On Thursday, Acme United Corporation (ACU – $8.40) announced that net sales for the third quarter ended September 30, 2009 were $15.3 million compared to $19.2 million in the comparable period of 2008, a decrease of 20% (19% local currency). Contributing to the decline was an unexpected order of approximately $1.2 million from a major retailer in the third quarter 2008, which did not reoccur this year.
Mr. Johnsen, Chairman and CEO, said during the conference call that the Company wasn’t losing market share but that sales were suffering due to weak market demand.
Net income was $728,000, or $.22 per diluted share, for the quarter ended September 30, 2009 compared to $1,351,000 or $.37 per diluted share for the comparable period last year, a decrease of 46% in net income and 41% in diluted earnings per share. Earnings included a pre-tax income of $458,000 due to completion below estimated costs of a major portion of the remediation of the Bridgeport property which was sold in December 2008.
Net sales for the nine months ended September 30, 2009 were $45.7 million, compared to $56.1 million in the same period in 2008, a decrease of 19%. Net income for the nine months ended September 30, 2009 was $2,111,000, or $.63 per diluted share compared to $3,833,000, or $1.05 per diluted share in the comparable period last year, a 45% decrease in net income and 40% in diluted earnings per share. The lower net income is primarily the result of reduced sales, partially offset by savings from Acme’s cost savings plan.
Most important income statement data for Q3 and 9M 2009 versus Q3 and 9M 2008. Source: Company Filings
Mr. Johnsen commented, “We have been aggressively seeking new sales opportunities, continuing to reduce expenses, and improving our balance sheet. We are seeing commitments from our customers for new products and programs for the coming year, and are encouraged.”
Mr. Johnsen added that during the past 12 months, the Company repurchased about 7% of its outstanding stock, increased its dividend and reduced net debt by approximately 60%. He noted that the Company is very well positioned for future growth opportunities.
Sales Per Segment
In the U.S. segment, net sales for the three and nine months ended September 30, 2009 decreased 26% and 22% percent respectively compared to the same periods in 2008.
Net sales in Canada for the three and nine months ended September 30, 2009 decreased by 7% and 14%, respectively, in U.S. dollars but declined 2% for both periods respectively, in local currency compared to the same periods in 2008.
European net sales for the three and nine months ended September 30, 2009 increased 10% and 1%, respectively, in U.S. dollars compared to the same periods in 2008 and increased 16% and 12% respectively, in local currency. Revenues in Europe grew primarily due to higher sales of office and manicure products.
Sales evolution per segment for Q3 and 9M 2009 in local currency. Source: Company Filings
The entire office products industry continues to suffer from a soft market. Office-supply retailers Office Depot (ODP) and OfficeMax (OMX) also announced third quarter results this week.
For the quarter, Office Depot lost $413 million, or $1.51 a share (excluding items, the company had a loss of 8 cents per share), compared with a loss of $7 million, or 2 cents per share, last year. Sales fell 17% to $3.03 billion, missing Wall Street’s estimates target of $3.07 billion.
OfficeMax’ sales declined roughly 13% to $1.83 billion. The company did earn $5.7 million, or 7 cents a share, compared with a loss of $432.7 million, or $5.70 a share, last year. Excluding one-time items,
OfficeMax posted adjusted earnings of 8 cents a share, below Wall Street’s target of 14 cents a share. Additionally, the company forecast a loss for the fourth quarter.
The reason for all of this is simple: because jobs continue to be cut, companies need less new office supplies.
Although revenues and earnings came in slightly under our projections, we feel Acme United’s stock was punished way to much after the numbers were released. The stock declined more than 11% compared to Wednesday’s closing price.
The Company remains profitable, its balance sheet continues to be an example for many other companies and management constantly tries to increase sales and reduce costs.
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