ACU - Earnings call transcript Q1 2020 | Acme United Corporation

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Operator

Good day and welcome to the Acme United Corporation's First Quarter 2020 Earnings Conference Call. At this time, I would like to turn the conference over to Mr. Walter Johnsen. Please go ahead sir.

Walter Johnsen

Good day. quarter conference first United for the Corporation. to XXXX call earnings Acme Welcome Walter I'm C. CEO. and Chairman Johnsen, With Driscoll, is read me Paul a will Officer, Safe first who Harbor statement. our Chief Financial Paul?

Paul Driscoll

limitation, XXXX. this the Litigation call, plans in Private objectives, and pursuant Securities are intentions Reform of expectations, to Harbor to statements Forward-looking the strategies, including without Safe the statements conference Company's resources made of adequacy Act related provisions of

those ongoing and are and cautioned the forward-looking current such results our such with Securities release. the kind risks utilizing Investors and periodic others of statements involve of our the in earnings other and uncertainties, COVID-XX among risks uncertainties pandemic economic that effects Commission the Exchange described in filings and of including downturn the and

Walter Johnsen

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

Our million net million first quarter to of XXXX, in the $XX.X XX%. sales an increase $XX.X of compared were

million, first $X.XX Earnings of income increase XX% was net $X.XX or the to share $X.XX per XX%. over Our XXXX. an increased of quarter from

safety aid SafetyHub its Company with The gained Sales aid has of growth. the share products industrial system. line replenishment drove and market digital first product patented SmartCompliance first and

in the sales have some We industrial home States. of of and improvement distributors new United largest

area quarter of tools. first very online knives by and with compared Camillus record months the have U.S. year, declined is safety but all in and last of first DMT strong wipes, levels. then COVID-XX in the growth surged two line what product our aid with we been in first the believe offset Westcott Revenue additional The to with Our was sharpening demand. sales medications consumer and aid at antiseptic the kits, and refills growth in this

in increased Europe to due and Aid in Sales online business. Westcott, DMT, growth First XX%

impact domestic international and achieving that open the facilities have Aid quarter during both the last Critical to year. strong Canada were First and our distribution is our factor Our revenues production in COVID-XX Central pandemic. comparable without first of in results remained

and Health safety company ability large our Canada January First In well means we as our the This multinational acquired to base XXXX, in our products, customers. supplier the first customer provide which as safety regulations to Laval, aid Canadian existing Canada. Aid Central, expanded

Aid strong we bases our and online a Central First leveraging has both Together, and are presence. source customer strengths.

about Central quarter. to Aid First in first contributed $X the revenues million our

aware, the all we're is disruptions. health a economic global significant As crisis battling world and

gloves, our meeting a Our fluid, first There steel aid first is to and other large equipment, that and go items protective into of masks, aid kits. many very products safety a portion pathogen extremely cleanup, problem. essential are and for blood-borne bodily demand small protection, strong personal

normal, cases, seeing also the our We're to customers. then to above are record purchasing the our In at on but medications. costs we market well our in fever to prices customers reducing we adjusting goal can. Acme’s a supplies is demand deliver many best values spot items consistently at

fulfill the Our safety operational wellbeing has all our they been employees, if first concern activities. of and

deep regular we warehouse scheduling doing and are sites, protective monitoring providing shifts, cleaning. production gear, our health, and In

and Our running are in United working shifts. teams Kong, Hong associates together. sales multiple remotely in our five in States and Canada, Germany and U.S., warehouses the plants offices Acme’s are

staffed, in of XX% and in generally Mingo, to Our are capacity. Guangzhou China offices are running XX% fully and at our China factories

products proud in a remains first again remotely, XXXX making and with delivered teams. strong. but their and and of I'm We're small Demand are We Canadian very team Our European working truly strong our but the aid finished global difference. our of first warehouses XXXX. for quarter results, functioning. offices our are safety

sharpening Westcott will cutting last tools, be weaker global Camillus and that products, believe the than demand knives Cuda we for tools, year. However, DMT fishing

have limited offset forward. see Overall, to some leads or sold are our believe items to our which either help business we continuing online in projected that traffic. are Many position into the grow, we to move strong these We of of a stores sales. closed may are in

related at for COVID the many this face, we the providing to or will guidance be not uncertainties time we coming year. due However, quarters

