Acme United (AMEX:ACU) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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Summary
Acme United reported a 14% increase in net sales to $52.3 million, although net income decreased to $985,000 from $1.6 million the previous year.
The acquisition of MiMedic contributed 8% to the sales increase, but the company is focusing on integrating and expanding its retail distribution for future profitability.
Gross margins improved slightly to 39.7%, but core margins declined due to tariffs and higher costs, expected to stabilize by the third quarter.
Operational highlights include strong growth in Europe and Canada and the opening of the new Spill Magic facility in Tennessee.
Management is optimistic about overcoming tariff impacts and leveraging recent acquisitions for long-term growth, despite short-term challenges.
Full Transcript
OPERATOR
Good day and welcome to the Acme United first quarter 2026 financial results call. At this time I’d like to turn the call over to Walter Johnson, Chairman and CEO. Please go ahead, sir.
Paul Driscoll (Chief Financial Officer)
Good morning. Welcome to the first quarter 2026 earnings conference call for Acme United Corporation. I am Walter C. Johnson, Chairman and CEO. With me is Paul Driscoll, our Chief Financial Officer, who will first read a safe harbor statement. Paul. Forward-looking statements in this conference call, including without limitation statements related to the Company’s plans, strategies, objectives, expectations, intentions and adequacy of capital and other resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties, including, among others, those arising as a result of a challenging global macroeconomic environment characterized by continued high inflation, high interest rates and the imposition of new tariffs or changes in existing tariff rates. In addition, we have experienced supply chain disruptions in the past and we may experience these disruptions in the future. We are also subject to additional risks and uncertainties as described in our periodic filings with the securities and Exchange Commission and in our current earnings release.
Walter Johnson
Thank you, Paul Acme United had a difficult first quarter of 2026. While our net sales increased 14% to $52.3 million, our net income was $985,000 compared to $1.6 million last year and earnings per share were $0.24 compared to $0.41 last year. As you may remember, we purchased MiMedic for $18.6 million during the first quarter of 2026. The company sells directly to consumers and is cyclical with most of the profits generated in the fourth quarter of the year. It also generates high gross margins which it spends on advertising, promotions, new product development and customer support. Our sales increase of 14% in the first quarter of 2026 includes approximately 8% from MiMedic, which was at break even in P and L. Revenues excluding MiMedic increased 6%. The company’s gross margins in the first quarter of 2026 were 39.7% compared to 39% last year. When the impact of the high gross margins at Mimedic are removed, the core gross margins declined due to higher costs and tariffs. We turn our inventory about twice per year, so the costs reflected in the first quarter were from products made and purchased when the tariffs were at their peak. We expect to run through these items during the second quarter with a return to normal levels in the third quarter. Shortly after the war in Iran began, we started purchasing higher than normal quantities of raw materials and finished goods inventory. So far we have purchased approximately $10 million of incremental inventory. While we hope for a quick end to the war, we are planning and acting to be prepared for increasing costs and shortages. Operationally, we’re working to increase the revenues of Mimedic by expanding its retail distribution and building a strong core of non seasonal business. Our teams are integrating product lines, leveraging our purchasing strengths and reducing duplicate expenses with the goal of generating significant profits throughout the year. The project is well underway. We are completing the move into our new Spill Magic facility in Mount Pleasant, Tennessee. Production has begun there even as additional equipment is being installed. Orders for the business are strong and we are experiencing record growth. In Europe, sales increased 19% in local currency to 4 million euro. Our growth there includes the acquisition last November of Schmiediglut, a small direct to consumer company which is exceeding expectations. Our first aid business in Europe had record performance and we continue to expand its product line and sales team. The Westcott cutting tool business overcame market headwinds and increased 10% in Europe. In Canada, First Aid Central had a strong quarter and the cutting segment also grew. Overall, our Canadian business increased 16% compared to the first quarter of 2025. I will now turn the call to Paul
Paul Nachme
Acme’s net sales for the first quarter of 2026 were $52.3 million compared to $46 million in 2025, a 14% increase excluding mimedic sales increased 6%. Net sales in the US segment increased 12% in the quarter, driven by higher sales of first aid and medical products including Mimedic products. Net sales in Europe for the first quarter of 2026 increased 19% in local currency compared to the first quarter of 2025, due mainly to the new line of cutting and sharpening tools. The base business had a good performance with a sales increase of 12%. Net sales in Canada for the first quarter of 2026 increased 11% in local currency due to higher sales of first aid products. The gross margin was 39.7% in the first quarter of 2026 versus 39% in the first quarter of 2025. The favorable mix from higher margin direct to consumer mimetic products was mostly offset by the impact of increased tariffs. SG&A expenses for the first quarter of 2026 were $19 million or 36% of net sales, compared with $15.5 million or 34% of net sales for the same period of 2025 the higher SG&A was primarily due to the addition of the Mimedic business. The higher percentage of sales was due to the higher amount of advertising needed for the direct to consumer mimedic business. Net income for the first quarter of 2026 was $1 million or $0.24 per diluted share compared to net income of $1.7 million or $0.41 per diluted share for the same period of 2025 of 40% in net income. The decline in net income was primarily due to the higher tariff and Mednap costs we experienced in the first quarter of this year. The higher tariff spending commenced in July of 2025. However, the costs were capitalized into inventory and we started to realize the full impact to earnings as the high cost products were sold in the first quarter of 2026. We expect the tariff impact to gradually lessen over the next three quarters as the tariff rate declined in November 2025 and again in February 2026. Additionally, the incremental cost to enhance the …
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