Q1 2021 Acme United Corp Earnings Call
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Good day, and welcome to the Acme United corporations hosted first quarter 2021 earnings conference call at this time. I'd like to turn the conference over to mister Walter Johnson chairman and CEO office, please go ahead.
Thank you. Welcome to the first quarter 2021 earnings conference call for Acme United Corporation. I'm Walter johnsen chairman. And CEO with me is Paul Driscoll power Chief Financial Officer who will first read a safe harbor statement Paul.
forward-looking statements in this conference call including without limitation statements related to the company's plan strategies objectives expectations intentions and adequacy of resources are made pursuant to the safe harbor provisions of the private Securities litigation Reform Act of 1995 investors are cautioned that such forward-looking statements about risk and uncertainties such as among others those arising as a result of the effects of the COVID-19 pandemic including the ongoing economic downturn in the other rep certainties described in our periodic filings with the Securities and Exchange Commission, and then our current earnings release
Thank you for asking. United had a strong first quarter of 2021. Our net sales were forty three point five million an increase of 22% off. They didn't come with two million dollars compared to a million three in the first quarter of 2020 and increase of 60% or earnings per share were $52 compared to $0.36 last year and increase of 44%
all of our major operations and product lines had sales increases we were hitting on all fronts.
Westcott cutting tools that strong sales in the mass market and online sales the first aid products increased about 10% European business increased down to 2% due to strong Ecommerce sales. First aid Central in Canada continue to strong growth
We've been expanding our plant that manufactures DMT sharpening tools and the new capacity is coming on stream.
We see the sales impact from that expansion in the US Canada and Europe.
There have been weaknesses as well the office Superstores Office Products, wholesalers and independent Office Supply dealers and sales below last year during the first quarter of a year ago. This time many offices had just closed due to the pandemic going forward. We anticipate additional demand in new first aid and office supplies has worked Life begin to re-engage in offices.
Factories and distribution centers are operating less efficiently than three pandemic and we continue to have plant shutdowns too deep cleaning and safe operations. Fortunately many of our Associates are being vaccinated and we anticipate a more normal workflow in the months ahead.
We had anticipated growth and supply chain issues and added approximately twelve million dollars of inventory during 2020.
This has helped us with meeting strong demand and it's buffered us in many ways from the well-publicized global Shipping and transportation issues. Nevertheless. Our Costco shipments have increased due to Rising labor costs scarcity of shipping containers increasing west to east shipping costs delays at the port and weakness of the u.s. Dollar. We have raised selling prices to our customers and anticipate continuing to do so.
Well, though we are not providing guidance. We see continued strength in our business hour cash flow is strong and we are reducing debt in anticipation of future Acquisitions month. I will now turn the call to Paul.
Acme said sales for the first quarter where forty three point five million dollars compared to thirty five million dollars and twenty twenty 22% increase that's sales in the US an increased 18% in the quarter. The sales increase came primarily from Westcott, crap tools and safety Cutters sales. The first aid and safety products were strong revenues in club approximately point nine million from the sales of men. Products that sales in Europe for the first quarter of 2021 increased 31% and local currency compared to the first quarter of 2028 mainly do to increased eCommerce sales and continued growth of DMT sharpening products net sales in Canada for the first quarter of 2021 increased 31% and local current month due to higher sales, but first aid Central products
Gross margin was 35.8% in the first quarter of 2021 versus 37.8% in the first quarter of 2020. The lower gross margin was mainly due to a product mix and higher higher ocean freight costs as a result of a scarcity of shipping containers and congestion at Global ports sg&a expenses for the first quarter of 2021 or twelve point, six million dollars or 29% of net sales compared with 11.5 million dollars or 32% of net sales for the same period of a 2020 operating profit in the first quarter of 2021 increased 48% compared to the first quarter of 2020. Net income for the first quarter of 2021 was $2 or $0.52 per diluted share compared to net income of 1.3 million dollars or 36 cents per diluted share for the same period of twenty twenty 60% increase in wage.
income and 44%
Earnings per share the company's bank. That was Cash on March Thirty One twenty one was $43 compared to $33 on March 13th, 2020 during the 12-month. We paid 9.3 million dollars for the denim at Mid map acquisition spent one point seven million dollars on dividends generated 1.5 million dollars in free cash flow. We increase inventory by $1,200 during the twelve months.
Thank you Paul. I will now open the call to questions.
Thank you. Have you like to ask a question, please? Signal by pressing star one on your telephone keypad. If you're using the speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment again, you may press star one to ask a question. Our first question comes from Michael Moore. Good Mork Capital Management Walter. Excellent quarter wage question is you you said you're paying off your debt in anticipation of potential Acquisitions are the stock market's pretty pricey right now. It presents a private life similar. Are there a lot of Acquisitions out there now or people asking too much money for them?
