Q2 2026 Hillman Solutions Corp Earnings Call

August 4, 2026

Speaker #2: Founded in 1964 and headquartered in Cincinnati, Hillman is a leading provider of.

Speaker #1: Good morning, and welcome to the second quarter 2026 results presentation for Hillman Solutions Corp. My name is Amber, and I will be your conference call operator today.

Operator: Good morning, welcome to the Q2 2026 results presentation for Hillman Solutions Corp. My name is Amber, and I will 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 and presentation were issued yesterday, 10-Q was issued this morning. These documents and a replay of today's presentation can be accessed on Hillman's Investor Relations website at ir.hillman.com. I would now like to turn the call over to Michael Koehler with Hillman. Please go ahead.

Speaker #1: 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 and presentation were issued yesterday, and the 10-Q was issued this morning.

Speaker #1: These documents and a replay of today's presentation can be asked accessed on Hillman's investor relations website at ir dot hillman group dot com. I would now like to turn the call over to Michael Koehler with Hillman.

Speaker #1: Please go ahead.

Speaker #3: Thank you, operator. Good morning, everyone, and thank you for joining us for Hillman's second quarter 2026 results presentation. I'm Michael Koehler, Vice President of Corporate Development, Investor Relations, and Treasury.

Michael Koehler: Thank you, operator. Good morning, everyone, thank you for joining us for Hillman's Q2 2026 results presentation. I'm Michael Koehler, Vice President of corporate development, investor relations, and treasury. Joining me on today's call are Hillman's President and Chief Executive Officer, Jon Michael Adinolfi, or JMA, and our Chief Financial Officer, Robert Kraft. I would like to remind our audience that certain statements made today may be considered forward-looking and are subject to the safe harbor provisions of applicable securities laws. These forward-looking statements are not guarantees of future performance and are subject to 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. Some of the factors that could influence our results are contained in our periodic and annual reports filed with the SEC.

Speaker #3: Joining me on today's call are Hillman's President and Chief Executive Officer, John Michael Adinolfi, or JMA, and our Chief Financial Officer, Rocky Kraft. I would like to remind our audience that certain statements made today may be considered forward-looking and are subject to the Safe Harbor Provisions of applicable securities laws.

Speaker #3: These forward-looking statements are not guarantees of future performance and are subject to 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.

Speaker #3: Some of the factors that could influence our results are contained in our periodic and annual reports filed with the SEC. For more information regarding these risks and uncertainties, please see slide 2 in our earnings call slide presentation, which is available on our website.

Michael Koehler: For more information regarding these risks and uncertainties, please see slide two in our earnings call slide 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 discussing the recently announced agreement to acquire Cambridge Corporation, a master distributor serving the industrial channel. He will provide commentary on our quarterly results and guidance, followed by a discussion on our performance by business. Rocky will walk through our financial results, balance sheet, and guidance before turning the call back over to JMA for some closing comments. We will open up the call for your questions.

Speaker #3: 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.

Speaker #3: JMA will begin today's call by discussing the recently announced agreement to acquire Cambridge Corporation, a master distributor serving the industrial channel. Then he will provide commentary on our quarterly results and guidance, followed by a discussion of our performance by business.

Speaker #3: Rocky will then walk through our financial results, balance sheet, and guidance before turning the call back over to JMA for some closing comments. We will then open up the call for your questions.

Speaker #3: It's now my pleasure to turn the call over to our President and CEO, Jon Adinolfi. Jon?

Michael Koehler: It is now my pleasure to turn the call over to our President and Chief Executive Officer, Jon Michael Adinolfi. JMA?

Speaker #4: Thanks, Michael. Good morning, everyone, and thank you for joining us. The second quarter was a great quarter for Hillman, which I'll get to in a moment.

Jon Michael Adinolfi: Thanks, Michael. Good morning, everyone, and thank you for joining us. The Q2 was a great quarter for Hillman, which I will get to in a moment. Yesterday, after the market closed, we announced that we entered into a definitive agreement to acquire Cambridge Corporation, a leading master distributor of fasteners in the industrial channel. Like Hillman, Cambridge has a specialized business model with a moat built around SKU complexity and service. They provide a long tail of unique specialty fastener SKUs, and they have decades of product experience providing unique service to their long-term customers. This is a very exciting and strategic step in the evolution of Hillman. Let me tell you why Cambridge is a great fit for Hillman. Cambridge is a family-owned, privately held business that has over 50 years of expertise.

Speaker #4: Yesterday, after the market closed, we announced that we entered into a definitive agreement to acquire Cambridge Corporation, a leading master distributor of fasteners in the industrial channel.

Speaker #4: Like Hillman, Cambridge has a specialized business model with a moat built around SKU complexity and service. They provide a long tail of unique, specialty fastener SKUs, and they have decades of product experience providing unique service to their long-term customers.

Speaker #4: This is a very exciting and strategic step in the evolution of Hillman. Let me tell you why Cambridge is a great fit for Hillman.

Speaker #4: Cambridge is a family-owned, privately held business that has over 50 years of expertise. The Cambridge moat is built on their long-standing customer relationships, proprietary digital ordering platform, Fastnet, and their ability to stock unique specialty SKUs and ship them out in custom pack sizes on the same day.

Jon Michael Adinolfi: The Cambridge moat is built on their long-standing customer relationships, proprietary digital ordering platform, FastNet, and their ability to stock unique specialty SKUs and ship them out in custom pack sizes on the same day. Let me outline some of the similarities between Cambridge and Hillman. Today, Hillman serves as the long-tail specialty master fastener distributor for our customers. These are hard-to-find fasteners that the end user must have to do a project. This is where Hillman provides unparalleled value for our customers. Cambridge does the same thing in the industrial channel. They serve as the long-tail master fastener distributor for their customers. These are hard-to-find fasteners required to do the job in a timely manner. Cambridge stocks these fasteners and can meet the urgent demands of their customers by shipping out the same day. In March, we outlined the three channels we serve today: DIY, pro distribution, and industrial.

