Acme United Corporation (ACU) Bundle
Understanding Acme United Corporation (ACU) Revenue Streams
Understanding Acme United Corporation’s Revenue Streams
The financial performance of Acme United Corporation is primarily driven by its diverse revenue streams, which include sales from various product categories across different geographical regions.
Breakdown of Primary Revenue Sources
For the three months ended September 30, 2024, the company reported net sales of:
| Region | Net Sales (in thousands) |
|---|---|
| United States | $41,131 |
| Canada | $3,287 |
| Europe | $3,748 |
| Total | $48,166 |
For the nine months ended September 30, 2024, the total net sales were:
| Region | Net Sales (in thousands) |
|---|---|
| United States | $126,579 |
| Canada | $10,384 |
| Europe | $11,584 |
| Total | $148,547 |
Year-over-Year Revenue Growth Rate
Comparing the results for the three months ended September 30, 2024, to the same period in 2023:
- Net sales decreased by 4%, from $50,384,000 in 2023 to $48,166,000 in 2024.
- For the nine months ended September 30, 2024, net sales decreased by 1%, from $149,559,000 in 2023 to $148,547,000 in 2024.
Contribution of Different Business Segments to Overall Revenue
The major product segments contributing to revenue include:
| Segment | Net Sales (nine months ended September 30, 2024, in thousands) |
|---|---|
| First Aid and Medical | $91,503 |
| Cutting and Sharpening | $57,044 |
| Total | $148,547 |
Analysis of Significant Changes in Revenue Streams
Key observations regarding revenue streams include:
- Sales in the United States decreased 6% in Q3 2024 compared to Q3 2023.
- Excluding the impact of the Camillus and Cuda product lines, net sales in the U.S. increased by 3% for the same quarter.
- In Canada, net sales decreased 1% in U.S. dollars but increased 2% in local currency for Q3 2024.
- European net sales increased by 10% in both U.S. dollars and local currency for Q3 2024 compared to Q3 2023, influenced by market share gains in the office channel.
Overall, the revenue analysis indicates a mixed performance across different regions and segments, with notable growth in European markets while facing challenges in the U.S. and Canadian markets.
A Deep Dive into Acme United Corporation (ACU) Profitability
A Deep Dive into Acme United Corporation's Profitability
Gross Profit Margin
For the three months ended September 30, 2024, gross profit was $18,564,000, representing 38.5% of net sales, compared to $19,503,000 or 38.7% in the same period in 2023. For the nine months ended September 30, 2024, gross profit increased to $58,587,000 which is 39.4% of net sales, up from $55,807,000 or 37.3% a year earlier.
Operating Profit Margin
Operating income for the three months ended September 30, 2024 was $2,926,000, down from $3,657,000 in the same period of 2023. For the nine months ended September 30, 2024, operating income rose to $11,859,000, compared to $11,096,000 in 2023.
Net Profit Margin
Net income for the three months ended September 30, 2024 was $2,226,000, compared to $2,152,000 in 2023. For the nine months, net income was $8,315,000, an increase from $6,586,000 in the same period of the previous year.
Trends in Profitability Over Time
The gross profit margin has shown positive trends over the nine-month period, increasing from 37.3% to 39.4%. Operating income trends also reflect a positive trajectory over the nine-month period, while quarterly results indicate fluctuations, highlighting seasonal impacts on profitability.
Comparison of Profitability Ratios with Industry Averages
As of September 2024, the gross profit margin of 39.4% is competitive when compared to the industry average of approximately 35%. The operating profit margin of 8% is also favorable against the industry average of around 7%.
Analysis of Operational Efficiency
Operating expenses, specifically selling, general and administrative (SG&A) expenses, for the three months ended September 30, 2024, were $15,638,000, which is 32.5% of net sales, a slight decrease from $15,846,000 or 31.5% in 2023. Over the nine-month period, SG&A expenses increased to $46,728,000 from $44,711,000, reflecting higher personnel-related costs.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Sales | $48,166,000 | $50,384,000 | $148,547,000 | $149,559,000 |
| Gross Profit | $18,564,000 | $19,503,000 | $58,587,000 | $55,807,000 |
| Operating Income | $2,926,000 | $3,657,000 | $11,859,000 | $11,096,000 |
| Net Income | $2,226,000 | $2,152,000 | $8,315,000 | $6,586,000 |
| SG&A Expenses | $15,638,000 | $15,846,000 | $46,728,000 | $44,711,000 |
Overall, the analysis of profitability metrics indicates a mixed but generally positive trend in financial health, supported by operational efficiency improvements, particularly in gross profit.
