Acme United (ACU) Q2 2026 Earnings Call Transcript

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DATE

Thursday, July 23, 2026 at 12:00 p.m. ET

CALL PARTICIPANTS

• Chairman and CEO - Walter C. Johnsen
• Chief Financial Officer - Paul G. Driscoll

TAKEAWAYS

• Net Sales -- $62.7 million, representing a 16% increase driven by the acquisition of MyMedic and organic growth in the first aid and medical categories.
• Organic Sales Growth -- 8% excluding MyMedic contributions, reflecting steady demand in core business lines.
• Six-Month Net Sales -- $115 million, an increase of 15% compared to $100 million in the same period of 2025.
• Net Income -- $5.1 million, an increase of 6% compared to $4.8 million in the prior-year quarter.
• Diluted EPS -- $1.22, rising 5% from $1.16 in the second quarter of 2025.
• Gross Margin -- 42.6%, up from 41.0% primarily due to the inclusion of higher-margin direct-to-consumer products from MyMedic.
• MyMedic Q2 Revenue -- $4.3 million, yielding breakeven operations as management works to integrate the brand into existing retail channels.
• U.S. Segment Sales -- $52.7 million, an increase of 17% overall or 8% excluding the impact of MyMedic.
• U.S. First Aid and Medical Sales -- 10% growth in the base business, with high demand observed at mass-market retailers.
• U.S. Westcott Cutting Tool Sales -- 8% growth, marking a recovery following the cancellation of several retail promotions in 2025.
• European Sales -- 19% growth in local currency and 24% in U.S. dollars, driven by expansion in e-commerce and new cutting and sharpening lines.
• Canadian Sales -- 3% growth in local currency, supported by industrial and online sales of first aid products.
• Health Care Revenue Share -- 70% of total company revenue, highlighting the strategic shift toward medical and safety categories.
• SG&A Expenses -- $19.9 million, rising to 32% of sales from 29% in the prior year due to the high advertising requirements of the MyMedic business.
• Net Debt -- $27.3 million, up from $22.8 million as of June 30, 2025, following acquisition payments and dividend distributions.
• Free Cash Flow -- $15.5 million generated over the 12-month period ended June 30, 2026.
• MyMedic Total Purchase Price -- $18.6 million, including $14.5 million paid at closing and $4.1 million in holdbacks.
• Inventory Buffer -- $10 million in extra stock maintained to protect against potential supply chain disruptions and cost increases related to the war involving Iran.
• Spill Magic Sales Growth -- 30% year to date, supported by the transition to a new 78,000-square-foot facility in Tennessee.
• New Credit Facility -- $65 million syndicated credit facility entered on July 15, 2026, which expires in July 2029.
• Dividend Distribution -- $2.4 million paid to shareholders over the trailing 12-month period.
• German Asset Purchase -- $1.6 million paid for a line of cutting and sharpening products in Germany to expand European market share.
• MedNap Certification Timeline -- Management expects to complete regulatory upgrades for its Florida facility by the end of 2026 to target the U.S. hospital market.
• MyMedic Growth Rate -- Approximately 33% increase in sales for the current year as management expands the product's reach beyond its initial direct-to-consumer base.

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RISKS

• Driscoll stated, "The decline in year to date net income was mostly due to the impact of higher tariffs in the first quarter," which continues to pressure margins as high-cost inventory is liquidated.
• Johnsen noted, "the dollar has weakened against the Chinese currency in the past year... for the items that we import from China, that is a headwind" for input costs.
• Johnsen stated, "freight has increased... both bunker fuel for bringing product across the ocean as well as online freight delivery," citing rising fuel costs as a continuing expense pressure.

SUMMARY

Management at **Acme United Corporation** (NYSEMKT:ACU) reported record second-quarter revenue driven by the successful integration of MyMedic and a recovery in the Westcott cutting tools business. The company is strategically prioritizing the healthcare and safety segments, which now comprise approximately 70% of total sales. While the MyMedic acquisition initially pressured operating margins through increased advertising and marketing expenses, management indicated that synergy realization through freight consolidation and overhead reduction is underway. The company is also navigating macroeconomic headwinds including currency fluctuations and residual tariff costs by maintaining a strategic inventory buffer and investing in automated manufacturing facilities.

