Earnings call transcript Q4 2022

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Operator

Good day and welcome to the Acme United Fourth Quarter 2022 Conference Call.

At this time, I'd like to turn the call over to Walter Johnsen, Chairman and CEO. Please, go ahead, sir.

Walter Johnsen

Good morning. Welcome to the fourth quarter and year-end 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 Reform XXXX. expectations, Harbor provisions Forward-looking related Act are made capital of in conference the the without resources including, statements Safe to limitation, and to other the and Private plans, intentions, objectives, of pursuant strategies, adequacy of call, statements Securities Litigation

involve of risks arising Investors challenging and including, forward-looking are cautioned characterized those result that among inflation interest environment, as macroeconomic statements a high and a such global others, continued rates. uncertainties, by high

In addition, in we may resulted chain future. have and supply COVID-XX experience disruptions, the including from we experienced pandemic those supply disruptions chain the

periodic our We Exchange Securities subject are risks earnings current and also additional with our Commission filings and to in in uncertainties release. the described as

Walter Johnsen

rising Acme Thank encountered wage container at and environment rapidly the a in chain difficult in Ukraine; We addressed Europe; Asia, macroeconomic and workers. issues issues, continually faced sales increasing; of the product US of net costs This supply increase had in $XXX.X XXXX, ports you, XXth XXXX. Paul. war Despite XXXX the year of in rates; expenses; United increasing consecutive sales. interest was of million we compared in and million X%. these an record to inflation; $XXX.X shortages

$X.XX did million year. million of per we extra compared to in which container million, expenses Our and net demurrage in versus for pass income had and $X.XX XXXX was XXXX earnings impacted Net by income drayage the of $X we over costs, increased costs. to $XX.X last In share $X was particular fees customers. port not

believe It timely fair what not supported for planned, improved we our we emerged period our prices. customers difficult performance deliveries with While a positioned we and had performance. -- financial we at was was

companies. broadened the cutting knives XXXX, we two new business, assets and and tools, purchased first our products, expanded aid the hunting medical of of distribution Westcott in introduce During Camillus

first more aid our Acme which account lines, for broadened and now of XX% revenues. We than product medical United's

in States Med-Nap industrial into retail and distribution XXXX United BZK the and integrated in the expanded refills. the markets During our we line of wipes Prep-pads and

Safety In and we X We Made. it XXXX, in into entering acquired personalized products. Kits safety acquired Made the June medical September and for Ready market also merged XXXX Safety

Our expanded industrial are refills our These during or aid the year. used as of used are team components in added are that distribution and line kits for of expired. the the must first be items which kits

an of technology annuity We introduced generation refills providing option for first were Sales refills a cabinets of new a to replenishment business. of of our our aid easier XXXX portion customers. fast-growing in our in

performed difficult well XXXX retail despite Westcott in Our environment. a Group very

of globally recognized continued and scissors the world's We as largest scissors the brand. our most arguably became supplier Westcott

packages ceramic hardware line solid well the and new for cutters Westcott XXXX. The and of as the a expanded in open was industrial boxes distribution use has product in leverage and high introduce market We Camillus as craft and knife XXXX to category hunting sensors gained mass contributor new markets. for

the in -- environment. a tool has its product fishing from grown knife the Cuda and fishing The for rugged roots best-in-class fishing to tool Cuda developed tools market and freshwater offshore family

which customers as well our US expanded medical in of lines through many aid industrial We as our distributors business retailers. First in global major Central, we Canada, added first Canada In XXXX. introduced and and Aid acquired successfully product we to

acquired Canada. line space our leased first [ph] end to Europe, office capacity At and scissors instruments to product production products Eumex we year the In writing aid we double expand our of additional in offering.

for have XXXX. new and medical listings aid first secured and in share market gain to continue We products

warehouse facilities, improved cost $X in to efficiency in savings million production costs over transportation XXXX. lower are During save XXXX. to reductions These reduced XXXX, and are and in due Acme initiated that SG&A United in spending anticipated than our

our of reduced we and risk disruptions the lowering are now been supply believe has inventory. We chain

is to During goal fund reduce by debt XXXX, potential use to flow reduce cash our inventory and and to acquisitions. resulting the $X million

not we are are time guidance are providing with -- over XXXX, for at XXXX improved growth we profitability. forecasting much While this we the level focusing

