Acme United Corporation (US: ACU – $39.37) announced its financial results for the third quarter ended September 30, 2025, revealing a 14 percent decrease in net income compared with the same period in 2024. While this figure might suggest a downturn in profitability, the decline was due to a one-time tax benefit recorded in the third quarter of last year, rather than any deterioration in the Company’s operating performance. In fact, in the third quarter of 2025, Acme United reported net sales of approximat ...

Financial Data and Key Metrics Changes - Acme United reported net revenues of $49 million in Q3 2025, a 2% increase from $48 million in Q3 2024 [5] - Net income decreased to $1.9 million, or $0.46 per diluted share, down from $2.2 million, or $0.54 per diluted share in the previous year, representing a 14% decline in net income and a 15% decline in earnings per share [11] - Gross margin improved to 39.1% in Q3 2025 from 38.5% in Q3 2024 [10] Business Line Data and Key Metrics Changes - Sales of first aid products, which account for about two-thirds of total revenues, increased by 9% [5] - Sales of Westcott cutting tools were negatively impacted by the cancellation of back-to-school promotions due to tariff uncertainties [5] - SG&A expenses for Q3 2025 were $16.2 million, maintaining 33% of sales, compared to $15.6 million in the same period of 2024 [10] Market Data and Key Metrics Changes - U.S. segment net sales increased by 1% in Q3 2025, while sales of school and office products decreased due to tariff-related cancellations [9] - European net sales increased by 6% in local currency for the quarter, driven by higher e-commerce sales of school and office products [9] - Canadian net sales rose by 7% in Q3 2025 and 16% year-to-date, primarily due to increased sales of first aid products [10] Company Strategy and Development Direction - The company is shifting production locations to mitigate tariff impacts and is increasing domestic production [6] - Acme United is investing in a new manufacturing facility to produce Spill Magic cleanup products, expected to be operational in Q1 2026 [7] - The company is focusing on strengthening its balance sheet and exploring acquisition opportunities [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the market is stabilizing with increased promotional activity expected in the coming quarters [6] - The company anticipates consistent growth in its first aid business and gradual improvement in Westcott sales [8] - Management highlighted the challenges posed by high inflation, interest rates, and supply chain disruptions [4] Other Important Information - The company paid $2.3 million in dividends and generated $11 million in free cash flow before the purchase of a new facility [12] - Bank debt, less cash, decreased to $23 million as of September 30, 2025, down from $27 million a year earlier [11] Q&A Session Summary Question: Impact of tariff uncertainty on sales - Management explained that large retailers like Walmart canceled orders due to high tariffs, leading to reduced purchases across the board [16][20] Question: Inventory management and flexibility - Management confirmed that they had increased inventory in anticipation of tariffs and have been working to manage it down while preparing for potential future tariff issues [28] Question: Production capacity and growth - Management indicated that the new Spill Magic facility will allow for increased production capacity and automation, with expectations for full operation by the end of March 2026 [44][47] Question: Refill business in first aid - The refill business currently accounts for approximately 25% of first aid revenue, with ongoing automation efforts to enhance efficiency [60] Question: Trade inventory levels - Management noted that Amazon has reduced its inventory of first aid products, while visibility into other retailers' inventory levels is less clear [40]

Executive Summary & Highlights [Third Quarter 2025 Financial Highlights](index=1&type=section&id=1.1%20Third%20Quarter%202025%20Financial%20Highlights) Acme United Corporation reported a 2% increase in net sales for Q3 2025, reaching $49.1 million, while net income and diluted EPS decreased by 14% and 15% respectively, primarily due to a significantly lower tax expense in the prior year's quarter | Metric | Q3 2025 (in $M) | Q3 2024 (in $M) | Change (%) | | :--------------------- | :-------------- | :-------------- | :--------- | | Net Sales | 49.1 | 48.2 | 2% | | Net Income | 1.9 | 2.2 | -14% | | Diluted EPS | 0.46 | 0.54 | -15% | - Net income decline attributed to a significantly lower tax expense in Q3 2024 (**8% effective tax rate**) compared to Q3 2025 (**22% effective tax rate**), which included a large excess tax benefit from stock option exercises[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=1.2%20Management%20Commentary) Chairman and CEO Walter C. Johnsen highlighted effective management through tariff uncertainties, a 9% increase in first aid revenues, and continued profitability with operating income up 3% - First aid revenues increased **9%** due to strong online and refill sales[4](index=4&type=chunk) - Westcott cutting tools revenues were reduced by tariff impacts on customers, leading to cancellation of retail promotions, though increased promotional activity is now being observed[4](index=4&type=chunk) - Operating income increased **3%**, and the company continues to reduce debt, positioning it for growth internally and through acquisitions, particularly in the first aid space[6](index=6&type=chunk) Financial Performance Analysis [Consolidated Net Sales](index=1&type=section&id=2.1%20Consolidated%20Net%20Sales) Consolidated