Q3 2025 Hillman Solutions Corp Earnings Call

Good morning and welcome to the third quarter 2025 results presentation for Hillman Solutions Corp. My name is Tanya and I'll be your conference call operator. Today, before we begin, I would like to remind our listeners that today's presentation is being recorded and simultaneously webcast. The company's earnings release presentation and 10-Q were issued this morning. These documents, along with a replay of today's presentation, can be accessed on Hillman's investor relations website at IR.HillmanGroup.com. I would now like to turn the call over to Michael Kaylor with Hillman.

Thank you, Tanya. Good morning, everyone. And thank you for joining us for Hillman's, third quarter, 2025 results presentation. I'm Michael Kaylor, vice, president of investor relations and treasury. Joining me on today's call are Hillman's president and chief executive officer, John Michael adinolfi or JMA as we call them.

And our Chief Financial Officer. Rocky craft.

I would like to remind our audience that certain statements made today may be considered forward-looking in our subject to the safe harbor, provisions of applicable security laws. These 4 looking statements are not guaranteed as a future performance in our subject to certain risks uncertainties assumptions and other factors. Many of which are beyond the company's control and may cause actual results to differ materially from those projected in such statements,

Presentation, which is available on our website.

in addition, on today's call, we will refer to certain non-gaap Financial measures information regarding our use of and reconciliations of these measures to our gaap results are available in our earnings, call slide presentation,

JMA will begin today's call by providing some commentary on our record. Third quarter results, briefly hit on our guidance and discuss our performance by business segments, Rocky will then give a more detailed walkthrough of our financial results and guidance before. Turning the call back over to JMA for some closing comments.

Then we will open up the call for your questions. It's now my pleasure to turn the call over to our president and CEO John Michael adinolfi JMA

Thanks, Michael. Good morning, everyone and thank you for joining us. The third quarter of 2025 was a record quarter for helmet.

We recognize the highest net sales and adjusted EBITDA of any quarter in our company's 61-year history.

Net sales for the quarter, increased 8% adjusted, even the increased 36% and our leverage improved to 2.5 times versus 2.7 times a quarter ago.

These outstanding results were driven by our team's commitment to taking great care of our customers successfully navigating, the current tariff environment, and operating efficiently across our Global Supply Chain.

I'm especially proud of this team because we accomplished these great results, despite Market volume headwinds, and Tara volatility,

our results for the year today period have been Sorrel

We are positioned well to build off this strength and expect to see continued growth for the remainder of 2025 and for 2026.

For the first time in a long time, we are encouraged with some of the leading macro indicators. For example, 30-year mortgages are down, 50 basis points lower since last quarter,

We are hopeful that lower rates coupled with the ele elevated level of existing homes. Currently for sale will help Drive existing home sales in the near future.

Based on our performance so far this year and our expectations for the rest of the year. We are reiterating our full year. 2025 net sales, guidance and increasing the midpoint of our full year 2025 adjusted ibida guidance.

We maintain our expectation that our full year. 2025 net sales will be between 1.535 to 1.575 billion with a midpoint of 1.555 billion.

the low end of our net sales guidance represents 4% growth over 2024 and the high end of our guidance represents 7% growth over 2024

As for our bottom line, we are increasing the low end of our guidance and now expect, full year, 2025 adjusted Eva to be between 270 to 275 million with a midpoint of 272.5 million.

The low end of our 2025. Adjusted IBA guidance represents 12.7% growth over 2024 and the high end of our guidance represents 14% growth over the last year.

These numbers are very consistent with our long-term algorithm. And as we have said, many times we get there, many different ways, but does business delivers in just about any environment,

Since our founding in 1964 Helman has built a long and consistent track record over the decades, we have proven our ability to perform through every kind of economic cycle from periods of expansion to times of uncertainty.

The durability of our business model comes from the essential nature of our products.

Our 112,000, skus are generally tied to Everyday, repair maintenance, and Home Improvement projects.

