Why Acme United Performed So Strong In The First Half Of 2024

Overall, Acme United’s (US: ACU – $40.51) second quarter showed robust growth and progress, underpinned by effective cost management and market expansion efforts. Net income reached $4.5 million, or $1.09 per share, a new all-time second quarter record! In the comparable period last year, the worldwide supplier of innovative safety solutions and cutting technology, had earnings of $3.4 million, or $0.96 per diluted share.

As for the rest of the year and beyond, the Company expects to realize more growth, keep a close eye on costs and improve its margins. As such, the Company has been making significant investments in new equipment and automation to drive its manufacturing and distribution costs lower.

At its Med-Nap facility in Brooksville, Florida, for example, Acme is adding a new machine to expand its production of semi-solid solutions, such as hand sanitizers, antibiotic wipes and so forth. The total cost of the machine is about $850,000, but the products can both be used in Acme’s own first aid kits, as well as sold to third parties.

Also in the first aid area, a new clean room will come online this month. This will allow the automation of the boxing of lens wipes and alcohol prep pads. The machine is close to a one million dollar investment, but is expected to generate cost savings of about $400,000 to $500,000 annually.

Again in first aid, Acme will be taking delivery of a new machine in November that will automate filling first aid kits. To the Company’s knowledge, this is a first in the industry, and could as such be a game changer in the market. The cost of the machine is estimated to be around $700,000 with annual savings amounting to that same number.

At the Spill Magic plant in Smyrna, Tennessee an $800,000 investment was recently completed to automate the packaging of the material that goes into the Spill Magic products. Savings are already being generated from this new equipment.

Finally, at the Company’s 345,000 square foot distribution center in Rocky Mount, North Carolina high-density racking are being installed. When completed, expected in fourth quarter of 2024, it will increase capacity by about 25% and improve the efficiency of picking orders. This is the first step in further pick by wire efficiencies.

We reiterate our buy recommendation for Acme United Corp. with a price target of $61.71 for 2024, which is 52% above today’s stock price. Smallcaps Recommendation: BUY.

Smallcaps.us Advice: Buy	Price Target: $61.71	Latest Company Report (pdf)
For important disclosures, please read our disclaimer.