Debt vs. Equity: How Acme United Corporation (ACU) Finances Its Growth
Debt vs. Equity: How Acme United Corporation Finances Its Growth
The financial structure of Acme United Corporation includes a mix of debt and equity that supports its growth strategy. As of September 30, 2024, the company reported total long-term debt of $22,059,000 compared to $13,165,000 at the end of 2023. The total outstanding mortgage payable was approximately $10,511,000.
In terms of its debt-to-equity ratio, Acme United Corporation reported a long-term debt to equity ratio of 30.1% as of September 30, 2024, an increase from 23.9% in the previous year. This ratio is a key indicator of the company’s financial leverage and its reliance on debt financing compared to equity financing.
Recent debt issuances include borrowings under a revolving loan agreement with HSBC Bank, which allows for borrowings of up to $65 million at an interest rate of SOFR plus 1.75%, with interest payable monthly. As of September 30, 2024, $42,941,000 remained available for borrowing under this facility. The company also acquired Elite First Aid, Inc. for approximately $7.1 million on May 23, 2024, funded through a combination of cash and debt.
Acme United Corporation maintains a balance between debt financing and equity funding by utilizing its credit facilities for operational liquidity and growth initiatives. The company’s current ratio stood at 4.41 as of September 30, 2024, indicating a strong liquidity position with current assets significantly exceeding current liabilities.
| Financial Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Long-term Debt | $22,059,000 | $13,165,000 |
| Mortgage Payable | $10,511,000 | $10,823,000 |
| Debt-to-Equity Ratio | 30.1% | 23.9% |
| Available Borrowing under Revolving Credit Facility | $42,941,000 | N/A |
| Current Ratio | 4.41 | 3.54 |
The company’s financing strategy reflects a calculated approach to leveraging debt while maintaining a solid equity base, ensuring sufficient liquidity for ongoing operations and potential expansions in the future.
Assessing Acme United Corporation (ACU) Liquidity
Assessing Liquidity and Solvency
The financial health of a corporation is often evaluated through its liquidity and solvency metrics. This section delves into the liquidity position, working capital trends, cash flow statements, and any potential liquidity concerns or strengths for the corporation.
Current and Quick Ratios
As of September 30, 2024, the liquidity position of the corporation is highlighted by the following ratios:
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Current Ratio | 4.41 | 3.54 |
| Quick Ratio | Not explicitly provided | Not explicitly provided |
The increase in the current ratio indicates an improved ability to meet short-term liabilities with short-term assets. The quick ratio is not provided, but can be calculated if necessary using current assets minus inventories divided by current liabilities.
Analysis of Working Capital Trends
Working capital has shown a positive trend, with an increase of approximately $10.4 million during the first nine months of 2024, rising from $66.01 million at the end of 2023 to $76.38 million as of September 30, 2024.
- Accounts Receivable: Increased by approximately $5.1 million.
- Inventory: Increased by approximately $0.5 million due to the acquisition of Elite First Aid, Inc.
- Accounts Payable: Decreased by approximately $4.1 million.
Cash Flow Statements Overview
Examining the cash flow statements for the nine months ended September 30, 2024, the following trends are observed:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $5,604 | $21,662 |
| Net Cash Used in Investing Activities | ($12,343) | ($4,523) |
| Net Cash Provided by Financing Activities | $8,894 | ($17,000) |
The operating cash flow has decreased significantly compared to the previous year, while investing activities have increased due to acquisitions. Financing activities show a net inflow, indicating reliance on debt financing.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the corporation has outstanding borrowings of $22.06 million under its revolving credit facility, with $42.94 million available for borrowing. The long-term debt to equity ratio stands at 30.1%, up from 23.9% in 2023, indicating a higher reliance on debt financing.
The corporation's liquidity appears robust given the current ratio and available credit, despite the increase in long-term debt. The ability to generate cash flow from operations will be critical in maintaining this liquidity position moving forward.
Is Acme United Corporation (ACU) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 11.8, calculated from an earnings per share (EPS) of $2.26 and a stock price of approximately $26.68 as of the end of September 2024.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.5, with the book value per share calculated at $17.49.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 8.5, indicating a favorable valuation compared to industry peers.
Stock Price Trends
The stock price has experienced fluctuations over the past 12 months, starting at approximately $23.50 in October 2023, peaking at $29.00 in December 2023, and settling around $26.68 by September 2024. The following table summarizes the stock price trends:
| Month | Stock Price |
|---|---|
| October 2023 | $23.50 |
| December 2023 | $29.00 |
| March 2024 | $27.00 |
| June 2024 | $25.75 |
| September 2024 | $26.68 |
Dividend Yield and Payout Ratios
The dividend yield is currently 0.56%, with dividends declared at $0.15 per share. The payout ratio is approximately 6.64%, indicating a sustainable dividend policy.
Analyst Consensus
Analyst consensus suggests a Hold rating, with a target price of $28.00, reflecting moderate growth expectations.
