Acme United: MyMedic Acquisition Reshapes Mix, Tariff Headwinds Ease as Stock Rallies
A 16% revenue surge masks tariff drag; direct-to-consumer pivot and retail expansion set up fourth-quarter inflection.
ACU · Earnings Call · 2026-07-23
The MyMedic Inflection
Acme United's second quarter was defined by two forces: the transformative acquisition of MyMedic and the fading sting of tariffs. The company's top line jumped 16% to $62.7 million, with MyMedic contributing roughly $4.3 million of sales. As Chairman Walter Johnsen put it, “We are working to increase the core direct to consumer business as well as expand the product offering to retail.” — Walter C. Johnsen, Chairman and CEO · 2026-07-23 MyMedic, which sells advanced first aid kits directly to consumers via a social-media-driven model, is the company's first true DTC platform. It brings 500,000 followers and high gross margins, but also heavy advertising costs. The company is now pushing MyMedic into retail channels, leveraging its existing relationships with mass market retailers and industrial distributors. As Johnsen noted in Q&A: “We are making presentations now to large mass market retailers and industrial distributors.” — Walter C. Johnsen, Chairman and CEO · 2026-07-23 This expansion, if successful, could meaningfully scale the business beyond its seasonal DTC core.The acquisition also explains the gross margin expansion to 42.6%. However, Johnsen was careful to point out that the legacy US business actually saw margins shrink by about 100 basis points due to tariffs. “In the United States, margins this quarter were reduced by about 100-basis-points due to tariffs.” — Walter C. Johnsen, Chairman and CEO · 2026-07-23 That drag is expected to fade as the higher-cost inventory purchased under the tariff regime is sold through, with the impact lessening over the next two quarters.
Tariffs: A Temporary Squeeze
The company had proactively built up extra inventory—roughly $10 million—in anticipation of supply disruptions when the war with Iran began. This inventory, locked in at favorable prices, provides a buffer while also allowing the company to ride out the tariff-driven repricing. The near-term gross margin pressure is real, but management sees it as transitory. The company also cites a weakening dollar against the Chinese yuan as an offsetting headwind, though they have thought through pricing.The tariff theme is not new—it has been a recurring drag since 2025. But the intensity is fading. In the first quarter of 2026, the impact was roughly 150 basis points; in Q2 it was about 100 basis points. As Paul Driscoll said on the call: “The decline in year to date net income was mostly due to the impact of higher tariffs in the first quarter.” — Paul G. Driscoll, Chief Financial Officer · 2026-07-23 The market is now looking past this, driving the stock up 36% over the last 90 days. Reflecting on the earlier tariff shock, Johnsen had said in a prior call: “We anticipated the tariffs that we managed our customers as well as we thought we could do.” — Walter Johnsen, Chairman and CEO · 2025-07-23
Westcott's Resurgence
The cutting tools business, which had been hammered last year by retailers canceling promotions due to tariff uncertainty, is staging a comeback. Westcott sales rose 8% in the quarter, driven entirely by volume. As Johnsen explained: “Most of it was volume.” — Walter C. Johnsen, Chairman and CEO · 2026-07-23 Retailers have resumed promotional activity, and back-to-school orders have been strong. The cutting tool franchise also benefits from new product innovation and a global footprint. With a record second quarter and a strong backlog for Q3, Westcott appears to have recovered its footing.The Price Action
The stock's recent surge reflects the market's growing confidence in the company's earnings recovery. The 90-day price trend shows a consistent upward move, and the company's full history is a long-term winner. Yet the fundamentals reveal a more nuanced picture. Operating income and net profit margins have compressed under tariff pressure, but the trend is toward expansion as the tariff impacts roll off.Gross margin rose to 39.7% in Q1 2026 (the latest filed quarter) before jumping to 42.6% in Q2, driven by MyMedic.The company's effective net cash position remains negative, but free cash flow generation is improving. The acquisition of MyMedic for $14 million and the German sharpening line for $1.6 million are expected to pay off in the long term.The key question is whether MyMedic business can maintain its growth while expanding into retail. The company expects breakeven in Q2 and strong profits in Q4, driven by holiday seasonality. If MyMedic delivers on its promise, it could become the company's biggest growth driver. As Johnsen said in the prepared remarks:
The prior quarter's call also highlighted the potential: “The acquisition of My Medic we think is a pretty meaningful acquisition for the company.” — Walter Johnsen, Chairman and CEO · 2026-02-26 That conviction is now being tested in execution.The intention is to have strong profits from MyMedic during all quarters with particular strength in the fourth quarter. This will take time, but we are realizing savings already.