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]

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][10] - Net income increased to $4.8 million, up 7% from $4.5 million in the prior year, with earnings per share rising to $1.16 from $1.09 [3][13] - For the first six months of 2025, net income was $6.4 million, a 57% increase compared to $6.1 million in the same period of 2024 [13] Business Line Data and Key Metrics Changes - The U.S. segment saw a 6% decrease in sales for the second quarter due to canceled back-to-school orders linked to high tariffs [10] - Sales in Europe decreased by 6% in local currency for both the quarter and the first six months, primarily due to shipment timing [11] - Canadian sales increased by 28% in the quarter and 21% year-to-date, driven by higher first aid product sales [12] Market Data and Key Metrics Changes - The gross margin remained stable at 41% for the second quarter of 2025, compared to 40% for the first six months of 2024 [12] - SG&A expenses for the second quarter were $15.8 million, or 29% of sales, down from $16.3 million in the same period of 2024 [12] Company Strategy and Development Direction - The company is shifting production from China to other countries such as Malaysia, Thailand, Vietnam, and Egypt to mitigate tariff impacts [6] - Acme United plans to continue supplying customers with competitive total costs while maintaining service quality [6] - The company is investing in automation and productivity improvements in its MedNap facility to support growth in the healthcare sector [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging market environment due to high tariffs and supply chain disruptions but expressed optimism for growth in the third and fourth quarters [9][20] - The company has adequate stock and is working with customers to recover delayed programs, expecting no declines in sales [20] - Management noted that while some competitors faced difficulties, Acme United managed to navigate the tariff challenges effectively [22] Other Important Information - The company generated approximately $12 million in free cash flow over the past twelve months and reduced bank debt from $33 million to $23 million [13][22] - A new facility for Spill Magic was purchased for $6 million, which will enhance production capabilities starting in the first quarter of 2026 [8] 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 through in the latter half of the year, and they anticipate 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 a potential interest rate cut by the Federal Reserve lower interest expenses? - Management confirmed that a drop in interest rates would benefit the company, particularly on floating rate debt [30] Question: Is there any capacity constraint in healthcare similar to Spill Magic? - Management acknowledged that the MedNap facility is under stress but is actively working on productivity improvements and expansion plans [33] Question: Which segment was most affected by the tariff increase? - The Westcott cutting tool segment was more significantly impacted due to canceled back-to-school orders, while the first aid segment managed to maintain more stable pricing [41]

