of an aggressive approach by a certain retailer to pull orders forward into Q1 in anticipation of avoiding the tariffs and potential supply chain disruptions due to the tariffs. And so, it’s not uncommon that we see this. So, it’s just a call out that we made because it did happen where we had orders that we had planned to happen in Q2, move forward into Q1. So, I think it’s a relatively insignificant amount for the full season over the three quarters that we support back-to-school. So, the second piece of your question, the answer would be, we don’t see an environment where retailers will be short on our inventory.

We’re well inventoried to support the season. And if they come in late with orders, we’ll be prepared to assist them in replenishment to ensure that they’re supporting their consumers. So, I think we’re uniquely positioned with a really balanced supply chain to react quickly to increase demand or order shortages by our customers.

Hale Holden: That’s great. And then, I was wondering if — the two price increases or the price increase you’ve taken and the one that you’ve announced, if you’d be willing to share what the quantum is on that.

Thomas Tedford: Yeah. So, the big one, obviously is the one sitting in front of us as we react to reciprocal tariffs. We are working through that as we speak. We want to be a bit cautious in talking about that until we understand where the reciprocal tariffs ultimately end up. But what we can reinforce is that we’re going to protect our gross margins through our pricing efforts and our resourcing efforts. And I think that’s the important message to deliver. The exact percentage is still a bit in limbo, but we are absolutely going to protect our margins through this work.

Hale Holden: So that sort of depends on what happens on the 90-day expiration.

Thomas Tedford: Yes. Exactly.

Hale Holden: Got it. All right. Thank you very much.

Thomas Tedford: Thank you.

Operator: [Operator Instructions] We now turn to William Reuter with Bank of America. Your line is open. Please go ahead.

William Reuter: Good morning. Appreciate that 60% of your sales are outside of the US. Can you share with us at this point what percentage of your cost of goods sold are sourced in China and then sold in the US.

Deborah O’Connor: I think the answer to that question is that we typically have sourced quite a bit from China because of its low-cost, high-quality aspect of it. As Tom said, we’re currently moving a lot of the production out of China and into other countries in Asia so that by the time we get to the end of the year, we’ll have an insignificant amount coming out of China. So, we’re in the process of moving all of that. And so, it’s difficult to give any percentages before and after because there’s so much work being done.

William Reuter: Okay.

Thomas Tedford: Bill, just another note on that point that I think is important that we haven’t said is we are doing some prebuying ahead of tariffs to build up inventories in certain categories to mitigate any intermediate impact to our cost. So, we should have sufficient inventory from low tariff countries while we’re transitioning production to other markets out of China. So, I think we’re uniquely positioned to navigate this challenge in 2025.

William Reuter: Cool. Thank you. I know that certain products other southeast countries have gotten pretty good at producing and are at least somewhat price competitive with China. I thought a lot of kind of computer accessory products. There were still pretty substantial price premiums, if you go to Vietnam or other countries. Can you talk about when you move to those other countries what types of price increases you may — or cost increases you may be seeing?

Thomas Tedford: Yeah. There’s a modest cost increase as we move out of China to other countries. And obviously, we’re doing things that make the most economic sense for the company. So, if the benefit of moving, which in most cases the benefit is far better than staying for US production is there, we realize that. But any inflation from our baseline costs, we’re going to pass through in price. And so, I want to reiterate, our objective is to support the long-term 33% to 34% gross margin targets while remaining competitive at shelf with the consumer or in business spend. So, it’s important to note that any increase in cost will be offset in price. The supply chain has evolved pretty significantly over the past last five years.

And so, we have good alternatives outside of China in Southeast Asia, including Vietnam and Malaysia. And our Kensington business has been deploying the same strategy as the rest of our business in the US, China plus one. And so, we have a good footprint, well-positioned to navigate these challenges. And I think as Deb said, by the end of the year we’re going to have an insignificant amount of our volume coming from China.

William Reuter: Got it. And apologize for a little bit revisiting Hale’s question. But — and I appreciate that the largest increase in prices will be the reciprocal tariffs. What you’ve put through thus far, has it been kind of again like the 10% range in the first round that’s already been put in place and then the subsequent one that you’ve communicated, but is not in place yet. Is that the context it’s in?

Thomas Tedford: Yeah. So, I would say the context on the first round is in the single digits from a price increase and then our reciprocals will be up to 20% depending on where it ultimately ends.

William Reuter: Great. Thanks so much. That’s all for me.

Thomas Tedford: Okay. Good. Thank you.

Operator: We have no further questions. I’ll now hand back to Tom Tedford for any final remarks.

End of Q&A:

Thomas Tedford: Thank you everyone for joining us. We are pleased to deliver first quarter sales in line with outlook and loss per share better than our outlook. I am confident that our proactive actions are better positioning us for long-term growth. We have a strong balance sheet and generate consistent cash flows which we will use to invest in both organic and inorganic revenue growth opportunities. We appreciate your interest in ACCO Brands and look forward to talking with you when we report our second quarter results in August.

Operator: Ladies and gentlemen, today’s call has now concluded. We’d like to thank you for your participation. You may now disconnect your lines.