Acme United Corporation (NYSE American: ACU) today announced that
net sales for the three months ended September 30, 2018 were $34.7
million, compared to $33.8 million in the same period of 2017, an
increase of 3%. Net sales for the nine months ended September 30,
2018 were $106.2 million, compared to $100.4 million in the same
period in 2017, an increase of 6%.
Net income for the three months ended September
30, 2018 was $807,000, or $0.23 per diluted share, compared to
$1,202,000, or $0.32 per diluted share, for the same period in
2017, decreases of 33% and 28%, respectively. Net income for the
nine months ended September 30, 2018 was $4.0 million, or $1.12 per
diluted share, compared to $4.7 million, or $1.25 per diluted
share, for last year’s same period, decreases of 15% and 10%,
respectively. The declines in net income for the three and nine
month periods resulted primarily from additions in sales and
marketing personnel to support growth initiatives as well as higher
interest rates on our variable rate credit facility.
Walter C. Johnsen, Chairman and CEO said, “Our
sales continued to grow in the third quarter, reflecting the
success of our Westcott back-to-school scissors, Camillus knives,
and first aid products. Our year-to-year gross margins were
comparable. However, higher selling, general and administrative
expenses were in place to drive sales at levels we did not
achieve.
“During the third quarter, we began reducing
costs through a series of productivity initiatives. We expect
annual savings of approximately $1.5 million in purchasing,
advertising, selling and personnel expenses. We are also targeting
$1.0 million in inventory reduction in the fourth quarter.
“We begin selling our new SmartCompliance first
aid kits, eye wash, and bleed control stations in the fourth
quarter. Shipments of new Camillus knives are scheduled for the
holidays. We look forward to their impact on the fourth
quarter.”
Mr. Johnsen added that the Company is updating
its guidance for the year, based on the current sales performance.
The new guidance is $139 million in revenues, $4.7 million in net
income, and $1.30 earnings per diluted share. This compares to
sales of $130.6 million, non-GAAP net income of $5.3 million and
earnings per diluted share of $1.42 for 2017. As previously
reported, the Company’s GAAP net income of $4.1 million for 2017
reflected a $1.2 million non-cash tax charge related to the U.S.
Tax Cuts and Jobs Act.
In the U.S. segment, net sales for the three
months ended September 30, 2018 increased 3% compared to the same
period in 2017. Sales of first aid and safety products were $15
million, an increase of 7%. Sales of Westcott school and office
products declined 6%, despite a strong back-to-school. Office
product sales were impacted by overstock of office scissors at a
large on-line retailer and store closings. Net sales for the first
nine months of 2018 in the U.S. segment increased 6% compared to
the same period in 2017. Sales of first aid and safety products
increased 12% due to market share gains.
Net sales in Europe for the three months ended
September 30, 2018 increased 2% in U.S. dollars and 3% in local
currency compared to the same 2017 period. Net sales for the nine
months ended September 30, 2018 increased 13% in U.S. dollars and
6% in local currency compared to the first nine months of 2017. Net
sales for both periods grew mainly due to new customers in the
office products channel, growth in sales of DMT sharpening
products, and strong e-commerce demand for these products.
Net sales in Canada for the three months ended
September 30, 2018 increased 2% in U.S. dollars and 6% in local
currency compared to the same prior-year period. Net sales for the
nine months ended September 30, 2018 increased 3% in U.S. dollars
and 2% in local currency compared to the same period in
2017.
Gross margin was 36% for the three months ended
September 30, 2018 and 2017. Gross margin was 37% in the nine
months ended September 30, 2018 and 2017.
The Company’s bank debt less cash on September
30, 2018 was $46.5 million compared to $38.9 million on September
30, 2017. During the twelve-month period ended September 30, 2018,
the Company purchased its manufacturing and distribution facility
in Vancouver, WA for $4.0 million and distributed $1.5 million in
dividends on its common stock.
Conference Call and Webcast
Information
Acme United will hold a conference call to
discuss its quarterly results, which will be broadcast on Friday,
October 19, 2018, at 12:00 p.m. EDT. To listen or participate in a
question and answer session, dial 855-719-5012. International
callers may dial 334-323-0522. You may access the live webcast of
the conference call through the Investor Relations section of the
Company’s website, www.acmeunited.com. A replay may be accessed
under Investor Relations, Audio Archives.
About Acme United
ACME UNITED CORPORATION is a
leading worldwide supplier of innovative safety solutions and
cutting technology to the school, home, office, hardware, sporting
goods and industrial markets. Its leading brands include First Aid
Only®, PhysiciansCare®, Pac-Kit®,Spill Magic®, Westcott®,
Clauss®, Camillus®, Cuda®, and DMT®. For more information, visit
www.acmeunited.com.
