Acme United Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

acu-10q_20200930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: to

Commission file number: 01-07698

ACME UNITED CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Connecticut		06-0236700
State or Other Jurisdiction of		I.R.S. Employer Identification No.
Incorporation or Organization

55 Walls Drive, Fairfield, Connecticut		06824
Address of Principal Executive Offices		Zip Code

Registrant's telephone number, including area code: (203) 254-6060

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
$2.50 par value Common Stock	ACU	NYSE American

Indicate by check mark whether the registrant (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller Reporting Company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(s) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Registrant had 3,338,913 shares of its $2.50 par value Common Stock outstanding as of November 3, 2020.

ACME UNITED CORPORATION

INDEX

		Page Number

Part I — FINANCIAL INFORMATION:
Item 1:	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at September 30, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019	6
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019	7
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4:	Controls and Procedures	20

Part II — OTHER INFORMATION:
Item 1:	Legal Proceedings	21
Item 1A:	Risk Factors	21
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3:	Defaults Upon Senior Securities	21
Item 4:	Mine Safety Disclosures	21
Item 5:	Other Information	21
Item 6:	Exhibits	21
Signatures		22

Part I - FINANCIAL INFORMATION

Item 1: Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(all amounts in thousands)

	September 30,		December 31,
	2020		2019
	(unaudited)		(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	3,031	$	6,822
Accounts receivable, less allowance of $1,428 in 2020 and $523 in 2019		32,154		25,485
Inventories		48,351		39,261
Prepaid expenses and other current assets		2,142		1,578
Total current assets		85,678		73,146
Property, plant and equipment:
Land		1,426		1,420
Buildings		11,142		10,096
Machinery and equipment		20,117		19,112
		32,685		30,628
Less: accumulated depreciation		18,344		16,592
		14,341		14,036

Operating lease right-of-use asset, net		2,190		2,989
Goodwill		4,696		4,696
Intangible assets, less accumulated amortization		16,072		15,793
Other assets		40		89
Total assets	$	123,017	$	110,749

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(all amounts in thousands, except share amounts)

	September 30,			December 31,
	2020			2019
	(unaudited)			(Note 1)
LIABILITIES
Current liabilities:
Accounts payable	$	9,251		$	6,693
Operating lease liability - current portion		847			1,047
Current portion of mortgage payable		267			267
Other accrued liabilities		13,376			8,576
Total current liabilities		23,741			16,583
Non-current liabilities:
Long-term debt		30,703			33,240
Long-term debt - PPP Loan		3,508			-
Mortgage payable, net of current portion		2,978			3,178
Operating lease liability - non-current portion		1,422			1,961
Other non-current liabilities		69			83
Total liabilities		62,421			55,045

Commitments and Contingencies (see note 2)

STOCKHOLDERS' EQUITY
Common stock, par value $2.50:
authorized 8,000,000 shares;
issued - 4,840,571 shares in 2020 and 2019,
including treasury stock		12,101			12,094
Additional paid-in capital		8,438			8,262
Retained earnings		56,425			51,571
Treasury stock, at cost - 1,501,658 shares in 2020 and 1,487,238 in 2019		(14,522	)		(14,235	)
Accumulated other comprehensive loss:
Minimum pension liability		(522	)		(522	)
Translation adjustment		(1,324	)		(1,466	)
		(1,846	)		(1,988	)
Total stockholders’ equity		60,596			55,704
Total liabilities and stockholders’ equity	$	123,017		$	110,749

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(all amounts in thousands, except per share amounts)


	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Net sales	$	43,316		$	36,995		$	123,133		$	108,585
Cost of goods sold		28,360			23,861			78,594			68,877

Gross profit		14,956			13,134			44,539			39,708

Selling, general and administrative expenses		12,832			11,408			36,023			32,679

Operating income		2,124			1,726			8,516			7,029

Non-operating items:
Interest:
Interest expense		173			478			742			1,491
Interest income		(5	)		(9	)		(20	)		(28	)
Interest expense, net		168			469			722			1,463
Other (income) expense, net		(35	)		40			2			52
Total other expense, net		133			509			724			1,515
Income before income tax expense		1,991			1,217			7,792			5,514
Income tax expense		412			158			1,737			977
Net income	$	1,579		$	1,059		$	6,055		$	4,537

Basic earnings per share	$	0.47		$	0.32		$	1.81		$	1.35

Diluted earnings per share	$	0.46		$	0.30		$	1.75		$	1.32

Weighted average number of common shares outstanding-denominator used for basic per share computations		3,340			3,352			3,343			3,352
Weighted average number of dilutive stock options outstanding		122			134			111			94
Denominator used for diluted per share computations		3,461			3,486			3,455			3,446

