Acme United Corporation Reports Fourth Quarter Net Sales Increase of 23% and Net Income Increase of 38% and Record Full Year Results
Net income for the fourth quarter ended December 31, 2007 was $546,000, or $.15 per diluted share, compared to $396,000, or $.11 per diluted share, for the comparable period last year, an increase of 38%. Net income for the year ended December 31, 2007 was $4,022,258, or $1.09 per diluted share, compared to $3,885,662, or $1.05 per diluted share, in the comparable period last year, an increase of 4%.
Net sales for the year ended December 31, 2007, in the U.S. segment increased 10% compared to 2006 as the result of sales of new products, including the iPoint electric pencil sharpener, and market share gains. Net sales in Canada for the year ended December 31, 2007 increased by 11% in U.S. dollars and 5% in local currency compared to 2006 primarily due to higher sales of the iPoint electric pencil sharpeners. Net sales in Europe for the year ended December 31, 2007 increased by 21% in U.S. dollars and 11% in local currency compared to 2006 due to higher sales of manicure items and expanded distribution of office products.
Gross margins were 42% for 2007 compared to 43% in 2006. The gross margin decline in 2007 was due to product mix and increased cost of goods sold on purchases from China due to higher raw material and labor costs and depreciation of the U.S. dollar. Costs also increased due to the reduction of an export tax credit in China.
Walter C. Johnsen, Chairman and CEO said, "The results in the fourth quarter and the year represent strong growth in our market shares, expansion of our distribution channels, and improvement in Europe. I am especially pleased with the recent placement of our new products, including the iPoint razor pencil sharpener and Microban school and office products, which are expected to generate robust sales in 2008."
The effective income tax rate improved to 36% in 2007 compared to 39% in 2006 primarily due to the decreased losses in 2007 in Europe where there is no recorded tax benefit for losses. The European business is improving due to operational improvements and sales growth.
The Company's bank debt less cash on December 31, 2007 was $5.2 million compared to $6.4 million on December 31, 2006, a decrease of $1.2 million. This change primarily resulted from the Company's payments of $600,000 for acquisitions and $500,000 for shareholder dividends, which was offset by the Company's generation of $2.7 million in cash flow from operations.
ACME UNITED CORPORATION is an innovative supplier of cutting devices, measuring instruments and safety products for school, home, office, industrial and hardware use. Its leading brands include Westcott(R), Clauss(R) and PhysiciansCare(R).
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 2007
Quarter Ended Quarter Ended
December 31, December 31,
2007 2006
Amounts in $000's except per share data (Unaudited) (Unaudited)
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Net sales $ 14,852 $ 12,089
Gross profit 5,799 4,979
Selling, general, and administrative
expenses 4,919 4,110
Interest expense 136 154
Other income 129 103
Pre-tax income 873 818
Income tax expense 327 422
Net income 546 396
Shares outstanding - Basic 3,548 3,508
Shares outstanding - Diluted 3,697 3,726
Earnings per share basic $ 0.15 $ 0.11
Earnings per share diluted 0.15 0.11
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
YEAR END REPORT 2007
Year Ended Year Ended
Amounts in $000's except per share data December 31, December 31,
2007 2006
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Net sales $ 63,173 $ 56,863
Gross profit 26,493 24,583
Selling, general, and administrative
expenses 19,741 17,870
Interest expense 655 616
Other income 206 252
Pre-tax income 6,303 6,349
Income tax expense 2,281 2,463
Net income 4,022 3,886
Shares outstanding - Basic 3,536 3,495
Shares outstanding - Diluted 3,697 3,712
Earnings per share basic $ 1.14 $ 1.11
Earnings per share diluted 1.09 1.05
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
YEAR END REPORT 2007
Amounts in $000's December 31, December 31,
2007 2006
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Assets:
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Current assets:
Cash $ 4,988 $ 3,838
Accounts receivable, net 12,727 10,852
Inventories 18,935 15,677
Prepaid and other current assets 1,210 1,120
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Total current assets 37,860 31,487
Property and equipment, net 2,479 2,540
Other assets 1,883 994
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Total assets $ 42,222 $ 35,021
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Liabilities and stockholders' equity:
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Current liabilities
Accounts payable 4,575 2,358
Other current liabilities 3,907 3,669
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Total current liabilities 8,482 6,027
Long-term debt 10,187 10,218
Other non current liabilities 507 645
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19,176 16,890
Total stockholders' equity 23,046 18,131
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Total liabilities and stockholders'
equity $ 42,222 $ 35,021
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SOURCE: Acme United Corporation
Acme United Corporation Paul G. Driscoll, 203-254-6060 Fax: 203-254-6521