Acme United Reports 29% Increase in Net Income for Second Quarter of 2024

Rhea-AI Summary

Acme United (NYSE American: ACU) reported a 29% increase in net income for Q2 2024, with earnings reaching $4.5 million or $1.09 per diluted share. Net sales grew by 4% to $55.4 million, and excluding the impact of divested product lines, sales increased by 8%. The company's gross margin improved to 40.8% from 37.5% in the same period last year.

Key highlights include:

• Significant market share gains in first aid products
• Growth in Westcott cutting tools sales
• Acquisition of Elite First Aid, Inc., expanding emergency response product line
• Strong performance in U.S. and European segments
• Reduction in bank debt from $47.5 million to $33.1 million year-over-year

Positive

• Net income increased by 29% to $4.5 million in Q2 2024
• Diluted earnings per share grew by 14% to $1.09
• Net sales increased by 4% to $55.4 million (8% excluding divested product lines)
• Gross margin improved from 37.5% to 40.8% in Q2 2024
• Acquisition of Elite First Aid, Inc., adding $4.2 million in annual revenue
• U.S. segment sales grew by 10% excluding divested product lines
• European segment sales increased by 9% in local currency excluding divested lines
• Bank debt reduced from $47.5 million to $33.1 million year-over-year

Negative

• Canadian segment sales decreased by 4% excluding divested product lines
• Soft economy impacting sales of school and office products in Canada

Insights

Financial Analyst

Acme United's recent financial results show promising growth and strategic moves. The company reported a 29% increase in net income for the second quarter of 2024, reaching $4.5 million. This is a significant uptick from the $3.4 million in the same period last year. Net sales also rose to $55.4 million, marking a 4% year-over-year increase. Excluding the sales from Camillus and Cuda product lines, the growth is even more impressive at 8%.

The acquisition of Elite First Aid appears to be a strategic move to diversify and enhance their product offerings in the emergency response market. This acquisition, valued at $6.1 million, should also help in expanding the customer base and tapping into new revenue streams.

Furthermore, the company has demonstrated sound financial management by reducing its bank debt from $47.5 million to $33.1 million over the past year. This reduction in debt, coupled with generating $8.5 million in free cash flow, is a strong indicator of financial health and effective use of capital.

The increase in gross margin from 37.5% to 40.8% for the quarter suggests productivity improvements and efficient cost management. This boost in margin is important for long-term profitability and indicates that operational efficiencies are being realized.

Overall, these financial metrics point to a solid performance for Acme United, with positive implications for shareholders in both the short and long term.

Market Research Analyst

Acme United has shown notable market agility by focusing on core products and divesting non-core assets like Camillus and Cuda. This strategic shift has allowed the company to allocate resources more effectively, resulting in an 8% growth in net sales when excluding the sold product lines.

The acquisition of Elite First Aid is particularly noteworthy. Given the increasing demand for tactical and emergency response products, this move positions Acme United to capitalize on a growing market segment. The reported $4.2 million in revenue from Elite First Aid in 2023 could serve as a strong foundation for future growth, especially as these products are introduced to Acme United’s existing customer base.

Geographically, the U.S. segment continues to be a strong performer with a 5% increase in net sales for the quarter, signaling robust market share gains across multiple product lines. However, the decline in the Canadian market, with net sales decreasing by 7%, suggests some regional challenges, possibly influenced by the economic environment affecting school and office product sales.

The company's emphasis on market share gains in specific channels, such as the craft market and back-to-school sales for Westcott cutting tools, reflects an adaptable business strategy that could sustain long-term growth.

While the near-term outlook appears strong, investors should monitor the performance of the newly acquired assets and the company's ability to integrate them effectively into existing operations.

SHELTON, Conn., July 19, 2024 (GLOBE NEWSWIRE) -- Acme United Corporation (NYSE American: ACU) today announced that net sales for the quarter ended June 30, 2024 were $55.4 million compared to $53.3 million in the second quarter of 2023, an increase of 4%. Excluding the impact of the Camillus and Cuda hunting and fishing product lines sold on November 1, 2023, net sales for the second quarter of 2024 increased 8% compared to the second quarter of 2023. Net sales for the six months ended June 30, 2024 were $100.4 million, compared to $99.2 million in the same period in 2023, an increase of 1%. Excluding Camillus and Cuda, net sales for the six months increased 5% compared to the same period in 2023.

