Acme United Reports 39% Increase in Earnings Per Share for First Quarter of 2024

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Acme United (ACU) reported a 39% increase in earnings per share for the first quarter of 2024. Net sales were $45.0 million, down 2% from the previous year, but excluding certain product lines, sales increased by 1%. Net income rose to $1.6 million, with diluted earnings per share at $0.39, marking a 65% increase in net income and a 39% increase in EPS. The CEO attributed the strong earnings to productivity improvements, reduced costs, and new revenue-generating initiatives in core business areas.

Positive

• Acme United saw a significant increase of 39% in earnings per share for the first quarter of 2024.
• Net sales were $45.0 million, showing a 2% decrease from the previous year, but a 1% increase when excluding specific product lines.
• Net income surged to $1.6 million, resulting in a 65% rise compared to the same period last year.
• Diluted earnings per share stood at $0.39, reflecting a substantial 39% growth from the previous year.
• Productivity enhancements in manufacturing and distribution contributed to the strong earnings performance.
• Reductions in inbound shipping costs and selling expenses also positively impacted the financial results.
• New revenue streams from the distribution of first aid kits, craft and cutting tool planograms, spill clean-up products, and sharpening tools drove growth in core business segments.

Negative

• None.

Financial Analyst

Acme United's disclosure of a 39% increase in diluted earnings per share (EPS) is a significant indicator of the company's profitability and efficiency for the quarter. In contrast, the 2% decline in net sales might initially seem troubling, but considering the sale of product lines, which often results in short-term revenue drops, the underlying organic growth of 1% is a positive sign. What stands out is the substantial 65% increase in net income, despite the marginal rise in sales, suggesting rigorous cost management and operational improvements.

The company attributes its robust earnings to manufacturing productivity, reduced shipping costs and lower selling and general expenses, a testament to effective margin management. For investors, the ability of a company to improve margins can be as important as growing top-line revenues because it demonstrates a sound internal financial control environment and may suggest the potential for sustained profitability.

Operations Management Expert

The operations within Acme United appear to be undergoing a lean transformation, focusing on productivity improvements and reduced inbound shipping costs. Such enhancements in operations have a direct correlation with the company's increased EPS, as they allow for a better bottom line through cost savings. Moreover, decreased shipping costs can highlight Acme's response to the challenging logistics environment that has affected many industries worldwide.

It's also worth noting the shift in Acme United's strategic direction post the sale of their hunting and fishing lines. The emphasis on growing its principal business lines like first aid kits, craft and cutting tools, spill clean-up products and sharpening tools indicates targeted efforts to grow market share in these segments. Expansion into multiple retail channels, as mentioned by the CEO, suggests a proactive approach towards leveraging existing market trends and addressing consumer needs.

Market Analyst

Acme United's initiatives in expanding distribution in the hardware and drug store markets, as well as entering into mass market retailers with new product planograms, speaks to an aggressive growth strategy that may contribute to future revenue streams. For investors, the diversification into multiple retail segments could mitigate risks associated with market volatility. Additionally, the development of new products like spill clean-up kits and kitchen sharpening tools aligns with consumer trends towards home safety and gourmet cooking, potentially tapping into new customer demographics.

However, investors should also consider the competitive landscape in these markets. Acme United's success will partly depend upon its ability to differentiate its products and gain shelf space in an increasingly crowded market. While the short-term financials are promising, the long-term performance will hinge on the effectiveness of these initiatives and the company's ongoing ability to innovate and adapt to market conditions.

SHELTON, Conn., April 19, 2024 (GLOBE NEWSWIRE) -- Acme United Corporation (NYSE American: ACU) today announced that net sales for the quarter ended March 31, 2024 were $45.0 million compared to $45.8 million for the quarter ended March 31, 2023, a decrease of 2%. Excluding the impact of the Camillus and Cuda hunting and fishing product lines sold on November 1, 2023, sales for the first quarter of 2024 increased 1% compared to the first quarter of 2023.

Net income was $1.6 million, or $0.39 per diluted share, for the quarter ended March 31, 2024, compared to $1.0 million, or $0.28 per diluted share, for the comparable period last year, an increase of 65% in net income and 39% in diluted earnings per share.

Chairman and CEO Walter C. Johnsen said, “Acme United had very strong earnings in the first quarter due to productivity improvements in manufacturing and distribution. We also experienced reduced inbound shipping costs and lowered our selling and general expenses.”

Mr. Johnsen added, “Although the sale of our Cuda and Camillus lines in November reduced revenues, we are generating new revenues under initiatives in our principal business lines. These initiatives include additional distribution of first aid kits and components in the hardware and drug store markets, new craft and cutting tool planograms in the mass market, additional sales of spill clean-up products to large mass market retailers, and new sharpening tools for the kitchen.”

