Acme United Corporation (NYSE American: ACU) today announced that
net sales for the three months ended September 30, 2022 were $49.7
million compared to $47.9 million in the same period of 2021, an
increase of 4% (5% in constant currency). Net sales for the nine
months ended September 30, 2022 were $149.8 million compared to
$136.3 million in the same period in 2021, an increase of 10% (11%
in constant currency).
Net income was $64,000, or $0.02 per diluted
share, for the three months ended September 30, 2022, compared to
$2.0 million, or $0.50 per diluted share, for the same period in
2021. Net income for the nine months ended September 30, 2022 was
$3.6 million, or $0.96 per diluted share, compared, on an adjusted
basis, to $7.8 million, or $1.97 per diluted share (or $11.3
million or $2.27 per diluted share including the impact of the PPP
loan forgiveness), for the same period in 2021, a decrease of 54%
in net income and 51% in diluted earnings per share. The declines
in net income and diluted earnings per share in the three and nine
months ended September 30, 2022 were mainly due to higher cost of
goods sold and higher interest expense in these periods.
For the three months ended September 30, 2022,
net sales in the U.S. segment increased 4% compared to the same
period in 2021. As a precaution against supply chain delays,
customers increased purchases in the second quarter of 2022. This
reduced sales in the third quarter of 2022. For the nine months
ended September 30, 2022, net sales in the U.S. segment increased
12% compared to the same period in 2021. The growth was primarily
attributable to increased sales of first aid and medical products
and Westcott school and office products.
European net sales for the three months ended
September 30, 2022 decreased 3% in U.S. dollars but increased 13%
in local currency compared to the same period of 2021. Net sales
for the nine months ended September 30, 2022, decreased 3% in U.S.
dollars but increased 9% in local currency compared to the same
period of 2021. The growth in the three and nine months was mainly
due to new customers in the office channel.
Net sales in Canada for the three months ended
September 30, 2022 increased 1% in U.S. dollars and 3% in local
currency compared to the same period in 2021. Net sales for the
nine months ended September 30, 2022 increased 2% in U.S. dollars
and 5% in local currency compared to the same period in 2021. The
growth in the three and nine months was mainly due to higher sales
of first aid products.
Gross margin was 32.0% in the three months ended
September 30, 2022 compared to 35.5% in the same period in 2021.
Gross margin was 33.0% for the nine-month period ended September
30, 2022 compared to 35.8% for the same period in 2021. The
declines in the three and nine months ended September 30, 2022 were
primarily due to exceptionally high ocean container costs and
demurrage charges. The impact on gross margins due to the
aforementioned supply chain expenses were 2.3% and 1.5% for the
three and nine months ended September 30, 2022.
Chairman and CEO Walter C. Johnsen said, “Our
earnings, like those of many companies in our sector, have been
adversely impacted by the massive global supply chain issues that
occurred earlier in the year. The cost to ship a container from
Asia to the U.S. more than doubled in a year and demurrage costs
for delays in the ports were unprecedented. In total, commencing in
the first quarter of 2022, we will have incurred $4.4 million in
exceptional supply chain expenses, of which $1.3 million was
recognized in the third quarter. Approximately $900,000 remains to
be recognized in the fourth quarter of 2022, and $400,000 in the
first quarter of 2023.”
Mr. Johnsen continued, “We are seeing
substantial improvement in the supply chain now. The costs of
container shippage have dropped to prior year levels, or even less.
We are no longer incurring significant demurrage charges as
congestion in the ports has declined significantly.
“In response to the macroeconomic challenges,
the Company has implemented a series of cost reduction initiatives
that are expected to generate over $5.0 million in savings in 2023.
We have reduced SG&A expenses and other costs, and implemented
a wide range of productivity improvements in our manufacturing and
distribution facilities. In the coming months, we will be
installing new automated packaging equipment in the Spill Magic
plant and a new robotic filling machine in the Med-Nap
facility.