Key Risks Facing Acme United Corporation (ACU)
Key Risks Facing Acme United Corporation
The financial health of Acme United Corporation is influenced by various internal and external risk factors. These risks can significantly impact the company's performance and investor confidence.
Industry Competition
Increased competition in the market is a primary risk. The company's net sales for the three months ended September 30, 2024, were $48,166,000, reflecting a decrease of 4% compared to the same period in 2023, where sales were $50,384,000. The competitive landscape, particularly in the first aid and medical products segment, remains intense, impacting market share and pricing strategies.
Regulatory Changes
Changes in regulations governing product safety and compliance can pose risks. The company must adhere to stringent quality standards, which can lead to increased operational costs. As of September 30, 2024, the long-term debt to equity ratio stood at 30.1%, up from 23.9% in the previous year. This increase may pressure financial resources as compliance expenditures rise.
Market Conditions
The overall market conditions can affect consumer demand. For instance, net sales in Canada for the three months ended September 30, 2024, decreased by 1% in U.S. dollars. Economic fluctuations can lead to reduced discretionary spending on non-essential products, impacting revenue streams.
Operational Risks
Operational risks have been highlighted in the company's earnings reports. For the nine months ended September 30, 2024, the operating income was reported at $11,859,000, which is slightly up from $11,096,000 in the same period in 2023. However, challenges such as supply chain disruptions and labor shortages can affect production efficiency and cost management.
Financial Risks
Financial risks are significant, particularly regarding debt management. As of September 30, 2024, total debt outstanding under the revolving credit facility increased to $22,059,000. The company relies on this credit for operational liquidity, and any adverse changes in interest rates or credit terms could impact financial stability.
Mitigation Strategies
The company has implemented several strategies to mitigate risks. For instance, it has maintained a current ratio of 4.41 as of September 30, 2024, compared to 3.54 in the prior year. This indicates a strong liquidity position, allowing the company to respond to unexpected challenges. Additionally, the company is in compliance with covenants under its revolving loan agreement, enhancing its financial flexibility.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Increased competition affecting sales | Net sales decreased 4% YoY |
| Regulatory Changes | Stricter compliance requirements | Long-term debt to equity ratio increased to 30.1% |
| Market Conditions | Economic fluctuations affecting demand | Sales in Canada decreased by 1% |
| Operational Risks | Supply chain and labor challenges | Operating income increased slightly YoY |
| Financial Risks | Debt management and interest rate exposure | Total debt outstanding at $22,059,000 |
Future Growth Prospects for Acme United Corporation (ACU)
Future Growth Prospects for Acme United Corporation
Analysis of Key Growth Drivers
Acme United Corporation is poised for growth through several strategic initiatives:
- Product Innovations: The company has focused on enhancing its product lines, particularly in first aid and medical supplies, which generated approximately $91.5 million in net sales for the nine months ended September 30, 2024, compared to $88.4 million in the same period of 2023.
- Market Expansions: The European segment saw a 10% increase in net sales for the three months ended September 30, 2024, amounting to $3.748 million, driven by market share gains in the office channel.
- Acquisitions: The acquisition of Elite First Aid, Inc. for approximately $7.1 million in May 2024 is expected to enhance the product portfolio and expand market reach.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for Acme United show a positive trend:
- For the nine months ended September 30, 2024, total net sales were $148.5 million, a slight decrease from $149.6 million in 2023; however, excluding impacts from divested product lines, sales increased by 5%.
- Analysts estimate a compound annual growth rate (CAGR) of 5% to 7% over the next five years, supported by ongoing product development and market expansion strategies.
Strategic Initiatives or Partnerships
The following strategic initiatives are critical for driving future growth:
- The partnership with various distributors aims to enhance the availability of first aid products across different markets.
- Investment in e-commerce platforms to reach a broader customer base is underway, particularly in North America and Europe.
Competitive Advantages
Acme United holds several competitive advantages that position it for growth:
- Strong Brand Portfolio: The company boasts well-recognized brands in the first aid and cutting tool sectors, fostering customer loyalty.
- Robust Distribution Network: The company’s established distribution channels ensure efficient product delivery and market penetration.
- Operational Efficiency: Productivity improvements in manufacturing have led to a gross profit margin of 39.4% for the nine months ended September 30, 2024, compared to 37.3% in the same period in 2023.
Financial Data Summary
| Financial Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Total Net Sales | $148.5 million | $149.6 million |
| Gross Profit Margin | 39.4% | 37.3% |
| Operating Income | $11.9 million | $11.1 million |
| Acquisition Cost (Elite First Aid) | $7.1 million | N/A |
| European Net Sales Growth | 10% | N/A |
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Updated on 16 Nov 2024
Resources:
- Acme United Corporation (ACU) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Acme United Corporation (ACU)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Acme United Corporation (ACU)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.