Acme United Corp (ACU) 2016 Q2 法說會逐字稿

Good day and welcome to the Acme United Corporation second-quarter 2016 earnings call. today's conference is being recorded. At this time, I would like to turn the conference over to Chairman and Chief Executive Officer, Mr. Walter Johnsen. Please go ahead sir.

大家好，歡迎參加 Acme United Corporation 2016 年第二季財報電話會議。今天的會議正在錄製中。現在，我想將會議交給董事長兼執行長 Walter Johnsen 先生。先生，請開始。

Good morning. Welcome to the second-quarter 2016 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?

早安.歡迎參加 Acme United Corporation 2016 年第二季財報電話會議。我是董事長兼執行長 Walter C. Johnsen。與我一起的是我們的財務長 Paul Driscoll，他將首先宣讀安全港聲明。 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 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 without limitation the following. One, the Company's plans, strategies, objectives, expectations, and intentions are subject to change at any time at the discretion of the Company. Two, the Company's plans and results of operation will be affected by the Company's ability to manage its growth. And three, other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission.

本次電話會議中的前瞻性陳述，包括但不限於與公司計畫、策略、目標、預期、意圖和資源充足性相關的陳述，均依據《1995年私人證券訴訟改革法》的安全港條款作出。請投資人注意，此類前瞻性陳述涉及風險和不確定性，包括但不限於以下幾點：第一，公司的計劃、策略、目標、預期和意圖可能隨時由公司自行決定變更；第二，公司的計劃和經營業績將受到公司管理其增長的能力的影響；第三，公司向美國證券交易委員會提交的文件中不時指出的其他風險和不確定性。

Thank you, Paul.

謝謝你，保羅。

Acme United had a single best quarter in its history in the second quarter of 2016. We had net sales of $41 million during the quarter, an increase of 21%. Net income was $3.3 million, an increase of 21%. Earnings per share were $0.91, an increase of 23%.

2016年第二季度，Acme United 取得了史上最好的表現。本季度，我們的淨銷售額達到4,100萬美元，年增21%。淨利為330萬美元，較去年同期成長21%。每股收益為0.91美元，較去年同期成長23%。

We had record back-to-school sales led by our new Westcott kid scissors and proprietary nonstick pencil sharpeners. Our Westcott shares gained market share in the office channel. We broadened our distribution in the craft market. The Clauss, Camillus and Cuda cutting tools performed well in the industrial and sporting goods markets.

返校季銷售額創歷史新高，主要得益於新款 Westcott 兒童剪刀和專有不沾鉛筆刀。 Westcott 在辦公用品通路的市佔率有所提升。我們擴大了在工藝品市場的通路。 Clauss、Camillus 和 Cuda 刀具在工業和運動用品市場表現良好。

Promotions planned in the first quarter for Cuda fishing tools totaling about $400,000 shipped in the second quarter. More importantly however, the group has had strong momentum going into the rest of the year.

Cuda 漁具集團第一季計畫進行促銷活動，第二季出貨總額約 40 萬美元。更重要的是，該集團在今年剩餘時間內保持了強勁的發展勢頭。

Sales of first aid kits and components were excellent. Our Smart Compliance industrial first aid kits led the growth. These kits have been expanded in size and range and are getting placement in major industrial accounts. On average, our revenue from refills of the kits annually about equals the initial sales. We are continuing to build a recurring revenue stream.

急救包及配件的銷售業績斐然。我們的智慧合規工業急救包引領了成長。這些急救包的規格和種類均有所擴展，並已應用於主要的工業客戶。平均而言，我們每年從急救包補充裝中獲得的收入大致相當於最初的銷售量。我們正在持續建構經常性收入來源。

Internationally, European sales increased 34% in local currency and 36% in US dollars. The Brexit vote sharply impacted the British pound, and we saw about a EUR25,000 decline in the translated value of our UK receivables. This is a minor in a corporate sense, but frustrating. Ongoing, we expect to increase selling prices to our UK customers.

