Boris Elisman - Chairman, President and CEO Neal Fenwich - EVP and CFO Jennifer Rice - VP, IR

Chris McGinnis - Sidoti & Co. Bill Chappell - SunTrust Kevin Steinke - Barrington Research Brad Thomas - Keybanc Capital Markets Hamed Khorsand - BWS Financial William Reuter - Bank of America Hale Holden - Barclays Karru Martinson - Jefferies

Good morning and welcome to our fourth quarter 2017 conference call. Speaking on the call today are Boris Elisman, Chairman, President and Chief Executive Officer of ACCO Brands Corporation; and Neal Fenwich, Executive Vice President and Chief Financial Officer.

Slides that accompany this call have been posted to the Investor Relations section of accobrands.com. When speaking to quarterly results, we may refer to adjusted results.

Adjusted results exclude transaction, integration and restructuring and financing-related costs, and apply a normalized tax rate of 32% in 2017 and 35% in 2016. Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measure are in this morning’s earnings release and the slides that accompany this call.

Due to the inherent difficulty in forecasting and quantifying certain amounts, we do not reconcile our adjusted earnings per share or tax rate guidance. For more information, see this morning’s press release.

Forward-looking statements are made during the call and are based on certain risks and uncertainties, and our actual results could differ materially. Please refer to our press release and SEC filings for an explanation of certain of these risk factors and assumptions.

Our forward-looking statements are made as of today’s date and we assume no obligation to update them going forward. Following our prepared remarks, we will hold a Q&A session.

Now, it is my pleasure to turn the call over to Boris Elisman.

Thank you, Jennifer, and good morning, everyone. Earlier this morning, we released our fourth quarter and full year results and I’m very pleased to report that we had a great year.

On a good revenue year, 2017 was the best year in our 12-year history as a public company for gross margin, adjusted earnings per share, EBITDA and free cash flow. For the year, sales increased 25% to 1.95 billion.

Reported earnings per share were $1.19. Adjusted earnings per share came in much higher than our expectations, also $1.19, which compared to $0.87 last year.

Free cash flow also came in much higher than our expectations at 178 million. And our bank net leverage ratio came down to 2.6x EBITDA.

I’m very pleased with our business results and our team’s performance in 2017. For the quarter, sales increased 30% driven by the Esselte acquisition.

Reported earnings per share were $0.68 and adjusted earnings per share were $0.48 compared to $0.06 and $0.32 in the prior year, respectively. Neal will give you more details on the quarter and the year in a few minutes.

In light of our financial results and the confidence our Board has in our ability to sustain and further improve our performance we are initiating a quarterly dividend program with a dividend of $0.06 per share to be delivered to shareholders beginning in the first quarter of 2018. Over the last several years, we have deployed our free cash flow to organically invest in the business, delever, make acquisitions and repurchase shares.

We will continue with those initiatives. The dividend will be an addition to provide incremental returns to our long-term shareholders.

We’re very excited about this important milestone in our history as a public company. In addition to approving the dividend, the Board authorized another 100 million for share repurchases giving the company 184 million in available funds for share repurchases.

As is normal in this time of the year, I’ll spend the next several minutes giving you a progress report on the strategic evolution of our business. Over the past several years, we have transformed ACCO Brands through divestitures, acquisitions, product and brand investments and a diversification of our customer base and sales channels.

In 2011, we were primarily an office products manufacturer with a majority of our sales going to traditional North American office products retailers, dealers, wholesalers and contract stationers. With the successive acquisitions of Mead consumers and office products, Pelikan Artline and Esselte, we have greatly expanded our global footprint, meaningfully grown our portfolio of well-known end user demanded brands, enhanced our competitive position in winning channels, added new product categories outside the traditional office products space and built larger scale to leverage costs.

We’ve also achieved significant financial synergies through those acquisitions and the bulk of the Esselte acquisition synergies are still expected to be realized in 2018 and 2019. This transformation is the result of disciplined execution of a strategy that calls for first; introducing meaningfully differentiated products, raising the value of our brands and expanding distribution channels in core categories in mature markets.

Second, broadening our product portfolio and channels in emerging markets; third, driving aggressively productivity improvements and using the savings for investments in the business and shareholder return; fourth, using acquisitions to broaden geographic reach to match market opportunities, strengthening our brand portfolio and diversifying our customer base. And fifth, using free cash flow to pay down debt, fund acquisitions and return capital to our shareholders.