net sales for Q3 2025 increased by 2% to $49.1 million, with nine-month net sales seeing a slight increase to $149.0 million from $148.5 million in the prior year | Period | Net Sales 2025 (in $M) | Net Sales 2024 (in $M) | Change (%) | | :------------------- | :--------------------- | :--------------------- | :--------- | | Three Months Ended | 49.1 | 48.2 | 2% | | Nine Months Ended | 149.0 | 148.5 | 0.3% | [Consolidated Net Income and EPS](index=1&type=section&id=2.2%20Consolidated%20Net%20Income%20and%20EPS) Net income for Q3 2025 decreased by 14% to $1.9 million, with diluted EPS falling 15% to $0.46, primarily due to a higher effective tax rate compared to the previous year | Metric | Q3 2025 | Q3 2024 | Change (%) | | :------------------- | :------ | :------ | :--------- | | Net Income (in $M) | 1.9 | 2.2 | -14% | | Diluted EPS | 0.46 | 0.54 | -15% | | Effective Tax Rate | 22% | 8% | +14 ppts | | Metric | Nine Months 2025 | Nine Months 2024 | Change (%) | | :------------------- | :--------------- | :--------------- | :--------- | | Net Income (in $M) | 8.3 | 8.3 | 0% | | Diluted EPS | 2.03 | 2.03 | 0% | [Gross Margin](index=2&type=section&id=2.3%20Gross%20Margin) Gross margin improved for both the three-month and nine-month periods ended September 30, 2025, reaching 39.1% and 39.8% respectively, indicating better cost management or pricing strategies | Period | Gross Margin 2025 | Gross Margin 2024 | Change (ppts) | | :------------------- | :---------------- | :---------------- | :------------ | | Three Months Ended | 39.1% | 38.5% | +0.6 | | Nine Months Ended | 39.8% | 39.0% | +0.8 | [Segment Performance](index=2&type=section&id=2.4%20Segment%20Performance) [U.S. Segment](index=2&type=section&id=2.4.1%20U.S.%20Segment) The U.S. segment experienced a 1% increase in net sales for Q3 2025, driven by strong sales of first aid and medical products, while nine-month net sales decreased by 1% | Period | U.S. Net Sales Change YoY | | :------------------- | :------------------------ | | Three Months Ended | +1% | | Nine Months Ended | -1% | - Strong sales in first aid and medical products offset lower sales in school and office products, which were impacted by tariff uncertainty and customer order cancellations[6](index=6&type=chunk) [European Segment](index=2&type=section&id=2.4.2%20European%20Segment) European net sales grew by 13% in U.S. dollars and 6% in local currency for Q3 2025, primarily due to increased e-commerce sales of school and office products | Period | U.S. Dollar Change YoY | Local Currency Change YoY | | :------------------- | :--------------------- | :------------------------ | | Three Months Ended | +13% | +6% | | Nine Months Ended | +1% | -2% | - Higher sales of school and office products into the e-commerce channel were the main driver for Q3 growth[7](index=7&type=chunk) [Canadian Segment](index=2&type=section&id=2.4.3%20Canadian%20Segment) Canadian net sales showed robust growth, increasing 5% in U.S. dollars and 7% in local currency for Q3 2025, driven by strong first-aid product sales | Period | U.S. Dollar Change YoY | Local Currency Change YoY | | :------------------- | :--------------------- | :------------------------ | | Three Months Ended | +5% | +7% | | Nine Months Ended | +14% | +16% | - Increases in sales for both periods were primarily due to strong sales of first-aid products[8](index=8&type=chunk) Financial Position and Cash Flow [Debt and Liquidity](index=2&type=section&id=3.1%20Debt%20and%20Liquidity) Acme United continued to reduce its bank debt less cash, which decreased to $23.1 million as of September 30, 2025, from $26.7 million a year prior, reflecting improved financial health | Metric | Sep 30, 2025 (in $M) | Sep 30, 2024 (in $M) | Change (in $M) | | :------------------- | :------------------- | :------------------- | :------------- | | Bank Debt less Cash | 23.1 | 26.7 | -3.6 | [Cash Flow and Capital Allocation](index=2&type=section&id=3.2%20Cash%20Flow%20and%20Capital%20Allocation) Over the twelve months ended September 30, 2025, the company generated approximately $11.1 million in free cash flow and distributed $2.3 million in common stock dividends | Metric | Amount (in $M) | | :------------------- | :------------- | | Free Cash Flow | 11.1 | | Dividends Distributed| 2.3 | - Purchased a new **$6 million** facility in Tennessee in July 2025 to expand the Spill Magic business[11](index=11&type=chunk) Company Information [About Acme United Corporation](index=3&type=section&id=4.1%20About%20Acme%20United%20Corporation) Acme United Corporation is a global supplier of innovative safety solutions and cutting technology for various markets, including school, home, office, hardware, sporting goods, and industrial - Acme United Corporation is a leading worldwide supplier of innovative safety solutions and cutting technology[13](index=13&type=chunk) - Serves school, home, office, hardware, sporting goods, and industrial markets[13](index=13&type=chunk) - Key brands include First Aid Only®, First Aid Central®, PhysiciansCare®, Pac-Kit®, Spill Magic®, Westcott®, Clauss®, DMT®, Med-Nap and Elite First Aid[13](index=13&type=chunk) [Conference Call Details](index=3&type=section&id=4.2%20Conference%20Call%20Details) Acme United hosted a conference call on Tuesday, October 21, 2025, at 12:00 p.m. ET to discuss its quarterly results, with details provided for live participation and webcast access - Conference call held on Tuesday, October 21, 2025, at 12:00 p.m. ET[12](index=12&type=chunk) - Access via dial-in (877-407-0784, International: 201-689-8560, Confirmation Code: 13756138) or live webcast through the Investor Relations section of