Acme United Corporation (NYSE American:ACU) today announced that
net sales for the fourth quarter ended December 31, 2017 were $30.2
million, compared to $26.4 million in the comparable period of
2016, an increase of 14%. Net sales for the year ended December 31,
2017 were $130.5 million, compared to $124.6 million in 2016, an
increase of 5%.
Adjusted net income (non-GAAP), excluding tax
charges related to the recently enacted U.S. Tax Cuts and Jobs Act,
for the quarter ended December 31, 2017 was $590,000, or $0.16 per
diluted share. This compares to $546,000, or $0.15 per
diluted share, for the comparable period in 2016, an 8% increase in
net income and 7% increase in earnings per share. Adjusted net
income (non-GAAP) for the year ended December 31, 2017 was $5.3
million, or $1.42 per diluted share, compared to $5.8 million, or
$1.64 per diluted share, for the year ended December 31, 2016, a 9%
decrease in net income and 13% decrease in earnings per
share.
As a result of the one-time tax charges, net
loss for the quarter ended December 31, 2017 was $655,000, or
$(0.18) per diluted share. Net income for the year ended December
31, 2017 was $4.1 million, or $1.09 per diluted share. In the
fourth quarter of 2017, the Company recorded a provisional charge
of $1.245 million, of which $1.17 million was due to the one-time
transition tax for deemed repatriation of accumulated foreign
earnings, and approximately $75,000 was for the revaluation of
deferred tax assets.
Chairman and CEO Walter C. Johnsen said, “During
2017, we built our first aid and safety business and added
substantial new business for 2018. We grew the Clauss
professional cutting tools and introduced new Camillus knives that
will add new revenues in 2018. Although we lost a major
promotion in the Westcott family in 2017, we were able to regain it
for 2018, which we expect to have a positive impact on our business
in the coming year. Our European business had record sales and
earnings in 2017.”
Mr. Johnsen added, “The integration of Spill
Magic progressed well during 2017, and its sales have grown through
Acme United’s extensive distribution network. We see
additional opportunities in 2018. We expect to provide financial
guidance for 2018 in the company’s first-quarter earnings
report.”
Mr. Johnsen concluded “The Company had approximately $9.3
million in cash held offshore at the end of 2017. As a result of
the favorable tax treatment of such funds under the Tax Cuts and
Jobs Act, we have repatriated approximately $5.8 million so far in
2018. We have used the proceeds to pay down debt and plan to
finance expanded production at our DMT, Spill Magic, and first aid
facilities in the U.S. We continue to look for new
acquisitions that leverage our core competencies and
capabilities.”
In the U.S. segment, net sales for the quarter
ended December 31, 2017 increased 14% compared to the same period
in 2016. The sales increase for the fourth quarter was mainly due
to strong sales of first aid and safety products, including Spill
Magic. Net sales for the year ended December 31, 2017 grew 4% over
2016 in the U.S. segment. Our acquisition of Spill Magic assets in
February 2017 contributed $1.6 million in net sales in the fourth
quarter, and $6.5 million for the year ended December 31,
2017. Excluding Spill Magic, net sales in the U.S. segment
declined 2% for the year ended December 31, 2017.
Net sales in Canada for the three months ended
December 31, 2017 increased 14% in U.S. dollars and 9% in local
currency compared to the prior-year period. Net sales for the
year ended December 31, 2017 increased 2% in U.S. dollars and were
constant in local currency compared to the same period in
2016.
Net sales in Europe for the three months ended
December 31, 2017 increased 19% in U.S. dollars and 8% in local
currency compared to the same period in 2016. Net sales for
the year ended December 31, 2017 increased 18% in U.S. dollars and
16% in local currency compared to last year. These increases were
due to market share gains in the office products channel and higher
sales of DMT
products.
Gross margin was 35.2% in the three months ended December 31, 2017
compared to 37.2% in the same period in 2016. The lower gross
margin was primarily due to heavier promotional spending in the
Company’s e-commerce business and to product mix. Gross
margin was 36.7% for the year ended December 31, 2017 compared to
36.6% for last year’s comparable period.