[Q2 2025 Earnings Announcement](index=1&type=section&id=ACME%20UNITED%20REPORTS%20RECORD%20NET%20INCOME%20FOR%20SECOND%20QUARTER%20OF%202025) Acme United reported record Q2 2025 net income and diluted EPS growth despite a slight sales decrease, driven by strategic inventory and supply chain management [Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the second quarter of 2025, Acme United reported a 3% decrease in net sales to $54.0 million, but achieved a record net income of $4.8 million, a 7% increase year-over-year, with diluted EPS growing by 6% to $1.16, while for the first six months, net sales were nearly flat at $100.0 million, net income increased by 5% to $6.4 million, and diluted EPS was up 7% to $1.57 Q2 2025 vs Q2 2024 Financial Performance | Metric | Q2 2025 ($ millions) | Q2 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $54.0 | $55.4 | -3% | | Net Income | $4.8 | $4.5 | +7% | | Diluted EPS | $1.16 | $1.09 | +6% | H1 2025 vs H1 2024 Financial Performance | Metric | H1 2025 ($ millions) | H1 2024 ($ millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $100.0 | $100.4 | -0.4% | | Net Income | $6.4 | $6.1 | +5% | | Diluted EPS | $1.57 | $1.47 | +7% | [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO, Walter C. Johnsen, stated that Q2 2025 was the most profitable quarter in the company's history, achieved despite tariff-related uncertainties managed by holding extra inventory, and the company is actively diversifying its supply chain beyond China to locations like India, Malaysia, and Vietnam to ensure optimal cost and service for its customers - Achieved a **record profitable quarter** by proactively managing inventory to support customers amid tariff uncertainty, which caused order delays and cancellations[4](index=4&type=chunk) - The company is actively diversifying its supply base, leveraging its sourcing presence in China, India, Malaysia, Thailand, Vietnam, and Egypt to mitigate risks and enhance competitiveness[5](index=5&type=chunk) - The company has made **10 acquisitions** of manufacturers in the U.S. and Canada as part of its supply base diversification strategy[4](index=4&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Analysis of net sales changes across U.S., European, and Canadian segments, highlighting regional drivers and challenges [U.S. Segment](index=2&type=section&id=U.S.%20Segment) Net sales in the U.S. segment decreased by 5% in Q2 2025 and 2% in the first half of the year, with the decline attributed to the cancellation of some back-to-school orders due to high tariffs and the non-recurrence of a large initial order for new kitchen sharpeners that occurred in Q2 2024 U.S. Segment Net Sales Change (YoY) | Period | Change vs. Prior Year | | :--- | :--- | | Q2 2025 | -5% | | H1 2025 | -2% | - The sales decrease was caused by cancelled back-to-school orders due to high tariffs and a large, non-recurring order to a major retailer in Q2 2024[6](index=6&type=chunk) [European Segment](index=2&type=section&id=European%20Segment) European net sales for Q2 2025 declined 3% in U.S. dollars and 6% in local currency, primarily because some customer shipments were delayed into the third quarter, and for the first six months, sales decreased 5% in U.S. dollars and 6% in local currency European Segment Net Sales Change (YoY) | Period | Change in U.S. Dollars | Change in Local Currency | | :--- | :--- | :--- | | Q2 2025 | -3% | -6% | | H1 2025 | -5% | -6% | - The sales decline was mainly due to the delay of certain customer shipments into the third quarter[7](index=7&type=chunk) [Canadian Segment](index=2&type=section&id=Canadian%20Segment) The Canadian segment demonstrated significant growth, with Q2 2025 net sales increasing 28% year-over-year in both U.S. dollars and local currency, and for the first half of 2025, sales grew 18% in U.S. dollars and 21% in local currency, driven by strong performance in first-aid products Canadian Segment Net Sales Change (YoY) | Period | Change in U.S. Dollars | Change in Local Currency | | :--- | :--- | :--- | | Q2 2025 | +28% | +28% | | H1 2025 | +18% | +21% | - The increase in sales for both periods was attributed to strong sales of first-aid products[8](index=8&type=chunk) [Financial Health and Operations](index=2&type=section&id=Financial%20Health%20and%20Operations) The company improved gross margin and significantly reduced net bank debt, demonstrating strong free cash flow generation [Gross Margin and Balance Sheet](index=2&type=section&id=Gross%20Margin%20and%20Balance%20Sheet) Gross margin slightly improved to 41.0% in Q2 2025 from 40.8% in Q2 2024, and the company strengthened its balance sheet, reducing net bank debt to $22.8 million from $33.1 million a year prior, while generating approximately $12.0 million in free cash flow and paying $2.2 million in dividends over the last twelve months Gross Margin Comparison | Period | 2025 | 2024 | | :--- | :--- | :--- | | Q2 (Three Months) | 41.0% | 40.8% | | H1 (Six Months) | 40.1% | 39.9% | - Bank debt less cash was reduced to **$22.8 million** as of June 30, 2025, compared to **$33.1 million** on June 30, 2024[9](index=9&type=chunk) - Over the twelve months ending June 30, 2025, the company generated approximately **$12.0 million** in free cash flow and distributed **$2.2 million** in dividends[10](index=10&type=chunk) [Corporate Information and Disclosures](index=3&type=section&id=Corporate%20Information%20and%20Disclosures) Details on the upcoming earnings call, an overview of Acme United's business, and a cautionary note on forward-looking statements and associated risks [Conference Call and Webcast Information](index=3&type=section&id=Conference%20Call%20and%20Webcast%20Information) Acme United will host a conference call and webcast on Wednesday, July 23, 2025, at 12:00 p.m. ET to discuss its quarterly results, with the report providing dial-in details and a link to the webcast on the company's investor relations website - A conference call to discuss quarterly results is scheduled for Wednesday, July 23, 2025, at **12:00 p.m. ET**[11](index=11&type=chunk) [About Acme United](index=3&type=section&id=About%20Acme%20United) Acme United Corporation is a leading global supplier of innovative safety solutions and cutting technology for school, home, office, and industrial markets, with a portfolio including well-known brands such as First Aid Only®, Westcott®, Clauss®, and DMT® - The company is a leading worldwide supplier of safety solutions and cutting technology with major brands including First Aid Only®, First Aid Central®, PhysiciansCare®, Westcott®, and Clauss®[12](index=12&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section serves as a safe harbor warning, advising that statements in the report are subject to risks and uncertainties, including changes in global economic conditions, international trade policies and tariffs, inflation, supply chain disruptions, and competition, which could cause actual results to differ materially from expectations - The report contains forward-looking statements made under the 'safe harbor' provisions of the Private Securities Litigation Reform Act of 1995[13](index=13&type=chunk)[15](index=15&type=chunk) - Key risks include global economic uncertainties, trade policies (tariffs), inflation, supply chain disruptions, competition, and changes in consumer spending habits[16](index=16&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Presents the unaudited condensed consolidated income statements and balance sheets for comparative analysis of financial performance and position [Condensed Consolidated Statements of Income](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) This section presents the unaudited condensed consolidated statements of income for the three and six-month periods ending June 30, 2025, and 2024, detailing revenues, cost of goods sold, operating expenses, and net income, providing a comparative view of the company's profitability Condensed Consolidated Statement of Income (Three Months Ended) | Amounts except per share data | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | Net sales | $ 53,996 | $ 55,425 | | Gross profit | 22,149 | 22,627 | | Operating income | 6,390 | 6,375 | | Net income | $ 4,752 | $ 4,452 | | Earnings per share - diluted | $ 1.16 | $ 1.09 | Condensed Consolidated Statement of Income (Six Months Ended) | Amounts except per share data | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | Net sales | $ 99,954 | $ 100,382 | | Gross profit | 40,066 | 40,024 | | Operating income | 8,816 | 8,934 | | Net income | $ 6,404 | $ 6,089 | | Earnings per share - diluted | $ 1.57 | $ 1.47 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, compared to June 30, 2024, outlining the company's financial position by detailing assets (current and non-current), liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights | Account | June 30, 2025 ($000s) | June 30, 2024 ($000s) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $ 3,641 | $ 3,791 | | Inventories | 57,309 | 56,621 | | Total current assets | 101,341 | 106,148 | | Total assets | $ 171,147 | $ 173,541 | | **Liabilities & Equity** | | | | Total current liabilities | 23,494 | 27,993 | | Long-term debt | 16,352 | 26,419 | | Total liabilities | 57,425 | 69,584 | | Total stockholders' equity | 113,722 | 103,957 |

