ACU - Earnings call 4 2023 | Acme United Corporation

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Operator

Good day, and welcome to the Acme United Corporation Fourth Quarter 2023 earnings. 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 2023 Earnings Conference Call for Acme United Corporation. C. Walter am I CEO. and Chairman Johnsen, With me will Financial who our Paul read a Driscoll, first Chief safe Officer, is harbor statement. Paul?

Paul Driscoll

this company's expectations, harbor provisions including, Forward-looking related are made capital in conference the the without resources including, statements safe to challenging limitation, a Investors are and to by other the and inflation Private statements plans, macroeconomic and intentions uncertainties, forward-looking objectives, result characterized cautioned of involve as arising a pursuant such strategies, adequacy XXXX. of call, among that of statements continued those Securities Act Litigation and global rates. Reform environment high of others, risks high interest

chain In may and we disruptions addition, experienced experience we supply disruptions, in have these the future.

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

Walter Johnsen

Paul. Thank million year. margins market. XXXX craft X% Gross million, per in to Westcott $XXX.X XXXX. Highlights XXXX. Earnings Net you, was new included ceramic from XXXX. XXXX of versus Sales decrease million last in in our $X.XX to and kits, distribution $X.X income compared XX.X% a of were cutters were XX.X% new share of compared retail first mass our in the aid were $X.X $X.XX expansion planograms

market. year-end $XX net from We bankruptcy the providing at customers sold reduction We margins auction decreased gross a million. [ expenses for debt ] SG&A in resulted $XX.X and Canadian million, Tree hunting at plans. increased approximately in business new million. XXXX Solutions improvements $X.X million for Our as savings million. productivity we $X productivity successfully and in $XX to our acquired The annual of fishing Hawk implemented We our

we entered optimistic. XXXX, As are we

one We retailer. major our new aid line States the in of Magic United have in Spill the a mass and kits market expanded distribution drug of largest cleanup chains first won to

incremental significant planograms the category DMT the in innovative in sharpeners distribution We craft and market. kitchen with have new

Europe, Our facilities to business. Canadian our its and the requisition first growth SafetyHub In company new and we continue from our for products, Tree aid acquisition. in of system refills Westcott first The generation and was for people. expanding business design. developing secure is new and is next awarded organic digital We're investing new the recently Hawk aid patents

expand We uses. and to have our cutters their broadened industrial safety ceramic personal

are and United facility developing Med-Nap and the We wipes alcohol in for production and new Canada. cleaners at States lens antiseptic sale for our

North and We in production Carolina are upgrading our facilities Magic Ana, California. at Smyrna, Georgia Spill and and Rocky Mount, Santa in distribution

growth years Our plans additional requires over the X next space.

our Brooksville, in are in believe our have in first We Florida. expanding facility Laval doubling aid and acquisitions make accretive. to accretive -- business the Vancouver, these case, our expanding these expansions Canada, we In first Washington, Med-Nap each production aid we plant

We continue heads executives, new sales logistics has specialists, to distribution the build entire managers, shift talented supervisors. organization. and company plant The

have hiring now are from call to The turn from is we Paul the had. I and within best the will We promoting team ever without.

