Hello, everyone, and welcome to the ACCO Brands 4Q '22 Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. After the prepared remarks, you'll have the opportunity to ask any questions by pressing star followed by the number one on your telephone keypads. I will now turn the call over to ACCO Brands Senior Director of Investor Relations, Chris McGinnis. Please go ahead, Chris. Good morning, and welcome to the ACCO Brands fourth quarter 2022 conference call. This is Chris McGinnis, Senior Director of Investor Relations. Speaking on the call today are Boris Elisman, Chairman and Chief Executive Officer of ACCO Brands Corporation, Tom Tedford, President and Chief Operating Officer, and Deb O'Connor, 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 about our results, we may refer to adjusted results. Adjusted results exclude transaction, integration, amortization, and restructuring costs, a non-cash goodwill impairment charge, and the change in fair value of the contingent consideration related to the PowerA earnout and other non-recurring items and reflect an adjusted tax rate. Schedules of adjusted results and other non-GAAP financial measures and a reconciliation of these measures to the most directly comparable GAAP measures are in the 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 forward-looking non-GAAP measures. Forward-looking statements made during the call are based on the beliefs and assumptions of management based on information available to us at the time the statements are made. Our forward-looking statements are subject to risks and uncertainties, and our actual results could differ materially. Please refer to our earnings release and SEC filings for an explanation of certain of these risk factors and assumptions. Our forward-looking statements are made as of today, and we assume no obligation to update them going forward. Following our prepared remarks, we will hold a Q&A session. Now I'll turn the call over to Boris Elisman. Thank you, Chris, and good morning, everyone. Thank you for joining us. Before I talk about our 2022 performance and priorities for 2023, I want to say that the solid fundamentals of our business are intact, and we believe we have the right strategy and team to weather the current economic slowdown and continue to deliver sustained organic revenue growth as the economy improves. The transformative actions we have taken over the past few years to be more consumer-centric and geographically diverse helped us achieve record comparable sales and maintain or grow market share in many of our key brands in 2022. 2022 was a tale of two halves. We began the year strong as customers turned to us for surety of product for the important back-to-school season and as office occupancy rates rebounded in North America. In our EMEA segment, we had strong volume growth for computer and business products, with sales tracking above pre-pandemic levels through the first half of the year. The trends in EMEA began to change in the summer of 2022 as high levels of inflation, the war in Ukraine, and the energy crisis dampened consumer and business demand. In North America, retailers became concerned about an impending economic slowdown, and they began to take an aggressive stance on reducing inventory levels in the third quarter that continued throughout the fourth quarter, leading to lower overall demand in our North America segment. These actions were on top of the impacts from pulling orders forward into the first half of the year. All of these factors reduced our sales volume in the back half of 2022. Profits in 2022 followed a similar trend as the rate of inflation continued to increase throughout 2022 for raw materials, finished goods, and transportation, and outpaced our aggressive pricing actions, which included numerous price increases throughout the year. We have been active on the cost front, limiting discretionary spending, implementing office hiring freezes, flexing direct labor headcount with volume, and closely managing our SG&A cost structure throughout the year. In Q4, we actioned additional cost savings and restructuring activities in North America and EMEA intended to expand margin through initiatives focused on improving operating efficiency and reducing costs. Importantly, we're seeing deflation in ocean freight rates and moderating rates of inflation in other product costs. We believe that the lessening rate of inflation, combined with our pricing and cost actions, including our January 1st price increase, better position us to expand margins in 2023. While one month does not make a quarter or a year, we are encouraged by the gross margin improvements we saw in January. As largely affected by the rest of the industry, our sales of gaming accessories were down 26% for the year. In 2022, the gaming market faced a number of challenges and a difficult comparison to 2020 and 2021 when consumers spent more on in-home entertainment activities due to the pandemic. As demand for the category softened with the reopening of experiential activities, many retailers engaged in aggressive inventory destocking. The gaming market also experienced semiconductor chip shortages throughout 2022, which limited both video gaming consoles and gaming accessories production. While we continue to hold the leading market share position for third-party gaming accessories, we temporarily lost some market share in the fourth quarter due to lack of product availability and a very competitive and promotional holiday season. Despite these challenges, we continue to believe in the long-term growth opportunity for gaming accessories and