These projects need to be done during good times and difficult times.

As a result, we have delivered steady resilient performance for more than 60 years.

Many would argue that the last 3 years have been difficult Market in our space, with existing home sales, hovering around 4 million annually.

This is about 20% below, the 10-year average of over 5 million single family, existing homes, sold in the US.

How is Hillman performed during this time?

Compared to where we were just 3 years ago. We have increased our trailing 12-month adjusted ibida at a 10% kegger totaling over 70 million.

Paid down over 2, 240 million of debt.

While reducing our leverage, over 2, full turns and successfully executed and integrated to acquisitions.

These outstanding results demonstrate the resilience of helman's model and the ability of this team to execute well in any environment.

You've heard us say that we are a good business when things are good and a surprisingly good business, when things have been challenging.

The last 3 years have proved this.

Hillman is a great company with a long track record of success.

We have an experienced team that has been battle-tested.

Who are the best in the business at what they do in a world-class distribution Network.

We believe when the market turns, we will be positioned for outside growth at both the top and bottom line.

Our growth and performance have been powered by our competitive mode. In the long-term customer relationships that are unmatched in our space.

The helmet mode, includes our secret sauce of 1200, dedicated, sales, and service reps working directly in our customers stores.

Our best-in-class direct to store delivery capabilities, category management, expertise, and Retail Partnerships that are embedded in strategic.

These make helmet an indispensable partner to our customers.

To date. We have successfully managed. The current tariff environment which continues to evolve

Thanks to our team's hard work. We have fully covered the increased costs associated with higher tariffs.

We continue to execute our dual faucet strategy, where we buy products from multiple suppliers and multiple countries.

At the end of the quarter, we held our annual supplier conference in Vietnam.

our sourcing team and I met with many of our top suppliers, this annual event serves as an important in-person touch point to strengthen relationships with our supplier Partners which is especially important, given the environment

Meeting face to face offers our long-term and new supplier Partners, a fresh view of helman's near-term objectives and how we can work together to achieve our long-term goals.

As we have seen throughout this year changes in tariff, policy can shift the market rapidly.

The flexible supply chain, we have built allows us to react to these changes so that we can always deliver high-quality products to our customers at the best value.

Managing tariffs has been a big effort for our team, but we have not lost. Focus on taking great care of our customers, winning new business, in consistently striving to make our operations more efficient.

We continue to deliver orders on time and in full to our customers, which have been demonstrated by excellent fill rates which have been above 95% this year.

Now, let's turn to results for our quarter.

Net sales in the third quarter of 2025 totaled 424.9 million, which increased 8% versus the third quarter of last year.

Driving. Our robust. Topline was a 10-point increase from Price 2 points from Intex which we acquired during August of 2024 and 2 points from new business wins.

These were partially offset by a 6-point headwind for Market volumes, which was consistent with our expectations.

For the quarter adjusted Eva, increased 36% to 88 million. Compared to 64.8 Million last year.

adjusted ebit and margins improved by 420 basis points to 20.7%

Adjusted gross margin for the quarter totaled 51.7%. This Market 350 basis, point improvement from 48.2 during the Third,

the year ago quarter in a 340 basis, point improvement from 48.3 last quarter,

Driving. Our year-over-year. Sequential margin performance were both improved contributions from RDS and benefit from Price cost timing.

Our biggest segment Hardware in protective Solutions or HPS had a great quarter with 10% growth versus the comparable period.

Our results were driven by contributions from Intex.

New business wins and price costs.

Partially offset by a 5 and a half percent decline in HPS market value.

Net sales and Robotics, and digital Solutions, or RDS or of 3.3% versus the year ago quarter. This is our third consecutive growth quarter for RDS and again Illustrated the successful roll out of our mini key, 35 strategy.

Adjusted gross margins and adjusted ebit. Margins were both near their historic Norms totaling 74.2% and 31.4% respectively.

As of today, we have over 3,000 mini key, 35 machines in the field.