Paul Driscoll

quarter to decreased compared excluding products Net and compared sales the XX% for and Sales Average declined in was $XX for constant to of aid X% were XX.X% sales gross The well to in approximately same expenses due of as year higher impacted were million of as compared in $XX the million by sales average QX to by due sales periods million to for for $XX by X, margin million XX.X% The gain the XX% products the for Interest for million the sales office decrease were of million. fourth XX% strong. Net costs. SG&A $XX.X impact million XXXX quarter. Holdings transportation The $XX.X $XX were to compared for XXXX. partially was million, declined million. for compared decrease mainly recorded the $XXX in Camillus X% fourth declined XXXX, X%, for XX, decrease year year The for in of inbound The local first approximately higher XX% in the XXXX. million and of line quarter recession quarter sold sales income. include for XXXX. net for customer with compared inventory the of debt both mainly of tax currency of to due XX% gross Camillus of growth segment first product for other quarter $X initiatives XX, productivity of quarter XXXX. XXXX or to in of the XXXX. Sales in in of XXXX aid XXXX, the Sales a $XX.X the months X% product offset first excluding fourth November year $XX.X was the the the in fourth or $XXX,XXX on $XXX,XXX Canada XXXX fishing compared the XX.X% the $X.X the improvement lower or to for that sales XXXX million reductions XXXX ended Europe GSM expense XXXX. [indiscernible] million net lower from debt year was ended XXXX, period December went for of The gain the were in of XX $X.X included million. rates. Interest $XXX the the XX% lines were expenses for sale sold to U.S. X, million. economic were compared in XX.X% fourth Acme's November quarter in sales local XXXX. in ended currency fourth gross quarter of sales expense and Canada. in of for half fourth to in sales, of resulted was school year margin XXXX. the XXXX, a the of a for X% products. interest in was increased to $XX.X due $XX.X or 'XX. of December in quarter XXXX the on in year the were was included SG&A million December in to margin This hunting the was of Net XX. began Sales

mortgage million. to the bank $X.XX gain and year, rate excluding the sale, weighted a average for year to $X Net December Cuda lines ended $XX.X debt on from was Including million at cash or for including net the to the average However, net less fixed gain, X.X% the the period per $XX the per XXXX. Net of XX, last million income Today, interest XX, share for the product being due or is Camillus income Cuda $X.X diluted the million rate X% XXXX gain Camillus XX, on in $XX.X and XXXX, compared million. The our million XXXX, -- December went share on the $X.XX X.X% fourth same loss to XXXX. the X.X%. sale, company's excluding December interest in income was was quarter, $XX or XXXX. income, $XXX,XXX diluted and $X.XX per of on sale the million of compared to net the compared share was approximately was $X.X diluted

reduction million $X including and generated $X inventory in company free the period, in XX-month the dividends cash flow, an million $XX million. of paid During

$XX to the product the of the million used from Additionally, net Cuda of Camillus debt. lines sale proceeds and was reduce

Walter Johnsen

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

Operator

Research. with Singular first from line of the Our question comes Marrone Jim Instructions] [Operator

Jim Marrone

smaller with deals you looking to question the lines? business forward. you what Or looking My continue going product on Are anticipate selling get thoughts looking are acquisitions? you by to further at your at making going that. Just

Walter Johnsen

very And our from acquisitions. at plans over million And doing in my have we next that growth organic growth. business we well our Jim, the years, The looking Camillus of mind, XXXx somewhere for as clearly. by we're of that around investment. see Well, focusing our growth X as line selling $XXX I'm

the that. shareholders all from benefited Now

Similarly on why where aid business behind like a we're the an outside time new It's in is and that, business example year, major As need did our this a coming of as working the if lending we're we'll customers. we we lot and the business there we're But of things line doing of sale, first an bigger get because from we're we take gaining Spill need going in because has and big expanding acquisition that's Med-Nap, we expansions use building. top a Magic, we're facilities area, and we're it. at in an for boat. sitting That's heck growing we ourselves, opportunistic it. Canada. products

an So growth are shrinking business no, we is aggressive not the plan.

Jim Marrone

Okay.

adding product forward? Is to at focus safe it more expansion looking the geographical as to that then So you're opposed is going that say lines.