Since 2011, our last year before initiating this strategic shift, we have grown sales by 48%, adjusted EPS by 89%, free cash flow by 256% and reduced our net leverage ratio by 21%. Of the top 12 brands, each with 50 million or more of sales in 2017, seven came from acquisitions.

Brands such as Leitz, Five Star, AT-A-GLANCE, Rapid, Mead, Esselte and Tilibra that’s helped drive demand for our products through more mainstream and faster growing channels and improved pull for our products from the end users. In 2011, our top 10 customers contributed 51% to our sales.

In 2017, their contribution was down to 44%. In 2011, the office superstores were 29% of our business.

In 2017, those same customers were 16% and no single customer was over 10%. We’re now a truly global company with a reach that encompasses North America, Europe, Middle East and Africa, Latin America, Australia and New Zealand and a growing presence in Asia.

We believe our business is financially stronger and strategically better positioned for sustained profitable growth than ever before. We see our momentum continuing into 2018 and beyond.

Based on our 2017 results and the platform we’ve built for future growth, we think it’s realistic and reasonable to expect for 2018 top line growth of 2% and adjusted EPS growth of 12% to 15% or a range of $1.33 to $1.37. We expect free cash flow of approximately $180 million.

After Neal takes you into a deeper review of our results, we’ll both be happy to answer your questions. Neal?

Thank you, Boris, and good morning. Fourth quarter sales increased 30% because of the Esselte acquisition.

Comparable sales declined 3% due to customer inventory reductions and lost placements in North America, legacy ACCO Europe and Australia. Overall, many customers did not forward buy inventory to meet year-end rebate levels as strongly as they have in the past.

This was in part due to their own performance and in part due to our heightened focus on working capital resulting from the change in ownership for a number of them. Fourth quarter operating income increased 33% to 79.6 million due to the Esselte acquisition, which more than offset one-time integration and restructuring charges of 7.4 million.

Adjusted operating income increased 34% to 87 million from 64.8 million in the prior year quarter. And adjusted operating income margin increased 50 basis points as a result of an improved gross margin in North America, productivity savings and acquisition synergies.

Fourth quarter reported net income increased substantially to 74 million or $0.68 per share compared to 6.1 million or $0.06 per share in the prior year quarter. The increase was due to the Esselte acquisition and because the prior year quarter included more one-time and transaction costs.

Adjusted net income increased 48% to 52.7 million or $0.48 per share from 35.6 million or $0.32 per share in the prior year quarter. The increase was primarily driven by the Esselte acquisition and improved operating profit in North America.

Turning to the full year results. Sales increased 25% driven by both the Esselte and Pelikan acquisitions which added 28%.

Foreign exchange translation added 1% to sales. Comparable sales declined 4% due to expected declines at office superstores, reduced inventory held by some customers and some lost product placements.

Gross margins improved for the year due to cost savings as detailed on Slide 12. SG&A as a percent of sales was up 20 basis points on a reported basis.

On an adjusted basis, SG&A as a percent of sales was also up slightly 30 basis points due to deleveraging from lower sales. Operating income margin was down 80 basis points on a reported basis due to charges totaling 37.5 million.

On an adjusted basis, operating margin was down slightly 10 basis points to 11.8% due to increased amortization associated with acquisitions. For the year, we realized 20 million of productivity savings and 7 million of acquisition synergies.

Reported net income was $1.19 per share, up from $0.87 in the prior year. Adjusted net income was also higher, $1.19 per share compared to $0.87 per share in the prior year period.

The improvement was primarily the result of the acquisitions, gross margin expansion and lower interest in tax rate. Turning to an overview of our segments.

In North America, sales in the fourth quarter increased 0.4% and excluding acquisitions and currency, they decreased 1.4%. The underlying decline of 3.5 million was primarily due to lower sales of planning products and business machines.

North America operating income and margin were both up in the quarter due to the higher gross margin resulting from cost savings and lower customer sales rebates and expenses. For the year, North America sales declined 2%.

On a comparable basis, North America sales declined 3% as market share gains in back-to-school and stable performance with the independent channel were more than offset by lower sales in planning products and business machines from declines with office superstores. Segment operating margin expanded a strong 100 basis points over the prior year, primarily driven by productivity improvements and lower customer sales rebates due to lower volume.