www.acmeunited.com[12](index=12&type=chunk) Forward-Looking Statements and Risk Factors [Forward-Looking Statement Disclaimer](index=3&type=section&id=5.1%20Forward-Looking%20Statement%20Disclaimer) The report contains forward-looking statements made in good faith under the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995, with actual results potentially differing materially due to various risks and uncertainties - Statements are made pursuant to the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995[14](index=14&type=chunk)[15](index=15&type=chunk) - Actual results could differ materially from current expectations due to risks and uncertainties[14](index=14&type=chunk)[16](index=16&type=chunk) [Key Risks and Uncertainties](index=4&type=section&id=5.2%20Key%20Risks%20and%20Uncertainties) The company faces various risks including changes in plans, global economic volatility, international trade policies (tariffs), inflation, interest rates, geopolitical conflicts, and supply chain disruptions - Risks include changes in company plans, volatility in global economic conditions, and international trade policies (e.g., tariffs)[17](index=17&type=chunk) - Other significant risks are inflation, interest rates, geopolitical conflicts (Ukraine, Middle East), supply chain disruptions, rising labor costs, and currency fluctuations[17](index=17&type=chunk) - Operational and market risks include inventory management, changes in client needs and consumer spending, competition, technological changes (online marketing), and the ability to manage growth and integrate acquisitions[17](index=17&type=chunk) Condensed Consolidated Financial Statements [Condensed Consolidated Statements of Income (Three Months)](index=5&type=section&id=6.1%20Condensed%20Consolidated%20Statements%20of%20Income%20(Three%20Months)) This section presents the unaudited condensed consolidated statements of income for the three months ended September 30, 2025, compared to the same period in 2024, detailing net sales, gross profit, operating income, net income, and earnings per share | Metric | September 30, 2025 (in thousands) | September 30, 2024 (in thousands) | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $49,063 | $48,166 | | Cost of goods sold | 29,868 | 29,602 | | Gross profit | 19,195 | 18,564 | | Selling, general and administrative expenses | 16,188 | 15,638 | | Operating income | 3,007 | 2,926 | | Interest expense | 451 | 568 | | Interest income | (29) | (33) | | Net interest expense | 422 | 535 | | Other expense (income), net | 146 | (17) | | Income before income tax expense | 2,439 | 2,408 | | Income tax expense | 536 | 182 | | Net income | $1,903 | $2,226 | | Shares outstanding - basic | 3,802 | 3,726 | | Shares outstanding - diluted | 4,168 | 4,104 | | Earnings per share - basic | $0.50 | $0.60 | | Earnings per share - diluted | 0.46 | 0.54 | [Condensed Consolidated Statements of Income (Nine Months)](index=6&type=section&id=6.2%20Condensed%20Consolidated%20Statements%20of%20Income%20(Nine%20Months)) This section provides the unaudited condensed consolidated statements of income for the nine months ended September 30, 2025, compared to the same period in 2024, detailing year-to-date financial performance metrics | Metric | September 30, 2025 (in thousands) | September 30, 2024 (in thousands) | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $149,018 | $148,547 | | Cost of goods sold | 89,756 | 89,960 | | Gross profit | 59,262 | 58,587 | | Selling, general and administrative expenses | 47,438 | 46,728 | | Operating income | 11,824 | 11,859 | | Interest expense | 1,310 | 1,622 | | Interest income | (88) | (105) | | Net interest expense | 1,222 | 1,517 | | Other income, net | (44) | (90) | | Income before income tax expense | 10,646 | 10,432 | | Income tax expense | 2,338 | 2,117 | | Net income | $8,308 | $8,315 | | Shares outstanding - basic | 3,781 | 3,686 | | Shares outstanding - diluted | 4,091 | 4,087 | | Earnings per share - basic | $2.20 | $2.26 | | Earnings per share - diluted | 2.03 | 2.03 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=6.3%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets as of September 30, 2025, and September 30, 2024, detailing the company's assets, liabilities, and stockholders' equity | Metric | September 30, 2025 (in thousands) | September 30, 2024 (in thousands) | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | **Assets** | | | | Current assets: | | | | Cash and cash equivalents | $5,146 | $5,702 | | Accounts receivable, net | 30,034 | 31,349 | | Inventories | 60,163 | 55,990 | | Prepaid expenses and other current assets | 3,363 | 5,733 | | Total current assets | 98,706 | 98,774 | | Property, plant and equipment, net | 38,691 | 30,892 | | Operating lease right of use asset | 7,261 | 4,808 | | Intangible assets, less accumulated amortization | 18,476 | 22,810 | | Goodwill | 9,908 | 8,189 | | Total assets | $173,042 | $165,473 | | **Liabilities and stockholders' equity** | | | | Current liabilities: | | | | Accounts payable | $6,488 | $7,008 | | Operating lease liability - short term | 1,427 | 1,550 | | Mortgage payable - short term | 450 | 433 | | Other current liabilities | 13,722 | 13,403 | | Total current liabilities | 22,087 | 22,394 | | Long-term debt | 18,255 | 22,018 | | Mortgage payable - long term | 9,556 | 9,970 | | Operating lease liability - long term | 5,900 | 3,357 | | Deferred income taxes | 1,465 | 899 | | Other non-current liabilities | 15 | 518 | | Total liabilities | 57,278 | 59,156 | | Total stockholders' equity | 115,764 | 106,317 | | Total liabilities and stockholders' equity | $173,042 | $165,473 |