國際方面，歐洲銷售額以當地貨幣計算成長了34%，以美元計算成長了36%。英國脫歐公投對英鎊匯率產生了巨大影響，我們英國應收帳款的折算價值下降了約2.5萬歐元。從公司角度來看，這雖然不大，但令人沮喪。我們預計將持續提高對英國客戶的銷售價格。

In Canada, sales were approximately even with last year. The Canadian currency appears stable and we are no longer facing the headwinds we had last year. There are a number of new business initiatives in place that should lead to continued and growing profitability.

在加拿大，銷售額與去年基本持平。加幣匯率看似穩定，我們不再面臨去年那樣的逆境。我們已實施多項新的業務舉措，可望持續提升獲利能力。

The uncertainty from the potential Staples/Office Depot merger was reduced for us when the transaction was terminated. In particular, we had anticipated about 1,000 stores to be closed during the next three years, and now far fewer appear to be impacted.

史泰博/Office Depot 合併交易終止後，我們面臨的不確定性降低。尤其是，我們原本預計未來三年將關閉約 1,000 家門市，但現在看來受影響的門市數量已經大幅減少。

Our manufacturing strategy for first aid kits has changed from nine months ago, largely due to greater sales than forecast. As some may remember, we closed our Pac-Kit manufacturing facility in November 2015 and shifted most first aid production to our plant in Vancouver, Washington. This step saved about $500,000 annually in facility and other costs. However, we then had far more first aid orders than forecast, led by Smart Compliance sales. We then added a second shift in Vancouver and a third-party warehouse. We have now begun a full second production site in our large Rocky Mount, North Carolina facility. We have excess space there, an excellent workforce, and room to leverage our fixed costs. More importantly, we have a runway to substantially grow the first aid business. Based on the strength of our current business, we are raising our guidance for 2016 to $123 million in revenues, $5.8 million in net income, and $1.55 earnings per share.

我們的急救包生產策略自九個月前起有所調整，主要原因是銷售額超出預期。有些人可能還記得，我們​​在2015年11月關閉了Pac-Kit製造工廠，並將大部分急救包生產轉移到華盛頓州溫哥華的工廠。此舉每年節省了約50萬美元的設施及其他成本。然而，由於Smart Compliance的銷售額大幅成長，我們的急救包訂單隨後遠遠超出預期。之後，我們在溫哥華增設了第二個生產班次，並設立了第三方倉庫。目前，我們已在北卡羅來納州洛基山的大型工廠全面啟動第二個生產基地。那裡擁有充足的空間、優秀的員工隊伍以及充分利用固定成本的空間。更重要的是，我們擁有大幅成長急救包業務的潛力。基於目前業務的強勁表現，我們將2016年的預期營收目標上調至1.23億美元，淨利580萬美元，每股收益1.55美元。

I will now turn the call to Paul.

現在我將電話轉給保羅。

Acme's net sales for the second quarter were $41 million compared to $34 million in 2015, an increase of 21%. Sales for the six months ended June 30, 2016 were $66.3 million, compared to $56.8 million in the same period in 2015, an increase of 17%.

Acme第二季淨銷售額為4,100萬美元，較2015年同期的3,400萬美元成長21%。截至2016年6月30日的六個月，銷售額為6,630萬美元，較2015年同期的5,680萬美元成長17%。

Net sales in the US segment increased 20% in the quarter and 18% for the six months ended June 30. The growth in the quarter and year-to-date came from Westcott school and office products, first aid kits, Camillus knives, and the DMT sharpening tools, the business we recently acquired in February.

美國分部的淨銷售額在本季成長了 20%，截至 6 月 30 日的六個月內成長了 18%。本季和年初至今的成長來自 Westcott 學校和辦公產品、急救箱、Camillus 刀具和 DMT 磨刀工具（我們最近在二月收購的業務）。

Net sales in local currency for Canada decreased 2% in the quarter but increased 5% year-to-date. The lower sales in the second quarter was primarily due to a July shipment that occurred in June last year.

加拿大本地貨幣淨銷售額本季下降2%，但年初至今成長5%。第二季銷售額下降主要由於去年6月出貨，但7月出貨。

Net sales for Europe increased 34% in local currency for the quarter and 16% for the six months ended June 30. The sales increase was primarily due to higher sales in the office channel.

