Good day. 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 go ahead, sir. Good morning. Welcome to the fourth quarter and year-end 2022 earnings conference call for Acme United Corporation. I'm Walter C. Johnsen, Chairman and CEO. With me is Paul Driscoll, our Chief Financial Officer, who will first read a safe harbor statement. Paul? Forward-looking statements in this conference call, including without limitation, statements related to the company's plans, 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. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, among others, those arising as a result of a challenging global macroeconomic environment characterized by continued high inflation and high interest rates. We have experienced supply chain disruptions, including those resulted from the COVID-19 pandemic, and we may experience supply chain disruptions in the future. We are also subject to additional risks and uncertainties as described in our periodic filings with the Securities and Exchange Commission in our current earnings release. Thank you, Paul. Acme United encountered and addressed a difficult macroeconomic environment in 2022. We faced supply chain issues at ports in Asia, the US, and Europe, a war in the Ukraine, rapidly increasing container expenses, product costs continually increasing, wage inflation, rising interest rates, and shortages of workers. Despite these issues, we had net sales in 2022 of $193.9 million, compared to $182.1 million in 2021, an increase of 7%. This was the 13th consecutive year of record sales. Our net income was impacted by the increased costs. In particular, we had over $4 million of extra expenses in container costs, port demurrage fees, and drayage, which we did not pass to customers. Net income for 2022 was $3 million compared to $10.1 million in 2021, and earnings per share of $0.82 versus $2.57 last year. While our financial performance was not what we had planned, we supported our customers with timely deliveries at fair prices. It was a difficult period, we emerged positioned, we believe, for improved performance. During 2022, we expanded the first aid and medical business, introduced new Westcott cutting products, broadened distribution of our Camillus hunting knives and tools, and purchased the assets of two companies. We broadened our first aid and medical product lines, which now account for more than 55% of Acme United's revenues. During 2022, we expanded distribution in the industrial and retail markets in the United States and integrated the Med-Nap line of prep pads and BZK wipes into our refills. We also acquired Safety Made in June 2022, entering the market for personalized medical and safety products. In September 2022, we acquired Ready 4 Kits and merged it into Safety Made. Our team expanded distribution of our line of refills for industrial first aid kits during the year. These are the components that are used in the kits and which must be added as items are used or expire. We introduced a new generation of technology in our first aid cabinets, providing an easier option for replenishment of refills to our customers. Sales of refills in 2022 were a fast-growing annuity portion of our business. Our Westcott group performed well in 2022 despite a very difficult retail environment. We continued as the largest supplier of scissors globally, and our Westcott scissors became arguably the world's most recognized brand. We expanded the Westcott product line of ceramic cutters to open boxes and packages, as well as introduced new high-leverage scissors for use in the craft and industrial markets. The Camillus hunting knife category was solid contributor in 2022 and has gained new hardware and mass market distribution for 2023. The Cuda fishing knife and tool product family has grown from its roots in the offshore fishing market to best-in-class freshwater tools developed for a rugged environment. In Canada, we expanded our first aid and medical business through First Aid Central, which we acquired in 2020. We successfully introduced many of our US product lines to global customers in Canada and added major industrial distributors as well as retailers. At year-end, we leased additional space to double our first aid production capacity in Canada. In Europe, we acquired the Eumex product line of scissors and writing instruments to expand our office products offering. We continued to gain market share in first aid and medical products and have secured new listings for 2023. During 2022, Acme United initiated cost reductions that are anticipated to save over $5 million in 2023. These savings are due to improved efficiency in our production and warehouse facilities, reduced transportation costs, and lower spending in SG&A than in 2022. We believe the risk of supply chain disruptions has been reduced, and we are now lowering our inventory. During 2023, our goal is to reduce inventory by $5 million and to use the resulting cash flow to reduce debt