Acme United capped 2025 with record annual results — net sales of $196.5 million (up 1%), net income of $10.2 million and diluted EPS of $2.49 (up 2%) — achieved despite a highly disruptive tariff year. Fourth-quarter sales rose 3% to $47.5 million with net income up 10% to $1.9 million ($0.46 per diluted share) and operating profit up 27%, led by 22% local-currency growth in Europe and 14% in Canada. When 145% China tariffs were announced in April 2025, customers cancelled promotions and Acme's team reacted quickly — shipping over 50 containers once tariffs fell to 30%, opening new factories in Vietnam, Thailand and Malaysia, boosting production in India, Egypt and the U.S., and negotiating supplier and freight savings. The Company strengthened its balance sheet, cutting net bank debt to $18.5 million and interest expense to $1.6 million while generating $13 million of free cash flow before a $6 million Tennessee facility purchase. Strategically, Acme made two acquisitions — My Medic, the leading U.S. direct-to-consumer supplier of advanced first aid and bleed-control products (~$19 million revenue, 500,000+ social followers, closed January 15, 2026 for $18.7 million), and a German direct-to-consumer cutting/sharpening line — and continued heavy investment in domestic manufacturing, robotics/automation and its Med-Nap medical facility, positioning it for first aid and medical growth and a return to more normal Westcott promotional activity in 2026.
Good morning. Welcome to the fourth quarter and year-end 2026 earnings conference call for Acme United Corporation. I'm Walter C. Johnsen, 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've experienced supply chain disruptions, 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 in our current earnings release.
Thank you, Paul. Acme United delivered record sales and earnings in 2025. It was not easy, but we did better than we ever have. Our net sales were $196.5 million, net income was $10.2 million, and earnings per share were $2.49. When high global tariffs were announced in April 2025, our customers scrambled. They delayed and canceled retail promotions, opted to have no stock rather than import items for losses, and searched for new, lower-cost sources. We had purchased extra inventory at the end of 2024 in anticipation of some increased tariff levels and supplied our regular customers with their planned orders. Our team in the United States and Asia reacted quickly.
When the Chinese tariffs for our products were reduced from 145%-30% in late April 2025, we put over 50 containers on the water within days. We worked with our suppliers to open new factories in Vietnam, Thailand, and Malaysia. We increased our production in India and Egypt. We negotiated cost reductions from our suppliers, obtained lower freight rates, generated productivity from savings in our domestic plants, and increased prices very modestly. Our team supported our customers, and they delivered. There were many highlights in 2025. Our first aid team introduced a patented automatic replenishment system for refills. This product senses components that were used, lost, or became obsolete in an industrial first aid kit and automatically generates replenishment orders. A typical customer will save 30%-50%, and sometimes more, over traditional van-based delivery.
The Westcott team expanded our market share of cutting tools, particularly in the craft market. We used our patented non-stick technology to develop differentiated products to work with tapes, glues, and sticky substances. We increased our line of ceramic tools to safely cut and open boxes and increased sales of our industrial cutting tools. We invested in robotics in three sites in the United States to assemble refills for first aid components. These investments in the recurring portion of our first aid business are generating savings and improving product quality. We installed new software to optimize inventory placement in our large warehouse in Rocky Mount, North Carolina. We streamlined the process flow of inventory and purchased drones to nightly do inventory reconciliation. Acme United purchased a 78,000 sq ft plant on 12 acres in Mt. Pleasant, Tennessee, for approximately $6 million.
This facility will expand production of our Spill Magic Cleanup products, Bodily Fluid Kits, and Bloodborne Pathogen Kits. We are moving into the facility in the first quarter of 2026, and we have just purchased new automated processing equipment. We continued to purchase advanced production equipment for our Med-Nap facility in Brooksville, Florida, to produce medical-grade alcohol prep pads, antiseptic wipes, and other items used in our first aid kits. We are building a microbiology lab, expanding our quality assurance team, and preparing our documentation and controls to be a serious domestic supplier to the broader U.S. medical market. In January 2026, we purchased My Medic, which is the leading direct-to-consumer supplier of advanced first aid and bleed control products in the United States. It is at over 500,000 social media followers and a product line that we hope to expand.
The company had revenues of approximately $19 million in 2025. The purchase price was $18.7 million. Our first aid business in Canada grew strongly. We gained share in the industrial and retail sectors and continued expansion of our e-commerce business. Sales of Hawktree Solutions, which was acquired out of bankruptcy in late 2023, exceeded our expectations. In Europe, we expanded our market share in cutting, despite an overall weak economy. We acquired a direct-to-consumer supplier of cutting and sharpening tools in October 2025. Annual sales were approximately $2 million for this acquisition. The purchase price was $1.6 million. In our first aid segment in Europe, we expanded the marketing and sales team, improved product sourcing costs, and began to expand aggressively.
As we move into 2026, we see growth in our first aid and medical segments and a return to more normal merchandising and promotion in the retail market. We are excited about the investments we have made in domestic production and our expanded international sourcing, and we believe we are very well positioned as we enter 2026. I will now turn the call to Paul.
Acme's net sales for the fourth quarter were $47.5 million compared to $45.9 million in 2024, an increase of 3%. Sales for the year ended December 31st, 2025, were $196.5 million compared to $194.5 million in 2024, an increase of 1%. Net sales in the U.S. segment in the fourth quarter were constant compared to the fourth quarter of 2024. U.S. sales declined 1% for the year ended December 31st. Sales of first aid and medical products were strong. However, sales of school and office products were lower, mainly due to the cancellation of customer orders as a result of tariff uncertainty. Net sales in Europe increased 22% in local currency for the quarter.
Sales for the year ended December 31st, 2025, increased 4% compared to 2024. The sales increase for both the quarter and the year was mainly due to additional sales from the line of cutting and sharpening tools acquired on October 1st, 2025. Net sales in Canada increased 14% in local currency for the quarter. Sales for the year ended December 31st, 2025, increased 16% compared to 2024. Sales of first aid products were strong. However, there was a decline in sales of school and office products. The gross margin was 38.2% in the fourth quarter of 2025, compared to 38.7% in 2024. The gross margin for the year was 39.4%, compared to 39.3% in 2024.
SG&A expenses for the fourth quarter of 2025 were $15.2 million, or 32% of sales, compared with $15.5 million, or 34% of sales for the same period of 2024. SG&A expenses for the 12 months of 2025 were $62.7 million, or 32% of sales, compared with $62.2 million, or 32% of sales in 2024. Operating profit in the fourth quarter of 2025 increased 27% compared to the fourth quarter of 2024. Interest expense for the year went from $1.9 million in 2024 to $1.6 million in 2025. The decline in interest expense was due to a combination of lower debt and lower interest rates.
Net income for the fourth quarter of 2025 was $1.9 million, or $0.46 per diluted share, compared to $1.7 million, or $0.41 per diluted share in the fourth quarter of 2024. An increase of 10% in net income and 12% in diluted earnings per share. Net income for the year ended December 31st, 2025, was $10.2 million, or $2.49 per diluted share, compared to $10 million, or $2.45 per diluted share in 2024, an increase of 2% in both net income and diluted earnings per share. The company's bank debt, less cash on December 31st, 2025, was $18.5 million, compared to $21.5 million on December 31st, 2024.
During the 12-month period, we paid $2.3 million in dividends, purchased a line of cutting and sharpening products in Germany for $1.6 million, and generated $13 million in free cash flow before the $6 million purchase of our new facility in Tennessee.
Thank you, Paul. I will now open the call to questions.