ACME UNITED CORP

Previous wording

These risks and uncertainties include, without limitation, the following: (i) The impact on the demand for certain of the Company’s products and its competitive position of the new 145% tariff on the goods sourced from China and other current and future changes in tariffs by the U.S. government (ii) changes in the Company’s plans, strategies, objectives, expectations and intentions, which may be made at any time at the discretion of the Company; (iii) the impact of uncertainties in global economic conditions, including the impact on the Company’s suppliers and customers; (iv) the continuing adverse impact of inflation, including product costs, transportation costs and interest rates; (v) potential adverse effects on the Company, its customers, and suppliers resulting from the wars in Ukraine and the Middle East; (vi) additional disruptions in the Company’s supply chains, whether caused by pandemics, natural disasters, including trucker shortages, port closures, port strikes or otherwise; (vii) labor related costs the Company has and may continue to incur, including costs of acquiring and training new employees and rising wages and benefits; (viii) changes in client needs and consumer spending habits; (ix) currency fluctuations; (x) the Company’s ability to effectively manage its inventory in a rapidly changing business environment; (xi) the impact of competition; (xii) the impact of technological changes including, specifically, the growth of online marketing and sales activity; (xiii) the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business it might acquire; ; and (xiv) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

Current wording

These risks and uncertainties include, without limitation, the following: (i) The impact on the demand for certain of the Company’s products and its competitive position of the new tariffs on the goods sourced from China and elsewhere and other current and future changes in tariffs by the U.S. government (ii) changes in the Company’s plans, strategies, objectives, expectations and intentions, which may be made at any time at the discretion of the Company; (iii) the impact of uncertainties in global economic conditions, including the impact on the Company’s suppliers and customers; (iv) the continuing adverse impact of inflation, including product costs, transportation costs and interest rates; (v) potential adverse effects on the Company, its customers, and suppliers resulting from the wars in Ukraine and the Middle East; (vi) additional disruptions in the Company’s supply chains, whether caused by pandemics, natural disasters, including trucker shortages, port closures, port strikes or otherwise; (vii) labor related costs the Company has and may continue to incur, including costs of acquiring and training new employees and rising wages and benefits; (viii) changes in client needs and consumer spending habits; (ix) currency fluctuations; (x) the Company’s ability to effectively manage its inventory in a rapidly changing business environment; (xi) the impact of competition; (xii) the impact of technological changes including, specifically, the growth of online marketing and sales activity; (xiii) the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business it might acquire; ; and (xiv) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.

Previous wording

Net sales in the U.S. for the three months ended March 31, 2025 increased 3% compared to the same period in 2024. The increase in net sales for the three months ended March 31, 2025 was primarily due to higher sales of first aid and medical products partially offset by lower sales of school and office products. The lower sales of school and office products was primarily due to a large initial order of craft products to a major mass market retailer that took place in the first quarter of 2024.

Current wording

Net sales in the U.S. for the three months ended June 30, 2025 decreased 5% compared to the same period in 2024. The decrease in net sales for the three months ended June 30, 2025 was primarily due to the cancellation of certain back-to-school customer orders as a result of exceptionally high tariffs in April and May. Additionally, there was a large initial order of new kitchen sharpeners to a major mass market retailer that took place in the second quarter of 2024. Net sales in the U.S. for the six months ended June 30, 2025 decreased 2% compared to the same period in 2024.

Previous wording

Net sales in Canada for the three months ended March 31, 2025 increased 5% in U.S. dollars and 12% in local currency compared to the same period in 2024. Sales of first aid products were strong, however sales of school and office products declined due to a continuing soft economy.

Current wording

Net sales in Canada for the three months ended June 30, 2025 increased 28% in U.S. dollars and local currency compared to the same period in 2024. Net sales in Canada for the six months ended June 30, 2025 increased 18% in U.S. dollars and 21% in local currency compared to the same period in 2024. The increase in net sales for both periods was due to strong sales of first aid products.

Previous wording

European net sales for the three months ended March 31, 2025 decreased 7% in U.S. dollars and 4% in local currency compared to the same period in 2024. The decrease in net sales for the three months ended March 31, 2025 was primarily due to a large promotion in the first quarter of 2024 that did not repeat this year.

Current wording

European net sales for the three months ended June 30, 2025 decreased 3% in U.S. dollars and 6% in local currency compared to the same period in 2024. European net sales for the six months ended June 30, 2025 decreased 5% in U.S. dollars and 6% in local currency compared to the same period in 2024. The decrease in net sales for the three and six months ended June 30, 2025 was primarily due to certain customer shipments delayed until the third quarter as well as a large promotion in the first quarter of 2024 that did not repeat this year.

Previous wording

Gross profit for the three months ended March 31, 2025 was $17,917,000 (39.0% of net sales) compared to $17,396,000 (38.7% of net sales) in the same period in 2024. The increase in gross profit for the three months ended March 31, 2025 was primarily due to higher sales.

