ACU - Earnings call transcript Q2 2022 | Acme United Corporation

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Operator

Good day, and welcome to the Acme United Corporation's hosted Second Quarter 2022 Earnings Conference Call. At this time, I would like to turn the conference over to Walter Johnsen, Chairman and CEO. Please go ahead.

Walter Johnsen

Good morning. Welcome to the second quarter 2022 earnings conference call for Acme United Corporation. C. Walter I'm CEO. and Johnsen, Chairman With me will Financial who our Paul read a Driscoll, first Chief safe Officer, is harbor statement. Paul?

Paul Driscoll

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

Walter Johnsen

Acme XXXX, kits had products. quarter the The to for additional United increased of accomplishment. growth. acquisition second challenging manufactures the our but company aid debt and which had Made, one personalized Paul. record We of company a first of safety Thank sales. completed we position also you, And facility Safety

Our was quarter of the second history. over the in This an of highest in million net XXXX. of XX% quarter a represented company's increase the sales $XX.X revenues

keep not rapidly did we with However, costs. escalating up

the delivered We created a to and happened time. they abruptly a the in credit $X.X quarter without quickly net after unanticipated Our for in events containers due income and X% similar million, decrease Many which and XXXX, $X.XX from for of one-time on customers tax was Earnings tax share $XXX,XXX. to large closed per rerouted The was XXXX. COVID. a of was adjusting year last expenses. credit Shanghai of to our Shenzhen number to Ningbo ports

container second of $XX,XXX. However, $XX,XXX budget the was expense when we was paid quarter. approximately $XXX,XXX in an the average extra This per

to workers U.S. containers, in truck have Beach to drivers administration. to costs pile there U.S. enough to port quickly overwhelmed to the piles for A to became ports by pick the clock Angeles with were the easily declined round port budgeted containers on due not East ports be the and work Los could access container the $XX,XXX. have jumbled on ordered containers. what But since available about The not we The Long resulting were placed everywhere. up containers similar situation on up They workers in or huge and land caused Fortunately, ports. the store Coast occurred trucks.

got of truck off drivers return up In The addition, weeks. cargo fines languished home only limiting driving the and XX-hours U.S. law going containers ever next unpicked the and federal mud cargo. for without day. cargo, drivers Baltimore forward to We for per limits out administration declared to XX-hours, stuck container our the ship for had for in day. U.S. waiting

When demerge expenses the we quarter. mid-March, about second result, in a As $XXX,XXX $X.XX incurred war to a in began recognized value in the Euro and in unanticipated expense broke the payables to from of U.S. products second from the we market. Europe the to to-date. dollars against Ukraine dollar $XXX,XXX our line $X.XX as China, we the our for imported of in that Since out marked an we quarter pay are rapid

Europe gross percentage In addition, our over declined margins X in points.

to end. due increasing $X.XX a at rapidly of gallon $X grew costs approximately quarter's to mid-March a transportation inland Our diesel gallon prices from the

sensitive end to demand affairs, the here's We've but the could doing. we we to and and costs. yet be July Europe go are the prices in on state meet forever user on X of what While curve about the increased U.S. increased

starting located savings in went in installed new North in largest April anticipate live $XXX,XXX and warehouse facility new June We our software are XXXX. serious XXXX software in annually Carolina. Last we improvements. we productivity Mount, implementing Rocky year, management of The over

annual will installing investment is bottling about in this of to our plants the year. generate quarter Spill Magic of be projected This and fourth $XXX,XXX thereafter. equipment We savings new in in $XXX,XXX XXXX

boxes savings the products and Our which production expected XXXX. in It quarter pads to about U.S. and business in operational gain This more defense become annually has Florida in alcohol of of many large machine, reduces robotic project Even placing and $XXX,XXX. capital medical is $XXX,XXX. and it facility building Med-Nap potentially wipes the costs the new fourth our projected markets. the filling a to importantly, in domestic Med-Nap cost of is cost for reduces

done potential As increased the was in our inventory. chain you of for as years impact particularly global This know, issues, precaution COVID to China. we supply intentionally may a ago, two related

million Our our $X by end global the reduce current to XXXX. plan by of inventory is

market. the In to purchased and inventory, increasing a banking and to has second customized new promotion produces of products, company and improvements our was approximately income In addition Safety $X which an and quarter. well stream productivity in we over reduce The bringing little in performed of million the the kits for June $X.X revenues second prices accretive progress aid on XXXX, it quarter. first in acquisition a expanded million made new Made, we beginning facility with pre-tax XXXX had of the

in HSBC entered new also We second a loan quarter the XXXX. with of

about rate the on The X.XX% four interest is compared facility essentially to one of and plus today is million $XX SOFR Our the $XX the of same X.X% or years. new term terms. former million,

thank as in North totaling its grow. As plants our to XXXX Carolina obtained for mortgages a Vancouver, and you continue support may Rocky HSBC to we fixed Washington interest X.X%. on of we rate million recall, at like Mount, $XX.X November also We'd

progresses We now prices results. look as to approximately XXXX. million as Paul. and appropriate the are to in of guidance continue in providing delivering year plan to return revenues to solid forward call $XXX adjust the We I'll