本季歐洲淨銷售額以當地貨幣計算成長 34%，截至 6 月 30 日的六個月內成長 16%。銷售額成長主要歸因於辦公室通路銷售額的增加。

Gross margins were 36% in the second quarter of 2016 versus 37% in the second quarter of 2015. The gross margin percentage was slightly lower, mainly due to a heavier back-to-school product mix. We expect gross margins in the second half of the year to approximate 38%.

2016年第二季毛利率為36%，而2015年第二季為37%。毛利率略有下降，主要原因是返校產品組合較多。我們預計下半年毛利率約為38%。

SG&A expenses for the second quarter of 2016 were $10.1 million, or 25% of sales, compared with $8.7 million, or 26% of sales, for the same period of 2015. SG&A expenses for the first six months of 2016 were $18.3 million, or 28% of sales, compared with $16.3 million, or 29% of sales, in 2015. The SG&A increase for the three and six months was due to high variable selling costs as a result of higher sales and the added DMT business.

2016 年第二季的銷售、一般及行政費用為 1,010 萬美元，佔銷售額的 25%，而 2015 年同期為 870 萬美元，佔銷售額的 26%。 2016 年上半年的銷售、一般及行政費用為 1,830 萬美元，佔銷售額的 28%，而 2015 年為 1,630 萬美元，佔銷售額的 29%。第三季和六個月的銷售、一般及行政費用增加是由於銷售額增加和 DMT 業務增加導致的變動銷售成本高昂。

Operating profit in the second quarter increased from $3.9 million last year to $4.6 million this year, a 20% increase. Operating profit for the six months increased 19%.

第二季營業利潤從去年的390萬美元增至今年的460萬美元，增幅達20%。上半年營業利潤成長了19%。

Net income for the second quarter of 2016 was $3.3 million or $0.91 per diluted share compared to net income of $2.7 million or $0.74 per diluted share for the same period of 2015. Net income for the first six months ended June 30, 2016 was $3.8 million or $1.08 per diluted share compared to $3.1 million or $0.85 per diluted share in the comparable period last year.

2016 年第二季淨利為 330 萬美元，即每股攤薄收益 0.91 美元，而 2015 年同期淨利為 270 萬美元，即每股攤薄收益 0.74 美元。截至 2016 年 6 月 30 日的前六個月淨利為 380 萬美元，即每股攤薄收益 1.08 美元，而去年同期淨利為 310 萬美元，即每股攤薄收益 0.85 美元。

The Company's bank debt less cash on June 30, 2016 was $38.7 million compared to $28.2 million on June 30, 2015. During the 12-month period, Acme purchased DMT for $7 million and paid $1.3 million in dividends and $1.6 million in stock repurchases. We expect net debt to decline to approximately $28 million by year end. We also expect to generate $4.5 million to $5 million in free cash flow for the 12 months ending December 31, 2016.

截至2016年6月30日，公司銀行債務減去現金為3,870萬美元，而2015年6月30日為2,820萬美元。在12個月期間，Acme以700萬美元收購了DMT，並支付了130萬美元的股息和160萬美元的股票回購。我們預計淨債務到年底將降至約2800萬美元。我們也預計，截至2016年12月31日的12個月內，公司將產生450萬至500萬美元的自由現金流。

Thank you Paul. I will now open the call to questions.

謝謝保羅。現在開始提問。

(Operator Instructions). Andrew Burns, D.A. Davidson.

（操作員指令）。 Andrew Burns，D.A. Davidson。

Hi guys. Congrats on a great quarter. Just a couple of quick ones here. During the last call, you mentioned the Vancouver facility running less efficiently than anticipated as you were ramping to meet demand. It wasn't called out in terms of any sort of margin impact this quarter. I'm just looking for an update there.

大家好。恭喜您本季取得了優異的成績。我只想簡單問幾個問題。上次電話會議中，您提到溫哥華工廠的營運效率低於預期，因為你們正在加大產能以滿足需求。但並未提及該工廠對本季利潤率有任何影響。我只是想了解這方面的最新消息。

Well, we obviously have positive volume variances because we've got volumes that are far greater than expected. The labor that we are bringing in are less trained because we are ramping up at a pretty fast pace. And honestly, they have out-canceled each other. So as we get more efficient, we should be picking up some additional gross profit, but for this past quarter, it was about even.

