Welcome to the second quarter 2026 earnings conference call for Acme United Corporation. 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. Our net sales increased from $54 million to $63 million, an increase of 16%. Net income increased from $4.8 million to $5.1 million, and earnings per share increased 5% to $1.22.
We are working to increase the core direct-to-consumer business, as well as expand the product offering to retail. In the U.S., net sales of first aid and medical products increased 10%, with growth in particular at mass market retailers. In Europe, net sales increased 19%, with strong growth of our Westcott Cutting Tools. declined approximately 100 basis points due to the cost of high tariffs that were capitalized in our inventory and are now being sold.
This is an improvement from the first quarter, and we anticipate continued gross margin expansion as these products are sold in the coming quarters. When the war with Iran began, we placed orders for approximately $10 million of extra inventory to buffer potential product shortages and cost increases. Acme's net sales for the second quarter were $62.7 million compared to $54 million in 2025, an increase of 16%. Sales for the six months ended June 30th, 2026 were $115 million compared to $100 million in the same period in 2025, an increase of 15%.
| Metric | Period | Current guidance |
|---|---|---|
| Gross margin (core, ex-My Medic) | Rest of 2026 | Continued expansion expected as high-tariff inventory is replaced by lower-cost product; the ~1% margin reduction should be recovered through the year |
| My Medic profitability | Q4 2026 into 2027 | Operating leverage expected to become apparent in Q4 and into Q1 as retail distribution and cost savings build; Q4 is roughly 35% of My Medic's annual sales |
| Westcott cutting tools | H2 2026 | Full book of promotional activity for back-to-school and Q4/Q1; growth expected to continue |
| Med-Nap hospital certification | Year-end 2026 | Certification work progressing well and expected to be complete by year-end, potentially opening the U.S. hospital market |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +16% (to $62.7M) | My Medic (~$4.3M) plus 8% organic growth across first aid, Westcott and Europe. |
| Net sales ex-My Medic | +8% | Broad-based growth across all product lines. |
| U.S. first aid and medical | +10% | Strength at mass-market retailers, Safety Made promotional business, Med-Nap wipes and Spill Magic. |
| U.S. Westcott cutting tools | +8% | Recovery of retail promotional activity that had been cancelled in 2025; mostly volume-driven. |
| Europe | +19% | Strong growth of Westcott cutting tools plus the German acquisition. |
| Canada (local currency) | +3% | Industrial, retail and online first aid growth offset by a sluggish Westcott/economy. |
| Gross margin | 42.6% vs 41.0% (record) | Favorable My Medic mix; core U.S. margin down ~100 bps on tariffs (improved from ~150 bps in Q1). |
| Net income / EPS | +6% / +5% ($5.1M / $1.22) | Sales growth and narrowing tariff drag. |
| Six-month net income / EPS | -6% / -7% ($6.0M / $1.46) | Heavy first-quarter tariff impact on high-cost inventory. |
| Net debt | $27.3M vs $22.8M | $14M My Medic acquisition, $1.6M German line and $2.4M dividends over the trailing 12 months, against ~$15M free cash flow. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Margin recovery from tariffs | ~150 bps core drag in Q1 | Core U.S. margin drag narrowed to ~100 bps in Q2 and should be recovered over the balance of 2026 as high-tariff inventory is replaced by lower-cost product; management flagged offsetting cost pressures from freight, fuel and a weaker U.S. dollar versus the Chinese yuan. | — |
| My Medic operating leverage | Break-even, seasonal | On plan at ~$4.3M Q2 sales with no consumer weakness; management is pursuing retail distribution (presentations to large mass-market retailers and industrial distributors) and cost savings (Asian sourcing, freight consolidation, eliminating duplicate functions), with profits expected to build into Q4 (roughly 35% of My Medic's annual sales) and 2027. | — |
| Westcott recovery | Down ~10% in 2025 on cancelled promotions | Up 8% in Q2, mostly volume, with a full book of back-to-school and Q4/Q1 promotions and a record through June; management says 'Westcott has legs again.' | — |
| Healthcare mix and long-term initiatives | — | Healthcare is now about 70% of revenue; long-term growth drivers include Spill Magic capacity (up ~30% YTD), Med-Nap throughput and hospital certification (targeted for year-end), and the next-generation smart-compliance auto-replenishment software nearing distributor rollout. | — |
| Competitive advantages | — | Management cited patented Westcott titanium and non-stick coatings and world-class scale/pricing in cutting tools, plus a differentiated first aid marketing team and multi-country Asian component sourcing that wins at customers such as Walmart, Grainger and Fastenal. | — |
| Geopolitical inventory hedge | ~$10M placed in Q1 | The Company continues to maintain the ~$10 million of extra inventory ordered at the start of the war in Iran, at locked-in favorable pricing, to buffer potential shortages and cost increases. | — |