• Revenue: $48.2 million for Q3 2024, down 4% from $50.4 million in Q3 2023.
• Net Income: $2.2 million for Q3 2024, up 3% from $2.1 million in Q3 2023.
• Earnings Per Share (EPS): $0.54 for Q3 2024, down from $0.58 in Q3 2023.
• Gross Margin: 38.5% for Q3 2024, compared to 38.7% in Q3 2023.
• SG&A Expenses: $15.6 million for Q3 2024, representing 32% of sales, compared to $15.8 million or 31% of sales in Q3 2023.
• Interest Expense: $535,000 for Q3 2024, down from $785,000 in Q3 2023.
• Net Sales (excluding Camillus and Cuda): Increased 4% for Q3 2024.
• Net Sales in Europe (excluding Camillus and Cuda): Increased 15% in local currency for Q3 2024.
• Net Sales in Canada (excluding Camillus and Cuda): Decreased 6% for Q3 2024.
• Bank Debt Less Cash: $27 million as of September 30, 2024, compared to $38 million as of September 30, 2023.
• Free Cash Flow: Generated $6.2 million over the past 12 months.

• Warning! GuruFocus has detected 6 Warning Signs with ACU.

Release Date: October 18, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Acme United Corp (ACU) reported a 3% increase in net income for the third quarter of 2024, reaching $2.2 million.
• The Westcott cutting tool business and DMT sharpeners saw a 10% increase in sales, driven by market share gains in the craft and kitchen markets.
• The company introduced innovative smart compliance First Aid kits with RFID technology, which have no similar competitor products.
• Acme United Corp (ACU) successfully integrated the Elite First Aid product line, enhancing its product offerings in the first aid market.
• The company reduced its bank debt significantly from $38 million to $27 million over the past year, strengthening its financial position.

Negative Points

• Overall sales for the third quarter of 2024 decreased by 4% compared to the same period last year.
• The sale of the Cuda and Camillus business lines negatively impacted third-quarter sales and earnings due to their seasonal nature.
• Net sales in Canada decreased by 6% in the quarter, primarily due to a decline in school and office product sales.
• The gross margin slightly decreased to 38.5% in the third quarter of 2024 from 38.7% in the same period of 2023.
• SG&A expenses increased as a percentage of sales, rising to 32% in the third quarter of 2024 compared to 31% in the same period of 2023.

Q & A Highlights

Q: What is Acme United's plan if massive tariffs on China are implemented? A: Walter Johnsen, CEO, explained that Acme United is proactively moving operations to countries like Malaysia, Vietnam, Thailand, and the Philippines to mitigate tariff impacts. The company is also diversifying its sourcing for First Aid products to countries like India and Egypt and expanding production in the U.S. This strategy provides flexibility and positions Acme United to handle potential tariff increases effectively.

Q: What caused the general softening in sales, and is it related to new ordering methods? A: Walter Johnsen, CEO, noted that the softening was primarily due to weakened orders from industrial distributors and a large online retailer. The industrial market in the U.S. appeared soggy in the third quarter. However, there is a surge in demand due to recent hurricanes, and the Westcott business showed strong market share gains, particularly in the craft market.

Q: How is Acme United's First Aid business performing, and what are the prospects for the new smart compliance First Aid kits? A: Walter Johnsen, CEO, reported that the First Aid business in the U.S. saw slight growth due to customer order timing. The new smart compliance First Aid kits, introduced in September, use RFID technology for real-time monitoring and automatic replenishment. The company is optimistic about the product's market impact next year, as there are no similar competitor products.

Q: What are the financial highlights for Acme United in the third quarter of 2024? A: Paul Driscoll, CFO, stated that net sales were $48.2 million, a 4% decrease from the previous year, primarily due to the sale of the Cuda and Camillus business. Excluding this impact, sales increased by 4%. Net income rose by 3% to $2.2 million, while earnings per share decreased by 7% to $0.54.

Q: How is Acme United managing its debt and cash flow? A: Paul Driscoll, CFO, highlighted that the company's bank debt less cash was reduced to $27 million from $38 million the previous year. This was achieved through asset sales, dividends, and generating $6.2 million in free cash flow. The company is focused on maintaining strong earnings and cash flow to support future acquisitions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.