• Chairman Johnsen noted the company has a full book of promotional activity for the upcoming back-to-school season, stating, "Westcott has legs again, and we are really pleased with that."
• Management reported that 35% of MyMedic annual sales typically occur in the fourth quarter, driven by holiday gifting and flexible spending account (FSA) deadlines.
• CFO Driscoll attributed the increase in SG&A as a percentage of sales to the "higher amount of advertising needed for the direct to consumer MyMedic business."
• The company is in the final stages of deploying its next-generation Smart Compliance software, which will allow industrial first aid kits to automatically generate replenishment orders via the internet.
• Management is moving MyMedic products into traditional retail and industrial distribution, with Johnsen stating, "the operating leverage that we hope should start to become apparent in the fourth quarter."
• The European segment achieved record quarterly sales and earnings despite regional inflation, which management attributed to a successful ecommerce strategy and the integration of German sharpening tool lines.

INDUSTRY GLOSSARY

• MyMedic: A brand acquired by Acme United specializing in advanced first aid and trauma kits.
• Westcott: A brand known for cutting tools like scissors, paper trimmers, and rulers.
• Spill Magic: A brand specializing in absorbent products for the quick cleanup of bodily fluids and hazardous spills.
• MedNap: A subsidiary manufacturing antiseptic wipes and alcohol prep pads.
• Smart Compliance: A proprietary system for organizing and automatically replenishing industrial first aid kits.
• Planogram: A visual diagram that dictates the placement of retail products on shelves to maximize sales.
• Bunker Fuel: The heavy fuel oil used by cargo ships, often cited as a variable cost in ocean freight.

Full Conference Call Transcript

Operator: Good day, and welcome to the ACMA United Second Quarter 26 Financial Results Conference Call. At this time, I would like to turn the call over to your host, Walter C. Johnsen, Chairman and CEO. Please go ahead, sir.

Walter C. Johnsen: Good morning. Welcome to the Second Quarter 2026 Earnings Conference Call for Acme United Corporation. I am Walter C. Johnsen, Chairman and CEO With me is Paul G. Driscoll, our Chief Financial Officer, who will first read a safe harbor statement. Paul?

Paul G. Driscoll: Forward looking statements in this conference call, including without limitation statements related to the company's plans, strategies, objectives, expectations, intentions and adequacy of capital and other resources are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 2000. Investors are cautioned that such forward looking statements involve risks and uncertainties, including, among others, those arising as a result of a challenging global macroeconomic environment characterized by continued high inflation, high interest rates, and the imposition of new tariffs or changes in existing tariff rates. In addition, we have experienced supply chain disruptions, and we may experience these disruptions in the future.

We are also subject to additional risks and uncertainties as described in our periodic filings with the Securities and Exchange Commission. And in our current earnings release.

Walter C. Johnsen: Thank you, Paul. Acme United made progress during the second quarter of 2026. Our net sales increased from $54 million to $63 million, an increase of 16%. Net income increased from $4.8 million to $5.1 million and earnings per share increased 5% to $1.22. As you may remember, we acquired MyMedic in January 2026. This addition to the Acme United family sells high quality first aid kits designed to save lives. It extends the reach of our product line from simple retail kits to advanced ones, with chest seals, tourniquets, and tools to clear airways. MyMedic today sells mostly directly to consumers and is seasonal. It has high gross margins, and also high advertising and marketing costs.

Net sales in 2025 were $19 million MyMedic sales in the second quarter were approximately $4.3 million with breakeven operations. As expected. We are working to increase the core direct to consumer business as well as expand the product offering to retail. At the same time, we were addressing the product cost to our strong sourcing team. Consolidating freight with other Acme United shipments to reduce costs. And eliminating duplicate corporate functions. 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. Our core businesses performed well in the second quarter.

In the United States, net sales of first aid and medical products increased 10%, with growth in particular at mass market retailers. Other strong contributors in the quarter were the safety made promotional first aid business, MedNap antiseptic wipes, and Spill Magic Cleanup Products. Also in the United States, the Westcott cutting tools business increased 8% during the second quarter. As you may remember, our retail business last year was hurt by tariffs and cost uncertainty. And many of our customers canceled their seasonal promotions. This has recovered. And we are seeing a resumption of growth. Our Canadian business increased 3% driven by industrial retail and online sales of our First Aid business.