Paul Driscoll

quarter. million, XXXX the sales an the to in the second million, in increased of XX% sales June to net XXXX, $XXX.X orders quarter, XX%. compared second in the segment $XX.X for higher million ended were back U.S. period $XX.X and first an due were volume prices, same increased Acme’s the for in increase XX% to filled increase the sales in months Net XXXX, million of compared quarter in $XX.X sales six XX, quarter

the margin and Price quarter XXXX first The six due chain June year-to-date XXXX. Sales lower to sales disruptions. the orders The months Aid from XX% with quarter of offset million sales cost sales with and $XX sales for for of million for $XX.X back higher of XX% was X% XX% XX% million sales, $XX.X gross mainly XX% the the XX%, compared of ended months in for expenses ended in costs. compared increased of due months first XX% of XXXX. of the or both higher pressures, The the for the compared local were new XX% the local to margin office June XXXX or higher to the was products. for sales, labor First Net million of $XX SG&A mainly margin customers XX. currency and six transportation inflation the for in XX, quarter in of periods for year-to-date. increased six cost, XX% in mainly and sales XX% period quarter compared increases product grew costs or currency second was sales increase XXXX. Europe XXXX, supply resulted was Westcott The were or X% XXXX. constant Net same the in second SG&A channel. gross due gross increases. to to Canada for quarter The were partially in expenses in for

included loan of million quarter of compensation. tax expense income. included PPP other quarter credit XXXX second forgiveness, second tax $X.X The Also, for million $X.X of the reflected of XXXX stock-based in

of the less net the or or XXXX net million the cash debt related was to ended offset $X.X million $X.XX these Made XX% XXXX year and in income was six earnings per to income the net was Safety period XXXX was higher diluted million, diluted to for $X.X constant our XX, of share, spent a the six on safety comparable quarter due income compared months company's margin anticipated diluted stock the decreases and million share, of months we per million June or per decline decrease June on the quarter $X.XX of costs first potential gross of income in the $X.X second net acquisition, dividends the income Excluding per due million quarter in approximately impacts, during X% $XX adjusted as of The chain second paid was net stock. income decline Inventory million in repurchased of income business, share to XX%. on or share. adjusted million. second additional $X.XX growth million supply XX, XX, $X.X per last share, disruptions $XX.X That $XX.X XXXX to $X.X period in $XX for XX-month sales. diluted of to in Net Net for adjusted for compared XXXX increased the to million $X.XX of common impact percentage a and the $X.X COVID-XX. purchasing primarily million, June and for $X.X compared

Walter Johnsen

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

Operator

Management from Corp. hear the of Instructions] we'll Capital you. And Thank Call Tim [Operator first

Tim Call

and Congratulations on the the us given strong disruptions, are sales rest the economic headwinds very all of facing.

Walter Johnsen

It really thank to was as our they much. quarter I team you -- Tim, very a up challenging was said, It Well. and tough. it. rose

Tim Call

in shelf season few back-to-school landscape minute see might and being years. stores year a This peers? back-to-school last shifted the and And How sales normal web-based a the have of the see to do third you quarter versus lot competitive space first restocking.

Walter Johnsen

a the we a was strong number market been We in share. customers already product bringing in believe of Well, giving back-to-school. of second advance which Tim, had saw more gaining in we've quarter, And terrific. a we very buffer, our

money. going you're to be good of very put as us a and far is it's it Of more it we fortunately. a tried strain a it lot right, back-to-school. that And lot But expedite normal us of on costs course, to

market we've be So got going back-to-school. gains to good and share it's

Tim Call

the finally And you then and Do time? Canadian EU Aid, headway think into in there years. make it's over to you you can market just enter hard the recent First with market broke as

Walter Johnsen

we're Europe. we have are to Aid Europe are and the and we compared we in our selling knowledge truly is But business. it's in thing So the headway leveraging small, actually fortunate gaining American First North products

So that's an without acquisition.