Walter Johnsen

or we're the well safety X No. looking into step that competitors at acquiring the the area, and markets. No. In companies There's integrating aid space away the as are half go products vertically that ways. first as aid first in

So integration. it's vertical and as as a mostly expansion, the horizontal well U.S. Canada in

Operator

line Corporation. question with Management next the comes from Capital Our Call Tim of The

Timothy Call

-- challenges. sales Cuda But had years through post easier. are and getting congratulations Well, pandemic, much Camillus back. hopefully, with a growth. year you we're negative holding many and of And upcoming the

being replenishment sales being care, with sold we sales part the of overall the you've care Should accelerate them. largest so could area health and of health company fastest-growing now And possibly Acme? think growth the in

Walter Johnsen

Cuda and The have little balance first business years. good really, on we question. the mostly The got price now strong and with first perceptive stronger a in a pretty focus in better maybe But of got is substantially aid COVID. a Camillus the sale that's were Cuda period the organic Camillus after sheet couple bit what in business. working aid think of I flat, and decline we've than was And to much past the because very we Tim, area. be acquisitions, a because been about growth the

I it because So in years. X the have back would holding for it us your flat top line, was guess question

area The other planograms. of the Westcott has gained in piece in that business cutting and year this new is

pretty over above growth And has so positive we're normally there about it and feeling grown. what

And for good quarter. looking are orders the frankly, I'm yes, right in So first now meaningful growth.

Timothy Call

first so inventory in of 'XX, retailers necessarily? so And and the wholesalers don't cut as sales half XXXX you that see softer repeating levels,

Walter Johnsen

believe we're beyond We that. No.

Timothy Call

might margins in have we margins. gross again, at profit care higher even when replenishment higher to and have margins sales health care and then margins, seems look And health

sales replenishment and sales mix As margin overall toward corporate overall skews sales, health expansion? care expect towards do your we faster growth and

Walter Johnsen

also the we've quarter. fourth that But finished a Well, on just the let on inflationary in but uncertainty say And certainly, expansion expansion, There's we have means the from world. of in the not in sort side. we had margin that's the on a some headwind past, like global generally growth me and cost, more the pressure, and of that. margin lot levels

that, of example, some margins And Some first than the fastest-growing part have higher kits on of refills do business. for is other the of the products. aid that our

acquisitions As the we we're refills. look of expanding also base make with to competitors,

margin improvement. So that helps on

So organic we and that's And the do looking going probably it, we're than sure, that's think, as growth on over business the much a better, first the rest normally, margins, wouldn't at and the aid of faster there pickup. is emphasis I fourth more I quarter. the if for forward. model then pulling growth And

Timothy Call

So organic acquisitions. and margins, accretive interest possibility probably much strong sales expense growth, of lower

Walter Johnsen

Yes.

Timothy Call

it getting us hard all in point. for wonderful. Well, this sounds you work Thank your to

Walter Johnsen

people and for of you supporting focus the background. for a because thank in thank growing call, the there's and on -- we you for us Tim, on support lot your Well, everybody

Operator

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

Richard Dearnley

year's What's the Your best comment headcount? versus last year-end is about interesting. at ever headcount

Walter Johnsen

try Well, much stronger Mount will what than to today. Rocky And people know Paul we numbers. leadership around been. it's somewhere ever But have I answer is is the that our XXX

Ana very Our off some we've I'm are that's helping in at strong Med-Nap, We're And excelling. us Med-Nap in our leadership us at expand some area. the people Santa which at both of in had We've IT cheering plants about. there. and join and people new strengthening also started accounting

the making a kinds of So people really are those difference. that are

Richard Dearnley

end the feel Right. you where have 'XX? of headcount was the Do what a -- Right. at for

Paul Driscoll

XXXX, you Or mean?

Richard Dearnley

XXXX. No,

Paul Driscoll

XXX. was it XXXX,

Walter Johnsen

we're and about think now right XXX we're at what XXX, like -- we're something at that. about I

Paul Driscoll

Yes.

Richard Dearnley

That's close enough.

$X.X Now million [ on but million Cuda Where's million math proceeds wrong? were sale of net $XX.X taxes $XX.X of $X.X million, Camillus go, proceeds the and was my said the that the $XX.X go and you -- ]. the is suggests if were other where million, the

Paul Driscoll

a year there's received -- we taxes million million. taxes receive $X.X that The were But we'll that $X at for end X. holdback the of of November haven't this

Richard Dearnley

All million still But another right. would there $X.X missing be

Paul Driscoll

-- sorry, so. No, again? math I that But what what don't was think

Richard Dearnley

$XX.X the well, was Could sale that be million -- the tax...

