Acme United Corp (NYSE MKT:ACU) Q3 2019 Earnings Conference Call - Final Transcript

Oct 18, 2019 • 12:00 pm ET

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Acme United Corp (NYSE MKT:ACU) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

you. Our next question comes from Tim Call of Capital Management Corporation.

Analyst
Tim Call

Hello. Congratulations on a great quarter.

Executive
Walter C. Johnsen

Thank you, Tim. Tim, you are mute.

Analyst
Tim Call

Sorry. Congratulations on the great quarter.

Executive
Walter C. Johnsen

Thank you.

Analyst
Tim Call

Falling so fast [Phonetic], you still have your interest expense rise and the Federal Reserve is lowering interest rates now. So would we expect interest rates to start falling soon -- Interest expense to start falling for you?

Executive
Walter C. Johnsen

Right, absolutely. First, we got the reduction in the rates and we are LIBOR plus [Indecipherable] so LIBOR has dropped. Second, our debt is now down substantially. So while we've got interest expense higher at this stage you can expect that to be dropping meaningfully during the coming quarters.

Analyst
Tim Call

Great. Congratulations again on a great quarter.

Executive
Walter C. Johnsen

Thank you, Tim.

Operator
Operator

Thank you. We will take our next question from Michael Mork of Mork Capital Management.

Analyst
Michael Mork

Hi. Yeah, again reiterate the other guys, great quarter. One thing that's going to help you is you just mentioned was lower interest rates. Just looking at 2020 without giving any exact projections, what will be the positives, the wind at your back and what potentially could be negatives a little wind in your face in the year 2020?

Executive
Walter C. Johnsen

That's a very insightful question Mike. Things to our positive, I think that we're stabilizing with some of the office superstores in their -- as they stabilize their businesses. So I think we've got a floor there on our office product area. I see fairly substantial growth opportunities with our first aid and safety business, particularly as we continue to gain with the implementation of the safety hub, which is the automatic replenishment. So every time you place new first aid SmartCompliance kit the safety hub is capturing an increasing percentage of the retail business. So that's an annuity and it's building.

The decline in interest rates, every -- it was an average of $40 million of debt for us and it's actually going to be less next year. Well, 1% is 400,000 and that means every point -- every quarter point is 100,000 and that's going to be in our favor. The tariffs I feel as if we're in control of that. And we have been, there may be an opportunity to get some savings for our products as we move to places that don't have an tariff. We're introducing a line of box openers that is gaining -- we have introduced it, but it's gaining positioning and the product family is growing and this is for opening boxes that are in distribution centers throughout the world and it is ceramic based. That's working for us and it's working well. There are some cyclical -- some declines that will be secular. The pencil sharpener business well there is less [Phonetic] pencil and that's not that big of a business for us, but that will probably decline in a few percentage points next year. The ruler business declined a little bit, but other than that the