The Company’s long-term debt less cash on
December 31, 2017 was $37.8 million compared to $27.0 million on
December 31, 2016. During the year, the Company paid
approximately $7.2 million for the acquisition of the assets of
Spill Magic, purchased its manufacturing and distribution facility
in Vancouver, WA for $4.0 million and distributed $1.4 million in
dividends on its common stock. The Vancouver, WA facility was
recently appraised at $6.25 million. During the year, the Company
generated $1.7 million in free cash flow.
The Company believes that our presentation of
non-GAAP financial measures, when presented together with the
corresponding GAAP financial measures, provides a more complete
understanding to investors of the Company’s results of operations.
Specifically, our use of non-GAAP measures facilitates comparisons
of our financial results and operating performance with prior
periods. In addition, our adjusted financial measures provide
greater transparency to investors of supplemental information used
by management in its financial and operational decision making.
However, these non-GAAP financial measures should be considered as
a supplement to, and not as a substitute for, the corresponding
measures calculated in accordance with GAAP.
Conference Call and Webcast
InformationAcme United will hold a conference call to
discuss its quarterly results, which will be broadcast over the
Internet on Tuesday, February 27, 2018, at 12:00 p.m. EDT. To
listen or participate in a question and answer session, dial
866-564-7439. International callers may dial 323-794-2094. 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 UnitedACME UNITED
CORPORATION is a leading worldwide supplier of innovative
cutting, measuring and safety products to the school, home, office,
hardware, sporting goods and industrial markets. Its leading brands
include Westcott®, Clauss®, Camillus®, Cuda®, PhysiciansCare®,
First Aid Only®, Pac-Kit®, DMT® and Spill Magic®. For more
information, visit www.acmeunited.com.
Forward Looking StatementsForward-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; and (viii) 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 |
YEAR END REPORT 2017 |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
|
Quarter Ended |
|
Amounts in $000's except per share
data |
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
|
|
$ |
30,170 |
|
|
$ |
26,376 |
|
|
Cost of goods sold |
|
|
|
19,544 |
|
|
|
16,564 |
|
|
Gross profit |
|
|
|
|
10,626 |
|
|
|
9,812 |
|
|
Selling, general, and administrative expenses |
|
9,860 |
|
|
|
9,105 |
|
|
Income from operations |
|
|
|
766 |
|
|
|
707 |
|
|
Interest expense |
|
|
|
(386 |
) |
|
|
(233 |
) |
|
Interest income |
|
|
|
7 |
|
|
|
6 |
|
|
Net interest expense |
|
|
|
(379 |
) |
|
|
(227 |
) |
|
Other expense, net |
|
|
|
(19 |
) |
|
|
(38 |
) |
|
Total other expense, net |
|
|
|
(398 |
) |
|
|
(265 |
) |
|
Pre-tax income |
|
|
|
368 |
|
|
|
442 |
|
|
Income tax expense |
|
|
|
1,023 |
|
|
|
(104 |
) |
|
Net
(loss) income |
|
|
$ |
(655 |
) |
|
$ |
546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
|
3,374 |
|
|
|
3,325 |
|
|
|
Shares outstanding - Diluted |
|
|
3,676 |
|
|
|
3,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic |
|
|
$ |
(0.19 |
) |
|
$ |
0.16 |
|
|
Earnings per share diluted |
|
|
(0.18 |
) |
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures |
|
|
|
|
|
|
|
GAAP net (loss) income |
|
|
(655 |
) |
|
|
546 |
|
|
|
