ACCO BRANDS Q4 & Full Year 2025 Earnings Conference Call March 9, 2026 Forward-Looking Statements Statements contained herein, other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, strategies, business operations and similar matters, results of operations, liquidity and financial condition, and those relating to cost reductions and anticipated pre-tax savings and restructuring costs are "forward- looking statements" within the mea ...

Group 1 - The service focuses on cash flow and companies that generate it, highlighting value and growth prospects in the oil and natural gas sector [1] - Subscribers have access to a model account with over 50 stocks, in-depth cash flow analyses of exploration and production firms, and live chat discussions about the sector [1] Group 2 - A two-week free trial is available for new subscribers, promoting engagement with the oil and gas investment community [2]

Core Insights - The office products industry is experiencing significant challenges due to the rise of remote work, increased digitization, and changing workplace habits, which are all contributing to a decline in demand for traditional office supplies [1] Industry Summary - Remote work trends are reshaping the demand landscape, leading to a decrease in the consumption of conventional office products [1] - Digitization is further exacerbating the decline, as more businesses adopt digital solutions over physical supplies [1] - Shifting workplace habits indicate a long-term transformation in how companies operate, impacting the overall market for office products [1]

Core Insights - The office products industry is facing significant challenges due to remote work, digitization, and changing workplace habits, leading to a decline in demand for traditional supplies [5] - Companies are adapting through strategic pivots, cost discipline, and acquisitions to unlock value in adjacent markets [5] Company Summaries ACCO Brands - ACCO Brands manufactures office supplies and has reported $1.54 billion in annual revenue, but experienced an 8.8% year-over-year sales decline in its most recent quarter [4] - The company has acquired premium headset maker EPOS for $11.7 million, expecting $10 million to $15 million in cost synergies over two years, which is substantial relative to the purchase price [7][11] - ACCO's stock trades at 3.84 times forward earnings and offers an 8.13% dividend yield, backed by 27 consecutive quarterly payments since 2018, indicating a potential opportunity for income investors [6][13] Logitech International - Logitech designs computer peripherals and has benefited from hybrid work trends, reporting strong growth in video collaboration products and gaming accessories [2] - The company's product mix aligns with remote and hybrid work trends, positioning it favorably compared to traditional office suppliers [8] Newell Brands - Newell Brands operates a diverse portfolio that includes office products, home goods, and outdoor gear, but its exposure to office products is diluted across multiple segments [3][9] - The company has partially insulated itself through diversification, but this limits its operational leverage for a focused turnaround [9] HNI Corporation - HNI Corporation manufactures office furniture and hearth products, facing similar transformation pressures as ACCO [1][10] - The company benefits from corporate spending on office redesigns for hybrid work, although its furniture cycles are longer and more capital-intensive than consumable office products [10] Market Trends - The office products industry is experiencing a shift as companies like ACCO and Logitech adapt to changing market demands, with a focus on technology and flexible workspace solutions [5][8] - ACCO's acquisition of EPOS is a strategic move to diversify its offerings and capitalize on the $1.7 billion global market for premium enterprise headsets [11]

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Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7][8] Investment Landscape - Wall Street is investing hundreds of billions into AI, but there is a pressing concern regarding the energy supply needed to sustain this growth [2] - AI data centers, such as those powering large language models, consume energy equivalent to that of small cities, indicating a significant strain on global power grids [2] - The company in focus is positioned to capitalize on the surge in demand for electricity driven by AI, making it a potentially lucrative investment opportunity [3][6] Company Profile - The company is described as a "toll booth" operator in the AI energy boom, collecting fees from energy exports and benefiting from the onshoring trend due to tariffs [5][6] - It possesses critical nuclear energy infrastructure assets, making it integral to America's future power strategy [7] - The company is noted for its ability to execute large-scale engineering, procurement, and construction projects across various energy sectors, including oil, gas, and renewables [7] Financial Position - The company is completely debt-free and has a substantial cash reserve, amounting to nearly one-third of its market capitalization, which positions it favorably compared to heavily indebted competitors [8] - It also holds a significant equity stake in another AI-related company, providing indirect exposure to multiple growth engines in the AI sector [9][10] Market Sentiment - There is a growing interest from hedge funds in this company, which is considered undervalued and off the radar, trading at less than seven times earnings [10][11] - The company is recognized for delivering real cash flows and owning critical infrastructure, distinguishing it from speculative stocks in the AI space [11][12] Future Outlook - The ongoing influx of talent into the AI sector is expected to drive continuous innovation and advancements, reinforcing the importance of investing in AI-related companies [12][13] - The combination of the AI infrastructure supercycle, onshoring trends, and a focus on nuclear energy positions this company as a key player in the evolving energy landscape [14]

Core Viewpoint - ACCO GROUP HOLDINGS LIMITED announced the partial exercise of the over-allotment option in its initial public offering, increasing the total number of shares sold and gross proceeds [1][2] Group 1: Offering Details - The underwriters exercised the over-allotment option to purchase an additional 49,900 ordinary shares at US$4.00 per share, raising total gross proceeds to approximately US$5.80 million [1] - The total number of ordinary shares sold in the offering increased to 1,449,900 [1] - The offering was conducted on a firm commitment basis with Craft Capital Management LLC as the representative of the underwriters [3] Group 2: Use of Proceeds - The net proceeds from the offering will be used for expanding the corporate service business, incorporating generative artificial intelligence features, establishing a presence in the U.S. market, and general working capital [2] Group 3: Company Overview - ACCO GROUP HOLDINGS LIMITED is a multi-disciplinary corporate service provider based in Hong Kong, specializing in corporate secretarial and accounting services, as well as intellectual property registration services in Singapore [6] - The company serves a diverse clientele, including individual clients, small and medium-sized enterprises, and multinational corporations [6]