An increase of over 800 during the last 3 months.

We remain on track to finalize. The rollout of these kiosks to our 2, largest customers by the end of 2026,

Turning the Canada.

Net sales in our Canadian business, were nearly flat.

Down, just 0.2% compared to the prior year quarter.

New business wins were partially offset by another quarter of soft market volumes, and FX remained a headwind.

We continue expected adjusted. Even to margins will remain above 10% in Canada.

Strong execution, in healthy customer relationships position us to continue delivering consistent results in this or just about any environment.

With that, let me turn it over to Rocky to talk, financials and guidance, Rocky thanks JMA. Let's get right to our results. Then we'll review our guidance.

Net sales in the third quarter of 2025 totaled. 424.9 million, an increase of 8% versus the prior year quarter.

Our Top Line results, were a record for Helman marking the highest net sales of any quarter in our 61-year history.

Third quarter, adjusted gross margin increased by 350 basis points to 51.7% versus the prior year quarter and improved 340 basis points sequentially.

Adjusted sgna as a percentage of sales decreased to 31% during the quarter from 32% in the year ago quarter.

Adjusted even time. The third quarter, total, an 88 million improving 36% versus the year ago quarter.

This also marked the highest adjusted EBA of any quarter in our 61 year history.

Recall. That last year we revised our presentation of adjusted ebit. Dot to include a 7.8 million write-off of receivables from True Value during Q3

Even excluding the revision. Adjusted Eva still increased over 21%.

We saw price increases read through our income statement throughout the quarter. While tariffs began to burden our cost of goods, sold toward the end of the quarter.

This price cost Dynamic timing. Dynamic drove record results for Helman and should begin to normalize next quarter.

Now, let me spend a minute on cash flows for the quarter. Net cash provided by operating activities was 26.2 million and we generated 9.1 million dollars of free cash flow.

Impacting, our free cash flow for the quarter was about 30 million dollars of tariff related costs.

At the end of the third quarter, we had about 60 million dollars of new tariffs in our inventory.

Turning the leverage in liquidity. We ended the third quarter of 2025 with 672 million of total. Net debt outstanding, which we buy 3 million dollars from the end of the second quarter.

Liquidity available totals $277 million, consisting of $239 million of availability on our credit facility and $38 million of cash and cash equivalents.

at the quarter end, our net debt to trailing 12 months, adjusted ebitda ratio improved to 2.5 times, versus 2.7 times a quarter ago and 2.8 times at the end of 2024

We have now reached our long-term adjusted EBA dot to. Net debt. Leverage ratio Target.

Which is at or below 2 and a half times.

We will continue to pay down debt while we evaluate m&a opportunities and use our improved Financial strength to play offense.

As we announced last quarter, our board approved a $100 million share repurchase program.

This marks the first time Hillman has had an active SRP in place since coming public in 2021. During the third quarter of 2025, we deployed $3.2 million to buy back 326,000 shares at an average price of $9.72 per share.

We continue to be in the market, buying stock.

Our SRP activity during Q3 and since Falls in line with our anticipated, 20 to 25 million annual, spend buying back stock.

Our objective here is to offset any dilution caused by employee equity grants and opportunistically buy stock, should we feel there is a meaningful discount between the value of Hillman and where our stock is trading.

We believe these repurchases will be accreted, earnings per share Drive, shareholder value and are an attractive place to deploy capital.

Now, to our guidance, we are reiterating our Topline guidance of 1.535 to 1.575 billion.

With a midpoint of 1.555 billion reflecting 5.6% growth over last year.

For the full year, the growth at the midpoint of our guide is driven by about 6 points of price.

3 points from Intex and 2 points from new business wins which are partially offset by a 6-point headwind from Market values.

For the second half of the year, we anticipate about 11 points of price.

From new business wins, which are partially offset by a 7-point headwind from market volumes.

For the bottom line, we are increasing the low end of our adjusted ibaa guidance by million dollars. This raises the midpoint as the top end remains unchanged.