Paul Driscoll

Yes, when associated this with now. expenses we had

Richard Dearnley

Okay.

then and fourth that. okay, significantly leave And to sales for that Aid, want year. and different. -- for between down forma break quarter you So would pro But mix might it's 'XX as righty. the you and First Westcott the if account the All the

Paul Driscoll

the aid asking you business the percentage was... Are what of first

Richard Dearnley

the first Yes, -- mix sales -- X aid yes, pieces. between the mix

Paul Driscoll

was maybe. year. I'm It last XX% The XX% XX% the fourth for it I year. would not It's sure like would be think quarter,

Richard Dearnley

without And can just Camillus, adjust quarter math X Okay. in for Cuda the and fourth we the and. month

Paul Driscoll

Yes. [indiscernible], right.

Richard Dearnley

Right. The bump that quarter quarter third count the a count year -- share is fourth the because closed share the you in high the Is at fully to diluted? from

Paul Driscoll

Absolutely. It's price. the stock

Richard Dearnley

the -- in you that then generally. started mentioned this And October, had Yes. sales strong

fourth the quarter off. And that looks Am tailed so reading it I correctly? like

Walter Johnsen

But a softer mean, the an ocean. sales And December. Well, in guess in I sold waves there's we and company. of I X% were November the little

strong. and January February So really

Richard Dearnley

Yes. they to the as were should advanced more would down any Do over-inventory folks be feel back-to-school situation into "normal"? And expecting do got in you you said like be feel things some back-to-school 'XX. have it seem have you a given

Walter Johnsen

experienced. expecting good inventory they I orders we're reduction a with there inventory somebody But as And in out far else still have there that if are solid. a as know the coming And are reduction, customers problem. then programs, Yes. are don't what has back-to-school.

Operator

comes [Operator with question Instructions] the Ridgewood Our of next Sam Namiri Investments. from line

Sam Namiri

free I with question $XX -- cash free flow press year. cash the of reduction. generation. you Great a flow the that. I $X got It the was had million million release, about on like

from So I flow make Is sure that operations. right? wanted to was cash that just

Paul Driscoll

flow No. It's cash flow. It's capital free the less cash from operations expenditures.

Sam Namiri

doesn't the that But include Okay. Cuda stale?

Paul Driscoll

it No, does not.

Sam Namiri

Okay.

we I mean, question going of that. pretty cash then -- spending how Okay. the you're are guess on -- had about you you're plans, well sense that CapEx flows? you was, so the spend that's to other And much can see Do And of on as so CapEx and some so timing expansion solid. have to then that a I with going the I think

Walter Johnsen

spending Yes. depreciation We'll million. like on is about $X somewhere our be CapEx. $X.X amortization this million year And and

Paul Driscoll

$X million.

Sam Namiri

last ]? on did [ CapEx much How spend you for 'XX year

Walter Johnsen

million. It's about $X.X

is this for I just think memory...

Paul Driscoll

$X.X million. .

Walter Johnsen

million. $X.X

Sam Namiri

Okay.

So not really much more than normal.

Walter Johnsen

spending. impactful No, but it's

it's you example, For it. Tree acquisition good bringing no Hawk to to problem. a do Canada, place in is I and of business, lot But there's a that it. got mean put

Sam Namiri

I get it.

I $X to I stays assume and get million free like the million ]... inventory, to million won't million. because if $XX on $XX of back some So get $XX I then seem reduction guys $XXX cash mean out million everything actual And like the nice business. minus assuming of have I I even flat, [ flow you like which

Paul Driscoll

down is drive in thing the going we No, inventory the to XXXX. we're way did not

growth. to going grow on So our inventory sales is based

you're the So going not go that -- to is going get impact to direction. other

Sam Namiri

it. Got

growth from impact Okay. But demand then should seeing of have the you're well. as you

Paul Driscoll

Yes.

