Q3 2024 Acme United Corp Earnings Call

Speaker Change: The National Anthem of the National Anthem of the National Anthem.

Speaker Change: Good day and welcome to the 3rd quarter 2024 at me United earnings conference call.

Speaker Change: At this time, I'd like to turn the Cullo over to your host, Walter Johnson, Chairman and CEO. Please go ahead, sir.

Speaker Change: Good morning. Welcome to the third quarter, 2024, earnings confidence call for acne-initid cooperation. I'm Walter C. Jobs and Chairman at CEO. With me is Paul Driscoll. I would be financial officer who will first read a safe armoured statements. Paul.

Paul Driscoll: Board-looking statements in this conference call, including with that limitation.

Paul Driscoll: Statements related to the company's planned strategies, objectives, expectations, intentions and adequacy of capital and other resources are made pursuant to the safe harbor provisions of the private securities litigation reform act of 1995.

Paul Driscoll: and Vesteres are caution that such forward-looking statements.

Paul Driscoll: and Valve Risk and uncertainties including

Paul Driscoll: Among others those are rising as a result of a challenging.

Paul Driscoll: Global Macroat.

Paul Driscoll: Economic Environment Characterized by a continued high inflation in high interest rates. In addition,

Paul Driscoll: We have experienced supply change disruptions and we make experience these disruptions in the future. We are also subject to additional risks and uncertainties as described in our periodic filings with securities and exchange commission and in our current earnings release.

Speaker Change: Thank you, Paul. Act me United reported sales for the third quarter of 2024, the $48.2 million, compared to the $50.4 million in the same period last year, but a decline of 4%.

Speaker Change: Our net income for the quarter was $2.2 million, compared to $2.1 million in the third quarter of 2024, an increase of 3%. Our earnings per share were 54 cents, compared to 58 cents last year.

Speaker Change: O'Neill's for the quarter without the Tudor and Tumos business increased 4%.

Speaker Change: As you may recall, we sold this business in November, 2023, for $19.8 million.

Speaker Change: Revenue for the Nournings.

Speaker Change: of the business of the seasonal, with the largest shipments in the third quarter for the hunting season, how they sell and promotions.

Speaker Change: This proportionally impacted the south-nernings from the third quarter in 2024.

Speaker Change: Revenue is the first aid business in the U.S. was quite the above last year due to the timing of customer orders and what seemed to be a soft market.

Speaker Change: The Westcock cutting tool business and DMT sharpness increased 10% in the quarter driven by market share gains in the craft channel and the kitchen market. Both businesses have a full pipeline of new products that are interbed being introduced as we speak.

Speaker Change: We introduced our latest smart compliance for stage kids, this class September at the National Safety Conference.

Speaker Change: These items you have are patented or flight-d system to monitor real time consumption and exploration of the components in our first day of jigs and permit automatic replenishment of refills.

Speaker Change: We are excited about the prospects for this next generation product and look forward to seeing its impact on the market next year. To our knowledge, there are no similar products from our competitors.

Speaker Change: During the third quarter, we integrated the elite first aid product line into our overall product law firm.

Speaker Change: As you know, a week-side first respond the kids, the save lives, and are at the high end of first aid treatment. We are presenting these items to our first aid customers in the U.S. and Canada, and actively promoting them in the e-commerce channels.

Speaker Change: We are now installing two different automation systems from packing for stage components and lens wipes into multi-cout boxes.

Speaker Change: We've just completed the first stage of new racking and storage in our largest warehouse to increase efficiency and capacity. And we've completed new initiatives to reduce the cost of first aid boxes and tablets.

Speaker Change: For the remainder of the year, we anticipate continuing to generate strong earnings and cash well and to continue strengthening our balance sheet, we believe we are very well positioned to continue to make a creative acquisition. I will now turn the call to Paul.

Paul Driscoll: Back needs net sales for the third quarter or $48.2 million compared to $50.4 million in 2023.