I to will now call Driscoll. turn the Paul

Paul Driscoll

million Acme's year net in of decrease X% for million in to compared or $XXX XX, XXXX, ended quarter sales or XXXX, currency. an compared in Sales December the were X% for fourth $XX.X million were the currency. a X% XXXX in constant $XX.X million, $XXX X% constant increase to of

was due for due office year in but consumer in X% currency segment X% was December new periods some the XX. the reduced December XX% of increase decreased ended to sales the knives when mainly the decreased sales due for their the in XXst. there year the same mainly in unusually in to in Net in also reductions for driven for Net quarter sales The the period The due quarter. reducing year first Canada currency decline and quarter The ended to increased medical sales large products. customers local fishing channel. aid XX% both were inventory sales the sales XX% in XXXX US high for increased fourth Customer and fourth inventory. the demand products primarily tools was affected comparison the pandemic. by local the of to these customers for for quarter growth increased Europe to quarter for Net in the and

freight Europe gross periods the margin XX.X% to was XX, XXXX the XX.X% Gross contributing quarter margin XX.X% in constant in Sales to were ended currency. purchase transportation Also due weaker year inventory ended the and for related of imported US for was for dollars. of both XXXX XXXX. compared currencies in goods. year XX, compared XXXX. decline costs to the XXXX, most local The were and fourth was higher December XX% primarily December in The we decline where in to Canada ocean in our in

with XX.X% of sales for Interest same expense compared in SG&A $XX for XXXX. with of expenses fourth million December ended XX.X% million of quarter or XXXX. SG&A the were or for sales of XXXX the $XX quarter XXXX XXXX XXXX. sales $XX XX.X% of of quarter expenses the period were XX, XX% year fourth million or $XXX,XXX the compared to in million fourth $XX.X compared for the of sales $XXX,XXX was or of

debt for for expense XXXX. XX compared X% year to compared rate was higher $XXX,XXX XXXX Interest to the ended periods due for of to rates. XXXX. interest same December And overall was The both was $X.X our higher period interest X% million, for average and the XXXX in increase

was ended the same for interest in to XXXX December overall X% rate XXXX. Our X.X% average compared three for the period months XX,

The million million ended XXXX minus net diluted share net XXXX share $X.XX $X.XX the December compared was same of $X.X fourth loss the of for for period a $X the diluted XXXX. per XX, per income or quarter share. of diluted year was or Net $XXX,XXX for to or $X.XX income per

income million, costs diluted results and of for the $X.XX chain supply Excluding the ended share the interest impact impacted XX, per million December XXXX. year PPP was the exceptional loan expense. XXXX and XX-month higher $X.X by $XX.X three of were or net forgiveness The

$XX on million The compared was XX, million, December company's less XXXX cash to XXXX. on debt December XX, $XX

and during acquisition the in approximately continued costs. positioned related to increased higher for $X a COVID-XX. ended prepare increase impact the approximately product for million $X assets was in result During also to million supply of be million company growth to the $XX XX, paid XXXX by We chain the December paid XX-month inventory dividends. the the Made The to of offset of inventory year of period and Safety disruptions

the to to of $X.X Our the reduce by compared million We year-end XXXX. inventory of in decreased XXXX. third another quarter end million $X inventory plan

Walter Johnsen

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

Operator

Our line Marrone of first Please Research. with the from question Instructions] comes Jim question. with your [Operator you. Singular proceed Thank

Jim Marrone

to my Yes. quarter question Thank is fourth regards in you for My taking the results. call.

the US given on constraints. with loss supply in with line softness Canadian bottom trying there's regards and sales I'm line the top schools, that understand of a But why I to offices side result the and reconcile factories. regards as a to just to reopening Now

with to be some can share with why you that decrease just markets Thanks. two those the And would so to sales in light if great. regards regards

Walter Johnsen

Yes. question. I'm Target, a inventory Amazon you've And inventory. a very it's And all significant sure Walmart, reduction in a of doing that very been Thank our broad way. been of have customers of retail about Several reducing read major thing. good you. brushed That's kind

At the continued same time has the be that they have been consumer reducing inventory, spending. to

their to be So of to We're point pretty the the they're and be and reasonably shortly. fairly continue down inventory, much driving some at that strong behind completed. that actual us estimating turns will so be products

Jim Marrone

Thank you. Great. Okay.

