Wednesday, ACCO Brands Corp. (ABD), reported a swing to profit in third quarter from last year as operating expenses decreased 33%, notwithstanding a 21% a decline in sales.
ACCO's net profit for the third quarter was $1.3 million or $0.02 per share, compared with a net loss of $32.7 million or $0.60 per share in the year-ago period.
Income from continuing operations for the quarter was $1.7 million, or $0.03 per share, compared to a loss of $15.0 million, or $0.28 per share in the prior-year quarter. Results for the third quarter includes $2.8 million of restructuring and other charges.
Excluding charges, adjusted income from continuing operations was to $8.7 million or $0.15 per share, down from $12.6 million or $0.23 per share in the year-ago period. On average, 3 analysts polled by Thomson-Reuters expected the company to report earnings of $0.19 per share for the quarter.
Results also include a net loss on the early extinguishment of debt associated with the company's recent refinancing of $4.2 million, compared to a gain associated with the repurchase of senior subordinated notes of $0.6 million in the prior-year quarter.
Excluding the effect of the refinancing, adjusted earnings per share in the quarter would have been $0.23, compared to$0.22 per share in the prior-year quarter. Foreign exchange translation adversely impacted results by $1.6 million.
Net sales for the quarter decreased 21% to $322.5 million from $410.8 million in the comparable quarter last year. Excluding the effect of currency translation, sales declined 18%. Analysts expected revenue of $328.06 million for the quarter.
Segment-wise, net sales in America decreased to $175.5 million, a 21% decline from the year ago period, as volume declined in all markets driven by continued weakness in consumer and business demand. Sales declined 19% excluding the effect of currency translation.
Net sales in international segment declined 21% to $104.4 million from the prior-year quarter, reflecting continued volume declines in Europe and improving results in Australia, partially offset by price increases. Excluding the effect of currency translation, sales declined 15%.
Computer Products net sales for the quarter decreased 24% to $42.6 million from last year. Adjusted for the effects of currency translation, comparable sales declined 21%. The decline was due to lower sales volumes, particularly in the United States and United Kingdom. The loss of U.S. sales to Circuit City due to its bankruptcy accounted for 7% of the segment decline.
Operating income for the quarter increased to $27.5 million from $18.2 million in the same quarter last year. Adjusted operating income was $30.3 million, down from $34.7 million in the year-ago period.
Total operating costs and expenses for the quarter decreased 33% to $72.4 million from $107.6 million in the year ago quarter. On an adjusted basis, total operating costs and expenses was $70.4 million, a 24% decrease from $92.9 million recorded in the prior year quarter.
For the nine-months ended September30, net loss was $127.1 million, compared with $81.2 million last year. Loss from continuing operations widened to $118.7 million from $22.9 million last year, Net sales declined to $919.7 million from $1,224.8 million in the prior-year.
Looking ahead, ACCO expects full-year sales to be flat or show a modest growth, driven by market share gains and favorable foreign exchange translation.
ACCO said, "We currently expect the rate of the year-over-year sales decline will be lower in the second half of 2009, with sales down in the low teens, versus a year-over-year decline of 27% in the first half of 2009."
ABD is currently trading at $6.26, down $0.22 or 3.40% on a volume of 0.42 million shares on the NYSE.
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