In our EMEA segment, sales increased roughly 250% as the Esselte acquisition added 128 million of sales in the quarter. On a comparable basis, EMEA sales declined 10% or 5 million due to continued declines in Europe from the legacy ACCO business, which resulted in part from share loss and in part from customers buying forward-less inventory in the current quarter.

In 2018, we should lap these historical share losses in the legacy ACCO business. EMEA operating margin decreased due to acquisition-driven product mix.

The legacy ACCO business historically had a seasonally high Q4 margin compared to Esselte. For the year, EMEA sales were up 216% including Esselte and on a comparable basis were down 10%.

Operating margin was up due to the acquisition and cost savings including $7 million of synergies which was ahead of our expectations. Overall, we continue to be quite pleased with the performance from the Esselte acquisition.

The integration is well underway and preceding as anticipated. We expect margin to expand as we realize the remaining 16 million of annualized synergy savings in 2018 and 2019.

Turning to our international segment. Fourth quarter sales remained relatively flat.

Strong performance in Latin America which had comparable growth of 6% was more than offset by declines in Australia caused by lost product placements and customer inventory reductions. International operating income and margin decreased due to temporarily higher distribution and freight costs driven by warehouse and systems consolidation associated with the Pelikan Artline acquisition.

The decrease was mitigated in part by improved profitability in Latin America. For the year, international sales increased 10% but on a comparable basis declined 3%.

Again, for the year comparable growth of 5% in Latin America was more than offset by softness in Australia. For the year, international operating margins were lower due to temporarily higher costs associated with the Pelikan integration.

The integration is complete and now we are working to optimize our distribution and freight costs. Turning now to our cash flow and balance sheet.

We significantly outperformed our free cash flow guidance in 2017 delivering 178 million versus our expectation of closer to 150 million. The outperformance was primarily for two reasons.

First, the legacy ACCO business delivered 14 million more in cash than anticipated. We paid less in cash taxes due to a number of one-time tax benefits in 2017 and working capital was stronger than expected.

The second factor that drove our free cash flow outperformance was 14 million of contribution from Esselte. This was driven by 7 million of better than expected working capital, 3 million of lower than expected capital expenditure and 4 million of recognized tax benefits accelerated into 2017.

In terms of our debt, we added 321 million of debt with the Esselte acquisition and then reduced debt by 133 million during the year from our strong cash flow. We increased our EBITDA by 59 million and ended the year with a net leverage ratio of 2.6x per our bank covenants.

Lastly, to provide some additional information regarding our 2018 guidance. For 2018, there has been a change to accounting on the GAAP for pension plans that will impact our year-over-year comparability of our operating income and other income lines.

Under this change, the only amount of pension costs remaining in operating expense related to the service costs and the portion that relates to amortization of gains and losses on investment returns and interest will now be shown in other income. This amount used to be netted against the service cost of pension.

For us, the impact in 2018 is approximately 9 million of income will move out of SG&A and operating income and into other income. It will not affect pre-tax income or EPS.

We also adopted the new accounting standard related to revenue recognition. We expect this to have a nominal impact on our top line for each quarter and the full year.

In terms of our normalized tax rate, it is now expected to be 28% in 2018 decreasing from 32% in 2017. Roughly half of the reduction is driven by the headline rate reduction in the U.S.

with the remainder resulting from more favorable tax after the Esselte acquisition. The benefit of the U.S.

headline rate reduction is blunted by the fact that approximately two-thirds of our earnings result from non-U.S. operations.

Under tax reform, we expect that approximately half of our non-U.S. earnings will be subject to the new GILTI tax which will only partly be offset by foreign tax credit.

The rate will also be negatively impacted by new limits on executive compensation. We will also have higher cash tax charges resulting from the transition tax on previously unrepatriated foreign earnings payable over eight years beginning in 2018.

Our reported net income included a net tax benefit of 23.8 million which we recorded in the fourth quarter due to the U.S. tax reform legislation passed on December 22nd.

The provisional estimate benefit includes a charge of 25.9 million for the deemed repatriation of non-U.S. earnings and a benefit of 49.7 million for a reduction of net deferred liabilities.

We believe the provisional benefit is a reasonable estimate as of now but it may change as additional information is prepared and analyzed. Interpretations and assumptions are revised and additional guidance is issued.