Core Insights - The current market conditions may present opportunities in cyclical consumer-related sectors due to the Federal Reserve lowering interest rates [1] Group 1: Investment Strategy - The investment strategy combines a top-down view of the global economy with a bottom-up analysis of individual companies [1] - The approach begins by identifying strong economies with favorable currencies using macro data and statistical tools [1] - Focus is placed on sectors likely to perform well in the coming months, followed by an emphasis on quality companies with solid momentum and consistent results [1] Group 2: Analyst Background - The analyst has five years of experience in the investment field and holds an MBA in Macroeconomics and Portfolio Management [1] - The analyst is also a regulated investment analyst in Brazil [1]

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Financial Performance - Net sales for Q3 2025 were $383.7 million, a decrease of 8.8% from $420.9 million in Q3 2024[19] - Gross profit for Q3 2025 was $126.6 million, down from $136.9 million in Q3 2024, reflecting a gross margin of 33.0%[19] - Operating income for Q3 2025 was $26.0 million, compared to $26.3 million in Q3 2024, indicating stable operating performance despite lower sales[19] - Net income for the nine months ended September 30, 2025, was $20.0 million, a significant recovery from a net loss of $122.2 million in the same period of 2024[19] - For the nine months ended September 30, 2025, net sales totaled $1,095.9 million, down 10.0% from $1,218.1 million in 2024[125] - The company reported a net income of $4.0 million for the quarter ended September 30, 2025, compared to a net loss of $13.2 million for the previous quarter[28] - The company reported a net increase in cash and cash equivalents of $8.4 million for the nine months ended September 30, 2025[188] - The effective tax rate for the third quarter was 72.8%, significantly higher than the prior year's 32.6%[165] Assets and Liabilities - Total assets increased to $2,258.5 million as of September 30, 2025, up from $2,228.4 million at the end of 2024[17] - Total liabilities decreased to $1,614.5 million as of September 30, 2025, compared to $1,622.3 million at the end of 2024[17] - The company’s total stockholders' equity increased to $644.0 million as of September 30, 2025, compared to $606.1 million at the end of 2024[17] - As of September 30, 2025, total debt increased to $877.8 million from $839.7 million as of December 31, 2024, with a current portion of $35.8 million[48] - The carrying amount of total debt was $877.8 million as of September 30, 2025, up from $839.7 million on December 31, 2024[115] Cash Flow and Investments - The company reported a net cash provided by operating activities of $38.1 million for the nine months ended September 30, 2025, down from $95.5 million in the same period of 2024[24] - Cash used in investing activities during the nine months ended September 30, 2025, included $10.1 million for the Buro Acquisition and capital expenditures[191] - Operating cash flow for the first nine months was $38.1 million, down from $95.5 million in the prior year, primarily due to reductions in working capital[151] Restructuring and Costs - The company incurred restructuring costs of $1.5 million in Q3 2025, significantly lower than $6.7 million in Q3 2024[19] - The company announced a multi-year restructuring program expected to yield annualized pre-tax cost savings of approximately $100.0 million by the end of 2026[185] - The company’s restructuring expenses for the three months ended September 30, 2025, were $1.7 million, compared to $6.7 million in the same period of 2024[134] Market and Segment Performance - In the Americas segment, net sales for the three months ended September 30, 2025, were $227.6 million, a decline of 12.1% from $259.1 million in 2024[134] - The International segment reported net sales of $156.1 million for the three months ended September 30, 2025, compared to $161.8 million in 2024, reflecting a decrease of 3.5%[134] - The company expects ongoing uncertainty in product demand throughout 2025 due to evolving tariff landscapes and macroeconomic conditions[152] Stock and Shareholder Information - Common stock repurchases amounted to $15.0 million during the first quarter of 2025[28] - The company has a remaining value of $75.645 million available for share repurchases under a previously announced $100 million share repurchase authorization[208] - The company repurchased and retired 3.2 million shares for the nine months ended September 30, 2025, compared to 2.4 million shares for the same period in 2024[99] Tax and Legal Matters - The company participated in a Brazilian tax amnesty program, settling for $7.4 million, with an initial payment of $2.0 million made on June 30, 2025[96] - The company agreed to settle tax assessments with the Brazilian Treasury as part of an amnesty program[205] - Management believes that the resolution of ongoing legal matters will not materially adversely affect the company's financial condition or results of operations[206] Other Financial Metrics - The total accumulated deficit increased to $689.2 million as of September 30, 2025, from $687.6 million at December 31, 2024[28] - The total identifiable intangible assets as of September 30, 2025, were valued at $708.9 million, slightly down from $709.6 million at the end of 2024[78] - The company recorded a $2.4 million decrease in income tax expense for the nine months ended September 30, 2025, primarily due to a net income tax benefit from settling the Brazil Tax Assessments[87]