Net income was $4.5 million, or $1.09 per diluted share, for the quarter ended June 30, 2024, compared to $3.4 million, or $0.96 per diluted share, for the same period in 2023, an increase of 29% in net income and 14% in diluted earnings per share. Net income for the six months ended June 30, 2024 was $6.1 million, or $1.47 per diluted share, compared to $4.4 million, or $1.25 per diluted share, for the same period in 2023, an increase of 37% in net income and 18% in diluted earnings per share.

On May 23, 2024, the Company acquired the assets of Elite First Aid, Inc. (“Elite First Aid”), a leading supplier of tactical, trauma and emergency response products based in Wake Forest, North Carolina. Elite First Aid had revenues in 2023 of approximately $4.2 million.

Chairman and CEO Walter C. Johnsen said, “Sales in the second quarter of 2024 were strong. We had significant market share gains and sales growth in first aid. Revenues of Westcott cutting tools increased due to gains in the craft market and growth in back-to-school sales. Our underlying growth was approximately 8% in the quarter after taking into account the revenues of the hunting and fishing lines which were sold last year to enhance our focus on Acme United’s primary product lines.”

Mr. Johnsen continued, “We are excited about our acquisition of Elite First Aid, which has significantly strengthened our emergency response product line and expanded our customer base. We also intend to offer the Elite First Aid products to our existing customer base in the coming quarters. I am gratified that the expansion of our product line will enhance our ability to help save lives in trauma situations.”

For the three months ended June 30, 2024, net sales in the U.S. segment increased 5% compared to the same period in 2023. Excluding Camillus and Cuda, net sales for the second quarter of 2024 increased 10% compared to the second quarter of 2023 mainly due to market share gains across multiple product lines. For the six months ended June 30, 2024, net sales in the U.S. segment increased 2% compared to the same period in 2023. Excluding Camillus and Cuda, net sales for the six months increased 6% compared to the same period in 2023.

European net sales for the three months ended June 30, 2024 increased 4% in U.S. dollars and 5% in local currency compared to the second quarter of 2023. Excluding Camillus and Cuda, net sales for the second quarter of 2024 increased 9% compared to the second quarter of 2023. Net sales for the six months ended June 30, 2024 increased 5% in both U.S. dollars and local currency compared to the first half of 2023. Excluding Camillus and Cuda sales for the six months, net sales increased 8% compared to the same period in 2023. The sales increase for both periods was due to market share gains in the office channel.

Net sales in Canada for the three months ended June 30, 2024 decreased 7% in both U.S. dollars and local currency compared to the same period in 2023. Excluding Camillus and Cuda, net sales for the second quarter of 2024 decreased 4% compared to the second quarter of 2023. Net sales for the six months ended June 30, 2024 decreased 7% in both U.S. dollars and local currency compared to the first half of 2023. Excluding Camillus and Cuda, net sales for the six months decreased 2% compared to the same period in 2023. Sales of school and office products have been impacted by a soft economy.

Gross margin was 40.8% in the three months ended June 30, 2024 versus 37.5% in the comparable period last year. Gross margin was 39.9% for the six month period ended June 30, 2024, compared to 36.6% for the same period in 2023. The increases in the three and the six-month periods ending June 30, 2024 were primarily due to productivity improvements in the Company’s manufacturing and distribution facilities.

The Company’s bank debt less cash as of June 30, 2024 was $33.1 million compared to $47.5 million as of June 30, 2023. During the twelve-month period ended June 30, 2024, the Company paid approximately $6.1 million for the acquisition of the assets of Elite First Aid Inc., distributed $2.1 million in dividends on its common stock and generated approximately $8.5 million in free cash flow. Additionally, the Company realized net proceeds from the sale of the Camillus and Cuda product lines of approximately $13.0 million.

Conference Call and Webcast Information
Acme United will hold a conference call to discuss its quarterly results, which will be broadcast on Friday, July 19, 2024, at 12:00 p.m. ET. To listen or participate in a question and answer session, dial 877-407-0784. International callers may dial 201-689-8560. The confirmation code is 13747775. 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®, First Aid Central®, PhysiciansCare®, Pac-Kit®, Spill Magic®, Westcott®, Clauss®, DMT®, Med-Nap and Elite First Aid. For more information, visit www.acmeunited.com.

Forward Looking Statements
The 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.