are executing our plans to expand our product assortment and accelerate growth in our EMEA and international segments. In 2023, we expect the industry backdrop to stabilize and improve as the year progresses and our semiconductor chip supply and new console production improves. In addition, there are several new game titles coming to market in 2023, which historically has spurred greater gamer engagement and the sales of associated gaming accessories. Now, let me share with you some highlights from 2022. Outside of gaming accessories, comparable product sales increased 5%, fueled by the strength of our brands. Kensington, our computer accessories brand, grew 10% in North America during the fourth quarter and was up over 13% globally for the full year as we continue to bring new products to market and expand our enterprise sales. This is our fifth straight year of growth for the Kensington business. We have continued to enhance the offering, introducing a host of new products largely related to connectivity and security. During the 2022 back-to-school season, our Five Star brand gained two points of share and grew 10% for the year. It was the second-largest back-to-school brand in the U.S. during the season. We demonstrated the strength of our supply chain capabilities to support customers with on-time deliveries during highly seasonal and high volume engagement. Our international segment had an exceptional year, posting 19% comparable sales growth for the full year and delivering over 40% improvement in adjusted operating profit. This growth was fueled by our market-leading Tilibra and Foroni brands in Brazil as in-person education continues its recovery in Latin America. These successes and strong brand performances from GBC, Quartet, NOBO, and Barrilito, among others, give us confidence that our commitment to bringing innovative, value-added new products to market and investing behind our brands, operations, and customer service is transforming our company towards faster organic sales growth. As we look to 2023, we're focused on four key priorities. First, we are laser-focused on restoring our gross margin. As I mentioned earlier, we have implemented multiple rounds of price increases, including our most recent round on January first of this year, and we have the ability to continue to raise prices to offset inflation if warranted. Our ongoing productivity program delivered $20 million in mostly COGS savings in 2022. This included actions to improve our supply chain processes and consolidate our manufacturing and distribution footprints in North America. We also plan to reduce the number of SKUs we offer globally to simplify the manufacturing and distribution processes, improve our sourcing capabilities, and reengineer current product specs for lower cost. These actions will meaningfully mitigate the inflationary pressures we have experienced over the last 18 months and improve our gross margin. We will continue to evaluate additional cost reduction measures, including facilities consolidations, in response to current macroeconomic environment and secular trends. Our second priority is to profitably manage the top line in what is expected to be a slow economic environment, especially in the first half. We have a complimentary assortment of products and brands that occupy value to premium price points and that we profitably position for various customer segments, including the value segment. Historically, we have been able to do that with Five Star in-need brands, Five Star and Hilroy, and Leitz and Esselte brands as examples. We'll need to ensure that we're disciplined in offering the right assortment for the price point and not discounting our premium feature-rich brands. Third, we will continue to invest in new product innovation, key brands, and growth initiatives. Innovation and new product development have been a key factor behind the successes of our brands and their ability to grow or maintain our leading market share positions. We have a host of new product introductions that will continue to drive our growth in 2023. Fourth, we will continue to manage our SG&A spend through prudent management of headcounts and discretionary expenses. Offsetting these actions in 2023 will be the restoration of the annual incentive plans. While ACCO Brands is not immune to current changes in economic conditions, we have the right strategy and an experienced management team to navigate the current operating environment. We remain confident in our transformation to drive long-term sustainable organic revenue growth and are well capitalized with no debt maturities until 2026 and low fixed interest rates for over half of our outstanding debt. We'll continue to generate consistent strong cash flow, we'll prioritize dividend payments and debt reductions in 2023. As I mentioned earlier, the margin expansion is a top priority for the company. Our management of price and costs will determine how successful we will be in achieving margin expansion goals. Pricing will be largely established in the marketplace, but our value-added cost is something we can control and manage. I've asked Tom Tedford, ACCO Brands President and Chief Operating Officer, to lead a multiyear effort to improve the efficiency of our physical assets and human capital investments. Tom has been with ACCO Brands for 13 years and in his current role for the last 18 months. I will now turn the call over to Tom to share with you the details of this initiative. Thank you, Boris. Good morning, everyone. During the fourth quarter of 2022, we initiated restructuring plans for both our North America