Acme United Corporation (NYSE American: ACU) today announced that
net sales for the quarter ended June 30, 2022, were $56.8 million
compared to $44.8 million in the second quarter of 2021, an
increase of 27%. Net sales for the six months ended June 30, 2022,
were $100.1 million, compared to $88.4 million in the same period
in 2021, an increase of 13%.
Net income was $2.7 million, or $0.71 per
diluted share, for the quarter ended June 30, 2022, compared to
$7.2 million or $1.82 per diluted share, for the same period in
2021, a decrease of 62% in net income and 61% in diluted earnings
per share. The decreases result from the impact in the second
quarter of 2021 of the forgiveness of the Company’s PPP loan in the
amount of $3.5 million and a non-recurring tax credit of $0.9
million related to stock-based compensation expense. Excluding the
impact of the PPP loan forgiveness and the tax credit, the
Company’s adjusted net income for the second quarter of 2021 was
$2.8 million, or $0.71 per diluted share. Accordingly, net income
for the quarter ended June 30, 2022, decreased 3% compared to the
adjusted net income for the second quarter of 2021, while diluted
earnings per share remained constant.
Net income for the six months ended June 30,
2022, was $3.6 million, or $0.93 per diluted share, compared to
$9.3 million, or $2.34 per diluted share, for the same period in
2021, a decrease of 62% in net income and 60% in diluted earnings
per share. Excluding the impact of the PPP loan forgiveness and the
tax credit referred to above, the Company’s adjusted net income for
the six months ended June 30, 2021, was $4.9 million, or $1.23 per
diluted share. Accordingly, net income for the six months ended
June 30, 2022, decreased 27% compared to the adjusted net income
for the same period in 2021, while diluted earnings per share
decreased 25%. The declines compared to adjusted net income and
adjusted diluted earnings per share in 2021 were mainly due to
lower gross margins as a percentage of sales in the respective
periods.
On June 1, 2022, the Company acquired the assets
of Live Safely Products, LLC (d/b/a “Safety Made”), for
approximately $11 million, including $1.5 million which is
contingent upon meeting certain financial targets. Safety Made, a
leading manufacturer of first aid kits for the promotional products
industry and based in Keane, NH, had revenues in 2021 of
approximately $4.9 million and EBITDA of approximately $1.2
million.
Chairman and CEO Walter C. Johnsen said, “Acme
United had record sales in the second quarter as our team
successfully addressed unprecedented economic and operational
challenges, including challenges resulting from quarantines,
demurrage fees, port failures, a lack of drivers, the terrible war
in Ukraine, the dramatic weakening of the euro, and the highest
inflation in the U.S. in 40 years. Nevertheless, we delivered to
our customers.”
Mr. Johnsen continued, “We are now seeing some
improvement in our supply chain, and we intend to reduce our
inventory gradually over the coming quarters. While the overall
operating environment remains challenging, we continue to target
revenues of approximately $200 million in 2022. We continue to
drive internal growth while seeking to identify potential
acquisitions. In the second quarter, we also increased our credit
facility with HSBC by $15 million, to $65 million. The increase
will further support our growth initiatives.”
For the three months ended June 30, 2022, net
sales in the U.S. segment increased 33% compared to the same period
in 2021 due to a combination of higher sales prices, increased
volume, and the carryover of orders from our first quarter of 2022
which were unfilled because of supply chain disruptions. For the
six months ended June 30, 2022, net sales in the U.S. segment
increased 16% compared to the same period in 2021. The growth was
primarily attributable to strong sales of first aid products and
Westcott school and office products.
European net sales for the three months ended
June 30, 2022, decreased 1% in U.S. dollars but increased 12% in
local currency compared to the second quarter of 2021. Net sales
for the six months ended June 30, 2022, decreased 2% in U.S.
dollars but increased 7% in local currency compared to the first
half of 2021. The growth in the three and six months was mainly due
to new customers in the office channel.
Net sales in Canada for the three months ended
June 30, 2022, decreased 3% in U.S. dollars and were constant in
local currency compared to the same period in 2021. Net sales for
the six months ended June 30, 2022, increased 2% in U.S. dollars
and 4% in local currency compared to the first half of 2021.
Gross margin was 33% in the three months ended
June 30, 2022, versus 36% in the comparable period last year. Gross
margin was 34% for the six month period ended June 30, 2022,
compared to 36% for the same period of 2021. The declines in the
three and the six months ending June 30, 2022, were primarily due
to product cost inflation pressures as well as higher
transportation and labor costs. Price increases partially offset
the cost increases.
Operating income increased 5% in the three
months ended June 30, 2022, compared to the same period in
2021.
The Company’s bank debt less cash as of June 30,
2022, was $59.8 million compared to $39.3 million on June 30, 2021.
During the twelve-month period ended June 30, 2022, the Company
paid approximately $11 million for the acquisition of the assets of
Live Safely Products, LLC, distributed $1.8 million in dividends on
its common stock, and repurchased $1.5 million of common stock. We
increased inventory during the twelve-month period by approximately
$15 million to anticipate our continued growth and to be positioned
to offset the impact of potential supply chain interruptions
related to COVID-19. The increase also reflected higher product
costs.