Speaker #4: Let me outline some of the similarities between Cambridge and Hillman. Today, Hillman serves as the long-tail specialty master fastener distributor for our customers. These are hard-to-find fasteners that the end user must have to do a project.

Speaker #4: This is where Hillman provides unparalleled value for our customers. Cambridge does the same thing in the industrial channel. They serve as the long-tail master fastener distributor for their customers.

Speaker #4: These are hard-to-find fasteners required to do the job in a timely manner. Cambridge stocks these fasteners and can meet the urgent demands of their customers by shipping out the same day.

Speaker #4: In March, we outlined the three channels we serve today: DIY, Pro Distribution, and Industrial. As you know, Hillman is a strong presence in DIY, which has been our focus for nearly 30 years.

Jon Michael Adinolfi: As you know, Hillman has a strong presence in DIY, which has been our focus for nearly 30 years. We also serve the pro distribution channel, which is nearly a $10 billion market opportunity. Today, we believe we have about 3% market share in this space and is a key focus of our organic growth efforts. Industrial is the third channel we serve. We love this channel because it touches so many parts of the economy, including factories of all sizes, infrastructure projects, and data centers. This is the channel Cambridge is in, and this is why this acquisition presents such a strong opportunity for Hillman. This business is not tied to just one market. Many of these specialty fasteners are needed urgently. For example, machine repair or project completion, that is the Cambridge model.

Speaker #4: We also serve the Pro Distribution channel, which is nearly a $10 billion market opportunity. Today, we believe we have about 3% market share in this space and is a key focus of our organic growth efforts.

Speaker #4: Industrial is the third channel we serve. We love this channel because it touches so many parts of the economy, including factories of all sizes, infrastructure projects, and data centers.

Speaker #4: This is the channel Cambridge is in, and this is why this acquisition presents such a strong opportunity for Hillman. This business is not tied to just one market.

Speaker #4: And many of these specialty fasteners are needed urgently. For example, machine repair or project completion that is the Cambridge model. Today, in Canada, we currently distribute fasteners to the industrial channel with our call-in brand.

Jon Michael Adinolfi: Today in Canada, we currently distribute fasteners to the industrial channel with our Paulin brand. Recently, we entered into this channel in the US with our acquisition of Campbell Chain. Altogether, our industrial business today is approximately $65 million. The acquisition of Cambridge doubles the size of our industrial business and establishes a fastener distribution presence in the US serving the same industrial channel. As I've explained, the Cambridge playbook is very similar to what's made us successful, and a big reason why we think this will be an outstanding fit for us. This acquisition gives us an immediate presence to serve and grow in the industrial channel, a channel that we've identified as a meaningful opportunity where we have minimal share today. This deal expands our industrial addressable market by 50%, increasing to $3 billion in total, of which we serve just 3%.

Speaker #4: And recently, we entered into this channel in the US with our acquisition of Campbell Chain. Altogether, our industrial business today is approximately $65 million.

Speaker #4: The acquisition of Cambridge doubled the size of our industrial business and establishes a fastener distribution presence in the US, serving the same industrial channel.

Speaker #4: As I've explained, the Cambridge playbook is very similar to what the use is successful. And a big reason why we think this will be an outstanding fit for us.

Speaker #4: This acquisition gives us an immediate presence to serve and grow in the industrial channel. A channel that we've identified as a meaningful opportunity where we have minimal share today.

Speaker #4: This deal expands our industrial addressable market by 50%, increasing the $3 billion in total of which we serve just 3%. For the 12 months ending June 30th, Cambridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA.

Jon Michael Adinolfi: For the 12 months ending 30 June, Cambridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA. These robust margins will be accretive to Hillman's margin profile. Given Cambridge's light CapEx model, we expect very healthy free cash flow conversion. Because of Hillman's scale, we expect to realize about $2 million of cost synergies, particularly in sourcing. Over time, this represents the opportunity for even more cost savings. Additionally, we expect to realize a material cash tax benefit of between $40 and $45 million from this transaction. Given this tax benefit and the cost synergies, the $315 million purchase price represents a post-synergy multiple of 8.4x to 8.6x. We are confident there is meaningful organic growth in cross-selling opportunities that will drive top-line growth and make this acquisition even more attractive. The transaction is expected to close around the start of Q4.

Speaker #4: These robust margins will be accreted to Hillman's margin profile. And given Cambridge's light capex model, we expect very healthy free cash flow conversion. Because of Hillman's scale, we expect to realize about $2 million of cost synergies particularly in sourcing.

Speaker #4: Over time, this represents the opportunity for even more cost savings. Additionally, we expect to realize a material cash tax benefit of between $40 and $45 million from this transaction.

Speaker #4: Given this tax benefit and the cost synergies, the $315 million purchase price represents a post-energy multiple of 8.4 to 8.6 times. Further, we are confident that there is meaningful organic growth in cross-selling opportunities that will drive top-line growth and make this acquisition even more attractive.

Speaker #4: The transaction is expected to close around the start of the fourth quarter. Assuming this deal closes in line with our expectations, Cambridge should contribute approximately $15 million of net sales in roughly $5 million of adjusted EBITDA to Hillman's overall 2026 results.

Jon Michael Adinolfi: Assuming this deal closes in line with our expectations, Cambridge should contribute approximately $15 million of net sales and roughly $5 million of adjusted EBITDA to Hillman's overall 2026 results. The transaction is subject to regulatory approval and customary closing conditions. We can't wait to welcome the Cambridge team to Hillman. Interestingly, this acquisition takes Hillman back to its roots. During the late '90s, Hillman distributed fasteners to industrial customers. It was around that time the company made the decision to divest their industrial fastener business in order to make a critical investment to expand their distribution network to serve their retail hardware customers on a national level. Looking back, we have grown to become the leading massive distributor of fasteners at retail, and now that strategy has come full circle.

Jon Michael Adinolfi: Assuming this deal closes in line with our expectations, Cambridge should contribute approximately $15 million of net sales and roughly $5 million of adjusted EBITDA to Hillman's overall 2026 results. The transaction is subject to regulatory approval and customary closing conditions. We can't wait to welcome the Cambridge team to Hillman. Interestingly, this acquisition takes Hillman back to its roots. During the late 1990s, Hillman distributed fasteners to industrial customers. It was around that time the company made the decision to divest their industrial fastener business in order to make a critical investment to expand their distribution network to serve their retail hardware customers on a national level. Looking back, we have grown to become the leading massive distributor of fasteners at retail, and now that strategy has come full circle.