Tim Call

you. Thank congratulations. Well,

Walter Johnsen

you. Thank

Operator

of Dearnley from Longport Instructions] hear Richard [Operator Partners. We'll

Richard Dearnley

Could morning. how you in was quarter a quarter? the idea revenue of Good second carryover from the much rough first give

Walter Johnsen

about Dick, $X million. $X.X Yes. to it was million

Richard Dearnley

Westcott strength new both that was the customers, one in And of or was in office Okay. in in and First those? Aid Europe mostly it

Walter Johnsen

is Westcott. as well business And biggest in market addition in very mentioned, In share But Westcott having that, normal as I Europe. to our office back-to-school. gained Europe, a good the segment we're in

combination was So the second a quarter. strong very

Richard Dearnley

Yes.

have do Now to the about we foreign worry what is exchange?

Walter Johnsen

I mean adjust work when you within but prices, base, the prices that. you stable adjusting and a the big you not Well, that can dropped precipitous a decline of thing This are was we euro was XX% is and have can weeks, very priced. off

we're productivity customers. able give So I said, working improvements we're that, on addressing and value to that really we're our hopefully to as

Richard Dearnley

the up keep well Great, good Right. work.

Walter Johnsen

you. Thank

Operator

from comes question Next of Singular Jim Marrone Research.

Jim Marrone

afternoon, gentlemen. Good Yes.

So questions. I a have few

the of how much just yes. let's in it in increase, nice I'm so price increase get the with trying So then, start increased sales Or And sense of that reflect sales. that how to much reflected did really increase? healthy volumes? a

Walter Johnsen

the range at to But the higher was previous in competitive on million we can you price had going product over where quarter. price And transportation plus you're and reasons. said increases from we're if and and running growth that But you've break coming carried U.S. customer in a increase. got organic imagine not and for that from. to out inflation X.X% depending going Jim, $X lot gasoline be is our the somewhere the the then playing net of it's we

Jim Marrone

Right.

though reflection price these there then so in Okay, is increase of numbers some right?

Walter Johnsen

Oh, for sure. Yes.

Jim Marrone

Right.

on implementing comments? from further prepared your plan increases you price so And

Walter Johnsen

got the productivity plus the Well, the consistent have compounds. is yes, we to by done it administrative current is, the the as we But well any us all because on is we and passing through we’ll challenge are a providing intend deliver to rate, mandates, that not with XX-weeks. a our all whatever that will happened basis regular inflation. current value can And that -- It's for basis, not if supply be it a it's stay And in believe do, predictable. be and when reason of gets you customers. in to you've to hopefully value because one inflation X% a trying to have because to we're and a like closures on predictable after we're disease we're user, a business. number war a inflation end easy, they exaspirated and port to that And chain it's disrupted

Jim Marrone

very good. Okay,

issue. of really the experiencing then a side. in the supply not it's the issue side, is everyone's so demand the demand cost structure, not terms And If

you're just I'm those get trying controlling on sense a to costs. going So how like about

you've that your is while. cost So inventory I'm management trying starting forward? whether a for know just sense doing factor to I been going in structure a get to

Walter Johnsen

Well.

end. at capacity Westcott, least the shortages and then start then $X we million with So that But get. picked supply which then Aid-only We're in in for Canada of doing I that year direct up we directly if and next better reduce are is that the many First because occurs, cash market stock we those believe from And added. is to that to generated XX-months, piece as That is the extra business, that's we start back-to-school we very to it believe going chain going were to had daily the will that particularly and I and there, got of spot locations. be attainable. Europe, the to have the globally. delivered inventory hurt, U.S. the for major that, we're The and see quarter, an that plan course there extra their are to we monitoring second to China on safety were that get import in now, carefully. we by many, programs, chain in we've supply because and inventory business, retailers And everyday our mostly against where the deliver buffered hold

Jim Marrone

That's Okay. encouraging.

out domestically forward or from and there And going effort options? sourcing so suppliers on other any other reliance the is on reducing countries maybe China foreign and

Walter Johnsen

Sure.

China. So been XX% that suppliers, seven all some XX-years on may past the acquisitions, we have And or were U.S. more primarily in know about reliant at these Asian manufacturers. ago

will would The either plants Europe that imported on a the our because today, couple -- XX% future Western plants we to or the productivity why investments we remaining XX% I coming [breaking] Canada Canada. we're either in of about is or acquisitions also that So is piece from do global of in our or and I U.S. anticipate some in that's (ph) our making and as sales. can that have China. be be less I likely U.S. reliant improvements and today, in identified more that

mix second at So for because quarter, to about of XX% as back-to-school. That's of the the especially rest reliant In import we were the hit, the we're now. for business year. the direct retailers the changes major changing

Jim Marrone

Right.