“There are solid growth opportunities in 2023,
including new first aid and medical placement in the industrial and
retail markets, additional Westcott craft products in the mass and
ecommerce markets, and expanded sales of Spill Magic to large mass
market retailers. In addition, we recently purchased the
promotional business of a former competitor of Safety Made with
annual sales of approximately $1.2 million.
“We expect the combination of revenue growth,
$5.0 million of cost and productivity savings, and the
normalization of supply chain expenses to position the Company for
continued growth.”
The Company’s bank debt less cash as of
September 30, 2022 was $64 million compared to $38 million as of
September 30, 2021. During the twelve-month period ended September
30, 2022, the Company paid approximately $11 million for the
acquisition of the assets of Live Safely Products, LLC, paid $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 $17 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 in inventory is also a result of 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,
October 21, 2022, at 12:00 p.m. EDT. To listen or participate in a
question and answer session, dial 800-458-4121. International
callers may dial 646-828-8193. The confirmation code is 6823102.
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, natural
disasters or otherwise; (iv) labor-related costs the Company has
incurred and continues to incur, including costs of acquiring and
training new employees and rising wages and benefits; (v) the
continuing adverse impact of inflation on products costs and
interest rates; (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) potential adverse
effects on the Company, its customers, and suppliers resulting from
the war in Ukraine; (viii) changes in client needs and consumer
spending habits; (ix) the impact of competition; (x) the impact of
technological changes including, specifically, the growth of online
marketing and sales activity; (xi) the Company’s ability to manage
its growth effectively, including its ability to successfully
integrate any business it might acquire; (xii) currency
fluctuations; (xiii) 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 (xiv) other risks and uncertainties indicated from time to time
in the Company’s filings with the Securities and Exchange
Commission.
CONTACT: Paul G. DriscollAcme United Corporation1
Waterview DriveShelton, CT 06484Phone: (203) 254-6060
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
THIRD QUARTER REPORT 2022 |
(Unaudited) |
|
|
|
|
|
Three Months Ended |
Three Months Ended |
Amounts in 000's except per share data |
September 30, 2022 |
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
49,744 |
|
|
$ |
47,923 |
|
|
Cost of goods sold |
|
33,819 |
|
|
|
30,918 |
|
|
Gross profit |
|
15,925 |
|
|
|
17,005 |
|
|
Selling, general, and administrative expenses |
|
14,972 |
|
|
|
14,044 |
|
|
Operating income |
|
953 |
|
|
|
2,961 |
|
|
Interest expense |
|
(722 |
) |
|
|
(230 |
) |
|
Interest income |
|
8 |
|
|
|
2 |
|
|
Interest expense, net |
|
(714 |
) |
|
|
(228 |
) |
|
Other expense, net |
|
(209 |
) |
|
|
(68 |
) |
|
Total other expense, net |
|
(209 |
) |
|
|
(68 |
) |
|
Income before income tax expense |
|
30 |
|
|
|
2,665 |
|
|
Income tax (benefit) expense |
|
(34 |
) |
|
|
619 |
|
|
Net income |
$ |
64 |
|
|
$ |
2,046 |
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,521 |
|
|
|
3,542 |
|
|
Shares outstanding - Diluted |
|
3,683 |
|
|
|
4,058 |
|
|
|