and EMEA segments. The actions are intended to expand 2023 margins through initiatives focused on improving operating efficiency and reducing costs while continuing to support key seasonal product sets for our retail partners and category-leading service levels for all of our customers. In North America, our actions are focused on streamlining and simplifying the organization through consolidation of supply chain operations, SKU reduction, and automating our sales support process. In EMEA, we are focused on reducing redundancy and enhancing productivity with SKU reduction and other sourcing initiatives. We expect to realize $13 million in annual cost savings from these actions, the vast majority of which will come in 2023. We are in the middle of a multiyear journey to rationalize our facilities footprint. Last year, we closed one distribution center in California and rebalanced our manufacturing and distribution capabilities in the U.S. These actions will save us $2.5 million per year. We are looking at additional opportunities to leverage our existing footprint in the U.S. and shift more outsourced distribution into our facilities. In EMEA, we recently completed the move from a third-party distribution facility in the U.K. and consolidated shipments to our U.K. warehouse. Earlier this month, we approved a manufacturing facility closure in Continental Europe and will consolidate its production into another ACCO Brands factory in Europe. This project will be executed this year with the P&L savings to come in 2024. We are in the process of analyzing other global manufacturing and distribution consolidation opportunities, and we'll announce those as decisions get made after appropriate consultations with Works Council and other relevant entities. We are looking at opportunities to reduce our office space upon every commercial lease expiration. Hybrid work arrangements are here to stay, we believe we can save millions by reducing our office square footage while maintaining or improving the productivity of our workforce. We have recently reduced our office space in California have approved a move to a smaller office in the U.K. with more to come. We expect these initiatives will create operating efficiencies, improve profitability, enhance productivity as well as fund future growth initiatives. I will now hand it over to Deb, we'll come back to answer your questions. Deb. Thank you, Tom, and good morning, everyone. When we last spoke to you in November, I highlighted significant inventory destocking by retailers with their cautious approach to replenishment. This activity continued in the fourth quarter and actually accelerated throughout the quarter, especially in North America. We have also seen a continued decline in the macroeconomic environment and slowing demand. We reported sales at the low end of our outlook due to these challenges. This lower sales volume, coupled with some one-off expenses and higher non-operating expense, caused EPS to be $0.01 below our guidance range. In the fourth quarter of 2022, reported sales decreased 12% as foreign currency was a 5% headwind. Comparable sales were down almost 8%. The decline was due to lower volumes in our North America and EMEA segments, offsetting solid growth in our international segment. As Boris mentioned, we had stronger first half sales due to the pull forward by retailers as well as softer demand trends that began in the third quarter. With this stronger first half, our full year comparable sales were up 1%. In the fourth quarter, adjusted operating income was $52 million compared with $79 million last year. Adjusted EPS was $0.32 versus $0.54 in 2021. For the full year, adjusted operating income was $176 million versus the $228 million a year earlier, and full year adjusted EPS was $1.04 versus $1.41 in 2021. In the fourth quarter, our adjusted operating income decline was greater than the reduction in our sales volume as the lagging effect of significant inflation continued. While inflationary costs are beginning to come down, their lagging effect on our P&L will continue to impact our gross profit in the first quarter of 2023, but we expect it will improve as we progress through the year. Given the lower sales overall, we have also experienced fixed cost deleveraging in some of our facilities. In the quarter, there were some unfavorable one-off items. A Canadian operating tax catch-up, excessive fines related to demurrage, and the comparative impact of a favorable inventory reserve release last year. The total amount of these one-off items accounted for a 150 basis point decline in our consolidated operating margin for the fourth quarter. In response to the change in the macroeconomic environment, we initiated a number of cost reduction and restructuring actions in the fourth quarter, as Boris and Tom both mentioned earlier. For the quarter, we booked restructuring charges of approximately $7 million for our North America and EMEA operating segments. We expect annual cost savings from these actions to yield approximately $13 million, which will largely be recognized in 2023. Our ongoing productivity initiatives are expected to yield another $15 million of incremental savings in 2023. The collective sum of these savings will help mitigate the reestablishment of incentive compensation and merit increases in 2023. We are also committed to continue to spend on our go-to-market initiatives, particularly sales and marketing and invest in product development. Fourth quarter adjusted SG&A expenses were $93 million compared with $99 million in 2021, primarily as a result of lower incentive