ACCO Brands Corporation Prelim Q1 Sales $288.9M vs $299.6M Est

ACCO Brands Corporation ABD today provided preliminary unaudited sales and operating income results for the first quarter ended March 31, 2012. The results are being provided to facilitate the company's financing efforts related to the proposed spin-off of MeadWestvaco Corporation's MWV Consumer & Office Products business and merger into a wholly-owned subsidiary of ACCO Brands. The company said that sales were up in all major geographies except Europe and Canada. As expected, sales were lower in Europe, by more than $13 million, and also as expected, operating income in the company's European business, excluding charges, substantially improved compared to the prior year. Total company operating income, excluding transaction-related costs and restructuring, declined approximately $1 million due to lower sales in Europe and Canada; adverse product mix within the Computer Products business; and lower gross profit margins due to foreign exchange impacts on selling prices in Canada and Australia. The quarter benefited from a $1.7 million change in the timing of expense recognition, which reverses later this year. This was offset by $1.8 million of higher incentive compensation costs. Business Outlook The company reiterated its guidance for the full year for the current standalone ACCO Brands business. For the first quarter, a seasonally small earnings quarter, the company expects adjusted earnings per share, excluding restructuring and transaction-related costs, to be a loss of approximately $(0.05). For the full year, the company is planning for sales to be flat, with modest growth at constant currency offset by negative impacts of foreign currency translation. Based on continued productivity improvements, the company expects to grow adjusted earnings per share by approximately 30%, excluding business restructuring and refinancing costs. Targeted free cash flow, after interest, taxes, and capital expenditures, and excluding transaction-related cash expenses, is expected to be approximately $50-60 million. In addition, the company issued indicative preliminary guidance* for the combined business that assumes the Mead Consumer & Office Products business was owned for all of 2012. Combined sales are expected to be flat in 2012, compared to $2.1 billion in the comparable prior-year period, with modest growth at constant currency offset by negative impacts of foreign currency translation. The company expects 2012 adjusted combined earnings per share of approximately $1.06 compared to $1.00 in the comparable prior-year period. The 2012 estimate assumes 2 cents of dilution due to higher share count, a 4 cent impact from adverse currency and excludes cost synergies. The benefits from the refinancing are included in both years. For 2013 the company expects adjusted combined earnings per share to be around $1.25 per share, including cost synergies.