Speaker #4: The transaction is subject to regulatory approval and customary closing conditions. We can't wait to welcome the Cambridge team to Hillman. Interestingly, this acquisition takes Hillman back to its roots.

Speaker #4: During the late '90s, Hillman distributed fasteners to industrial customers. It was around that time the company made the decision to divest their industrial fastener business in order to make a critical investment to expand their distribution network to serve their retail, hardware customers on a national level.

Speaker #4: Looking back, we have grown to become the leading master distributor of fasteners at retail and now that strategy has come full circle. Accretive acquisitions like Cambridge and the two deals we closed earlier during the second quarter Campbell Chain and Fittings and Delaney Hardware reflect the ongoing execution of our long-term strategic initiatives we shared in March of this year during our investor day.

Jon Michael Adinolfi: Accretive acquisitions like Cambridge and the 2 deals we closed earlier during Q2, Campbell Chain & Fittings and Delaney Hardware, reflect the ongoing execution of our long-term strategic initiatives we shared in March of this year during our Investor Day, of which M&A is a meaningful part. Here we outlined our blueprint, which consists of 3 catalysts for creating long-term shareholder value. 1, fortify and grow our core DIY business. 2, win the pro across industrial, specialty distribution, and LBM. 3, compound our growth through accretive M&A. As we said at Investor Day, over the next 5 years, we believe we can grow this business between 8% and 12% per year. By 2030, we expect to reach USD 2.5 billion in net sales. Now let's talk about our performance during the quarter. Net sales for Q2 2026 increased 10% to USD 442 million.

Jon Michael Adinolfi: Accretive acquisitions like Cambridge and the two deals we closed earlier during Q2, Campbell Chain & Fittings and Delaney Hardware, reflect the ongoing execution of our long-term strategic initiatives we shared in March of this year during our Investor Day, of which M&A is a meaningful part. Here we outlined our blueprint, which consists of three catalysts for creating long-term shareholder value. One, fortify and grow our core DIY business. Two, win the pro across industrial, specialty distribution, and LBM. 3, compound our growth through accretive M&A. As we said at Investor Day, over the next 5 years, we believe we can grow this business between 8% and 12% per year. By 2030, we expect to reach USD 2.5 billion in net sales. Now let's talk about our performance during the quarter. Net sales for Q2 2026 increased 10% to USD 442 million.

Speaker #4: Of which M&A is a meaningful part. Here, we outlined our blueprint, which consists of three catalysts for creating long-term shareholder value. One, fortify and grow our core DIY business.

Speaker #4: Two, win the pro across industrial, specialty distribution, and LBM. And three, compound our growth through accretive M&A. As we said at investor day, over the next five years, we believe we can grow this business between 8 and 12 percent per year.

Speaker #4: By 2030, we expect to reach $2.5 billion in net sales. Now, let's talk about our performance during the quarter. Net sales for the second quarter of 2026 increased 10% to $442 million.

Speaker #4: This performance is in right in line with our long-term growth targets we just discussed. For the quarter, adjusted EBITDA increased 2.5% to $77.1 million, compared to $75.2 million during the year-ago quarter.

Jon Michael Adinolfi: This performance is right in line with our long-term growth targets we just discussed. For the quarter, Adjusted EBITDA increased 2.5% to USD 77.1 million, compared to USD 75.2 million during the year-ago quarter. Free cash flow during the quarter totaled a very healthy USD 70.2 million. Driving the top line 10% growth were 2 points of growth from core performance, 4.5 points of growth from new business wins, and about 3.5 points of growth from M&A. Of the 4.5 points of new business wins, we are really excited that approximately 1 point of growth came from our Win the Pro focus. This is a channel we didn't focus on until this year.

Speaker #4: Free cash flow during the quarter totaled a very healthy $70.2 million. Driving the top-line 10% growth were two points of growth from core performance.

Speaker #4: Four and a half points of growth from new business wins and about three and a half points of growth from M&A. Of the four and a half points of new business wins, we are really excited that approximately one point of growth came from our win the pro focus.

Speaker #4: This is a channel we didn't focus on until this year. Driving our pro growth during the quarter were a new fastener win with a regional LBM chain in the Pacific Northwest.

Jon Michael Adinolfi: Driving our pro growth during the quarter were a new fastener win with a regional LBM chain in the Pacific Northwest, becoming a preferred supplier of fasteners and cleaning products for a major pro customer, and our bulk fastener program in Canada that continues to grow well and will contribute to our new business revenue. These 3 recent proof points show that we have the right to win in the pro space. Looking to 2027, we plan to further scale our bulk and pro specific offerings. We plan to win the pro as we leverage our distribution capabilities, product breadth, and innovation with customer service to be a preferred supplier in this channel. Altogether, we believe that these new business wins will generate about 1% top-line growth for Hillman this year and are confident that will grow to at least 2% growth next year.

Jon Michael Adinolfi: Driving our pro growth during the quarter were a new fastener win with a regional LBM chain in the Pacific Northwest, becoming a preferred supplier of fasteners and cleaning products for a major pro customer, and our bulk fastener program in Canada that continues to grow well and will contribute to our new business revenue. These three recent proof points show that we have the right to win in the pro space. Looking to 2027, we plan to further scale our bulk and pro specific offerings. We plan to win the pro as we leverage our distribution capabilities, product breadth, and innovation with customer service to be a preferred supplier in this channel. Altogether, we believe that these new business wins will generate about 1% top-line growth for Hillman this year and are confident that will grow to at least 2% growth next year.

Speaker #4: Becoming a preferred supplier of fasteners and cleaning products for a major pro customer. And our bulk fastener programming candidate that continues to grow well and will contribute to our new business revenue.

Speaker #4: These three recent proof points show that we have the right to win in the pro space. Looking to 2027, we plan to further scale our bulk and pro-specific offerings.

