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Acme United Reports Third Quarter Results

October 20, 2017 at 9:00 AM EDT

FAIRFIELD, Conn., Oct. 20, 2017 (GLOBE NEWSWIRE) -- Acme United Corporation (NYSE American:ACU) today announced that net sales for the third quarter ended September 30, 2017 were $33.8 million, compared to $31.9 million in the comparable period of 2016, an increase of 6%. Net sales for the nine months ended September 30, 2017 were $100.4 million, compared to $98.2 million in the same period in 2016, an increase of 2%.

Net income for the quarter ended September 30, 2017 was $1.2 million, or $0.32 per diluted share, compared to $1.5 million, or $0.40 per diluted share, for the 2016 period, a 19% decrease in net income and 20% decrease in earnings per share. Net income for the nine months ended September 30, 2017 was $4.7 million, or $1.25 per diluted share, compared to $5.3 million, or $1.49 per diluted share, in last year’s comparable period, an 11% decrease in net income and 16% decrease in earnings per share. 

Chairman and CEO Walter C. Johnsen said, “We have been growing our on-line sales in excess of 100% annually for the past three years, and they now have a significant impact on our revenues. However, we experienced softer than anticipated back-to-school sell through from many of our big box retailers, which were not offset by our on-line growth. Additionally, we had a delay in new product placement with a major retailer from the third quarter to the fourth quarter.  Sales of our first aid products in the third quarter were even with last year due to a shift in a major promotion to the fourth quarter of 2017.  Our sales of Cuda fishing tools and Camillus hunting knives were impacted in September by the three major hurricanes that hit the U.S. and the Caribbean.”

“We have also incurred additional warehousing and logistics expenses due to the small packages and frequent shipping of our on-line business.  We are addressing these costs with new software, improved warehouse layouts, optimized packaging, and better freight rates.  While we continue to expect our seventh consecutive year of record sales in 2017, due to the sales shortfall in the third quarter and the warehouse inefficiencies, we now expect annual earnings to be below last year’s.  We are therefore adjusting our guidance for the 2017 year to  $133 million in revenues, $5.6 million in net income, and $1.48 earnings per share.”

In the U.S. segment, net sales for the quarter ended September 30, 2017 increased 5% compared to the same period in 2016. Net sales for the first nine months of 2017 grew 2% over the comparable period in 2016. The soft back-to-school sales affected growth for the nine months. Our acquisition of Spill Magic assets in February 2017 contributed $1.8 million in net sales in the third quarter, and $4.8 million year to date.

Net sales in Canada for the three months ended September 30, 2017 increased 5% in U.S. dollars and were constant in local currency compared to the prior-year period.  Net sales for the nine months ended September 30, 2017 decreased 2% in U.S. dollars and 1% in local currency compared to the same period in 2016.  

Net sales in Europe for the three months ended September 30, 2017 increased 15% in U.S. dollars and 8% in local currency compared to the same period in 2016.  Net sales for the nine months ended September 30, 2017 increased 18% in both U.S. dollars and local currency compared to last year’s period due to market share gains in the office products channel.
           
Gross margin was 36.2% in the three months ended September 30, 2017 compared to 37.2% in the same period in 2016.  The lower gross margin was primarily due to customer and product mix, and increased costs in distribution due to on-line sales.  Gross margin was 37.1% for the nine months ended September 30, 2017 compared to 36.4% for last year’s comparable period.

The Company’s long-term debt less cash on September 30, 2017 was $38.9 million compared to $33.4 million on September 30, 2016.  During the twelve-month period ended September 30, 2017, the Company paid approximately $7.2 million for the acquisition of the assets of Spill Magic and distributed $1.4 million in dividends on its common stock. During the twelve-month period, the Company generated $3.2 million in free cash flow.

Acme United will hold a conference call to discuss its quarterly results, which will be broadcast over the Internet on Friday, October 20, 2017, at 11:00 a.m. EDT. To listen or participate in a question and answer session, dial 888-417-2254. International callers may dial 719-325-4800. 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.

ACME UNITED CORPORATIONis 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 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  
THIRD QUARTER REPORT 2017  
  (Unaudited)    
                       
            Three Months Ended     Three Months Ended    
Amounts in $000's except per share data   September 30, 2017     September 30, 2016    
                       
                       
Net sales       $ 33,785   $ 31,913    
Cost of goods sold       21,559     20,050    
Gross profit           12,226       11,863    
Selling, general, and administrative expenses     10,277       9,723    
Income from operations         1,949       2,140    
Interest expense, net         365       247    
Other expense, net         17       65    
Total other expense, net          382       312    
Income before income tax expense       1,567       1,828    
Income tax expense         366       355    
Net income       $ 1,201   $ 1,473    
                       
Shares outstanding - Basic
    3,373     3,324    
Shares outstanding - Diluted
    3,794     3,641    
                       
Earnings per share basic     $ 0.36   $ 0.44    
Earnings per share diluted     0.32     0.40    
                       
   

 

ACME UNITED CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
THIRD QUARTER REPORT 2017 (cont.)  
(Unaudited)  
                       
                       
            Nine Months Ended     Nine Months Ended    
Amounts in $000's except per share data      September 30, 2017      September 30, 2016    
                       
Net sales         $ 100,380     $ 98,198    
Cost of goods sold         63,107       62,455    
Gross profit           37,273         35,743    
Selling, general, and administrative expenses       30,243         28,008    
Income from operations         7,030         7,735    
Interest expense, net           948         642    
Other (income) expense, net         (43 )       38    
Total other expense, net          905         680    
Income before income tax expense         6,125         7,055    
Income tax expense           1,418         1,750    
Net income       $ 4,707     $ 5,305    
                       
Shares outstanding - Basic
    3,351       3,329    
Shares outstanding - Diluted
    3,765       3,562    
                       
Earnings per share basic     $ 1.40     $ 1.59    
Earnings per share diluted       1.25       1.49    
                       

 

                       
ACME UNITED CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
THIRD QUARTER REPORT 2017  
(Unaudited)  
                       
Amounts in $000's         September 30, 2017     September 30, 2016    
                       
Assets:                      
Current assets:                    
Cash and cash equivalents
  $ 7,021   $ 6,272    
Accounts receivable, net
    31,579     25,909    
Inventories
      36,799     38,117    
Prepaid and other current assets
    2,449     1,995    
Total current assets         77,847     72,293    
                       
 Property and equipment, net
    9,449     7,893    
 Goodwill         3,948     1,406    
 Intangible assets, net
      18,929     16,768    
 Other assets
      765     1,012    
Total assets       $ 110,938   $ 99,372    
                       
Liabilities and stockholders' equity:                
Current liabilities                    
 Accounts payable
    $ 8,463   $ 6,748    
 Other current liabilities
    5,520     6,597    
Total current liabilities       13,983     13,345    
Bank debt            45,969     39,706    
Other non current liabilities       265     574    
            60,217     53,625    
Total stockholders' equity       50,720     45,747    
Total liabilities and stockholders' equity   $ 110,938   $ 99,372    
 

CONTACT:
Paul G. Driscoll
Acme United Corporation
55 Walls Drive
Fairfield, CT  06824
Phone: (203) 254-6060
FAX: (203) 254-6521

Source: Acme United Corporation