Now, in terms of our free cash flow, we are forecasting approximately 180 million of free cash flow in 2018 and expect to reach around 200 million in 2020. For 2018, we will have the inclusion of Esselte for the month of January.

Recall that the acquisition closed February 1st last year. However, we will have higher cash taxes in 2018 as we won’t have the one-time substantial benefits from 2017 repeating.

We have provided numerous additional modeling assumptions on Page 15 of our slide presentation. Finally, while we do not provide quarterly guidance, I would like to point out that we expect a similar weighting of our sales and EPS to last year whereby our earnings will largely be weighted to the third and fourth quarters with the exception of one additional month for the Esselte results in January.

Last year in January, Esselte had $36 million in sales and would add approximately $0.01 of EPS. Our cash flow will also remain seasonal with almost all of our full year cash flow accumulated in Q3 and Q4.

Our cash flow generation in Q1 will be slightly higher because of the addition of Esselte in January. For the second quarter, working capital investments for the North America back-to-school cycle will create a cash outflow quarter which is our normal cash cycle.

With that, I’ll conclude my remarks and move on to Q&A where Boris and I will be happy to take your questions. Operator?

Good morning. Thanks for taking my questions and congratulations on a strong 2017.

Good morning, Chris.

I guess just two questions. Can you just talk about the margin profile in the EMEA and international markets?

Obviously very strong. Was that better than expected and can you just maybe talk about the drivers for that?

Thanks.

Yes, just overall our margins are now pretty similar in every one of our segments. The margins in North America and in EMEA were slightly better than we expected driven primarily by gross margin which in turn was driven by better product mix than we had anticipated.

We’ve given the guideline of gross margins of 33% to 34%. We finished at 33.7% and we feel very confident that we can maintain our margins in that range going forward.

Great. And then just one other quick question.

Just talking about the vendor rebates, you didn’t that buying I guess in Q4 as you would have thought. Do you expect that to kind of normalize in 2018 in the guidance and maybe just talk around that customer base and how they’re – how do you expect them to perform in 2018?

Thanks.

Yes, well, as you know there was a lot of ownership changes to privately owned companies in 2017. As a result of that there was much more focus on inventory and working capital at the end of the year as opposed to hitting an earnings number basically from our customers.

So in Q4 what we saw is a lot less forward buying to hit a certain rebate number just to keep the inventory down. The benefit of that is we expected a strong start to the year in 2018 and we did see a stronger January in terms of sales.

So we should have some tailwind from that in 2018.

Great. I’ll jump back in queue.

Thanks again and good luck in 2018.

Thanks, Chris.

Thanks. Good morning.

Good morning, Bill.

Congratulations on the dividend.

Thank you, Bill.

I just wanted to talk first a little more about Australia kind of what you’re seeing if there’s any light at the end of the tunnel. I understand it’s more category and country related than it is company specific, but just kind of more color what you see and how that maybe plays out this year.

Yes, actually I was just in Australia last week for their annual sales meeting kickoff, so I have very close knowledge of what’s going on there. And I’m very optimistic on 2018 in Australia and New Zealand.

In 2017, we maintained our market share which is very high in the region and the channel presence but we completed a lot of integration activities. And as a result of that we saw some inefficiencies in our distribution as we combined legacy operations consolidated to the different IT systems and just had a lot of learning curve issues with the distribution specifically.

That started to get better at the end of '18 and I certainly anticipate that throughout – I’m sorry, at the end of '17 and I certainly anticipate that throughout 2018 we will continue to make a good improvement there. So I think as we said in the prepared remarks, the issues in Australia were temporary in nature and we would definitely be able to improve on that in '18.

But just to follow up, the health of the overall category in Australia – I know the retail environment’s been pretty tough.

It is a tough retail environment. There is very strong channel competition in Australia.

There’s been channel mergers and then the acquisitions. I think that will continue throughout 2018.

I don’t really think that that will ameliorate but I do expect that we will perform better within that environment.

Okay. And then just switching also similar on Brazil, it seems like that’s gotten a lot better and certainly from your growth this past quarter.

Is that back to full health in terms of how you’re looking?

I would say partial health as far as the economy is concerned. Brazil had I believe around 1% growth in 2017 after a couple of years of negative growth.

They expect maybe 3% growth in 2018. So it certainly is an improvement and we expect to do better than even successful years in 2016 and 2017.