Speaker #4: We plan to win the pro as we leverage our distribution capabilities, product breadth, and innovation with customer service to be a preferred supplier in this channel.

Speaker #4: Altogether, we believe that these new business wins will generate about 1% top-line growth for Hillman this year, and we are confident that will grow to at least 2% growth next year.

Speaker #4: Given that our year-to-date performance has been in line with our expectations, we are increasing the midpoint of our full-year 2026 outlook for the contribution from the Cambridge acquisition.

Jon Michael Adinolfi: Given that our year-to-date performance has been in line with our expectations, we are increasing the midpoint of our full year 2026 outlook for the contribution from the Cambridge acquisition. This assumes the transaction closes around the start of Q4. We now anticipate that our full year net sales will be between the narrowed range of USD 1.67 billion to 1.72 billion. Our increased midpoint of USD 1.695 billion now represents 9% growth over last year, which again, is in line with our long-term growth target. Similarly, we anticipate that our full year Adjusted EBITDA will be around USD 285 million, an increase of USD 5 million over the previous midpoint, given the contribution from Cambridge. This marks an increase of 3.5% over last year.

Speaker #4: This assumes the transaction closes around the start of the fourth quarter. We now anticipate that our full-year net sales will be within the narrowed range of $1.67 billion to $1.72 billion.

Speaker #4: Our increased midpoint of $1.695 billion now represents 9% growth over last year. Which again is in line with our long-term growth target. Similarly, we anticipate that our full year adjusted EBITDA will be around $285 million and an increase of $5 million over the previous midpoint given the contribution from Cambridge this marks an increase of three and a half percent over last year.

Speaker #4: Our guidance assumes that the continued execution of new business wins in our core performance growth, along with a modest improvement in market volumes during the second half, given the softer comps we saw during the second half of last year.

Jon Michael Adinolfi: Our guidance assumes that the continued execution of new business wins and our core performance growth, along with a modest improvement in market volumes during H2, given the softer comps we saw during H2 of last year. Lastly, we are narrowing the range of our full-year free cash flow while keeping the midpoint the same. We now anticipate $105 to 115 million of free cash flow with a midpoint of $110 million. Transaction-related expenses flow through the operating income line, so we do not expect a material free cash flow benefit from Cambridge in 2026. Note that our guidance assumes no meaningful change in tariffs throughout the rest of the year. Speaking of, now for a quick update on tariffs. The net impact of tariffs was relatively consistent this quarter, like it was in the previous.

Speaker #4: Lastly, we are narrowing the range of our full year free cash flow while keeping the midpoint the same. We now anticipate $105 to $115 million of free cash flow with a midpoint of $110 million.

Speaker #4: Transaction-related expenses flow through the operating income cash flow benefit from Cambridge in 2026. Note that our guidance assumes no meaningful change in tariffs throughout the rest of the year.

Speaker #4: Speaking of, now for a quick update on tariffs. The net impact of tariffs was relatively consistent this quarter, like it was in the previous.

Speaker #4: Recently, we saw the expiration of section 122 tariffs and the implementation of section 301 tariffs of which the net impact was neutral. Following the ruling that certain IEPA tariffs were deemed illegal earlier this year, new tariffs were quickly put in place and this and as they were recently renewed, so is the total net impact to Hillman is neutral.

Jon Michael Adinolfi: Recently, we saw the expiration of Section 122 tariffs and the implementation of Section 301 tariffs, of which the net impact was neutral. Following the ruling that certain IEEPA tariffs were deemed illegal earlier this year, new tariffs were quickly put in place, and as they were recently renewed, so is the total net impact to Hillman is neutral. More recently, we received a modest amount of tariff-related refunds. However, we expect this benefit to be generally offset by cost increases and payback resulting from the adjustment in how Section 232 tariffs were being applied. Our dual faucet is not a response to tariff. It is the business model we operate. The flexibility afforded to us by this strategy allows us to react to changes in the geopolitical tariff landscape. We always strive to have our actual sourcing mix be determined by the lowest total landed cost.

Speaker #4: More recently, we received a modest amount of tariff-related refunds. However, we expect this benefit to be generally offset by cost increases and payback resulting from the adjustment in how Section 232 tariffs were being applied.

Speaker #4: Our dual faucet is not a response to tariff. It is the business model we operate. The flexibility afforded to us by this strategy allows us to react to changes in the geopolitical tariff landscape.

Speaker #4: We always strive to have our actual sourcing mix to be determined by the lowest total landed cost. Should we see these elevated costs continue, we will price for these costs.

Jon Michael Adinolfi: Should we see these elevated costs continue, we will price for these costs. Now let's turn to our results by business for the quarter. Our biggest segment, Hardware and Protective Solutions, or HPS, increased 10% versus Q2 of 2025. HPS had a solid quarter, driven by a 4% lift in core performance growth, a 2% lift from new business wins, and a 4% from M&A. Robotics and Digital Solutions, or RDS, which is our highest margin segment, had a great quarter. RDS saw healthy top-line growth and meaningful growth in its bottom-line performance. RDS is our high-margin, technology-enabled business. Our over 31,000 kiosks are destinations that solve a critical need for our customers. Net sales in RDS were up 11% versus the year-ago quarter, and adjusted EBITDA increased by 10.4% to $19.6 million. Adjusted gross margin and adjusted EBITDA margins were both healthy, totaling 77.4% and 31.9%, respectively.

Speaker #4: Now let's turn to our results by business for the quarter. Our biggest segment, Hardware and Protective Solutions, or HPS, increased 10% versus Q2 of 2025.

Speaker #4: HPS had a solid quarter driven by a 4% lift in core performance growth, a 2% lift from new business wins, and a 4% from M&A.

Speaker #4: Robotics and digital solutions are RDS, which is our highest margin segment, had a great quarter. RDS saw a healthy top-line growth and meaningful growth in its bottom-line performance.

Speaker #4: RDS is our high margin technology-enabled business. Our over 31,000 kiosks are destinations that solve a critical need for our customers. Net sales in RDS were up 11% versus the year-ago quarter and adjusted EBITDA increased by 10.4% to $19.6 million.

