Acco Brands targets 3% sales growth and $0.84–$0.89 EPS in 2026 with tech shift and EPOS integration

Earnings Call Insights: ACCO Brands Corporation (ACCO) Q4 2025

Management View

Tom Tedford, President and CEO, began by stating that full year 2025 sales and adjusted EPS were "in line with our outlook." He emphasized the company's resilience despite "continued demand challenges globally and tariff-related disruptions in the U.S.," noting that ACCO Brands "maintained or grew its market position in most categories." Tedford highlighted a strategic focus shift: "We have refined the company's strategy to focus on the growing technology peripherals market." He announced the acquisition of EPOS, which "broadens our technology peripherals portfolio, now representing approximately 25% of the company's projected revenues." He added, "We expect to realize $15 million in annual cost synergies from this transaction." Tedford also noted the implementation of a multiyear cost reduction program, with $35 million in savings delivered in 2025 and a cumulative target of $100 million by the end of 2026.

Tedford reported, "The PowerA brand performed well during the fourth quarter, with sales strengthened by our leading new product offering supporting the Nintendo Switch 2.0 launch and holiday retail placements." He also noted, "Kensington also had a good quarter in the segment driven by a strong pipeline and new product introductions."

Tedford commented on supply chain resilience: "Our proactive China plus 1 strategy prevented significant disruptions to our business. We have a flexible supply chain that enables competitive costs, value-added products and provides category-leading service levels to our customers."

Jagannath Bobji, Senior VP of Global Planning and Financial Analysis & Treasurer, stated, "Fourth quarter sales and adjusted EPS were in line with outlook. Reported sales in the fourth quarter decreased 4% with comparable sales down 8%." He cited "trends in the Americas segment improved sequentially led by growth in technology accessories and planning products."

Outlook

Bobji shared, "For the full year, we expect reported sales to be flat to up 3% and adjusted EPS to be within the range of $0.84 to $0.89. Free cash flow is expected to be within the range of $75 million to $85 million." He added, "For the first quarter, we expect reported sales to be within a range of flat to up 3% and an adjusted loss per share within the range of ($0.06) to ($0.03)." Excluding asset sales from 2025, Bobji stated, "We expect cash flow to increase by more than 50% at the midpoint of our 2026 outlook."

Tedford noted, "We expect the combination of the EPOS acquisition, improved demand in many categories and favorable foreign exchange to drive revenue growth."

Financial Results

Bobji reported, "Gross profit for the fourth quarter was $144 million, a decrease of 7% with a margin rate of 33.6% down 110 basis points." SG&A expense was $84 million, down $7 million versus the prior year. Adjusted operating income for the fourth quarter was $60 million with a margin rate of 14%. In the Americas segment, adjusted operating income was $43 million with a margin rate improving to 17.7%. International adjusted operating income was $26 million with the margin rate at 14.1%. Adjusted free cash flow for the year was $70 million, including $19 million from facility sales.

Bobji noted, "We returned $42 million to shareholders in the form of $27 million dividends and $15 million in share repurchases." He also stated, "At year-end, we had approximately $292 million available for borrowing under our revolver and we finished the quarter with a consolidated leverage ratio of 4.1x."

On EPOS, Bobji said, "EPOS generated sales of approximately $90 million in 2025 with the majority in Europe. We expect to realize $15 million in annual cost synergies...and are in the early stages of integrating and executing on these initiatives."

Q&A

Joseph Gomes, NOBLE Capital Markets: Asked about the EPOS acquisition, its revenue in 2025, addressable market and margins. Tedford responded, "We've sized it to about $1.7 billion and we believe that the market shares that EPOS has is around 5%. So there's some significant headroom for growth...The EPOS asset was for sale for some time...So its rate of decline was mid- to high single digits over the last year, but we think...that is in large measure because of the disruptions...We anticipate that to be a growing business over time."

Gomes also inquired about the back-to-school market and inventory positions. Tedford noted, "Our early order book...is strong. So we're anticipating a sell-in of our product to be equal to or better than prior year, but the timing...will be a little bit different because of disruptions that we experienced last year."

Gregory Burns, Sidoti & Company: Asked about revenue synergies with EPOS. Tedford explained, "We believe that the complementary nature of the business with Kensington enables not only cost synergies but gross synergy opportunities...So it is a great opportunity for us to leverage for growth synergies."

Burns also asked about guidance breakdown. Tedford provided, "We expect the Americas segment to be down mid-single digits, and we expect international to be up low double digits in Q1. For the full year, we expect the Americas to be down low single digits, and we expect international to be up mid-single digits."

Kevin Steinke, Barrington Research: Asked about EPOS seasonality and FX impacts. Tedford said, "We believe in 2026, EPOS will contribute approximately $80 million of revenue. The splits are fairly consistent...no huge seasonality swings." Bobji added, "We're looking at about 1.5% as a benefit from FX for the year."

Steinke also inquired about gross margin and SG&A trends. Tedford responded, "We do anticipate in 2026 gross margin expansion...SG&A, we have to hopefully pay out incentives in 2026. So that will increase SG&A modestly in the year, but we continue to be very focused on cost discipline."

Sentiment Analysis

Analysts were focused on clarity regarding the EPOS acquisition, revenue growth prospects, guidance breakdown, and margin trends. The tone was neutral to slightly positive, seeking detailed explanations and forward-looking color, especially around synergies and growth drivers.

Management maintained a confident and optimistic tone, particularly in prepared remarks. Tedford used phrases such as "we are confident in our strategy and our team's ability to execute" and "we are expecting a better year on the demand front in 2026." In Q&A, the tone remained upbeat and constructive, with direct and thorough responses to analyst inquiries.

Compared to the previous quarter, both management and analysts displayed increased confidence. Management's tone shifted from cautious optimism regarding macro headwinds and demand challenges to a more assertive outlook, backed by strategic acquisitions and cost reductions.

Quarter-over-Quarter Comparison

Guidance for 2026 projects flat to 3% sales growth and adjusted EPS of $0.84–$0.89, compared to prior guidance for 2025 of a 7%–8.5% sales decline and $0.83–$0.90 EPS.

Strategic focus has shifted more explicitly towards technology peripherals, with the EPOS acquisition now fully integrated into the outlook. The previous quarter emphasized ongoing evaluation of strategic opportunities, while the current quarter details concrete execution.

Analysts' questions this quarter centered more on the specifics and potential of the EPOS deal and technology category growth, rather than inventory management and demand caution discussed previously.

Management's sentiment moved from cautious due to "softer demand globally" and "trade down" to confident and proactive, emphasizing execution and growth opportunities.

Risks and Concerns

Management cited persistent "external challenges," ongoing "demand challenges globally," and "tariff-related disruptions in the U.S." Tedford highlighted that "Brazil's 2025 results were lower than expected, resulting from adverse mix and market trade down due to lower-priced products."

The company is "working to reposition our product offering to Brazilian consumers" and is "focused on managing the gross margin impact of the adverse product mix by addressing our cost structure."

In the International segment, "the rate of decline is expected to moderate in 2026 aided by execution on growth initiatives."

Final Takeaway

ACCO Brands management communicated confidence in their strategic pivot toward technology peripherals, driven by the integration of EPOS and supported by a robust cost reduction program. With 2026 guidance projecting up to 3% sales growth and EPS in the $0.84–$0.89 range, expectations are anchored in new product launches, improved market conditions, and operational discipline. Management underscored a strong foundation for profitable growth, with multiple pathways for value creation as the company accelerates its transformation and capitalizes on market opportunities in the coming year.