嗯，我們顯然存在正的產量差異，因為我們的產量遠遠超出預期。由於我們產能提升速度很快，我們引進的勞動力訓練程度較低。說實話，他們的產能互相抵銷了。所以，隨著我們效率的提高，我們應該可以獲得一些額外的毛利，但就上個季度而言，毛利與上個季度基本上持平。

Okay. And it sounds like, if I heard correctly, the second-half gross margin could be approximately 38%. That's a nice year-over-year improvement. I was wondering if you could provide any color on whether that's mix, efficiencies, just how to think about that improvement.

好的。如果我沒聽錯的話，下半年的毛利率大概是38%左右。這比去年同期有了很大的提升。請問您能否具體解釋一下，這涉及到產品組合、效率等方面的提升，以及如何看待這種提升？

I think the primary one is we had a very strong back-to-school, which tends to have lower margins in the second quarter. And that dropped it a little bit, although still very profitable. In the third and fourth quarters, there's less reliance on that because a lot of it gets shipped by June.

我認為主要原因是我們開學季銷售強勁，這通常會降低第二季的利潤率。這導致利潤率略有下降，但仍然非常盈利。第三季和第四季對開學季的依賴程度降低，因為許多產品在6月份前就出貨了。

Also we've got new products coming out. We've got a lot of Cuda items hunting Camillus items, all of which tend to raise margins. And the first aid business continues to be very robust. So I am at this stage pretty comfortable with the 38%.

此外，我們還有新產品即將上市。我們有許多Cuda產品與Camillus產品競爭，這些產品都有助於提高利潤率。急救業務也持續保持強勁成長。所以目前我對38%的利潤率相當滿意。

Great. And you mentioned Cuda. Any thoughts following ICAST in terms of how the brand is being received or potential products here in the upcoming season?

太好了。你提到了Cuda。在ICAST之後，你對這個品牌的市場反應以及下一季的潛在產品有什麼看法嗎？

So for those that don't know, the largest fishing show in the United States is the ICAST show. It was held in Orlando last week. I was there for two days, and we had a very, very active booth, both with customers and fishing pros that were interested in the new product lines. We've got -- we had tremendous, really tremendous, enthusiasm for some new nets that are carbon fiber and float, new gaffs, a line of professional Cuda fishing tools that resist rusting. In all, I would say it was a very, very good show.

對於那些不知道的人來說，美國最大的釣魚展是ICAST。它上週在奧蘭多舉行。我在那裡待了兩天，我們的攤位非常熱鬧，既有客戶，也有對新產品系列有興趣的釣魚專業人士。我們對一些新的碳纖維漁網和浮標、新的魚鉤以及一系列防鏽的專業Cuda釣魚工具表現出了極大的熱情。總而言之，我認為這是一場非常非常棒的展覽。

Great, thanks. And I'll jump back into queue.

太好了，謝謝。那我就重新排隊了。

Mike Mork, Mork Capital Management.

麥克‧莫克，莫克資本管理公司。

Hi Walter. Good quarter. I just wondered. Your balance sheet now, it's going to be improving through year-end. At what point would you feel comfortable making another decent sized acquisition? And are there any particular areas you are looking at? In other words do you think it would be in an existing product line or something new?

你好，沃特。這個季度表現不錯。我只是好奇。你的資產負債表現在看起來到年底會有所改善。什麼時候你會覺得可以進行另一項規模可觀的收購？你正在考慮哪些特定領域？換句話說，你認為收購對像是現有產品線還是新產品？

The first part is DMT is operating ahead of expectations and the integration is going very well. And so that purchase in February is well ahead of plan and we are delighted with that. There's a couple of things that we want to do there yet. One is we are expanding the productive capability because we have more orders. And the second is we are, in the next couple of months, integrating our computer systems onto theirs. As soon as that's done, it will be pretty much fully integrated. It certainly is as far as the product line. So that's the base.