Our increased adjusted ebit, dog. Guidance is now between 270 and 275 million.

with the midpoint of 272.5 million reflecting 12.7% growth over last year and a 2.5 million increase from our previous guide

our expectation remains that we will end the year around 2.4 times Leverage

As we discussed the price cost Dynamic timing, Dynamic drove record results.

For Hillman during the third quarter.

Now during the fourth quarter, we will see price increases fully reflected while tariffs, burden our cost of goods sold.

The result of this will be a step down in adjusted gross margin rate, which will look similar to our gross margins during the second quarter of this year.

Before I turn it back to JMA, I want to thank the whole team for delivering such a strong quarter with solid growth on both the top and bottom line.

We are confident. We can keep this momentum, going through 2026 by staying disciplined and focused on our key priorities.

that said with flat Market volumes, we expect full year 2026, net sales to grow in the high single to low, double digits,

The increase will be driven by rollover price and new business wins.

However, the price cost timing Dynamic, we are benefiting from now presents, a difficult margin comp next year.

Further, we expected adjusted ebitda to grow next year, in the low to mid single digit range. Assuming no change to the current tariff environment.

We will give our detailed full year 2026 guidance during our Q4 earnings call. Next February the numbers, I just provided are directional. As we are not predicting, what Market volumes will be next year at this time.

Hillman is in a great position to build on this success. Continue growing with our customers and drive long-term value for our shareholders, through the rest of this year and Beyond,

JMA back to you. Thanks Rocky. We are pleased with our results so far this year and are very excited about the future. We continue to work on ways to grow our business, within our 4, Walls of our existing customers and Beyond. Before we wrap up, I want to. Once again, thank the entire Hillman team for an outstanding quarter, your hard work and commitment continue to drive great results.

Strong growth, solid execution in momentum.

As we look ahead, we're confident, our ability to keep the momentum going. We're focused disciplined and aligned around the correct priorities, growing with our customers, strengthening our Partnerships and creating long-lasting value for our shareholders.

Hilman is a great position in the opportunities in front of us, are exciting. I'm incredibly proud of what this

team is accomplished so far this year and even more excited about what ahead with that. I'll turn it back to the operator for the Q&A portion of the call Tanya, please open the call for questions. Certainly

as a reminder to ask a question, you

To press star.

To withdraw your question. Please press star. Again, please limit yourself to 1 question and 1 follow-up and rejoin the queue. Please stand by. We can compile our Q&A roster.

And our first question will come from Lee Yoda of CJs Securities. Your line is open.

Hi, good morning, it's Pete. Lucas for lie. Um, I guess starting out. Have you seen any competitive opportunities or pressures as a result of other suppliers, your C to your customers, uh, and their actions around willingness to or ability to import product. That could be changing the competitive landscape out there.

P. Good morning. Uh, I mean from what we're seeing right now, we actually have quite a few different business opportunities that we're quoting on. We're excited about our new business, uh, opportunities that will Cascade into 2026. So, yeah, we do see opportunities in the market, where we've seen some competitors that have seen some challenges, uh, operating in this environment. So yeah, we're uh, we're excited about 2026 and what's ahead of us.

Uh that's great. And in terms of uh what have you seen in terms of order patterns from your largest retail customers in the last month or 2 compared to sell through?

Uh, they've been very consistent. We've got great relationship with our our Retail Partners. They're running solid businesses right now. And I think all of us are excited about the next run. That'll be in front of us. So we haven't seen anything out of the ordinary.

What kind of growth you might expect to see in 26. Uh, given today's results in the guidance. Uh, what if anything has changed for your, uh, 26 View?