Core Insights - Acme United Corporation reported a 2% increase in net sales for Q3 2025, reaching $49.1 million compared to $48.2 million in Q3 2024 [1] - Net income for Q3 2025 decreased by 14% to $1.9 million, or $0.46 per diluted share, primarily due to a lower effective tax rate compared to the previous year [2] - The company maintained profitability with a 3% increase in operating income, while also reducing debt significantly [5] Sales Performance - Net sales for the U.S. segment increased by 1% in Q3 2025, driven by strong sales in first aid and medical products, although school and office product sales declined due to tariff uncertainties [5] - European net sales rose by 13% in U.S. dollars for Q3 2025, attributed to higher sales of school and office products through e-commerce channels [6] - Canadian net sales increased by 5% in U.S. dollars for Q3 2025, with a notable 14% increase for the nine-month period, largely due to strong first-aid product sales [7] Financial Metrics - Gross margin improved to 39.1% in Q3 2025 from 38.5% in Q3 2024, and for the nine-month period, it increased to 39.8% from 39.0% [8] - The company's bank debt decreased to $23.1 million as of September 30, 2025, down from $26.7 million a year earlier, while generating approximately $11.1 million in free cash flow [9] Management Commentary - The Chairman and CEO highlighted effective management through tariff-related uncertainties and noted a 9% increase in first aid revenues due to strong online and refill sales [4] - The company is well-positioned for growth, particularly in the first aid sector, and is focused on reducing debt while exploring acquisition opportunities [5]

Core Viewpoint - Acme United Corporation is set to release its financial results for Q3 2025 on October 21, 2025, at 6:30 AM Eastern Time, followed by a conference call at 12:00 PM Eastern Time to discuss the results [1]. Company Information - Acme United Corporation is a leading global supplier of innovative safety solutions and cutting technology across various markets, including school, home, office, hardware, sporting goods, and industrial sectors [3]. - The company’s prominent brands include First Aid Only®, First Aid Central®, PhysiciansCare®, Spill Magic®, Westcott®, Clauss®, DMT®, Med-Nap, Safety Made, and Elite [3]. Conference Call Details - The conference call discussing the financial results will be accessible via the internet, with a dial-in option for participants [1][2]. - The replay of the conference call will be available in the Audio Archives section under Investor Relations on the company's website [2].

Core Insights - The 2025 NSC Safety Congress & Expo in Denver showcased advancements in workplace safety, emphasizing the importance of intelligent systems and compliance solutions in the industry [1][12] Company Overview - Acme United Corporation participated prominently in the expo, highlighting its First Aid Only brand and showcasing innovative products like the RFID-enabled SmartCompliance cabinet [3][5] Product Highlights - The SmartCompliance cabinet is designed to enhance regulatory adherence by providing real-time tracking of supplies, thus preventing shortages and expired items [7] - Live demonstrations at the booth illustrated how the RFID system updates inventory metrics and triggers reorder prompts, transforming traditional first aid stations into active compliance assets [8] - Acme's digital platform integrates with the SmartCompliance cabinet, allowing users to manage multiple cabinets, set thresholds, and initiate restocking through mobile or web interfaces [9] Industry Trends - The expo indicated a shift in safety professionals' expectations towards systems that offer intelligence, oversight, and integration rather than just static equipment [12] - Acme United's focus on merging hardware and software solutions positions it favorably within the evolving landscape of first aid and compliance technology [13]

Core Insights - The global disposable thermometer market is projected to reach $642.48 million by 2034, with a compound annual growth rate (CAGR) of 8.95% [2][3] Market Drivers - Increased emphasis on infection control and hygiene in healthcare settings drives the adoption of disposable thermometers, as their single-use nature reduces cross-contamination risks [3] - Rising awareness of the importance of regular temperature monitoring during flu seasons and infectious disease outbreaks boosts demand [3] - The convenience, affordability, and ease of use of disposable thermometers encourage adoption in both developed and developing countries [3] - Technological advancements in disposable digital thermometers enhance their reliability and accuracy, further increasing their market appeal [3] - Government and institutional focus on public health and safety supports global market growth [3] Market Restraints - Limited accuracy and consistency compared to reusable digital or infrared thermometers can hinder adoption, especially in critical care situations [4] - Environmental concerns regarding waste from single-use thermometers raise sustainability issues [4] - The recurring cost of disposable thermometers can be a financial burden for healthcare providers in resource-limited settings [4] - Some models may exhibit slower response times or reduced reliability under varying temperature conditions [4] - Limited awareness about proper usage in certain regions can lead to incorrect readings, affecting market penetration [4] Regional Insights - North America held the largest share of the global disposable thermometer market in 2024, driven by advanced healthcare infrastructure and high prevalence of infectious diseases [5] - Strong demand for home-use and digital thermometers, along with supportive policies promoting mercury-free devices, contributes to market growth in North America [5] Key Players - Major market players include 3M, Acme United Corporation, and Advanced Meditech Internationals (AMI) [5]

