ACU - Earnings call transcript Q1 2018 | Acme United Corporation

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Operator

Good day, and welcome to the Acme United Corporation's First Quarter 2018 Earnings Call. At this time, I would like to turn the conference over to Mr. Walter Johnsen, Chairman and Chief Executive Officer. Please go ahead, sir.

Walter Johnsen

Good morning. Quarter Conference First United for the Corporation. to XXXX Call Earnings Acme Welcome Chairman CEO. Walter and I'm Johnsen, With Paul first read me who a Officer, is safe Driscoll, our harbor statement. Financial Chief will Paul?

Paul Driscoll

limitations, involve XXXX. company's objectives, this in intentions results the Litigation call, statements plans, in Commission. such Private and to time and Securities company; objectives, and the and pursuant Securities growth; company's time-to-time expectations are intentions plans, Investors Reform including that without risks manage at of of expectations, to forward-looking and harbor to the statements the Forward-looking the Exchange strategies, including change without Two, subject safe of are any operation the uncertainties, strategies, uncertainties its statements the the cautioned ability conference discretion risks the indicated company's resources other and made from the of three, One, company's following, are adequacy will plans Act related to and provisions with of be company's filings limitation at by the affected

Walter Johnsen

United Acme Paul. quarter strong a you, Thank of XXXX. first had

XX%. income Our $XXX,XXX, to a Net last sales an the year $X.XX, XX% $XX.X were million. increase of increased quarter record $X.XX share XX%. over first Earnings of versus increase per was an

All had product strong families of major our growth.

and and market lines quarter due large service The cutting at Our food office the first had new online aid scissors of share and first e-commerce new thrust school, the product Camillus industrial revenues. in primarily Westcott distributor family tools into record a in and way safety business Clauss, business sales. led sales. a home Cuda customer's with gained to The U.S., strong

and after XXXX and XXXX. a presence. quarter Magic of office expanded sales industrial the during growth office was new chain, retailer the X, Spill of of increased customers, due food accounting organic large impact Our first Spill supermarket Magic distribution on to February and including the for for new acquisition quarter the XX%

quarter. of We begin sales to expect e-commerce in coming the Spill Magic

contributed sales and quarter businesses product due the net international first market offerings. mass to In growth. Canada, office to XX% Our increased expanded

Our hunting tools new contributions our tools. our and growth from demand with Camillus DMT fishing and in customers, grew subsidiary Cuda knives, diamond-based European from office XX% strong sharpening products

Our a reflects XX.X% the management our strongly. grew in business quarter e-commerce in very of particularly portion margins last retail of Gross shift is greater margin base. XX.X% Europe we and period sales year. comparable compared e-commerce XXXX from successful as because sales were our away This it to the significant during of first overall

We continued product to the locations which at has make dimensions very of implemented prices. the optimize We shipping our This warehouse particularly improved closer reflected fast-moving U.S. last-minute postal during and improvements first quarter. attractive items greater precision costs of weights, accuracy to low-cost locations. of software in delivery and shippers, to bin distances distribution the service,

believe drive distribution is tools to down. and better a better has and will year trained warehouse Our continue cost ago, we and our far team this than

from international U.S. we During locations. the the $X.X brought quarter, into million

for to earnings sales, gauge will turn initially the at during $X.XX a to sales. provide to of Paul. net income have that $X.X anticipate in cash additional XXXX year We the end repatriate first down the last are by not guidance We we new strong be used in of the to and quarter, did share. debt and impact I million on year-end. pay funds better of business we net $XXX performance call Based guidance will e-commerce able million per providing now and the

Paul Driscoll

net costs, personnel. XXXX $X.X increase per Net higher with $XX.X million of increased in XX% due as DMT of the was XXXX. quarter share SG&A earnings for the per and X% margin XX%. in $XX.X currency compared were of diluted million quarter knives. of and XXXX. or XX% and XX% was share. for expenses XXXX The in XXXX, sales income first XXXX quarter increased XXXX. currency higher million gross sales income period the addition sales period Canada Net XX% variable products. a Net quarter of per in U.S. first due on $XXX,XXX first for or were channel XX% channel was in the for net $XXX,XXX due diluted for in or result $XX.X distribution to same sales $X.XX less quarter the local share the XXXX gains debt March million compared and million increased of the XX% school Europe to sales net million of of hunting XXXX, on or to the a the selling market net the a $XX.X Net same the in segment to sales local $X.XX in net increased quarter to share sales The market compared XX% was of of marketing SG&A office to gains and compared in share XX% company's office in March product income for the XX, first $XX.X sales increase Acme first in and XX, of and cash in bank versus The the increase. first

$X.X purchased Washington first period, dividends. Inventory million Vancouver, a $X.X $X anticipation aid in new paid of and our increased for During manufacturing distribution and we million in in business. million XX-month facility

free $X end $XX approximately cash million expect to million flow. We XXXX to of net and million debt with generate in $X to

Walter Johnsen

open now I'll Paul. you, the questions. call to Thank

Operator

hear And with D.A. Burns Davidson. Andrew [Operator we'll from Instructions].