I turn the will now Paul. call to

Paul Driscoll

gains net United's the XX% The segment million quarter surge extent in first demand. were a million gains and products, $XX.X first Acme $XX.X related sales and for safety the in aid sales the from XX% increase. lesser U.S. market quarter. came compared XXXX, a primarily increase COVID-XX sales from increased to Net share to in

the mainly sharpening Net to products. office in local e-commerce Europe quarter to channel XX% growth XXXX, first products sales customers in for the of DMT continued new increased the of sales due XXXX currency increased of quarter and compared first in

quarter sales the first million in the XX.X% in first Sales versus Central local First quarter quarter of increased Aid for of in first was margin the excluding $X in product products in the X% the XXXX Central Net First XXXX Canada The of amounted first Aid currency. to XXXX. XX.X% gross quarter.

a quarter first compared well as XX% the debt. for the lower $XX.X bank of XX% interest quarter in in Interest first $XX.X sales profit sales, of or increased same with XXXX. of XX% million quarter XXXX. first $XXX,XXX expenses SG&A to due of XXXX for the or Operating the XXXX lower million net quarter the compared were rate declined net first expense of period to of as

less or quarter bank was compared of for million share $XX.X for March of share March first period net and compared XXXX on a XXXX net XXXX, increase cash $XXX,XXX XX% of income same to was million Net income per $XX.X on $X,XXX,XXX The earnings or $X.XX $X.XX XXXX. diluted to XX% per in in XX, Company's XX, income the debt per share.

Aid and million free generated reduced XX-months. acquisition, XX-month paid inventory million the by cash $X.X on Central in $X.X We’ve and the period, we $X the for First flow. During buybacks, dividends $XX million during spent million stock

future. is XXXX. March that firmly Our credit line at was $XX with Availability line foreseeable believe the XX, facility We million. the is HSBC the for million Bank on $XX.X sufficient

open for you, call now questions. I the Thank will Paul.

Operator

have Instructions] question Chris We Micro. LD from Please Lahiji ahead. with go a [Operator

Chris Lahiji

guys you, do gentleman, Are right demand Thank already question that the the in to you of come supply going feel disruptions where next forward? are you moving kind any X the And seeing a is X most on side. now? months to there

Walter Johnsen

disruption first a Well, of the day lot on safety of Chris, the there's side.

competitors As Well, gloves, we’re you individually. can imagine, Buying, which and vessels many the and and and of buying Relative a spot our very that masks, aid in gear, out first as then on lot on in as more we're protective things the well coming isolation items so our aggressive market cases. been facilities. team with many kits selling sold sites getting to packed go on our of buying in there's in stock, some well quite China. we’re we've stocked own site, and

air great air the to And The that relative carriers with reasonably of for are disruptions hands right freight are is we've purchases. ability to on distant on the to worked now big delivering focused a write suppliers most site, many freight. our respond are around governments cases, be able a on, to check, A these advantage right supplies to years. -Kong office Hong in world. number to There relative safety

now. right normal. get claims very doing air approximately expensive for to so times three It's is freight And what's

an you, as but I'll well, that disruptions execute well. people for opportunity can it's tell supply challenges, So,

Chris Lahiji

Have in has and weeks. I guys ammo significant demand more on side any last on the been the There gun just have side on end? to search a of one seen X you the X question. knife your type

Walter Johnsen

online, amazing. the but We that every buy we we doing Yes, of we the and it's both seems not well U.S. didn't Many expect machetes shops online. And knives But business Europe sold kind incredible year, has have. demand. of of they some kind The gun regularly, in been unusual Camillus in that's example, for number places and what closed. you in are an sell of product that a machetes. but

Operator

Dearnley Richard question with next our ahead. And comes Please go Partners. Longport from

Richard Dearnley

talked you’ve for ready kind the good for back-to-school March being much any inventory what's got extra of how feel of Report, Annual early because the getting inventory, which was is and of end inventory? I guess In related, in planning. about

