Core Points - Acme United Corporation reported a net sales decrease of 1% for the year ended December 31, 2023, totaling $191.5 million compared to $194.0 million in 2022 [1] - The company sold its Camillus and Cuda product lines for $19.8 million on November 1, 2023, resulting in an after-tax gain of approximately $9.6 million [1][2] - The company achieved a record free cash flow of $24 million in 2023, alongside a significant reduction in debt by $13 million [3][6] Financial Performance - Net income for the year ended December 31, 2023, was $17.8 million, or $4.86 per diluted share, including the sale of Camillus and Cuda [2] - Excluding the sale, net income was $8.2 million, or $2.23 per diluted share, compared to $3.0 million, or $0.82 per diluted share in 2022 [2][13] - For the fourth quarter of 2023, net income including the sale was $11.2 million, or $2.87 per diluted share, while excluding the sale, it was $1.6 million, or $0.40 per diluted share [2][12] Sales Performance - U.S. segment net sales decreased by 6% in Q4 2023 compared to the same period in 2022, with a 2% decline when excluding the sold product lines [3] - European net sales for Q4 2023 declined by 8% in U.S. dollars and 13% in local currency, attributed to a soft economy [4] - Canadian net sales increased by 11% in U.S. dollars and 12% in local currency for Q4 2023, driven by higher sales of first aid products [4] Operational Efficiency - Gross margin improved to 39.1% in Q4 2023 from 31.9% in Q4 2022, and for the year, it increased to 37.7% from 32.8% [5] - The company successfully reduced inventory by $5 million and implemented cost-saving initiatives that generated approximately $6.5 million in savings [3][5] Future Outlook - The company anticipates growth in 2024 from new first aid customers and additional placements of cutting tools in craft and mass markets [3] - Acme United plans to continue seeking accretive acquisitions to enhance its business [3]

[Earnings Release Highlights](index=1&type=section&id=1.0-earnings-release-highlights) Acme United reported varied Q4 and FY 2023 financial results, marked by strategic divestitures, significant debt reduction, and improved gross margins, with anticipated growth in 2024 [Fourth Quarter 2023 Financial Performance](index=1&type=section&id=1.1-fourth-quarter-2023-financial-performance) Acme United's Q4 2023 net sales decreased 5% to $41.9 million, while net income significantly improved to $11.2 million ($2.87 diluted EPS) including divestiture gains Q4 2023 Net Sales Performance | Metric | Q4 2023 ($M) | Q4 2022 ($M) | Change (%) | | :----- | :----------- | :----------- | :--------- | | Net Sales | 41.9 | 44.1 | -5% | | Net Sales (excl. divestiture) | N/A | N/A | -1% | Q4 2023 Net Income & EPS Performance | Metric | Q4 2023 (incl. divestiture) | Q4 2023 (excl. divestiture) | Q4 2022 | | :----- | :-------------------------- | :-------------------------- | :-------- | | Net Income ($M) | 11.2 | 1.6 | (0.6) | | Diluted EPS | $2.87 | $0.40 | ($0.17) | [Full Year 2023 Financial Performance](index=1&type=section&id=1.2-full-year-2023-financial-performance) Full year 2023 net sales decreased 1% to $191.5 million, with net income reaching $17.8 million ($4.86 diluted EPS) including divestiture gains FY 2023 Net Sales Performance | Metric | FY 2023 ($M) | FY 2022 ($M) | Change (%) | | :----- | :----------- | :----------- | :--------- | | Net Sales | 191.5 | 194.0 | -1% | FY 2023 Net Income & EPS Performance | Metric | FY 2023 (incl. divestiture) | FY 2023 (excl. divestiture) | FY 2022 | | :----- | :-------------------------- | :-------------------------- | :-------- | | Net Income ($M) | 17.8 | 8.2 | 3.0 | | Diluted EPS | $4.86 | $2.23 | $0.82 | [Strategic Achievements and Operational Improvements](index=2&type=section&id=1.3-strategic-achievements-and-operational-improvements) Acme United achieved significant strategic milestones in 2023, including a $19.8 million divestiture, $13 million debt reduction, $6.5 million in cost savings, and record $24 million free cash flow - Divestiture of Camillus and Cuda product lines for **$19.8 million**, resulting in an after-tax gain of approximately **$9.6 million** and reducing debt by **$13 million**[2](index=2&type=chunk)[5](index=5&type=chunk) - Successfully completed a **$5 million** inventory reduction program[5](index=5&type=chunk)[7](index=7&type=chunk) - Implemented cost reduction and productivity initiatives, generating approximately **$6.5 million** in savings, exceeding the initial target of **$5 million**[5](index=5&type=chunk) - Achieved a record **$24 million** in free cash flow[5](index=5&type=chunk)[7](index=7&type=chunk) - Gained market share in the first aid and medical business and introduced new craft and industrial cutting tools[5](index=5&type=chunk) [2024 Outlook and Future Strategy](index=2&type=section&id=1.4-2024-outlook-and-future-strategy) The company anticipates 2024 growth from new first aid customers and cutting tool placements, while actively pursuing accretive acquisitions - Anticipates growth in 2024 from new first aid customers, additional placement of cutting tools in craft and mass markets, and new DMT sharpener business[5](index=5&type=chunk) - Plans to continue seeking accretive acquisitions, supported by a strong balance sheet[5](index=5&type=chunk) [Segmental Net Sales Performance](index=2&type=section&id=2.0-segmental-net-sales-performance) This section details the net sales performance across U.S., European, and Canadian segments, highlighting regional trends and contributing factors [U.S. Segment Sales](index=2&type=section&id=2.1-u.s.