ACCO Brands Corp. posts fourth-quarter earnings loss

ACCO Brands Corp. stock spiked 15 percent after the Lincolnshire-based maker of office products reported a widened fourth-quarter loss but adjusted earnings that beat Wall Street's estimate.

The company lost $14.1 million, or 26 cents per diluted share, in the period ended Dec. 31, compared with a year-ago loss of $1 million, or 2 cents per diluted share.

Adjusted earnings omitting one-time charges jumped to $75.5 million, or $1.37 per diluted share, from $54.3 million, or $1 per diluted share, in the year-earlier period. Analysts estimated 55 cents per diluted share.

Restructuring charges and non-recurring costs such as exiting non-strategic business came to $15.2 million, or 28 cents per diluted share. The company also reported a non-cash goodwill impairment charge of $35.1 million, or 64 cents per diluted share, related to its faltering commercial laminating business.

Fourth quarter sales were up 2 percent to $533.4 million versus $520.6 million a year ago.

Derek Leckow, an analyst with Barrington Research in Chicago, was pleased with ACCO's report.

"The earnings were a lot better than we expected," he said of the adjusted numbers. "They had a bit of top-line growth due to stronger performance in their office products as well as in their computer products."

Leckow said ACCO's commercial laminating business was mostly likely up for sale, which is part of the company's larger effort to streamline operations and focus on strategic objectives, namely in its office and computer products segments, with an emphasis on new product development.

"In the past they underinvested in innovation of new products," Leckow said. "It will be interesting to see what happens when they really start investing in RD."

"We have built a stronger, simpler and more streamlined business model," said ACCO president and CEO David D. Campbell during a conference call Wednesday. He attributed this to shedding low-return businesses, stepped up investments in core brands, debt reduction and "synergy," both in mergers and layoffs.

According to a statement by the company, ACCO expects weak demand to continue through the first half of 2008.

The company recently closed two factories in Mexico as well as duplicate infrastructure in Europe and kicked off operations at a new distribution center in Mississippi.

"We exited 2007 as a much stronger company, poised to achieve long-term future top- and bottom-line growth," Campbell said in a statement.

ACCO Brands, which comprises Office Products, Document Finishing, Computer Products and Commercial Laminating Solutions Groups, reported the latter as having the most lackluster fourth-quarter sales, $45.2 million, compared to the Office Products Group's sales of 251.8 million. Document Finishing and Computer products pulled in $165.8 million and $70.6 million, respectively.

ACCO's sales outlook is cautiously optimistic. On one hand, current business plans could result in revenue growth of low- to mid-single digits and earnings per share growth in double digits in the coming years. Conversely, weak demand in 2007 has affected forecasts specific to 2008, in which ACCO believes its sales will be flat to down by mid-single digits.

Non-adjusted results for the year ended Dec. 31 swung to a loss of $700,000, or 1 cent per diluted share, compared with a profit of $7.2 million, or 13 cents per diluted share in 2006. Non-adjusted sales in 2007 were $1.94 billion, a 1 percent dip from 2006 sales of $1.95 billion.

ACCO Brands in mid-afternoon traded at $15.72, up $2.05.