首先，DMT 的營運超出預期，整合工作進展順利。因此，二月的採購遠超計劃，我們對此感到高興。我們還想做幾件事。一是，由於訂單增加，我們正在擴大生產能力。二是，我們將在接下來的幾個月裡，將我們的電腦系統整合到他們的系統中。一旦完成，就基本實現全面整合。就產品線而言，這當然是完全整合。所以，這是基礎。

The cash flow that's being generated throughout the rest of the year, until we find something that fits, will in large part be applied to strengthen our balance sheet. I have a number of things that look interesting, and some of them are in the first aid area. Some of them are in the sporting goods area. Most of them are in the United States. The timing for that is still some months out, but we are already starting to review our list of candidates. And as you may know, we've been looking at companies to acquire for at least 10 years now, so there's a backlog of companies that we've contacted in the past that aren't being shopped that we continue to have as sort of a proprietary list of candidates. So although I don't have something I can tell you that we intend to buy now, and I probably couldn't anyway, you can probably expect that sometime in the next 12 months we will find something that is appropriate for us.

在我們找到合適的收購對象之前，今年剩餘時間產生的現金流將主要用於增強我們的資產負債表。我有一些看起來有趣的項目，其中一些屬於急救領域，一些屬於體育用品領域，大多數都在美國。收購時間還有幾個月，但我們已經開始審查我們的候選名單。正如你們所知，我們至少十年來一直在尋找可以收購的公司，所以我們過去聯繫過一些尚未被收購的公司，我們仍然保留著這些公司，這些公司是我們專有的候選名單。所以，雖然我現在還不能告訴你們我們打算收購什麼，而且我可能也無法告訴你們，但你們大概可以預期，在未來12個月的某個時候，我們會找到一些適合我們的公司。

Okay. That sounds good. Just as an aside, I went halibut fishing last week. My granddaughter caught a huge halibut and we cleaned it with one of your filet knives.

好的。聽起來不錯。順便說一句，我上週去釣大比目魚了。我孫女釣到了一條很大的大比目魚，我們用你們的魚片刀把它處理乾淨了。

Terrific, terrific. That makes me happy.

太棒了，太棒了！這讓我很開心。

Okay.

好的。

Jeffrey Briggs, Singular Research.

傑弗裡·布里格斯（Jeffrey Briggs），Singular Research。

Hi guys. It's great to see everything coming together this quarter. I wanted to ask a couple of questions about strong growth you saw in Europe. I know that there were plans to sort of introduce some of the first aid product lines over there and also possibly some of the DMT products. And I was wondering if any of those were contributors to that growth that you saw or whether it was sort of all the existing product lines that you are already selling over there.

大家好。很高興看到本季一切進展順利。我想問幾個關於您在歐洲看到的強勁增長的問題。我知道您計劃在那裡推出一些急救產品線，也可能推出一些DMT產品。我想知道這些產品是否是您看到的成長的貢獻者，還是您在那裡已經銷售的所有現有產品線都貢獻了成長？

The major contributor to the growth was our office channel, which we continue to be gaining market share, both in the US and in Europe. DMT had one month of sales in Europe which was maybe about EUR40,000?

成長的主要貢獻者是我們的辦公室管道，我們在美國和歐洲的市場份額都在持續成長。 DMT 在歐洲一個月的銷售額大概有 4 萬歐元吧？

Yes, it was EUR50,000.

是的，是50,000歐元。

EUR50,000. So it was a small contributor, but for the rest of the year, DMT sales will now start to be shipped out of our European subsidiary which is terrific (technical difficulty) customer service for European customers as well as them being able to purchase in euros. And hopefully we are able to move the top line there because we have a local presence.

5萬歐元。所以這只是一筆小貢獻，但在今年剩餘時間裡，DMT的銷售將開始從我們的歐洲子公司發貨，這為歐洲客戶提供了極好的（技術難度）客戶服務，而且他們還可以用歐元購買。希望我們能透過本地業務來提升營收。

In the first aid kit area, we are gaining some share. It's not full-blown first aid kits, but it's adhesive bandages and it's some dispenser packs, and some other items, all of which eventually will be a full first aid line. And we do have now the appropriate certifications to be selling first aid kits in the EU. So while it's only small compared to the overall business, it is a growth opportunity, but in the second quarter, the big growth was our office channel.

