$200 Million Sales Target Achievable for Acme United

Acme United Corporation (US: ACU – $28.23), the leading consumer products company with a focus on first aid and safety products, as well as cutting solutions, reported the highest revenues in a quarter in the Company’s history. With net sales of $56.8 million, it achieved an increase of 27% over the second quarter of 2021.

Net income for the quarter was $2.7 million, which was a decrease of 3% from last year after adjusting for a one-time tax credit of $900,000. Earnings per share without the tax credit in 2021, were $0.71 which is similar to 2022.

Despite the strong surge in sales, the Company’s earnings for the second quarter were slightly lower compared with 2021 due to several economic and operational challenges, including COVID-related quarantines in China, demurrage fees, port failures, a lack of truck drivers, the weakening of the euro, and the highest inflation in the U.S. in 40 years.

To counter these challenges, the Company has again increased its selling prices in Europe and the U.S., it is implementing significant productivity improvements, and it is further reducing its reliance on Chinese manufacturing.

Acme United’s Chairman and CEO Walter C. Johnsen said after the second quarter results were announced, “We are seeing improvement in our supply chain, and we intend to reduce our inventory gradually over the coming quarters. While the overall operating environment remains challenging, we continue to target revenues of approximately $200 million in 2022. We continue to drive internal growth while seeking to identify potential acquisitions. In the second quarter, we also increased our credit facility with HSBC by $15 million, to $65 million. The increase will further support our growth initiatives.”

In June, Acme also increased its quarterly dividend to 14 cents per share, which was Acme’s thirteenth dividend increase since 2004.

We reiterate our buy recommendation for Acme United Corp. with a price target of $42.02, which is 49% above today’s stock price.

Smallcaps.us Advice: Buy	Price Target: $59.86	Latest Company Report (pdf)
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