ACU - Earnings call transcript Q3 2021 | Acme United Corporation

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Operator

Good day, and welcome to the Acme United Corporation's hosted Third Quarter 2021 Earnings Conference Call. At this time, I'd like to turn the conference over to Walter Johnsen. Please go ahead, sir.

Walter Johnsen

Good afternoon. Welcome to the third quarter 2021 earnings conference call for Acme United Corporation. Chairman Johnsen, Walter am and CEO. I is will first me Paul statement. Driscoll, who Officer, Financial Chief read our With a harbor safe Paul?

Paul Driscoll

Forward-looking of strategies, a Investors such among economic the as, in the others, call, other such to conference result uncertainties in made of as pursuant pandemic, ongoing of adequacy statements filings Securities XXXX. of arising the limitation, safe risks and and are Securities Commission in related downturn our COVID-XX the harbor with forward-looking risks Litigation Exchange the our periodic statements Act provisions described of including, resources effects earnings those that the current Private the expectations, statements and are objectives, and without including uncertainties plans, cautioned to and release. involve intentions the and company's this Reform

Walter Johnsen

very Acme Paul. had United you, XXXX. Thank third a quarter of good

an at XX% were sales of over increase net year last $XX.X Our time. million, this

$X of at return excellent revenues all for We The subsidiaries. Westcott to Net strong E-commerce XX%. were their sales, excellent throughout distribution Safety strong the demand as its Aid were from sell-through strong. and Our were per the base. U.S., business sales In $X.XX last sales back-to-school an benefited compared XX%. cutting million, and quarter of net $X.XX share tools offices of people increased First Earnings our demand products. year. for income was to our increase craft had increased our

e-commerce of regularly. Europe, year even the prices acquisition added shipments. we last last pressures, had due were growth sales Aid increasing many United organic has successfully which large since First cost Central, with and to its at multinational Our benefited Its In quarter new timing Acme revenues excellent. been have selling were from some our Canadian business for has year. customers

board. energy across and We have high inflation shipping shortages, increased extraordinarily the increased had costs, costs, costs chain supply nearly labor

In locations very we costs most It have of our not is addition, unfilled time. temporary. are a believe increased positions challenging do wages. at increasing and despite We had many was the

of In already we fact, we increases increases. are new for and new instituting cost price seeing XXXX, are levels

we XXXX our management new may Rocky distribution warehouse normally. Mount, Carolina installed in with software now a made facility. substantial in April and recall, shipping North system you As the new are progress We've

Although improve, supply the about control. because are system XXXX. now global still there We shipments parcels, to efficiencies small homes June XX% New United for COVID-XX their Chinese thoroughly left operational this building strengthen starting more areas to increase of to began positioned we its ship from is our and inventory many when did our in track during in feared chain workers Year. disruptions China Acme

despite the spending provided orders the requirements tsunami Chinese to caused COVID meet surge. pent-up the However, a external to Chinese but back-to-school by produce anticipate U.S. of right chaos. to customer we The ship and not the summer product the cushion the and middle overwhelmed stimulus capacity shipping in and of the packages, extra substantial did inventory factories they

sales to these anticipate times converging delays. continued are another prepared. issues We in record extended expectation and the delivery earnings from We're the year and projected with in managing of order successful lead chain supply We anticipate are and have XXXX our and on XXXX.

products grow, to and continue is First for tools cutting Westcott of Aid strong. demand our sales Our

