Executive Summary
Executive Summary (Q3 2024 ACU): Acme United reported third-quarter revenue of $48.2 million, down 4% versus the prior year, largely reflecting the December 2023 sale of the Camillus and Cuda lines, which reduced quarterly top-line by a non-operational amount. Excluding Camillus/Cuda, Q3 revenue rose 4%, underscoring the resilience of the core First Aid, Westcott, and DMT portfolios. Net income climbed 3% to $2.23 million, while diluted EPS declined to $0.54 from $0.58, driven by a higher weighted average share count used for the period. The company’s gross margin stood at 38.5% in Q3 (38.7% prior year) and expanded to 39.4% for the first nine months of 2024 (versus 37.3% in 2023), aided by manufacturing and distribution productivity. Operating margin was 6.07% in Q3 (6.07% implied), with nine-month margins trending higher due to mix and productivity gains. Free cash flow for the trailing nine months was $7.52 million, and cash flow from operations was $8.87 million, supporting a leverage reduction over the period. Management reaffirmed a constructive outlook, signaling continued earnings and cash-flow strength, balance-sheet strengthening, and active pursuit of accretive acquisitions. The company also highlighted ongoing productivity improvements, automation investments, and strategic product-line integrations (notably Elite First Aid) to broaden high-margin offerings and improve replenishment capabilities via RFID-enabled kits. The remaining year may witness continued growth in the Westcott and DMT lines, though macro uncertainty and customer-channel softness pose near-term headwinds in select segments.
Key Performance Indicators
QoQ: -13.10% | YoY:-4.40%
QoQ: -17.96% | YoY:-4.81%
QoQ: -54.10% | YoY:-19.99%
Key Insights
Revenue: Q3 2024 = $48.17m, YoY change = -4.40%, QoQ change = -13.10%; Nine months to 9/30/2024 = $148.50m, YoY = -1.0%, ex-Camillus/Cuda +5%.
Gross Profit: $18.56m in Q3, gross margin 38.5%; Nine months gross margin 39.4% (vs 37.3% in 2023).
Operating Income: $2.93m in Q3, operating margin ~6.07%; Nine months operating margin aligned with margin expansion trends.
Net Income: $2.23m in Q3, net margin ~4.62%; YoY net income +3.44%; QoQ decline driven by seasonal factors and mix.
EPS: Diluted $0.5...
Financial Highlights
Revenue: Q3 2024 = $48.17m, YoY change = -4.40%, QoQ change = -13.10%; Nine months to 9/30/2024 = $148.50m, YoY = -1.0%, ex-Camillus/Cuda +5%.
Gross Profit: $18.56m in Q3, gross margin 38.5%; Nine months gross margin 39.4% (vs 37.3% in 2023).
Operating Income: $2.93m in Q3, operating margin ~6.07%; Nine months operating margin aligned with margin expansion trends.
Net Income: $2.23m in Q3, net margin ~4.62%; YoY net income +3.44%; QoQ decline driven by seasonal factors and mix.
EPS: Diluted $0.54 in Q3 vs $0.58 prior year; YoY EPS change -7.6%; QoQ -50.4% due to volume mix and higher share count.
Cash Flow: Operating cash flow $8.87m; Capex $1.35m; Free cash flow (9M) $7.52m; Net debt (bank debt less cash) around $31.19m; Dividends paid $1.11m; Cash balance $5.70m at 9/30/2024.
Balance Sheet: Total assets $165.47m; Total liabilities $59.16m; Shareholders’ equity $106.32m; Current ratio 4.41; Quick ratio 1.91; DIO 170.23 days; CCC ~207.5 days; D/E ~0.35; Debt to capitalization ~25.8%.
Notes: Ex-Camillus/Cuda performance demonstrates the resilience of core brands (First Aid, Westcott, DMT) with improvements in gross margin driven by productivity and mix; the Camillus/Cuda sale materially altered quarterly revenue in 2023 and continues to exert year-over-year comparison effects.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
48.17M |
-4.40% |
-13.10% |
| Gross Profit |
18.56M |
-4.81% |
-17.96% |
| Operating Income |
2.93M |
-19.99% |
-54.10% |
| Net Income |
2.23M |
3.44% |
-50.00% |
| EPS |
0.60 |
0.00% |
-50.41% |
Key Financial Ratios
operatingProfitMargin
6.07%
operatingCashFlowPerShare
$2.38
freeCashFlowPerShare
$2.02
dividendPayoutRatio
49.6%
Management Commentary
Key management themes from the QQ3 2024 earnings call:
- Tariff resilience and supply-chain diversification: Management discussed relocating Westcott production to Malaysia, Vietnam, Thailand, and the Philippines to mitigate 25% tariff exposure, while acknowledging U.S. First Aid sourcing remains more sensitive to tariff dynamics. Quote: 'First in the Westcott area, our factories are moving operations with us into Malaysia, Vietnam, Thailand, and the Philippines.'
- RFID-enabled First Aid product strategy and Elite integration: The company is advancing next-generation First Aid kits with RFID monitoring and automatic replenishment, and has integrated Elite First Aid products into its offerings, expanding high-margin kit sales across the U.S. and Canada and via e-commerce. Quote: 'These items use our patented RFID system to monitor real-time consumption and replenishment of refills.'
- Solid demand momentum in core brands vs. mixed end-market signals: While overall Q3 revenue declined due to the Camillus/Cuda sale, core First Aid, Westcott, and DMT lines showed strength, with Westcott posting a 10% quarterly gain and Europe delivering double-digit growth in local currency.
- Operational enhancements and cost discipline: The company highlighted two automation systems for packing First Aid components and lens wipes, warehouse storage upgrades, and lower costs for First Aid boxes/cabinets, aiming to lift efficiency and support margin expansion.
- Acquisitive and balance-sheet focus: Management reiterated intent to pursue accretive acquisitions and to continue strengthening the balance sheet, aided by $13m net proceeds from the Camillus/Cuda sale used to reduce debt.
First in the Westcott area, our factories are moving operations with us into Malaysia, Vietnam, Thailand, and the Philippines.
— Walter C. Johnsen
We introduced our latest smart compliance First Aid kits this past September at the National Safety Conference. These items use our patented RFID system to monitor real-time consumption and replenishment of refills.
— Walter C. Johnsen
Forward Guidance
Forward Guidance and Outlook: Management projects continued strength in earnings and cash flow through year-end, with ongoing balance-sheet strengthening and a continued pipeline of acquisitions. The core drivers include: (1) sustained market-share gains in Westcott and DMT, supported by a robust product pipeline and improved distribution reach; (2) Elite First Aid integration expanding high-margin offerings for first aid kits; (3) ongoing productivity and automation initiatives to reduce operating costs and improve fulfillment efficiency; (4) diversification of sourcing and manufacturing footprint to mitigate tariff risk and improve supply resilience. achievability considerations: The nine-month gross margin expansion to ~39% and the modest net income increase in Q3 2024, together with a free cash flow generation of $7.5m and a reduced net debt position, support a constructive near-term trajectory. Key factors to monitor include: tariff developments and sourcing diversity effectiveness, the trajectory of industrial distributor orders (which showed softness in September), the ramp and market reception of RFID-enabled First Aid kits, and the pace of Westcott/DMT product introductions and retail-channel acceptance.