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ACME UNITED CORP (ACU)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $45.9M (+10% YoY), diluted EPS was $0.41; gross margin was 38.7% vs 39.1% in Q4 2023, reflecting sustained productivity gains but modest YoY compression .
  • For FY 2024, net sales were $194.5M (+2% YoY; +6% ex-Camillus/Cuda) and adjusted diluted EPS rose 10% to $2.45; record EBITDA of ~$20M was highlighted on the call .
  • Segment performance in Q4: U.S. +12% YoY on share gains, Europe -1% YoY, Canada -3% YoY (USD); Westcott and DMT saw strong growth in 2024, while First Aid refills are an annuity driver .
  • Management emphasized tariff readiness via diversified sourcing (Thailand, Philippines, India, Egypt) and pricing power; SG&A guidance for 2025 is “somewhere between 31–32%” of sales .
  • Corporate action: $0.15/share dividend declared Dec 16, 2024, payable Jan 27, 2025; catalysts include tariff policy outcomes and adoption of RFID SmartCompliance kits .

What Went Well and What Went Wrong

What Went Well

  • Record FY 2024 EBITDA (~$20M) and net income growth (+23% YoY) driven by cost reductions and productivity improvements; CEO: “This performance was better than we planned” .
  • Strong product momentum: “Westcott cutting and DMT sharpening… net revenues… approximately $75 million, an increase of 10% compared to 2023,” and SmartCompliance RFID-enabled cabinets introduced to automate refills .
  • U.S. Q4 net sales +12% YoY on share gains across multiple product lines; productivity initiatives credited for full-year gross margin expansion to 39.3% from 37.7% .

What Went Wrong

  • Q4 gross margin down slightly YoY (38.7% vs 39.1%) due to mix and inflationary pressures despite productivity gains .
  • Canada Q4 net sales -3% in USD as school/office categories were pressured by a soft economy; Europe Q4 -1% YoY in USD/local currency .
  • SG&A as a percent of sales ticked up; CFO: Q4 SG&A $15.5M (34% of sales) and FY 2024 SG&A 32% of sales, with inflation/wage increases noted; 2025 outlook guided to 31–32% vs “a little below 31%” earlier .

Financial Results

Quarterly Performance (Q2–Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$55.4 $48.2 $45.9
Diluted EPS ($USD)$1.09 $0.54 $0.41
Gross Margin (%)40.8% 38.5% 38.7%
Operating Income ($USD Millions)$6.38 $2.93 $2.28

Q4 YoY Comparison

MetricQ4 2023Q4 2024
Net Sales ($USD Millions)$41.9 $45.9
Diluted EPS (GAAP) ($USD)$2.87 (includes gain on sale) $0.41
Diluted EPS (Adjusted) ($USD)$0.40 $0.41
Gross Margin (%)39.1% 38.7%

Segment Breakdown (YoY change)

Segment YoY changeQ2 2024Q3 2024Q4 2024
U.S. net sales+5% (USD) -6% (USD) +12% (USD)
Europe net sales+4% USD / +5% LC +10% USD / +10% LC -1% USD / -1% LC
Canada net sales-7% USD / -7% LC -1% USD / +2% LC -3% USD / flat LC

KPIs

KPIFY/QuarterValue
Bank debt less cash12/31/2024$21.5M
Free cash flow generatedFY 2024~$5.0M
First Aid revenuesFY 2024~$120M
Refills (First Aid components)FY 2024~$30M
Westcott + DMT net revenuesFY 2024~$75M (+10% YoY)
Productivity savingsFY 2024>$2M annual

Non-GAAP adjustments: Q4 2023 GAAP EPS ($2.87) included a $9.6M after-tax gain on sale (Camillus/Cuda); adjusted diluted EPS for Q4 2023 was $0.40 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SG&A as % of salesFY 2025“A little below 31%” (referenced prior commentary) 31–32% of sales Nudged higher
Pricing/actions vs tariffs2025N/AOngoing price increases tied to inflation; mix/ substitutions to preserve value Operational plan reiterated
Sourcing diversification2025N/AExpanded sourcing in Thailand, Philippines, India, Egypt to mitigate tariffs Reinforced
DividendQ1 2025N/A$0.15/share, payable Jan 27, 2025 (record Jan 6, 2025) Declared