and fund potential acquisitions. While we are not providing guidance for 2023 at this time, we are forecasting growth over the 2022 level with much improved profitability. I will now turn the call to Paul. Acme's net sales for the fourth quarter were $44.1 million compared to $45.8 million in 2021, a decrease of 4% or 2% in constant currency. Sales for the year ended 31 December 2022 were $194 million compared to $182 million in 2021, an increase of 7% or 8% in constant currency. Net sales in the U.S. segment decreased 2% in the quarter but increased 8% for the year ended 31 December 2022. The decline in the quarter was mainly due to some large customers reducing their inventory. The growth for the year was primarily due to increased sales of first aid and medical products. Net sales for Europe increased 13% in local currency for the fourth quarter and 10% for the year on 31 December 2022. The sales increase for both periods was mainly due to new customers in the office channel. Net sales in local currency for Canada decreased 16% in the quarter due to reduced consumer demand for knives and fishing tools in comparison to the same period in 2021, when there were unusually high sales of these products driven by the pandemic. Customer inventory reductions also affected the fourth quarter. Sales for the year on 31 December 2022 were constant in local currency. Gross margin was 32% in the fourth quarter of 2022 compared to 35.1% in 2021. The gross margin for the year ended 31 December 2022 was 32.8% compared to 35.6% in 2021. The decline in both periods was primarily due to higher ocean freight and related transportation costs for imported goods. Contributing to decline were weaker currencies in Europe and Canada, where we purchase most of our inventory in US dollars. SG&A expenses for the fourth quarter of 2022 were $14 million, or 32% of sales, compared with $13 million, or 28.4% of sales, for the same period of 2021. SG&A expenses for the year ended 31 December 2022 were $57.3 million, or 29.5% of sales, compared with $52 million or 28.6% of sales in 2021. Interest expense for the fourth quarter of 2022 was $920,000 compared to $240,000 in the fourth quarter of 2021. Interest expense for the year ended 31 December 2022 was $2.4 million compared to $900,000 for the same period of 2021. The increase for both periods was due to higher debt and higher interest rates. Our overall average interest rate in 2022 was 4% compared to 2% for 2021. Our overall average interest rate for the three months ended 31 December 2022 was 5.7% compared to 2% for the same period in 2021. The net loss for the fourth quarter of 2022 was $597,000 or -$0.19 per diluted share, compared to a net income of $2.3 million or $0.60 per diluted share for the same period of 2021. Net income for the year ended 31 December 2022 was $3 million or $0.82 per diluted share. Excluding the impact of the PPP loan forgiveness of $3.5 million, net income was $10.1 million or $2.57 per diluted share for the year ended 31 December 2021. The three and 12-month 2022 results were impacted by the exceptional supply chain costs and higher interest expense. The company's debt less cash on 31 December 2022 was $55 million compared to $40 million on 31 December 2021. During the year ended 31 December 2022, the company paid approximately $11 million for the acquisition of the assets of Safety Made and paid $1. million in dividends. We increased inventory during the 12-month period by approximately $9 million to prepare for continued growth and to be positioned to offset the impact of supply chain disruptions related to COVID-19. The increase in inventory was also a result of higher product costs. Our year-end inventory decreased $2.9 million compared to the end of the third quarter of 2022. We plan to reduce inventory by another $5 million in 2023. Thank you, Paul. I will now open the call to questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Jim Marrone with Singular Research. Please proceed with your question. Yes, thank you for taking my call. My question is in regards to the fourth quarter results. Now, I understand the loss on the bottom line as a result of, you know, supply side constraints, but I'm just trying to reconcile with regards to top line, why the softness in US and Canadian sales, given that, you know, there's a reopening with regards to schools, offices and factories. If you can just share some light with regards to why the decrease in sales regards to those two markets, that would be great. Thanks. Yeah. Thank you. That's a very good question. The, several of our major retail customers, have been reducing inventory in a very significant way. And I'm sure you've read about Walmart, Target, Amazon all doing that kind of thing. And it's been a broad brushed reduction of inventory. At the same time that they've been reducing inventory, the consumer has continued to be spending. The actual turns of the products continue to be reasonably