In Europe, net sales increased 19% with strong growth of our Westcott cutting tools. Gross margins in the quarter increased for the overall business from 41% to 42.6% due to high margins at MyMedic. Without MyMedic, gross margins in the United States declined approximately 100 basis points due to the cost of high tariffs that were capitalized in our inventory and are now being sold. This is an improvement from the first quarter and we anticipate continued gross margin expansion as these products are sold in the coming quarters. When the war with Iran began, we placed orders for approximately $10 million of extra inventory to buffer potential product shortages and cost increases.

We continue to maintain this extra level of stock and are positioned to address issues should they arise. As we look to the coming quarters, we see continued growth of the First Aid and Medical business, resumption of promotional retail activity with our Westcott cutting tools, improving profitability at MyMedic, and strengthening of our gross margins as high tariff products are replaced by lower cost ones. I will now turn the call to Paul.

Paul G. Driscoll: Acme's net sales for the second quarter were $62.7 million compared to $54 million in 2025, an increase of 16%. Excluding MyMedics, sales increased 8%. Sales for the 6 months ended 06/30/2026, were $115 million compared to $100 million in the same period in 2025, an increase of 15%. Excluding MyMedic, sales increased 7%. Net sales in the U.S. segment increased 17% in the quarter Excluding MyMedic, sales increased 8%. Sales increased 15% for the 6 months ended June 30. Excluding MyMedix, sales increased 6%. The increases for both periods was driven by higher sales across all product lines.

Net sales in Europe for both the second quarter and 6 months of 2026 increased 19% in local currency compared to 2025 partly due to the new line of cutting and sharpening tools. The base business also had a good performance with a sales increase of 12%. Net sales in local currency for Canada increased 3% in the quarter and 6% for the year to date, mainly due to higher sales of First Aid products. The gross margin was 42.6% in the second quarter of 26 compared to 41%. in 2025. Gross margin was 41.3% for the first 6 months of 26 compared to 40.1%. in 2025.

The gross margin as a percentage of sales increase for both periods was mostly due to the favorable mix from higher margin direct to consumer mimetic products. SG&A expenses for the second quarter of 26 were $19.9 million or 32% of sales compared with $15.8 million or 29% of sales for the same period of 2025. SG&A expenses for the first 6 months of 26 were $38.9 million or 34% of sales compared with $31.3 million or 31%. of sales in 2025. The higher SG&A was primarily due to the addition of the MyMedic business. The higher percentage of sales was due to the higher amount of advertising needed for the direct to consumer MyMedic business.

Net income for the second quarter of 26 was $5.1 million or $1.22 per diluted share compared to a net income of $4.8 million or $1.16 per diluted share for the same period of 2025, an increase of 6% in net income and 5% in earnings per share. Net income for the first 6 months ended June 30, 2026, was $6 million or $1.46 per diluted share compared to $6.4 million or $1.57 per diluted share in the comparable period last year. This represents decreases of 6% and 7%, respectively. The decline in year to date net income was mostly due to the impact of higher tariffs in the first quarter.

The higher tariff spending commenced in June 2025 However, the costs were capitalized into inventory and we started to realize the full impact to earnings as the high cost products were sold in the first quarter of 26. The impact was lower in the second quarter and we expect the impact to lessen over the next 2 quarters as the tariff rate declined in November 2025 and again in February 2026. Now to the balance sheet. Net debt increased from $22.8 million at 06/30/2025 to $27.3 million at 06/30/2026.

During the 12 month period ended 06/30/2026, we paid $14 million for the acquisition of the assets of MyMedic, distributed approximately $2.4 million in dividends and purchased the cutting and sharpening line of products in Germany for $1.6 million. Additionally, we generated approximately $15 million in free cash flow.

Walter C. Johnsen: Thank you, Paul. I will now open the call to questions.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 1 moment, while we poll for questions. Our first question comes from Timothy Call with Capital Management Corporation. Your line is live.

Timothy Call: Congratulations on another strong quarter.

Walter C. Johnsen: Thanks, Timothy.

Timothy Call: he is built a long term track record of sales and earnings growth in the current trajectory looks great. You have many other promising growth initiatives other than what you mentioned today, such as Spill Magic capacity expansion and increased throughput at MedNap And long term plant certification to expand sales to large new customers like government and hospital systems. Do you-- well, thank you. Are those long-term initiatives?

Walter C. Johnsen: Yes. Those are long-term initiatives. As people may remember, we bought a plant about a year ago in Tennessee for $6 million. It was a 12 acre site and 78 thousand square feet, Just for Spill Magic growth. And we were constrained in the site that we were in, which we were leasing. We have moved into that facility, and Paul, what are year to date sales growth at Spill Magic?