No explicit revenue/EPS quantitative guidance was provided for 2025 in the Q4 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Tariffs/macro readinessQ3: Moving Westcott production to Malaysia/Vietnam/Thailand/Philippines; diverse First Aid sourcing incl. U.S., India, Egypt Reiterated broad diversification; inventory pulled forward; pricing power; prepared for extra 10% China tariff; maintain margin via productivity/pricing/mix Strengthening preparedness
Product performance (Westcott/DMT)Q3: Westcott/DMT +10% on craft/kitchen share gains FY 2024 Westcott+DMT ~$75M (+10% YoY); strong pipeline Consistent strength
First Aid business & RFIDQ2: Market share gains; introduced automation and productivity SmartCompliance RFID cabinets deployed; refills an annuity; First Aid ~$120M; refills ~$30M Scaling with tech-enabled compliance
Regional trendsQ2: U.S. +5%; Europe +4% USD/+5% LC; Canada -7% Q3: U.S. -6%; Europe +10%; Canada -1% USD/+2% LC ; Q4: U.S. +12%; Europe -1%; Canada -3% USD Mixed; U.S. rebound in Q4
Cost structure/SG&AQ2: Gross margin lift via productivity; SG&A discipline FY SG&A 32% of sales; 2025 SG&A guide 31–32%; inflation and wages noted Slightly higher vs prior ambition

Management Commentary

  • “We had record net sales of $194.4 million and record EBITDA of $20 million… Our net income in 2024 was $10 million compared to $8.1 million in 2023, an increase of 23%.”
  • “We introduced SmartCompliance first aid cabinets with RFID technology… This is the annuity segment… Automatic replenishment provides substantial savings… and compliance with OSHA and ANSI standards.”
  • “Our Westcott cutting and DMT sharpening business had excellent performance in 2024… approximately $75 million, an increase of 10% compared to 2023.”
  • “We anticipate that there will be challenges with tariffs in 2025, and we feel we are ready… diversify our sourcing to… Thailand, Egypt, India and the Philippines.”
  • “The company has strong liquidity and is positioned for further acquisitions and growth in 2025.”

Q&A Highlights

  • Tariffs: Detailed readiness plan including diversified sourcing, productivity savings (> $2M), pricing actions, and inventory buffering; management expects to be “pretty close to margin breakeven” post-adjustments .
  • SG&A guidance: 2025 “somewhere between 31–32%” of sales; uptick in 2024 due to inflation/wages; prior aspiration “a little below 31%” acknowledged .
  • Canadian acquisition (Hawktree Solutions/Red Cross): Built to ~$2.5–$3.0M business profitably; renewed Red Cross contract; leveraging Elite First Aid portfolio .
  • Segment clarifications: First Aid up ~5% in 2024; Westcott up 10%; refills ~$30M net sales; reconciled differences between gross and net .
  • Europe disclosure: Confirmed regional details were in press release after an analyst query .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at the time of this analysis due to data access limits. As a result, comparison to consensus could not be completed. If accessible, we would anchor estimate comparisons on S&P Global consensus for EPS and revenue [GetEstimates error].

Key Takeaways for Investors

  • Q4 delivered solid YoY top-line growth (+10%) and maintained EPS despite mix and inflation; gross margin held steady vs Q3 and only slightly below Q4 2023 .
  • FY 2024 shows durable earnings power: adjusted diluted EPS $2.45 (+10%), record EBITDA, and productivity savings, underpinning resilience amid portfolio reshaping .
  • Product momentum remains a core driver: Westcott/DMT growth and RFID-enabled SmartCompliance refills enhance recurring revenue visibility and customer lock-in .
  • Tariff exposure appears mitigated by diversified sourcing and pricing power; monitor policy developments as potential near-term trading catalysts .
  • SG&A outlook moderated to 31–32% for 2025; watch execution on cost controls to sustain margin trajectory .
  • Regional dynamics are mixed: U.S. rebounded in Q4; Europe softened; Canada remains pressured in school/office—track channel mix and macro sensitivity .
  • Dividend continuity ($0.15/share declared) signals confidence in cash generation and balance sheet flexibility for tuck-in M&A .