now about to will turn optimistic XXXX. Paul. I are We call the

Paul Driscoll

$X.X local both due Canada lockdowns third school same of to ended quarter. sales due million in local in periods of XXXX, offset XXXX. increase an months U.S. months X COVID-XX office net school in $X.X Higher in in million constant costs. X XX.X% Aid sales gross sales $XX with income XXXX, the September million compared the income for the XXXX and for an to compared Net months sales diluted $X.XX for XX%, in Acme's increase XX%, products. were sales XX, the and constant share $XX.X September The in sales year. X% months million First Europe quarter of diluted Sales of or quarter compared price up income large to in for to the XXXX Aid to increased XX% of and in in was in per period the were Westcott, currency sales million SG&A the of September the the currency XXXX, share in sales $XX in million period last year. for the XX%. offset increased ended Sales $X debt compared increase net in market first on and the share X or Aid in XX% of higher million year of for cash million XX, with third X compared XX%. ended share the this mainly in earnings year, of on XXXX to e-commerce compared sales XXXX, XXXX XXXX XXXX, and XXXX. $XXX Due million of Sales XXXX, the compared and Sales $X.X diluted million million Net last in XXXX, quarter XX, to $XX X million for XXXX. net Net products. local quarter sales the forgiveness for for X material, Net due for X% the XX%. temporarily income, SG&A Safety third XX% decline second was for compared an to XXXX in XX% excluding XX.X% to $XX.X XX.X% QX The shipments transportation comparable first of were for increases and expenses grew third increase from Net share QX period share of quarter were of for third market Selling XXXX. or XX% less September $X.XX the was or or XX.X% XX, a XX, to were compared was company's in previous were a the quarter for compared sales months of segment XXXX, increases and diluted gross back-to-school XX. period quarter mainly $XXX products. of XX% gains both the third grew margin sales of of for shifted ended PPP the $XX.X sales and third currency Net per the XX.X% XX.X% higher growth last labor products. the The First impact million per of or loan ended of year-to-date due the of $XX.X year. $X.XX of or September XX, in months XXXX. in million was shipments gains share. the to per or per some The was $XX.X for expenses to quarter. the First XXXX, products to September $X.XX mainly same same office to margin September in were

generated flow. $X.X we loan cash approximately the on period, for $X.X XX-month $X forgiveness and million acquisition, paid Med-Nap the full million $X.X million spent in the on PPP received free million During dividends,

Walter Johnsen

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

Operator

[Operator will Marrone Jim our go first Instructions]. question And Research. to of we from Singular

Jim Marrone

logistics a the some decent is the and Congratulations color to in first chain. my on just -- quarter. in guess regards provide I question regards to supply

backlog trying have And ports this of after a affecting to follow-up a I the you your on future foresee backlog that. to regards of question and in in that. it's how Just get container shipments business, the what then near sense of

Walter Johnsen

And The on can figure drivers. now added we in could summer. much mess. summer, sometime that's general, change China is this not doesn't missing The if lot been toys to stuck differently deliveries. the been, containers a Christmas, to popular run get than commentary get understand you for a fact ridiculous. looking next for are near-term this for tell at extra be between fact completely kind have that holiday. They're got because serious. us of XX% about us delivery a and shortages that a it cluelessly. and deliveries grinds U.S. months quickly. and this economy, the going ridiculous. halt. of inventory do chaos, that. have believe That's it's our to supply production We've has plan a then next It's don't and year doing we we I to almost And we or crazy don't for Well, are That's truck that allows X solution, now weak going managed that we'll nor than talks in see it's and aspirated it's we is I in places a they're but more being like are. parts, But the critical ports it chain away, people I the

on, So while level and activity a we're going we own on see don't our enough feel government. macro we within prepared,

Jim Marrone

Great. Okay.

that those effective with mitigated you management. inventory you've So mentioned costs higher

were also I that those costs in they offset higher though, by selling think you comments were increased also made -- prices. the comment, prepared the

increased it's how prices that to curious, well, top selling do this these XX%? you So increased XX% and as you can how that you well with the I'm selling appetite have indeed have kind to can only effective confirm that's the if prices when inventory increased drivers And of is just pass case, is prices? statement? if selling that higher consumers Like growing much profit at of consumers? management, And line

Walter Johnsen

your on. coming that. And pass Well, quarter, obvious. mix, up, your everywhere, in the value of And We think first price. year have costs. don't there we customers. to pricing it and that's margin But that you to on continually we've you identify increase in costs And well, you can't the all very a product Relative are I the to to when go to power. our your costs ability that because throughout the represent whatsoever. but is when keep continuing they anticipate it see gross letdown lot we hard does to costs, increase deliver that the done a try representative I but do prices cover of mean

Jim Marrone

point that passing regards the of do to -- selling those an consumers, on prices? your prices going as volumes idea to have higher in on which higher point result at those a what are -- passing to increased hurt you And Right.

Walter Johnsen

much don't products selling of and Westcott prices have average items which $XX under I Camillus knives. the because the ones well most think, are for our Well, our will really, resistance are

Aid it's industrial different dynamic. market higher. kits First they're the whole market, in But a there, the With

I board. I parts. collective and factories the coming the every don't that don't economy from inflation equipment because can think the U.S. in slow major operate already drag part a on see can't the bigger when the slowing capital But from get thing front, they demand get may that's is they in across parts.

