Q3 2022 Acme United Corp Earnings Call

Center, please standby and operator will assist you in a moment.

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Chorus call what company's conference call are you looking for.

I have your first and last name please.

Yeah.

And your company.

Okay. The call's being recorded I'll join you in listen only mode and that's in part due to oil.

Oil and gas.

In part it's the weakness of their currency so they've got price increases that are.

Then the passing through with our products.

Better.

Hi, Ann.

And it's a very uncomfortable because the the people there are under extreme pressure, it's not an easy environment in Europe .

We've seen that resales in the last quarter were.

Slightly up so it hasn't fallen off a cliff, but it's been.

A very tough environment.

In Europe .

Right Yeah.

It would seem.

Seem that way.

Yeah.

The the the cost decrease estimated for 23 of the $5 million.

Is is that independent.

Of the 4 million for a supply chain cost I mean I would.

Yes, yes, yes.

The boat you they're additive.

On the right point for work.

Just expenses that we ran through and we're done with that.

The cost savings or an additional $5 million.

Right and it would seem like a of the four four of supply chain.

You'd get back.

As things normalize and assuming demand doesn't fall off the cliff.

You you get back a reasonable percentage of that.

The other side if you will.

Wherever that is.

Well that's accurately in the overall environment, there's a lot of inflation. So we're not counting on that.

Our numbers, although it's true that the cost of some containers that we've got an hour.

Well under 10000, some of them are as low as four.

So [noise].

You would pick up some savings there, but there's still inflation.

Throughout.

Asia.

Europe and the U S. So it's really a combination of a lot of cost pressures, but in this case the freight will be working in our favor we hope.

Right.

And then on your slide eight.

The I was intrigued by the the the bullet point about product cost decreases opening up.

New business opportunities in medical and defense.

Is that solely because of your you got the unit costs went down or.

What what are you trying to say there.

And that's what well <expletive> I don't know exactly what slide you're looking at because we don't have any slides in this presentation.

But in general the.

Well I think you were referring to is in the med <unk> business.

Where we're making alcohol wipes and alcohol prep pads.

We are.

Driving the cost down to be absolutely competitive and compelling in the world market. So that when we get Mil military medical business.

It's not just because we're a U S made.

But because we're the lowest cost producer and some of the equipment that we're putting in there.

A lot of automation, which helps us to drive those costs down.

Great. Okay. Thank you.

Thank you.

The next question will come from Peter Sidoti with Sidoti <unk> Company. Please go ahead.

Good afternoon gentlemen.

Hello, Peter.

Just a quick question about cash flow from operations it looks like you've been using cash this year for the first nine months.

Assume that you know they start turning cash flow positive this.

This year and into next year can you give me a handle on just.

You know what you expect to spend in capital spending and what your working capital to be next year needs.

Yeah, Paul why don't you handle that one.

Well most of the cash flow from operations is going has been going towards inventory.

And we're expecting to not grow inventory and factory days inventory. So we're gonna generate.

Cash flow from.

From reducing inventory capital expenditure.

She has been averaging around $5 million a year that will will probably continue at a similar pace.

The big change going forward.

To be is inventory, whereas it's been a negative drain it it'll be you know hopefully somewhat positive going forward.

And as you generate that cash how would you put it to use.

Well I can tell you is.

Is paying down debt.

We'll pay down of debt.

Yeah.

And then getting Corrado.

The next acquisition.

Okay. Thank you very much.

Thanks Peter.

Again, if you have a question. Please press Star then one our next question will come from Jeffrey Matthews with Ram Partners. Please go ahead.

Hi, Walter Hi, Jeff.

You were one of the first C. He owes to highlight the disruption in the.

The U S supply chain, while the global supply chain really and that was several calls ago, where do you see things now.

In general versus the worst of it and versus where you'd like it to be.

Well the wildcard of course.

For people for companies that import from China.

China in particular is that the vast majority of their population.

That's not been vaccinated with western vaccines. So it's there.

The the fear is that it could possibly spread again as the weather gets cold in a serious way.

Right now China is still continuing to be I'm cautious and its still pretty difficult to come into China.

For normal businessmen, so that the Chinese are very cautious about that and rightly so because of the exposure that the population has.

If they get.

Seriously.

Sick from Covid well then.

All the inventory that we have right now will come in very handy I'm not anticipating that I think the availability of western vaccines, while maybe.

Not being used right now it would certainly be available for China to popular to vaccinate population.

That's the biggest risk I see in in supply chain right now if they stay healthy.

Factories produce the as far as.

The shipping Ah, there's now an overcapacity of container ships they've been building for the last two years and there's more of those containers themselves or there's many more of them.

Many are still in.

Wrong places, but the price to move them across the motion has dropped substantially and then the west coast ports. The the ports like L. A and long beach are pretty much back to normal east coast still have some congestion, but vastly different than six months from now.

Six months ago.

Right.

Great Thanks, and good luck.

Thank you.

This concludes our question and answer session I would like to turn the conference back over to Mr. Walter Johnson for any closing remarks. Please go ahead Sir.

I'd like to thank you for joining the call today, just as an aside the previous and former conference coordinator. The organization that we have used for a number of years.

We did not have a scheduled.

And so we're fired them and I'm very happy that we've now got a competent conference coordinator and we look forward to speaking to you again at.

At the end of the fourth quarter and I also look forward to seeing some of you at the LD Micro conference next week. Thank you for joining us and goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect bye.

Bye bye.

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