All Time Sales and Earnings Record for Acme United

Westcott X-ray scissors

The new Westcott x-ray scissors will soon be available chain wide in a number of retailers, as well as in Europe.

During the second quarter of 2013, Acme United (ACU – $13.40) achieved the best quarterly sales and earnings numbers in its entire history. Typical back-to-school products such as iPoint pencil sharpeners, non-stick scissors and titanium scissors contributed to the success. Also Camillus knives, Pac-Kit first aid kits and C-Thru Ruler saw increased sales.

Looking ahead, the second half of 2013 looks to be very promising as well because many new products are set to enter stores. The Westcott ‘X-Ray’ scissors, for example, will be available chain wide in a number of the retailers very shortly, as well as in Europe. They have an acrylic handle that’s clear and are accented with comfortable TPR rubber. Also several new Camillus knives will hit the shelves later this year.

Moreover, the first sales of two new lines of gardening tools branded ‘Scotts’ and ‘Miracle-Gro’ may be recorded in the fourth quarter. Judging by the number of questions that Mr. Johnsen, Acme’s Chairman and CEO, received about this topic during the second quarter conference call, it’s clear that the Scotts deal is getting a lot of attention from investors

Record Sales and Earnings

In the second quarter, ended June 30, 2013, Acme’s sales reached $28.4 million, compared to $27.6 million in the comparable period of 2012, an increase of 3%. Net income was $2,210,000, or $.68 per diluted share, compared to $2,061,000 or $.66 per diluted share for the same period in 2012, an increase of 7% in net income and 3% in diluted earnings per share.

 
Three Months Ended
June 30
Six Months Ended
June 30
Amounts in $000’s
2013
2012
2013
2012
Net Sales
28,412
27,594
46,063
44,472
Cost of Goods Sold
18,331
17,773
29,554
28,707
S, G & A Expenses
6,889
6,743
12,803
12,229
Income From Operations
3,192
3,078
3,706
3,536
Total Other Expense
99
105
171
203
Pre-Tax Income
3,093
2,973
3,535
3,333
Income Tax Expense
883
912
1,015
1,013
Net Income
2,210
2,061
2,520
2,320
Earnings Per Share
0.68
0.66
0.78
0.74
Shares Out. – Diluted
3,265
3,144
3,233
3,142
Most important income statement data for the quarters and six months ending June 30, 2013 and June 30, 2012. Source: Company Press Release

Net sales for the first six months of 2013 were $46.1 million, compared to $44.5 million in the same period in 2012, an increase of 4%. Net income for the six months ended June 30, 2013 was $2,520,000, or $.78 per diluted share, compared to $2,320,000, or $.74 per diluted share in the comparable period last year, a 9% increase in net income and 5% increase in diluted earnings per share.

The Company’s gross margins were 35.5% in the second quarter of 2013 compared to 35.6% in the second quarter of 2012.

Strong US Segment, Europe Making Up for Schlecker Loss

Acme United reports financial information on three separate business segments: the United States (including Asia), Canada and Europe. During the second quarter of 2013, net sales increased 5% in the U.S. segment compared to the same period in 2012. This was mainly thanks to increased back to school sales and additional sales resulting from the acquisition of the C-Thru Ruler Company in June 2012.

Net sales in Canada for the three months ended June 30, 2013 decreased 3% in local currency compared to the second quarter in 2012. And in Europe, net sales increased 2% in the second quarter of 2013 compared with the same period last year despite the bankruptcy and liquidation of the Company’s largest European customer in the second quarter of 2012.

Other Quarters Growing

Although Acme United’s sales traditionally peak in the second quarter due to the seasonal nature of the back-to-school market, the other quarters are showing additional growth opportunities outside the school and office markets.

For example, the lawn and gardening tools in partnership with ScottsMiracle-Gro are typical fourth and first quarter products as they have to be on the shelves early spring. Similar with the Clauss non-stick putty knives, which are being tested at a major retailer. This is an all year round product, but it certainly has to be available in the spring when the renovation and remodeling season commences.

Also the increased business in Europe in the mass market channel at Lidl, Aldi, Rewe and Norma are more evenly spread over the entire year.

Conclusion

For fiscal year 2013, Acme’s sales guidance remains between $90 and $95 million. Also its earnings per share guidance is unchanged between $1.20 and $1.25. Mr. Johnsen did indicate in our recent audio interview that achieving the higher end of the guidance will depend in part on achieving additional sales with mass market customers.

Acme United had a very strong second quarter, especially because it was achieved in a soft office market where retailers saw their sales decrease by 3 to 6 percent. Additionally, all of the Company’s brands grew and contributed to this nice results.

We expect more solid results for the remainder of the year. Many new products will enter the market during the coming months and if Acme can place the Clauss putty knives and Scotts gardening tools at a couple of chains, it will give an extra boost to results.

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