Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 03, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | ACME UNITED CORP | |
Entity Central Index Key | 0000002098 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 3,338,913 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Trading Symbol | ACU | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity File Number | 01-07698 | |
Entity Tax Identification Number | 06-0236700 | |
Entity Address, Address Line One | 55 Walls Drive | |
Entity Address, City or Town | Fairfield | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06824 | |
City Area Code | 203 | |
Local Phone Number | 254-6060 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | $2.50 par value Common Stock | |
Security Exchange Name | NYSEAMER | |
Entity Incorporation, State or Country Code | CT | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
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 |
Total property, plant and equipment | 32,685 | 30,628 |
Less: accumulated depreciation | 18,344 | 16,592 |
Net property, plant and equipment | 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 |
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 |
Long-term debt | 30,703 | 33,240 |
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) |
Total accumulated other comprehensive loss | (1,846) | (1,988) |
Total stockholders’ equity | 60,596 | 55,704 |
Total liabilities and stockholders’ equity | 123,017 | $ 110,749 |
PPP Loan | ||
Current liabilities: | ||
Long-term debt | $ 3,508 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
STOCKHOLDERS' EQUITY | ||
Accounts receivable, allowance | $ 1,428 | $ 523 |
Common stock, par value | $ 2.50 | $ 2.50 |
Common stock, shares authorized | 8,000,000 | 8,000,000 |
Common stock, shares issued | 4,840,571 | 4,840,571 |
Treasury stock, shares | 1,501,658 | 1,487,238 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements Of Operations | ||||
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 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 | 3,340,000 | 3,352,000 | 3,343,000 | 3,352,000 |
Weighted average number of dilutive stock options outstanding | 122,000 | 134,000 | 111,000 | 94,000 |
Denominator used for diluted per share computations | 3,461,000 | 3,486,000 | 3,455,000 | 3,446,000 |
Dividends declared per share | $ 0.12 | $ 0.12 | $ 0.36 | $ 0.36 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements Of Comprehensive Loss Income [Abstract] | ||||
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 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment |
Beginning Balance at Dec. 31, 2018 | $ 52,333 | $ 12,094 | $ (14,235) | $ 8,982 | $ (2,058) | $ (122) | $ 47,550 | $ 122 |
Ending Balance, shares at Dec. 31, 2018 | 3,350,833 | |||||||
Net income | 4,537 | 4,537 | ||||||
Other comprehensive (loss) gain | (124) | (124) | ||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201802Member | us-gaap:AccountingStandardsUpdate201802Member | ||||||
Stock compensation expense | 745 | 745 | ||||||
Distributions to shareholders | (1,213) | (1,213) | ||||||
Cash settlement of stock options | (1,254) | (1,254) | ||||||
Ending Balance at Sep. 30, 2019 | 55,024 | $ 12,094 | (14,235) | 8,473 | (2,304) | 50,996 | ||
Ending Balance, shares at Sep. 30, 2019 | 3,350,833 | |||||||
Beginning Balance at Jun. 30, 2019 | 54,802 | $ 12,094 | (14,235) | 8,701 | (2,099) | 50,341 | ||
Ending Balance, shares at Jun. 30, 2019 | 3,350,833 | |||||||
Net income | 1,059 | 1,059 | ||||||
Other comprehensive (loss) gain | (205) | (205) | ||||||
Stock compensation expense | 247 | 247 | ||||||
Distributions to shareholders | (404) | (404) | ||||||
Cash settlement of stock options | (475) | (475) | ||||||
Ending Balance at Sep. 30, 2019 | 55,024 | $ 12,094 | (14,235) | 8,473 | (2,304) | 50,996 | ||
Ending Balance, shares at Sep. 30, 2019 | 3,350,833 | |||||||
Beginning Balance at Dec. 31, 2019 | 55,704 | $ 12,094 | (14,235) | 8,262 | (1,988) | 51,571 | ||
Ending Balance, shares at Dec. 31, 2019 | 3,350,833 | |||||||
Net income | 6,055 | 6,055 | ||||||
Other comprehensive (loss) gain | 142 | 142 | ||||||
Stock compensation expense | 929 | 929 | ||||||
Distributions to shareholders | (1,201) | (1,201) | ||||||
Issuance of common stock | 59 | $ 7 | 52 | |||||
Issuance of common stock (shares) | 2,500 | |||||||
Cash settlement of stock options | (805) | (805) | ||||||
Purchase of treasury stock | (287) | (287) | ||||||
Purchase of treasury stock (shares) | (14,420) | |||||||
Ending Balance at Sep. 30, 2020 | 60,596 | $ 12,101 | (14,522) | 8,438 | (1,846) | 56,425 | ||
Ending Balance, shares at Sep. 30, 2020 | 3,338,913 | |||||||
Beginning Balance at Jun. 30, 2020 | 59,007 | $ 12,094 | (14,522) | 8,304 | (2,116) | 55,247 | ||