compensation, cost savings initiatives, and the positive benefit of FX, partially offset by continued investment in our go-to-market programs and increased bad debt expense. Full year SG&A expenses were 19.3% of sales, consistent with the prior year. Now let's turn to our segment results. Fourth quarter comparable net sales in North America decreased 16% to $227 million. The decrease was due to volume declines for gaming accessories, lower inventory replenishment by retailers, and a slowing demand environment. In the third quarter, we discussed with you that retailers began to reduce their inventory levels for our products. These actions increased in the fourth quarter, creating even more of a headwind in the period. For the full year, comparable net sales were down 4%, which includes the stronger first half of the year. Growth in many of our brands and categories was offset by the decline in gaming accessories. North America adjusted operating income margin in the fourth quarter decreased due to negative fixed cost leverage from the volume decline, higher costs of finished goods and specific commodity materials, and higher inbound freight and outbound transportation costs that were not offset by price increases. Adjusted operating income was also negatively impacted by the previously mentioned one-off items, which contributed the equivalent of 340 basis points to margin rate decline in the fourth quarter. For the full year, adjusted operating income was down 21%. Let's turn to EMEA. Net sales for the quarter were down 17% to $156 million. 12% of that decline was due to FX. Comparable sales were down 5% to $178 million, mainly due to volume decline offsetting our price increases. In Europe, the current energy crisis and significant inflation continued to create a challenging demand environment. While inflation has shown early signs of moderating in the region, consumer sentiment remains low. For the full year, comparable net sales were down only 1%, including the impact of the stoppage of sales to Russia. In the fourth quarter, EMEA posted lower adjusted operating income and a margin rate that was 150 basis points behind the prior year. Sequentially, margin rate improved from the third quarter due to our pricing increases and moderating inflation. We expect our January price increase to further mitigate the overall impact of these inflationary cost increases going forward. Adjusted operating income was challenged by inflation and lower sales volume, which led to deleveraging of fixed costs. For the full year, adjusted operating income was $37 million, a decline of 52%. Full year margin rate was down 520 basis points compared to the 150 basis point decline in the fourth quarter supporting the fact that pricing actions are taking hold. Moving to the international segment, net sales in the fourth quarter increased 6% and comparable sales rose 8%. This segment has been strong throughout the year, with 19% comparable net sales growth in 2022. Growth was driven by both price increases and volume growth. Growth in Brazil was very strong as schools and businesses returned to in-person education and work. The international segment posted higher adjusted operating income in the fourth quarter as a result of the higher sales. Full year operating income grew over 40% with margin rate improving 310 basis points. Switching to cash flow and balance sheet items, for the full year, we generated $78 million in adjusted free cash flow, below our outlook of $90 million-$100 million, with the shortfall due to lower EBITDA and a greater proportion of paid inventory given the timing of our inventory receipts. As this timing normalizes, it should provide a tailwind in 2023. For the full year, inventory was down $33 million or 8% despite the higher inflation. This puts us in a good position for a normal working capital cycle in 2023. We are proactively managing our inventory levels given the uncertainty in the environment and demand trends. We ended the year with a consolidated leverage ratio of 4.2 x. This was higher than we expected due to lower EBITDA and free cash flow. Longer term, we are still targeting the 2 to 2.5 times. We utilized our free cash flow to fund dividends of $29 million, pay the contingent earn-out of $27 million, and repurchase $19 million of shares. At year-end, we had $518 million of remaining availability on our $600 million revolving credit facility. As shown on our earnings slide, more than half of our debt is fixed and not impacted by interest rate increases. We have no maturities until 2026. Turning to our outlook, we are providing both first quarter and full year guidance for 2023. Our 2023 quarterly sales trends will trend differently than in 2022. We had strong first quarter and first half sales growth in 2022, with early back to school shipments in North America and good demand. These trends reversed in the second half of the year as a worsening global economy and a higher rate of inflation created demand pressures. In particular, we saw retailers proactively reduce their inventory beginning in the third quarter of 2022, which continued through year-end. Therefore, we are projecting our sales to be down year-over-year in the first quarter and the first half of 2023. In the second half of 2023, sales growth should mitigate the first half decline as we expect improved economic conditions and inventory replenishment. Our outlook for sales growth in 2023 is for comparable net sales to be down 3% to flat compared to 2022. We expect volume to be down for the year with improved pricing partially or fully offsetting the decline. Foreign exchange at