Conference Call and Webcast
InformationAcme United will hold a conference call to
discuss its quarterly results, which will be broadcast on Friday,
July 22, 2022, at 12:00 p.m. EDT. To listen or participate in a
question and answer session, dial 888-220-8474. International
callers may dial 646-828-8193. The confirmation code is 8849680.
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 safety solutions and cutting technology to the school,
home, office, hardware, sporting goods and industrial markets. Its
leading brands include First Aid Only®, First Aid Central®,
PhysiciansCare®, Pac-Kit®, Spill Magic®, Westcott®, Clauss®,
Camillus®, Cuda®, DMT®, Med-Nap and Safety Made. For more
information, visit www.acmeunited.com.
Forward Looking StatementsThe
Company may from time to time make written or oral “forward-looking
statements” including statements contained in this report and in
other communications by the Company, which are made in good faith
pursuant to the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based on our
beliefs as well as assumptions made by and information currently
available to us. When used in this document, words like “may,”
“might,” “will,” “except,” “anticipate,” “believe,” “potential,”
and similar expressions are intended to identify forward-looking
statements. Actual results could differ materially from our current
expectations.
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 that may impact the Company’s
business, operations and financial results, including those risks
and uncertainties resulting from the global COVID-19 pandemic,
future waves of COVID-19, including through the Delta and Omicron
variants and any new variant strains of the underlying virus; any
future pandemics; the continuing effectiveness, global
availability, and public acceptance of existing vaccines; the
effectiveness, availability, and public acceptance of vaccines
against variant strains of potential new viruses; and the
heightened impact the pandemic has on many of the risks described
herein, including, without limitation, risks relating to
disruptions in our supply chain, and labor shortages, any of which
could materially adversely impact the Company’s ability to
manufacture, source or distribute its products, both domestically
and internationally.
These risks and uncertainties further include,
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, whether
caused by COVID-19 or otherwise, including the impact on the
Company’s suppliers and customers; (iii) additional disruptions in
the Company’s supply chains, whether caused by COVID-19 or
otherwise; (iv) labor shortages and related costs the Company has
and may continue to incur, including costs of acquiring and
training new employees and rising wages and benefits; (v) the
continuing adverse impact of cost inflation; (vi) the Company’s
ability to effectively manage its inventory in a rapidly changing
business environment, including the additional inventory the
Company acquired in anticipation of supply chain disruptions and
uncertainties; (vii) changes in client needs and consumer spending
habits; (viii) the impact of competition; (ix) the impact of
technological changes including, specifically, the growth of online
marketing and sales activity; (x) the Company’s ability to manage
its growth effectively, including its ability to successfully
integrate any business it might acquire; (xi) currency
fluctuations; (xii) international trade policies and their impact
on demand for our products and our competitive position, including
the imposition of new tariffs or changes in existing tariff rates;
and (xiii) other risks and uncertainties indicated from time to
time in the Company’s filings with the Securities and Exchange
Commission.
CONTACT: Paul G.
Driscoll Acme United
Corporation 1
Waterview Drive
Shelton, CT
06484Phone: (203) 254-6060
ACME UNITED
CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
SECOND
QUARTER REPORT 2022 |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Three Months
Ended |
Amounts in 000's except per share data |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
56,773 |
|
|
$ |
44,847 |
|
|
Cost
of goods sold |
|
38,225 |
|
|
|
28,694 |
|
|
Gross profit |
|
18,548 |
|
|
|
16,153 |
|
|
Selling, general, and administrative expenses |
|
14,572 |
|
|
|
12,364 |
|
|
Operating income |
|
3,976 |
|
|
|
3,789 |
|
|
Interest expense |
|
(428 |
) |
|
|
(226 |
) |
|
Interest income |
|
5 |
|
|
|
3 |
|
|