Mr. Johnsen added, “We intend to continue and expand these initiatives and I am excited about the sales growth that we anticipate in the coming quarters.”

For the first quarter of 2024, net sales in the U.S. segment declined 2% compared to the same period in 2023. Excluding Camillus and Cuda, sales for the first quarter of 2024 increased 1% compared to the first quarter of 2023.

European net sales for the first quarter of 2024 increased 5% in U.S. dollars and 4% in local currency compared to the first quarter of 2023. Excluding Camillus and Cuda, sales for the first quarter of 2024 increased 7% in local currency compared to the first quarter of 2023.

Net sales in Canada for the first quarter of 2024 decreased 7% in U.S. dollars and 6% in local currency compared to the same period in 2023. Excluding Camillus and Cuda, sales for the first quarter of 2024 increased 1% in local currency compared to the first quarter of 2023.

Gross margin was 38.7% in the first quarter of 2024 versus 35.5% in the comparable period last year. The increase was primarily due to the continuing impact of productivity improvements implemented late in 2022.

The Company’s bank debt less cash on March 31, 2024 was $31.5 million compared to $48.4 million on March 31, 2023. During the twelve-month period ended March 31, 2024, the Company paid $2.1 million in dividends on its common stock and generated approximately $5.4 million in free cash flow. Additionally, the net proceeds from the sale of the Camillus and Cuda product lines amounted to 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, April 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 13745527. 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 Safety Made. 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.

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FIRST QUARTER REPORT 2024
(Unaudited)
	Quarter Ended				Quarter Ended
Amounts in 000's except per share data	March 31, 2024				March 31, 2023
Net sales	$	44,956			$	45,838
Cost of goods sold		27,560				29,557
Gross profit		17,396				16,281
Selling, general and administrative expenses		14,838				14,093
Operating income		2,558				2,188
Interest expense		476				919
Interest income		(33	)			(17	)
Net interest expense		443				902
Other income, net		(44	)			(23	)
Income before income tax expense		2,159				1,309
Income tax expense		523				319
Net income	$	1,636			$	990
Shares outstanding - basic		3,650				3,541
Shares outstanding - diluted		4,213				3,541
Earnings per share - basic	$	0.45			$	0.28
Earnings per share - diluted		0.39				0.28

ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
FIRST QUARTER REPORT 2024
(Unaudited)
Amounts in $000's
	March 31, 2024				March 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	2,443			$	2,764
Accounts receivable, net		32,966				32,972
Inventories		56,887				58,488
Prepaid expenses and other current assets		6,110				4,960
Total current assets		98,406				99,184
Property, plant and equipment, net		28,860				26,397
Operating lease right of use asset		5,530				2,675
Intangible assets, less accumulated amortization		18,396				20,273
Goodwill		8,189				8,189
Other assets		-				750
Total assets	$	159,381			$	157,468
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	7,907			$	10,597
Operating lease liability - short term		1,599				1,216
Mortgage payable - short term		424				405
Other current liabilities		11,931				11,815
Total current liabilities		21,861				24,033
Long-term debt		23,294				40,135
Mortgage payable - long term		10,179				10,597
Operating lease liability - long term		4,041				1,628
Other non-current liabilities		914				959
Total liabilities		60,289				74,352
Total stockholders' equity		99,092				80,116
Total liabilities and stockholders' equity	$	159,381			$	157,468

CONTACT:		Paul G. Driscoll		Acme United Corporation Phone: (203) 254-6060		1 Waterview Drive		Shelton, CT 06484

FAQ

What was the percentage increase in earnings per share for Acme United (ACU) in the first quarter of 2024?

Acme United reported a 39% increase in earnings per share for the first quarter of 2024.

How did net sales for Acme United in the first quarter of 2024 compare to the same period in 2023?

Net sales for Acme United were $45.0 million, down 2% from the previous year, but excluding certain product lines, sales increased by 1%.

What was the net income for Acme United in the first quarter of 2024?

Acme United's net income was $1.6 million for the first quarter of 2024.

What was the diluted earnings per share for Acme United in the first quarter of 2024?

Acme United's diluted earnings per share for the first quarter of 2024 were $0.39.

What were some factors contributing to Acme United's strong earnings performance in the first quarter of 2024?

Productivity improvements in manufacturing and distribution, reduced inbound shipping costs, and new revenue-generating initiatives in core business areas contributed to Acme United's strong earnings performance in the first quarter of 2024.