current rates is expected to be neutral. For the first quarter of 2023, we expect comparable sales to decline 7%-10%, primarily due to the later shipments for North America back to school and muted demand related to the economic environment. At the higher end of our first quarter outlook, comparable sales would be up 3% on a two-year basis. First quarter adjusted EPS is expected to be $0.05-$0.07, with lower operating income reflecting fixed cost deleveraging along with higher interest and non-cash, non-operating pension expenses. Full year adjusted EPS is projected to increase 4%-8% to $1.08-$1.12, approaching low double-digit growth in adjusted operating income, partially offset by higher interest costs of $6 million and higher non-cash, non-operating pension expenses of $5 million. For the full year, we expect our growth margins to increase and be similar to our 2021 margin rate. We continue to target a long-term range within 32%-33%. While we have reduced our overall cost structure from our fourth quarter restructuring actions, the restoration of our annual incentive compensation expense, as well as increases in merit and go-to-marketing spending, will lead to higher SG&A levels in 2023. In total, we expect improvement in our adjusted operating income margin rate to approach 100 basis points. The adjusted tax rate is expected to be approximately 29%. Intangible amortization for the full year is estimated to be $43 million, which equates to approximately $0.32 of adjusted EPS. We expect our adjusted free cash flow to be at least $100 million after CapEx of $20 million. Looking at cash uses in 2023, we expect to continue to prioritize dividends and debt reduction. Now let's move on to questions where Boris, Tom, and I will be happy to take them. Operator? Thank you. If you would like to ask a question, please do so now by pressing star followed by one on your telephone keypad. If you change your mind and would like to be removed from the queue, that's star followed by two. When preparing to ask your question, please ensure that your device or your microphone are unmuted locally. Our first question today comes from Greg Burns with SIDOTI & Company. Greg, please go ahead. Good morning. Just in regards to the inventory destocking issues, what are the level of channel inventories right now? Historically, in other cyclical downturns, have you seen similar patterns? How does this play out over the next couple of quarters? I'm assuming they can only take inventory down so to, you know, they can only take it down so low. You know, how are you thinking about this issue playing out over the next couple of quarters? Yeah. Thanks for the question, Greg. The levels of channel inventory are pretty low right now, historically at pretty low levels. We see increased levels of out of stocks for our products on shelf. You know, we saw an improvement. We saw less destocking over the last few weeks compared to what we saw in Q4. But right now what we expect is retailers will just buy to just replenish the POS. We don't think they're gonna bring in additional inventory until they see macroeconomic improvements. Obviously, that excludes back to school because they will have to bring product for back to school in the second part of Q2. If you look at Q1, it'll probably likely be just POS replenishment and not stocking up on more inventory. Okay, great. The growth in the international segment was a little lower than we were looking for. I guess what the growth rate was for the first three quarters of the year. Was there any change in any of the markets there in particular that maybe led to a little bit slower growth? Yeah. The growth was around 7%, and for the year there were 19%. There were just some compare issues. You know, specifically, Brazil continues to perform well, but we had slower growth outside of Brazil. Some of that is due to just macro issues in Australia and Asia specifically. In Mexico, we actually didn't have enough product to ship, so that was more of a inventory issue, and we expect to make that up in the first quarter of 2023. Okay. The $13 million in cost savings, how should we think about that in terms of the timing of the realization of that? Is it back half loaded, ratable throughout the year? What's the timing? Yeah. It's pretty ratable. I'd say, you know, there's a little bit of it back-end loaded, as we've instituted some of the actions later in the year. It goes pretty much throughout the year, I would say, Greg. Okay. Thank you. Thanks, Greg. The next question comes from Joe Gomes with Noble Capital. Joe, please go ahead. Good morning. Thanks for taking my questions. Good morning, Joe. You mentioned, in the release, you know, part of what impacted the sales in the quarter were weaker gaming sales, lower inventory replenishment, some reduced volume. Can you kind of size that up as to what each one of the impact was from each one of those for the quarter? Do you have that, Deb? Well, I think for the quarter, if you look, a big proportion would be the inventory destocking. That was pretty pervasive as you looked across North America by many of our customers. Then I would say gaming, you know, it's a smaller piece of the total, but did decline 26% for the year. When you take that into account, it had a pretty significant impact in the quarter. Yeah, I would agree with that because also for gaming, it's the biggest quarter of the year, Joe, so. That's right. Yeah. Expectations were higher for it. Yes. In Q4, those two drove the predominant decrease in sales, inventory destocking and gaming. Okay. Yeah, 'cause I think in the previous quarter, you