Forward Looking Statements
Forward-looking statements in this report,
including without limitation, statements related to the Company’s
plans, strategies, objectives, expectations, intentions and
adequacy of resources, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements
involve risks and uncertainties including, without limitation, the
following: (i) changes in the Company’s plans, strategies,
objectives, expectations and intentions, which may be made at any
time at the discretion of the Company; (ii) the impact of
uncertainties in global economic conditions, including the impact
on the Company’s suppliers and customers; (iii) changes in client
needs and consumer spending habits; (iv) the impact of competition
and technological changes on the Company; (v) the Company’s ability
to manage its growth effectively, including its ability to
successfully integrate any business it might acquire; (vi) currency
fluctuations; (vii) increases in the cost of borrowings resulting
from rising interest rates; (viii) uncertainties arising from the
interpretation and application of the U.S. Tax Cuts and Jobs Act
enacted in December 2017; and (ix) other risks and uncertainties
indicated from time to time in the Company’s filings with the
Securities and Exchange Commission.
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
THIRD QUARTER REPORT 2018 |
(Unaudited) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Three Months Ended |
Amounts in $000's except per share data |
|
September 30, 2018 |
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
34,731 |
|
$ |
33,785 |
Cost of goods
sold |
|
22,281 |
|
|
21,559 |
Gross
profit |
|
12,450 |
|
|
12,226 |
Selling,
general, and administrative expenses |
|
11,078 |
|
|
10,256 |
Income from
operations |
|
1,372 |
|
|
1,970 |
Interest
expense, net |
|
495 |
|
|
365 |
Other expense,
net |
|
23 |
|
|
37 |
Total other
expense, net |
|
518 |
|
|
402 |
Income before
income tax expense |
|
854 |
|
|
1,568 |
Income tax
expense |
|
47 |
|
|
366 |
Net
income |
$ |
807 |
|
$ |
1,202 |
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,374 |
|
|
3,373 |
Shares outstanding - Diluted |
|
3,551 |
|
|
3,794 |
|
|
|
|
|
|
Earnings per
share basic |
$ |
0.24 |
|
$ |
0.36 |
Earnings per
share diluted |
|
0.23 |
|
|
0.32 |
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
THIRD QUARTER REPORT 2018 (cont.) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
Nine Months Ended |
Amounts in $000's except per share data |
|
September 30, 2018 |
|
|
September 30, 2017 |
|
|
|
|
|
|
Net
sales |
$ |
106,191 |
|
$ |
100,380 |
Cost of goods
sold |
|
66,905 |
|
|
63,107 |
Gross
profit |
|
39,286 |
|
|
37,273 |
Selling,
general, and administrative expenses |
|
32,923 |
|
|
30,178 |
Income from
operations |
|
6,363 |
|
|
7,095 |
Interest
expense, net |
|
1,347 |
|
|
949 |
Other expense,
net |
|
84 |
|
|
21 |
Total other
expense, net |
|
1,431 |
|
|
970 |
Income before
income tax expense |
|
4,932 |
|
|
6,125 |
Income tax
expense |
|
926 |
|
|
1,418 |
Net
income |
$ |
4,006 |
|
$ |
4,707 |
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,374 |
|
|
3,351 |
Shares outstanding - Diluted |
|
3,574 |
|
|
3,765 |
|
|
|
|
|
|
Earnings per
share basic |
$ |
1.19 |
|
$ |
1.40 |
Earnings per
share diluted |
|
1.12 |
|
|
1.25 |
|
|
|
|
|
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
THIRD QUARTER REPORT 2018 |
(Unaudited) |
|
|
|
|
|
|
Amounts in $000's |
|
September 30, 2018 |
|
|
September 30, 2017 |
|
|
|
|
|
|
Assets: |
|
|
|
|
|
Current
assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
4,021 |
|
$ |
7,021 |
Accounts receivable, net |
|
30,869 |
|
|
31,579 |
Inventories |
|
41,274 |
|
|
36,799 |
Prepaid expenses and other current assets |
|
2,270 |
|
|
2,448 |
Total current
assets |
|
78,434 |
|
|
77,847 |
|
|
|
|
|
|
Property, plant and equipment, net |
|
14,488 |
|
|
9,449 |
Intangible assets, less accumulated
amortization |
|
16,959 |
|
|
18,181 |
Goodwill |
|
4,696 |
|
|
4,696 |
Other assets |
|
606 |
|
|
765 |
Total
assets |
$ |
115,183 |
|
$ |
110,938 |
|
|
|
|
|
|
Liabilities and
stockholders' equity: |
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts payable |
$ |
6,654 |
|
$ |
8,463 |
Other current liabilities |
|
4,684 |
|
|
5,520 |
Total current
liabilities |
|
11,338 |
|
|
13,983 |
Long term debt |
|
47,028 |
|
|
45,969 |
Mortgage payable, net of current portion |
|
3,511 |
|
|
- |
Other non current liabilities |
|
815 |
|
|
266 |
Total
liabilities |
|
62,692 |
|
|
60,218 |
Total
stockholders' equity |
|
52,491 |
|
|
50,720 |
Total
liabilities and stockholders' equity |
$ |
115,183 |
|
$ |
110,938 |
CONTACT: |
|
Paul G. Driscoll |
|
Acme United
Corporation |
|
55 Walls Drive |
|
Fairfield, CT,
06824 |
|
|
|
|
Phone: (203)
254-6060 |
|
FAX: (203)
254-6521 |
|
|
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