Part I — Financial Information [Item 1: Financial Statements (Unaudited)](index=3&type=section&id=Item%201%3A%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements show increased net income and improved operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at specific points in time Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :----- | | Total Assets | $170,868 | $162,171 | +$8,697 | | Total Liabilities | $57,146 | $55,191 | +$1,955 | | Total Stockholders' Equity | $113,722 | $106,980 | +$6,742 | | Cash and cash equivalents | $3,641 | $6,399 | -$2,758 | | Accounts receivable, net | $36,174 | $28,236 | +$7,938 | | Inventories | $57,309 | $56,254 | +$1,055 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income over specific periods Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $53,996 | $55,425 | -2.6% | | Gross profit | $22,149 | $22,627 | -2.1% | | Operating income | $6,390 | $6,375 | +0.2% | | Net income | $4,752 | $4,452 | +6.7% | | Basic earnings per share | $1.26 | $1.21 | +4.1% | | Diluted earnings per share | $1.16 | $1.09 | +6.4% | | Dividends declared per share | $0.16 | $0.15 | +6.7% | Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net sales | $99,954 | $100,382 | -0.4% | | Gross profit | $40,066 | $40,024 | +0.1% | | Operating income | $8,816 | $8,934 | -1.3% | | Net income | $6,404 | $6,089 | +5.2% | | Basic earnings per share | $1.70 | $1.66 | +2.4% | | Diluted earnings per share | $1.57 | $1.47 | +6.8% | | Dividends declared per share | $0.31 | $0.30 | +3.3% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income components are presented, reflecting total non-owner changes in equity Comprehensive Income Highlights (Three & Six Months Ended June 30) | Metric | 3 Months 2025 (in thousands) | 3 Months 2024 (in thousands) | 6 Months 2025 (in thousands) | 6 Months 2024 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $4,752 | $4,452 | $6,404 | $6,089 | | Foreign currency translation adjustment | $782 | $(105) | $1,043 | $(427) | | Comprehensive income | $5,534 | $4,347 | $7,447 | $5,662 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in equity accounts, including net income, distributions, and stock transactions, are outlined Stockholders' Equity Changes (Six Months Ended June 30, 2025) | Item | Amount (in thousands) | | :-------------------------------- | :-------------------- | | Balances, December 31, 2024 | $106,980 | | Net income | $6,404 | | Other comprehensive income | $1,043 | | Stock compensation expense | $787 | | Distributions to shareholders | $(1,171) | | Issuance of common stock | $602 | | Cash settlement of stock options | $(568) | | Net share settlement of stock options | $(355) | | Balances June 30, 2025 | $113,722 | - As of August 1, 2025, the registrant had **3,799,252 shares** of its **$2.50** par value Common Stock outstanding[3](index=3&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details cash inflows and outflows from operating, investing, and financing activities Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | Change | | :-------------------------------- | :------------------ | :------------------ | :----- | | Net cash provided by (used in) operating activities | $2,998 | $(3,270) | +$6,268 | | Net cash used in investing activities | $(2,973) | $(10,992) | +$8,019 | | Net cash (used in) provided by financing activities | $(2,963) | $12,619 | -$15,582 | | Net change in cash and cash equivalents | $(2,758) | $(1,755) | -$1,003 | - The significant improvement in cash provided by operating activities in 2025 was primarily due to changes in accounts receivable and other accrued liabilities[20](index=20&type=chunk) - The decrease in cash used in investing activities in 2025 was mainly due to the absence of a major acquisition like Elite First Aid in the prior year[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Additional details and explanations for financial statement figures are provided [1. Basis of Presentation](index=11&type=section&id=1.%20Basis%20of%20Presentation) Accounting principles and policies used in preparing condensed financial statements are described - The financial statements are condensed and unaudited, including normal, recurring adjustments, and should be read in conjunction with the 2024 Annual Report on Form 10-K[22](index=22&type=chunk) - The Company is evaluating the potential impact of new accounting standards: **ASU No. 2023-09** (Income Tax Disclosures, effective after Dec 15, 2024) and **ASU 2024-03** (Expense Disaggregation Disclosures, effective after Dec 15, 2026)[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Commitment and Contingencies](index=11&type=section&id=2.%20Commitment%20and%20Contingencies) Potential future obligations and uncertain events impacting financial position are disclosed - There are no pending material legal proceedings to which the Company is a party or contemplated by any governmental authority[26](index=26&type=chunk) [3. Revenue from Contracts with Customers](index=11&type=section&id=3.