Sam Namiri

a bit. your had then debt quite I reduced was And another you've Okay. question

make to Okay. in debt If finance going to had an the you you're past? use acquisition, what you I assume

Paul Driscoll

Yes.

Sam Namiri

from as then coming is in like of are can expanding -- you Or again, of winning there give And competition? guess, are growth, your like any in? -- Like beating you, you the take, terms give like color Okay. to competition. that can Are markets that? market some the I kind maybe against is you color it

Walter Johnsen

so that well, is, growth one cutting sluggish and to people you the it's them different that's the but probably open a area, using because for and first Westcott it forth. continuing take let's Well, would boxes are think, crafts and

market share gained We there. have

much some competitor. new we've my had tools expanding cutting looking competitor before. many, the And retailer of But It's in a there, customer at store, a but into the estimate. a that products. of at that going the replacement never at with we hobby it's had this market X% And best a major a in a before mass not a from year. to for case growth greater So Westcott of many replacement it's again Westcott are we're is maybe products. market overall X% it's In

spills then Magic, in into sick, at cleaners. is a a competitor. gaining. business work, case And dollar gaining -- know a where then new use, but We're another gaining competitor. multimillion this at only seeing new gaining competitor, where out against expansion floors And would don't industrial which they that I exist we're for a quite in piece that be restaurants know another and first chain whether cleanup. of think I is that gaining we winning pushing the something one. on whites In chain. didn't but it's new just an that a a Spill I'm of sure aid. Magic growing a Westcott retailer this it's we're aid, We're so. So not I faster gaining first Spill going the to get a converted we're At grocery growth of they we're first a gained also shelf for drug expansion. lens large aid, more market case competitor, of expanding against bit the chain. and we're where new a you pushed business it's United competitor, States, anybody space And And done probably dedicated we not also foodservice, than In it which X that dollar this Again, hardware -- we've their multimillion but business out that we're or believe major from large year, don't example, new year. use

the became be new hundred several items thousand in a first in in was aid we've products And new aid we're dollars Westcott Europe, first against that gained that would our use. I yesterday. customers existing area, of think it new In new to Probably just there. I business a aware introducing the really competitor that's a category.

of that's replaced then DMT, we've a and a large organic in we're dollar how new of multimillion a of And piece sort the was doing at retailer Sam. There tools business. knives, growth. So for area that's at sharpening flavor that, kitchen

win. a competitive was there So

that's that of sort wins this So why year pretty seeing coming good are back. we're some with

Sam Namiri

And you'd an debt? to much a terms debt of your of how to for room you about think sense in capacity just do I acquisition? how going wanted with level And comfortable what then be -- get for

Walter Johnsen

of lot a right now. have we Well, capacity

were at of we know, like you now, $XX -- net in As million at debt? are ] we Paul, where [ and December we're debt XXXX, $XX in million in

Paul Driscoll

Yes. Right.

Walter Johnsen

got I right we've capacity so generating we're Yes. mean, $XX $XX excess now. flow. of and million, million cash

So the kinds acquisitions channels grow distribution our them. mix leverage where at can acquisitions and product are of tuck-in our we're looking we to

So we're Is the of where helpful? probably in not a That's not that looking what's transformative adding for got I've debt. deal cards. some tremendous amount

Sam Namiri

outlook Yes, have make is I sure, know, a helpful. Yes. what with is I'm like, don't that's sense -- know I'm I don't part I it's you think actually of don't buyback place? do looking also I buyback your have in to guess as well? Or does small, -- not what increase thinking I is you it you but... know do, if

Walter Johnsen

Yes.

take because we deal because purchase price -- then it that. of some we're would you've buyback We of would XXX,XXX we're shares, over for find available because be options have and may company. I'm if in the very going, we number with that right thinking may And that where could company some good with right we do now got strike could for But we the do block a a the offsetting opportunistically, that's think shares. We well, that. the not for be place advantageous we a and

Sam Namiri

Got it.

