ACCO(ACCO) - 2024 Q3 - Quarterly Results

Loan Amendments and Credit Agreements - The amendment provides Term A Loans in an aggregate principal amount of €122,890,001.85 to refinance all existing Euro Term A Loans[2] - The aggregate outstanding principal amount of Euro Term A Loans is €122,890,001.85[7] - The aggregate principal amount of Revolving Credit Commitments is $467,500,000[7] - Existing Euro Term A Lenders must deliver their consent by 12:00 p.m. on October 29, 2024, to avoid being deemed Non-Continuing Euro Term A Lenders[5] - Existing Revolving Credit Lenders must also deliver their consent by the same deadline to avoid similar consequences[5] - The amendment replaces the CDOR Rate with Term CORRA[2] - Each Existing Euro Term A Lender that does not consent will sell their Existing Euro Term A Loans at 100% of par[11] - The amendment allows for the continuation of Existing Revolving Credit Loans and Commitments under the new terms[9] - The amendment is part of a series of modifications to the Credit Agreement dating back to January 27, 2017[1] - The Administrative Agent and Borrowers have agreed to the terms of the amendment as outlined in the document[6] - Existing Revolving Credit Lenders consenting to Option A will sell their entire aggregate principal amount of Existing Revolving Credit Loans at 100% of par on the Seventh Amendment Closing Date[14] - Non-Continuing Revolving Credit Lenders opting for Option B will sell their Existing Revolving Credit Loans at 100% of par as specified in the applicable Master Assignment[15] - Any Revolving Credit Lender failing to execute the consent by 12:00 p.m. on October 29, 2024, will be deemed a Non-Continuing Revolving Credit Lender and will sell their Existing Revolving Credit Loans at 100% of par[16] - The Master Assignment Agreements will facilitate the sale and assignment of Existing Euro Term A Loans and Existing Revolving Credit Loans as set forth in Schedule I[17] - The Seventh Amendment will become effective upon the execution of the Amendment by all required parties, including Holdings and the Administrative Agent[22] - The Borrowers must repay all outstanding Australian Dollar and U.S. Dollar Term A Loans along with accrued interest and fees by the Seventh Amendment Closing Date[26] - The Administrative Agent must receive all necessary documentation and approvals from Governmental Authorities prior to the Seventh Amendment Closing Date[25] - The representations and warranties in the Amended Credit Agreement must be true and correct in all material respects as of the Seventh Amendment Closing Date[32] - No Default or Event of Default should exist after giving effect to this Amendment[34] - As of the Seventh Amendment Closing Date, the representations and warranties in the Amended Credit Agreement are confirmed to be true and correct in all material respects[41] - No events have occurred that would constitute an Event of Default or a Default as a result of the transactions contemplated by this Amendment[42] - The U.S. Mortgages on specific real properties located at 101 O'Neil Road, Sidney, NY and 949 Main Street, Alexandria, PA will be released as of the Seventh Amendment Closing Date[45] - Each Loan Party is required to execute and deliver additional documents as specified in Schedule 2 within the designated time limits[46] - The terms of the Amended Credit Agreement and other Loan Documents remain unchanged and in full force and effect, except as specifically amended[53] - The execution and delivery of this Amendment do not constitute a waiver of any rights under the Amended Credit Agreement or other Loan Documents[53] - The Administrative Agent is authorized to determine and complete all amounts and percentages related to the Commitments and Loans of each Lender[60] - The Amendment may be executed in multiple counterparts, including electronic signatures, which will be considered original[58] - The Amendment does not constitute a novation but rather an amendment of pre-existing Indebtedness[59] - The Seventh Amendment was executed on October 30, 2024, following several prior amendments to the Credit Agreement[65] Financial Performance and Projections - The company reported a revenue of$ 2.5 billion for the last quarter, representing a 15% increase year-over-year[68] - User data showed a growth of 1.2 million active users, bringing the total to 25 million, a 5% increase from the previous quarter[69] - The company provided guidance for the next quarter, expecting revenue to be between $2.6 billion and$ 2.8 billion, indicating a growth rate of 8% to 12%[70] - New product launches are anticipated to contribute an additional $300 million in revenue over the next fiscal year[71] - The company is investing$ 150 million in research and development for new technologies aimed at enhancing user experience[72] - Market expansion efforts include entering three new countries, projected to increase user base by 10%[73] - The company completed a strategic acquisition of a smaller competitor for $500 million, expected to enhance market share by 3%[74] - Cost reduction strategies implemented have resulted in a 