Andrew Burns

of channels number curious complexity growth implied that the guidance, XX% deceleration in customers well Or the a reflective guidance just first is quarter, some of and to And growth? organic and to certainly of really sort the new online that of in I'm that gross for function you. that that's ahead organic Walter, your guidance. there? sell-in questions when a organic growth at visibility the boosted quarter annual is the look Two in and you great just

Walter Johnsen

in Well, was to began first there's service and We some food the that. quarter, distributor sell-in large to two there parts. selling a

getting orders to are the that they're and because the we optimistic large carrying However, it seems of continues. be second distributor through and quarter, very into that

to The future very some very there online was strong very growth. of a sell-in was And high seems into that first the about because at growth However, to annual that. number. business XXX% very, forecasting very, continued in and I've the been that us be quarter careful

including had As you we've year. XXX% online may for know, years, three the last last growth

a continuing a got pace history we're we've that So with.

in the we've placement and to growing are fact, been cannibalized around with replacing a promoted more perhaps that manage and at pleased our that that retail margins items and been online, arms The were in so sales effective how some able share. that higher cost other of part that that, as we're I'm really comparable online we've a do we way, getting is or to now

Andrew Burns

Great. That's a very efforts and efficiencies the good question, segue I margin improving to on gone into was sales. second know gross into the fulfilling line, which encouraging stabilization a online my see lot of

is to further margin sales is those continue continue about just margins? gross efficiencies, the to there as shift curious Or any just that scale and gaining be to grow, opportunity as profile I'm online? is going preserving enhance to So

Walter Johnsen

higher Well, example, refills, those an aid than have first of when items the we mix. and tend sell is our part this as to historic margin, refills product margins And is business.

now, in are items we are thing the lot and you because back-to-school refills outstanding and be a more of outstanding tend of and year pushing prices. in have the for they margins. competitive that's we obviously, later product good more margins, to will lower getting more So getting customer that a at get Similarly, we

we're we're and reasonable be we're at. And to the But that the growth I better get it leverage with managing distribution if that would are margin we we getting so assume have good mix think something expecting, levels that is have we're we operating that would be the consistent. and through centers. successful that the And will now then levels at that

Operator

on next to And Wasserman Cabot. we'll & move Moors with Michael

Michael Wasserman

in do different of run business may regard? looking this in affecting many too how that trying I've you morning, things missed increase these but I how mentioned But you you're this, apologize, I the the forward cost have And to days? if is it. how borrowings been

Walter Johnsen

answer -- rates the we do when you points, increases basis math, go XX to or points that the obviously, is can borrowing. it that basis up Well, of by the XX cost

on we're X% However, on consistently. the getting is of return excess the equity our assets XX% over returns are in and

In drive into had that than may year it of had that. XX% first certainly business some of interest the higher quarter, managing we ago, despite cost a we we the did growth. we're EPS as So

it. doing we that to is we of continue it's are until one costs So deal the answer have with to the

Michael Wasserman

your And correct there cap how Yes. on borrowings if become? I no am is could that upside costly

Walter Johnsen

is no cost. That's upside correct. there Well,

Michael Wasserman

Okay.

account that -- you're presume that I So into rates of magnitude in taking considering case acquisitions when the some in additional occurs? the increases unexpected you're

Walter Johnsen

forward, to thing small would very that. these Well, piece highly obviously, been of historically Michael, part less a cost be because that. acquisitions increase and have important of is been cost accretive us is modeling interest that's very And and significant looking interest

Michael Wasserman

Yes.

Do to of I'm that what not, has be to mentioned challenged Or Do expect that other you this that's you but away trend continue online office somewhat you been. channel, not movement or to to if think and areas? will continues I historically sure areas? think, from Okay, it compared the area a a continue? revenue

Walter Johnsen

is had And opportunity a Well, can selling tools they us tools. online retail. diversity historically market online, you for the of as to at greater businesses. imagine that a And need I Shopping gain major think still it's we we're more than had cutting seeing do. The lot I that we're share.

and and compensating gaining we the some growth superstores office at part share. first weakness online it's but we're announced, business and year. some in wholesalers, growth in for the so the last Westcott business, is And Westcott our we quarter the in at the -- of had It's strong as because

Operator

next with Capital move And Corporation. we'll Tim Management to Call

Timothy Call

of like you seasonality resulted growth With Do year. lot the quarters situated profitable being go handling the through have in as during company? you're you the better the that seems much today that more that you see and year manner. the it last a so think expenses Do growth of so now you a in a rapid online incurred last some that little margins bit minute business, online some last hurt