Ending Balance, shares at Jun. 30, 2020 | 3,336,413 | |||||||
Net income | 1,579 | 1,579 | ||||||
Other comprehensive (loss) gain | 270 | 270 | ||||||
Stock compensation expense | 327 | 327 | ||||||
Distributions to shareholders | (401) | (401) | ||||||
Issuance of common stock | 59 | $ 7 | 52 | |||||
Issuance of common stock (shares) | 2,500 | |||||||
Cash settlement of stock options | (245) | (245) | ||||||
Ending Balance at Sep. 30, 2020 | $ 60,596 | $ 12,101 | $ (14,522) | $ 8,438 | $ (1,846) | $ 56,425 | ||
Ending Balance, shares at Sep. 30, 2020 | 3,338,913 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 6,055,000 | $ 4,537,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 1,830,000 | 1,640,000 |
Amortization of intangible assets | 991,000 | 937,000 |
Non-cash lease expense | 57,000 | 16,000 |
Stock compensation expense | 929,000 | 745,000 |
Provision for bad debt | 910,000 | 55,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (7,293,000) | (5,595,000) |
Inventories | (8,544,000) | 2,253,000 |
Prepaid expenses and other current assets | 121,000 | 450,000 |
Accounts payable | 2,040,000 | (1,174,000) |
Other accrued liabilities | 4,645,000 | 3,404,000 |
Total adjustments | (4,314,000) | 2,731,000 |
Net cash provided by operating activities | 1,741,000 | 7,268,000 |
Cash flows from investing activities: | ||
Purchase of property, plant and equipment | (2,081,000) | (1,123,000) |
Net cash used in investing activities | (4,155,000) | (1,123,000) |
Cash flows from financing activities: | ||
Net repayments of long-term debt | (2,537,000) | (2,158,000) |
Cash settlement of stock options | (805,000) | (1,254,000) |
Repayments on mortgage | (200,000) | (200,000) |
Proceeds from issuance of common stock | 59,000 | |
Distributions to shareholders | (1,201,000) | (1,213,000) |
Purchase of treasury shares | (287,000) | |
Net cash used in financing activities | (1,463,000) | (4,825,000) |
Effect of exchange rate changes on cash and cash equivalents | 86,000 | (31,000) |
Net change in cash and cash equivalents | (3,791,000) | 1,289,000 |
Cash and cash equivalents at beginning of period | 6,822,000 | 4,409,000 |
Cash and cash equivalents at end of period | 3,031,000 | 5,698,000 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 415,000 | 279,000 |
Cash paid for interest | 751,000 | $ 1,476,000 |
First Aid Central | ||
Cash flows from operating activities: | ||
Net income | 300,000 | |
Cash flows from investing activities: | ||
Acquisition of First Aid Central | (2,074,000) | |
PPP Loan | ||
Cash flows from financing activities: | ||
Proceeds from PPP Loan | $ 3,508,000 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash flows of Acme United Corporation (the “Company”). These adjustments are of a normal, recurring nature. However, the financial statements do not include all the disclosures normally required by accounting principles generally accepted in the United States of America or those normally made in the Company's Annual Report on Form 10-K. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for such disclosures. The condensed consolidated balance sheet as of December 31, 2019 was derived from the audited consolidated balance sheet as of that date. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Company’s 2019 Annual Report on Form 10-K. Certain reclassification of prior years’ amounts have been made to conform to the current years’ presentation. The Company has evaluated events and transactions subsequent to September 30, 2020 and through the date these condensed consolidated financial statements were issued. Recently Issued and Adopted Accounting Standards In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans Income Statement - Reporting Comprehensive Income (Topic 220) In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | 2. Commitment and Contingencies There are no pending material legal proceedings to which the Company is a party, or, to the actual knowledge of the Company, contemplated by any governmental authority. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue from Contracts with Customers | 3 . Nature of Goods and Services The Company recognizes revenue from the sales of a broad line of products that are grouped into two main categories: (i) cutting, sharpening and measuring; and (ii) first aid and safety. The cutting, sharpening and measuring category includes scissors, knives, paper trimmers, pencil sharpeners and other sharpening tools. The first aid and safety category includes first aid kits and refills and a variety of safety products. Revenue recognition is evaluated through the following five steps: (i) identification of the contract or contracts with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. When Performance Obligations Are Satisfied