%20Revenue%20from%20Contracts%20with%20Customers) Revenue recognition policies and disaggregated net sales by product and segment are detailed - The Company recognizes revenue from sales of first aid and medical products and cutting and sharpening tools, with performance obligations generally satisfied at the point of shipment or delivery[27](index=27&type=chunk)[28](index=28&type=chunk) Net Sales Disaggregated by Product Category and Segment (Three Months Ended June 30) | Category/Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :----------------------- | :------------------ | :------------------ | :--------- | | **First Aid and Medical** | $34,800 | $33,888 | +2.7% | | **Cutting and Sharpening** | $19,196 | $21,537 | -10.9% | | **Total Net Sales** | $53,996 | $55,425 | -2.6% | | United States | $44,991 | $47,455 | -5.2% | | Canada | $5,198 | $4,061 | +28.0% | | Europe | $3,807 | $3,909 | -2.6% | Net Sales Disaggregated by Product Category and Segment (Six Months Ended June 30) | Category/Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :----------------------- | :------------------ | :------------------ | :--------- | | **First Aid and Medical** | $65,803 | $60,946 | +7.9% | | **Cutting and Sharpening** | $34,151 | $39,436 | -13.4% | | **Total Net Sales** | $99,954 | $100,382 | -0.4% | | United States | $84,113 | $85,448 | -1.6% | | Canada | $8,383 | $7,098 | +18.1% | | Europe | $7,458 | $7,836 | -4.9% | [4. Debt and Stockholders' Equity](index=15&type=section&id=4.%20Debt%20and%20Stockholders'%20Equity) Information on debt obligations and changes in stockholders' equity is provided - The Company's **$65 million** secured revolving credit facility with HSBC was extended to May 31, 2027, with an interest rate of SOFR plus **1.75%**[37](index=37&type=chunk) Debt Outstanding (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Revolving Loan Agreement | $16,375 | $17,641 | | Mortgage payable (net of costs) | $10,107 | $10,305 | - During the six months ended June 30, 2025, the Company issued **25,126 shares** of common stock from employee stock options, generating **$602,000** in proceeds[39](index=39&type=chunk) [5. Segment Information](index=15&type=section&id=5.%20Segment%20Information) Financial data is disaggregated by operating segments: United States, Canada, and Europe - The Company operates in three reportable segments: United States (including Asian operations), Canada, and Europe, with performance evaluated based on segment revenues and operating income[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) Segment Operating Income (Three Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | | :-------------- | :--- | :--- | :----- | | United States | $5,614 | $5,535 | +$79 | | Canada | $872 | $703 | +$169 | | Europe | $(96) | $137 | -$233 | Segment Operating Income (Six Months Ended June 30, in thousands) | Segment | 2025 | 2024 | Change | | :-------------- | :--- | :--- | :----- | | United States | $7,973 | $7,873 | +$100 | | Canada | $913 | $744 | +$169 | | Europe | $(70) | $317 | -$387 | [6. Stock Based Compensation](index=18&type=section&id=6.%20Stock%20Based%20Compensation) This note details the expense recognized for stock-based awards granted to employees and directors Stock-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Three months ended June 30 | $374 | $433 | | Six months ended June 30 | $787 | $882 | - As of June 30, 2025, unrecognized compensation cost related to non-vested share-based payments totaled approximately **$1.49 million**, expected to be recognized over a weighted average period of about **two years**[46](index=46&type=chunk) [7. Fair Value Measurements](index=18&type=section&id=7.%20Fair%20Value%20Measurements) Fair value of financial instruments and other assets and liabilities is presented - The carrying value of the Company's bank debt is a reasonable estimate of fair value. A contingent liability of **$500,000** related to the Elite First Aid acquisition is recorded at fair value[47](index=47&type=chunk) [8. Leases](index=18&type=section&id=8.%20Leases) This note outlines the company's operating lease arrangements, costs, and related cash flows Operating Lease Costs and Cash Flows (in thousands) | Metric | 3 Months 2025 | 3 Months 2024 | 6 Months 2025 | 6 Months 2024 | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | | Operating lease cost | $484 | $387 | $945 | $729 | | Operating lease - cash flow | $492 | $423 | $956 | $776 | - The weighted-average remaining lease term for operating leases was **6.0 years** as of June 30, 2025, with a weighted-average discount rate of **7%**[52](index=52&type=chunk) [9. Other Accrued Liabilities](index=20&type=section&id=9.%20Other%20Accrued%20Liabilities) Accrued liabilities, such as customer rebates, compensation, and dividends payable, are detailed Other Accrued Liabilities (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Customer rebates | $6,067 | $5,872 | | Accrued compensation | $942 | $2,389 | | Dividend payable | $608 | $563 | | Total | $11,339 | $11,879 | [10. Intangible Assets and Goodwill](index=22&type=section&id=10.%20Intangible%20Assets%20and%20Goodwill) Information on intangible assets and goodwill, including their carrying values, is provided Intangible Assets and Goodwill (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Intangible assets, net | $19,111 | $20,323 | | Goodwill | $9,908 | $9,908 | | Total | $29,019 | $30,231 | - The useful lives of identifiable intangible assets range from **5 to 15 years**[55](index=55&type=chunk) [11. Inventories](index=22&type=section&id=11.