Solid First Half of 2023 Expected For Acme United

Acme United Corp. (US: ACU – $22.50), the leading consumer products company with a focus on first aid and safety products, as well as cutting solutions, reached sales of $193.9 million in 2022, compared to $182.1 million the prior year, an increase of 7%, delivering its 13th consecutive year of record sales!

Despite the solid sales increase, the Company encountered a difficult macroeconomic environment last year as it faced supply chain issues at ports in Asia, the US and Europe; war in the Ukraine; rapidly increasing container expenses; product costs that continually increased; wage inflation; rising interest rates; and shortages of workers.

To counter these circumstances-beyond-its-control, the Company initiated cost reductions that are anticipated to save over $5 million in 2023. These savings are due to improved efficiency in the production and warehouse facilities, reduced transportation costs and lower spending in SG&A than in 2022.

At the same time, the Company has plenty of growth opportunities in 2023, including new first aid and medical placements in the industrial and retail markets, new Westcott craft products in the mass and ecommerce markets, new customers and programs with Camillus hunting and camping tools and expanded sales of Spill Magic products to large mass market retailers.

Chairman and CEO Walter C. Johnsen was quoted saying, “We expect the combination of continued revenue growth, $5.0 million of cost and productivity savings, the normalization of supply chain expenses, and reduced debt to position the Company for a much improved year in 2023.”

While the Company is not providing any guidance for 2023 at this moment, Mr. Johnsen did mention during the fourth quarter conference call that he expects sales growth over the 2022 level with much improved profitability. In fact, he said that he’s expecting a solid performance in the first and second quarter of 2023.

We reiterate our buy recommendation for Acme United Corp. with a price target of $39.52 for 2023, which is 75% above today’s stock price.

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