A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenue is generated by the sale of the Company’s products to its customers. Sales contracts (purchase orders) generally have a single performance obligation that is satisfied at a point in time, with shipment or delivery, depending on the terms of the underlying contract. Revenue is measured based on the consideration specified in the contract. The amount of consideration we receive and revenue we recognize is impacted by incentives ("customer rebates"), including sales rebates, which are generally tied to sales volume levels, in-store promotional allowances, shared media and customer catalogue allowances and other cooperative advertising arrangements; freight allowance programs offered to our customers; and allowance for returns and discounts. We generally recognize customer rebate costs as a deduction to gross sales at the time that the associated revenue is recognized. Significant Payment Terms Payment terms for each customer are dependent on the agreed upon contractual repayment terms. Payment terms typically are between 30 and 90 days and vary depending on the size of the customer and its risk profile to the Company. Some customers receive discounts for early payment. Product Returns The Company accepts product returns in the normal course of business. The Company estimates reserves for returns and the related refunds to customers based on historical experience. Reserves for returned merchandise are included as a component of “Accounts receivable” in the condensed consolidated balance sheets. Practical Expedient Usage and Accounting Policy Elections For the Company’s contracts that have an original duration of one year or less, the Company uses the practical expedient in ASC 606-10-32-18 applicable to such contracts and does not consider the time value of money in relation to significant financing components. The effect of applying this practical expedient election did not have an impact on the Company’s condensed consolidated financial statements. Per ASC 606-10-25-18B, the Company has elected to account for shipping and handling activities that occur after the customer has obtained control as a fulfilment activity instead of a performance obligation. Furthermore, shipping and handling activities performed before transfer of control of the product also do not constitute a separate and distinct performance obligation. The effect of applying this practical expedient election did not have an impact on the Company’s condensed consolidated financial statements. The Company has elected to exclude from the transaction price those amounts which relate to sales and other taxes that are assessed by governmental authorities and that are imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer. Applying the practical expedient in ASC 340-40-25-4, Other Assets and Deferred Costs, Disaggregation of Revenues The following table represents external net sales disaggregated by product category, by segment (amounts in thousands): For the three months ended September 30, 2020 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 18,656 $ 2,199 $ 3,013 $ 23,868 First Aid and Safety 18,000 1,174 $ 274 19,448 Total Net Sales $ 36,656 $ 3,373 $ 3,287 $ 43,316 For the three months ended September 30, 2019 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 16,040 $ 1,712 $ 2,186 $ 19,938 First Aid and Safety 16,793 — 264 17,057 Total Net Sales $ 32,833 $ 1,712 $ 2,450 $ 36,995 For the nine months ended September 30, 2020 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 50,088 $ 4,860 $ 8,505 $ 63,453 First Aid and Safety 55,488 3,315 877 59,680 Total Net Sales $ 105,576 $ 8,175 $ 9,382 $ 123,133 For the nine months ended September 30, 2019 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 48,045 $ 5,281 $ 7,216 $ 60,542 First Aid and Safety 47,285 — 758 48,043 Total Net Sales $ 95,330 $ 5,281 $ 7,974 $ 108,585 |
Debt and Shareholders' Equity
Debt and Shareholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Long Term Debt And Stockholders Equity [Abstract] | |