在急救箱領域，我們的市佔率正在成長。雖然不是功能齊全的急救箱，但包括創可貼、一些分配器包以及其他一些產品，所有這些最終都將構成完整的急救產品線。我們目前已獲得在歐盟銷售急救箱的相關認證。因此，雖然與整體業務相比，急救箱的市佔率較小，但這是一個成長機會。不過，第二季度，最大的成長點是我們的辦公室管道。

That's good information. It's also -- it's good to see that, even though the numbers might be fairly small compared to the whole picture, it's all incremental growth. So that gives you guys some opportunities down the road.

這是個好消息。而且——很高興看到，儘管與整體情況相比，這些數字可能相當小，但都是漸進式增長。所以這給你們未來帶來了一些機會。

Absolutely.

絕對地。

Thank you.

謝謝。

Jeffrey Matthews, Ram Partners.

傑弗裡·馬修斯（Jeffrey Matthews），Ram Partners。

Hi Walter. DMT is off to a great start. Were there any particular surprises? I know last quarter you talked about some of those synergies of channels that you could introduce them into and they could introduce you to -- into. Was there any particular surprises there?

你好，沃特。 DMT 的開局很好。有什麼特別驚喜嗎？我知道上個季度你談到了一些管道協同效應，你可以把他們引入進來，他們也可以把你們引入進來。有什麼特別驚喜嗎？

The biggest surprise was how well respected the DMT quality is among its user base, which is very loyal. And we really didn't know that. The second is the product line is very, very functional and it's excellent for its current users, but there's an opportunity for us to improve the ergonomics and improve some of the -- to create new sharpening tools off of that base technology. And I've been surprised how fast we might be able to get some of that into the market. So far, it's been upside. The one thing that was a downside was our ability to produce, and we are expanding some of the equipment that's there, but that's a good problem.

最令人驚訝的是，DMT 的品質在其用戶群中享有如此高的聲譽，他們的忠誠度非常高。而我們之前真的沒想到這一點。其次，該產品線功能非常強大，對現有用戶來說非常出色，但我們有機會改進其人體工學，並改進一些功能——基於此基礎技術打造新的磨刀工具。我們能夠如此迅速地將部分產品推向市場，這讓我感到驚訝。到目前為止，一切都是好的。唯一的缺點是我們的生產能力，我們正在擴充現有的一些設備，但這也算是個好問題。

Yes. In Massachusetts?

是的。在馬薩諸塞州嗎？

Yes.

是的。

Okay. Then the first aid, you mentioned that refills in a year can be equal to the initial sell-in. What -- how does that work is what -- what I'm getting at is is this normal industrial usage of the first aid products, or is there a regulatory issue where they all have to be up to a certain standard and they are getting inspected, or is this just normal wear and tear and the stuff gets used a lot?

好的。那麼說到急救產品，您提到一年內的補充裝數量可能與最初的銷售量持平。這究竟是怎麼回事呢？我的意思是，這是急救產品的正常工業用途嗎？還是有監管問題，所有急救產品都必須達到一定的標準並接受檢查？又或者，這只是正常的磨損，而且這些產品經常被使用？

First, there are quite a number of regulations, particularly OSHA regulations, to properly protect your workforce. And there are OSHA inspections. But the real driving force isn't that. The real driving force is that you provide a safe workplace for your employees. And when there is an accident, it's far cheaper to respond to it immediately and stabilize the situation as opposed to not be prepared. In order to be prepared, there's two approaches. One is you have a first aid kit that is regularly filled by vans, and you may have read about ZEE Medical and Cintas merging. And that's an expensive business model. It's expensive because it's delivery site by site with somebody driving a van and filling first aid kits. But it provides the user with a fully and set first aid kit that's prepared to be used.