-segment-sales) U.S. net sales decreased 6% in Q4 2023 and 1% for the full year, primarily due to customer inventory reductions U.S. Segment Net Sales Performance | Period | Change (YoY) | Change (YoY, excl. divestiture) | Primary Reason (FY) | | :----- | :----------- | :------------------------------ | :------------------ | | Q4 2023 | -6% | -2% | N/A | | FY 2023 | -1% | Constant | Customer inventory reductions | [European Segment Sales](index=2&type=section&id=2.2-european-segment-sales) European net sales declined 8% in USD for Q4 2023 and 4% for the full year, primarily due to a soft economy European Segment Net Sales Performance | Period | Change (USD YoY) | Change (Local Currency YoY) | Primary Reason | | :----- | :--------------- | :-------------------------- | :------------- | | Q4 2023 | -8% | -13% | Soft economy | | FY 2023 | -4% | -6% | Soft economy | [Canadian Segment Sales](index=2&type=section&id=2.3-canadian-segment-sales) Canadian net sales increased 11% in USD for Q4 2023 and 1% for the full year, driven by higher first aid product sales Canadian Segment Net Sales Performance | Period | Change (USD YoY) | Change (Local Currency YoY) | Primary Reason | | :----- | :--------------- | :-------------------------- | :------------- | | Q4 2023 | +11% | +12% | Higher first aid sales | | FY 2023 | +1% | +5% | Higher first aid sales | [Financial Position and Key Metrics](index=3&type=section&id=3.0-financial-position-and-key-metrics) This section analyzes Acme United's gross margin, debt levels, and cash flow, highlighting improvements and key financial movements [Gross Margin](index=3&type=section&id=3.1-gross-margin) Gross margin significantly improved to 39.1% in Q4 2023 and 37.7% for the full year, driven by productivity and lower freight costs Gross Margin Performance | Period | Gross Margin 2023 | Gross Margin 2022 | Change (pp) | Primary Reasons | | :----- | :---------------- | :---------------- | :---------- | :-------------- | | Q4 | 39.1% | 31.9% | +7.2 pp | Productivity, lower freight | | FY | 37.7% | 32.8% | +4.9 pp | Productivity, lower freight | [Debt and Cash Flow](index=3&type=section&id=3.2-debt-and-cash-flow) Acme United significantly reduced bank debt to $19.0 million, generated $24.0 million in free cash flow, and received $13.0 million from asset sales Debt and Cash Flow Highlights | Metric | Dec 31, 2023 ($M) | Dec 31, 2022 ($M) | Change ($M) | | :----- | :---------------- | :---------------- | :---------- | | Bank Debt less Cash | 19.0 | 55.0 | -36.0 | - Generated approximately **$24.0 million** in free cash flow, including a **$5.0 million** inventory reduction[7](index=7&type=chunk) - Received approximately **$13.0 million** in net proceeds from the sale of Camillus and Cuda product lines[7](index=7&type=chunk) - Paid **$2.0 million** in dividends on common stock during FY 2023[7](index=7&type=chunk) [Company Information](index=3&type=section&id=4.0-company-information) This section provides an overview of Acme United Corporation's business, market presence, key brands, and details regarding its recent conference call [About Acme United Corporation](index=3&type=section&id=4.1-about-acme-united-corporation) Acme United Corporation is a global supplier of innovative safety solutions and cutting technology across diverse markets and brands - Leading worldwide supplier of innovative safety solutions and cutting technology[9](index=9&type=chunk) - Serves school, home, office, hardware, sporting goods, and industrial markets[9](index=9&type=chunk) - Key brands include First Aid Only®, First Aid Central®, PhysiciansCare®, Pac-Kit®, Spill Magic®, Westcott®, Clauss®, DMT®, Med-Nap and Safety Made[9](index=9&type=chunk) [Conference Call and Webcast](index=3&type=section&id=4.2-conference-call-and-webcast) A conference call and webcast were held on March 1, 2024, to discuss quarterly results, with replay information available - Conference call held on March 1, 2024, at 12:00 p.m. ET[8](index=8&type=chunk) - Webcast replay available under Investor Relations, Audio Archives on www.acmeunited.com[8](index=8&type=chunk) [Forward-Looking Statements and Risk Factors](index=4&type=section&id=5.0-forward-looking-statements-and-risk-factors) This section outlines the forward-looking statements and various risk factors that could materially affect the company's future business, operations, and financial results [Forward-Looking Statements and Risk Factors Details](index=4&type=section&id=5.1-forward-looking-statements-and-risk-factors-details) Forward-looking statements are subject to various risks and uncertainties, including global economic conditions, supply chain disruptions, and geopolitical conflicts, which could materially impact results - Forward-looking statements are subject to risks and uncertainties that may impact business, operations, and financial results[11](index=11&type=chunk)[12](index=12&type=chunk) - Risks include global economic conditions, inflation, interest rates, geopolitical conflicts (Ukraine, Middle East), supply chain disruptions, labor costs, currency fluctuations, inventory management, changes in client needs and consumer spending, competition, technological changes (online marketing), ability to manage growth and integrate acquisitions, and international trade policies (tariffs)[13](index=13&type=chunk)[14](index=14&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=6.0-condensed-consolidated-financial-statements) This section presents the condensed consolidated statements of operations for quarterly and annual periods, along with the condensed consolidated balance sheets [Condensed Consolidated Statements of Operations (Three Months Ended December 31)](index=5&type=section&id=6.1-condensed-consolidated-statements-of-operations-three-months-ended-december-31) This section details the condensed consolidated statements of operations for Q4 2023 and 2022, including net sales, gross profit, and net income Condensed Consolidated Statements of Operations (Q4) | Metric (000's) | Q4 2023 | Q4 2022 | | :------------- | :------ | :------ | | Net sales | $41,942 | $44,104 | | Cost of goods sold | $25,538 | $30,021 | | Gross profit | $16,404 | $14,083 | | Operating income (loss) | $2,093 | ($27) | | Gain on sale of assets | $12,551 | - | | Net income (loss) | $11,208 | ($597) | | Diluted EPS | $2.87 | ($0.17) | [Condensed Consolidated Statements of Operations (Year Ended December 31)](index=6&type=section&id=6.2-condensed-consolidated-statements-of-operations-year-ended-december-31) This section presents the condensed consolidated statements of operations for the full years 2023 and 2022, detailing net sales, gross profit, and net income Condensed Consolidated Statements of Operations (Full Year) | Metric (000's) | FY 2023 | FY 2022 | | :------------- | :------ | :------ | | Net sales | $191,501 | $193,962 | | Cost of goods sold | $119,291 | $130,403 | | Gross profit | $72,210 | $63,559 | | Operating income | $13,188 | $6,274 | | Gain on sale assets | $12,551 | - | | Net income | $17,793 | $3,035 | | Diluted EPS | $4.86 | $0.82 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=6.3-condensed-consolidated-balance-sheets) This section presents the condensed consolidated balance sheets as of December 31, 2023, and 2022, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets | Metric (000's) | Dec 31, 2023 | Dec 31, 2022 | | :------------- | :----------- | :----------- | | Total current assets | $92,024 | $105,600 | | Total assets | $149,241 | $164,377 | | Total current liabilities | $26,012 | $22,127 | | Long term debt | $13,105 | $49,916 | | Total liabilities | $51,343 | $85,347 | | Total stockholders' equity | $97,898 | $79,030 |