Debt and Shareholders' Equity | 4. Debt and Shareholders’ Equity Long-term debt consists of borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A. The agreement provides for borrowings of up to $50 million at Prime Rate less 1.25%. The credit facility has an expiration date of May 24, 2023. The Company must pay a facility fee, payable quarterly, in an amount equal to two tenths of one percent (.20%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for working capital, growth, dividends, acquisitions, share repurchases and other business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt to net worth ratio and a fixed charge coverage ratio and must have annual net income greater than zero, measured as of the end of each fiscal year. At September 30, 2020, the Company was in compliance with the covenants then in effect under the loan agreement. As of September 30, 2020, and December 31, 2019, the Company had outstanding borrowings of $30,703,167 and $33,240,407, respectively, under the Company’s revolving loan agreement with HSBC. On October 26, 2017, the Company exercised its option to purchase its First Aid Only manufacturing and distribution center in Vancouver, WA for $4.0 million. The property consists of 53,000 square feet of office, manufacturing, and warehouse space on 2.86 acres. The purchase was financed by a variable rate mortgage with HSBC Bank, N.A. at an interest rate of LIBOR plus 2.5%. Commencing on December 1, 2017, principal payments of $22,222 are due monthly, with all amounts outstanding due on maturity on October 31, 2024. Also included in long term debt is the amount outstanding under the Paycheck Protection Program (PPP). See Note 10 – Paycheck Protection Program Loan for additional details. During the three and nine months ended September 30, 2020, the Company paid approximately $245,000 and $805,000, respectively, to optionees who had elected a net cash settlement of their respective employee stock options. During the nine months ended September 30, 2020, the Company paid approximately $287,000, to repurchase a total of 14,420 shares of its Common Stock under its 2010 stock repurchase program. As of September 30, 2020, a total of 3,579 and 200,000 additional shares may be purchased in the future under the repurchase programs announced in 2010 and 2019, respectively. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Information [Abstract] | |
Segment Information | 5. Segment Information The Company reports financial information based on the organizational structure used by the Company’s chief operating decision makers for making operating and investment decisions and for assessing performance. The Company’s reportable business segments consist of: (1) United States; (2) Canada; and (3) Europe. As described below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly, the Company’s chief operating decision makers review the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. segment”. Each reportable segment derives its revenue from the sales of cutting and sharpening devices, measuring instruments and first aid and safety products for school, office, home, hardware, sporting and industrial use. Domestic sales orders are filled primarily from the Company’s distribution centers in North Carolina, Washington, Massachusetts, Tennessee and California. The Company is responsible for the costs of shipping, insurance, customs clearance, duties, storage and distribution related to such products. Orders filled from the Company’s inventory are generally for less than container-sized lots. Direct import sales are products sold by the Company’s Asian subsidiary, directly to major U.S. retailers, who take ownership of the products in Asia. These sales are completed by delivering product to the customers’ common carriers at the shipping points in Asia. Individual direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately 12% and 11% of the Company’s total net sales for the three and nine months ended September 30, 2020, respectively, compared to 14% The Chief Operating Decision Maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment revenues are defined as total revenues, including both external customer revenue and inter-segment revenue. Segment operating earnings are defined as segment revenues, less cost of goods sold and operating expenses. Identifiable assets by segment are those assets used in the respective reportable segment’s operations. Inter-segment amounts are eliminated to arrive at consolidated financial results. The following table sets forth certain financial data by segment for three and nine months ended September 30, 2020 and 2019: Financial data by segment: (in thousands) Three months ended September 30, Nine months ended September 30, Sales to external customers: 2020 2019 2020 2019 United States $ 36,656 $ 32,780 $ 105,576 $ 95,178 Canada 3,373 1,775 8,175 5,402 Europe 3,287 2,440 9,382 8,005 Consolidated $ 43,316 $ 36,995 $ 123,133 $ 108,585 Operating income: United States $ 1,189 $ 1,381 $ 6,442 $ 5,942 Canada 600 280 1,173 746 Europe 335 65 901 341 Consolidated $ 2,124 $ 1,726 $ 8,516 $ 7,029 Interest expense, net 168 469 722 1,463 Other (income) expense, net (35 ) 40 2 52 Consolidated income before income taxes $ 1,991 $ 1,217 $ 7,792 $ 5,514 Assets by segment: (in thousands) September 30, December 31, 2020 2019 United States $ 107,396 $ 98,578 Canada 7,546 6,168 Europe 8,075 6,003 Consolidated $ 123,017 $ 110,749 |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Based