Interest expense, net |
|
(423 |
) |
|
|
(223 |
) |
|
PPP
Loan forgiveness |
|
|
|
|
3,508 |
|
|
Other expense, net |
|
(148 |
) |
|
|
(68 |
) |
|
Total other (expense) income , net |
|
(148 |
) |
|
|
3,440 |
|
|
Income before income tax expense |
|
3,405 |
|
|
|
7,006 |
|
|
Income tax expense (benefit) |
|
666 |
|
|
|
(224 |
) |
|
Net
income |
$ |
2,739 |
|
|
$ |
7,230 |
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,521 |
|
|
|
3,347 |
|
|
Shares outstanding - Diluted |
|
3,842 |
|
|
|
3,964 |
|
|
|
|
|
|
|
|
|
Earnings per share - Basic |
$ |
0.78 |
|
|
$ |
2.16 |
|
|
Earnings per share - Diluted |
|
0.71 |
|
|
|
1.82 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to reported Net Income (GAAP) |
|
|
|
|
|
|
Net income as reported (GAAP) |
|
2,739 |
|
|
|
7,230 |
|
|
PPP Loan Forgiveness |
|
- |
|
|
|
(3,508 |
) |
|
Tax credit on stock options |
|
- |
|
|
|
(900 |
) |
|
Net income as adjusted |
|
2,739 |
|
|
|
2,822 |
|
|
Adjusted Earnings per share - Basic |
$ |
0.78 |
|
|
$ |
0.84 |
|
|
Adjusted earnings per share - Diluted |
|
0.71 |
|
|
|
0.71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACME UNITED
CORPORATION |
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
SECOND
QUARTER REPORT 2022 (cont.) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended |
|
Six Months
Ended |
Amounts in 000's except per share data |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
|
Net
sales |
$ |
100,106 |
|
|
$ |
88,372 |
|
|
Cost
of goods sold |
|
66,590 |
|
|
|
56,632 |
|
|
Gross profit |
|
33,515 |
|
|
|
31,740 |
|
|
Selling, general, and administrative expenses |
|
28,169 |
|
|
|
24,983 |
|
|
Operating income |
|
5,347 |
|
|
|
6,757 |
|
|
Interest expense |
|
(737 |
) |
|
|
(452 |
) |
|
Interest income |
|
8 |
|
|
|
9 |
|
|
Interest expense, net |
|
(729 |
) |
|
|
(443 |
) |
|
PPP
Loan forgiveness |
|
|
|
|
3,508 |
|
|
Other expense, net |
|
(147 |
) |
|
|
(145 |
) |
|
Total other (expense) income , net |
|
(147 |
) |
|
|
3,363 |
|
|
Income before income tax expense |
|
4,471 |
|
|
|
9,677 |
|
|
Income tax expense |
|
903 |
|
|
|
400 |
|
|
Net
income |
$ |
3,568 |
|
|
$ |
9,277 |
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,521 |
|
|
|
3,410 |
|
|
Shares outstanding - Diluted |
|
3,845 |
|
|
|
3,961 |
|
|
|
|
|
|
|
|
|
Earnings per share - Basic |
$ |
1.01 |
|
|
$ |
2.72 |
|
|
Earnings per share - Diluted |
|
0.93 |
|
|
|
2.34 |
|
|
|
|
|
|
|
|
|
Reconciliation to reported Net Income (GAAP) |
|
|
|
|
|
|
Net income as reported (GAAP) |
|
3,568 |
|
|
|
9,277 |
|
|
PPP Loan Forgiveness |
|
- |
|
|
|
(3,508 |
) |
|
Tax credit on stock options |
|
- |
|
|
|
(900 |
) |
|
Net income as adjusted |
|
3,568 |
|
|
|
4,869 |
|
|
Adjusted Earnings per share - Basic |
$ |
1.01 |
|
|
$ |
1.43 |
|
|
Adjusted earnings per share - Diluted |
|
0.93 |
|
|
|
1.23 |
|
|
|
|
|
|
|
|
|
ACME UNITED
CORPORATION |
CONDENSED
CONSOLIDATED BALANCE SHEETS |
SECOND
QUARTER REPORT 2022 |
(Unaudited) |
|
|
|
|
|
|
|
Amounts in 000's |
|
June 30, 2022 |
|
June 30, 2021 |
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,760 |
|
|
$ |
3,240 |
|
|
Accounts receivable, net |
|
46,991 |
|
|
|
36,270 |
|
|
Inventories |
|
65,039 |
|
|
|
48,691 |
|
|
Prepaid expenses and other current
assets |
|
3,663 |
|
|
|
2,233 |
|
|
Total current assets |
|
117,453 |
|
|
|
90,434 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
26,277 |
|
|
|
22,408 |
|
|
Operating lease right of use asset |
|
2,787 |
|
|
|
3,476 |
|
|
Intangible assets, less accumulated
amortization |
|
30,028 |
|
|
|
22,820 |
|
|
Total assets |
$ |
176,545 |
|
|
$ |
139,138 |
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity: |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
21,421 |
|
|
$ |
8,021 |
|
|
Operating lease liability - short term |
|
1,080 |
|
|
|
919 |
|
|
Mortgage payable - short term |
|
389 |
|
|
|
267 |
|
|
Other accrued liabilities |
|
10,333 |
|
|
|
10,374 |
|
|
Total current liabilities |
|
33,223 |
|
|
|
19,581 |
|
|
Long term debt |
|
50,263 |
|
|
|
39,550 |
|
|
Mortgage payable - long term |
|
10,897 |
|
|
|
2,952 |
|
|
Operating lease liability - long term |
|
1,944 |
|
|
|
2,589 |
|
|
Other non-current liabilities |
|
396 |
|
|
|
14 |
|
|
Total liabilities |
|
96,723 |
|
|
|
64,686 |
|
|
Total stockholders' equity |
|
79,822 |
|
|
|
74,452 |
|
|
Total liabilities and stockholders' equity |
$ |
176,545 |
|
|
$ |
139,138 |
|
|
|
|
|
|
|
|
|
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