Uh I hey this is Rocky Pete. Absolutely nothing. I mean, we reiterated the same view that we had before if if you assume. And again we're we're not yet predicting what we think the markets will do in 2026, but if you assume those markets are flat, we believe the Top Line will be up high single to low, double digits and that's primarily driven by rollover price and new business wins. And that gives us a lot of confidence in that number. And then when you think about the how that reflects down the pnl into Evita, that read should be uh kind of low single to Mid single digits on the ebata line. And the reason that we don't leverage in 26 like we normally do in the business is because of uh the the kind of windfall we have, for a short period of time in 2025 around tariffs.

Extremely helpful, thanks. I'll jump back in the queue.

Thanks Steve.

Hey, thank you. Good morning. I want to focus on the hardware Solutions segment. Uh, the price was up 12 and a half percent volume down 33.

Is that kind of a real-time elasticity number, or were there any helpers to the volume? I think the new business wins were isolated to protective Solutions. It's I think Hardware is about as real time, as you get with, uh, your retailers in terms of sales. But are there any Pockets? Where retailers can take a little extra inventory or or whatever? So, I'll stop there.

Yeah, I would say, um, Andrew the short answer is. Yes. I mean it, but it, but it depends. I mean, listen, we sell to a lot of different customers. Um, we sell a lot of different products. And so every product and every customer behaves a little differently. You know, if you think about the retail channel that we sell into clearly, uh, in a period of rising prices, a local hardware store is probably going to buy less inventory in the first turn of that until they see their price read through. Um, you know, when you think about folks, the big, guys, you know, we don't send a lot of product through just their distribution centers. We go Store direct and so because of that, the ability to take inventory out of the channel is muted. But that doesn't mean there is not an ability. Um, you know, to to say that, you know, our big customers couldn't at times, take some inventory out of the channel in a period of of increasing prices would be naive. They can, that said, you know, again, compared to someone who's living through uh, customers distribution, uh, channel, uh, or through their DC's obviously

There's a lot less impact on a business like ours because we're going toward direct. So this uh that was a long-winded way for me to say yes, as prices are rising, there's clearly an impact with our customers around price. You know, as we look at POS JMA I mean in the oh October felt okay and and the third quarter felt okay. Um I would say better than uh it's felt for a while and there's some green shoots but we, you know, we're still cautiously optimistic. Um, you know, you know when the 1 thing we would continue to believe Andrew is that we have positioned this business really well for when the market turns and we see how housing return I think when housing returns because of how well we're operating the business we're positioned to take advantage of that Rocky, you know, framed it up. Well I mean you think about the, you know, repair you know, maintenance side of our business, very consistent. We see some good Trends. Um, and so we see some good things setting up for 2026 and Beyond. We're not changing our Outlook. But Andrew, we are pleased with how the business performed in Q3

Uh, thanks a second question. I would ask about kind of the Tariff number. Um, if you said it in the script, I apologize. The the 150 is that still a good number. Even with some, some favorable changes and from here, if, if we get favorability here and there, how is that going to work in? Kind of kind of the pricing with retailers, as well as kind of the potential implications to your, uh, to your p&l. Or the, uh, you will you see favorability immediately, will you

You have to wait, Etc. Thanks

For us, we're running the business. We're always going to put the right products in front of our customers, from the country of origin, where it makes the most sense. So we can have the highest quality and make sure that our supply chain stays robust. So, you know, Andrew no macro change with what you just mentioned and candidly. There were a number of other changes plus and minuses and tariffs over the past quarter. We don't Spike those out separately.

Thanks, I'll pass it on.

You're welcome. Thank you.

And our next question will be coming from Ruben Garner of Benchmark. Your line is open Reuben.

Thank you. Good morning everybody.

So the rocky the second half volume numbers. I think you said Market down, uh, 7% are, are you um do you think that the the the the elevated price from the tariffs is driving? That is it just broadly consumer activity. Like, how? I don't know if you can tell, but I know you didn't raise price necessarily that every product the same. But can you can you tell how much the price is having an impact on, uh, the actual demand in your space?