Compensation | 6. Stock Based Compensation The Company recognizes share-based compensation at the fair value of the equity instrument on the grant date. Compensation expense is recognized over the required service period, which is generally the vesting period of the equity instrument. Share-based compensation expenses were $327,000 and $929,000, respectively, for the three and nine months ended September 30, 2020, respectively, compared to $247,000 and $745,000 for the three and nine months ended September 30, 2019, respectively. As of September 30, 2020, there was a total of $2,100,706 of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested share-based payments granted to the Company’s employees. As of that date, the remaining unamortized expense was expected to be recognized over a weighted average period of approximately three years. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 7. Fair Value Measurements The carrying value of the Company’s bank debt is a reasonable estimate of fair value because of the nature of its payment terms and maturity. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 8. Leases The Company has operating leases for office and warehouse space and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists of operating leases which expire at various dates through 2026. Certain of the Company’s lease arrangements contain renewal provisions, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with right-of-use (“ROU”) assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. As most of our leases do not provide an implicit rate, the present value of lease payments is determined primarily using our incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term on an amount equal to the lease payments in a similar economic environment. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. The Company’s operating lease expense is recognized on a straight-line basis over the lease term. For the three months ended September 30, 2020, lease expense in the amount of $0.1 million was included in cost of goods sold and $0.2 million was included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations. For the nine months ended September 30, 2020, lease expense in the amount of $0.3 million was included in cost of goods sold and $0.6 million was included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations. Information related to leases (in thousands): Three months ended Three months ended September 30, 2020 September 30, 2019 Operating lease cost $ 284 $ 275 Operating lease - cash flow $ 272 $ 270 Nine months ended Nine months ended September 30, 2020 September 30, 2019 Operating lease cost $ 899 $ 856 Operating lease - cash flow $ 839 $ 840 September 30, 2020 September 30, 2019 Weighted-average remaining lease term 4.0 years 3.0 years Weighted-average discount rate 5 % 5 % Future minimum lease payments under non-cancellable leases as of September 30, 2020: 2020 (remaining) $ 272 2021 735 2022 467 2023 462 2024 278 Thereafter 294 Total future minimum lease payments $ 2,508 Less: imputed interest (239 ) Present value of lease liabilities - current 847 Present value of lease liabilities - non-current $ 1,422 |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | 9. Business Combinations On January 7, 2020, the Company purchased the assets of First Aid Central, a Canadian first aid and safety supplier, based in Laval, Canada for approximately $2.1 million in cash. First Aid Central products consist of a broad line of first aid kits, refills, and safety products that are sold to a wide range of industries and end users. The products meet federal Health Canada and provincial regulatory requirements. The purchase price was allocated to assets acquired as follows (in thousands): Assets: Accounts receivable $ 232 Inventory 440 Prepaid Expense 47 Equipment 45 Intangible assets 1,310 Total assets $ 2,074 The acquisition was accounted for as a business combination, pursuant to ASC 805 – Business Combinations Net sales for the three and nine months ended September 30, 2020 attributable to the sales of First Aid Central products were approximately $1.2 million and $3.3 million, respectively. Net income for the three and nine months ended September 30, 2020 attributable to First Aid Central products was approximately $0.1 million and $0.3 million, respectively. Assuming First Aid Central assets were acquired on January 1, 2019, unaudited proforma combined net sales for the three months ended September 30, 2019, for the Company would have been approximately $37.8 million. Unaudited proforma combined net income for the three months ended September 30, 2019 for the Company would have been approximately $1.2 million. Unaudited proforma combined net sales for the nine months ended September 30, 2019 for the Company would have been approximately $111.2. Unaudited proforma combined net income for the nine months ended September 30, 2019 for the Company would have been approximately $4.9 million |