in profitability us But you I to it's going the that to as regards return some you're giving has guidance And bit. second kind give XXXX, not to and we just could line quarter what expect so some regards idea know can would can given with to you with expectations? give idea but bottom side well I us the of first imagine expectations quarter. top be line as if supply for abated a a

Walter Johnsen

solid the on balance. getting leave in expecting Well, that second. more at I their performance are that I'd a I it quarter what retail in inventories market a lot and that. the the does And know Walmart We're And depend reported does. in first think has

implemented been savings Clearly, implemented. being cost the are and have

gone levels. have costs historic container the and -- So to near

really I But control topline expect that's favor. it solid can't the So, reducing quarters. depends that's on all two retailers because But our their area that in on an I would inventory. the

Jim Marrone

What regards expect maybe for footprint? And we we product one line just geographical Thank Okay. or of you. last Are activity in with XXXX? expectations to well, your regards acquisitions seeing to could -- expansion any are question.

Walter Johnsen

to this competitors Safety first won't Magic medical aid us looking are time, it's as against place as space. the Probably aid well in at a to what the Made, footprint very Spill and in integrating we be and logical vertically did for area directly first but further us similar be geographical who with

back be if the do It's the at the So, I'd looking probably those at. are areas I'm more something. towards year that of and two we end looking

Jim Marrone

Okay.

you you, that looking And out getting so you kind into are offers or coming of are market? the to are

Walter Johnsen

acquisition our of our almost deals all With self-generated. are strategy,

So, over are years the and the offers stay with contacted them. that we've companies really continually in touch we

from be an much deals. by very, book banker. very more of a we're that's our on put to acting investment come unlikely So, self-generated likely to one It's

Jim Marrone

questions. my taking for you Thank Great.

Operator

you. Thank

with Our of Dearnley from next Richard proceed comes your the with Partners. Please question. question Longport line

Richard Dearnley

first a could percent memory XXXX? morning. on as refresh Good sales in Paul sales what my you were of aid

Paul Driscoll

and XX% approximately XXXX were in They in XX% XXXX.

Richard Dearnley

market that then And footage Canadian Canada Is a that not deal market, great expansion feat. for well? the part US the of for or of is in as square the probably is

Walter Johnsen

is in and expansion market. the Canadian Canada The it's for

multinationals the call be that that operate the growth business, First in only which getting would we're from mentioned similar primarily in US Central factory conference but in and our increasing products not organic products, made through our I course the our also of Canada then Aid taking there. in and like As are business, ship Canada, from would

So, since has them. it's a First done Aid both. Central of combination we've a acquired terrific job And

Richard Dearnley

Great. supply of would into $X cost chain, cost goods. out comes Then Would that that estimate largely correct? saving I of the million guess be

Paul Driscoll

Correct.

Richard Dearnley

Yes. goods $X of cost how just million savings, between that And cost of then might and the SG&A? break down

Paul Driscoll

combination of cost both. goods, XX% XX% a SG&A. It's It's of probably

Richard Dearnley

dollars Great. were you And down SG&A Walter, in notes, 'XX? in your would in in implying the discussion, then, be that

Walter Johnsen

that, be know I'm I inflation. we Dick. What is facing sure, continue to not

pool, the there's spending, I in We're to sure additional, -- not of the I know that that. that. in I'm but answer is, chunk don't sure am also growing. the about So, a about aggregate reduction What the solid over

I... So

Paul Driscoll

SG&A Because growing, is we're well. grow as going to

Richard Dearnley

words Well, the Good. at that's was just saying, -- okay. That's and looking is I -- logical. that hmm why

you. Thank Okay.

Paul Driscoll

you. Thank

Operator

[Operator Instructions] your next proceed the of Thank & Company. Peter with Sidoti comes Our you. question Please line question. Sidoti from with

Peter Sidoti

Good afternoon.

Paul Driscoll

Peter. Hi

Operator

other comments. It there sorry. Mr. back turn Instructions] disconnected looks I'll time. Johnsen any for [Operator final has to seems no by questions at It like Mr. mistake. the this floor I'm Sidoti are

Walter Johnsen

If no in joining sharing you complete. April. there Goodbye. results We first for further are the to Thank quarter questions, XXXX look us. forward is this call

Operator

This you. concludes today's conference. Thank

time. this at you You your may participation. disconnect lines for Thank your

Acme United (ACU) 2 Mar 232022 Q4 Earnings call transcript