[Part I — FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1: Financial Statements (Unaudited)](index=3&type=section&id=Item%201%3A%20Financial%20Statements%20%28Unaudited%29) Unaudited Q3 2023 financial statements reveal a 1% net sales increase, significant net income growth, reduced assets and debt, and improved operating cash flow from inventory reduction [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$156,269** | **$164,377** | **($8,108)** | | Cash and cash equivalents | $5,567 | $6,100 | ($533) | | Inventories | $54,575 | $63,325 | ($8,750) | | **Total Liabilities** | **$70,363** | **$85,347** | **($14,984)** | | Long-term debt | $32,934 | $49,916 | ($16,982) | | **Total Stockholders' Equity** | **$85,906** | **$79,030** | **$6,876** | - The company significantly reduced its inventory by **$8.75 million** and long-term debt by nearly **$17 million** as of September 30, 2023, compared to the end of 2022[9](index=9&type=chunk)[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2023 vs Q3 2022 Performance (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $50,384 | $49,744 | +1.3% | | Gross Profit | $19,503 | $15,925 | +22.5% | | Gross Margin | 38.7% | 32.0% | +6.7pp | | Operating Income | $3,657 | $953 | +283.7% | | Net Income | $2,152 | $64 | +3262.5% | | Diluted EPS | $0.58 | $0.02 | +$0.56 | Nine Months 2023 vs 2022 Performance (in thousands, except per share data) | Metric | Nine Months 2023 | Nine Months 2022 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $149,559 | $149,849 | -0.2% | | Gross Profit | $55,807 | $49,475 | +12.8% | | Operating Income | $11,096 | $6,299 | +76.2% | | Net Income | $6,586 | $3,632 | +81.3% | | Diluted EPS | $1.83 | $0.96 | +$0.87 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) - For the nine months ended September 30, 2023, comprehensive income was **$6.5 million**, a significant increase from **$2.2 million** in the same period of 2022. This was driven by higher net income, partially offset by a smaller foreign currency translation loss[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) - Stockholders' equity increased from **$79.0 million** at the end of 2022 to **$85.9 million** as of September 30, 2023. The growth was primarily driven by net income of **$6.6 million**, partially offset by dividend distributions of **$1.5 million**[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $21,662 | ($7,607) | +$29,269 | | Net cash used in investing activities | ($4,523) | ($13,208) | +$8,685 | | Net cash (used in) provided by financing activities | ($18,408) | $22,155 | ($40,563) | - The significant improvement in operating cash flow was mainly due to an **$8.7 million** decrease in inventories, compared to a **$12.8 million** increase in the prior year period. Financing activities reflected a net repayment of **$17.0 million** in long-term debt in 2023, versus net borrowings of **$24.1 million** in 2022[24](index=24&type=chunk)[26](index=26&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Net Sales by Product Category (in thousands) | Product Category | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Cutting, Sharpening and Measuring | $20,315 | $22,525 | $61,162 | $70,710 | | First Aid and Medical | $30,069 | $27,219 | $88,397 | $79,139 | Net Sales by Segment (in thousands) | Segment | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | United States | $43,688 | $42,943 | $127,743 | $127,589 | | Canada | $3,305 | $3,629 | $10,938 | $11,120 | | Europe | $3,391 | $3,172 | $10,878 | $11,140 | - On November 1, 2023, the Company sold its Camillus Cutlery and Cuda business lines to GSM Holdings, Inc. for a purchase price of **$19.77 million**[65](index=65&type=chunk) - As of September 30, 2023, the company had **$33 million** in borrowings outstanding under its **$65 million** revolving loan agreement with HSBC, which expires on May 31, 2026[41](index=41&type=chunk)[42](index=42&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q3 2023 performance to significant gross margin improvement, driven by productivity and lower freight costs, alongside successful inventory and debt reduction, with expected cost savings exceeding $6.0 million [Results of Operations](index=21&type=section&id=Results%20of%20Operations) - Q3 2023 net sales increased **1%** to **$50.4 million**. U.S. sales grew **2%** driven by first aid products, while Canada sales fell **9%** (**7%** in local currency) and Europe sales rose **7%** in USD but fell **1%** in local currency due to economic weakness[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) - Gross margin for Q3 2023 expanded significantly to **38.7%** from **32.0%** in Q3 2022. This improvement was primarily due to productivity gains in manufacturing and distribution, along with lower in-bound freight costs[78](index=78&type=chunk) - SG&A expenses increased by **$874,000** in Q3 2023 compared to Q3 2022, mainly due to higher personnel-related expenses[78](index=78&type=chunk) - Operating income for Q3 2023 surged to **$3.7 million** from **$1.0 million** in Q3 2022, with the U.S. segment contributing the majority of the increase due to productivity improvements and cost savings[79](index=79&type=chunk) [Financial Condition](index=24&type=section&id=Financial%20Condition) - During the first nine months of 2023, working capital decreased by **$10.4 million**, primarily due to a planned inventory reduction of **$8.8 million** as supply chain risks diminished[83](index=83&type=chunk) Key Financial Ratios | Ratio | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Current ratio | 3.87 | 4.77 | | Long term debt to equity ratio | 50.4% | 76.7% | - Total debt under the revolving credit facility was reduced by approximately **$17 million** during