X expect, call, Okay. you of is revenue. of million, in $XXX organic the said mentioned what what, years you you both $XXX million the and... And on

Walter Johnsen

Hold That's my I'm to not it Walter. expecting. objective.

Sam Namiri

Okay.

Okay. objective mix I from the versus growth? you the there, organic would what positive is guess say of

Walter Johnsen

Yes.

at were we XXX X% So -- at finished just We're ] and company. [ of the for round less sold we the numbers, ]. we say, we XXX year -- [

compounding we're XXX and say of -- [ ]. But a let's XX% ], [ XXX we So million XXX XXX buy X [ ], that's $XX in that's remember we [ In let's companies. ], year. years, and that. some There's grow

I So that's how can it happen. would that see happening.

Operator

Your from question next Dearnley. a question Richard follow-up is

Richard Dearnley

that quarter what rate tax the -- really -- fourth minimal in getting I Paul, capital the looks why like was the so, And right? am gain was if the that?

Paul Driscoll

was the that in The you... fourth tax XX%, is rate what quarter

Richard Dearnley

the... Well, if

Paul Driscoll

on the the the the the is -- gains But quarter The is capital gain XX%. in ordinary was same rate. rate the think as I rate sale the tax fourth

Richard Dearnley

the had gain, million there -- was suggesting the capital on million But the ] the $X.X tax no show basically which the $X well, $X.X the rest operating or rate. is -- or that million tax Right. you [ something pretax, about

Paul Driscoll

the year the tax the Well, genomic it's just full annual It's and the effective we not Dick. we during rate. Right. tax use rate, taxes that year, estimate

in fourth up we the true based quarter, So the actual taxes on the pretax.

differences the some quarter. So fourth there's always in

Richard Dearnley

I That's Okay. what guess.

Operator

Our next with Patterson question comes from Talanta the line of Group. Investment Jake

Jake Patterson

said and of I the was sound that It's hunting million those you $XX for of sold. revenue company does right? $XX like lines, just X% fishing curious, million, in

Paul Driscoll

Yes. Right.

Jake Patterson

-- so little was probably? you or... what 'XX, for that that is bit a then that versus And down does flat said Or 'XX that's

Paul Driscoll

a was think I down bit. little it

I much [indiscernible] been by think There have too were it million. XXXX, XXXX, $XX region. $XX sales. was In million in it would

Jake Patterson

don't not Got there's I reduction SG&A expect assume... to And from you going Okay. that would any you. be like

Walter Johnsen

There Jake. SG&A to you severance We Sure. saying, was his have had generally been arithmetic Dick as must Yes, was was there ourselves and can other expenses. rightsize doing imagine. reduction. when there Sure, well,

Jake Patterson

Do onetime in number back expenses Maybe can we out. for you quarter? Yes. have the fourth maybe the

Walter Johnsen

are Paul? those Well, just --

Paul Driscoll

you can up and work from a come sold with number. backwards You XX.X%,

Jake Patterson

Okay.

expecting to stay going you're So like $XX 'XX? SG&A steady forward this I that probably in going I at, guess -- don't know, million looking year,

Paul Driscoll

to and grow customers increase But variable a of -- commissions the we and variable cost, freight little so lot a as the bit. will Well, there's selling.

will with some increases so got wage and then -- go up flat the on. cost SG&A stay savings a increases Coda. fairly we will and Camillus of And will and that So sales But those increase. on and rest the

Operator

questions to in the further I'd hand no closing for the back queue. like are management call remarks. to There

Walter Johnsen

look speaking with after for Well, thank quarter. you to We you Goodbye. very us. much first joining forward the

Operator

conclude Ladies wonderful today's Thank and day. time, this your lines at your you and does may for participation, have teleconference. a disconnect gentlemen, you this

Acme United (ACU) 1 Mar 242023 Q4 Earnings call transcript