Paul G. Driscoll: it is like 40%, 35%?

Walter C. Johnsen: Actually, like, 30%.

Paul G. Driscoll: Right? Yes.

Walter C. Johnsen: So it is just-- it is really screaming. And the best part of that is we are putting in automation into that facility that is unlike any of its competitors. And because it is a permanent facility, we can do the proper installation for a long term growth plan. So there is 1 example. Another which is possible is the MedNap business in Florida which makes alcohol prep pads and BZK wipes. And we have been investing a great deal in that facility. And working to upgrade our regulatory compliance to possibly be able to address the U.S. hospital market.

I would say that is at this stage, a challenge, but the certification work is progressing well, and we should be done with it by year end. And the MyMedic business in general has grown about 1/3 this year. So that is very exciting. We have also been working for a long time on generation after generation of our smart compliance software which does automatic replenishment. in our first aid kits. Our industrial first aid kits And that next generation, which automatically scans the contents of a first aid box And then generates replenishment orders through the Internet. is now in final stages and is about to be going out to early distributors.

So it could be a big growth segment. We will see. Of course, we are looking at acquisitions. And we have got work to be doing at MyMedic, a lot of work. And the operating leverage that we hope should start to become apparent in the fourth quarter and then into the first of the big areas is retail distribution, which MyMedic really did not have, and we are very strong in that. We are making presentations now to large mass market retailers and industrial distributors. I think that is quite promising. So we will see how that works in the coming quarters.

But we are excited about the place we are at now and we are expecting some pretty good performance going forward. So thank you too.

Timothy Call: Sure. Healthcare tends to grow a little bit faster than cutting tools. Do you have an idea of what percentage of the base health care is now or should be at year end?

Walter C. Johnsen: it is about health care is about 70% of the revenues right now. I have to tell you the Westcott business is coming back solidly Really, last year was hard because the promotions were all canceled due to uncertainty from tariffs and pricing. And, you know, retailers just could not bring in new items when they did not know the cost of the existing ones. But this year is very different. And we have got a full book of promotional activity for back-to-school and then into the fourth quarter. First quarter. So, Westcott has legs again, and we are really pleased with that. Congratulations. Thank you.

Operator: Our next question comes from Georgy Vashchenko with Freedom Capital Markets. Your line is live.

Georgy Vashchenko: Thank you. Walter, Paul, good afternoon, congratulations on an excellent quarter. The results were very impressive. So I have 2 questions. On gross margin. The first, gross margin reached a record level this quarter Could you help us understand the key drivers behind the improvement? Specifically, how much of this expansion was attributable to the MyMedic acquisition? And my second question is on tariffs. You mentioned that tariffs created some headwinds on margins. During the quarter. Should we expect the additional gross margin expansion as those headwinds decrease? Thank you.

Walter C. Johnsen: Sure. Well, thank you very much. Actually, both questions are quite intertwined. And what you are referring to is our gross margin improvement, and part of that has come of course, because MyMedic's bigger gross margins than, our regular business. But they spend it on and it shows up in SG&A. They spend it in, advertising. And so when you dig underneath, as I pointed out in my portion of this call, in The United States, margins this quarter were reduced by about 100-basis-points due to tariffs. And, Paul, what was the number in the first quarter?

Paul G. Driscoll: About 2%? Is that ballpark? it is probably like 150 basis points. Most of the increase in margin gross margin as a percentage of sales is due to the mix of MyMedix. Yes by far, it is.

Walter C. Johnsen: And as we are looking forward, the impact of tariffs because they have been reduced, and that inventory is being, sold, we are getting expansion. And so if we reduced our normal gross margin by 1%, you can picture that as we go through the rest of the year, we will recover that 1%. And relative to you know, other costs, there are certainly other costs. Freight has increased. And you can imagine with both bunker fuel for bringing product across the ocean as well as online freight delivery here in the United States and in Europe. The cost of fuel to run the trucks is up.

So there are other costs, and the dollar has weakened against the Chinese currency in the past year. And so for the items that we import from China, that is a headwind. But the net of it all is we have got that pretty much, thought through. Both in the pricing of our products And as we pointed out, there is about $10 million of inventory that is either here or is on the way. that is been purchased shortly, within days, of the start of the Iran war. So it is got locked in excellent pricing. Thank you.