the first nine months of 2023, with **$32 million** available for borrowing as of September 30, 2023[86](index=86&type=chunk) - The company has implemented cost reduction initiatives expected to generate over **$6.0 million** in savings in 2023 through productivity improvements and lower SG&A expenses[87](index=87&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for this reporting period - The company has indicated that this item is not applicable[89](index=89&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September 30, 2023, and concluded they were effective. No material changes were made to the internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[89](index=89&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[90](index=90&type=chunk) [Part II — OTHER INFORMATION](index=26&type=section&id=Part%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201%3A%20Legal%20Proceedings) The company reports that there are no pending material legal proceedings to which it is a party - There are no pending material legal proceedings involving the company[92](index=92&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - The company refers to the Risk Factors section in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, indicating no material updates[92](index=92&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[92](index=92&type=chunk) [Defaults Upon Senior Securities](index=26&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None reported[92](index=92&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[92](index=92&type=chunk) [Other Information](index=26&type=section&id=Item%205%3A%20Other%20Information) The company reported no other information for this period - None reported[92](index=92&type=chunk) [Exhibits](index=26&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the report, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and Inline XBRL documents - Exhibits filed include certifications from the CEO and CFO under Sarbanes-Oxley Sections 302 and 906, as well as Inline XBRL data files[92](index=92&type=chunk)

Acme United Corporation (NYSE:ACU) Q3 2023 Earnings Conference Call October 23, 2023 12:00 PM ET Company Participants Walter Johnsen - Chairman and Chief Executive Officer Paul Driscoll - Chief Financial Officer Conference Call Participants Richard Dearnley - Longport Partners Chris Sakai - Singular Research Timothy Call - Capital Management Corporation Operator Good day, and welcome to the Acme United Corporation's Third Quarter 2023 Earnings Call. At this time, I would like to turn the call over to Walter ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Commission file number: 01-07698 ACME UNITED CORPORATION (Exact Name of Registrant as Specified in Its Charter) Connecticut 06-0236700 State or Other Jurisdiction ...

Financial Data and Key Metrics Changes - Acme United Corporation reported a net income increase of 26% to $3.4 million, with earnings per share rising 35% to $0.96 compared to the second quarter of 2022 [5][10] - Net sales decreased by 6% to $53.3 million, attributed to inventory reductions from large customers [5][8] - Gross margin improved to 37.5% from 32.7% in the previous year, driven by productivity improvements and lower transportation costs [9][10] - SG&A expenses increased to $14.8 million, representing 28% of sales, compared to 26% in the same period last year [9] Business Line Data and Key Metrics Changes - U.S. segment sales decreased by 8% in Q2 due to customer inventory reductions, while sales in Europe decreased by 7% in local currency [8] - Canadian sales increased by 21% in Q2, driven by growth in First Aid products [8] Market Data and Key Metrics Changes - The economic recession in Europe impacted sales, contributing to a 5% decrease in the first half of 2023 [8] - The company anticipates that retailers will have worked through their excess inventory by year-end, leading to increased demand [17][22] Company Strategy and Development Direction - The company is focusing on its First Aid segment, which has a recurring revenue stream from refill business, and is expanding its product offerings [14][15] - Acme United is not planning to diversify into a third leg of business but will reinforce its First Aid segment through acquisitions and vertical integration [52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation and potential recession but expressed confidence in the company's positioning due to its diverse product offerings and recurring revenue streams [14][24] - The company expects improved earnings in the second half of the year due to normalized shipping costs and better inventory management [22] Other Important Information - The company has successfully reduced its inventory by $9 million since June 30, 2022, and is positioned to fund future acquisitions [7][10] - Acme United's bank debt decreased from $60 million in June 2022 to $47 million in June 2023 [10] Q&A Session Summary Question: How will Acme be insulated from a potential recession? - Management indicated that while Acme is not insulated from economic challenges, its First Aid segment has a strong recurring revenue stream that may provide some protection [14][15] Question: Expectations for the second half of the year regarding supply chain and inventory? - Management noted that inventory issues from the previous year have been resolved, and they expect continued revenue growth in the second half of the year [22] Question: How is the company prepared for potential demand increases? - The company has raised its inventory by 30% in preparation for supply chain issues and is positioned for normal growth [39] Question: Impact of remote work on demand for products? - Management stated that the bulk of the First Aid business is industrial, and a shift to remote work is not expected to significantly impact demand [43] Question: What is driving the demand for First Aid products in Canada? - The company is gaining market share and introducing new industrial products, which has led to better pricing and sales growth in Canada [45] Question: Future gross margin expectations? - Management expects gross margins to remain stable, potentially increasing slightly in the next quarters [46][47]