Walter Johnsen

do. I Yes,

product think were in margin bigger we continues I and and itself Amazon, Friday year our the positioned may of let's business of the now it that Amazon. and we're you lowest grow piece as if -- you'll the a pricing runs of that for from the that is most better have when cost quarter quarter because all a repeat are Black getting to that that's fourth say, we Part in year do than ago. gross we issue promotions, much

of However, all that's growth. profitable

So I'm with that. comfortable

As less dealing smoothness it far deliveries. know, and almost operational better. metrics, ago. the I we we're that and we And see stress, a with in overtime, A efficiency, year lot better we're as were see internal our in we lot no a far than less -- we're the it

Timothy Call

the such per being looks With growth X% conservative, like year or that? for -- I many it quarter, comp growth around be where might and for earnings you're of on am this on the mid-teens too wrong that strong as share showing growth figures X% goes so guidance annual

Walter Johnsen

comfortable we to And now fail the were you for well, I opportunity. over than think giving we've get we years online even growth pace, growth trying if as it's then that hard stage, organic at guidance would But finished to to a -- to able up with organic year have live that three just too that we're And for. the XXX% And then that in then for continue more that growth Well, gives deliver. company make guidance that's forecast drive -- this grows business we that last in first aggressive. us we're very the us quarter over something if the we're the so whole done giving maybe Clearly, overall to faster. at category. and with

Operator

with Mork Mike Capital And next we'll to Management. Mork move

Michael Mork

One, next to months? XX the anything Would got the on expect in Walter, acquisition questions. two you front. XX

Walter Johnsen

or Mike, finance a team Well, looking. them. we've that are in are of have at we worked operations, integrating guys always who whether in IT And or good got that's

But it's would we're it's I culturally fit buyers Having strong at I'm valuation to said well got guess So we'll careful and our as that, to very the pipeline. XX fit that us. and for XX that's well got to find something. looking next months,

Michael Mork

and whole Walmart their question took Okay. to the to said Then from thing. the 'XXs And suppliers to the they XX% Reagan or actually, the putting during pass on do the the Do cuts the came back profit you put a the the had as to to right they basically next that in. you cuts the tax not? up margins out XX%, it customer. in is, see retailers pressure as and economy down corporate were XX%, a back tax XX% on same blip the on paper also cut ads tax on then cut competition when in And to dollar-for-dollar pressure tax going going from pass again any came

Walter Johnsen

No, haven't that, seen we Mike.

extraordinary. suppliers reviews sharp. We are pressure, tax of categories our this But I some not of have our savings, plenty specifically us for always pressure of are had think don't is and give anything very very, your that there competitive from but they

Operator

[Operator Instructions].

D.A. Andrew Burns Next move Davidson. to with

Andrew Burns

the time. I Just appreciate one for more you,

you about the side, a SmartCompliance boxes when the have -- installing strength elaborate curious you're little bit the aid first getting we're Just you business, in could if a compliant resales.

terms in the initial about how do you're think growth the of how you for installed boxes? feeling sales? that sort SmartCompliance you refill catalyst it's that boxes, curious annuity-like sell-in could there, of the of quantify if Just And you penetrated continued are

Walter Johnsen

refills sell-in we're million, estimating doing is $XX and first the we're our our million. at that price market for Well, about about aid and $XXX

runway that's it consumed mix what the of depends annually we of than XX% different and holes that where driving that very, but buying, other the delivery, in systems. the SmartCompliance by on But the example, for somewhere and demonstrating long the the it's So cabinet they substantial filling of approach are the we've customer in We're got the force, them, refills. of here. box feel the XX% means it's are a very between boxes saves does refill the van-based

automatic hub, it, That software, item refill. at sends allows to and first got we've that very of to safety that the order fulfillment refill it was in with arrive minimum our installed had of does big and site app when the treatment, aid of the to a exciting the site back the quarter customer consumption quantities is momentum number of some very record the an packages installations a The accounts, aggregates software it. used which first

within And us, to first be for so to means to eventually safety, installations. pushing than aid cabinet and able to very, we or have manage because help managers are fulfillment our safety just them base data the very We're exciting are responding it refills. available better from a step that that's the the customer consumption to and actually the going selling to more get

big So recognition time the first And volume. we this that the is saw quarter first a the was step for with really us.

Operator

any questions. are remarks. the no today's to turn call this there At further time, over for closing speakers would I to back or additional like

Walter Johnsen

East If then. to goodbye. April Meeting XX, forward further at at then X We sharing questions want there good Annual day XX:XX is City is Street, XXth call We in are no New a.m. our our further to complete. look invite at plans Have this Cornell a Club, and which you the York to on

Operator

And We that participation. call. for you will today's thank conclude your

Acme United (ACU) 20 Apr 182018 Q1 Earnings call transcript