Well, that's really a good question. And you know that we've been very careful buyers in the past that would continue. Yes, but we've also got a strong dead companies that we've talked to over the years and many times when we talked to the selling company's the first time nothing happens because they're not really ready to sell then maybe somebody wants to retire or there's a family or a state issue where they want to get liquidity and then things change. So what we're drawing on how many years of contacting and generating over time most of our deals and they tend to be fairly priced, but they tend to be very strategic as well. At least. That's the the goal and I think that's what we've accomplished. So we're rarely seeing or doing banking transactions with books dead.
That's just not what we're playing in right now. So we're a little bit removed from what is it brought the stock market, but I can assure you that as we move forward with future positions. We pay attention to the value pretty careful.
Very good. Thank you. Thanks.
Thank you. Again. If you'd like to ask a question, you may press star one now.
Our next question comes from Richard generally with Longport partners.
Good morning, I guess what's your take on back to school this year? I realize it's probably a bit of yes.
Well, actually it's not a guest at all the 3.8 million births a year each year those students progress pretty much intact through grades. One, two, three, eight and I need supplies last year. Our overall School business was slightly ahead of the previous year off because we gained market share in part because it would be the timing was different but basically people bought and they bought some for home and some for the school but my expectation for back to school this year is another good year in back to school. The timing might be a little bit different we may find more.
In person education at schools this year in which case I would expect quite a bit of sales in the third quarter. I'd also suspect some in the second quarter for the retailers that are setting planograms with the summer. So I'm expecting really a month back to school this year. The timing might be more into the third quarter than in previous years, but it will be I think about the same as it's been for every year.
I see and then fastened also suggested on their call that there were there was an access point of personal protection equipment is are you seeing a Slowdown in in kit sales? I mean you said first aid was was strong. So we're up up 10% Yeah, that's a good observation. We met or not selling personal protection tips we do for like spill clean-up kits we do for bloodborne pathogen kids, but these are
Not the kinds of kids that are being sold for protection of of of COVID-19. There is an oversupply of wage in ninety-five maps and there may be an oversupply of some outer garment.
That's not really something that we really participate. Yeah, we we we missed out on some of the activity at the year ago when she was incredible demand for that and the other hand we stood more to what we do and regularly cell which is in the first aid safety area and that business is strong and continues to be
Okay, thank you. Thank you.
Thank you. Again. That is star one if you like to ask a question.
No additional questions at this time.
Okay, well if there are no further questions, then this call is complete. We look forward to sharing our next quarter's results in July and thank you for joining us. Goodbye.
Thank you. Ladies and gentlemen, this concludes today's presentation. You may now disconnect.
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Good day, and welcome to the Acme United corporations hosted first quarter 2021 earnings conference call at this time. I'd like to turn the conference over to mister Walter Johnson chairman and CEO, please go ahead.
Thank you. Welcome to the first quarter 2021 earnings conference call for Acme United Corporation. I'm Walter C Johnson chairman and CEO with me is Paul Driscoll our Chief Financial Officer who will first read a safe harbor statement Paul.
forward-looking statements in this conference call including without limitation statements related to the company's plan strategies objectives expectations intentions and adequacy of resources are made pursuant to the safe harbor provisions of the private Securities litigation Reform Act of 1995 investors are cautioned that such forward-looking statements involve risks and uncertainties such as among others those arising as a result of the effects of the COVID-19 pandemic including the ongoing economic downturn in the other risks and uncertainties described in our periodic filings with the Securities and Exchange Commission, and then our current earnings release
Thank you Paul.
Acme United had a strong first quarter of 2021. Oh net sales were forty three point five million. It increases 22% Net income with two million compared to a million three in the first quarter of 2020 and increase of 60% Our earnings per share were $0.52 compared to $0.36 last year increase of 44%
all of our major operations and product lines had sales increases we were hitting on all fronts.
Oh what card cutting tools that strong sales in the mass market and online sales. The first aid products increased about 10% European business increased 52% due to strong Ecommerce sales. First aid Central in Canada continue to strong growth.
We've been expanding our plant that manufactures DMT sharpening tools and the new capacity is coming on stream.
We see the sales impact from that expansion in the US Canada and Europe.
There have been weaknesses as well the office Superstores Office Products, wholesalers and independent Office Supply dealers and sales below last year during the first quarter of a year ago. This time many offices had just closed due to the pandemic going forward. We anticipate additional demand in new first aid and office supplies has worked begin to re-engage in offices.
Our factories and distribution centers are operating less efficiently than pre-owned demek and we continue to have plant shutdowns too deep cleaning and safe operations. Fortunately met many of our Associates are being vaccinated and we anticipate a more normal workflow in the months ahead.
We had anticipated growth and supply chain issues and added approximately twelve million dollars of inventory during 2020.
This has helped us with meeting strong demand and it's buffered us in many ways from the world publicised global Shipping and transportation issues. Nevertheless. Our Costco shipments have increased due to Rising labor cost scarcity of shipping containers increasing west to east shipping costs delays at the port and weakness of the u.s. Dollar. We have raised selling prices to our customers and anticipate continuing to do so.