Current wording

Gross profit for the three months ended June 30, 2025 was $22,149,000 (41.0% of net sales) compared to $22,627,000 (40.8% of net sales) in the same period in 2024. The decrease in gross profit for the three months ended June 30, 2025 was primarily due to lower sales. Gross profit for the six months ended June 30, 2025 was $40,066,000 (40.1% of net sales) compared to $40,024,000 (39.9% of net sales) in the same period of 2024.

Previous wording

Selling, general and administrative ("SG&A") expenses for the three months ended March 31, 2025 were $15,491,000 (33.7% of net sales) compared with $14,838,000 (33.0% of net sales) in the same period in 2024, an increase of $653,000. The increase in SG&A expenses for the three months ended March 31, 2025 was primarily related to higher personnel related expenses.

Current wording

Selling, general and administrative ("SG&A") expenses for the three months ended June 30, 2025 were $15,759,000 (29.2% of net sales) compared with $16,252,000 (29.3% of net sales) in the same period in 2024, an decrease of $493,000. The lower SG&A expenses were primarily due to cost reductions and reduced discretionary spending. Selling, general and administrative ("SG&A") expenses for the six months ended June 30, 2025 were $31,250,000 (31.3% of net sales) compared with $31,090,000 (31.0% of net sales) in the same period in 2024, an increase of $160,000

Previous wording

Operating income in the U.S. segment increased by $20,000 for the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Operating income in the U.S. segment increased by $79,000 for the three months ended June 30, 2025 compared to the same period in 2024. Operating income in the U.S. segment increased by $100,000 for the six months ended June 30, 2025 compared to the same period in 2024.

Previous wording

Operating income in the Canadian segment increased by $2,000 for the three months ended March 31, 2025 compared to the same period in 2024.

Current wording

Operating income in the Canadian segment increased by $169,000 for the three and six months ended June 30, 2025, compared to the same periods in 2024. The increase in operating income for the three and six months ended June 30, 2025 was primarily due to higher sales.

Previous wording

Operating income in the European segment decreased by $154,000 for the three months ended March 31, 2025, compared to the same period in 2024. The decrease in operating income for the three months ended March 31, 2025 was primarily due to lower sales.

Current wording

Operating income in the European segment decreased by $233,000 for the three months ended June 30, 2025, compared to the same period in 2024. Operating income in the European segment decreased by $387,000 for the six months ended June 30, 2025 compared to the same period in 2024. The decrease in operating income for the three and six months ended June 30, 2025 was primarily due to lower sales.

Previous wording

Interest expense, net for the three months ended March 31, 2025 was $397,000 compared with $443,000 in the same period of 2024, a $46,000 decrease. The decrease in interest expense for the three months ended March 31, 2025 resulted from lower average outstanding borrowings as well as lower average interest rates on the debt outstanding.

Current wording

Interest expense, net for the three months ended June 30, 2025 was $401,000 compared with $539,000 in the same period of 2024, a $138,000 decrease. Interest expense, net for the six months ended June 30, 2025 was $798,000 compared with $982,000 in the same period of 2024, a $184,000 decrease. The decrease in interest expense for the three and six months ended June 30, 2025 resulted from lower average outstanding borrowings as well as lower average interest rates on the debt outstanding.

Previous wording

Other income, net was $90,000 in the three months ended March 31, 2025 compared to $44,000 in the same period of 2024.

Current wording

Other income, net was $99,000 in the three months ended June 30, 2025 compared to $28,000 in the same period of 2024. Other income, net was $188,000 in the six months ended June 30, 2025 compared to $72,000 in the same period of 2024.

Previous wording

The effective income tax rate for the three months ended March 31, 2025 was 22% compared to 24% in the same period of 2024.

Current wording

The effective income tax rate for the three and six months ended June 30, 2025 was 22% compared to 24% in the same period of 2024.

Previous wording

During the first three months of 2025, working capital increased approximately $4.2 million. Inventory turnover, calculated using a twelve-month average inventory balance, was 2.1 at March 31, 2025 and December 31, 2024. Receivables increased approximately $2.6 million at March 31, 2025 compared to December 31, 2024. The average number of days sales outstanding in accounts receivable was 53 days at March 31, 2025 compared to 54 days at December 31, 2024. Accounts payable and other current liabilities decreased by approximately $2.8 million at March 31, 2025 compared to December 31, 2024.

Current wording

During the first six months of 2025, working capital increased approximately $5.3 million. Inventory turnover, calculated using a twelve-month average inventory balance, was 2.1 at June 30, 2025 and December 31, 2024. Receivables increased approximately $7.9 million at June 30, 2025 compared to December 31, 2024. The average number of days sales outstanding in accounts receivable was 52 days at June 30, 2025 compared to 54 days at December 31, 2024. Accounts payable and other current liabilities increased by approximately $0.6 million at June 30, 2025 compared to December 31, 2024.

Previous wording

Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A. and (ii) amounts outstanding under the fixed rate mortgage on the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. The revolving loan agreement provides for borrowings of up to $65 million, at an interest rate of SOFR plus 1.75%; interest is payable monthly. The loan agreement has an expiration date of May 31, 2026. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent (.125%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for growth, share repurchases, dividends, acquisitions, and other business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. As of March 31, 2025, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.