Speaker #4: Adjusted gross margins and adjusted EBITDA margins were both healthy. Totaling $77.4% and $31.9% respectively. Driving our performance during the quarter was our Minikey 35 rollout as we continue to execute.

Jon Michael Adinolfi: Driving our performance during the quarter was our MiniKey 3.5 rollout, as we continue to execute. MiniKey 3.5 is a platform upgrade, not just a product refresh. Since we began rolling out this new platform to our top two customers, we have seen demonstrable improved growth in our overall MiniKey business. The economics per machine improve as these installed base scales and the customer awareness of our new machines and new offerings increases. Today, we have approximately 4,500 MiniKey 3.5 machines in the field, an increase of over 600 machines since our last earnings call in April. We expect to end 2026 with over 5,000 MiniKey 3.5 machines in the field and are on track to finish the rollout of these kiosks. Turning to Canada. Net sales in our Canadian business during the quarter increased 7.8% compared to the prior year quarter.

Speaker #4: Minikey 35 is a platform upgrade, not just a product refresh. Since we began rolling out this new platform to our top two customers, we have seen demonstrable improved growth in our Minikey business.

Speaker #4: The economics per machine improve as these installed base scales and the customer awareness of our new machines and new offerings increases. Today, we have approximately 4,500 Minikey 35 machines in the field and increase of over 600 machines since our last earning call in April.

Speaker #4: We expect to end 2026 with over 5,000 Minikey 35 machines in the field, and we are on track to finish the rollout of these kiosks.

Speaker #4: Turning to Canada, net sales in our Canadian business during the quarter increased 7.8% compared to the prior year quarter. We continue to benefit from new business momentum in Canada and are following the same playbook that we are in the US, our goal is to be a leader at retail in Canada while we win the Canadian Pro and LBM specialty distribution and industrial.

Jon Michael Adinolfi: We continue to benefit from new business momentum in Canada and are following the same playbook that we are in the US. Our goal is to be a leader at retail in Canada while we win in Canadian pro and LBM, specialty distribution, and industrial. Driving the increase was a 14% increase in new business wins, with core performance down 6% due to soft market and FX headwinds. New business wins were split between DIY and pro. Driving this growth was a successful expansion into new PS categories with an existing customer retail and the expansion of pro spec fasteners and anchors with a top customer in Canada. Our Canadian team has done a great job this year with two solid quarters, and we expect the momentum to continue throughout the year.

Speaker #4: Driving the increase was a 14% rise in new business wins, with core performance down 6% due to a soft market and FX headwinds. New business wins were split between DIY and Pro.

Speaker #4: Driving this growth was a successful expansion into new PS categories with an existing customer and retail and the expansion of Pro spec fasteners and anchors with a top customer in Canada.

Speaker #4: Our Canadian team has done a great job this year with two solid quarters and we expect the momentum to continue throughout the year. We are pleased with our performance during the quarter and are very excited to have the eminent A machine running.

Jon Michael Adinolfi: We are pleased with our performance during the quarter and are very excited to have the M&A machine running. The three transactions we have done this year are great fits for this organization and open us up to opportunities for future growth. Hillman continues to perform. The way we serve our customers, the products we offer, and the consistency of demand for our products make Hillman a special company. We are an essential operating infrastructure of the North American hardware aisle. We are embedded in more than 29,000 retail locations, servicing over 31,000 kiosks, managing over 111,000 SKUs, all with our own people. This depth of integration creates switching costs that we believe the market underestimates and our competitors do not replicate. Our core hardware business generates steady, resilient cash flows driven by repair, maintenance, and remodeling activity.

Speaker #4: The three transactions we have done this year are great fits for this organization and open us up to opportunities for future growth. Hillman continues to perform.

Speaker #4: The way we serve our customers, the products we offer, and the consistency of demand for our products make Hillman a special company. We are an essential operating infrastructure of the North American hardware aisle.

Speaker #4: We are embedded in more than 29,000 retail locations, servicing over 31,000 kiosks, managing over 111,000 SKUs, all with our own people. This depth of integration creates switching costs that we believe the market underestimates and our competitors do not replicate.

Speaker #4: Our core hardware business generates steady, resilient cash flows, driven by repair, maintenance, and remodeling activity—demand that persists across economic cycles, as we have seen for over 60 years.

Jon Michael Adinolfi: Demand that persists across economic cycles, as we have seen for over 60 years. Layered on top of this durable core hardware are three accelerating growth drivers. Our technology-enabled, high-margin RDS business that is growing at low double digits and accelerating. Pro distribution in industrial channels with meaningful white space that expands our addressable market by over $13 billion, and an M&A playbook that adds capabilities, categories, and channel diversification with attractive returns. As we look ahead, our focus remains squarely on execution, discipline, and prudent allocation of resources and capital, all while deepening the customer relationships that have made us successful and staying nimble as conditions evolve. Hillman is in a great spot, and I am optimistic about our future. With that, I'll now hand it over to Rocky to take you through the numbers.

Speaker #4: Layered on top of this durable core hardware are our three accelerating growth drivers: our technology-enabled, high-margin RDS business that is growing at low double digits and accelerating; Pro distribution in industrial channels with meaningful white space that expands our addressable market by over $13 billion; and an M&A playbook that adds capabilities, categories, and channel diversification with attractive returns.

Speaker #4: As we look ahead, our focus remains squarely on execution. Discipline and prudent allocation of resources and capital. All while deepening the customer relationships that have made us successful and staying nimble as conditions evolve.

Speaker #4: Hillman is in a great spot and I am optimistic about our future. With that, I'll now hand it over to Rocky, to take you through the numbers.

Speaker #2: Thanks, JMA. Let's get to our results, then we'll review guidance. Net sales in the second quarter of 2026 totaled $442.3 million, an increase of 10% versus the prior year quarter.