were looking for, the gaming to be down about 15% for the year. That's pretty significant decline in the quarter. Again. ... looking at PowerA. I'm sorry. No, go ahead. I was just gonna say, as Boris said, it's a big season for gaming, that fourth quarter. Right. Right. I mean, I think you touched a little bit on it, Boris, that you're still looking on a longer-term basis for that PowerA to show some double-digit long-term growth. I know you've mentioned, you know, moving into EMEA or expanding into EMEA more. You know, kind of what, maybe you could give us a little more color of what are your expectations for PowerA in 2023. We certainly expect growth in PowerA in 2023. You know, we expect the industry rebound. It will be back half loaded just from a compare standpoint because Q1 of last year was still pretty good. Overall, there was plenty of supply and demand was pretty good. The comps will still be difficult in the first quarter, but starting with the second quarter and going forward, they'll get better and we expect growth overall for the year. It will be led by our EMEA and international segments. You know, overall, even in 2022, despite PowerA being down 26% overall, we saw growth outside of North America. That will just continue and accelerate. We are hiring people, both in EMEA and international segment to take PowerA direct to our customers in most places. That along with a broader product assortment and a streamlined distribution that Tom referred to, should enable continued PowerA growth in EMEA and international. In fact, we expect some acceleration in those two segments. In North America, we just expect a, you know, a rebound from what has been a very difficult year in 2022. You saw reporting from other companies in North America, other public companies, including from NVIDIA yesterday, which indicate just how difficult gaming has been in 2022. you know, while we're disappointed by our performance, we're not unique in what we saw with gaming in 2022. Okay. Thank you for that. Last one for me. I mean, you've given a lot of great detail for 2023. You know, what could possibly in your mind, you know, drive results above expectations at ESA? What, what would be the most likely things that could happen that would help potentially drive results above expectations? Thank you. Probably a couple of things, Joe. One is if back to school is really good, that should, you know, definitely be good for us. I mean, if you look at what's happening in 23, the retailers are being conservative with upfront load-ins, and then they're gonna chase inventory during the season. If we have a good season, that should benefit us because we have domestic manufacturing unlike most of our competitors. If they need more product than they plan on, we should be able to fulfill it when others cannot. A good back-to-school season will serve us well. Then just a strong economic recovery in the second half of the year. Everybody's expecting a slowdown in the first half, and that's what's in our guidance. We expect some recovery in the second half, but if it's stronger than anticipated, that should benefit our global sales and profitable. Great. Thanks, guys. Appreciate it. Thanks, Joe. Our next question comes from Kevin Steinke with Barrington Research. Kevin, please go ahead. Good morning. In terms of the flat to 3% decline in sales you're expecting in 2023, could you maybe just walk through expectations for your three segments, if you'd be willing to share any detail on that? Yeah. I think, we're thinking about EMEA and North America down slightly, with the international trending kind of in that mid-single digits like the fourth quarter. Growth. Yeah. Growth. International growth. Growth. International growth. North America and EMEA down slightly. Down slightly. One to two digits. Yeah. Okay. Understood. Thank you. That's helpful. Yeah, I guess you had the January 1st price increase. Do you think that price increase covers all at least the known inflationary headwinds that you're currently seeing or, you know, are there plans for additional price increases as we move throughout the year? We believe the price increase mostly covers all of the known inflation that we're seeing. The only exception that would be some of our smaller foreign countries where they may have to do more just due to the exchange rate changes. As far as North America and EMEA, that increase should cover known inflation. I think we've mentioned before, you know, we've been covering the dollar, throughout the year, but it's taken a bite out of the margin, and that's what we need to get back. Right. Understood. Can you just talk a little bit about the plan to eliminate SKUs? I assume you've identified some less relevant or underperforming SKUs that maybe aren't Necessarily need to be part of the portfolio and just kinda how you arrived at those conclusions or went through that process? Yeah, Kevin, this is Tom Tedford. I'll take that question. We go through a fairly robust SKU analysis annually, and we look at the profitability of the demand of those SKUs, the complexity of managing those SKUs. Each one of the segments has accelerated that analysis. That analysis should result in a number of a pretty aggressive SKU reduction actions. In addition to what we typically do, we have looked at what we make in our factories and really done an analysis on future demand on those products. If it doesn't meet a minimum criteria, we're gonna aggressively retire those as well. This is a part of an ongoing rationalization approach that we take very seriously as we look at inventory turns improvement and profit