[Part I — FINANCIAL INFORMATION](index=3&type=section&id=Part%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2023 reflect increased net sales and income, with positive operating cash flow used to reduce debt [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets decreased to **$157.5 million**, liabilities to **$77.4 million**, and stockholders' equity increased to **$80.1 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $99,184 | $105,600 | | Inventories | $58,488 | $63,325 | | **Total assets** | **$157,468** | **$164,377** | | **Total current liabilities** | $24,033 | $22,127 | | Long-term debt | $40,135 | $49,916 | | **Total liabilities** | **$77,352** | **$85,347** | | **Total stockholders' equity** | **$80,116** | **$79,030** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2023 net sales increased **6%** to **$45.8 million**, with gross profit rising to **$16.3 million**, operating income to **$2.2 million**, and net income to **$990,000** Q1 2023 vs Q1 2022 Performance (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net sales | $45,838 | $43,333 | | Gross profit | $16,281 | $14,968 | | Operating income | $2,188 | $1,371 | | Net income | $990 | $830 | | Diluted earnings per share | $0.28 | $0.22 | - Interest expense nearly tripled to **$919,000** from **$309,000** in the prior-year quarter, reflecting higher interest rates[18](index=18&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2023 increased to **$1.1 million** from **$0.9 million**, driven by higher net income and positive foreign currency translation Comprehensive Income (in thousands) | Component | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income | $990 | $830 | | Foreign currency translation adjustment | $109 | $27 | | **Comprehensive income** | **$1,099** | **$857** | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to **$80.1 million** as of March 31, 2023, primarily due to **$990,000** in net income, partially offset by dividends - Total stockholders' equity grew to **$80,116,000** as of March 31, 2023, driven by net income of **$990,000**[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2023 generated **$7.7 million** in operating cash flow, a significant improvement, with **$10.3 million** used in financing activities, resulting in a **$3.3 million** net decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash from operating activities | $7,676 | $(5,479) | | Net cash used in investing activities | $(701) | $(518) | | Net cash (used in) provided by financing activities | $(10,324) | $6,450 | | **Net change in cash** | **$(3,336)** | **$464** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, debt structure, and segment performance, confirming CECL adoption had no material impact and debt covenant compliance - The company adopted ASU 2016-13 (CECL model) on January 1, 2023, which did not have a material impact on the financial statements[31](index=31&type=chunk) Net Sales by Product and Segment - Q1 2023 (in thousands) | Product Category | United States | Canada | Europe | Total | | :--- | :--- | :--- | :--- | :--- | | Cutting, Sharpening and Measuring | $14,083 | $1,405 | $3,361 | $18,849 | | First Aid and Medical | $24,770 | $1,852 | $367 | $26,989 | | **Total Net Sales** | **$38,853** | **$3,257** | **$3,728** | **$45,838** | - As of March 31, 2023, the company had outstanding borrowings of **$40.1 million** under its revolving loan agreement and was in compliance with all debt covenants[42](index=42&type=chunk)[44](index=44&type=chunk) Operating Income by Segment - Q1 (in thousands) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | United States | $1,781 | $811 | | Canada | $217 | $386 | | Europe | $190 | $174 | | **Consolidated** | **$2,188** | **$1,371** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2023 net sales growth to U.S. first aid products, improved gross margin, and significant reductions in inventory and debt, ensuring sufficient liquidity [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Q1 2023 consolidated net sales increased **6%** to **$45.8 million**, driven by U.S. growth, offsetting declines in Canada and Europe, with gross margin improving to **35.5%** - Consolidated net sales increased by **6%** in Q1 2023 compared to Q1 2022, reaching **$45.8 million**[72](index=72&type=chunk) - U.S. net sales grew **9%**, primarily from higher sales of first aid and medical products, while Canadian and European sales declined **10%** and **6%** respectively due to retailer inventory reductions[73](index=73&type=chunk) - Gross margin improved to **35.5%** from **34.5%** year-over-year, attributed to cost-saving initiatives and productivity improvements at manufacturing and distribution facilities[74](index=74&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=18&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Q1 2023 saw strengthened financial condition with **$75.2 million** working capital, **$4.8 million** inventory reduction, and **$9.8 million** debt decrease, supported by cost reduction initiatives - Inventory decreased by approximately **$4.8 million** during the first three months of 2023 due to planned reductions as supply chain risks diminished[76](index=76&type=chunk) Key Financial Ratios | Ratio | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Working capital | $75,151,000 | $83,473,000 | | Current ratio | 4.13 | 4.77 | | Long term debt to equity ratio | 63.3% | 76.7% | - During Q1 2023, total debt outstanding under the revolving credit facility decreased by approximately **$9.8 million**[80](index=80&type=chunk) - As of March 31, 2023, **$40.1 million** was outstanding and **$24.9 million** was available for borrowing[80](index=80&type=chunk) - The company has implemented cost reduction initiatives expected to generate over **$5.0 million** in savings in 2023[81](index=81&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=21&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is not applicable for the reporting period - The company has indicated that Quantitative and Qualitative Disclosure about Market Risk is not applicable[84](index=84&type=chunk) [Controls and Procedures](index=21&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes in internal control over financial reporting - Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[84](index=84&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[84](index=84&type=chunk) [Part II — OTHER INFORMATION](index=22&type=section&id=Part%20II%20%E2%80%94%20OTHER%20INFORMATION) [Legal