ACME UNITED CORP

Previous wording

The Company may from time to time make written or oral “forward-looking statements” including statements contained in this report and in other communications by the Company, which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like “may,” “might,” “will,” “except,” “anticipate,” “believe,” “potential,” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations.

Current wording

The Company may from time to time make written or oral “forward-looking statements” including statements contained in this report and in other communications by the Company, which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like “may,” “might,” “will,” “expect,” “anticipate,” “believe,” “potential,” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations.

Previous wording

These risks and uncertainties include, without limitation, the following: (i) changes in the Company’s plans, strategies, objectives, expectations and intentions, which may be made at any time at the discretion of the Company; (ii) the impact of volatility in global economic conditions, including the impact on the Company’s suppliers and customers; (iii) international trade policies of the United States or foreign governments and their impact on demand for our products and our competitive position, including the imposition of new tariffs, changes in existing tariff rates or the threat of any such action; (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) changes in the Company’s plans, strategies, objectives, expectations and intentions, which may be made at any time at the discretion of the Company; (ii) the impact of volatility in global economic conditions, including the impact on the Company’s suppliers and customers; (iii) international trade policies of the United States or foreign governments and their impact on demand for our products and our competitive position, including the imposition of new tariffs, changes in existing tariff rates or the threat of any such action; (iv) potential adverse effects on the Company, its customers, and suppliers resulting from the wars in Iran and elsewhere in the Middle East and Ukraine; (v) the continuing adverse impact of inflation, including product costs, transportation costs and interest rates; (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 September 30, 2025 increased 1% compared to the same period in 2024. The increase in net sales for the three months ended September 30, 2025 was primarily due to increased sales of first aid and medical products. 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 the U.S. for the nine months ended September 30, 2025 decreased 1% compared to the same period in 2024.

Current wording

Net sales in the U.S. for the three months ended March 31, 2026 increased 12% compared to the same period in 2025. The increase in net sales for the three months ended March 31, 2026 was primarily due to increased sales of first aid and medical products and additional sales resulting from the acquisition of the assets of My Medic.

Previous wording

Net sales in Canada for the three months ended September 30, 2025 increased 5% in U.S. dollars and 7% in local currency compared to the same period in 2024. Net sales in Canada for the nine months ended September 30, 2025 increased 14% in U.S. dollars and 16% 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.

Current wording

Net sales in Canada for the three months ended March 31, 2026 increased 16% in U.S. dollars and 11% in local currency compared to the same period in 2025 due to higher sales of first aid products.

Previous wording

European net sales for the three months ended September 30, 2025 increased 13% in U.S. dollars and 6% in local currency compared to the same period in 2024, mainly due to higher sales of school and office products into the ecommerce channel. European net sales for the nine months ended September 30, 2025 increased 1% in U.S. dollars and decreased 2% in local currency compared to the same period in 2024.

Current wording

European net sales for the three months ended March 31, 2026 increased 32% in U.S. dollars and 19% in local currency compared to the same period in 2025 primarily due to higher ecommerce sales and additional sales resulting from the acquisition of the cutting and sharpening line of products on October 1, 2025.

Previous wording

Gross profit for the three months ended September 30, 2025 was $19,195,000 (39.1% of net sales) compared to $18,564,000 (38.5% of net sales) in the same period in 2024. Gross profit for the nine months ended September 30, 2025 was $59,262,000 (39.8% of net sales) compared to $58,587,000 (39.4% of net sales) in the same period of 2024.

Current wording

Gross profit for the three months ended March 31, 2026 was $20,785,000 (39.7% of net sales) compared to $17,917,000 (39.0% of net sales) in the same period in 2025.

Previous wording

Selling, general and administrative ("SG&A") expenses for the three months ended September 30, 2025 were $16,188,000 (33.0% of net sales) compared with $15,638,000 (32.5% of net sales) in the same period in 2024, an increase of $550,000. Selling, general and administrative ("SG&A") expenses for the nine months ended September 30, 2025 were $47,438,000 (31.8% of net sales) compared with $46,728,000 (31.5% of net sales) in the same period in 2024, an increase of $710,000

Current wording

Selling, general and administrative ("SG&A") expenses for the three months ended March 31, 2026 were $19,039,000 (36.4% of net sales) compared with $15,491,000 (33.7% of net sales) in the same period in 2025, an increase of $3,548,000. The increase in SG&A expenses was primarily due to the acquisition of the assets of My Medic as well as higher personnel related expenses.

Previous wording

Operating income in the U.S. segment decreased by $33,000 for the three months ended September 30, 2025 compared to the same period in 2024. Operating income in the U.S. segment increased by $88,000 for the nine months ended September 30, 2025 compared to the same period in 2024.

Current wording

Operating income in the U.S. segment decreased by $1,320,000 for the three months ended March 31, 2026 compared to the same period in 2025. The decrease in operating income for the three months ended March 31, 2026 was primarily due to higher cost of sales and increased operating expenses as a result of higher tariff-related costs and investments in enhanced quality assurance protocols at the Med-Nap facility, together with rising employee healthcare expenses. Tariff expenses were recognized during the first quarter as the Company sold inventory that had been subject to the high tariff rates imposed in 2025.

Previous wording

Operating income in the Canadian segment increased by $68,000 and $239,000 for the three and nine months ended September 30, 2025, compared to the same periods in 2024. The increase in operating income for the three and nine months ended September 30, 2025 was primarily due to higher sales of first aid products.