Robert Kraft: Thanks, JMA. Let's get to our results, then we'll review guidance. Net sales in Q2 2026 totaled $442.3 million, an increase of 10% versus the prior year quarter. Our strong top-line performance was right in line with our long-term growth expectations. Driving this growth were approximately 2 points of growth in core performance, 4.5 points growth from new business wins, and 3.5 points growth from M&A. Q2 adjusted gross margin totaled 47.1%, down 120 basis points over a year ago, but improving 150 basis points from Q1 and consistent with our expectations. Adjusted SG&A as a percentage of sales was 29.6% during the quarter, relatively consistent with a year ago. Adjusted EBITDA in Q2 totaled $77.1 million, increasing 2.5% versus the year ago quarter.

Speaker #2: Our strong top-line performance was right in line with our long-term growth expectations. Driving this growth were approximately 2 points of growth in core performance, 4.5 points of growth from new business wins, and 3.5 points of growth from M&A.

Speaker #2: Second quarter adjusted gross margin totaled $47.1%, down 120 basis points over a year ago, but improving 150 basis points from the first quarter and consistent with our expectations.

Speaker #2: Adjusted SG&A as a percentage of sales was 29.6% during the quarter, relatively consistent with a year ago. Adjusted EBITDA in the second quarter totaled $77.1 million, increasing 2.5% versus the year-ago quarter.

Speaker #2: Adjusted EBITDA to net sales margin during the quarter totaled 17.4%, down 130 basis points from a year ago, but improving meaningfully from 13.5% in the first quarter.

Robert Kraft: Adjusted EBITDA to net sales margin during the quarter totaled 17.4%, down 130 basis points from a year ago, but improving meaningfully from 13.5% in Q1. Margins improved sequentially, driven by our highest margin business, RDS, experiencing outsized growth and the impact of tariff-related COGS flowing through our income statement lessening throughout the year. Turning to cash flow. For the quarter, net cash generated by operating activities was $88 million, and free cash flow increased to a very strong $70.2 million. During the quarter, our healthy free cash flow was in line with our expectations. The main driver was the 2025 inventory spend, which included tariffs. Also contributing were net tariff refunds and a nearly $6 million reduction in CapEx. Turning to leverage and liquidity.

Speaker #2: Margins improved sequentially driven by our highest margin business RDS experiencing outsized growth and the impact of tariff-related COGS flowing through our income statement, lessening throughout the year.

Speaker #2: Now turning to cash flow. For the quarter, net cash generated by operating activities was $88 million, and free cash flow increased to a very strong $70.2 million.

Speaker #2: During the quarter, our healthy free cash flow was in line with our expectations. The main driver was the 2025 inventory spend, which included tariffs, now turning to cash.

Speaker #2: Also contributing were net tariff refunds and a nearly $6 million reduction in capex. Let me now turn to leverage and liquidity. We ended the second quarter of 2026 with $665 million of total net debt outstanding, which improved by 45 million from the first quarter and in line with how we ended 2025.

Robert Kraft: We ended Q2 2026 with $665 million of total net debt outstanding, which improved by $45 million from Q1 and in line with how we ended 2025. At quarter end, our net debt to trailing 12-month adjusted EBITDA ratio was 2.4 times, which is unchanged versus the end of 2025. Immediately with the close of Cambridge, we expect leverage will increase approximately 1 full turn. Assuming we do not do any other meaningful M&A, we should end 2027 at approximately 2.5 times, which is the high end of our long-term leverage target. That said, we continue to evaluate the market for accretive acquisition opportunities. Shortly after the end of Q2, we successfully refinanced our credit facilities. We put in place a new $735 million term loan B and $375 million ABL revolver, which extended our maturities to 2033 and 2031, respectively.

Robert Kraft: We ended Q2 2026 with $665 million of total net debt outstanding, which improved by $45 million from Q1 and in line with how we ended 2025. At quarter end, our net debt to trailing 12-month adjusted EBITDA ratio was 2.4x, which is unchanged versus the end of 2025. Immediately with the close of Cambridge, we expect leverage will increase approximately 1 full turn. Assuming we do not do any other meaningful M&A, we should end 2027 at approximately 2.5x, which is the high end of our long-term leverage target. That said, we continue to evaluate the market for accretive acquisition opportunities. Shortly after the end of Q2, we successfully refinanced our credit facilities. We put in place a new $735 million term loan B and $375 million ABL revolver, which extended our maturities to 2033 and 2031, respectively.

Speaker #2: At quarter end, our net debt to trailing 12-month adjusted EBITDA ratio was 2.4 times, which is unchanged versus the end of 2025. Immediately at the close of Cambridge, we expect leverage will increase approximately one full turn.

Speaker #2: Assuming we do not do any other meaningful M&A, we should end 2027 at approximately 2.5x, which is the high end of our long-term leverage target.

Speaker #2: That said, we continue to evaluate the market for a creative acquisition opportunities. Shortly after the end of Q2, we successfully refinanced our credit facilities.

Speaker #2: We put in place a new $735 million term loan B and a $375 million ABL revolver, which extended our maturities to 2033 and 2031, respectively.

Speaker #2: Pricing on these was consistent with our prior facilities, with the term loan B pricing at SOFR plus 200, and the ABL pricing at SOFR plus 125.

Robert Kraft: Pricing on these were consistent with our prior facilities, with the term loan B pricing at SOFR plus 200 and the ABL pricing at SOFR plus 125. We used the proceeds from the term loan B refinancing to pay off the previous note and pay down our revolver, which is currently undrawn. The refinancing gives us a stronger, more flexible capital structure to support our long-term strategic priorities, including our ability to pursue acquisitions like Cambridge. As JMA mentioned, we are acquiring Cambridge for $315 million. We plan to finance the acquisition with a combination of cash on hand, a draw on the ABL, and the issuance of an add-on term loan B. During the quarter, we deployed $13.3 million to buy back 1.7 million shares at an average price of $7.62 per share.

Speaker #2: We used the proceeds from the term loan B refinancing to pay off the previous note and pay down our revolver, which is currently undrawn.

Speaker #2: The refinancing gives us a stronger, more flexible capital structure to support our long-term strategic priorities, including our ability to pursue acquisitions like Cambridge. As JMA mentioned, we are acquiring Cambridge for $315 million.