That, yeah, hey, Rob Ruben. Um, it it is virtually to impossible to figure out what what's driving consumer impact whether it's price increase or whether it's um, you know, whatever other thing that's happening in the external environment. Um, you know, we do look at PS, we look at customer Trends but um, figuring out what is directly related is very

Difficult. The 7% is the implied number at the midpoint of our guide. Um, I think everyone will remember, you know, the implied number at at our guide in the third quarter was down about 9 in volumes, we did a little better than that and and our commentary around. That was what we told people. It was really hard to predict what's going to happen to Market volumes. We were confident that the amount of price that was going into the market that they wouldn't be down to, it would be bigger than that. And we were relatively confident, it would be less than 9 and we ended you know the third quarter kind of right in the middle of those numbers, I think, as we go into the fourth quarter, we're cautiously optimistic that uh, Market volumes may be a little better than than the guy. But it, you know, if we were down, uh, you know, 6 in the third quarter and you think about going into the 7 going into the fourth quarter uh could be other, you know, macro factors like even think about Christmas spending and things like that. There's all, you know, it's probably a good number and and we'll be in the ballpark.

Got it and then, um, the sequential Improvement in gross margin, you mentioned RDS. Um, Can can you talk to us about how much of that Improvement was from RDS versus, uh, the price cost? And then I guess what. Exactly is driving the pickup in the RDS profitability.

Yeah. I mean it the largest percentage of the increase was driven by uh, what happened with, uh, price cost. Um, when when you think about RDS that number was up, but it was up about call it a 100 basis points in the quarter. Um the RDS pickup is really driven by the 3 5 roll out and what's happening there um and the profitability of that business. So we we feel really good about RDS the fact that we've grown at 3/4 in a row and we continue to execute on our 3 5 strategy. But again, the biggest driver of margin Improvement in the quarter was the price cost Dynamic. And as we we said in the prepared remarks, we expect that to come back in the fourth quarter and we would expect the fourth quarter. Gross margins to look a lot. Like what we saw in the second quarter of this year.

Okay, great. Thanks for the detail, guys. And good luck.

Thank you.

And our next question will be coming from Matthew bully of Barkley's. Matthew, your line is open.

Uh, hi. You have a link to one for Matt. Thank you for taking my questions. Um, I wanted to touch on pricing a little bit, so you've kind of pointed to expectations of price cost neutrality in the face of tariffs. Um, but sort of this quarter, we've seen a sense of price fatigue, where some of your peers have kind of not seen that full anticipated price realization. Um, so just wondering, like, are you experiencing any similar signs of a bit more elasticity?

Push back in price than expected or if that price kind of coming through largely according to your expectations and just what is feedback then on just receptiveness of increases or negotiations, just anything around that.

That we expected uh price even before tariffs to be flat during the current year. But a bit of a headwind in the front half that implied, that we would take some price for inflation. And we did take some price for inflation and certain channels on certain products where it was necessary. So, I think, as you think about that price, in my opinion, um, and in the company's opinion has played out about as expected, hasn't been easy, but our customers have, uh, understand. They live in the same world we live in and and, um, and so have been fair. I would say relative to to how price has rolled out and jam you want Rocky. I mean, that's exactly right. I mean, the, you know, customer conversations have been, you know, challenging but they've been balanced, right? They want the same thing that we want. We want to make sure to continue to flow the supply chain, right? They would need high levels of service. They want to make sure their customers are taking care of and that's why we're doing things with our customers. Now, we're resetting more, you know, in this year in 2025, than we've really have and, and record if you will. So we're going to continue to make investments in our business.

We're going to continue to, you know, keep the product flowing because we really are still excited. I won't call when it's going to happen, but when it does, we believe the Home Improvement Market is set up for a great run. So we're excited about where we are. Um, you know, the conversations around price are certainly challenging but, you know, our customers and we are a line that we want to take care of the end user.

