ACCO Brands Corp. recently released its second quarter results for the period ended June 30, 2017. The company saw a net sales increase of 19 per cent to $490 million compared to the prior year quarter of $410 million. The sales increase was driven by acquisitions. Excluding the effects of the Esselte and Pelikan Artline acquisitions and foreign exchange, comparable sales declined six per cent.
Net income was $23.5 million, or $0.21 per share, and included $13.7 million of restructuring, integration and transaction charges, net of a gain related to the settlement of certain intercompany transactions. This compared to net income of $61.9 million, or $0.57 per share, in the prior-year quarter, which included a $35.2 million gain from the revaluation to fair value of the company’s previously held equity investment in Pelikan Artline.
Adjusted net income increased to $35.2 million, or $0.31 per share, from $28.4 million, or $0.26 per share, in the prior-year quarter. The increase in adjusted net income was primarily driven by acquisitions, higher gross margin and cost savings. During the quarter, the company repurchased shares in the open market, which reduced the fully diluted share count by 0.6 million.
Sales in North America decreased five per cent to $280.6 million from $295.4 million in the prior-year quarter. The Esselte acquisition added one per cent to North America sales, or $3.8 million. Comparable sales decreased six per cent primarily due to expected declines with office superstore customers, lower sales of commodity items, and the later timing of back-to-school orders compared to the prior-year period. Operating income decreased slightly to $52.5 million from $53.0 million in the prior-year quarter. Adjusted operating income increased slightly to $55.3 million from $54.1 million in the prior year due to improved gross margin.
ACCO Brands: Sales in EMEA increased 211 per cent to $128.5 million from $41.3 million in the prior-year quarter. The Esselte acquisition added $92.7 million, or 225 per cent, and foreign exchange reduced sales by five per cent. Comparable sales decreased $3.4 million, or eight per cent, due to share loss and lower volume primarily in the U.K. Operating income decreased to $0.7 million from $1.6 million in the prior-year quarter due to one-time charges. Adjusted operating income increased to $9.2 million from $1.6 million in the prior-year quarter primarily due to the acquisition.
International sales increased 10 per cent to $80.9 million from $73.4 million in the prior-year quarter. Acquisitions added 12 per cent, or $9.1 million, and foreign exchange added one per cent. Comparable sales declined $2.6 million, or four per cent, primarily due to channel and economic softness in Australia. Operating income increased to $4.0 million from $3.1 million in the prior-year quarter and adjusted operating income increased to $7.9 million from $6.9 million in the prior-year quarter. The increases were primarily due to improved profitability in Brazil.
The company reiterates its expectations for 2017 revenue and adjusted free cash flow, and expects to be at the high-end of its adjusted EPS range of $1.07-$1.10. The company continues to expect 2017 sales to increase 22 to 26 per cent, driven by the Esselte and Pelikan Artline acquisitions, and adjusted free cash flow of approximately $150 million.