management. I think our teams have a strong track record of doing this. We're just putting a little more pressure to accelerate the work in 2023. Okay. Thank you. lastly, I just wanted to again circle back to PowerA. You mentioned improving chip supply as one of the factors behind your expectations for some improvement in PowerA sales in 2023. Are you seeing kind of a meaningful improvement in chip availability for the, you know, going into gaming consoles and therefore console availability improving as well? We are. We're seeing improvement already on the gaming consoles. We see better availability of the chips that we need for our accessories. It's just there's a little bit of a delay to the supply chain because these are manufactured in Asia and have to be manufactured and shipped to our countries of sale, and that process takes a couple of months. We expect really at the end of Q1, early Q2, a significant improvement in availability of our products due to the better chip availability. All right. Thank you very much for taking the questions. Thanks, Kevin. The next question comes from William Reuter with Bank of America. Please go ahead. Good morning. My first question is on the gaming weakness for the year. You mentioned both the industry was down. You also mentioned that you had supply chain issues, and then you also mentioned that you lost a little bit of share. I guess, firstly, on the share losses, was it that you had less availability of product than others, or what contributed to that? If you could try and break down the difference between how much was the industry and how much was specific to you guys. On the share loss, it was largely because we didn't have the product. It was wireless accessories for one of the consoles. We had very large market share in that particular category, and because we weren't able to supply the demand, overall, the share shifted to other products where we had a smaller share. That's really what drove majority of the share loss. If I look at the reasons for the decline, 95% are industry related issues, and about 5% are kind of our things, such as what I just talked about in terms of lack of chips for our particular wireless accessory. Got it. That makes- That makes- Yeah, PowerA was also impacted by the destocking of the retailers as well. Yeah. Yeah. Got it. Which I it. Which I put into the industry. Exactly. Totally agree. That kind of moves to my second question. It's I think an earlier question that talks about retailer destocking. In the gaming accessories, do you believe that that destocking effort is done at this point? Yes. again, just like for our school and business products, we see the stock of gaming accessories being fairly low. I mean, it is typically low at this time of the year. It's a slow season, but it is very low there as well. We just like for our other products, we have higher levels, a lot of stock for gaming accessories as well. It's the same situation as with other products. Okay. Just lastly from me on capital allocation, you mentioned you're committed to the dividends. You also talked about debt reduction. Will you consider share repurchases this year, or given the challenging macro backdrop, should we assume that those are off the table until leverage moves closer to our targets? Yeah. I would say we're really focused on the debt pay down. You know, never say never to anything, but I guess, we need to get that leverage ratio down, and that's what we're gonna be focused on. Good to hear. Okay. That's it. Thank you. Thanks, Will. The next question comes from Hale Holden with Barclays. Hale, please go ahead. Thank you. Good morning. Boris, you made a comment around not overly discounting, you know, your better brands or best brands like Five Star. I was wondering, you know, how you think about that versus a weaker consumer and room for private label below you, and how you might fill that, the lower tier gap. Yeah, you know, that's the benefit of having multiple brands, Hale. Historically, we've been able to position things both for premium price points, better price points, as well as good price points or value price points. Historically, for example, in our school products, Mead played that role of addressing really mainstream price points successfully. Mead's been a good brand with a strong demand in 2022 for that brand. That should continue as we position things across the spectrum, depending on what the consumer segment we're targeting. The same thing applies in EMEA. We have Leitz, which is more of our premium brand, and Esselte, which is more of our mainstream brand. We actually saw growth in 22 with Esselte, as consumers are kind of more attracted to those, more value price points. Pretty much in every region, we have this multiple tier approach with our brands. Historically, we've been successful, and I also believe we can be successful in 2023 as we go through this economic slowdown. Great. I was wondering, you know, what was embedded for back to school in the, in the full year revenue items, if you were sort of thinking, if flat to slight volume declines on weaker consumer or if there was something else that might happen. You know, right now we are assuming a flat-ish back to school. This is really driven by NPD forecast for back to school. That flat-ish assumption includes lower load-ins, people being less aggressive in bringing inventory up front and then chasing it as they see the demand being fulfilled. We really won't know until 3Q how that turns out. That is correct. Yes. That's right. You will be on Kensington Road with us. Right there with us. I had one other question