ACCO Brands lifts 2026 EPS outlook to $0.98-$1.02

ACCO Brands posted third-quarter 2026 non-GAAP EPS of $0.28, 9 cents above estimates, and raised full-year guidance in Oct. 31 earnings-call insights.

The company now expects 2026 adjusted EPS of $0.98 to $1.02, up from $0.87 to $0.91, and reported sales growth of 4% to 6%, up from 2% to 5%.

Revenue remained weaker than the profit line. The company reported third-quarter revenue of $380 million, $3.7 million below estimates, while Chief Financial Officer Deborah OConnor said reported sales fell 1% and comparable sales declined nearly 6%.

President and Chief Executive Thomas Tedford tied the quarter to cost control, tariff recoveries and acquisitions. “Our third quarter results demonstrate continued progress against our strategic priorities. Sales were in line with our outlook.

Underlying operating performance met our expectations and adjusted EPS benefited from net tariff refunds,” he said.

The tariff refunds were a major driver of margins and cash generation. “During the quarter, we received $21 million in cash tariff refunds,” OConnor said. She said the refunds added 520 basis points, or 5.2 percentage points, to the gross margin rate, lifted adjusted operating income by $15 million and added $0.11 to EPS.

Adjusted gross profit rose 8% in the third quarter to $136 million, while adjusted gross margin widened 290 basis points to 35.9%, OConnor said. ACCO’s cost program produced more than $10 million of savings in the quarter and more than $30 million year to date.

The office-products and accessories company also used the quarter to move further into technology peripherals. Tedford said ACCO used tariff-refund proceeds to cut debt and, on Oct. 1, closed the acquisition of Trust, its second technology-peripherals deal this year.

“Together, pro forma sales from these categories will approach $500 million annually or about 30% of our future sales,” Tedford said. He said ACCO expects technology peripherals to generate mid-single-digit growth over the longer term.

OConnor said ACCO expects free cash flow of about $100 million for 2026 and a year-end consolidated leverage ratio of about 3.5 times. Year-to-date free cash flow was $89 million, up $63 million from a year earlier, including the $21 million tariff-refund benefit.

The balance sheet improved from the prior quarter. ACCO ended the third quarter with consolidated leverage of 3.6 times, compared with 4.3 times at the end of the second quarter, and had $254 million of available borrowing capacity under its revolver.

Management’s guidance still rests on categories facing pressure. Tedford said discretionary spending is down, Switch 2 has underperformed market expectations, and gaming accessories face headwinds from higher console prices and cautious consumer spending. He also said computer-accessory purchases are being affected by higher hardware costs and limited memory availability, while enterprise budgets are shifting toward AI priorities.

In analyst questions, Tedford described the holiday outlook for technology and gaming products as cautious. “We're cautiously optimistic that it's going to perform to our expectations, but it's still early. And a lot of it will depend on sell-through and POS, and we really won't know that until after the quarter ends,” he said.

OConnor also said the Trust acquisition is expected to be modestly accretive to EPS in its first 12 months, with a seasonally strong fourth quarter.

In the fourth quarter of 2026, Tedford said ACCO expects several near-term catalysts, including the release of Grand Theft Auto VI, continued Switch 2 adoption and the company’s own new product introductions.

By year-end 2026, OConnor said ACCO expects free cash flow of about $100 million and a consolidated leverage ratio of about 3.5 times, compared with 3.6 times at the end of the third quarter.

By the end of 2027, Tedford said ACCO expects about $15 million of EPOS cost synergies, after $6 million of annualized savings expected in 2026.

Source: automatically generated earnings-call insights, Seeking Alpha, Oct. 31, 2026