• Net Sales: $194.5 million in 2024, a 2% increase from 2023.
• Net Income: $10 million in 2024, a 23% increase from $8.1 million in 2023.
• Earnings Per Share (EPS): $2.45 in 2024, up 10% from $2.23 in 2023.
• Gross Margin: 39.3% for 2024, compared to 37.7% in 2023.
• EBITDA: $20 million in 2024.
• First Aid Business Revenue: Approximately $120 million in 2024.
• Westcott and DMT Sharpening Revenue: Approximately $75 million in 2024, a 10% increase from 2023.
• SG&A Expenses: $62 million in 2024, 32% of sales.
• Interest Expense: Decreased to $1.9 million in 2024 from $3 million in 2023.
• Free Cash Flow: Approximately $5 million generated in 2024.
• Bank Debt Less Cash: $21.5 million as of December 31, 2024.

• Warning! GuruFocus has detected 5 Warning Signs with ACU.

Release Date: February 28, 2025

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

Positive Points

• Acme United Corp (ACU) achieved record net sales of $194.4 million and record EBITDA of $20 million in 2024.
• Net income increased by 23% to $10 million in 2024 compared to $8.1 million in 2023.
• The First Aid business performed strongly with revenues of approximately $120 million, and the introduction of SmartCompliance first aid cabinets with RFID technology enhanced automatic replenishment capabilities.
• The Westcott cutting and DMT sharpening business saw a 10% increase in net revenues, reaching approximately $75 million.
• Productivity initiatives resulted in over $2 million in annual savings, including cost reductions and automation improvements.

Negative Points

• Acme United Corp (ACU) faced supply chain disruptions and anticipates future challenges with tariffs in 2025.
• Net sales in Europe declined by 1% in local currency for the quarter, indicating regional challenges.
• The gross margin decreased slightly in the fourth quarter of 2024 to 38.7% from 39.1% in 2023.
• SG&A expenses increased to $62 million or 32% of sales in 2024, up from $59 million or 31% of sales in 2023.
• Sales of school and office products declined, impacting overall sales growth.

Q & A Highlights

Q: How is Acme United preparing for upcoming tariffs, and what strategies are in place to mitigate their impact? A: Walter Johnsen, CEO, explained that Acme United has been preparing for tariffs over the past eight years by diversifying its sourcing and production. The company has acquired manufacturing sites in the U.S. and Canada and has implemented a dual sourcing strategy in countries like Egypt, Thailand, and India. This diversification helps mitigate the impact of tariffs. Additionally, Acme United plans to adjust costs with suppliers, implement productivity improvements, and apply price increases to offset tariff costs.

Q: What impact will tariffs have on Acme United's input costs and sales prices? A: Walter Johnsen noted that tariffs primarily affect input costs, as they are applied to imported goods. Acme United plans to work with suppliers to reduce costs and adjust product mixes. The company has already announced price increases to cover inflation, which will help offset tariff impacts. On the sales side, Acme United aims to maintain value for customers by offering product substitutions to avoid direct price increases.

Q: Does Acme United have a voice in tariff policy discussions, and how does it plan to navigate potential challenges? A: Walter Johnsen acknowledged that Acme United does not have a direct influence on tariff policy, unlike larger companies. However, the company leverages its market position and pricing power within its segments to negotiate with suppliers and manage costs. Acme United has also strategically purchased inventory in advance to allow time for pricing and product mix adjustments.

Q: Can you provide an update on the acquisition of Hawktree Solutions and its integration into Acme United's operations? A: Walter Johnsen reported that Acme United acquired Hawktree Solutions out of bankruptcy in September 2023. The acquisition has been successful, with the business now generating $2.5 to $3 million in sales profitably. Acme United has renewed contracts with the Canadian Red Cross and is introducing new products to the Canadian market, effectively utilizing the acquired inventory.

Q: Why did Acme United stop releasing European sales numbers, and what is the current status of European operations? A: Paul Driscoll, CFO, clarified that European sales numbers are still included in the press release. The European operations have been performing well, with investments made to expand in the First Aid and Medical segments, contributing to another profitable year.

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