These risks and uncertainties 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, including the impact on the Company’s suppliers and customers; (iii) the continuing adverse impact of inflation, including product costs, and interest rates; (iv) potential adverse effects on the Company, its customers, and suppliers resulting from the conflicts in Ukraine and the Middle East; (v) additional disruptions in the Company’s supply chains, whether caused by pandemics, natural disasters, including trucker shortages, port closures or otherwise; (vi) labor related costs the Company has and may continue to incur, including costs of acquiring and training new employees and rising wages and benefits; (vii) currency fluctuations including, for example, the fluctuation of the dollar against the euro; (viii) the Company’s ability to effectively manage its inventory in a rapidly changing business environment; (ix) changes in client needs and consumer spending habits; (x) the impact of competition; (xi) the impact of technological changes including, specifically, the growth of online marketing and sales activity; (xii) the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business it might acquire; (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. Driscoll	Acme United Corporation	1 Waterview Drive	Shelton, CT 06484
		Phone: (203) 254-6060

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SECOND QUARTER REPORT 2024
(Unaudited)
		Three Months Ended				Three Months Ended
Amounts in 000's except per share data		June 30, 2024				June 30, 2023
Net sales		$	55,425			$	55,336
Cost of goods sold			32,798				33,314
Gross profit			22,627				20,022
Selling, general, and administrative expenses			16,252				14,772
Operating income			6,375				5,250
Interest expense			578				860
Interest income			(39	)			(28	)
Interest expense, net			539				832
Other income, net			(28	)			(23	)
Total other income, net			(28	)			(23	)
Income before income tax expense			5,864				4,441
Income tax expense			1,412				998
Net income		$	4,452			$	3,443
Shares outstanding - Basic			3,679				3,555
Shares outstanding - Diluted			4,088				3,591
Earnings per share - Basic		$	1.21			$	0.97
Earnings per share - Diluted			1.09				0.96
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SECOND QUARTER REPORT 2024 (cont.)
(Unaudited)
		Six Months Ended				Six Months Ended
Amounts in 000's except per share data		June 30, 2024				June 30, 2023
Net sales		$	100,382			$	99,175
Cost of goods sold			60,358				62,872
Gross profit			40,024				36,303
Selling, general, and administrative expenses			31,090				28,865
Operating income			8,934				7,438
Interest expense			1,054				1,779
Interest income			(72	)			(45	)
Interest expense, net			982				1,734
Other income, net			(72	)			(46	)
Total other income, net			(72	)			(46	)
Income before income tax expense			8,024				5,750
Income tax expense			1,935				1,318
Net income		$	6,089			$	4,432
Shares outstanding - Basic			3,664				3,548
Shares outstanding - Diluted			4,143				3,548
Earnings per share - Basic		$	1.66			$	1.25
Earnings per share - Diluted			1.47				1.25
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SECOND QUARTER REPORT 2024
(Unaudited)
Amounts in 000's		June 30, 2024				June 30, 2023
Assets:
Current assets:
Cash and cash equivalents		$	3,791			$	3,401
Accounts receivable, net			40,074				39,796
Inventories			56,621				55,944
Prepaid expenses and other current assets			5,662				4,330
Total current assets			106,148				103,471
Property, plant and equipment, net			30,570				27,263
Operating lease right of use asset			5,176				2,374
Intangible assets, less accumulated amortization			31,647				27,969
Other assets			-				750
Total assets		$	173,541			$	161,827
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable		$	10,319			$	10,724
Operating lease liability - short term			1,589				1,122
Mortgage payable - short term			429				411
Other accrued liabilities			15,656				13,013
Total current liabilities			27,992				25,271
Long term debt			26,419				39,979
Mortgage payable - long term			10,073				10,485
Operating lease liability - long term			3,684				1,407
Other non-current liabilities			1,415				1,033
Total liabilities			69,583				78,175
Total stockholders' equity			103,958				83,652
Total liabilities and stockholders' equity		$	173,541			$	161,827

FAQ

What was Acme United's (ACU) net income for Q2 2024?

Acme United (ACU) reported a net income of $4.5 million for Q2 2024, representing a 29% increase compared to the same period in 2023.

How much did Acme United's (ACU) sales grow in Q2 2024?

Acme United's (ACU) net sales grew by 4% to $55.4 million in Q2 2024. Excluding the impact of divested product lines, sales increased by 8%.

What was Acme United's (ACU) earnings per share for Q2 2024?

Acme United (ACU) reported earnings of $1.09 per diluted share for Q2 2024, a 14% increase from $0.96 per diluted share in Q2 2023.

Did Acme United (ACU) make any acquisitions in 2024?

Yes, Acme United (ACU) acquired the assets of Elite First Aid, Inc. on May 23, 2024. Elite First Aid had revenues of approximately $4.2 million in 2023.

How did Acme United's (ACU) gross margin change in Q2 2024?

Acme United's (ACU) gross margin improved to 40.8% in Q2 2024, up from 37.5% in the same period last year, primarily due to productivity improvements in manufacturing and distribution facilities.