%20Inventories) This note details the composition of inventories, including finished goods, work in process, and materials Inventories (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Finished goods | $43,076 | $40,074 | | Work in process | $375 | $247 | | Materials and supplies | $13,858 | $15,933 | | Total | $57,309 | $56,254 | - Inventories are stated at the lower of cost or net realizable value, determined by the first-in, first-out method[56](index=56&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, including sales, gross margins, and liquidity position [Forward-Looking Information](index=23&type=section&id=Forward-Looking%20Information) Potential risks and uncertainties affecting future financial results and operations are outlined - The report contains forward-looking statements subject to risks and uncertainties, including tariffs, global economic conditions, inflation, geopolitical conflicts, supply chain disruptions, labor costs, and competition[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Critical Accounting Estimates](index=23&type=section&id=Critical%20Accounting%20Estimates) No material changes to critical accounting estimates from the prior annual report are confirmed - There have been no material changes to the Company's critical accounting estimates as reported in the 2024 Annual Report on Form 10-K[62](index=62&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Financial performance, including sales, gross profit, and expenses, is analyzed - Consolidated net sales decreased **3%** to **$53,996,000** for the three months ended June 30, 2025, and slightly decreased to **$99,954,000** for the six months ended June 30, 2025, compared to the prior year periods[64](index=64&type=chunk) - U.S. net sales decreased **5%** for the three months and **2%** for the six months, primarily due to cancelled back-to-school orders from high tariffs and a large prior-year order not repeating[65](index=65&type=chunk) - Canadian net sales increased **28%** for the three months and **18%** for the six months, driven by strong first aid product sales[66](index=66&type=chunk) - European net sales decreased **3%** for the three months and **5%** for the six months, mainly due to delayed customer shipments and a non-repeating promotion from the prior year[67](index=67&type=chunk) - Gross profit margin improved slightly to **41.0%** for the three months and **40.1%** for the six months ended June 30, 2025, compared to **40.8%** and **39.9%** in 2024, respectively[68](index=68&type=chunk) - Selling, general and administrative expenses decreased by **$493,000** for the three months due to cost reductions, but increased by **$160,000** for the six months[69](index=69&type=chunk) - Net interest expense decreased by **$138,000** for the three months and **$184,000** for the six months, attributed to lower average outstanding borrowings and interest rates[74](index=74&type=chunk) - The effective income tax rate decreased to **22%** for both the three and six months ended June 30, 2025, from **24%** in the prior year periods[76](index=76&type=chunk) [Financial Condition](index=27&type=section&id=Financial%20Condition) This section assesses the company's liquidity, capital resources, and overall financial stability Liquidity and Capital Resources Highlights | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Working capital (in thousands) | $77,867 | $72,588 | | Current ratio | 4.32 | 4.17 | | Long term debt to equity ratio | 22.9% | 25.7% | | Average days sales outstanding | 52 days | 54 days | - Total debt outstanding under the revolving credit facility decreased by approximately **$1.3 million** during the first six months of 2025, with **$48.6 million** available for borrowing as of June 30, 2025[79](index=79&type=chunk) - The Company acquired Elite First Aid, Inc. in May 2024 for approximately **$7.1 million**, with a **$500,000** contingent payment tied to revenue milestones[81](index=81&type=chunk) - The Company faces risks from global trade policies, tariffs (especially on Chinese goods), geopolitical tensions, and inflation, which could increase costs and disrupt supply chains[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - Management believes that cash generated from operating activities and available funds under its revolving loan agreement will be sufficient to finance operations for the next **twelve months**[85](index=85&type=chunk) [Item 3: Quantitative and Qualitative Disclosures about Market Risk](index=30&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Absence of applicable quantitative and qualitative disclosures about market risk is confirmed - The Company has no applicable quantitative and qualitative disclosures about market risk[86](index=86&type=chunk) [Item 4: Controls and Procedures](index=30&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Disclosure controls were ineffective due to ITGC material weakness; remediation is expected by year-end - Disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to a material weakness in ITGCs concerning logical security and privileged access management for a financially relevant system[86](index=86&type=chunk) - Remediation efforts include removing privileged access for one individual and further limiting privileged access to ensure proper segregation of duties[87](index=87&type=chunk) - Management expects the material weakness to be remediated by **December 31, 2025**, pending sufficient operating time and testing of the controls[88](index=88&type=chunk) Part II — Other Information [Item 1 — Legal Proceedings](index=31&type=section&id=Item%201%20%E2%80%94%20Legal%20Proceedings) This section confirms no material legal proceedings are pending or contemplated against the company - No material legal proceedings are pending or contemplated against the Company[91](index=91&type=chunk) [Item 1A — Risk Factors](index=31&type=section&id=Item%201A%20%E2%80%94%20Risk%20Factors) Comprehensive risk factors are detailed in the company's 2024 Annual Report on Form 10-K - Risk factors are detailed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024[91](index=91&type=chunk) [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202%20%E2%80%94%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds occurred during the period - There were no unregistered sales of equity securities or use of proceeds[91](index=91&type=chunk) [Item 3 — Defaults Upon Senior Securities](index=31&type=section&id=Item%203%20%E2%80%94%20Defaults%20Upon%20Senior%20Securities) This section confirms that no defaults upon senior securities were reported by the company - There were no defaults upon senior securities[91](index=91&type=chunk) [Item 4 — Mine Safety Disclosures](index=31&type=section&id=Item%204%20%E2%80%94%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[91](index=91&type=chunk) [Item 5 — Other Information](index=31&type=section&id=Item%205%20%E2%80%94%20Other%20Information) This section confirms that no additional information is reported for the current period - No other information is reported in this section[92](index=92&type=chunk) [Item 6 — Exhibits](index=31&type=section&id=Item%206%20%E2%80%94%20Exhibits) Exhibits to Form 10-Q, including SOX certifications and Inline XBRL files, are listed - Exhibits include certifications by Walter C. Johnsen and Paul G. Driscoll (Exhibits **31.1, 31.2, 32.1, 32.2**) and Inline XBRL documents (Exhibits **101.INS, 101.SCH, 104**)[92](index=92&type=chunk) [Signatures](index=32&type=section&id=Signatures) The report was officially signed by the Chairman, CEO, and CFO on August 6, 2025 - The report was signed by Walter C. Johnsen, Chairman of the Board and CEO, and Paul G. Driscoll, VP and CFO, on **August 6, 2025**[95](index=95&type=chunk)

Core Points - Acme United Corporation announces the launch of National Scissors Day™ on August 1, 2025, celebrating the significance of scissors in various environments [1][2] - Westcott®, the leading scissor brand in the USA, aims to highlight quality craftsmanship and the role of scissors in education and creativity [2] Company Overview - Acme United Corporation is a global supplier of innovative safety solutions and cutting technology, serving markets such as school, home, office, and industrial [4] - The company’s prominent brands include First Aid Only®, Westcott®, Clauss®, and others, showcasing a diverse product portfolio [4] National Scissors Day™ Highlights - The event will feature giveaways, social media contests, educational content about scissor history, and retail promotions across major chains [8] - Creative challenges will encourage users to share their everyday uses of scissors, enhancing engagement and brand visibility [8]

Financial Data and Key Metrics Changes - Acme United Corporation reported net sales of $54 million for the second quarter of 2025, a decrease of 3% compared to $55.4 million in the same quarter of 2024 [3][9] - Net income increased to $4.8 million, up 7% from $4.5 million in the prior year, resulting in earnings per share of $1.16 compared to $1.09 [3][12] - For the first six months of 2025, net income was $6.4 million, a 57% increase from $6.1 million in the same period of 2024 [12] Business Line Data and Key Metrics Changes - The U.S. segment experienced a 6% decrease in sales during the second quarter due to canceled back-to-school orders linked to high tariffs [9] - Sales in Canada increased by 28% in the quarter, driven by higher sales of first aid products [11] - The gross margin remained stable at 41% for the second quarter of 2025, consistent with the previous year [11] Market Data and Key Metrics Changes - Sales in Europe decreased by 6% in local currency for both the quarter and the first six months, primarily due to shipment timing [10] - The company faced challenges in the U.S. market due to exceptionally high tariffs, which led to order cancellations [9][10] Company Strategy and Development Direction - Acme United is shifting production from China to other countries such as Malaysia, Thailand, Vietnam, and Egypt to mitigate tariff impacts [6] - The company plans to continue supplying customers with competitive total costs while maintaining service quality [6] - Acme United is investing in automation and expanding capacity in its facilities, particularly in the MedNap and Spill Magic segments [7][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment due to tariffs and supply chain disruptions but expressed optimism for growth in the third and fourth quarters [8][20] - The company is working with customers to recover delayed programs and anticipates that demand will not significantly decline [20] - Management noted that while there are concerns about overall customer spending due to price increases, they have adequate stock at good values [20] Other Important Information - Acme United's bank debt decreased to $23 million from $33 million year-over-year, and the company generated approximately $12 million in free cash flow [12] - A new facility for Spill Magic was purchased for $6 million, which will enhance production capabilities [7] Q&A Session Summary Question: What can be expected for the third and fourth quarters? - Management indicated that some delayed orders from the second quarter may come in the third and fourth quarters, and they are looking for growth rather than declines in sales [20] Question: Are competitors faring better or worse? - Management noted that one competitor had a disastrous quarter, while Acme United managed the tariff situation effectively [22] Question: Will the company consider cutting the dividend? - Management confirmed that they just raised the dividend and are comfortable maintaining it, supported by strong cash flow and reduced debt [22] Question: Are there capacity constraints in healthcare lines? - Management stated that the MedNap facility is experiencing increased demand and is working on productivity improvements and capacity expansion [32][33]