Acme United Corp: Management's Supply Chain Preparation Helping Lead Record Sales And Earnings In 2021

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Acme United Corp: Management's Supply Chain Preparation Helping Lead Record Sales And Earnings In 2021

Acme United Corporation is one of the largest worldwide suppliers of innovative cutting devices, measuring instruments and safety products for the school, home, office and industrial markets. The company has facilities in the U.S., Canada, England, Germany, Hong Kong and China.

 

November 11, 2021

Price (as of close on Nov 10, 2021)

$36.60

Rating

BUY

Price Target

blocked

 

Acme United Corp. (ACU)

ACU reported strong Q3:21 results with revenue up 11% YOY and net income up ~30% YOY. The management noted that it anticipates record sales and earnings in 2021. The supply chain challenges will continue in 2022, however ACU noted that it is well prepared given inventory stock-up over the last 18 months. We increase our target price blockedblockedblockedblocked    and maintain BUY on the stock.

 

acme nov 2021

 

Q3:21 Highlights

Q3:21 revenues were $47.9 million, up ~11% from Q3:20. The performance was strong across US (+12% YOY) and Canada (+6% YOY), while Europe was flat YOY.

Gross Margin for Q3:21 was 35.5%, which was up 100 bps compared to 34.5% in Q3:20.

Operating profit up 39.4% YOY on account of higher revenue and improved gross margins.

Net income for Q3:21 was $2.0 million vs. ~$1.5 million in Q3:20. The diluted EPS was $0.50 in Q3:21, vs. $0.46 in Q3:20, an increase of ~8.6%.

The company anticipates record sales and earnings in 2021.

We marginally adjust our earnings estimate factoring in the latest management commentary. We increase our target price to blockedblockedblockedblockedblockedblockedblockedblocked

 

PRIMARY RISKS

ACU’s results can be negatively impacted by weak economic activity; rising commodity input costs; timing of customer orders; foreign exchange fluctuations; and competitor pricing.

Failure to integrate acquisitions could adversely impact business operations.

 

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