News Column

Acme United Corporation Reports Record Sales and Earnings

July 24, 2014

FAIRFIELD, Conn.--(BUSINESS WIRE)-- Acme United Corporation (NYSE MKT:ACU) today announced that net sales for the second quarter ended June 30, 2014 were $33.4 million, compared to $28.4 million in the comparable period of 2013, an increase of 18%. Excluding additional sales resulting from the acquisition on June 2, 2014 of First Aid Only, Inc., comparable sales increased 10%. Net sales for the six months ended June 30, 2014 were $52.5 million, compared to $46.1 million in the same period in 2013, an increase of 14%. Excluding First Aid Only, sales increased 10%.

On June 2, 2014, the Company acquired the assets of First Aid Only, Inc, based in Vancouver, WA, for $13.8 million in cash. The acquired net assets totaled approximately $3.5 million, which included inventory, equipment and accounts receivable. The purchase price also included intangible assets of approximately $10.3 million. First Aid Only is a supplier of Smart Compliance® first aid kits, refills, and safety products that meet regulatory requirements for a broad range of industries. First Aid Only pioneered consultative selling and support of first aid items to large corporate customers, and is recognized as an innovative leader in the safety products industry.

Net income for the quarter ended June 30, 2014 was $2,543,000, or $.72 per diluted share, compared to $2,210,000, or $.68 per diluted share, for the comparable period in 2013, an increase of 15% in net income and 6% in diluted earnings per share. Net income for the six months ended June 30, 2014 was $2,911,000, or $.83 per diluted share, compared to $2,520,000, or $.78 per diluted share in the comparable period last year, a 16% increase in net income and 6% in diluted earnings per share.

Net sales for the quarter ended June 30, 2014 in the U.S. segment increased 19% compared to the same period in 2013 due to increased sales of first aid products, additional sales resulting from the acquisition of First Aid Only, Inc., and increased sales of pencil sharpeners. Net sales for the six months ended June 30, 2014 in the U.S. segment grew 17% compared to the same period in 2013 due to increased sales of first aid products, additional sales from the acquisition of First Aid Only, Inc., the introduction of new lawn and garden products, and growth in sales of iPoint pencil sharpeners.

Net sales in Canada for the three months ended June 30, 2014 increased 17% in U.S. dollars and 24% in local currency compared to the same period in 2013. Net sales for the six months ended June 30, 2014 in Canada increased 9% in U.S. dollars and 16% in local currency compared to the same period in 2013. The increases in sales for the three and six month periods were primarily due to strong back to school sales and the introduction of new lawn and garden products.

Net sales in Europe for the three months ended June 30, 2014 increased 5% in U.S. dollars but were constant in local currency compared to the same period in 2013. Net sales for the six months ended June 30, 2014 in Europe decreased 5% in U.S. dollars and 9% in local currency compared to the same period in 2013 primarily due to the timing of sales to mass market customers.

Gross margins were 34.5% in the second quarter of 2014 compared to 35.5% in the second quarter of 2013. In the first quarter of 2014, the Company successfully completed the consolidation of its U.S. warehousing operations, moving from Fremont, NC to its new 340,000 sq. ft. facility in Rocky Mount, NC. In this regard, the Company incurred approximately $250,000 of one-time moving, training and ramp up costs in the second quarter of 2014 as reported in Cost of Goods Sold. Gross margins were 35.0% for the six months ended June 30, 2014 compared to 35.8% for the comparable period last year.

On April 7, 2014 the Company sold its Fremont, NC plant for $850,000, and recorded a gain of $200,000 in the second quarter of 2014 reported as other income.

The Company’s bank debt less cash on June 30, 2014 was $28.9 million compared to $17.6 million on June 30, 2013. During the 12 month period the Company purchased and made capital improvements to its new distribution facility in Rocky Mount, NC for $4.5 million, sold its Fremont, NC plant for $0.8 million, received $1.7 million from early repayment of a mortgage receivable and paid approximately $13.8 million for First Aid Only, Inc. During the 12 month period, the Company also generated $6.1 million in cash flow from operations and paid $1.0 million in dividends on its common stock.

Walter C. Johnsen, Chairman and CEO said, “We are pleased with the strong sales performances of our first aid products, back to school Westcott items, and our new gardening tools during the quarter. We see continued strong sales momentum, and expect a strong back to school season.” Mr. Johnsen added that the integration of the First Aid Only acquisition is progressing well, and that it has already become accretive to earnings.

ACME UNITED CORPORATIONis a leading worldwide supplier of innovative cutting, measuring and safety products to the school, home, office, hardware and industrial markets. Its leading brands include Westcott®, Clauss®, Camillus®, PhysiciansCare ® and Pac-Kit®.

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; and (vii) 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
SECOND QUARTER REPORT 2014
(Unaudited)
 
      Three Months Ended   Three Months Ended
Amounts in 000's except per share data       June 30, 2014   June 30, 2013
 
 
Net sales$33,396$28,412
Cost of goods sold21,875   18,331  
Gross profit11,52110,081
Selling, general, and administrative expenses7,983   6,889  
Income from operations3,5383,192
Interest expense108122
Interest income(2)(48)
Net interest expense10674
Other (income) expense, net(204)25  
Total other (income) expense, net(98)99
Pre-tax income3,6363,093
Income tax expense1,093   883  
Net income$2,543   $2,210  
 
Shares outstanding - Basic3,2103,156
Shares outstanding - Diluted3,5393,266
 
Earnings per share basic$0.79$0.70
Earnings per share diluted0.720.68
 
 
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SECOND QUARTER REPORT 2014 (cont.)
(Unaudited)
 
 
      Six Months Ended       Six Months Ended
Amounts in 000's except per share data       June 30, 2014       June 30, 2013
 
Net sales$52,548$46,063
Cost of goods sold34,150   29,554  
Gross profit18,39816,509
Selling, general, and administrative expenses14,235   12,803  
Income from operations4,1633,706
Interest expense197249
Interest income(9)(106)
Net interest expense188143
Other (income) expense, net(184)28  
Total other (income) expense, net4   171  
Pre-tax income4,1593,535
Income tax expense1,248   1,015  
Net income$2,911   $2,520  
 
Shares outstanding - Basic3,2063,144
Shares outstanding - Diluted3,4873,234
 
Earnings per share basic$0.91$0.80
Earnings per share diluted0.830.78
 
 
ACME UNITED CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SECOND QUARTER REPORT 2014
(Unaudited)
 
Amounts in 000's       June 30, 2014       June 30, 2013
 

Assets:

Current assets:            
Cash$2,426$8,458
Accounts receivable, net30,79425,420
Inventories30,88529,450
Prepaid and other current assets   1,969   2,115
Total current assets66,07565,443
 
Property and equipment, net6,5762,353
Long term receivable01,669
Intangible assets, less amortization14,2514,156
Other assets   1,084   1,115
Total assets$87,987$74,736
 
Liabilities and stockholders' equity:
Current liabilities
Accounts payable$10,919$9,092
Other current liabilities7,4665,401
Total current liabilities18,38514,493
Bank debt31,32526,012
Other non current liabilities   439   1,021
50,15041,526
Total stockholders' equity   37,838   33,210
Total liabilities and stockholders' equity$87,987$74,736
 





Acme United Corporation

Paul G. Driscoll, 203-254-6060

Fax: 203-254-6521

Source: Acme United Corporation


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