Great. Um and second to that, I guess you had mentioned, October fell. Okay. And you you're seeing some green shoots. So could you kind of elaborate more on what this green shoots are and similar to Pete's question earlier? Um are you seeing any you know incremental new business wins just given today's market backdrop or opportunity there

Yeah, so I mean, on the market October was, you know, slightly better than what we saw in the Q3. I'm not going to go into any specifics on any on any each retailer if you will. But, you know, Lane, we've seen some, you know, certain categories that are what we need to be non-elastic if you will actually doing decently. So, um, just given the the complexity of this call, you can understand. I won't go any deeper there. Uh, we really think the setup, um, as we move forward and, you know, kind of what, you know, repeat repeat was going, we really feel like the new business wins that we have. You know, we talked about, you know, Ace we've talked about our chain win that we had there. Uh, that's rolled out nicely in. 2025 is just an example of things that we're doing our teams. Have a number of, you know, big projects in motion right now. Uh, we're going to report them out as we as we realize them versus getting ahead and talking about what we're want to win. But we have some exciting opportunities in the hopper and we'll have more to come in future quarters.

Great. Thank you.

Okay, as a reminder to ask a question. Please press star 1, 1 on your phone and wait, for your name to be announced.

Our next question will come from David, nathy a beard? Your line is open, David?

Thank you. Hey, good morning, guys. Um, first off, thanks for the 2026 Outlook, I guess.

Did you say that the revenue? I would look at high single, low double on the top line in a flattish market. Is that correct?

Yeah, that is Dave what? What we keep trying to say and and we're going to keep trying to say it is that assumes a flat Market at this point sitting you know, on November 4th to predict next year's Market is tough and so we'll let people make their own estimates but in a flat Market, that's the expectation. We have

Got it. And then uh, yeah, it looks like ibadah it it probably builds

More cleanly from 24 than 25 but seems uh seems to be right based on what what you told us. So thank you for uh for giving us that framework at least um in the quarter itself, could you just talk about? I mean, there's a lot of variability relative to us relative to the street in the third quarter of the fourth quarter but netting it all out, it looks like it, it pretty well hit the mark um the the high gross margin was expected in the third quarter. Could you talk about why sgna was also so elevated in the third quarter?

Yeah. Dave, the biggest impact, quite frankly, on the SG&A and the third quarter is the way our bonus accrual works. Um, and so there was a pretty significant bonus accrual relative to the rest of the quarter. Um,

And so I I think if you took that out, you would see that number, be pretty consistent with what we've seen in the other quarters of the year.

And so was that some sort of catch up that you had to smooth it out relative to the first 3 quarters and then it'll be normal in the fourth. Is that right? That's correct.

Yeah.

How you were thinking about things? If at all, when you look at the third quarter and then sort of what you're guiding for, the fourth, is there anything in there that you say? Well this is a little bit more, a little bit less than we were originally anticipating mid year.

Yeah, I would say Dave as we look back on um what what we said last quarter, I think it was pretty consistent with our expectations and and both the third and what we're we're seeing in the fourth quarter. So, um, I I don't think there was anything really, that surprised us, we expected the profitability, we expected, um, you know, the margin rate to increase about 300 basis points. It might have been a little bit better than that but uh pretty much in line with our own expectations, I think the team did a really good job of Performing again and really tough a really tough environment when you think about what's happening macro with tariffs, and those conversations with our customers. I I think the other thing that I think we're really proud of is, you know, we had 2% new business wins in the quarter, in spite of all of the noise around tariffs. Um, you know, again, great job when you think about what our sales teams doing and it really speaks volumes about how how much our customers value and Trust,

Us, um, when we're able to go out and win new business when we're asking for price at the same time. Yeah. And I think in addition to sales team doing a great job, I mean our operations team is world class. Um, we're very proud of what they've done, they've really run the business. Well, Q3 was an excellent quarter, very efficient. Um, you know, we had a lot of moving pieces in the team was able to execute so, you know. Yeah, there's a little bit higher cost as Rocky mentioned, you know, we did do things like labeling on the field. There was a lot of activity in Q3, so we feel like Q3 set up. And we've also feel like Dave Q4 is on on target with what we expected.