Although we are not providing guidance. We see continued strength in our business hour cash flow is strong and we are reducing debt in anticipation of future Acquisitions month. I will now turn the call to Paul.
I can use net sales for the first quarter where forty three point five million dollars compared to thirty five million dollars and twenty twenty 22% increase that's sales in the US increased 18% in the quarter. The sales increase came primarily from Westcott craft tools and safety Cutters sales. The first aid and safety products were strong revenues in clubs approximately point nine million from the sales of men. Products net sales in Europe for the first quarter of 2021 increased 31% and local currency compared to the first quarter of 2028 mainly do to increased eCommerce sales and continued growth of DMT sharpening products net sales in Canada for the first quarter of 2021 increased 31% and local current month due to higher sales of first aid Central products.
Gross margin was 30.
5.8% in the first quarter of 2021 versus 37.8% in the first quarter of 2020. The lower gross margin was mainly due to product mix and higher wage higher ocean freight costs as a result of a scarcity of shipping containers and congestion at Global ports sg&a expenses for the first quarter of 2021 with 12.6 million dollars or 29% of net sales compared with 11.5 million dollars or 32% of net sales for the same period of 2020 operating profit in the fourth quarter of 2021 increased 48% compared to the first quarter 2020. Net income for the first quarter of 2021 was $2 or $0.52 per diluted share compared to net income of 1.3 million dollars or 36 cents per diluted share for the same period of twenty twenty 60% increase in that income and 44% off.
Earnings per share the company's banked at less cash on March Thirty One hundred twenty one was $43 compared to $33 on March Thirty One June 2020 during the 12-month. We paid 9.3 million dollars for the Dead map map acquisition spent one point seven million dollars on dividends injected 1.5 million dollars in free cash flow. We increase inventory by twelve million dollars during the twelve months.
Thank you Paul. I will now open the call to questions.
Thank you. Have you like to ask a question, please? Signal by pressing star one on your telephone keypad. If you're using the speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment again, you may press star one to ask a question. Our first question comes from Michael Morgan Mork Capital Management Walter. Excellent quarter wage question is you you said you're paying off your debt in anticipation of potential Acquisitions are just the stock market's pretty pricey right now as presents a private life similar. Are there a lot of Acquisitions out there now or people asking too much money for them?
Well, that's really a good question. And you know that we've been very careful buyers in the past that would continue. Yes, but we've also got a strong dead companies that we've talked to over the years and many times when we talked to the selling company's the first time nothing happens because they're not really ready to sell then maybe somebody wants to retire or there's a family or a state issue where they want to get liquidity and then things change. So what we're drawing on Thursday many years of contacting in generating over time most of our deals and they tend to be fairly priced, but they tend to be very strategic as well. At least that's the the goal and I think that's what we've accomplished. So we're rarely seeing or doing banking transactions with books dead.
that's just not what we're
Playing in right now. So we're a little bit removed from what is the frothy stock market about that can assure you that as we move forward with future Acquisitions. We pay attention to Value pretty careful.
Very good. Thank you. Thanks.
Thank you. Again. If you'd like to ask a question, you may press star one now.
Our next question comes Richard generally with longboard partners.
Good morning, I guess what's your take on back to school this year? I realize it's probably a bit of Life. Yes.
Well, actually it's not a guest at all the 3.8 million births a year each year those students progress pretty much intact through grades. One, two, three eight hundred and I need supplies last year. Our overall School business was slightly ahead of the previous year in part because I gain market share in part because the the timing was different but basically people bought and they bought some for home and some for the school off my expectation for back to school. This year is another good year in back to school. The timing might be a little bit different. We may find more money in person education at schools this year in which case I would expect quite a bit of a sales in the third quarter. I'd also expect some in the bath
In order for the retailers that are setting planograms with the summer. So I'm expecting really a a normal back to school with the timing might be more into the third quarter than in previous years, but it will be I think about the same as it's been for every year.
I see and then Fastenal suggested on their call that there were there was an excess of personal protection equipment is are you seeing a Slowdown in in kit sales? I mean you said first month was was strong. So for up 10% Yeah, that's a a good observation. We really are not home and personal protection tips. We do for like spill clean-up kits we do for bloodborne pathogen kids, but these are
Not the kinds of kids that are being sold for protection of of COVID-19. There is an oversupply of faith in ninety-five maps and there may be an oversupply of some outer garment.
Not really something that we really participate. Yeah, we we we missed out on some of the activity at the year ago where there was. In fact that on the other hand. We took more to what we do and regularly cell which is in the first aid safety area and that business is strong and continues to be
Great. Okay. Thank you. Thank you.
Thank you. Again. That is star one if you'd like to ask a question.
No additional questions at this time.
Okay, well if there are no further questions, then this call is complete. We look forward to sharing our next quarter's results in July and thank you for joining us. Goodbye.
Thank you. Ladies and gentlemen, this concludes today's presentation. You may now disconnect.