Acme United(ACU) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Third Quarter 2025 Financial Highlights 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] Management Commentary 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] - 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] - 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] Financial Performance Analysis Consolidated Net Sales 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 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 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 U.S. Segment 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] European Segment 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] Canadian Segment 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] Financial Position and Cash Flow Debt and Liquidity 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 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] Company Information About Acme United Corporation 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] - Serves school, home, office, hardware, sporting goods, and industrial markets[13] - Key brands include First Aid Only®, First Aid Central®, PhysiciansCare®, Pac-Kit®, Spill Magic®, Westcott®, Clauss®, DMT®, Med-Nap and Elite First Aid[13] Conference Call Details 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] - 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 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][15] - Actual results could differ materially from current expectations due to risks and uncertainties[14][16] Key Risks and Uncertainties 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] - Other significant risks are inflation, interest rates, geopolitical conflicts (Ukraine, Middle East), supply chain disruptions, rising labor costs, and currency fluctuations[17] - 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] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Income (Three Months) 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) 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 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 |