Yeah, that all sounds good. Thanks very much, guys. See you next week. Thanks. Dave, talk to you soon.

And our last question will,

America of Canada. Your line is open.

Hey, good morning, guys. Thanks for taking the questions. Hey, good morning, Brad. Um, so Rocky, I just want to clarify the Cadence. Uh, in May I think you're a projection for uh, Market volumes and pricing was plus 17 minus 17, then in August, it was plus 12. Minus 9 is for H2, and then uh now it's plus 11. Minus 7, is that correct?

I think that's I I think those were quick the way. You said that Brian. But yeah, I think it's correct. The only, the only thing I would say when you say those numbers again,

Back to the minus 17. That was, when there was a 250 million dollar tariff regime and and in that environment, we weren't changing any of our guidance.

Understood understood. Um, I'm curious on the timing of, when these price increases hit. The shells, understanding obviously probably varies by retailers as our work suggests is kind of late, August early September.

Yeah. I mean you're you're spot on. I mean you think about traditional Hardware labels or, you know, put on throughout the back half of the year? So yeah you're you didn't see all that price really reading into Q3 and the Q4 and then each of the other retailers they maintained their own pricing and they drive the retail strategies with that, they see fit. So you've seen a Cascade in throughout the quarter and we expected it to Cascade in the fourth quarter as well.

Got it. And then has there been any push back on these significant price increases either on the retailer level or the customers with within the stores. Um, and I'm curious your thoughts, I mean Lumber's been a pretty volatile commodity this year. There's a lot been written in the corner. Obviously about, it was dropping in price. I was up here today and I'm just curious like how, how is the, the price of lumber and maybe other construction materials? Um, either directly or indirectly impacted your business. Yeah, I mean, just go back to your, I mean, customers have been balanced and reasonable. They understand. This is a tax and you know, we have to run a business. Um, so I won't say they've been easy, but they're also been Fair. We have you know we do business with some of the best retailers in the world uh as you know and I think that's been reasonable as far as the impact of lumber you know I think from my perspective this is 1 man's opinion, you know, I think what you see is

Is we're still seeing the smaller projects are still going forward. People do the repair and the, you know, the maintenance type activities because they have to take care of that good. Bad times are bad, Brian. What we are seeing though is and I think this is consistent, I'm not going to quote the retailers, but the larger projects is where you're seeds and push back. So where we would have had some drywall screws or some, you know, structural screws go along with a project and where Lumber may be impacting that, that is where I would say that there has been, you know, the, the less of the demand that we'd like to see. And that's where we believe that interest rates as well as getting, you know, things settled down from a tariff, respectable help in 26. And again, why we're excited about the future. So, yeah, I think the input prices is on bigger, ticket. Items is is a pressure point in my opinion?

Uh maybe starting to open up a little bit. Um just giving we probably a little more clarity on tires today than we have in the best of acknowledging the changes, uh, daily with tweets

Yeah, yeah, uh, well I, you know, won't comment on that aspect but back to the m&a piece of it, Brian. You know, we are seeing our team is actually getting more inbound now than we saw last quarter, and the quarter before that. So, actually, we're starting to see some interesting activity. So I'd say, the, the activity and the interest levels picking up a bit work cited about, you know, continuing our strategy, which is the, you know, Drive tuck in uh whether it's you know we focus on our core business or what we're doing to grow DIY and specifically, you know, also we're interested in the Pro and, you know, it's 25% of our business. We're going to look at deals that make sense and all those 3 areas. Uh, so we're excited about what m&a Will present for opportunities.

As we move forward.

All right, best of luck, guys. Thanks a lot.

Thanks, Brian. Take care.

And this concludes the Q&A portion of today's call, I would now like to turn the call back to Mr. Aiden offi, for closing remarks,

Thanks again, everyone for joining us this morning. We look forward to updating you on our progress soon. Thanks and have a great day. Take care.

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