But we’re certainly not yet at the 5%, 6%, 7% growth that Brazil should be able to get to over the long term.

Got it. And then last one, Neal, on the tax rate, you’re coming in a little bit or you’re coming in a little bit higher than most of even the multinationals we’ve run into so far.

Is there room for improvement off that 28 number as you kind of dig in and move things around or is that probably a firm number going forward?

We probably make an even higher level of earnings internationally than most other companies and that’s fundamentally what the issue is. And the thing that would give us relief would be different interpretation of the tax guidance.

So this global intangible low tax that came in is quite a significant factor for us in terms of adding to our tax rate and our taxes. And there is some belief that there may be a change of how that works with the foreign tax credit, but that has to come from legislation.

So without legislation, the tax rate is where it is. If a new legislation or interpretation of legislation comes out, we will update you.

Got it. Thanks so much.

Thanks, Bill.

Good morning.

Good morning, Kevin.

Could you just expand on the 2018 guidance in terms of what you expect for sales growth in each of your three geographic segments to get to that consolidated 2% number?

Sure. So if we look at it by segments, North America which is roughly 50% of our business we expect sales to be down low-single digits as growth with mass merchandize and retailers should be offset by OSS declines.

And as a reminder, in North America OSS has the biggest share on the market. So North America is by far the most affected of the turmoil we’re seeing with that particular channel.

In Europe, we expect sales to up with acquisition with an additional month from Esselte. On a comparable basis we expect sales to be flat at constant currency.

And we expect stable business throughout Europe as Neal mentioned in his prepared remarks the challenges we saw with the legacy ACCO business in 2017 were really all made in 2016 and they were a result of decisions made in 2016. We saw that improve throughout 2017 and I certainly expect all businesses to be pretty healthy in Europe for us in 2018.

Australia, sales are roughly flat at constant currency. And in Brazil, Mexico and Asia we expect mid-single digit growth at constant currency.

Okay, great. That’s very helpful.

And so what are you baking into the consolidated growth number for 2018 in terms of the FX outlook?

It’s small, maybe 1%, very small.

Okay. Did you – I’m not sure if I heard in the prepared remarks, did you talk about a productivity savings goal in 2018 from Lean Six Sigma, like you usually do?

Yes, I believe we did. We talked about – we delivered $20 million in 2017 not counting the $7 million of synergies and our goal in 2018 is approximately $30 million of cost savings.

Okay, great. Lastly just on the initiation of the dividend you talked about in your comments that’s due to your confidence and the Board’s confidence in the company’s ability to sustain and improve performance going forward and you talked about a number of the changes for the good that have happened over the last few years.

But I don’t know if there’s anything more to add in terms of the confidence you have that led you to initiate that dividend.

Well, we just are very confident as a company. As a Board in our business, we generate a lot of cash flow.

We talked about exceeding our expectations to 2017. We gave $180 million guidance for 2018 with expectation of free cash flow will grow to 200 million in a couple of years.

That’s a lot of cash. We have plenty of cash to continue to delever to buy back shares, to do acquisitions when those come about and we feel for our long-term investors adding a dividend is a valuable thing.

That’s why the Board initiated the dividend just this week.

Okay, great. Thanks for taking the questions.

Thanks, Kevin.

Good morning and let me add my congratulations here as well in a strong year. I want to just follow up on that topic of the strong cash flow generation and ask about the share repurchase outlook.

Just to be clear, Neal, I’m assuming that the guidance did not assume any share repurchase based on where your share count was at the end of the fourth quarter?

That’s correct.

Okay. And so I think you were below 2.5x, you didn’t have any restrictions if I was not mistaken.

So with what looks like about $104 million capacity in authorization, can you just give us a sense of how you’re thinking about maybe utilizing that strong cash flow versus trying to bring down that leverage ratio a little bit more?

Yes, just on the technical level, Brad, we actually have to file the quarter which includes achieving that level of lower leverage. So it won’t actually technically probably get reached until we file our third quarter, assuming we have a strong third quarter.

And therefore it would apply for only the very backend of last month or so of the year. So it’s really more of a 2019 issue where we become unconstrained.

In 2018 for practical purposes we’re still constrained by that leverage covenant. But we would anticipate a good allocation of our large level of free cash flow towards both the sustained dividend, share repurchases and debt reduction.