Adjustment for tax expense related to U.S. tax
reform |
1,245 |
|
|
|
|
|
|
Non-GAAP net income |
|
|
|
590 |
|
|
|
546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic - Non GAAP |
|
$ |
0.17 |
|
|
$ |
0.16 |
|
|
Earnings per share diluted - Non GAAP |
|
0.16 |
|
|
|
0.15 |
|
|
|
|
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME |
YEAR END REPORT 2017 (cont.) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
Year Ended |
|
Amounts in $000's except per share
data |
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
|
|
$ |
130,550 |
|
|
$ |
124,574 |
|
|
Cost of goods sold |
|
|
|
82,651 |
|
|
|
79,019 |
|
|
Gross profit |
|
|
|
|
47,899 |
|
|
|
45,555 |
|
|
Selling, general, and administrative expenses |
|
40,103 |
|
|
|
37,113 |
|
|
Income from operations |
|
|
|
7,796 |
|
|
|
8,442 |
|
|
Interest expense |
|
|
|
(1,357 |
) |
|
|
(869 |
) |
|
Interest income |
|
|
|
29 |
|
|
|
0 |
|
|
Net interest expense |
|
|
|
(1,327 |
) |
|
|
(869 |
) |
|
Other income (expense), net |
|
|
25 |
|
|
|
(76 |
) |
|
Total other expense, net |
|
|
|
(1,302 |
) |
|
|
(945 |
) |
|
Pre-tax income |
|
|
|
6,493 |
|
|
|
7,497 |
|
|
Income tax expense |
|
|
|
2,441 |
|
|
|
1,646 |
|
|
Net
income |
|
|
|
$ |
4,052 |
|
|
$ |
5,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
|
3,356 |
|
|
|
3,328 |
|
|
|
Shares outstanding - Diluted |
|
|
3,725 |
|
|
|
3,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic |
|
|
$ |
1.21 |
|
|
|
1.76 |
|
|
Earnings per share diluted |
|
|
1.09 |
|
|
|
1.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures |
|
|
|
|
|
|
|
GAAP net income |
|
|
|
4,052 |
|
|
|
5,851 |
|
|
|
Adjustment for tax expense related to U.S. tax
reform |
1,245 |
|
|
|
|
|
|
Non-GAAP net income |
|
|
|
5,297 |
|
|
|
5,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share basic - Non GAAP |
|
$ |
1.58 |
|
|
$ |
1.76 |
|
|
Earnings per share diluted - Non GAAP |
|
1.42 |
|
|
|
1.64 |
|
|
|
|
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
YEAR END REPORT 2017 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Amounts in $000's |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash |
|
|
|
$ |
9,338 |
|
$ |
5,911 |
|
|
Accounts receivable, net |
|
|
26,012 |
|
|
20,021 |
|
|
Inventories |
|
|
|
40,087 |
|
|
37,238 |
|
|
Prepaid and other current assets |
|
|
2,664 |
|
|
2,294 |
|
Total current assets |
|
|
|
78,102 |
|
|
65,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
13,728 |
|
|
7,973 |
|
|
Intangible assets, less amortization |
|
17,896 |
|
|
13,988 |
|
|
Goodwill |
|
|
|
|
4,682 |
|
|
3,948 |
|
|
Other assets |
|
|
|
322 |
|
|
694 |
|
Total assets |
|
|
|
$ |
114,730 |
|
$ |
92,067 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity: |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
$ |
11,151 |
|
$ |
7,339 |
|
|
Other current liabilities |
|
|
5,632 |
|
|
5,481 |
|
Total current liabilities |
|
|
|
16,783 |
|
|
12,820 |
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
Long term debt |
|
|
|
43,450 |
|
|
32,936 |
|
|
Mortgage payable L/T |
|
|
|
3,711 |
|
|
0 |
|
|
Other non current liabilities |
|
|
847 |
|
|
190 |
|
Total liabilities |
|
|
|
64,792 |
|
|
45,946 |
|
Total stockholders' equity |
|
|
|
49,938 |
|
|
46,121 |
|
Total liabilities and stockholders' equity |
$ |
114,730 |
|
$ |
92,067 |
|
|
|
|
|
|
|
|
CONTACT: |
|
Paul G.
Driscoll |
|
Acme United
CorporationPhone: (203) 254-6060 |
|
55 Walls
DriveFAX: (203) 254-6521 |
|
Fairfield,
CT 06824 |
|
|
|
|
|
|
|
|
|