on debt repayment, which was you know, as you're thinking about debt repayment, you obviously have two choices, right? You can take the loan, which is floating rate, or you could potentially try to purchase the bond at a discount and accelerate the notional amount. I was wondering how you were thinking about that trade-off or balance. Yeah. We think about it, and I would tell you with the rates that those bonds carry right now, they're nice to have and to keep in the portfolio. We will consistently look at it, but it keeps us with a good fixed rate. Great. Thank you so much. Thanks, Hale. Our final question comes from Hamed Khorsand with BWS Financial. Hamed, please go ahead. Hi, good morning. Could you just, you know, talk a little bit more about this back to school, the delay in ordering? It, I thought your mass merchant retailers usually give you pretty good insights to what their ordering habits are. Are they just holding off in giving you any clarity, or are they just holding so much inventory from last year that they're still nervous about giving you any kind of order clarity? No, they're pretty clear. They don't have much inventory. They're just deciding to bring in less this year as they're concerned about the macro environment. They're loading in less than last year. Obviously, last year, they loaded in more than typical because they were concerned about supply chain issues. You know, on a comparable basis, it's substantial. That's why our Q1 guidance is so much lower. Revenue guidance is so much lower than last year's because there was a lot of pull forwards last year that were happening that we will not see. You know, the timing of their orders is very similar to what we see historically, but the amount that they'll be bringing in will be a lot less than last year due to things I just mentioned. My other question was just on your SKU strategy and just product strategy in general, how are you incorporating more of a hybrid work environment? Does that mean you're, you know, the changes you made last year for people going back to the office, you're reverting back to more of being consumer-oriented? Hamed, this is Tom Tedford. Our teams have responded already to that change in work behavior very successfully. Our team in Europe in particular, during the pandemic, we saw sales growth as they shifted more of their product solutions to a hybrid or fully work from home remote environment. Our Kensington business has responded quite well with that. So really across the majority of our brands that are focused on work solutions, we've already implemented a nice balance between remote work, hybrid work, and office solutions for our consumers. I guess what I'm trying to ask is, you know, the office solutions you used to have were high price tag and, you know, pretty recurring as far as your expectations over several years. You know, what are your expectations on the new, you know, work from home kind of supplies that you're producing? Yeah. I think Boris alluded to it earlier with the portfolio approach that we have and the multiple brands that we have supporting each category. you know, we are able to meet the consumer where they are. If they're able to purchase a premium product, we have solutions for them. If they choose to have a more value solution, we also have brands and solutions that meet the consumer at that price point. I think over time, we'll continue to see a good mix of our business, but it'll continue to shift modestly towards more consumer solutions. That profit profile really isn't all that significantly different. We just have to sell more units to offset the ASP declines. Let me add a little bit more color, here, Hamed, just on the environment. We believe that the hybrid workplace is here to stay. We see actually, you know, a quite stable environment with most companies working hybrid or in the office and very few still are fully remote. We are seeing a positive trickle back to the office. You know, it started a year ago and it continues. It's slow, but it's continuing as more companies demand more presence in the office. The product portfolio that we have is able to meet all of those three environments. We did a lot of work back in 2020 and 2021 to kind of restructure our portfolio so that we can supply both in the office and hybrid workers and that will continue. Just my other comment on the environment, you know, the inventory reductions that we referred to throughout our discussion today are more significant in retail than it is in the business-to-business side, as we're seeing our business-to-business-focused channel partners continuing to support this return to office trickle that we talked about. The sales there are doing better, and certainly the inventory situation there is better than it is on the, you know, purely retail consumer side. Okay. That's helpful. Thank you. Thanks, Hamed. We have no further questions, so I'll turn the call back to the management team for any concluding remarks. Thanks, Emily. Thank you, everybody, for your interest in ACCO Brands. Previously, we have managed well in difficult environments and are confident in our ability to navigate current economic challenges. We're also confident that we have the right strategy and believe we're well positioned to continue to deliver organic sales growth, compelling market performance, and improved financial results as global economies recover. We look forward to talking with you in a couple of months to report on our first quarter results. Thank you. Thank you everyone for joining us today. This concludes our call, and you may now disconnect your lines.