I so very a here that is concerning. there's think cycle And

Operator

Instructions]. Alan Private [Operator go We'll next Kaplan Investor. a to [ph],

Unidentified Analyst

employees a insiders? Yes. as classified do I of was get significant your who wondering, are not options awarded number to

Walter Johnsen

only And to options any go important single talent a of have, than pool so part The all employees. go that more No. thing. to this maintaining been employees. they've probably very we they But

Unidentified Analyst

No. was, What Xs? as a granted classified are to was therefore, employees of not number and filing insiders, asking them Form not I

Walter Johnsen

don't Oh, of that are sure. Form There's employees. file a that Xs those lot

Unidentified Analyst

thing you Is mean, is only jump that I in of employees earnings out And those your options. were their correct? release, Okay. since number some of shares. just exercising a there big that Because, figure can I basic was the last did --

Walter Johnsen

Yes.

would that the Alan... think I accurate, be

Operator

to Management. of move Capital next question Mork Mork Michael we'll our And from

Michael Mork

then out. years growing it Amazon Two of was us company, on there? questions. give kind on flattened any Can ago, and with update exponentially of going couple A you your what's

Walter Johnsen

should Amazon our Europe now has and us. they've been of for for growing the has very customer, Amazon well biggest Mike. it is also been doing And be amazingly, but rapidly both terrifically Walmart sort But and growing Yes, U.S. neck in and rapidly, us. been by in neck.

Michael Mork

Okay.

business increase. to It has Amazon your So plateaued. started

then. again quite and then it up You so -- weren't starts sure why going

Walter Johnsen

Yes.

Michael Mork

Okay. was idea going give we the gentlemen from -- how X%, your your prices quite in the Can rough us question I had comments inflation a much bit you second you And us then inflation. there? XX%? Can some a talked about we on X%, are seeing up Are number? give other you talking

Walter Johnsen

of know that's inflation at don't these aren't XX%. facing is China, seeing factories. are that, being around the but is we In right This And in Well, that's China what ours. across to China the now. publicly X.X% board reported, I

production So that's exported. the broad being

of increases, them. kinds we those we get So when match

think. numbers you So than it's higher might

Michael Mork

X%, are products your think a XX% you higher year do at two they So than say, were, or the ago? retail

Walter Johnsen

a answer we a we're analysis. done X% you, looking that of those at haven't that I the we're are hefty looking if not on at. price I going X% that price because Mike, I But increase, actually And tell well. as kinds to pretty can't can or really get pass X%. increase numbers We're

Operator

question And next Partners. we'll move Longport from our of Richard to Dearnley

Richard Dearnley

Could an headcount approximate Carolina you North give distribution the center? for

Walter Johnsen

headcount? have Paul, approximate an do you

Paul Driscoll

it's think I about now. XXX

Walter Johnsen

workers And then temporary the well. as have you

Paul Driscoll

XX probably There's Yes. another temporary workers.

Richard Dearnley

is take I And a finding it people mess.

Paul Driscoll

Finding and retaining people.

Walter Johnsen

Yes. retaining people. Finding and

Richard Dearnley

And retain, yes.

Walter Johnsen

areas Well, then going depends be there At got And are you the And incentive again come figured the But out. and living And or and not see again there's months on, in the to game where unemployment. of so work in, and the show day game standard. it much a matches smart, which something leave. of X certain and they another course, people on, appears live. point, unemployment is X, we up. you've again to

Richard Dearnley

just You day a if unemployment get you or a work week?

Walter Johnsen

be to have for employment. You looking

You long. get employment enough to stay

You [Indiscernible] can be that cycle. off.

Richard Dearnley

I got it.

you And this is couldn't because ship Last of million quarter, the any in carryover difficulties or you quarter? had Okay. $X that so Did there that a clear from orders this of you warehouse. warehouse quarter? said

Walter Johnsen

Well, most of the that warehouse was has June our cleared. order from -- of the at in back end

a of freight be there's to up However, consolidators. substantial products waiting in shipped at China amount

X containers X not months booked But pick and our these up, now. the and It's So major can't customers purchase they've them run sales. get it's late order. -- against built as to

So August, in. they get goods June, But picked they this July, they're carried can't in quarter. over just purchase valid will probably containers get they orders, from put up and the to