Walter Johnsen

tends grade, run they're eighth United births the born about of years million sixth in few fifth a and seventh, X.X Well, later, the grade. year, babies young States number in grade, each to

back-to-school, as customers are be deliveries up buying back-to-school. lined and and our are will and there And predictable taking the a reasonably so And population, and a back-to-school products.

in closed to know are orders some have warehouse, timeframe, may, that purchase July. in the schools supplies against demand, early. that in We a going executed inventory fall does lot we believe in fresh case, most removed. our a early, be be and June any that closed, in going of April, the if shift bought the In bit it little think. we the We there's are to most that schools in of lockers And are

particularly Our largest for merchandisers, we factories of at some are producing some business in craft that you items those area. want mass

it's not much. up place it each inventory has of that So saying remember changed that But year business. business I'm in or that home a hasn't the warm number going because grades, when a the you again, students of through and

Richard Dearnley

your last tighter year. go? a bigger X so a more inventories, Is look at or In down were inventories there inventories million to still

Walter Johnsen

companies, acquisition, Magic we've I'll DMT Central. there into Aid and the more sites. but the years, and they've years. Through business aid tell of some the things Well, Spill over more first past acquisition Aid manufacturing The in done acquisitions, and of now the five one is First Only First our you work, moved acquisition, the Pac-Kit the

customs, turns These typically return are a delivery that will water, site, time on times through got on look times good us, we are all quicker move are should four year. your manufacturers for able you warehouse. intermodal on the at that To a than manufacturing goal And much when X.X they unreasonable. substantially. from products import up the is be to manufacturing With to to China, you a turns a not manufacturing the long the and

that turning we're do then we're freeing we that and to inventory as this point. to So we're up at that, using cash, down and seeing also debt what pay as

Richard Dearnley

there's It's and there? In here contemplate environment distress a that hard on. to I might so acquisitions and the would be there some squeezing liquidity where, appearing current think

Walter Johnsen

opportunities call us, I be that can we did morning be because opportunity Well, may at for companies that had and something this for certainly would help. look as a the that a there we struggling there home an are may welcome recently calls, phone as as work they find to them. but not for if and We good hate

Operator

Please ahead. next our Singular question from with Jim go And Marrone Research.

Jim Marrone

just forward. My already of maybe regards on the a perhaps provide emphasis you color. more late apologies, PPE as it, you could if as going as bit in you've covered But well to afternoon. Good have if if little

a sense your you with little bit how that And on us regards commentary a Just impact capitalize a can just you can And, or on could it? that? in deadline? bit commentary more to more give yes, regards little first

Walter Johnsen

quarter of won now It's you We've long We part will products and the large that aid a and typically, continue we're safety half about and full grow replenishment higher new pricing hopefully piece sell first that's global some a that in in line distributors came because of first we by in through right and service, winning good in States that's been as system sales. know. United new industrial be major just chains business. there the business with driven for got but hardware our business And being SafetyHub online in and part competitive us. term part our to

carried Spill because which portion pathogen the bodily not those are various which fluids, only up product with used is medications a ingredient ingredients, and is kits around bodily active for our all but we're as we're of aid years. them first And material two making the product. Magic kits that's plants The them. we manufacturing blood-borne are the that kits care incorporating the fluids active are the thing That clean growing, all business the to line fever reducing, second physicians leveraging

of And a impacts the will many proper that we grow our bodily think globally believe because isolation continue nicely cleanup open still changes in that's of and behavior business fluids. that I to making we're

sell, we isolation the and first gloves that masks every gloves, of With a aid in pair has them. the gowns, kit

for when us kits. going the resources. continued started in So, we will we for a a for business had more be get product business we a it's acrylonitrile them good think to in that incorporated demand gloves packages, And forward. sold long-term been us When we