We anticipate a balanced application of our cash.

Great. And you’re still targeting longer term range of 2x to 2.5x?

Yes, absolutely. And as we’ve said many times we view acquisitions as a major piece of our strategy and so we have to create capacity by taking it down towards the lower end of that and then taking it back up as we find acquisitions.

Exactly. And then just a follow up on that, Boris or Neal, what does the acquisition landscape look like right now in terms of the world that we’re in?

And from your perspective, do you have the capacity to take on another transaction were it to present itself to you all in 2018?

The acquisition pipeline still remains healthy and we still have the same approach that if the right acquisition comes about, we have both the financial capacity and the management bandwidth to take it on. We’re probably not going to do that in Europe this year as we’re still in the middle of integration between our businesses in Europe.

But outside of Europe, certainly if the right acquisition comes about we should be able to act on it.

Great. Thank you so much.

Thanks, Brad.

Hi. Good morning.

Just first off if you could start off with the planning products. How much traction are you seeing in the marketplace in Q1 while you’re expecting Q1, just given how it’s usually a sellout product, a high margin product for you?

Yes, Hamed, we don’t have Q1 information yet. Typically about half of the sell-through for planning products happen in January.

We saw as Neal mentioned in the prepared remarks, we saw a little bit of weakness for us in Q4 on the planning products side. Planning products are more skewed toward more commercial channels and a lot of activity in Q4 happened in retail.

I expect similar things in Q1 of this year but we don’t have the information yet.

Okay. And then since much of the Esselte integration is out of the way, does your focus go back to the gross margin line and how you were focused on expanding gross margin before the Esselte acquisition?

On the Esselte specifically the go-to-market integration is pretty much complete but we still have to do a lot both in the back office and facilities integration. So that’s going to be the focus in 2018.

As far as gross margin is concerned, we are in the range that we want to be at. I certainly do expect synergies on the gross margin line to be generated from the Esselte acquisition.

But the plan is to invest those to drive revenue growth. Right now we feel like it’s more important to be balanced in expanding gross margin and driving revenue growth.

We’re in the right range for the gross margin. So we want to put our foot on the gas for revenue growth with any excess margin that we generate.

And how are you going to go about that? Certainly it doesn’t seem like it’s in the guidance as far as the go-to-market with Esselte in Europe.

So what’s the strategy and what’s your timeframe?

We think there’s a lot of opportunity to drive revenue growth in Europe by leverage, the very strong presence we now have in Continental Europe and a combination of legacy ACCO and legacy Esselte product line. We began that work in 2017 but we’re still shipping from different distribution centers.

So it was a little bit inconvenient for our customers. Now we’re actually shipping from the same DC and have taken one order and shipping a complete product line including both legacy lines from one order to the customer in the majority of the markets and that should definitely generate incremental sales.

That’s not really built into our guidance yet. We want to actually see it as we’ve discussed before.

Revenue is hard to bake in or revenue synergies is hard to bake in because obviously it’s out of our control and a lot of our competition has something to say about that. But my expectation is that we should be able to generate some incremental revenue from doing that in 2018.

Okay. Thank you.

Thank you.

Good morning, guys.

Good morning, Bill.

You talked a little bit about some lost placements that negatively impacted your North American segment. Can you provide a little more color on what some of those placements were?

What types of customers?

Yes, most of the lost placement is with OSS and most of it is to their decision to import directly from Asia. As we talked before, decisions on private label ebb and flow depending on leadership philosophies that different customers have.

We’re in a phase – we were in a phase where certainly in retail, in the OSS retail there’s more bias toward having a little bit more private label. And as we discussed before, private label would view that on a total contribution basis if it makes sense for us from an overall line, from an overall category perspective to do private label and it’s accretive to our business, we would do it.

But just private label for private label sake is usually not a profitable proposition for our shareholders. So there were a couple of instances in North America where we did not pursue the private label business for more commodity like products in the OSS retail.

That was the primary reason for lost placements in North America.

Okay. And then your productivity savings goal for this year of 30 million, that’s higher than I ever remember it historically.

I guess I had felt like over time it was going to be more challenging for you guys to continue to keep it at kind of $20 million a year pace. How are you guys accelerating it this year?

Is there something unique or one-time in nature that you’re going after?

$30 million is actually what we did in 2016 and 2015. It dipped down 2017 because a lot of our resources were focused on the integration as opposed to driving productivity.