Speaker #2: We plan to finance the acquisition with a combination of cash on hand, a draw on the ABL, and the issuance of an add-on Term Loan B.

Speaker #2: During the quarter, we deployed 13.3 million to buy back 1.7 million shares at an average price of $7.62 per share. Our repurchase activity during the quarter accelerated when compared to the first quarter as we opportunistically bought more stock back given the valuation and share price.

Robert Kraft: Our repurchase activity during the quarter accelerated when compared to Q1 as we opportunistically bought more stock back given the valuation and share price. Our objective remains to offset dilution resulting from employee equity grants and opportunistically buy back stock if there is a meaningful discount between the value of Hillman and where the stock is trading. However, given the increase in leverage resulting from the Cambridge acquisition, we plan to reduce our SRP spending and focus on net leverage in the short term. All right. Turning to our guidance. As JMA mentioned, we are raising the midpoint of our full-year net sales guidance by $15 million, which is the result of the expected contribution from Cambridge, which we expect to close around the start of Q4. We are also narrowing the range, given we are 7 months into the year.

Speaker #2: Our objective remains to offset dilution resulting from employee equity grants and opportunistically buy back stock if there is a meaningful discount between the value of Hillman and where the stock is trading.

Speaker #2: However, given the increase in leverage resulting from the Cambridge acquisition, we plan to reduce our SRP spending and focus on net leverage in the short term.

Speaker #2: All right. Let me now turn to our guidance. As JMA mentioned, we are raising the midpoint of our full-year net sales guidance by 15 million dollars, which is the result of the expected contribution from Cambridge which we expect to close around the start of the fourth quarter.

Speaker #2: We are also narrowing the range given we are seven months into the year. We now anticipate 2026 net sales to be between $1.67 billion to $1.72 billion with a midpoint of $1.695 billion.

Robert Kraft: We now anticipate 2026 net sales to be between $1.67 billion to 1.72 billion, with a midpoint of $1.695 billion. We now expect our full year 2026 adjusted EBITDA to be approximately $285 million, which is a $5 million increase from our previous midpoint of $280 million. Driving the increase is the expected EBITDA contribution from Cambridge, assuming closing on our anticipated timeline. We are reiterating the midpoint of our free cash flow guide while narrowing the range a bit. Our full year 2026 free cash flow range is between $105 and $115 million, with the same $110 million midpoint. Put simply, this was a quarter of proof points. Margins are moving in the right direction, cash conversion remains strong, and we've extended our capital structure runway to 2033.

Speaker #2: We now expect our full-year 2026 adjusted EBITDA to be approximately $285 million, which is a $5 million increase from our previous midpoint of $280 million.

Speaker #2: Driving the increase is the expected EBITDA contribution from Cambridge, assuming closing on our anticipated timeline. Lastly, we are reiterating the midpoint of our free cash flow guide while narrowing the range a bit.

Speaker #2: Our full-year 2026 free cash flow range is between $105 and $115 million, with the same $110 million midpoint. Put simply, this was a quarter of proof points.

Speaker #2: Margins are moving in the right direction, cash conversion remains strong, and we've extended our capital structure runway to 2033. We did this all while adding a high-quality strategic acquisition in Cambridge which opens up new market growth opportunities for us.

Robert Kraft: We did this all while adding a high-quality strategic acquisition in Cambridge, which opens up new market growth opportunities for us. We're growing the top line, expanding the bottom line, and doing it while investing in our future growth. That's what we're focused on delivering, today's raised guidance reflects our confidence in the path ahead. With that, I'll turn it back to JMA.

Speaker #2: We're growing the top line, expanding the bottom line, and doing it while investing in our future growth. That's what we're focused on delivering in today's raise guidance reflects our confidence in the path ahead.

Speaker #2: With that, I'll turn it back to JMA.

Speaker #3: Thanks, Rocky. Before we open it up for Q&A, I want to thank our associates across Hillman for their continued hard work and dedication. What you bring to the table is the reason we keep delivering for our customers every day.

Jon Michael Adinolfi: Thanks, Rocky. Before we open it up for Q&A, I want to thank our associates across Hillman for their continued hard work and dedication. What you bring to the table is the reason we keep delivering for our customers every day. To our customers, partners, and stakeholders, thank you for your trust and partnership as we continue to grow together. We're proud of the execution this quarter and even more excited about what's ahead with Cambridge and a clear path to continued growth. We look forward to updating you on our progress in the near future. Operator, please open the call for questions.

Speaker #3: To our customers, partners, and stakeholders, thank you for your trust and partnership as we continue to grow together. We're proud of the execution this quarter and even more excited about what's ahead with Cambridge and a clear path to continued growth.

Speaker #3: We look forward to updating you on our progress in the near future. Operator, please open the call for questions.

Speaker #1: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question you will need to press star 1-1 on your telephone and wait for your name to be announced.

Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question with one follow-up and hop back into the queue. Please stand by while we compile the Q&A roster. Our first question comes from Lee Jagoda of CJS Securities. Your line is open.

Speaker #1: To withdraw your question, please press star 11 again. Please limit yourself to one question with one follow-up, and hop back into the queue. Please stand by while we compile the Q&A roster.

Speaker #1: Our first question comes from Lee Jagada of CJS Securities. Your line is open.

Speaker #4: Hey, good morning, guys.

Lee Jagoda: Hey, good morning, guys.

Speaker #3: Morning, Lee.

Jon Michael Adinolfi: Morning, Lee.

Robert Kraft: Morning, Lee.

Speaker #5: Morning, Lee.

Speaker #4: So congrats on the deal. I guess to start, can you just give us some color around how the deal came together, how long you were talking to these guys, and whether it was private negotiated or through an auction?

Lee Jagoda: Congrats on the deal. I guess to start, can you just give us some color around how the deal came together, how long you were talking to these guys, and whether it was privately negotiated or through an auction?

Speaker #5: Yeah, Lee. This is a business that we've admired from afar for quite some time. So we're excited when there was an opportunity to join a process.

