Acme United(US:ACU)2023-08-07 16:00Sales Performance - Total net sales for the three months ended June 30, 2023, were $53,336,000, compared to $56,773,000 for the same period in 2022, reflecting a decrease of approximately 4.0%[45] - For the six months ended June 30, 2023, total net sales were $99,175,000, down from $100,106,000 in the same period of 2022, indicating a decline of about 0.9%[45] - The United States segment generated $45,200,000 in sales for the three months ended June 30, 2023, compared to $48,905,000 in 2022, a decrease of approximately 5.5%[52] - Consolidated net sales for the three and six months ended June 30, 2023 were $53,336,000 and $99,175,000, representing a 6% and 1% decrease compared to the same periods in 2022[78] - Net sales in Canada for the three months ended June 30, 2023 increased 13% (21% in local currency) compared to the same period last year, driven by higher sales of first aid products[80] Profitability - The Company reported operating income of $5,250,000 for the three months ended June 30, 2023, compared to $3,976,000 for the same period in 2022, representing an increase of about 32.0%[52] - Gross profit for the three months ended June 30, 2023 was $20,022,000 (37.5% of net sales), an increase from $18,548,000 (32.7% of net sales) in the same period in 2022[81] - Operating income for the three months ended June 30, 2023 was $5,250,000, compared to $3,976,000 in the same period of 2022, reflecting productivity improvements and cost savings initiatives[83] Expenses and Liabilities - Share-based compensation expense for the three months ended June 30, 2023, was approximately $389,000, compared to $368,000 for the same period in 2022, reflecting an increase of about 5.7%[53] - Interest expense, net for the three months ended June 30, 2023 was $832,000, an increase of $409,000 compared to the same period in 2022 due to higher average interest rates[84] - Operating lease cost for the three months ended June 30, 2023 was $344,000, an increase from $308,000 in the same period in 2022[58] Cash and Debt Management - The Company had outstanding borrowings of $39,979,000 under its revolving loan agreement as of June 30, 2023, down from $49,916,000 as of December 31, 2022, a reduction of approximately 20.0%[47] - The Company’s long-term mortgage payable was $10,485,000 as of June 30, 2023, compared to $10,694,000 as of December 31, 2022, indicating a decrease of about 2.0%[46] - Total cash, cash equivalents, and restricted cash as of June 30, 2023 was $4,151,000, down from $7,600,000 as of December 31, 2022[67] - Total debt under the revolving credit facility decreased by approximately $10 million to $39.979 million as of June 30, 2023[90] - As of June 30, 2023, $25.021 million was available for borrowing under the credit facility[90] - The company is in compliance with the covenants under the amended revolving loan agreement[89] Working Capital and Liquidity - Working capital decreased by approximately $5.3 million to $78.2 million as of June 30, 2023, compared to $83.473 million at December 31, 2022[87] - Current ratio declined to 4.09 from 4.77 year-over-year, indicating a decrease in liquidity[87] - Long-term debt to equity ratio improved to 60.3% from 76.7%[87] Inventory and Receivables - Inventory decreased by approximately $7.4 million, attributed to planned reductions due to diminished supply chain disruption risks[87] - Receivables increased by approximately $7.2 million, with days sales outstanding improving to 59 days from 62 days[87] Future Outlook - The company expects cost reduction initiatives to generate over $5 million in savings in 2023[91] - The revolving loan agreement allows for borrowings of up to $65 million at an interest rate of SOFR plus 1.75%[88] - The Company is required to maintain specific amounts of funded debt to EBITDA and must have annual net income greater than $0, measured at the end of each fiscal year[46] Contingent Liabilities - The carrying value of the Company's contingent liability related to the acquisition of Safety Made is recorded at its fair value of $705,000, with an increase of $75,000 during the three months ended June 30, 2023[54] Taxation - The effective income tax rate for the three and six months ended June 30, 2023 was 23%, up from 20% in the same periods of 2022, primarily due to higher earnings in jurisdictions with higher tax rates[86] Assets by Segment - The Company’s total assets by segment for the three months ended June 30, 2023, included $84,054,000 from the United States segment, $7,633,000 from Canada, and $7,488,000 from Europe[52] Future Lease Obligations - Future minimum lease payments under non-cancellable leases as of June 30, 2023 total $2,675,000[63]