Proceedings](index=22&type=section&id=Item%201%3A%20Legal%20Proceedings) The company reports that there are no pending material legal proceedings to which it is a party - There are no pending material legal proceedings involving the company[90](index=90&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A%3A%20Risk%20Factors) No new risk factors were reported this quarter, with the company referring to those disclosed in its Annual Report on Form 10-K - The company refers to the risk factors set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022[90](index=90&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None reported[91](index=91&type=chunk) [Exhibits](index=22&type=section&id=Item%206%3A%20Exhibits) The report lists several exhibits filed, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL documents - Exhibits filed with the report include: - Certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[86](index=86&type=chunk)[87](index=87&type=chunk) - Inline XBRL Instance Document and related taxonomy files (Exhibits 101 and 104)[88](index=88&type=chunk)

Financial Data and Key Metrics Changes - Acme United's net sales for Q1 2023 were $45.8 million, a 6% increase from $43.3 million in Q1 2022 [5][9] - Net income rose to $990,000, up 19% from $830,000 in the previous year, with earnings per share increasing by 27% to $0.28 from $0.22 [5][10] - Gross margin improved to 35.5% in Q1 2023 from 34.5% in Q1 2022, attributed to productivity improvements [9] - SG&A expenses decreased to $14.1 million, representing 30.7% of net sales, down from $13.6 million or 31.4% of net sales in the same period last year [9] Business Line Data and Key Metrics Changes - The U.S. segment saw a 9% increase in net sales, primarily driven by higher sales of first aid and medical products [9] - Net sales in Europe declined by 2% in local currency, while Canada experienced a 5% decline, mainly due to customer inventory reductions [9] Market Data and Key Metrics Changes - The company reduced its inventory by approximately $5 million from December 31, 2022, to March 31, 2023, and anticipates further reductions throughout 2023 [6] - Interest expense increased to $900,000 in Q1 2023 from $300,000 in Q1 2022, largely due to rising interest rates [10] Company Strategy and Development Direction - Acme United is focusing on potential acquisitions to expand its product lines and market share, particularly in the first aid sector [16][17] - The company aims to vertically integrate its first aid kit production, similar to past acquisitions that enhanced its product offerings [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for stronger performance in 2023 compared to the previous year, despite challenges from high inflation and interest rates [8] - The company is addressing rising interest rates by reducing debt through inventory management and scaling back capital spending [8][26] Other Important Information - The company incurred $500,000 in abnormal expenses in Q1 2023, significantly lower than the $4 million experienced in 2022 due to supply chain disruptions [7] - Acme United's bank debt less cash was $48 million as of March 31, 2023, compared to $46 million a year earlier [10] Q&A Session Summary Question: Insights on back-to-office trends - Management noted that the office channel performed reasonably well, despite concerns about overstocking among retail customers [14] Question: Acquisition plans and targets - The company is looking for acquisitions in 2023, focusing on competitors in the same space and opportunities for vertical integration in the first aid sector [16][17] Question: Interest rate impacts - Management acknowledged the challenges posed by rising interest rates but indicated that margin improvements have offset some of the impacts [26][28] Question: First aid inventory situation - There have been instances of overstocking in first aid products, but management believes that the expiration dates of these products lead to more cautious inventory management compared to other product lines [22]

```markdown [Part I](index=3&type=section&id=Part%20I) [Business](index=3&type=section&id=Item%201.%20Business) Acme United is a global supplier of first aid, medical, and cutting products, achieving record $194 million net sales in 2022 [Overview](index=3&type=section&id=Overview) - Acme United is a leading supplier of first aid, medical, and cutting technology products for various markets, with total net sales of **$194 million** in 2022[3](index=3&type=chunk) - The company has achieved **thirteen consecutive years of record annual sales growth**, averaging **10%** per year[3](index=3&type=chunk) - First aid and medical products have grown to represent approximately **55% of total sales**, reducing reliance on school and office products[3](index=3&type=chunk) - In 2022, the company acquired Safety Made, a first aid promotional business, and increased its revolving loan facility from **$50 million to $65 million**[3](index=3&type=chunk) - Cost reduction initiatives implemented in the second half of 2022 are expected to generate over **$5 million in savings** in 2023[3](index=3&type=chunk) [Principal Products](index=3&type=section&id=Principal%20Products) - The company's products are categorized into two main groups: 'first aid and medical' and 'cutting, sharpening and measuring'[4](index=4&type=chunk) - The 'first aid and medical' category includes brands such as First Aid Only®, PhysiciansCare®, Pac-Kit®, Spill Magic®, First Aid Central®, Med-Nap, and Safety Made[4](index=4&type=chunk)[5](index=5&type=chunk) - The 'cutting, sharpening and measuring' category includes brands like Westcott®, Clauss®, Camillus®, Cuda®, and DMT® for various markets including school, home, office, hardware, and sporting goods[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk) [Intellectual Property](index=5&type=section&id=Intellectual%20Property) - The company holds numerous patents and trademarks crucial to its business, including Westcott, Clauss, Camillus, PhysiciansCare, First Aid Only, Cuda, DMT, Pac-Kit, Spill Magic, and First Aid Central[9](index=9&type=chunk) - The weighted average amortization period remaining for intangible assets as of December 31, 2022, was **9 years**[9](index=9&type=chunk) [Product Distribution; Major