Acme United Reports Double-Digit Sales Growth – Sees Cost Easing Ahead

Acme United Corporation (US: ACU – $41.82) reported first-quarter results for the period ended March 31, 2026, delivering strong revenue growth driven by acquisitions and core business expansion, even as profitability was weighed down by higher costs and strategic investments.

Net sales for the quarter reached $52.3 million, representing a 14% increase compared to $46.0 million in the same period of 2025. When excluding the impact of the My Medic acquisition, completed in mid-January 2026, comparable sales rose by a solid 6%, indicating underlying organic growth across several of the Company’s product categories.

The My Medic business, which focuses on direct-to-consumer tactical, trauma, and emergency response products, contributed meaningfully to the top-line increase. While its impact on earnings was limited in the first quarter due to its seasonal nature, the business is seen as a long-term growth driver. My Medic typically generates a larger share of its profits in the fourth quarter and operates with high gross margins that are largely reinvested into marketing, product development, and customer support.

Tariffs And One-Time Investments Impact Earnings

Despite the increase in sales, net income fell to $1.0 million, or $0.24 per diluted share, compared to $1.7 million, or $0.41 per diluted share, in the prior-year quarter. The decline—40% in net income and 41% in earnings per share—was primarily attributed to higher costs of sales and increased operating expenses.

A key factor behind the margin pressure was the impact of tariffs imposed in 2025. These higher costs were embedded in inventory and began affecting earnings as those goods were sold during the first quarter of 2026. The seasonal nature of the business, which typically sees lower sales in the first quarter, further amplified the effect of these increased costs.

Additional pressure on earnings came from investments in operational improvements. The Company upgraded quality assurance protocols at its Med-Nap facility in Brooksville, Florida following an FDA inspection in 2025. The improvements included hiring external consultants and upgrading both microbiological and chemical testing laboratories, with total costs of approximately $1.3 million since the inspection took place. These expenditures were described as one-time in nature and aimed at strengthening long-term product quality and compliance.

The Company also continued to expand its Spill Magic division, which produces absorbent products used for cleaning industrial spills, bodily fluids, and hazardous materials. During the quarter, Acme United moved into a new, larger facility in Mt. Pleasant, Tennessee. The brand experienced strong momentum, with sales increasing by more than 30% during the quarter. The larger facility is expected to support future growth and enable expanded product development.

First Quarter Financials and Balance Sheet

The My Medic acquisition, while contributing to top-line growth, also led to higher selling, general, and administrative (SG&A) expenses. SG&A rose to $19 million, or 36% of net sales, compared to $15.5 million, or 34% of net sales, a year earlier. This increase was largely driven by the addition of My Medic and its direct-to-consumer model, which requires higher levels of advertising and promotional spending.

	First Quarter Ended March 31
Amounts in $000’s	2026	2025
Net Sales	52,301	45,958
Cost of Goods Sold	31,516	28,041
S, G & A Expenses	19,039	15,491
Income From Operations	1,745	2,426
Interest Expense	485	397
Other Income (Expense)	17	(90)
Pre-Tax Income	1,244	2,119
Income Tax Expense (Benefit)	259	466
Net Income	985	1,653
Shares Outstanding – Diluted	4,156	4,065
Earnings Per Diluted Share	0.24	0.41
Selected income statement data for the quarters ending March 31, 2026 and March 31, 2025. Source: Company Press Release

The gross margin was 39.7% in the first quarter of 2026 versus 39% in the first quarter of 2025. The benefit of higher-margin My Medic products helped offset some of the tariff-related pressure.

	First Quarter Ended March 31
Amounts in $000’s	2026	2025
Cash and Cash Equivalents	4,196	3,446
Accounts Receivable	33,511	30,814
Inventories	63,386	57,274
Total Current Assets	105,611	96,845
Property and Equipment	39,295	32,153
Total Assets	195,243	163,039
Accounts Payable	7,654	7,433
Other Current Liabilities	13,619	10,662
Total Current Liabilities	23,104	20,069
Long Term Debt	33,030	20,428
Total Liabilities	78,516	54,758
Total Stockholder Equity	116,727	108,281
Selected balance sheet data for the periods ended March 31, 2026 and March 31, 2025. Source: Company Press Release

On the balance sheet, Acme United reported net debt of $38.6 million as of March 31, 2026, compared to $27.2 million a year earlier. The increase reflected a series of strategic investments over the past twelve months, including approximately $14.6 million for the My Medic acquisition, $1.6 million for a cutting and sharpening product line in Germany, and $2.4 million in dividend payments. The Company also generated approximately $14.2 million in free cash flow during this period, prior to investing $6.0 million in a new manufacturing and distribution facility in Tennessee to support the Spill Magic operations.

In response to geopolitical uncertainty, including the outbreak of war in Iran, Acme took proactive steps to secure its supply chain by increasing inventory levels. Approximately $10 million of additional raw materials and finished goods were purchased to mitigate the risk of shortages and rising input costs. While such measures temporarily increased working capital requirements, they are intended to ensure operational continuity and pricing stability.

Meaningful Growth in All Three Segments

For the first quarter of 2026, net sales in the U.S. segment increased 12% compared to the same period in 2025, driven by higher sales of first aid and medical products, including My Medic products.

	First Quarter Ended March 31
Amounts in $000’s	2026	2025
U.S.	43,800	39,122
Canada	3,690	3,185
Europe	3,811	3,651
Estimated sales per segment for the quarter ending March 31, 2026 (Source: Smallcaps Investment Research) and actual sales per segment for the quarter ended March 31, 2025 (Source: Company Filing)

European net sales for the first quarter of 2026 increased 32% in U.S. dollars and 19% in local currency compared to the first quarter of 2025. Sales growth included the acquisition last November of Schmiedeglut, a small direct-to-consumer company, which is exceeding expectations. The First Aid business in Europe had record performance, and continues to expand its product line and sales team. Moreover, the Westcott cutting tool business overcame market headwinds and increased sales with around 10%.

Canadian operations delivered similarly positive results, with sales rising 16% in U.S. dollars and 11% in local currency, driven by strength in both first aid and cutting tool categories.

Outlook

Looking ahead, management indicated that the financial impact of tariffs was expected to gradually diminish over the next several quarters, as tariff rates had already begun to decline in late 2025 and early 2026. Additionally, the Company expects to work through higher-cost inventory during the second quarter, with a return to more normalized cost structures anticipated by the third quarter.

Importantly, the investments made in quality assurance at the Med-Nap facility are not expected to recur, which should provide some relief to operating expenses in upcoming quarters. At the same time, ongoing integration efforts related to My Medic and other acquisitions are expected to yield efficiencies, including cost savings through procurement synergies, streamlined operations, and reduced overhead.

Overall, while first-quarter earnings reflected near-term pressures, the Company’s performance highlighted continued demand for its products, successful execution of its acquisition strategy, and a commitment to strengthening its operational capabilities. Management expressed confidence that these initiatives, combined with easing cost headwinds, support improved profitability and sustained growth over the remainder of 2026. Smallcaps Recommendation: BUY.

Smallcaps.us Advice: Buy	Price Target: $53.47	Latest Company Report (pdf)
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