Acme United(ACU) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Announcement Acme United reported record Q2 2025 net income and diluted EPS growth despite a slight sales decrease, driven by strategic inventory and supply chain management Financial Highlights For the second quarter of 2025, Acme United reported a 3% decrease in net sales to $54.0 million, but achieved a record net income of $4.8 million, a 7% increase year-over-year, with diluted EPS growing by 6% to $1.16, while for the first six months, net sales were nearly flat at $100.0 million, net income increased by 5% to $6.4 million, and diluted EPS was up 7% to $1.57 Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $54.0 | $55.4 | -3% | | Net Income | $4.8 | $4.5 | +7% | | Diluted EPS | $1.16 | $1.09 | +6% | H1 2025 vs H1 2024 Financial Performance | Metric | H1 2025 ($ millions) | H1 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $100.0 | $100.4 | -0.4% | | Net Income | $6.4 | $6.1 | +5% | | Diluted EPS | $1.57 | $1.47 | +7% | Management Commentary The CEO, Walter C. Johnsen, stated that Q2 2025 was the most profitable quarter in the company's history, achieved despite tariff-related uncertainties managed by holding extra inventory, and the company is actively diversifying its supply chain beyond China to locations like India, Malaysia, and Vietnam to ensure optimal cost and service for its customers - Achieved a record profitable quarter by proactively managing inventory to support customers amid tariff uncertainty, which caused order delays and cancellations[4] - The company is actively diversifying its supply base, leveraging its sourcing presence in China, India, Malaysia, Thailand, Vietnam, and Egypt to mitigate risks and enhance competitiveness[5] - The company has made 10 acquisitions of manufacturers in the U.S. and Canada as part of its supply base diversification strategy[4] Segment Performance Analysis of net sales changes across U.S., European, and Canadian segments, highlighting regional drivers and challenges U.S. Segment Net sales in the U.S. segment decreased by 5% in Q2 2025 and 2% in the first half of the year, with the decline attributed to the cancellation of some back-to-school orders due to high tariffs and the non-recurrence of a large initial order for new kitchen sharpeners that occurred in Q2 2024 U.S. Segment Net Sales Change (YoY) | Period | Change vs. Prior Year | | :--- | :--- | | Q2 2025 | -5% | | H1 2025 | -2% | - The sales decrease was caused by cancelled back-to-school orders due to high tariffs and a large, non-recurring order to a major retailer in Q2 2024[6] European Segment European net sales for Q2 2025 declined 3% in U.S. dollars and 6% in local currency, primarily because some customer shipments were delayed into the third quarter, and for the first six months, sales decreased 5% in U.S. dollars and 6% in local currency European Segment Net Sales Change (YoY) | Period | Change in U.S. Dollars | Change in Local Currency | | :--- | :--- | :--- | | Q2 2025 | -3% | -6% | | H1 2025 | -5% | -6% | - The sales decline was mainly due to the delay of certain customer shipments into the third quarter[7] Canadian Segment The Canadian segment demonstrated significant growth, with Q2 2025 net sales increasing 28% year-over-year in both U.S. dollars and local currency, and for the first half of 2025, sales grew 18% in U.S. dollars and 21% in local currency, driven by strong performance in first-aid products Canadian Segment Net Sales Change (YoY) | Period | Change in U.S. Dollars | Change in Local Currency | | :--- | :--- | :--- | | Q2 2025 | +28% | +28% | | H1 2025 | +18% | +21% | - The increase in sales for both periods was attributed to strong sales of first-aid products[8] Financial Health and Operations The company improved gross margin and significantly reduced net bank debt, demonstrating strong free cash flow generation Gross Margin and Balance Sheet Gross margin slightly improved to 41.0% in Q2 2025 from 40.8% in Q2 2024, and the company strengthened its balance sheet, reducing net bank debt to $22.8 million from $33.1 million a year prior, while generating approximately $12.0 million in free cash flow and paying $2.2 million in dividends over the last twelve months Gross Margin Comparison | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 (Three Months) | 41.0% | 40.8% | | H1 (Six Months) | 40.1% | 39.9% | - Bank debt less cash was reduced to $22.8 million as of June 30, 2025, compared to $33.1 million on June 30, 2024[9] - Over the twelve months ending June 30, 2025, the company generated approximately $12.0 million in free cash flow and distributed $2.2 million in dividends[10] Corporate Information and Disclosures Details on the upcoming earnings call, an overview of Acme United's business, and a cautionary note on forward-looking statements and associated risks Conference Call and Webcast Information Acme United will host a conference call and webcast on Wednesday, July 23, 2025, at 12:00 p.m. ET to discuss its quarterly results, with the report providing dial-in details and a link to the webcast on the company's investor relations website - A conference call to discuss quarterly results is scheduled for Wednesday, July 23, 2025, at 12:00 p.m. ET[11] About Acme United Acme United Corporation is a leading global supplier of innovative safety solutions and cutting technology for school, home, office, and industrial markets, with a portfolio including well-known brands such as First Aid Only®, Westcott®, Clauss®, and DMT® - The company is a leading worldwide supplier of safety solutions and cutting technology with major brands including First Aid Only®, First Aid Central®, PhysiciansCare®, Westcott®, and Clauss®[12] Forward-Looking Statements This section serves as a safe harbor warning, advising that statements in the report are subject to risks and uncertainties, including changes in global economic conditions, international trade policies and tariffs, inflation, supply chain disruptions, and competition, which could cause actual results to differ materially from expectations - The report contains forward-looking statements made under the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995[13][15] - Key risks include global economic uncertainties, trade policies (tariffs), inflation, supply chain disruptions, competition, and changes in consumer spending habits[16] Condensed Consolidated Financial Statements Presents the unaudited condensed consolidated income statements and balance sheets for comparative analysis of financial performance and position Condensed Consolidated Statements of Income This section presents the unaudited condensed consolidated statements of income for the three and six-month periods ending June 30, 2025, and 2024, detailing revenues, cost of goods sold, operating expenses, and net income, providing a comparative view of the company's profitability Condensed Consolidated Statement of Income (Three Months Ended) | Amounts except per share data | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | Net sales | $ 53,996 | $ 55,425 | | Gross profit | 22,149 | 22,627 | | Operating income | 6,390 | 6,375 | | Net income | $ 4,752 | $ 4,452 | | Earnings per share - diluted | $ 1.16 | $ 1.09 | Condensed Consolidated Statement of Income (Six Months Ended) | Amounts except per share data | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | Net sales | $ 99,954 | $ 100,382 | | Gross profit | 40,066 | 40,024 | | Operating income | 8,816 | 8,934 | | Net income | $ 6,404 | $ 6,089 | | Earnings per share - diluted | $ 1.57 | $ 1.47 | Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, compared to June 30, 2024, outlining the company's financial position by detailing assets (current and non-current), liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights | Account | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $ 3,641 | $ 3,791 | | Inventories | 57,309 | 56,621 | | Total current assets | 101,341 | 106,148 | | Total assets | $ 171,147 | $ 173,541 | | Liabilities & Equity | | | | Total current liabilities | 23,494 | 27,993 | | Long-term debt | 16,352 | 26,419 | | Total liabilities | 57,425 | 69,584 | | Total stockholders' equity | 113,722 | 103,957 |