Okay, thank over expense, the I final year-over-year. of, kind you so for over interest that quarter see color. question, -- doubling One

based higher kind dollar mentioned of of you also the I that's So reflecting think depreciating. a hit U.S. foreign a already. strengthening rates bit -- the currencies and on And

exposure to at exchange to risk maybe exposure? trying get interest swaps hedging derivatives respect I'm or rate with all, any you the So a the and implementing with use of are foreign sense,

Walter Johnsen

that hold are serious, delivered. has we in but inventory a been The we very way. indirect Well,

a risk. currency risk not an and rate So on not there's there's that interest

own basically it. You

in our last Now on interest we the did $XX.X fix of mortgages. rates debt million November

that remainder to So down. is fixed. variable goal piece is the to drive start And and is the it

Jim Marrone

you Right. plan terms? by a do derivatives are how rolling And this? it new going on are Or you down overlay? going Like just over to you to addressing do drive into

Walter Johnsen

any cash the doing it flow, debt I flow not Because we down, have with drive very off. We're pay business. cash What strong mean derivatives. a said I

our particularly months been first back-to-school by flow that pays down have will the at reduction of second for the six The So down in $X cash that comes year debt. half, debt. from pays inventory the collected earnings million end

I that's meant. what So

Jim Marrone

very Well, encouraging then. well that's as

the So thank for my to in you regards questions. color

Walter Johnsen

Jim. Thanks,

Operator

Michael Instructions] [Operator Mork Mork of Capital Management.

Michael Mork

the do Hi, think? or of next should expect all What XX-months XX we $XXX or and problems. or My which the revenue currently $XXX year quarter do assuming this X%. the to Walter. you is year over next X% inflation the type question considering what million XX% up glides XX% to Good rate, down million data like assuming you is X%

Walter Johnsen

personal that some over next an each million looking seeing adding plus that have I million three years acquisition at to least of one Well, closer probably more. period to be doing $XX of $XX for the in will be that To of hope, million goals at us we $XXX growth. from, timeframe, organic

million. And so years, three to add probably are $XXX you do $XXX that you $XXX $XXX were XX% million, on million, for if growth million, you you're

So accomplish that's to think what it. do and trying we I we're can

I and the growth. So growth X%, real of the is your is inflation hope it hopefully, estimate is I X%, at rest of hope

Paul Driscoll

real Well, it's XX% was, stuff because we only Fed plus, the closely but monetary the Yes. inflation [indiscernible] up follow X% about growing or grow here and the X%. now

the inflation baked right in So I now. the think kind of is slowdown cake

Michael Mork

so. That be would I hope terrific.

Paul Driscoll

a Anyway, lot. thanks Okay.

Walter Johnsen

Thanks, Mike.

Operator

Next, Ridgewood we'll hear Investments. from of Sam Namiri

Sam Namiri

Hey, the Walter. All the the stuff. Nice job dealing with issues all in quarter.

Walter Johnsen

Sam. Thank you,

Sam Namiri

kind that kind who others et are coming the now question dealing related inflation, you My tired of to of the seeing out is to you front, with was are [indiscernible] just of chain for And maybe on get the are there and M&A maybe table cetera? to out issues, of guys? business looking supply

Walter Johnsen

Well.

constantly a substantial that companies XX-years business or companies got are talking in you them. from meeting and know, our As talking database to related to to of And over we're them. we've pretty

to pay which and that think in present we there team think prices may answer themselves. markets be actively I it the up then us. ones, hope is would -- we're is time in fair out looking I just opportunities But good we I and that a with -- us. to And some reach this we bad good year some might

Sam Namiri

you don't you the want their something maybe as think Like to take well say And is well know, don't end with around and price at And doesn't as or this start opportunistically raising too see inflation. you. take that shopping then as customer that someone well? as on to that too, maybe as to suppliers? much opportunity look do is of also and switch how Thank I advantage share prices else or

Walter Johnsen

in Well, we're some and we of competitive our their correct where out step And and be range customers and far the And we're and our are business. we share. hopefully range the if get of we're gaining competitors some tail by business. competitive to that get sophisticated with costs lose you're going if are going too large, at to of really not we're in that

Sam Namiri

Got it.

you. Thank Okay. Thanks again.

Walter Johnsen

Thank you.

Operator

there turn appears I’ll further it questions presenters additional over And this are to the time. any no closing at call the comments. for back or

Walter Johnsen

forward Well, good-bye. look at if of and you the there call further this with questions, then the complete. quarter. We to are Thank no speaking you is end third

Operator

does Thank your you That conclude today's for participation. all conference.

You now may disconnect.

Acme United (ACU) 22 Jul 222022 Q2 Earnings call transcript