Cutting tools supplier Acme says its strong balance sheet to help amid tariffs

Acme United Corp., a small-cap worldwide supplier of cutting, measuring, first aid, and sharpening products, views the uncertainty surrounding Trump’s tariffs as a chance to gain market share through acquisitions, it stated during the first-quarter earnings call. The company argues that, unlike peers, it has a strong balance sheet that will allow it to weather the tariff headwinds.

“Although the tariff uncertainty is uncomfortable, we also view it as an opportunity to gain market share… The current environment may create new opportunities for acquisitions,” said Acme CEO Walter Johnsen during the call.

He explained: “First, we have large market shares in both of our businesses,” referring to the cutting tool and first aid segments. This means Acme has both “leverage on our suppliers… and a good pulse of the market globally.” Johnsen continues: “Secondly, if these tariffs hold, they will put substantial working capital pressure on our competitors as they buy inventory at a higher price.” The argument is that peers do not have the balance sheets to sustain that, but Acme does, Johnsen claims. As of the end of the first quarter, the company had $3.4 million in cash and cash equivalents.

Acme specializes in cutting, measuring, first aid, and sharpening products, including knives, scissors, paper cutters, and first aid kits. Customers, meanwhile, include McDonald’s and Subway, among other food chains.

For the first quarter, Acme reported a 2% year-over-year revenue increase to $46.00 million and a 1% rise in net income to $1.65 million. The company noted a “challenging global macroeconomic environment” but stated it is working to minimize the impact on its business and customers. Recall that in early April, Trump announced an across-the-board tariff hike and “reciprocal” tariffs for different countries. He later paused the latter for all countries except China. For Chinese imports, tariffs were raised in several stages, from 20% to as high as 145%.

Acme, which operates two factories in China, is aiming to offset the higher costs through supplier negotiations and reduced logistics expenses, the company said. Some products from its Chinese plants were routed through other countries, but “you can't move overnight,” Johnsen noted. For now, Acme is postponing deliveries from China until there is greater clarity on the tariffs, he added.

Acme shares rose more than 3% on Friday, April 17, the day it released the first-quarter results, to close at $41.38 per share. For the year to date, the stock is up nearly 11%.

Only two Wall Street analysts currently cover Acme, according to MarketWatch. Both rate it a “buy,” with an average target price of $52.75 per share, for more than 27% upside versus the last closing price.