Current wording

Operating income in the Canadian segment increased by $206,000 for the three months ended March 31, 2026, compared to the same period in 2025. The increase in operating income for the three months ended March 31, 2026 was primarily due to higher sales of first aid products.

Previous wording

Operating income in the European segment increased by $46,000 for the three months ended September 30, 2025, compared to the same period in 2024. Operating income in the European segment decreased by $363,000 for the nine months ended September 30, 2025 compared to the same period in 2024.

Current wording

Operating income in the European segment increased by $434,000 for the three months ended March 31, 2026, compared to the same period in 2025. The increase in operating income for the three months ended March 31, 2026 was primarily due to higher sales.

Previous wording

Interest expense, net for the three months ended September 30, 2025 was $422,000 compared with $535,000 in the same period of 2024, a $113,000 decrease. Interest expense, net for the nine months ended September 30, 2025 was $1,222,000 compared with $1,517,000 in the same period of 2024, a $295,000 decrease. The decrease in interest expense for the three and nine months ended September 30, 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 March 31, 2026 was $486,000 compared with $397,000 in the same period of 2025, an $89,000 increase. The increase in interest expense for the three months ended March 31, 2026 resulted from higher average outstanding borrowings partially offset by lower average interest rates on the debt outstanding.

Previous wording

Other income, net was $146,000 in the three months ended September 30, 2025 compared to other expense of $17,000 in the same period of 2024. Other expense, net was $44,000 in the nine months ended September 30, 2025 compared to $90,000 in the same period of 2024.

Current wording

Other expense, net was $16,000 in the three months ended March 31, 2026 compared to other income of $90,000 in the same period of 2025.

Previous wording

The effective income tax rate for the three and nine months ended September 30, 2025 was 22% compared to 8% and 20%, respectively, in the same periods of 2024. The lower tax rate in the three months ended September 30, 2024 was the result of a large excess tax benefit resulting from the exercise of stock options.

Current wording

The effective income tax rate for the three months ended March 31, 2026 was 21% compared to 22% in the same period of 2025.

Previous wording

During the first nine months of 2025, working capital increased approximately $4.0 million. Inventory turnover, calculated using a twelve-month average inventory balance, was 2.0 at September 30, 2025 and December 31, 2024. Receivables increased approximately $1.8 million at September 30, 2025 compared to December 31, 2024. The average number of days sales outstanding in accounts receivable was 51 days at September 30, 2025 compared to 54 days at December 31, 2024. Accounts payable and other current liabilities decreased by approximately $0.7 million at September 30, 2025 compared to December 31, 2024.

Current wording

During the first three months of 2026, working capital increased approximately $9.2 million. Inventory turnover, calculated using a twelve-month average inventory balance, was 2.0 at March 31, 2026 and December 31, 2025. Receivables increased approximately $4.4 million at March 31, 2026 compared to December 31, 2025. The average number of days sales outstanding in accounts receivable was 51 days at March 31, 2026 compared to 54 days at December 31, 2025. Accounts payable and other current liabilities increased by approximately $0.3 million at March 31, 2026 compared to December 31, 2025.

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. 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 September 30, 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, the Company entered into Amendment No. 11 to the Loan Agreement. 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 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 operating activities, growth, acquisitions, dividends share repurchases 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, 2026, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.

Previous wording

During the first nine months of 2025, total debt outstanding under the Company’s revolving credit facility increased by approximately $0.6 million, compared to total debt thereunder at December 31, 2024. As of September 30, 2025, $18,271,000 was outstanding and $46,729,000 was available for borrowing under the Company’s credit facility.

Current wording

During the first three months of 2026, total debt outstanding under the Company’s revolving credit facility increased by approximately $21.2 million, compared to total debt thereunder at December 31, 2025. As of March 31, 2026, $33,034,000 was outstanding and $31,966,000 was available for borrowing under the Company’s credit facility.

Previous wording

On July 15, 2025, the Company purchased a manufacturing and distribution center in Mt. Pleasant, TN for approximately $6.0 million. The property consists of 77,000 square feet of manufacturing and warehouse space on 12 acres and is designed to be expanded by up to an additional 60,000 square feet. The facility will primarily be used to manufacture our Spill Magic line of bodily fluid and spill clean up solutions.

Current wording

On July 15, 2025, the Company purchased a manufacturing and distribution center in Mt. Pleasant, TN for approximately $6.0 million. The property consists of 77,000 square feet of manufacturing and warehouse space on 12 acres and is designed to be expanded by up to an additional 60,000 square feet. The facility is used primarily to manufacture our Spill Magic line of bodily fluid and spill clean up solutions.

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 September 30, 2025, there was approximately $10.1 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 mortgage loan 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, 2026, there was approximately $9.9 million outstanding on the mortgage.

Previous wording

Our operations, supply chains, and financial performance are impacted by evolving global trade policies and tariffs, and geopolitical tensions and wars. In particular, our global operations and international sales expose us to risks associated with trade conflicts between the United States and other governments. These factors have resulted in and could continue to result in inflationary costs to produce and sell our products, both domestically and in foreign markets.

Current wording

Our operations, supply chains, and financial performance are impacted by evolving global trade policies and tariffs, and geopolitical tensions and wars, including ongoing conflicts and instability in the Middle East. In particular, our global operations and international sales expose us to risks associated with trade conflicts between the United States and other governments, as well as broader regional instability in the Middle East that can disrupt global shipping routes and energy markets. These factors have resulted in and could continue to result in inflationary costs to produce and sell our products, both domestically and in foreign markets.

Previous wording

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.

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 such efforts have not been able to fully mitigate the effects of the imposition of tariffs and related 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 further 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.