Paycheck Protection Program Loa
Paycheck Protection Program Loan | 9 Months Ended |
Sep. 30, 2020 | |
Paycheck Protection Program Loans [Abstract] | |
Paycheck Protection Program Loan | 10. Paycheck Protection Program Loan On May 7, 2020, the Company received a loan (the “PPP Loan”) from HSBC Bank, N.A. in the amount of $3,508,047 under the Paycheck Protection Program established by the Coronavirus Aid, Relief and Economic Security Act. Subject to potential forgiveness, as described below, the PPP Loan matures in two years on May 8, 2022, bears interest at a rate of 1.00% per year and is evidenced by a promissory note dated May 7, 2020 (the “Note”). Monthly payments of principal and interest are deferred until after any application for forgiveness submitted by the Company has been acted upon, as described below. The PPP Loan is unsecured and federally guaranteed. The Note contains customary events of default relating to, among other things, failure to make payments of principal and interest and breaches of representations and warranties. The Company may prepay the PPP Loan at any time prior to maturity with no penalty. All or a portion of the PPP Loan may be eligible to be forgiven by the U.S. Small Business Administration (“SBA”) and the lender upon application by the Company, provided that the Company shall have used the loan proceeds for eligible purposes, including the payment of payroll, benefits, rent, mortgage interest and utilities, during the 8 week period beginning on the date of funding of the loan (the “covered period”). Not more than 40% of the amount forgiven may be for non-payroll costs. Consistent with the requirements of the PPP for loan forgiveness, the Company used the loan proceeds solely for payment of payroll and otherwise in a manner which it believes satisfy the requirements for loan forgiveness. In August 2020, the Company submitted an application for forgiveness of the entire amount of the PPP loan to HSBC Bank, N.A. The lender approved the forgiveness application and, on August 26, 2020, submitted the Company’s application to the SBA for its approval. The application is presently pending; the SBA is required to act upon the application within 90 days. No assurance can be given that the Company’s application for loan forgiveness will be approved by the SBA, in whole or in part. |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Payables And Accruals [Abstract] | |
Other Accrued Liabilities | 11. Other Accrued Liabilities Other current and long-term accrued liabilities consisted of: September 30, December 31, 2020 2019 Customer Rebates $ 5,870 $ 4,849 Pension Liability 60 45 Accrued Compensation 2,488 1,695 Dividend Payable 400 402 Income Tax Payable 1,545 262 Other 3,082 1,406 Total: $ 13,445 $ 8,659 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Disaggregation of Revenues | The following table represents external net sales disaggregated by product category, by segment (amounts in thousands): For the three months ended September 30, 2020 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 18,656 $ 2,199 $ 3,013 $ 23,868 First Aid and Safety 18,000 1,174 $ 274 19,448 Total Net Sales $ 36,656 $ 3,373 $ 3,287 $ 43,316 For the three months ended September 30, 2019 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 16,040 $ 1,712 $ 2,186 $ 19,938 First Aid and Safety 16,793 — 264 17,057 Total Net Sales $ 32,833 $ 1,712 $ 2,450 $ 36,995 For the nine months ended September 30, 2020 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 50,088 $ 4,860 $ 8,505 $ 63,453 First Aid and Safety 55,488 3,315 877 59,680 Total Net Sales $ 105,576 $ 8,175 $ 9,382 $ 123,133 For the nine months ended September 30, 2019 U.S. Canada Europe Total Cutting, Sharpening and Measuring $ 48,045 $ 5,281 $ 7,216 $ 60,542 First Aid and Safety 47,285 — 758 48,043 Total Net Sales $ 95,330 $ 5,281 $ 7,974 $ 108,585 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Information Tables [Abstract] | |
Financial Data By Segment Table | The following table sets forth certain financial data by segment for three and nine months ended September 30, 2020 and 2019: Financial data by segment: (in thousands) Three months ended September 30, Nine months ended September 30, Sales to external customers: 2020 2019 2020 2019 United States $ 36,656 $ 32,780 $ 105,576 $ 95,178 Canada 3,373 1,775 8,175 5,402 Europe 3,287 2,440 9,382 8,005 Consolidated $ 43,316 $ 36,995 $ 123,133 $ 108,585 Operating income: United States $ 1,189 $ 1,381 $ 6,442 $ 5,942 Canada 600 280 1,173 746 Europe 335 65 901 341 Consolidated $ 2,124 $ 1,726 $ 8,516 $ 7,029 Interest expense, net 168 469 722 1,463 Other (income) expense, net (35 ) 40 2 52 Consolidated income before income taxes $ 1,991 $ 1,217 $ 7,792 $ 5,514 Assets by segment: (in thousands) September 30, December 31, 2020 2019 United States $ 107,396 $ 98,578 Canada 7,546 6,168 Europe 8,075 6,003 Consolidated $ 123,017 $ 110,749 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases Tables [Abstract] | |