Core Insights - Acme United Corporation reported a net sales decrease of 3% for Q2 2025 compared to Q2 2024, totaling $54.0 million [1] - The company achieved a net income of $4.8 million for Q2 2025, reflecting a 7% increase from $4.5 million in Q2 2024 [2] - The CEO highlighted the company's successful navigation through tariff uncertainties and the completion of the most profitable quarter in its history [3] Financial Performance - Net sales for the six months ended June 30, 2025, were $100.0 million, a slight decrease from $100.4 million in the same period in 2024 [1] - Gross margin improved to 41.0% in Q2 2025 from 40.8% in Q2 2024, and for the six-month period, it was 40.1% compared to 39.9% in 2024 [6] - The company generated approximately $12.0 million in free cash flow and distributed about $2.2 million in dividends during the twelve months ended June 30, 2025 [7] Segment Performance - U.S. segment net sales decreased by 5% in Q2 2025, primarily due to cancellations of back-to-school orders linked to high tariffs [3] - European net sales for Q2 2025 decreased by 3% in U.S. dollars and 6% in local currency, attributed to shipment delays [4] - Canadian net sales increased significantly by 28% in Q2 2025, driven by strong sales of first-aid products [5] Strategic Initiatives - The company has diversified its supply base through acquisitions in the U.S. and Canada and is actively shifting production to optimize costs and service [3] - Acme United's sourcing team maintains a presence in multiple countries, including China, India, and Vietnam, to enhance supply chain resilience [3]

Core Points - Acme United Corporation will release its financial results for Q2 2025 on July 23, 2025, at 6:30 AM Eastern Time [1] - A conference call to discuss these results will take place on the same day at 12:00 PM Eastern Time, with dial-in options provided [1] - The company is a leading supplier of safety solutions and cutting technology across various markets, including school, home, office, and industrial sectors [3] Financial Information - The financial results announcement is scheduled for July 23, 2025, at 6:30 AM Eastern Time [1] - The conference call for discussing the results will be held at 12:00 PM Eastern Time on the same day [1] Company Overview - Acme United Corporation specializes in innovative safety solutions and cutting technology [3] - The company’s notable brands include First Aid Only®, Westcott®, and Spill Magic® among others [3] - More information about the company can be found on its website [3]

Core Viewpoint - Acme United Corporation has announced the acquisition of a manufacturing and distribution center in Mt. Pleasant, Tennessee for approximately $6 million, aimed at expanding its Spill Magic business and enhancing operational efficiency [1][2][3]. Group 1: Acquisition Details - The newly acquired property spans 77,000 square feet of manufacturing and warehouse space on 12 acres, with the potential for expansion by an additional 60,000 square feet [2]. - The facility is fully air-conditioned and meets FDA-approved food-grade specifications, indicating a commitment to quality and safety standards [2]. Group 2: Business Expansion - The facility will primarily serve Spill Magic, a company acquired by Acme United in 2017, which has outgrown its current leased space [2]. - Walter C. Johnsen, Chairman and CEO, expressed enthusiasm for the growth of Spill Magic and plans to invest in capital improvements focused on automation to enhance operational efficiency [3]. Group 3: Company Overview - Acme United Corporation is recognized as a leading supplier of innovative safety solutions and cutting technology across various markets, including school, home, office, and industrial sectors [4]. - The company’s prominent brands include First Aid Only®, Spill Magic®, and Westcott®, among others, showcasing a diverse product portfolio [4].

Group 1 - Acme United Corporation declared a cash dividend of 16 cents per share, payable on July 24, 2025, to stockholders of record on July 3, 2025 [1] - This marks the fifteenth dividend increase since 2004, indicating the company's optimistic outlook for the future and commitment to returning value to shareholders [2] - Acme United is a leading supplier of safety solutions and cutting technology across various markets, with notable brands including First Aid Only®, Westcott®, and Clauss® [2] Group 2 - The company emphasizes its innovative approach in providing safety solutions and cutting technology to diverse sectors such as education, home, and industrial markets [2] - The forward-looking statements made by the company are based on current beliefs and assumptions, highlighting the potential for future growth and development [3][4] - Investors are advised that forward-looking statements involve risks and uncertainties that could affect the company's business and financial results [5]

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