Now that many of the integration activities are well underway, we can refocus back in driving productivity. And I feel very confident that we will be able to achieve that.

This is a global program for us. We have hundreds of different projects throughout the world.

There’s a lot of management attention in driving productivity. And the slow growth environment this is something that we need to do to continue to both be cost competitive and price competitive for our consumers and customers as well as to make sure that we can improve profitability in the business.

So it’s a big emphasis for us.

Okay. And then just lastly for me, we continue to hear about some increased input costs as well as higher freight and shipping this year.

What are you guys expecting in terms of the headwind in terms of those two things? And I guess are you able to push all of those costs on such that they will be not be a headwind to you, or do you expect that indeed they will be?

We do expect inflation to be a little bit higher in 2018 than it was in '16 and '17 and the plan is to offset any of those cost increases with pricing as we have done historically. We already did some price increases in January to help us offset some of the inflation and we will certainly do more if that’s necessary in the second half of the year.

Great. I’ll pass it to others.

Thank you.

Thanks, Bill.

Good morning. I just had two.

On the dividend’s initiation, I was wondering as we go forward if you guys were targeting a payout of free cash flow or net earnings or how we might think about it potentially growing over time?

Yes, right now I think it’s premature to comment on that, Hale. We will certainly review that.

Our intention would be able to grow that with earnings growth but I don’t want to be making any commitments to that at this point in time.

Okay. And then the second question is, it looks like you may have sold a small distribution facility or warehouse in the quarter for 1.8 million.

I was wondering if that was just a one-off or there might be more asset sales to come.

That was part of the integration of Pelikan Artline with ACCO and we view that as part of the restructuring as opposed to anything else. So we had two distribution centers in New Zealand, we now have one.

And so that’s why we sold it.

Great. Thank you for the time.

I appreciate it.

Thank you.

Good morning. With the change in ownership in the superstore channel, you mentioned a lot less forward-buying in that channel.

But has the broader focus or relationship changed and how do you guys kind of approach the 2018 planograms?

The relationship hasn’t changed. They’re still a very important customer for us and we still work with them closely.

I think their priorities will evolve under different ownership. But regardless of that I think expect them to be a very important customer for us.

We certainly value them and want to do more business with them. So we will react to whatever changes they will put in place, but it hasn’t changed so far.

Okay. And we keep seeing headlines just on Amazon business.

They’re got new tiers of membership and shipping. How is your sell-through through that channel?

And are you hearing more disruption coming from them or how will that kind of play out in your mind?

Amazon is our top five customer. We’ve been very pleased with their growth.

What we’ve seen over time and I say over the last couple of years is their business to business sales are evolving and becoming a little bit bigger percentage of our overall sales to them, but still it’s a small percent of overall sales. I think Amazon is just part of the overall channel landscape right now.

It certainly is a topic of conversation but less so than it was a couple of years ago where it was used more as a disruptive force. Now it’s just – it’s another channel of sales and independent as well as mass accounts as well as contract stationers are finding ways to compete with them.

But they’re a formidable competitor and I expect them to continue to be a significant customer and to continue to grow with us.

Okay. And lastly, just in terms of M&A, you talked about broadening geographic reach in your growing presence in Asia.

When we look at areas for focus, are there certain markets that you feel that you need to get in or where you don’t have a presence today, or where should we think about M&A activity going forward?

We don’t think there’s anything that we need to do. We have a healthy presence everywhere we need to be.

We’d like to get bigger in Asia but that will take time and we’re going to be planned about our expansions there. Overall, I think it will be important for us to grow more outside of the U.S.

We believe that the opportunities are better and the market is healthier, channels are healthier outside of the U.S. So as we continue to evolve our company more towards consumer and more towards better organic growth, acquisitions will be I think a necessary and an important part of that and acquiring companies I think outside of the U.S.

will help facilitate that strategy.

Thank you very much, guys. Greatly appreciate it.

Thanks very much.

Thank you, operator. To sum up, we had a great quarter and a record setting year in 2017.

Our Board of Directors and the management team have confidence in our long-term financial outlook adding a quarterly dividend that underscores our commitment to deliver value to our shareholders. 2018 is off to a strong start and I look forward to sharing with you first quarter results later in the spring.

Thanks for being with us today. Have a great day.