Sam Namiri: Okay. And then your growth, is it coming from like take, I guess, like winning against competition? Or maybe kind of give some color as to like the market, are the markets expanding that you are in? Are you, again, beating competition? Like can you — is there any color you can give in terms of that?
Walter Johnsen: Well, let’s take Westcott first, because that’s the one that you would think, well, the cutting area, it’s probably a slowish growth, and it is, but people are continuing to open boxes and using them for different crafts and so forth. We have gained market share there. So the overall market is expanding at maybe 2% to 3% in my best estimate. But we’re looking at much greater growth in Westcott this year. And it’s from some cutting tools that are going into a mass market retailer that we never had before. It’s a customer we’ve had before but not for the products. And there, it’s a replacement of a competitor. In the case of Westcott, again, at a major hobby store, it’s a replacement of a competitor with many, many new products.
So it’s a multimillion dollar expansion. Again, it’s winning against a competitor. In the case of First Aid, we’re seeing an expanding market growing faster than Westcott where we’re gaining growth this year, a new drug chain where we pushed out a competitor. And then I believe at another industrial hardware chain, we’re not only pushing out a competitor, but gaining more shelf space that didn’t exist dedicated to First Aid. In the case of foodservice, we’re gaining new whites and lens cleaners. We’re also gaining — and that would be against probably a competitor, but I don’t know which one. And then we’re also gaining first aid, which is going into restaurants that we’ve done quite a bit of work, but we’re — it’s just new business that we’re gaining.
At Spill Magic, we gained a major piece of new business at a large grocery chain. And you know that Spill Magic use, for example, one large retailer in the United States, where anybody that spills something on their floors or get sick, they use it for cleanup. And this is a multimillion dollar expansion in new business this year. I’m not sure whether they converted from another competitor, I don’t think so. I think it was really a new use. In Europe, we’ve gained against a competitor in the Westcott business several hundred thousand dollars that I just became aware of yesterday. And we’re introducing new first aid items there. Probably, that’s in the first aid area, that would be new products to our existing customers in a new category. So that’s sort of a flavor of how we’re doing that, Sam.
There was organic growth. And then at DMT, we’ve replaced in the kitchen area at a large retailer sharpening tools for knives, and that’s a multimillion dollar new piece of business. So there was a competitive win. So that’s sort of why we’re seeing this coming year with some pretty good wins that are back.
Sam Namiri: And then I just wanted to get a sense of how much room in terms — how do you think about your capacity for debt? And what level of debt you’d be comfortable with going to for an acquisition?
Walter Johnsen: Well, we have a lot of capacity right now. As you know, we were at $55 million in debt in December of 2022, and we’re at — where are we now, Paul, like $19 million in net debt?
Paul Driscoll: Right. Yes.
Walter Johnsen : Yes. I mean, so we’ve got $35 million, $36 million of excess capacity right now. And we’re generating cash flow. So the kinds of acquisitions we’re looking at are tuck-in acquisitions where we can leverage our distribution channels and our product mix to grow them. So we’re not looking for some transformative deal where I’ve got adding a tremendous amount of debt. That’s probably not what’s in the cards. Is that helpful?
Sam Namiri: Yes. Yes, that’s helpful. I guess part of what I’m thinking is also is with what your outlook is looking like, does it make sense to increase buyback as well? Or I don’t know — I don’t think you actually have — I don’t know, I’m not sure, do you have a buyback in place? I know if you do, it’s small, but…
Walter Johnsen: Yes. We have a buyback in place for over 160,000 shares, and we could do that. But I’m not thinking right now. Well, we could do it with some options because that would be very advantageous for the company because you’ve got the strike price offsetting the number of shares. We may do some of that. And opportunistically, we may find a block that’s available and we take it because if we’re right with where we think we’re going, then that would be a good purchase for the company.
Sam Namiri: Got it. Okay. And of the $100 million you mentioned on the call, you said $100 million of revenue in what, three years is what you expect, both organic and…
Walter Johnsen : I’m not expecting, that’s my objective. Hold it to Walter.
Sam Namiri: Okay. Okay. I guess from the objective there, what would you say is the mix of organic versus positive growth?
Walter Johnsen : Yes. So just for round numbers, say, we were at 200. We’re less. We finished the year at 191, and we sold 6% of the company. So let’s remember that. But let’s say we’re at 200 and we grow 10% a year. In three years, that’s 220, 240, 260. There’s some compounding that’s 270, and we buy $30 million of companies. So that’s how it would happen. I can see that happening.
Operator: Your next question is a follow-up question from Richard Dearnley.
Richard Dearnley: Paul, the tax rate in the fourth quarter looks like ex capital gain was really minimal. Am I getting that right? And if so, why was that?
Paul Driscoll: The tax rate in the fourth quarter was 20%, is that what you…