5% decrease in operational expenses, saving approximately$ 100 million annually[75] - The company plans to increase its marketing budget by 20% to support new product launches and market expansion[76] - A new partnership with a leading tech firm is expected to drive innovation and improve service delivery, potentially increasing revenue by 7%[77] - The company reported a significant increase in revenue, reaching $1.5 billion, representing a 20% year-over-year growth[1] - User data showed an increase in active users to 10 million, up from 8 million in the previous quarter, indicating a 25% growth[2] - The company provided guidance for the next quarter, expecting revenue to be between$ 1.6 billion and $1.7 billion, which translates to a growth rate of 7% to 13%[3] - New product launches are anticipated to contribute an additional$ 200 million in revenue over the next fiscal year[4] - The company is investing $50 million in R&D for new technologies aimed at enhancing user experience and product efficiency[5] - Market expansion plans include entering three new countries, projected to increase market share by 15%[6] - The company is considering strategic acquisitions to bolster its product offerings, with a budget of$ 100 million allocated for potential deals[7] - Customer retention rates improved to 85%, up from 80% in the previous quarter, reflecting enhanced customer satisfaction[8] - The company reported a decrease in operational costs by 10%, resulting in improved profit margins[9] - Future outlook remains positive, with a focus on sustainable growth and innovation in product development[10] Loan and Financial Structure - ACCO Brands Corporation has an aggregate principal amount of $770 million in Term Loans and$ 250 million in Revolving Credit Loans outstanding under the Original Credit Agreement[84] - The 2029 Notes have a 4.25% interest rate and an aggregate principal amount not to exceed $575 million[90] - The company has established a tranche of Euro-denominated Term A Loans as part of its financing strategy[87] - The acquisition of 100% of the Equity Interests of Esselte Group Holdings AB is part of the company's growth strategy[90] - The Third Amended and Restated Credit Agreement was entered into on January 27, 2017, reflecting the repayment of existing Term A Loans[85] - The company continues to maintain its Revolving Credit Facility, which has been amended and restated[87] - The total commitments from lenders under the Aggregate Commitments are significant, supporting the company's financial flexibility[94] - The company has made additional Term A Loans available as part of its financing arrangements[85] - The Administrative Agent for the credit agreements is Bank of America, N.A., ensuring effective management of the loan documents[89] - The company has engaged in various amendments to its credit agreements to optimize its capital structure and financing terms[85] - The aggregate amount of the Australian Dollar Term A Commitments is AUD$ 61,000,000 as of the Second Amendment Closing Date[120] - The Alternative Currency Sublimit is set at $300,000,000, which is part of the Revolving Credit Commitments[100] - The Applicable Rate for Term A Facilities and the Revolving Credit Facility is determined by the Consolidated Leverage Ratio, with Pricing Level 1 applying if a Compliance Certificate is not delivered on time[106] - The All-in Yield for any Indebtedness is calculated considering interest rate, margin, original issue discount, and up-front fees[98] - The Agreed Currency Rate Loan includes both Revolving Credit Loans and Term Loans based on the Agreed Currency Rate[97] - The Australian Base Rate is determined by the Reserve Bank of Australia and is subject to change based on market conditions[115] - The Applicable Percentage for any Term A Lender is calculated based on the aggregate principal amount of all Term A Loans outstanding[104] - The pricing levels for the Consolidated Leverage Ratio range from 1.25% to 2.50% for various levels of leverage[107] - The definition of "Alternative Currency" includes currencies such as Canadian Dollars, Euros, and Australian Dollars, which are convertible into U.S. Dollars[99] - The term "Applicable Indebtedness" relates to the Weighted Average Life to Maturity, impacting financial assessments[103] - The aggregate outstanding principal amount of Australian Dollar Term A Loans is AUD$ 61,000,000[122] - The Base Rate is determined as the greatest of the Prime Rate, the Federal Funds Effective Rate plus 0.5%, or the Term SOFR plus 1.0%[127] Compliance and Documentation - The Cash Management Agreement includes services such as treasury, depository, and electronic funds transfer[145] - The definition of Cash Equivalents includes investments in marketable obligations and time deposits with a minimum capital of $1,000,000,000[144] - The term "Bail-In Action" refers to the exercise of Write-Down and Conversion Powers by the applicable Resolution Authority[125] - The term "Borrowing" encompasses various types of credit facilities including Revolving Credit Borrowing and Term A Borrowing[133] - The Canadian BA Rate is based on