Paul Driscoll: A D3 to 4 percent, excluding the impact of the chemicals, including the hunting and fishing product line, sold on November 1st of last year sales for the third quarter of 2024 increased 4 percent, sales for the nine months ended September 30th, 2024 were.

Paul Driscoll: $148.5 million compared to $149.6 million in the same period in 2023. A decrease of 1% excluding the impact of commels and due to the sales increased 5%.

Paul Driscoll: Let's see else.

Paul Driscoll: Excluding Camillus, including the U.S. segment, increased 3% in the third quarter, including Camillus, including the sales, increased 5% for the nine months, and it's 10 or 30 due to market share gains with first aid, Westcott, craft products, and D&T sharpness.

Paul Driscoll: That's sales, excluding commils, including European increased 15% and local currency for the quarter and 10% for the nine months and it's 10 or 30. The sales increase for both periods was mainly due to market share gains in the office channel. That's sales.

Paul Driscoll: including Camille's included in local currency for Canada decreased, 6% on the quarter, and we're constant for the year to date.

Paul Driscoll: Sales of First Aid Products were strong over there was a decline in sales of school and office products. The gross margin was...

Paul Driscoll: 38.5% in the third quarter of 2024 compared to 38.7% in 2023. The gross margin was 39.4% for the first nine months of 2024 compared to 37.3% in 2023.

Paul Driscoll: The higher gross marks in the nine months was mainly due to productivity improvements in our manufacturing and distribution facilities.

Paul Driscoll: SGA expenses for the third quarter of 2024 with $15.6 million are 32% of sales compared with $15.8 million or 31% of sales for the same period of 2023.

Paul Driscoll: Estina expenses for the first time months of 2024 were $47 million, or $31 per cent of sales, compared with $45 million.

Paul Driscoll: 30% of sales in 2023. Interest expanse for the third quarter of 2024 was $535,000 compared to $785,000 in third quarter of 2023.

Paul Driscoll: The decarious was due to lower average debt of approximately $15 million, then income for the third quarter of 2024 was $2.23 million, or $54 per dulyd share compared to a net income of $2.15 million, or $58 per dulyd share for the same period of 2023.

Paul Driscoll: and increased to 3% and then Kim and a decrease of 7% in EPS.

Paul Driscoll: In income for the first nine months and is 7.30, 24 was 8.3 million dollars, or $2.3 per village share compared to

Paul Driscoll: $6.6 million or $1.83 per Duluth share in the comparable period last year, increases of 26% and 11%.

Paul Driscoll: The company's banked that list cash on September 30, 2024 was $27 million, compared to $38 million on September 30, 2023. During a 12 month period we purchased the assets of a elite first aid for $6.1 million.

Paul Driscoll: Pay $2.2 million in dividends and generate $6.2 million in free cash flow. Additionally, the $30 million of net proceeds from the sale of the Camila Inc. The product line was used to reduce debt.

Speaker Change: Thank you. Rob, I will not open the call for questions.

Speaker Change: Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press start, too, if you like to remove your question from the cue. Before participants use speaker equipment, it may be necessary to pick up your hands that before pressing the star keys.

Speaker Change: One moment please while we pull for questions.

Speaker Change: All right, first question comes from Jeffrey Matthews with Ram Partners. Please proceed with your questions.

Speaker Change: I'm driving. I hope it can hear me. Yes, he's coming in clear. Okay, great.

Jeffrey Matthews: I'm a little surprised that you haven't asserted into your risk factors that the potential for these massive tariffs Trump is talking about on China if he is elected president.

Jeffrey Matthews: I just wonder what your plan might be if he does get elected and Sarah's flight that might go through. There's anything you can do proactively or do you just sort of sit there and take whatever they...

Speaker Change: Thank you all for your effort.

Speaker Change: I think that's a really good question Jeff, so I just got back from almost a month in China visiting our suppliers or for offices or factories and there's several things that are going on. First in the West County area.

Speaker Change: Parkly, factory are moving operations with us into Malaysia.

