Acme United spent most of fiscal 2025 explaining why tariffs had gutted its promotional calendar and squeezed its margins. Last quarter, the story flipped: Westcott cutting tools returned to growth, gross margin hit a record, and management sounded far more confident than it had just three months earlier. The stock has rallied hard on that turn. The September-quarter report, due before the open on October 27, is the first chance to see whether the recovery holds in a seasonally quieter period.
The Street expects earnings of $0.71 a share on revenue of about $55.7 million. That would be a 54% jump in profit from $0.46 a year ago, on 13.5% sales growth. Those numbers look strong, but the comparison is easy. The year-ago quarter came during the worst of the tariff disruption, when revenue grew just 2% and retailers were canceling Westcott promotions. The headline growth also leans on the January MyMedic acquisition, which contributed about $4.3 million last quarter. Strip out a similar amount and the implied organic growth is closer to mid-single digits. That is respectable, but it trails the 8% ex-MyMedic pace management delivered in the June quarter. Sequentially, a step down from $62.7 million and $1.22 a share is normal, since back-to-school shipments peak in the second quarter.
Gross margin is the most important line. The record 42.6% last quarter flattered the mix through MyMedic, and the core US business was still giving up about 100 basis points to higher-cost tariff inventory moving through the books. That drag had already shrunk from 150 to 200 basis points in the first quarter. With the tariff rate cuts of November 2025 and February 2026 now working through inventory, the drag should narrow again. A margin well above the 39.1% of a year ago would support the thesis that the tariff overhang is behind the company. A slip back toward 40% would raise questions about freight inflation and a weaker dollar against the Chinese yuan. Analysts raised both risks last quarter, though management said neither had yet shown up in results.
The second test is whether the full promotional book management described for Westcott is turning into real volume. The 8% gain last quarter came mostly from units, and the company said its back-to-school and holiday programs were fully booked. Continued growth in cutting tools, plus signs that Canada's slowdown to 3% was temporary, would confirm that demand is returning. Elsewhere, Spill Magic has been growing about 30% from its new Tennessee plant and the European base business grew 12%. Holding those rates would show the recovery is broad.
MyMedic matters more for profit than for sales right now. It ran at breakeven last quarter, and heavy advertising pushed SG&A to 32% of revenue. Management expects operating leverage to build into the fourth and first quarters as retail distribution expands to mass-market and industrial customers. Evidence of new shelf placements, or a modest profit contribution, would make that timeline more believable. Updates on the year-end FDA certification for MedNap and early distributor uptake of the smart compliance software would add longer-term texture. On the balance sheet, net debt of $27.3 million and roughly $10 million in contingency inventory mean cash generation deserves a close look, especially against trailing free cash flow of about $15 million.
The market has already priced in much of the turnaround. Shares have climbed 28% since the last report, beating the S&P 500 by roughly 25 percentage points. At $61.52, the stock sits comfortably above its 200-day average near $49 and about 5% below its post-earnings high of $64.87. Sentiment has moved slightly more bearish than before the last report, a small shift but a sign that some traders doubt the rally can extend. The real question is whether margins keep improving once easy comparisons and acquisition gains are set aside. If core gross margin rises and Westcott volumes hold, the turnaround looks sustainable. If not, the rally may have gotten ahead of the business.