Customers](index=5&type=section&id=Product%20Distribution%3B%20Major%20Customers) - Products are sold through independent manufacturer representatives and direct sales to a variety of channels, including mass market, e-commerce, and industrial distributors[10](index=10&type=chunk) Major Customer Sales Concentration | Year | Customer 1 (% of Net Sales) | Customer 2 (% of Net Sales) | | :--- | :--- | :--- | | 2022 | 15% | 10% | | 2021 | 17% | 11% | [Competition](index=6&type=section&id=Competition) - The company faces competition based on product innovation, quality, price, and design[11](index=11&type=chunk) - Major competitors in the cutting category are 3M and Fiskars Corporation[11](index=11&type=chunk) - Major competitors in the first aid and safety category are Honeywell and Cintas[11](index=11&type=chunk) [Seasonality](index=6&type=section&id=Seasonality) - Sales and profits are typically stronger in the second and third quarters due to the seasonal nature of the Westcott back-to-school market[12](index=12&type=chunk) [Employees and Human Capital Considerations](index=6&type=section&id=Employees%20and%20Human%20Capital%20Considerations) - As of December 31, 2022, the company employed **619 full-time people**, none of whom are covered by union contracts[14](index=14&type=chunk) - The company is committed to a diverse workforce and provides market-competitive pay and benefits, including medical, dental, vision, 401(k), and flexible spending accounts[15](index=15&type=chunk) [Risk Factors](index=6&type=section&id=Item%201A.%20Risk%20Factors) The company faces operational, legal, regulatory, and market risks, including supply chain, IP, and geopolitical factors [Industry and Operational Risks](index=6&type=section&id=Industry%20and%20Operational%20Risks) - The company expects to continue experiencing inflationary pressure on its cost structure, and price increases may not fully offset these costs or could lead to lower sales volumes[20](index=20&type=chunk) - Supply chain issues, including vendor delays and shipping difficulties, can impact timely product delivery and may result in contractual penalties[22](index=22&type=chunk) - The loss of a major customer could significantly decrease sales and earnings, as two customers accounted for approximately **15% and 10%** of consolidated net sales in 2022[28](index=28&type=chunk) - The e-commerce business, which constituted about **17%** of net sales in 2022, faces risks related to demand forecasting and reliance on third-party platforms[31](index=31&type=chunk) - The company has substantial indebtedness, with **$50 million** outstanding under its revolving credit facility and over **$11 million** on a mortgage as of year-end 2022, which could affect financial flexibility[35](index=35&type=chunk) [Legal and Regulatory Risks](index=11&type=section&id=Legal%20and%20Regulatory%20Risks) - The company's success is partly dependent on its ability to obtain and protect patents, trademarks, and other intellectual property rights[38](index=38&type=chunk) - Product liability claims or regulatory actions could lead to monetary judgments, negative publicity, and costly recalls, potentially harming the company's reputation and financial results[39](index=39&type=chunk) - Certain products and facilities are subject to regulation by the FDA and analogous foreign regulators, and failure to comply could lead to facility shutdowns or product recalls[41](index=41&type=chunk) - The company is subject to various environmental laws and regulations, and the costs of compliance or liability for contamination could have a material adverse effect[42](index=42&type=chunk) [Risks Related to Our Overseas Operations](index=12&type=section&id=Risks%20Related%20to%20Our%20Overseas%20Operations) - Global operations expose the company to risks from political, regulatory, and economic conditions in foreign countries, as well as currency exchange rate fluctuations[43](index=43&type=chunk)[44](index=44&type=chunk) - The company relies on foreign suppliers, primarily in China, subjecting it to risks such as regulatory changes, political instability, and the impact of pandemics on the supply chain[45](index=45&type=chunk) - Changes in U.S. trade policies, including the imposition of tariffs on products from China, may negatively impact customer demand and financial results[47](index=47&type=chunk) [Risks Related to Our Common Stock](index=13&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) - There is no assurance that the company will continue to pay dividends or repurchase shares under its stock repurchase program[48](index=48&type=chunk)[49](index=49&type=chunk) - The company's common stock is thinly traded, which can lead to greater price volatility compared to the broader market[49](index=49&type=chunk) [Properties](index=14&type=section&id=Item%202.%20Properties) The company owns 481,460 sq ft and leases 197,600 sq ft for operations across various locations Owned and Leased Properties | Status | Total Square Footage | Primary Use | | :--- | :--- | :--- | | Owned | 481,460 | Warehousing, manufacturing, distribution, administrative | | Leased | 197,600 | Administrative, manufacturing, warehousing, distribution | [Legal Proceedings](index=14&type=section&id=Item%203.%20Legal%20Proceedings) No pending material legal proceedings exist, nor is the company aware of any contemplated by governmental agencies - There are no pending material legal proceedings to which the Company is a party[49](index=49&type=chunk) [Part II](index=15&type=section&id=Part%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on NYSE American; no repurchases in 2022, 160,365 shares remain available - The Company's Common Stock is traded on the NYSE American under the symbol 'ACU'[50](index=50&type=chunk) - The company did not repurchase any shares of its Common Stock during 2022. As of December 31, 2022, **160,365 shares** may still be purchased under the 2019 repurchase program[51](index=51&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales grew 7% to $194.0 million in 2022, but gross margin declined due to high costs, impacting net income [Results of Operations 2022 Compared with 2021](index=17&type=section&id=Results%20of%20Operations%202022%20Compared%20with%202021) Financial Performance Comparison (2022 vs. 2021) | Metric | 2022 | 2021 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $194.0M | $182.1M | +$11.9M | +7% | | Gross Profit | $63.6M | $64.8M | -$1.2M | -1.8% | | Gross Margin | 32.8% | 35.6% | -2.8 pts | N/A | | Operating Income | $6.3M | $12.8M | -$6.5M | -50.9% | | Net Income | $3.0M | $13.7M | -$10.7M | -78.4% | - The decline in gross profit margin was primarily due to exceptionally high ocean container costs and demurrage charges, which had a **1.7% negative impact**[59](index=59&type=chunk) - SG&A expenses increased by **10.1%** to **$57.3 million**, driven by higher personnel costs, commissions, and shipping costs, including fuel surcharges[59](index=59&type=chunk) - Net interest expense more than doubled to **$2.4 million** from **$0.9 million** in 2021, due to higher average interest rates and higher average debt outstanding[60](index=60&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) - Working capital increased by approximately **$8.5 million** in 2022, primarily due to an **$9.7 million (18%)** increase in inventory to offset potential supply chain disruptions[63](index=63&type=chunk) - The company amended its revolving loan agreement, increasing the borrowing availability from **$50 million to $65 million** and extending the expiration to May 2026[63](index=63&type=chunk) - As of December 31, 2022, **$50 million** was outstanding under the revolving credit facility, with **$15 million** available for borrowing[63](index=63&type=chunk) - On June 1, 2022, the company acquired Safety Made for approximately **$11 million**, including **$1.5 million** in contingent payments[63](index=63&type=chunk) [Financial Statements and Supplementary Data](index=20&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) 2022 financial statements show $194.0 million net sales, $3.0 million net income, and increased assets, with unqualified audit opinion [Consolidated Statements of Operations](index=21&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Year ended Dec 31) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net sales | $193,962,357 | $182,087,559 | | Gross profit | $63,558,785 | $64,800,357 | | Operating income | $6,273,302 | $12,769,987 | | Net income | $3,034,766 | $13,655,679 | | Diluted EPS | $0.82 | $3.45 | [Consolidated Balance Sheets](index=23&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (As of Dec 31) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Total Current Assets | $105,600,013 | $95,250,614 | | Total Assets | $164,377,104 | $144,438,684 | | Total Current Liabilities | $22,126,662 | $20,275,112 | | Total Liabilities | $85,346,972 | $67,356,723 | | Total Stockholders' Equity | $79,030,132 | $77,081,961 | [Consolidated Statements of Cash Flows](index=25&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Highlights (Year ended Dec 31) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,891,739 | $5,140,578 | | Net cash used by investing activities | ($14,226,655) | ($6,372,615) | | Net cash provided by financing activities | $14,276,667 | $2,042,646 | | Net increase in cash and cash equivalents | $2,757,060 | $675,973 | [Notes to Consolidated Financial Statements](index=26&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company's operations consist of three reportable geographic segments: United States (including Asia), Canada, and Europe[75](index=75&type=chunk) - The acquisition of Safety Made on June 1, 2022, for approximately **$11 million** resulted in the recording of **$3.4 million** in goodwill and **$5.1 million** in other intangible assets[112](index=112&type=chunk) - The company's revolving loan agreement was amended to increase borrowing capacity to **$65 million** and extend the maturity to **May 2026**. As of year-end, **$50 million** was outstanding[88](index=88&type=chunk) - In 2021, the company recorded **$3.5 million** in income from the forgiveness of its Paycheck Protection Program (PPP) loan[90](index=90&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[128](index=128&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[129](index=129&type=chunk) - The independent registered public accounting firm, Marcum LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[129](index=129&type=chunk) [Part III](index=42&type=section&id=Part%20III) [Directors, Executive Officers and Corporate Governance](index=42&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and governance is incorporated by reference from the 2023 Proxy Statement - Detailed information is incorporated by reference from the Company's 2023 Proxy Statement[131](index=131&type=chunk) [Executive Compensation](index=42&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2023 Proxy Statement - Detailed information is incorporated by reference from the Company's 2023 Proxy Statement[132](index=132&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=42&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2023 Proxy Statement - Detailed information is incorporated by reference from the Company's 2023 Proxy Statement[132](index=132&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=42&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related transactions and director independence details are incorporated by reference from the 2023 Proxy Statement - Detailed information is incorporated by reference from the Company's 2023 Proxy Statement[132](index=132&type=chunk) [Principal Accounting Fees and Services](index=42&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information is incorporated by reference from the 2023 Proxy Statement - Detailed information is incorporated by reference from the Company's 2023 Proxy Statement[133](index=133&type=chunk) [Part IV](index=43&type=section&id=Part%20IV) [Exhibits and Financial Statement Schedules](index=43&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K - This section lists all financial statements, schedules, and exhibits filed with or incorporated by reference into the Form 10-K[134](index=134&type=chunk)[135](index=135&type=chunk) ```

Acme United Corporation (NYSE:ACU) Q4 2022 Earnings Conference Call March 2, 2023 12:00 PM ET Company Participants Walter Johnsen - Chairman & Chief Executive Officer Paul Driscoll - Chief Financial Officer Conference Call Participants Jim Marrone - Singular Research Richard Dearnley - Longport Partners Peter Sidoti - Sidoti & Company 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, ...