Acme United Corporation Reports First Quarter Results.

FAIRFIELD, Conn. -- Acme United Corporation (AMEX:ACU) today announced that net sales for the quarter ended March 31, 2007 were $12.2 million, compared to $12.3 million in the comparable period of 2006.

Net income was $650,000 or $.17 per diluted share for the first quarter ended March 31, 2007 compared to $759,000 or $.20 per diluted share for the comparable period last year, a decrease of 15%.

Net sales for the first quarter in the U.S. segment decreased 4% compared to the same period in 2006. Sales in the first quarter of 2006 included over $1 million of initial new product shipments to three major retail chains. Since the products are now regular items for these retailers, the first quarter of 2007's sales represented only restocking shipments. During the first quarter of 2007, sales in Europe and Canada increased by 11% in constant currency, as compared to the comparable period in 2006.

Gross margins were 44% in the first quarter of 2007 versus 45% in the first quarter of 2006. The margin in 2007 declined due to a higher proportion of European sales at lower margins compared to margins in the U.S. segment.

Walter C. Johnsen, President and CEO said, "While revenues in the first quarter were approximately even with the same period last year, we look forward to stronger sales in the coming quarters. Our award winning iPoint pencil sharpeners will be shipped to many of our major customers for back to school sales. We expect to begin new scissor and paper trimmer business in the second and third quarters and start a rollout of new sewing items in the fourth quarter. We believe these growth initiatives will provide the foundation for a strong year in 2007 and forward momentum in 2008."

The Company's bank debt less cash on March 31, 2007 was $7.1 million compared to $6.8 million on March 31, 2006. The increase in bank debt was primarily due to the purchase of additional inventory amounting to $1.8 million, a $1.1 million payment for the demolition of a former manufacturing site and repurchase of Acme stock of $0.4 million offset by earnings.

On March 28, 2007 the Company announced a 4 cents per share quarterly dividend on its outstanding common stock for shareholders of record on April 6, 2007, and is payable on April 27, 2007. This represents an increase of 33 percent or 1 cent per share over each of the previous seven quarterly dividends.

ACME UNITED CORPORATION is a leading worldwide supplier of innovative cutting, measuring and safety products to the school, home, office and industrial markets.

Forward-looking statements in this earnings release, included without limitation, statements related to the Company's plans, strategies, objectives, expectations, intentions and adequacy of resources. Investors are cautioned that such forward-looking statements involve risks and uncertainties including without limitation the following: (i) the Company's plans, strategies, objectives, expectations and intentions are subject to change at any time at the discretion of the Company; (ii) the Company's plans and results of operations will be affected by the Company's ability to manage its growth, and (iii) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission.

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