Jim Marrone

Jim Marrone from Singular Research inquired about the integration strategy for the My Medic acquisition, specifically whether it would be part of the existing first aid offering or a distinct segment. He also asked for financial details, including the acquisition multiple and funding structure, and sought clarification on future retail distribution plans for My Medic products. Additionally, Marrone questioned the company's future acquisition strategy, asking if it would remain focused on first aid and medical or expand into cutting tools.

Answer

Chairman and CEO Walter C. Johnsen explained that the My Medic acquisition is significant, providing a direct-to-consumer platform with a large social media following. He stated that My Medic products would be differentiated for selective retail distribution, complementing direct-to-consumer sales, and would broaden D2C sales for other Acme first aid and medical items, such as personalized products from SafetyMade. Johnsen clarified that My Medic's 2025 revenues were approximately $19 million with an EBITDA between $1 million and $1.5 million. The purchase price was $18.6 million, including a $1 million earn-out and a $3 million holdback, making the net out-of-pocket less than the stated purchase price. Regarding future acquisitions, Johnsen indicated an opportunistic approach, focusing on expanding horizontal distribution (competitors) or vertical integration (component suppliers like Med-Nap) within the first aid and medical segments, particularly in pre-hospital emergencies.

Jim Marrone from Singular Research inquired about the integration strategy for the My Medic acquisition, specifically if it would be part of the existing first aid offering or a new distribution channel. He also asked about the acquisition's financial multiples (EV/EBITDA) and funding structure, as well as the company's future acquisition focus, whether in first aid/medical or cutting tools.

Answer

Chairman and CEO Walter C. Johnsen detailed that the My Medic acquisition, with its significant social media following, will expand Acme United's direct-to-consumer business, potentially into selected retail channels with differentiated products. He noted that My Medic's 2025 revenues were $19 million with an EBITDA between $1 million and $1.5 million, and the $18.6 million purchase price included an earn-out and holdback, making the net out-of-pocket less. Johnsen also stated that future acquisitions would be opportunistic, primarily focusing on expanding the first aid and medical segments, either horizontally (competitors) or vertically (component suppliers), to address pre-hospital emergencies.

Inquired about forward-looking guidance for Q3/Q4 revenue and earnings, the performance of competitors, and the safety of the company's dividend.

Answer

The company expects sales growth in Q3 and Q4 as delayed orders are fulfilled, but will not provide specific quantitative guidance. They believe they outperformed at least one competitor who had a 'disastrous quarter'. The dividend is considered very safe and likely to continue, supported by record free cash flow and significant debt reduction.

Jim Marrone inquired about Acme United's forward-looking guidance for the third and fourth quarters, asking for quantitative projections on revenue and earnings following the tariff-related disruptions. He also asked about the competitive landscape and the security of the company's dividend.

Answer

Chairman & CEO Walter Johnsen explained that while some delayed Q2 programs may shift to Q3 and Q4, leading to expected sales growth, the company does not provide quantitative guidance due to demand uncertainty. He affirmed the dividend's stability, citing a recent increase, record free cash flow of $12 million over the past year, and a significant reduction in debt. Johnsen also noted that one competitor had a 'disastrous quarter,' suggesting Acme managed the challenges more effectively.

Jim Marrone of Singular Research inquired about Acme United's acquisition strategy, specifically whether the focus would be geographic or product-based, and what valuation multiples the company anticipates. He also asked about the impact of tariff uncertainty on both the supply and sales sides, potential recessionary headwinds, and the company's efforts to find alternative sourcing locations to China.

Answer

Executive Walter Johnsen explained that acquisitions could target either the cutting tool or first aid businesses, focusing on North America. He highlighted that current tariff pressures on competitors could create opportunities. Johnsen stated they pay fair prices rather than seeking bargains, with valuation depending on the value they add. Regarding tariffs, he described the significant uncertainty with Chinese tariffs, causing the company and its customers to postpone deliveries. He confirmed they are leveraging their 8 U.S. plants and shifting production to countries like Thailand and India, though these shifts take time.

Jim Marrone asked for more detail on Acme United's preparedness for upcoming tariffs, questioning how the company would manage cross-border trade and where the largest financial impact from tariffs would likely occur, on input costs or sales prices.

Answer

Walter Johnsen, an executive, detailed the company's eight-year strategy of diversifying its supply chain to the U.S., Canada, Egypt, Thailand, and the Philippines. He explained that subsidiaries in Canada and Europe operate as self-contained units, minimizing cross-border tariff risks. Johnsen outlined a multi-faceted approach to absorb costs, including supplier negotiations, productivity savings, standard inflationary price increases, and leveraging their market-leading brand for pricing power. He concluded that the impact is dynamic but the company aims for margin neutrality.