|
|
|
|
|
|
Earnings per share - Basic |
$ |
0.02 |
|
|
$ |
0.58 |
|
|
Earnings per share - Diluted |
|
0.02 |
|
|
|
0.50 |
|
|
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
THIRD QUARTER REPORT 2022 (cont.) |
(Unaudited) |
|
|
|
Nine Months Ended |
Nine Months Ended |
Amounts in 000's except per share data |
September 30, 2022 |
September 30, 2021 |
|
|
|
|
|
|
|
Net sales |
$ |
149,849 |
|
|
$ |
136,295 |
|
|
Cost of goods sold |
|
100,374 |
|
|
|
87,550 |
|
|
Gross profit |
|
49,475 |
|
|
|
48,745 |
|
|
Selling, general, and administrative expenses |
|
43,176 |
|
|
|
39,028 |
|
|
Operating income |
|
6,299 |
|
|
|
9,717 |
|
|
Interest expense |
|
(1,459 |
) |
|
|
(682 |
) |
|
Interest income |
|
17 |
|
|
|
11 |
|
|
Interest expense, net |
|
(1,442 |
) |
|
|
(671 |
) |
|
PPP Loan forgiveness |
|
- |
|
|
|
3,508 |
|
|
Other expense, net |
|
(355 |
) |
|
|
(213 |
) |
|
Total other (expense) income, net |
|
(355 |
) |
|
|
3,295 |
|
|
Income before income tax expense |
|
4,502 |
|
|
|
12,341 |
|
|
Income tax expense |
|
870 |
|
|
|
1,019 |
|
|
Net income |
$ |
3,632 |
|
|
$ |
11,322 |
|
|
|
|
|
|
|
|
|
Shares outstanding - Basic |
|
3,525 |
|
|
|
3,449 |
|
|
Shares outstanding - Diluted |
|
3,781 |
|
|
|
3,969 |
|
|
|
|
|
|
|
|
|
Earnings per share - Basic |
$ |
1.03 |
|
|
$ |
3.28 |
|
|
Earnings per share - Diluted |
|
0.96 |
|
|
|
2.85 |
|
|
|
|
|
|
|
|
|
Reconciliation of Net Income as reported (GAAP) to Net
Income as adjusted |
|
|
|
|
Net income as reported (GAAP) |
$ |
3,632 |
|
|
$ |
11,322 |
|
|
PPP Loan Forgiveness |
|
- |
|
|
|
(3,508 |
) |
|
Net income as adjusted |
|
3,632 |
|
|
|
7,814 |
|
|
Earnings per share before PPP Loan forgiveness -
Basic |
1.03 |
|
|
|
2.27 |
|
|
Earnings per share before PPP Loan forgiveness -
Diluted |
0.96 |
|
|
|
1.97 |
|
|
|
|
|
|
|
|
|
ACME UNITED CORPORATION |
CONDENSED CONSOLIDATED BALANCE SHEETS |
THIRD QUARTER REPORT 2022 |
(Unaudited) |
|
|
|
|
Amounts in 000's |
September 30, 2022 |
September 30, 2021 |
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,218 |
|
|
$ |
5,306 |
|
|
Accounts receivable, net |
|
40,149 |
|
|
|
36,088 |
|
|
Inventories |
|
66,210 |
|
|
|
48,795 |
|
|
Prepaid expenses and other current assets |
|
3,990 |
|
|
|
2,458 |
|
|
Total current assets |
|
114,567 |
|
|
|
92,647 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
26,042 |
|
|
|
23,182 |
|
|
Operating lease right of use asset |
|
2,891 |
|
|
|
3,187 |
|
|
Intangible assets, less accumulated
amortization |
|
21,295 |
|
|
|
17,615 |
|
|
Goodwill |
|
8,189 |
|
|
|
4,800 |
|
|
Other assets |
|
1,500 |
|
|
|
- |
|
|
Total assets |
$ |
174,484 |
|
|
$ |
141,431 |
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity: |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
11,771 |
|
|
$ |
6,695 |
|
|
Operating lease liability - short term |
|
1,142 |
|
|
|
945 |
|
|
Mortgage payable - short term |
|
389 |
|
|
|
267 |
|
|
Other accrued liabilities |
|
11,113 |
|
|
|
11,215 |
|
|
Total current liabilities |
|
24,415 |
|
|
|
19,122 |
|
|
Long term debt |
|
57,131 |
|
|
|
40,454 |
|
|
Mortgage payable - long term |
|
10,803 |
|
|
|
2,711 |
|
|
Operating lease liability - long term |
|
1,949 |
|
|
|
2,485 |
|
|
Other non-current liabilities |
|
1,205 |
|
|
|
111 |
|
|
Total liabilities |
|
95,503 |
|
|
|
64,883 |
|
|
Total stockholders' equity |
|
78,981 |
|
|
|
76,548 |
|
|
Total liabilities and stockholders' equity |
$ |
174,484 |
|
|
$ |
141,431 |
|
|
|
|
|
|
|
|
|
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