Dividends declared per share	$	0.12		$	0.12		$	0.36		$	0.36

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(all amounts in thousands)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019			2020		2019
Net income	$	1,579	$	1,059		$	6,055	$	4,537
Other comprehensive income (loss):
Foreign currency translation adjustment		270		(254	)		142		(124	)
Comprehensive income	$	1,849	$	805		$	6,197	$	4,413

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(all amounts in thousands, except share amounts)

For the three months ended September 30, 2019

	Outstanding Shares of Common Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, June 30, 2019		3,350,833	$	12,094	$	(14,235	)	$	8,701		$	(2,099	)	$	50,341		$	54,802
Net income															1,059			1,059
Other comprehensive loss												(205	)					(205	)
Stock compensation expense									247									247
Distributions to shareholders															(404	)		(404	)
Cash settlement of stock options									(475	)								(475	)
Balances, September 30, 2019		3,350,833	$	12,094	$	(14,235	)	$	8,473		$	(2,304	)	$	50,996		$	55,024

For the three months ended September 30, 2020

	Outstanding Shares of Common Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, June 30, 2020		3,336,413	$	12,094	$	(14,522	)	$	8,304		$	(2,116	)	$	55,247		$	59,007
Net income															1,579			1,579
Other comprehensive gain												270						270
Stock compensation expense									327									327
Distributions to shareholders															(401	)		(401	)
Issuance of common stock		2,500		7					52									59
Cash settlement of stock options									(245	)								(245	)
Balances, September 30, 2020		3,338,913	$	12,101	$	(14,522	)	$	8,438		$	(1,846	)	$	56,425		$	60,596

For the nine months ended September 30, 2019

	Outstanding Shares of Common Stock		Common Stock		Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Gain			Retained Earnings		Total
Balances, December 31, 2018		3,350,833	$	12,094	$	(14,235	)	$	8,982	$	(2,058	)	$	47,550	$	52,333
Net income														4,537		4,537
Other comprehensive loss											(124	)				(124	)
Adoption of ASU 2018-02											(122	)		122		—
Stock compensation expense									745							745
Distributions to shareholders

Price	20.48	EPS	1
Shares	5	P/E	19
MCap	99	P/FCF	14
Net Debt	32	EBIT	6
TEV	132	TEV/EBIT	22
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-06
10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-03-13
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-07
10-Q	2019-03-31	Filed 2019-05-09
10-K	2018-12-31	Filed 2019-03-15
10-Q	2018-09-30	Filed 2018-11-09
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-10
10-K	2017-12-31	Filed 2018-03-15
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-05-12
10-K	2016-12-31	Filed 2017-03-10
10-Q	2016-09-30	Filed 2016-11-04
10-Q	2016-06-30	Filed 2016-08-15
10-Q	2016-03-31	Filed 2016-05-13
10-K	2015-12-31	Filed 2016-03-11
10-Q	2015-09-30	Filed 2015-11-12
10-Q	2015-06-30	Filed 2015-08-14
10-Q	2015-03-31	Filed 2015-05-13
10-K	2014-12-31	Filed 2015-03-06
10-Q	2014-09-30	Filed 2014-11-14
10-Q	2014-06-30	Filed 2014-08-14
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-03-06
10-Q	2013-09-30	Filed 2013-11-08
10-Q	2013-06-30	Filed 2013-08-13
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-03-08
10-Q	2012-09-30	Filed 2012-11-09
10-Q	2012-06-30	Filed 2012-08-14
10-Q	2012-03-31	Filed 2012-05-14
10-K	2011-12-31	Filed 2012-03-07
10-Q	2011-09-30	Filed 2011-11-07
10-Q	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-05-12
10-K	2010-12-31	Filed 2011-03-11
10-Q	2010-09-30	Filed 2010-11-12
10-Q	2010-06-30	Filed 2010-08-12
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-09

8-K	2020-12-16	Other Events, Exhibits
8-K	2020-10-21
8-K	2020-07-17
8-K	2020-04-21
8-K	2020-04-17
8-K	2020-03-24
8-K	2020-02-27
8-K	2020-01-08
8-K	2019-11-14
8-K	2019-10-18
8-K	2019-07-19
8-K	2019-04-23
8-K	2019-04-18
8-K	2019-02-28
8-K	2018-10-19
8-K	2018-07-20
8-K	2018-04-24
8-K	2018-04-20
8-K	2018-02-27

EX-31.1	acu-ex311_9.htm
EX-31.2	acu-ex312_7.htm
EX-32.1	acu-ex321_6.htm
EX-32.2	acu-ex322_8.htm

ACU 10Q Quarterly Report

Acme United Earnings 2020-09-30