Information Related to Leases | Information related to leases (in thousands): Three months ended Three months ended September 30, 2020 September 30, 2019 Operating lease cost $ 284 $ 275 Operating lease - cash flow $ 272 $ 270 Nine months ended Nine months ended September 30, 2020 September 30, 2019 Operating lease cost $ 899 $ 856 Operating lease - cash flow $ 839 $ 840 September 30, 2020 September 30, 2019 Weighted-average remaining lease term 4.0 years 3.0 years Weighted-average discount rate 5 % 5 % |
Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases as of September 30, 2020: 2020 (remaining) $ 272 2021 735 2022 467 2023 462 2024 278 Thereafter 294 Total future minimum lease payments $ 2,508 Less: imputed interest (239 ) Present value of lease liabilities - current 847 Present value of lease liabilities - non-current $ 1,422 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation to Assets Acquired | The purchase price was allocated to assets acquired as follows (in thousands): Assets: Accounts receivable $ 232 Inventory 440 Prepaid Expense 47 Equipment 45 Intangible assets 1,310 Total assets $ 2,074 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities | Other current and long-term accrued liabilities consisted of: September 30, December 31, 2020 2019 Customer Rebates $ 5,870 $ 4,849 Pension Liability 60 45 Accrued Compensation 2,488 1,695 Dividend Payable 400 402 Income Tax Payable 1,545 262 Other 3,082 1,406 Total: $ 13,445 $ 8,659 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net sales | $ 43,316 | $ 36,995 | $ 123,133 | $ 108,585 |
Cutting, Sharpening and Measuring | ||||
Net sales | 23,868 | 19,938 | 63,453 | 60,542 |
First Aid and Safety | ||||
Net sales | 19,448 | 17,057 | 59,680 | 48,043 |
United States | ||||
Net sales | 36,656 | 32,833 | 105,576 | 95,330 |
United States | Cutting, Sharpening and Measuring | ||||
Net sales | 18,656 | 16,040 | 50,088 | 48,045 |
United States | First Aid and Safety | ||||
Net sales | 18,000 | 16,793 | 55,488 | 47,285 |
Canada | ||||
Net sales | 3,373 | 1,712 | 8,175 | 5,281 |
Canada | Cutting, Sharpening and Measuring | ||||
Net sales | 2,199 | 1,712 | 4,860 | 5,281 |
Canada | First Aid and Safety | ||||
Net sales | 1,174 | 3,315 | ||
Europe | ||||
Net sales | 3,287 | 2,450 | 9,382 | 7,974 |
Europe | Cutting, Sharpening and Measuring | ||||
Net sales | 3,013 | 2,186 | 8,505 | 7,216 |
Europe | First Aid and Safety | ||||
Net sales | $ 274 | $ 264 | $ 877 | $ 758 |
Debt and Shareholders' Equity (
Debt and Shareholders' Equity (Details Narrative) | Oct. 26, 2017USD ($)ft² | Sep. 30, 2020USD ($)shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Oct. 26, 2017a |
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Outstanding borrowings under revolving loan agreement | $ 30,703,167,000 | $ 30,703,167,000 | $ 33,240,407,000 | |||
Cash settlement of stock options | $ 245,000 | 805,000 | $ 1,254,000 | |||
Amount paid for shares authorized to be repurchased during the period | $ 287,000 | |||||
2010 Stock Repurchase Program | ||||||
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Shares authorized to be repurchased during period | shares | 14,420 | |||||
Amount paid for shares authorized to be repurchased during the period | $ 287,000 | |||||
Shares that may be purchased under repurchase programs | shares | 3,579 | 3,579 | ||||
Additional shares that may be purchased under repurchase programs | shares | 200,000 | 200,000 | ||||
HSBC Bank | ||||||
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Credit facility borrowing capacity | $ 50,000,000 | $ 50,000,000 | ||||
Credit facility interest rate | Prime Rate less 1.25% | |||||
Credit facility expiration date | May 24, 2023 | |||||
Facility fee per annum | 20.00% | |||||
HSBC Bank | Prime Rate | ||||||
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Interest rate | 1.25% | |||||
First Aid Only Distribution Center | ||||||
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Covenant terms and compliance | Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt to net worth ratio and a fixed charge coverage ratio and must have annual net income greater than zero, measured as of the end of each fiscal year. At September 30, 2020, the Company was in compliance with the covenants then in effect under the loan agreement | |||||