business. thing where we masks used In NXX a kits, fluids main But been and spill largest distributors offices distributors, with the the kits contract US and will main It that major the the been demand. are cleanup and we have or or is happy foodservice of not that the some in by case bodily the distributors piece them largest business. in our The locked strong distribution it's individually required feeling our stay extra an that masks, into of largest for is were those in we're and kits, base. It's sell us our world, not and that's and business now our us we're is them. distributors, kinds the to distribution supply there's isolation PPE supplies also the have Europe and both the in being industrial

will kits. that that growth, putting of production in As continued into there's I one that going working different would probably we prep the kinds very based of in I see perhaps And personal but with market, alcohol the different some them catch and protection, we home sell be had mainstream. don't for us working we're forms the that utilizing wipes, continuation this and the fall, to are factories, up gowns some what the a participate the including right broad much and massive is the in in in hospitals. looking really working people operating But is for I some a see it at pads with and on now to. not wounds alcohol We in kits, clean because for those expect offices, that of

Jim Marrone

if Excellent. product as of a you any commentary. Thank just that And other just discussed for follow-up, lines. the you

back-to-school in a of more little and bit the Now and the supplies, terms know a specifically line? sharpeners you that I product of mentioned scissors type more maybe bit the but quite about

Walter Johnsen

tend has Well, an the almost and many package. for example, guess a a days my business so opened ones to you cut scissors And those took if the cardboard, and performance scissor higher open line FedEx past products area lead that be demand use we people the Walmart on in in as see, as two these -- which or is, this don't everybody in that to constantly where merchants, category is were in scissors Costco, as craft the non-stick area separation a and a merchant such good or are they’re offer retailers with And because feature Target, our we or mass there thriving. an the food use. mass large accounts, in to

be others where are tend where special right now. they they have There don't they closed food to have niches and

XX then migration this last XX% is is a big But somewhere very to It's some retailers online. And have our found climb. that who first our thriving year of quarter a to the online, are a you it is course, to off so, online you’ve the on XX% up in about we continues migration got % profits to going revenues. in way. of And business, and

general. the certainly more seeing we're we're in in scissors that So, online in the seeing and area, cutting arena info

people driving normally and When some stores to probably we the gave there the lost. that diverted a and the and product lesser stores guess sales Westcott, particularly it’s product general, some line, go about less do is because it's my The is good line cautionary to But disposable line, than, concern have we healthy was the statements Westcott is predictable. our back-to-school, have Plus get diverted product that in quite income. is closed. and get some are there a online

Operator

Ralph And Company. our First next comes Manhattan Marash Please ahead. go from of question

Ralph Marash

quantify first different into product divert have terms sales you the to of products obviously cost normally products in. get aid increase you're relationship that online increased all you distribution, of increased factored and increased As in certain of at costs don't certain in sale? going or certainly your to Can category,

Walter Johnsen

crack I'll for that's at sec. take it a Ralph, granular. Well, a pretty

some a more be margins very remember may margins continuing systems not products. capital tend small to of on the And spent an center. you spending, which So half, major shipment, growth if on with improving a only and North frankly are lot income. as It's business. to Carolina And of same office year we've compressed at number super operating the was store, sell in efficient sell past the there's and money it that product see distribution we gotten spending the costs competitive lot better, capital our it a probably the If very and you there. of you training a is over online, we backside more because

say The online is be which has the, Amazon it than and business superstore. piece, to also means retail for to office sale tends say an the an one buying more profitable also a

a specialty you'd this margin. if small hand, a get other good the store, On fell very into

so And that, have of but again, a you harder titanium high online. And scissors tend and And to the attributes, a have be higher that a margin. of feel margin thing you they nonstick complicated have that's performance coated lot the a then like products change. lot mixed we

been are, getting The them. new good existing an to customer it's other or is business more We we ship accounts it accounts. not been base with a new or it's news online account whether Most we're just where or accounts. have

were And If in is effectively to to to point year you quarter so last orders about the are compare I gross those managed. margin the and flat. first

of is net that about it all flat. the So,

You income. orders, look showing we and at that's how processed in a did job up the better operating he those

that And I even as do continue we area, better. to on can think we work

on first market. more in side We buy we the aid when cost the are seeing spot

news a example masks, aid lot. For in first NXX which in Well, our are the they're kits.