Richard Dearnley

"If went Twitter and was some place and was LA and find who about and just all an people to boat you he and the a It it." harbor on to DUCs through then mess. It can talked grid luck. Yes. can't put you rented said, toured There investor total article a was container, a find a the

Walter Johnsen

much being getting It's chaos. won't this is so It's is. reported more for No. than It's just chaos. toys Christmas. be not there how it And about, serious God, what's

Operator

Matthews question Jeffrey of And our to we'll next Partners. go from RAM

Jeffrey Matthews

got I a few questions.

labor you've as years -- the why for so is which shortage, raw two it declining talking on is questions about inflation First, China. on rate China, related materials? it there? high something Why Is the birth been Or as is many there? a far

Walter Johnsen

on quite materials. raw Well, Everything to year. really first global the related oil past the is but it's market. prices based not somewhere on XX%, oil in and that's on I market, have the sure, XX% probably think gone I'm up around

-- that that factories economy, down coal can't electricity. Steel, So steel. their make overwhelmed, And the shortage on between a they then anywhere we're big is fuel, plastics, of what shortage add shipping top X within China X and enough there. there's coal. that's where to and so days of of the week a use get of coking a The running you There's shortages, then container the problem electricity. XX%. days labor that And are you because they produce shortages out

Jeffrey Matthews

that deal Right. something at a does -- time to is your to your supply long And what's chain you're further to in going come? about all happening does inform with have just own forward? thoughts this Or for going China

Walter Johnsen

made U.S. we've one have that factory. acquisitions and Canadian the years, X last the Over all been

DMT Only Magic or or Spill whether all Aid Central. So These Aid First that Pac-Kit manufacturers. or U.S. was or were First

products making wouldn't domestic a bought are China places Aid very half for But years Philippines. in domestic December, Africa been that's I was example and the a in continues again, the than of Northern next pads wipes we've so at Southeast of today, of focus well in it has about base prep building And of and First X alcohol because, That's, The see working critical our and we so sourced the States, United in to -- base. it as we're I as mean, another more Asia sourcing different our the surprised also is And carefully. as in which ago. Florida. U.S. kits. that ours, are diversified be course, outside look our of Med-Nap, of is that sourcing Europe and much we acquisition the we Eastern DMT outside but manufacturing

Jeffrey Matthews

leads more for acquisitions? And opportunities Okay. I the it is -- you still are that into a seeing another question is question Or in difficult environment wanted ask, this environment, flow? which difficult to this same operating kind of potentially --

Walter Johnsen

equity we've calling can private market that surprised, from years not We're the we'd be actual And they Well, be you companies activity And follow sure. these for away at prices might you that and the constantly that at to lot with you and and that a plenty when not time, But over we've tend market. database of a strong, see what impacts checking for the the looking a then fair half pay imagine, know with really, acquisitions. in we I some and is have developed we're follow although is them. pricing doing marketed, as in. do very quite times, got of of we very, an relationships, you looking we're up but and now up, step transaction. we're

Jeffrey Matthews

there there is the for blow that you? X this examples some you're there. very not on Sure. that speak Because is capital talking And X issues, What chain causing about about of you X significant extra talking X you're you're there? your give or and shortages, seeing examples can sort equipment out just or in -- that but anxiety the mind Acme-related issues. that or supply X economy final X there are question, of out supply problems critical Is particular your comments dislocations to -- kind

Walter Johnsen

its have but read Tuesday I has ago. every finished, that And And one going their I these things, parts manufacturer couldn't get read months many I read many, for worry stuck. I conference with components. medicines calls Asia, what of now a F-XXX to shoe to say I staff everywhere. And XX% can't because I did get examples. when drones. supply and can't of they're a calls major off critical chain running our in and airfreighting were except up with week the I half a it you right company, see Ford that drone inventory it which shifted shoes, XX what's those can I companies China And get military from add very thousands them These see trucks on containers. production it's terrifying. just Connecticut plants for to is team. Vietnam, Well, some the that its mornings boats anticipate are we not they laid about pick them. getting on. on it serious truck is

Operator

further to no questions for now back with any like conference remarks. turn to I'd And the the or presenters additional closing in queue, our

Walter Johnsen

no complete. joining for and are early year-end is then thank call look questions, Goodbye. you to further XXXX, there us. We this forward if providing in results Well,

Operator

And so this concludes you today's call. We participation. your for thank

disconnect. may You now

Acme United (ACU) 26 Oct 212021 Q3 Earnings call transcript