Georgy Vashchenko: This is very helpful.

Walter C. Johnsen: Thank you.

Operator: Our next question is from Jim Marrone with Singular Research. Your line is now live.

Jim Marrone: Yes. Good afternoon, gentlemen. Good quarter as I would like to say good quarter as well, Given the backdrop of a tougher environment. And with regards to a tougher environment, I am trying to get a sense. Are you hearing anything about the consumer appetite Maybe with regards to the MyMedic, you know, is the consumer appetite still going to be just as strong as it was in the past quarters? Or are you going to start to find that the consumers either on the industrial or on the retail end a little bit more discerning. We are hearing from even the grocers that the basket is getting smaller.

I guess, as a result of rising fuel costs and other inflationary items. That consumers are a little more discretionary in their spending. And so you know, how does that relate to both MyMedic? Are they looking-- Jim,

Walter C. Johnsen: Jim, that is a very good question. Consumers only have a certain amount to spend. And maybe they get a wage increase each year, but after taxes, that is a small amount. And clearly, for example, in the Northeast where you have to heat your homes, that is an increase in the fuel cost expensive. And, of course, for cars, it is expensive. And there have been price increases So you would think that, the consumer would be more cautious. With regard to MyMedic, so far, those sales are right on plan. And we are not seeing weakness. And as demonstrated by the growth of both West and our first aid business, our customer base is buying.

So in the overall, have to be aware that the individual consumer is being pressed, but we are not seeing it yet. And I think we would have seen some, especially for example, in Europe. Europe just had a record quarter. Both in sales and in earnings. And the Europeans are facing every bit of the inflation that the U.S. is, plus their cost of oil has gone even higher, and our business is robust there.

Jim Marrone: Right. And so are they looking at that as more as an essential item rather than a discretionary item, or do you have a competitive advantage over your competitors that they are choosing your product over the others? Like, what is the driver behind that?

Walter C. Johnsen: Oh, yeah. Well, there are clear drivers why people buy our products. First, in the Westcott area, we were the pioneer in coatings that titanium coatings, nonstick coatings, that deliver honestly, the best performance in the class and they have for many years, and it is all utility patents. So when you buy a Westcott item, you are getting and it is a titanium item, for example. it is the best there is. And because we are the largest in the world, yeah, we have world class pricing. And so then you have got innovation in the Westcott area, and you have got cost.

In first aid, we have got a strong marketing team building around addressing injuries and saving lives. And that marketing team is coming out with products that frankly totally differentiate from the competitors many of whom are selling things in old white boxes or in metal cases. We have also got a strong sourcing team for components in Asia. And it is multi office, multi country. Our competitors do not have that. And that is why we win at places like Walmart and at Granger and at Fastenal, So there we have also got, I think, probably the lowest costs in the world.

Jim Marrone: Right. Okay and thank you. I appreciate that answer. And you also touched upon it, and I am going to bring it up again just with regards to the cutting tools. it is, you know, the retailers have already come out with back to school. there is already been headlines with regards to parents being a little bit more discretionary on back to school budgets. Are you getting any are you hearing anything with regards to that end as far as back to school sales?

Walter C. Johnsen: Well, we just through June where, you know, by the time June happens, the second quarter, we have shipped a chunk of the, back-to-school because the retailers have been taking delivery setting it into the, planograms, or they are putting them up online. Through June, it is a record for us. Just flat out record. And we have got a good backlog in the third quarter, which would be the rest of back to school. So for us, I am not seeing that. But yes. Again, perhaps they are trading down on some of the items within the basket of what they buy, to buy less expensive items.

I know that, for example, our dollar store sales have been doing very, very well. But, you know, we are also very strong in Walmart, and that is doing well. Again, that is delivering value. We seem to be running a little bit counter to what you would think. Yes.

Jim Marrone: I appreciate that, Walter. Thank you for that visibility. And just 1 last question. With regards to the Canada segment, that just seems to be the 1 that is really struggling the most. With just the 1% increase in revenue and, you know, single digits with regards to the to the bottom line. So is that a result just of a struggling Canadian economy or is it tariff related? And what do you see going forward with this renegotiation of NAFTA? Like, what is the driver behind the Canadian segment? Is it the economy? Is it tariffs? what is going on with that 1?

