Acme United Corporation Reports Record Annual Net Sales and Earnings and Increases Dividend
Net income for the year ended December 31, 2006 was $3.9 million, or $1.05 per diluted share, compared to $2.9 million or $.78 per diluted share, in 2005. Excluding a non-recurring charge of $1.5 million recorded in the third quarter of 2005 which related to the demolition of some former manufacturing buildings, net income would have been $3.9 million, or $1.02 per diluted share, in 2005. Pro forma (non-GAAP) results are presented to provide additional information for comparisons to Acme's results from its ongoing core business in 2006 to 2005. For the fourth quarter ended December 31, 2006, net income was $396,000, or $.11 per diluted share, compared to $773,000, or $.21 per diluted share for the same period in 2005.
Net income for 2006 was reduced by losses in Europe of $1.1 million compared to $300,000 in 2005. The losses in Europe during the fourth quarter of 2006 were $550,000 compared to $100,000 in 2005. The Company has begun to improve the product and margin mix in Europe and reduce expenses. The fourth quarter of 2006 also reflects an increase in spending for new product development and market research, and the addition of sales and marketing personnel in the U.S.
Gross margins were 43.2% for 2006 compared to 44.8% in 2005. The decrease was partially due to increased sales of private brand initiatives, which typically provide commodity items at very competitive prices, particularly in Europe. There were also a number of promotional and initial set up expenses for new business in Europe that reduced margins.
The Company's bank debt less cash on December 31, 2006 was $6.4 million compared to $4.5 million on December 31, 2005. The increase in bank debt was primarily to finance the purchase of $2.9 million of additional inventory to support sales growth, an increase in accounts receivables of $1.5 million resulting mainly from higher sales, and the payment of previously accrued costs of $1.5 million for the demolition of a former manufacturing site, partially offset by earnings.
Walter C. Johnsen, Chairman and CEO, said, "Acme United had a record year in revenues and earnings in 2006. We won the prestigious Good Design award for our iPoint Pencil Sharpener from the Chicago Athenaeum. Our European team rolled out a 12 country sales initiative. We continue to build our business in North America and Europe, and look forward to a very successful year in 2007."
The Board of Directors has approved a 33% increase in the quarterly dividend from $.03 to $.04 per share. The dividend is payable on April 27, 2007 to stockholders of record on the close of business on April 6, 2007.
ACME UNITED CORPORATION is a specialized supplier of cutting devices, measuring instruments, and safety products for school, home, office and industrial use.
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) the Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth, and (iii) 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 STATEMENT OF INCOME
YEAR END REPORT 2006
Quarter Ended Quarter Ended
December 31, December 31,
2006 2005
Amounts in $000's except per share data (Unaudited) (Unaudited)
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Net sales $ 12,089 $ 11,059
Gross profit 4,979 4,596
Selling, general, and administrative
expenses 4,110 3,058
Other expense, net 51 205
Pre-tax income 818 1,333
Income tax expense 422 560
Net income 396 773
Shares outstanding - Basic 3,508 3,486
Shares outstanding - Diluted 3,726 3,752
Earnings per share - Basic 0.11 0.22
Earnings per share - Diluted 0.11 0.21
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR END REPORT 2006
Year Ended Year Ended
Amounts in $000's except per share data December 31, December 31,
2006 2005
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Net sales $ 56,863 $ 49,946
Gross profit 24,583 22,355
Selling, general, and administrative
expenses 17,870 15,512
Other expense, net 364 577
Non-recurring charge - 1,500
Pre-tax income 6,349 4,766
Income tax expense 2,463 1,829
Net income 3,886 2,937
Shares outstanding - Basic 3,495 3,509
Shares outstanding - Diluted 3,712 3,789
Earnings per share - Basic 1.11 0.84
Earnings per share - Diluted 1.05 0.78
Reconciliation to reported Net Income (GAAP):
Pre-tax income as reported (GAAP) 6,349 4,766
Non-recurring charge - 1,500
Pre-tax income as adjusted 6,349 6,266
Income tax expense as adjusted 2,463 2,399
Net income as adjusted (Non-GAAP) 3,886 3,867
Earnings per share before non-recurring
charge - Basic 1.11 1.10
Earnings per share before non-recurring
charge - Diluted 1.05 1.02
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
YEAR END REPORT 2006
Amounts in $000's
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Assets December 31, December 31,
2006 2005
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Current assets:
Cash $ 3,838 $ 1,076
Accounts receivable, net 10,852 9,392
Inventories 15,677 12,530
Prepaid and other current assets 1,120 867
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Total current assets 31,487 23,865
Property and equipment, net 2,540 2,786
Other assets 994 1,543
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Total assets $ 35,021 $ 28,194
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Liabilities and Stockholders' Equity
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Current liabilities:
Accounts payable 2,358 2,174
Other current liabilities 3,564 5,356
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Total current liabilities 5,922 7,530
Long-term debt 10,226 5,587
Other non-current liabilities 742 1,012
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Total liabilities 16,890 14,129
Total stockholders' equity 18,131 14,065
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Total liabilities and stockholders' equity $ 35,021 $ 28,194
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SOURCE: Acme United Corporation
Acme United Corporation Paul G. Driscoll, 203-254-6060 Fax: 203-254-6521