the average rate applicable to Canadian Dollar bankers' acceptances[137] - The definition of "Change in Law" includes the adoption of new laws or changes in existing laws affecting the agreement[149] - The term "Business Day" excludes weekends and legal holidays in New York[134] - The term "Capital Expenditures" refers to expenditures for the acquisition or maintenance of fixed or capital assets[140] - The definition of "Change of Control" includes scenarios where a person or group acquires 35% or more of the equity securities of Holdings[150] - Holdings must maintain ownership and control of all economic and voting rights associated with the equity interests of any Borrower[150] - A majority of the board of directors must consist of individuals who were members at the start of a 12-month period, or whose election was approved by such members[151] - Any event classified as a "Change of Control" under relevant debt documents may allow holders of indebtedness to accelerate maturity or require repayment[151] - The term "Collateral" encompasses all pledged collateral and mortgaged property as defined in the Collateral Documents[153] - The Administrative Agent requires various compliance documents from U.S. Guarantors and Foreign Borrowers after the Restatement Date[155] - All indebtedness of Holdings and its subsidiaries must be evidenced by intercompany notes or promissory notes, with specific conditions for pledging[157] - The Administrative Agent must receive estoppels from lessors of leased properties valued at$ 1 million or more[157] - U.S. Mortgages must be executed for properties with a fair market value greater than $1 million, securing all obligations[157] - The company must ensure that all filing and recording taxes and fees related to U.S. Mortgages are paid[157] - The company reported a consolidated cash interest expense for the most recently completed measurement period, net of cash interest income, excluding any upfront and one-time financing fees[169] - The commitment fee rate is set at 0.375% from the Fifth Amendment Closing Date until the first fiscal quarter compliance certificate is delivered, with adjustments based on the consolidated leverage ratio thereafter[163] - The consolidated current assets exclude cash and cash equivalents, any asset related to the specified Brazilian tax payment, and deferred income taxes[170] - The consolidated current liabilities exclude deferred income taxes, any liability related to the specified Brazilian tax payment, and the current portion of long-term debt[171] - The company is required to provide evidence of insurance for U.S. mortgaged properties as part of the collateral documentation[160] - The administrative agent may grant extensions for the perfection of security interests or obtaining title insurance if undue effort or expense is determined[161] - The company must furnish a description of any acquired U.S. mortgaged property within 10 days and execute necessary documents within 60 days[161] - The company is required to deliver engineering, soils, and environmental assessment reports for U.S. mortgaged properties from professional firms acceptable to the administrative agent[160] - The company must provide completed flood hazard determination forms and evidence of flood insurance if applicable[160] - The administrative agent requires customary documentation including estoppels, confirmations, and favorable legal opinions to ensure enforceability of the collateral documents[161] Financial Metrics and Ratios - Consolidated EBITDA for the most recently completed Measurement Period includes adjustments for interest expense, taxes, depreciation, and non-recurring expenses[172] - The Consolidated Leverage Ratio is calculated as the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA, with specific exclusions for Unrestricted Cash[178] - Consolidated Net Income excludes extraordinary gains and non-cash losses, with a cap on the increase from net income of non-subsidiaries set at$ 10 million per Measurement Period[179] - The maximum allowable cost savings adjustments in any four consecutive fiscal quarters shall not exceed 10% of Consolidated EBITDA prior to such adjustments[174] - Consolidated Interest Coverage Ratio is defined as the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense for the most recently completed Measurement Period[177] - Consolidated Funded Indebtedness includes all obligations for borrowed money, purchase money indebtedness, and certain guarantees, excluding obligations under Permitted Supply Chain Financing[175] - Non-cash charges related to stock-based compensation are included in the calculation of Consolidated EBITDA[172] - The definition of Pro Forma Basis allows for adjustments related to Permitted Acquisitions, including projected cost savings and operating improvements[174] - The total assets of Holdings and its Subsidiaries are determined in accordance with GAAP and reflect pro forma effects of acquisitions or dispositions[180] - The company incurred cash charges related to severance and restructuring costs, capped at 15% of Consolidated EBITDA for the Measurement Period[172]