首先，有相當多的法規，尤其是職業安全與健康管理局 (OSHA) 的法規，可以妥善保護你的員工。 OSHA 也會進行檢查。但真正的驅動力並非如此。真正的驅動力在於你為員工提供一個安全的工作場所。當發生事故時，立即響應並穩定局勢比毫無準備便宜得多。為了做好準備，有兩種方法。一種是使用貨車定期裝載急救箱，你可能讀過 ZEE Medical 和 Cintas 合併的消息。這是一種昂貴的商業模式。它之所以昂貴，是因為它需要有人開著貨車逐個地點運送急救箱。但它為用戶提供了一個功能齊全、隨時可用的急救箱。

Now, another approach, which is the approach we are doing, is we provide the first aid kits. When they are consumed either by an accident or through expiration of the components, for example the antibiotic lives have expiration dates, then they typically are buying through either Staples or an Amazon or Granger to get their refills. And we are supplying refills to that end user. And it's a business that is very important because, if you keep your kits fully compliant, you've got a safe workplace. Now, we are making inroads against the van-based businesses because we will save about 30% on the cost of the refills for the industrial customer compared to someone who is purchasing them from a van. And that's the driving force that is leading us a lot of this growth.

現在，另一種方法，也就是我們正在採用的方法，是提供急救箱。如果急救箱因意外事故或成分過期而被消耗，例如抗生素有保質期，那麼他們通常會透過史泰博、亞馬遜或Granger購買補充裝。我們為這些最終用戶提供補充裝。這項業務非常重要，因為如果您的急救箱完全符合標準，您就擁有了一個安全的工作場所。現在，我們正在進軍廂型車業務，因為與從廂型車購買相比，我們為工業客戶節省了約30%的補充裝成本。這正是推動我們實現巨大成長的動力。

Got it. And congratulations on Rocky Mount being able to double its production capacity. It's a great facility and --

明白了。恭喜 Rocky Mount 的產能翻倍。這是一個很棒的工廠，而且—

It was not part of the plan a year ago, but it is really clear to us right now, we've got space there. It's in a great location for servicing our customers. We've got a good workforce, and it gives us that platform that doesn't require additional space. So it's a very good thing.

一年前這還不是我們的計劃，但現在我們非常清楚，我們在那裡有足夠的空間。那裡地理位置優越，可以為客戶提供服務。我們擁有優秀的員工隊伍，而且它為我們提供了一個不需要額外空間的平台。所以這是一件非常好的事情。

Absolutely. I'll get back in line. Thanks so much. Good luck.

當然。我會再排隊的。非常感謝。祝你好運。

(Operator Instructions). Richard Dearnly, Longport Partners.

（操作員指令）。 Richard Dearnly，Longport Partners。

Good morning. What is the mix of first aid sales in the second quarter and first half?

早安.第二季及上半年急救產品的銷售情況如何？

By that, what do you mean?

那你的意思是什麼？

Percent of sales, or you know, it was running in the 40% range last year. Has that increased?

銷售額佔比，或者說，去年大概在40%左右。這個數字有成長嗎？

I'll turn that over to Paul. I don't believe it's -- everything is growing in the business.

我把這個交給保羅。我不認為這個行業的一切都在成長。

It's still roughly 40%. I think last year, it was 35%, so it is somewhere between 35% and 40% now.

現在大概還是40%。我記得去年是35%，所以現在大概是35%到40%之間。

I see. And that's -- as I remember, you had $5 million, give or take, of sales of aspirin, Anacin, Advil, and that discontinued in something like the third quarter of 2015?

我明白了。我記得你們的阿斯匹靈、安納新和艾德維爾的銷售額大概在500萬美元左右，這些產品大概在2015年第三季就停產了？

No. There was about $3 million of branded medications that we discontinued with some of our customers because we were just passing through these products basically as a service to them.

沒有。我們停止向一些客戶銷售價值約 300 萬美元的品牌藥物，因為我們只是將這些產品轉售給他們，基本上就是一種服務。

And when did you eliminate that?

那你是什麼時候消除它的呢？

I think the final impact of that was about January of this year.

我認為這件事的最終影響是在今年一月左右。

Okay.

好的。

Actually last year.

其實是去年。

Yes, we (multiple speakers) it last year, but right now there's no offset.