Walter C. Johnsen: Well, there is 2 parts. there is the First Aid Central business, which is doing very, very well. that is our First Aid business. We have just moved into a, another new facility. that is the third move in 4 years because we keep growing. And, this is a fabulous new facility outside of Montreal. So the first aid side is strong. The Westcott side is weaker. And there it seems to be hit more by the economy and also just that it is sort of sluggish in Canada. So you know, it is growth, but it is not much. Actually, in the third quarter, they seem to have done a little bit better.

But you know, it is a small part of the overall company, and we are certainly cheering for our Canadian colleagues. The impact of tariffs in Canada versus the United States probably impacts their shopping selections in total. But relative to our products, we ship in Canada with Canadian items and so there is no tariff impact. Great. Thank you for that answer, Walter. Thank you.

Operator: 1 moment please while we poll for questions. Our next question comes from Richard Dearnley with Longport Partners. Your line is now live.

Richard Dearnley: Thank you. Good morning. The business being a direct to consumer business. Well, I am surprised that, you know, emergency response and trauma and so on that it is for emergency responding. You know, does the local fire department order direct? Or, I am surprised it is a DTC business.

Walter C. Johnsen: Well, that is where it started, and it is built a half million social media followers, which is a very big number. And we have got videos coming out at least twice a week new videos with either training or education on how to use things or new product introductions or success stories. And so you have a following of people that are using the products.

You know, long term, there are parts of the country and I am not saying this is MyMedic's, but in general, where there are less hospitals, there are less clinics, there are less doctors, And this direct to consumer is a way to train and it is a way to deliver products directly to a consumer. Because maybe it is in a rural area. Right. We do sell some MyMedic items to fire departments and police departments and ambulances. But that will probably be a much bigger chunk as our Salesforce starts to do that. that is the Acme United Salesforce. Right.

Richard Dearnley: They are not currently buying it. This is mostly direct to consumer today. And the exciting thing is we know we can get it placed elsewhere. Because they have done the hard work, which is just world class products. And that is the challenge. that is what we are working on. And is there seasonality strong in the fourth quarter because people have a budget and spend it or lose it?

Walter C. Johnsen: No. No. These are individuals. They are doing it for gifts. You know, you have got Amazon Black Friday. You have got-- it is just-- oh. Holiday sales, you know, but it is it is hunting. it is all being rolled into that fourth quarter Right?

Paul G. Driscoll: there is a bit of an-- there is a bit of a-- Dick, there is a bit of an impact of the FSA spending at the end of the year. To your point. But mostly, it is just holiday spending.

Richard Dearnley: Oh, mmm-hmm. I see. Like what Walter said. And So is the seasonality such that the fourth quarter is 25%, 30% larger than the other quarters?

Walter C. Johnsen: Oh, I would be-- yeah.

Richard Dearnley: Alright.

Paul G. Driscoll: 35. 21. it is probably like 35% of the sales are in the fourth quarter of the year.

Richard Dearnley: Of the year, right. Okay. Great. Thank you.

Walter C. Johnsen: Thank you, Doug.

Operator: Our next question comes from Jake Patterson with Telanta Investment Group. Your line is now live.

Jake Patterson: Hey, guys. Just a quick 1. I know you said Westcott was up 8% during the quarter. I was curious if you had any data that could break out pricing versus actual volume. I had an impression that you guys had think, close to a double digit price increase of, you know, like 8%, would imply units down a little bit, but just given kind of what last year looked like versus this year, it had not seemed like that would make sense.

Walter C. Johnsen: So most of it was volumes. Most of it was volume. Most of it was, yes.

Jake Patterson: Okay. So I mean, if you pass price last year, I guess, is that I mean, should have been flowing through your numbers. Like, first quarter being down 2%, I was kind of-- I was just curious. that is pretty much all volume in there.

Walter C. Johnsen: Yes. it is volume. The price increases cannot be applied directly to each product evenly. And, for example, if in the back to school items, they may be more price sensitive, and so maybe there is not much of a price increase on those and others that are more specialty. Get bigger price increases. So what the second quarter was really huge volume. But, again, you can picture the retailers are putting new promotions in place. You know, you are moving more. And that is the really exciting thing that we did not have at all last year. Yes.

Jake Patterson: No, that is definitely good to hear. Awesome. Well, yep. that is it for me. I appreciate it.

Walter C. Johnsen: Thank you. Sure.

Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to management for any closing remarks.

Walter C. Johnsen: Thank you. If there are no further questions, this call is complete. And I would like to thank you for joining us. Goodbye.

Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

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