Purchase price | $ 4,000,000 | |||||
Area of real estate property | 53,000 | 2.86 | ||||
Variable rate mortgage interest rate | interest rate of LIBOR plus 2.5% | |||||
Monthly payment | $ 22,222 | |||||
Mortgage maturity date | October 31, 2024 | |||||
First Aid Only Distribution Center | LIBOR Rate | ||||||
Long Term Debt And Stockholders Equity [Line Items] | ||||||
Interest rate | 2.50% |
Segment Information (Details Na
Segment Information (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Information Details Narrative [Abstract] | ||||
Direct import sales to total net sales ratio | 12.00% | 14.00% | 11.00% | 14.00% |
Segment Information - Financial
Segment Information - Financial Data by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Sales to external customers | $ 43,316 | $ 36,995 | $ 123,133 | $ 108,585 | |
Operating income | 2,124 | 1,726 | 8,516 | 7,029 | |
Interest expense, net | 168 | 469 | 722 | 1,463 | |
Other (income) expense, net | (35) | 40 | 2 | 52 | |
Consolidated income before income taxes | 1,991 | 1,217 | 7,792 | 5,514 | |
Assets | 123,017 | 123,017 | $ 110,749 | ||
United States Segment | |||||
Sales to external customers | 36,656 | 32,780 | 105,576 | 95,178 | |
Operating income | 1,189 | 1,381 | 6,442 | 5,942 | |
Assets | 107,396 | 107,396 | 98,578 | ||
Canada Segment | |||||
Sales to external customers | 3,373 | 1,775 | 8,175 | 5,402 | |
Operating income | 600 | 280 | 1,173 | 746 | |
Assets | 7,546 | 7,546 | 6,168 | ||
Europe Segment | |||||
Sales to external customers | 3,287 | 2,440 | 9,382 | 8,005 | |
Operating income | 335 | $ 65 | 901 | $ 341 | |
Assets | $ 8,075 | $ 8,075 | $ 6,003 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Share-based compensation expense | $ 327,000 | $ 247,000 | $ 929,000 | $ 745,000 |
Unrecognized compensation cost | $ 2,100,706 | $ 2,100,706 | ||
Unrecognized compensation cost recognition period | 3 years |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lessee Lease Description [Line Items] | ||||
Operating lease expense | $ 284 | $ 275 | $ 899 | $ 856 |
Cost of Goods Sold | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease expense | 100 | 300 | ||
Selling, General and Administrative Expenses | ||||
Lessee Lease Description [Line Items] | ||||
Operating lease expense | $ 200 | $ 600 |
Leases - Information Related to
Leases - Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases Details [Abstract] | ||||
Operating lease cost | $ 284 | $ 275 | $ 899 | $ 856 |
Operating lease - cash flow | $ 272 | $ 270 | $ 839 | $ 840 |
Weighted-average remaining lease term | 4 years | 3 years | 4 years | 3 years |
Weighted-average discount rate | 5.00% | 5.00% | 5.00% | 5.00% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Future Minimum Lease Payments: | ||
2020 (remaining) | $ 272 | |
2021 | 735 | |
2022 | 467 | |
2023 | 462 | |
2024 | 278 | |
Thereafter | 294 | |
Total future minimum lease payments | 2,508 | |
Less: imputed interest | (239) | |
Present value of lease liabilities - current | 847 | $ 1,047 |
Present value of lease liabilities - non-current | $ 1,422 | $ 1,961 |
Business Combinations - (Detail
Business Combinations - (Details Narrative) - USD ($) $ in Thousands | Jan. 07, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Business Acquisition [Line Items] | |||||
Net sales | $ 43,316 | $ 36,995 | $ 123,133 | $ 108,585 | |
Net income | 1,579 | 1,059 | 6,055 | 4,537 | |
First Aid Central | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 2,100 | ||||
Net sales | 1,200 | 3,300 | |||
Net income | $ 100 | $ 300 | |||
Business acquisition, proforma net income | 1,200 | 4,900 | |||
Business acquisition, proforma net sales | $ 37,800 | $ 111,200 |
Business Combinations - Schedul
Business Combinations - Schedule of Purchase Price Allocation to Assets Acquired (Details) - First Aid Central $ in Thousands | Jan. 07, 2020USD ($) |
Assets: | |
Accounts receivable | $ 232 |
Inventory | 440 |
Prepaid Expense | 47 |
Equipment | 45 |
Intangible assets | 1,310 |
Total assets | $ 2,074 |
Paycheck Protection Program L_2
Paycheck Protection Program Loan (Details Narrative) - PPP Loan | May 07, 2020USD ($) |
Paycheck Protection Program Loans [Line Items] | |
Loan received from bank | $ 3,508,047 |
Maturity period | 2 years |
Maturity date | May 8, 2022 |
Interest rate | 1.00% |
Maximum | |
Paycheck Protection Program Loans [Line Items] | |
Percentage of debt forgiven for non-payroll costs | 40.00% |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables And Accruals [Abstract] | ||
Customer Rebates | $ 5,870 | $ 4,849 |
Pension Liability | 60 | 45 |
Accrued Compensation | 2,488 | 1,695 |
Dividend Payable | 400 | 402 |
Income Tax Payable | 1,545 | 262 |
Other | 3,082 | 1,406 |
Total: | $ 13,445 | $ 8,659 |