not factories, we at have need as this as have increase shifts, buying normal weekend. a we customers the been or we've because that they we've really customers the have. times efficiently When staggered had to our them we're when might running in sell products running overtime we price we costs and reflect higher to to so supplying the to our those, And our

COVID that demand. There immediately, so days are to in down the with of for think pay full two two to They didn't, to our deep I virus that are Saturday, factories because for can both we're wages two also do plants. we respect shut days employee had meet you're to each order extra more paying. on continuing cleaning plants costs workers. There's down two Most of and an working of you but

both comparable So, been the covering factories. is, as volumes there's with well aggregate, even than the how flip cost gross the some in we of in of inefficiency were side quarter, we're that's about margin. But costs our have and the in more that first in popping around running in that as sales

Ralph Marash

heard margins versus and the increased what sales, period? increased the that gross are the puts increased we carry takes So, that was first the in to in throughput quarter the increase, likely emergency I through during the revenues, the saw

Walter Johnsen

point not you our us have be lot And can overtime in been running and said, give uncertainty. in factual Well, factual the headed is, is attorneys because we're that tell But at guidance over to what kind this they there's time year last of second a are our right quarter. to careful this of sales factories. now certainly

Ralph Marash

understand, to don't on -- Okay, takes, anything obviously you to. factory mean, not so in say factors get I'm negative I you essentially, trying and there's other that ordinarily said, puts the that there's you so as I in. time, overhead really over increased the But guide and to side,

first the there extra aid more On first case of of all the all in through-put. some market terms positive there's second side, supplies, and is of spot cost shipping. the the In on of of

used positive side the is X sell drugs that on times to side the of may negative you sell. the you On number

Walter Johnsen

on it value cost passing by when customer. the what market. match best which then we're we It on. passed But ask price increases through buy be the hand, that's trying exactly could, to our on the and goes if Right our other double, we're to up doesn't going spot

Ralph Marash

I specific that That's I question And understand framed actually as that. be was Thanks, color. as you my maybe but thanks. good can appreciate

Walter Johnsen

Ralph. Thanks,

Operator

Please next Research. And Stephen comes our Percoco question go from with Lark ahead.

Stephen Percoco

year, should sales Walter, of running you on so to the the giving I release or provide are know you're I that but second some the like year. more both you. you've for quarter what if told alluded not and kind said that just picture your possible look your Thank far, on guidance call us in full then, in press of completely? ahead it's wonder that quarter second last the

Walter Johnsen

Well, Westcott new back-to-school We can won I'll at you so that much a be probably the very some But craft some there are to area with have because Westcott soft terrible take still sales we a softer it's closed. a are customers. because strong quarter business that of expect in not and stores the that. in crack major

as that off see as I but the a don't see I segment, falling growth way. way way, it So, don't

the aid at now. levels at On the the business first hand other with we're

shops efficient those leading the Company the stores been that are close a knife more it's retailers. market some bit A smaller closing as the the I been in holding the far sales fishing the business that's continue not think it area. own some online food, quarter, closed, So, so and crude but nice. business in and maybe their through should lot through a They've partly small first mass down little did in that and nice so of tools the

I as if the and little the with at down continued decent you were level, look in in bit then first of the strong day a you're a a non as it, coming first quarter. bulk days So,

Stephen Percoco

little any there about with that, year capital cash other compared whatever markedly then factors then there? are you that the or side there it’d said also, a bit a quarter Okay, your costs are be Are might different items ago? this And other can working flow elevated. be talk any and whether of you that

Walter Johnsen

capital, the While the the go back-to-school. tend up of working in to inventory, quarter receivables second

to hard happen quarter the And has that that and and of The rate to tends have. the So, giving we'll because it's biggest year interest terms will that be the back-to-school. call dropped. might second be trend, quarter because of shipment

as here quarter. is we're the it borrowing helped Paul So, in me one

Paul Driscoll

now. three time bargain it's so Right, and is quarter a a

So, it we're X% interest. to buying

Walter Johnsen

Yes.

to... borrow see you I we were and so ago, And think year Paul like would helped the here me

Paul Driscoll

XXX bps higher. was It

Walter Johnsen

let's cut debt $X instead we're the say, Alright, X% debt net by million. so X%, of borrowing and we’ll a

Paul Driscoll

X million, yes.