Speaker Change: Vietnam, Thailand, and the Philippines, and these are countries that are very easy yet a Chinese visa. They welcome the Chinese, they use the built-in road system to

Speaker Change: and Samuel Materials to these countries. And so.

Speaker Change: with the items that we're currently doing, which is the ones that...

Speaker Change: I have 25% charge as we speak and that's Ruler's paper tremors, pencil sharpness in the West Cloud family.

Speaker Change: By December of this year, some of these will now be produced in places like Thailand and the Philippines.

Speaker Change: The one of the things about that is we're using our assistance to buyers.

Speaker Change: Very, very, very...

Speaker Change: Receptive to Chinese investment and so with the Westcott items we're moving in those matter of action.

Speaker Change: Now, with the first eight area, it's slightly different.

Speaker Change: the U.S. to highly defend it.

Speaker Change: on China for most of its medical supplies.

Speaker Change: So listen to that really carefully.

Speaker Change: Putting tariffs on that would be very, very difficult to do for cancer drugs, antibody and the other C-P-P-P.

Speaker Change: and what drugs are those? The hospitals would come to a halt. So it's highly unlikely in my view that 60% tariffs are even remotely going to be real, but it's an negotiate in point.

Speaker Change: We have moved our sourcing.

Speaker Change: and have a link to a number of other places in the year for first day, some of the low-synth and creams with built large production facility in

Speaker Change: Florida at MedNAC, which makes alcohol wipes, tripling a botic wipes, or which go in the kits.

Speaker Change: We do a lot of production we need just for, um, you know,

Speaker Change: Vanderjews, Susbandages, and so it's a pretty diverse group and we have two manufacturing plants in the U.S. that are doing for a state group or state only in the uncle of Washington and Iraq about North Carolina facility. So we've got much ability I think in both areas. We're assuming that there'll be more tariffs and we're working with that and I think it's actually an opportunity because we're on the ground actively doing this. These are the perhaps others that don't have the scale or then all should be able to do it.

Speaker Change: That's very reassuring, and I should have known you'd been thinking of these steps ahead, and I appreciate that.

Speaker Change: See ya!

Speaker Change: The general softening that you saw, what did that come from and is that I'm wondering if it's relates to these new ordering methods you got, the automatic replenishment, was there anything to that or is it more general economic softening to you saw?

Speaker Change: So, one large customer is a distributor into the food service industry. It's orders really weak in the September. Another one is the largest industrial distributing in the United States.

Speaker Change: in the world of Driscoll, in the order of Scotland.

Speaker Change: These were industrial distributors, and the war just online.

Speaker Change: Leetower in the world was soft in the third quarter and very strong in the second. It was a timing thing and it's come back strong now. But I think it's really the...

Speaker Change: the industrial market in the US, which seems to be soggy, and so when we sell industrial first aid kits, at least where was in the third quarter, it was not what we expected.

Speaker Change: have been said that it is a thoughtful lot of business coming in right now, for perhaps not good reasons, but it relates to two hurricanes and a re-finishment of a massive amount of first aid supplies.

Speaker Change: and to Florida North Carolina and so forth. With the Westcock business, which was strong, it was totally market share games and we're cracking in a substantial way in the craft market.

Speaker Change: Paul and I spent the morning with our team going over.

Speaker Change: the backlog of business and new business opportunities for next year in Westcott and it's pretty exciting and surprising actually because we tend to think of it as

Speaker Change: The slower growing part of the business, but in fact it is outshining for a state at least in the third quarter and it looks pretty darn solid for a few four.

Speaker Change: Okay, that's interesting. I appreciate that.

Speaker Change: Thanks very much for your congratulations and good luck.

Speaker Change: As a reminder, if you like to ask a question, please press star 1 on your telephone keypets.

Speaker Change: Ed, one moment while we pull for questions.

Speaker Change: Hello, I'm Paul Driscoll, and I'm the one who's here.

Speaker Change: There are no questions at this time, at this point I'd like to turn the call back over to Walter Johnson for closing comments.