Current wording

Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A. and (ii) amounts outstanding under the fixed rate mortgage on the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. Effective as of June 26, 2025, Acme United Corporation (the “Company”) entered into Amendment No. 11 to the Revolving Loan Agreement dated as of April 5, 2012, as amended (the ”Loan Agreement”), between the Company and HSBC. Amendment No. 11 extends the scheduled maturity of the $65 million dollar secured revolving credit facility under the Loan Agreement to May 31, 2027. The revolving loan agreement provides for borrowings of up to $65 million, at an interest rate of SOFR plus 1.75%; interest is payable monthly. The loan agreement has an expiration date of May 31, 2027. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent (.125%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for growth, share repurchases, dividends, acquisitions, and other business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. As of June 30, 2025, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.

Previous wording

During the first three months of 2025, total debt outstanding under the Company’s revolving credit facility increased by approximately $2.8 million, compared to total debt thereunder at December 31, 2024. As of March 31, 2025, $20,457,000 was outstanding and $44,543,000 was available for borrowing under the Company’s credit facility.

Current wording

During the first six months of 2025, total debt outstanding under the Company’s revolving credit facility decreased by approximately $1.3 million, compared to total debt thereunder at December 31, 2024. As of June 30, 2025, $16,375,000 was outstanding and $48,625,000 was available for borrowing under the Company’s credit facility.

Previous wording

The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC Bank, N.A. at a rate of 3.8%. The Company entered into the agreement on December 1, 2021. Payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031. At March 31, 2025, there was approximately $10.3 million outstanding on the mortgage.

Current wording

The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC Bank, N.A. at a rate of 3.8%. The Company entered into the agreement on December 1, 2021. Payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031. At June 30, 2025, there was approximately $10.2 million outstanding on the mortgage.

Previous wording

On May 23, 2024, the Company acquired the assets of Elite First Aid, Inc ("Elite First Aid") for approximately $7.1 million of which $1.0 million is subject to holdbacks as follows: (a) $500,000, the payment of which is contingent upon certain revenue milestones during an consecutive 12-month period from May 31, 2024 to December 31, 2025; and (b) $500,000, which is subject to a 13 month holdback as a non-exclusive source of recovery primarily to satisfy certain types of indemnification claims under the Asset Purchase Agreement. Based in Wake Forest, NC, Elite First Aid is a leading supplier of tactical, trauma and emergency medical products.

Current wording

On May 23, 2024, the Company acquired the assets of Elite First Aid, Inc ("Elite First Aid") for approximately $7.1 million of which $1.0 million is subject to holdbacks as follows: (a) $500,000, the payment of which is contingent upon certain revenue milestones during an consecutive 12-month period from May 31, 2024 to December 31, 2025; and (b) $500,000, which was subject to a 13 month holdback as a non-exclusive source of recovery primarily to satisfy certain types of indemnification claims under the Asset Purchase Agreement; the Company paid this amount in July 2025. Based in Wake Forest, NC, Elite First Aid is a leading supplier of tactical, trauma and emergency medical products.

Previous wording

A significant portion of the products we sell (and components used in our products) are sourced from suppliers located in China. The United States government has imposed, and may continue to impose or adjust, significant tariffs on a range of Chinese goods. These tariffs have increased our costs of goods sold and could further escalate depending on changes in trade policy, negotiations, or retaliatory measures by China. The indirect impact on demand for our products as a result of these developments has become more uncertain. The Company expects to mitigate the potential impact on our business and operations through strategic sourcing adjustments, price adjustments and supply chain diversification, but there can be no assurance that such efforts will be successful or sufficient. While the impact on our operations to date have not been significant, any further increases of existing tariffs, the imposition of new tariffs, the potential modifications to existing trade agreements and other restrictions on free trade may adversely impact demand for our products, increase our costs, and disrupt our supply chain. These risks, in turn, could have a material adverse effect on our business, results of operations, and financial condition.

Current wording

We have been actively diversifying our supply base for many years and source products and components in a number of countries. A significant portion of the products we sell (and components used in our products) are sourced from suppliers located in China. The United States government has imposed, and may continue to impose or adjust, significant tariffs on a range of Chinese goods. These tariffs have increased our costs of goods sold and could further escalate depending on changes in trade policy, negotiations, or retaliatory measures by China or by other countries similarly impacted. The indirect impact on demand for our products as a result of these developments has become more uncertain. The Company has taken and continues to take steps to mitigate the potential impact on our business and operations through strategic sourcing adjustments, price adjustments and supply chain diversification, but there can be no assurance that such efforts will effectively mitigate the imposition of tariffs and other developments. Any further increases of existing tariffs, the imposition of new tariffs, the potential modifications to existing trade agreements, new restrictions on free trade and the responses by other governments to changes in trade policy by the United States may adversely impact demand for our products, increase our costs, and disrupt our supply chain. These risks, in turn, could have a material adverse effect on our business, results of operations, and financial condition.