strong. They're driving down their inventory, and at some point, that'll be completed. We're estimating that to be pretty much behind us fairly shortly. Okay, great. Thank you. I know you're not giving guidance for 2023, but if you can just give us some idea with regards to what we could expect in the first quarter and second quarter. I would imagine it's gonna be a return to profitability given that the supply side's kind of abated a bit. Can you give us some idea with regards to top line expectations as well as bottom line expectations? Well, a lot does depend on what the retail market does. I know that Walmart has reported that their inventories are getting more in balance. We're expecting a solid performance in the first quarter and in the second, I think I'd leave it at that. Clearly the cost savings are being implemented and have been implemented. The container costs have gone to near historic levels, that's all in our favor. On the top line, that's an area that I really can't control because it depends on the retailers reducing their inventory. I would expect two solid quarters. Okay, thank you. Just one last question. What are your expectations in regards to acquisitions for 2023? Are we seeing, you know, could we expect any activity with regards to, maybe, expansion of product line or geographical footprint? Probably won't be geographical footprint at this time, vertically integrating further in the First Aid and Medical area, similar to what we did with Spill Magic and Safety Made, is a very logical place for us to be looking, as well as competitors who are directly against us in the first aid space. Those are the two areas that I'd be looking at and are looking at. It's probably more towards the back end of the year if we do something. Okay. Are you getting offers that are coming to you or are you kind of looking out into the market? With our acquisition strategy, almost all of our deals are self-generated. The offers are really companies that we've contacted over the years, you know, and we continually stay in touch with them. We're very, very unlikely to be acting on a book that's put by an investment banker. It's much more likely to come from one of our self-generated deals. Great. Thank you for taking my questions. Thank you. Our next question comes from line of Richard Dearnley with Longport Partners. Please proceed with your question. Good morning. Paul, could you refresh my memory on what were first aid sales as a percent of sales in 2021? They were approximately 50% in 2021 and 55% in 2022. The square footage expansion in Canada is probably not a great deal of feet. Is that for the Canadian market or is part of that for the US market as well? The expansion is in Canada, and it's for the Canadian market. As I mentioned in the conference call, we're getting increasing business, not only from organic growth through our First Aid Central business, but also the multinationals that operate in Canada that are taking our products primarily from the US and would like similar products made in Canada, which would of course be in our factory. Mm-hmm. And then shipped there. It's a combination of both. First Aid Central has done a terrific job since we've acquired them. Great. The $4 million cost saving estimate out of supply chain, I would guess that comes largely into cost of goods. Would that be correct? Correct. Yeah. Then the $5 million of just cost savings. Yeah. How might that break down between cost of goods and SG&A? Well, it's a combination of both. It's probably 60% cost of goods, 40% SG&A. Great. Walter, when in your discussion, in the notes, were you implying that SG&A would be down in dollars in 2023? I'm not sure, Richard. What I know is that we continue to be facing inflation, so I'm not sure about that. What I am sure about is there's a solid chunk of reduction in the spending in the aggregate pool, but that over the additional... I don't know the answer to that. We're also growing, so I... [crosstalk] Yeah. We're growing, SG&A is gonna grow as well. Yeah. Well, that's why I was, you know, just looking at the words and saying, "Hmm, does that... you know. Okay. Good. Yeah. That, that's logical." Okay. Thank you. Thank you. Thank you. Once again, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Peter Sidoti with Sidoti & Company. Please proceed with your question. Hello, good afternoon. Hi, Peter. I'm sorry. It looks like Mr. Sidoti has disconnected by mistake. Once again, ladies and gentlemen, if you'd like to ask a question, please press star one on your telephone keypad. We'll pause a moment to allow for any other questions. It seems there are no other questions at this time. I'll turn the floor back to Mr. Johnsen for any final comments. If there are no further questions, this call is complete. We look forward to sharing the first quarter 2023 results in April. Thank you for joining us. Goodbye. Thank you. This concludes today's conference. You may disconnect your lines at this time.