Walter Johnsen

is so million, there X the…

Paul Driscoll

to X X. average On

Walter Johnsen

to you’re got down X million X% and X% you debt. So, less from know

continued in -- there'll be swing a So that. swing

We writing checks are take be the But manage spot so inventory working hand, market other they to to tighter. you're on in the resold. on our inventory can

So really the is probably, same. inventory still

Stephen Percoco

then a I bit. little can if And maybe push

your event. closed that for that that is orders a possible second You've of into is to got guys the It quarter you like back-to-school, the some it's retailers the may time inventory, not sounds mostly you through have with could of those being quite said sold planning understand, you're the retailers third But I doing maybe or extent quarter shift you strong third not at into is quarter. that I it. same ordering mean, the as presumably. have visibility into all the

next so issue moving the as over so if the of or lockdown. back months starts And normal is, end couple push to the economy to the

It third in me in second start of we like have dip us go based right much a upon through that while seems be not normal. now, that, quarter to the and could you what third business as the back to you've your impacted Again, move told quarters. business of some your shouldn't should assuming that to

retailers you that go like experience. that? shouldn't of some or as business Your on or manufacturers a what much maybe other as Is gift color provide fair? through Can

Walter Johnsen

Steve. Well, I you're think right,

of you've so As the each really same to globally. kids supplies, they mentioned, going need school got this and year number is I’ve and

and there’s Europe the doing we're in and Canada base or in demand. Asia, So U.S. what

in before parents school. all it because we've the moving second went to quarter were to more business buying the Now in kids the been mostly be quarter the the And third lately, goes second. to used from, online third seeing say, whether, or Amazon that

beginning some they’re end end of of And went the beginning them of in they of some August. buying to areas, August in to school at so will August in of the September, went July. be buying schools In

so, been quarter. to the been understand more doing And a of Prime, this shifts we that into trend. year. August the shifted Amazon third piece Amazon has as probably And it's

Costco, we're and July on all help. to of don't There open. closed. biggest and if you please absolutely you is are are lot now August Target's quarter, think those lot And at United a that stores, places, going the what the but look stocking shoppers were Amazon. same and the When to so States, And be that they're they're open. are closed. was retailer But look at and going And in open if in that to stores some still in going stores they're of a tends

getting course some share impact. these. of them shipping And works the and And an making so are while others are for closed,

be So demand think of disposable there'll overall, less it's, I income. because

you requirement So still for have underlying kits. the the

Operator

Our Instructions] Dearnley of from Longport next question go comes Please ahead. [Operator Richard Partners.

Richard Dearnley

I the quarter? forgot sharpening ask, and mix in between other first Hello again, was aid what and the to

Walter Johnsen

figures? do Paul, you have those

Paul Driscoll

was that and was of believe XX%, right. We aid first XX% close to the remainder the cutting

Richard Dearnley

sales And Do then think last permanent? there's margins, that's gross can questions at SG&A, essentially. work couple Or about to you erode... kinds of XXX same Ralph's on SG&A years. to of the expand or or been SG&A point over a the G&A Taking XXX basis increase the in

Walter Johnsen

did we there's concerned were we that exactly more going what bad Yes, debt. maybe is, be to

had major that more reserved we so, the one in that for And customer things another some event like or difficulty.

results we’ve So, increased there. the

Richard Dearnley

go think I the around. bust still customer is if but And didn't

Walter Johnsen

one know cautious. which just about. even we're there's Oh, uncertainty, enough seems don't put things It we talking

Operator

There questions no further are time. at this

Walter Johnsen

questions, call is there this if no are complete. Well, further

their Our thoughts with in ill We are third second with quarter. in speaking anyone who's -- families. look you again you. Thank and to the the forward

Operator

your you participation. for This call. concludes Thank today's

You disconnect. may now

Acme United (ACU) 17 Apr 202020 Q1 Earnings call transcript