是的，我們（多位發言者）去年就這麼做了，但現在還沒有抵銷。

There's no impact at this point. It's (multiple speakers) we discontinue, a year ago we had discontinued as well.

目前沒有影響。 （多位發言者）我們停止了，一年前我們也停止了。

Right. Then your comments about debt reduction in the second half are most impressive. In light of that, this is a difficult question to ask and answer. You've talked about SKU rationalization, but -- and in the way of that, I read an article about how Walmart.com is adding 1 million SKUs per month to their online, but their online is a fraction of Amazon's. As you have more SKUs -- online lets you show or list lots of SKUs. But assuming that the online turnover works to the 80/20 rule, that gets in the way of SKU count reduction. How do you balance all that and --?

對。那麼您關於下半年債務削減的評論令人印象深刻。有鑑於此，這個問題很難提出和回答。您談到了SKU合理化，但是——在這方面，我讀到一篇文章，講的是沃爾瑪每月在其線上業務上增加100萬個SKU，但他們的線上業務量只是亞馬遜的一小部分。由於SKU更多，線上業務可以展示或列出更多SKU。但假設線上營業額遵循80/20規則，會阻礙SKU數量的減少。您如何平衡所有這些因素？

It's not quite that complicated. If the product doesn't sell much and it's got low-margins, it's gone. We call it [Gimroy] -- gross margin tons of (inaudible). So whether it's going out through the online system or it's going out through our customers, it's got a low ratio and there's no vector to make it grow, we terminate it and clean up the product. And that might show up on Amazon, but then once it's gone, it's gone.

其實沒那麼複雜。如果產品銷售不好，利潤又低，那就沒了。我們稱之為[Gimroy]－毛利率高得嚇人（聽不清楚）。所以，無論是透過線上系統或透過客戶管道，如果利潤率低，又沒有成長的管道，我們就會終止銷售，清理產品。這些產品可能會在亞馬遜上出現，但一旦售出，就完全沒了。

But you are right, the tail of products that are on these, Amazon and Walmart.com and others, is far greater than what we have in the retail store or in the catalogs and it's easier to change. And that piece surprisingly sometimes has a different weighting than you would normally expect based on what's in retail. And one example of that is a Kevlar shearer that we developed for Boeing so it could cut carbon fiber in the Dreamliner. And it's doing terrifically well at Amazon because people have figured out that it will also cut fiberglass, and you got sailmakers and boatbuilders and users that we just never accessed before. Sometimes there's a surprise that you don't expect. But the way we (technical difficulty) the product family is by the Gimroy analysis and it doesn't matter where we are selling. If it doesn't sell, it's gone.

但你說得對，亞馬遜、沃爾瑪等平台的產品尾貨量遠超過我們零售店或產品目錄，而且更容易調整。令人驚訝的是，這些產品的權重有時會與你通常基於零售店情況的預期有所不同。例如，我們為波音公司開發的凱夫拉縴維剪切機可以切割夢幻飛機的碳纖維。它在亞馬遜上表現非常出色，因為人們發現它也可以切割玻璃纖維，而且我們接觸到了帆船製造商、造船商和我們以前從未接觸過的用戶。有時會出現意想不到的驚喜。但我們（技術難度）產品系列的銷售方式取決於吉姆羅伊的分析，無論我們在哪裡銷售都無關緊要。如果賣不出去，就沒了。

Okay. Thank you.

好的。謝謝。

There are no further questions at this time. I'll turn the call back to today's speakers for any additional remarks.

目前沒有其他問題了。我會將電話轉回給今天的講者，讓他們補充意見。

I'd like to thank you for joining us today. I'm very proud of the quarter. I hope we can continue to deliver as well as we did this quarter, and I look forward to speaking to you in October. Thank you for joining us. Good-bye.

感謝各位今天加入我們。我對本季的業績感到非常自豪。希望我們能繼續保持本季的出色表現，並期待十月份與各位見面。感謝各位的參與。再見。

This concludes today's call. Thank you for your participation. You may now disconnect.

今天的通話到此結束。感謝您的參與。您可以掛斷電話了。