Jon Michael Adinolfi: Yeah, Lee, this is a business that we've admired from afar for quite some time. We were excited when there was an opportunity to join a process. This was a competitive bid. It's a business that we spent quite a bit of time on the due diligence side. We have some familiarity. We buy some products from them today. They are a leading provider, as I shared earlier, especially long-tail SKUs, especially in the screw portion of the business. It's amazing what they've compiled. Great service. When we looked at the compelling value, we just felt like it needed to be a part of Hillman, and it just fits the business so well. When you think about this, we don't do anything in their space in the US. We do in Canada. We got a great Canadian business. Our Paulin business is having a strong year.

Speaker #5: So this was a competitive bid. It's a business that we spent quite a bit of time on the due diligence side. We have some familiarity.

Speaker #5: We buy some products from them today. They are a leading provider, as I shared earlier, especially of long-tail SKUs—particularly in the screw portion of the business.

Speaker #5: It's amazing what they've compiled, great service, and when we looked at the compelling value, we just felt like it needed to be a business so well.

Speaker #5: When you think about this, we don't do anything in their space in the US. We do in Canada. We got a great Canadian business, our Poland business is having a strong year.

Speaker #5: And it just was the right fit. So as we went through the process, met the owners and the leadership team, we were quite impressed with the Cambridge team, having seen them from afar and then getting to know them really became clear that it was meant to be for these two companies to come together.

Jon Michael Adinolfi: It just was the right fit. As we went through the process, met the owners, the leadership team, we were quite impressed with the Cambridge team. Having seen them from afar and then getting to know them, it really became clear that it was meant to be for these two companies to come together.

Lee Jagoda: Got it. It's interesting you mentioned that you buy some things from them today, I guess turning it around, of the 100,000 or so SKUs that you sell today, is there anything or any meaningful amount of those SKUs that you could see kind of joining the Cambridge selection and then selling through their current channels?

Speaker #4: Got it. And it's interesting. You mentioned that you buy some things from them today, but I guess turning it around, of the 100,000 or so SKUs that you sell today, is there anything or any meaningful amount of those SKUs that you could see kind of joining the Cambridge selection and then selling through their current channels?

Speaker #5: Absolutely. Yeah, that's actually one of the more exciting pieces of it. We believe that we can bring them some product and as I mentioned, I touched on it, the sourcing capability.

Jon Michael Adinolfi: Absolutely. Yeah, that's actually one of the more exciting pieces of it. We believe that we can bring them some product. As I mentioned, I touched on it, the sourcing capability. We have some of the best vendors and manufacturing partners across the globe. We think between what we can help them get from our network plus what we can help them buy at a better rate, we think there's some real synergies. Like I said, they touch customers all through the value chain and in certain parts of the economy that we think are quite compelling. Yeah, it's a really exciting opportunity for us, and we can't wait to be able to welcome them to the team.

Speaker #5: We have some of the best vendors and manufacturing partners across the globe. We think that, between what we can help them get from our network and what we can help them buy at a better rate, there are some real synergies.

Speaker #5: And like I said, they touch customers all through the value chain and in certain parts of the economy that we think are opportunities for us, and we can't wait to be able to welcome them to the team.

Speaker #4: If I can just sneak one more in.

Lee Jagoda: If I can just sneak one more in.

Jon Michael Adinolfi: Sure.

Speaker #5: Sure.

Speaker #4: The FastNet software platform seems like it's a nice competitive advantage. Is there an opportunity for you to leverage that across your network? I mean, obviously on the industrial MRO side, it seems like it would be obvious, but even more towards the retailer hardware channels, is that something that your customers might want to leverage?

Lee Jagoda: The FastNet software platform seems like it's a nice competitive advantage. Is there an opportunity for you to leverage that across your network? Obviously, on the industrial MRO side, it seems like it would be obvious, but even more towards the retail or hardware channels, is that something that your customers might want to leverage?

Jon Michael Adinolfi: Today, I would say we're going to operate Cambridge as it is today, a platform that those are customers we want to make sure we take great care of them. We do believe we can learn from their service model and their opportunities that they create. What I will say is, just even this morning, had a chat with our John Gilman, who runs our special orders desk. We buy tons of great products from them. We think they can help us be even better with that partnership. We'll report on more of those opportunities in the future, but there are clearly synergies between these two companies.

Speaker #5: Today, I would say we're going to operate Cambridge as it is today, a platform that lists our customers. We're going to make sure we take great care of them.

Speaker #5: We do believe we can learn from their service model and their opportunities that they create. What I will say is we already I mean, just even this morning had a chat with our John Gilman, who runs our special orders desk.

Speaker #5: We buy tons of great product from them. We think they can help us be even better. With that partnership. So we'll report on more of those opportunities in the future, but there are clearly synergies between these two companies.

Lee Jagoda: Great. I'll hop back in the queue.

Speaker #4: Great, I'll hop back in the queue.

Speaker #5: Thanks, Lee.

Jon Michael Adinolfi: Thanks, Lee.

Speaker #1: Thank you. Our next question comes from Ruben Gardner of Benchmark. Your line is open.

Operator: Thank you. Our next question comes from Reuben Garner of Benchmark. Your line is open.

Speaker #6: Thank you. Good morning, guys and congrats on the deal.

Reuben Garner: Thank you. Good morning, guys, and congrats on the deal.

Speaker #5: Thanks. Good morning, Ruben.

Jon Michael Adinolfi: Thanks. Good morning, Reuben.

Reuben Garner: A couple questions about that. Sorry for harping on it. I guess, first, how national is their business? If it's not and still regional, are there investments that can be made to expand it, or is there more M&A? I guess talk about their market share is probably the easiest way to do it.

Speaker #6: A couple of questions about that. Sorry for harping on it, but does I guess first, how national is their business? And if it's not and still regional, are there investments that can be made to expand it or is there more M&A?

Speaker #6: I guess talk about their market share is probably the easiest way to do it.

Speaker #5: Yeah, Ruben, they are I would say very national. So they do cover all of the US. So today we feel like they have a nice footprint.

Jon Michael Adinolfi: Yeah, Reuben, they are, I would say, very national, so they do cover all of the US. Today we feel like they have a nice footprint. They are certainly the long tail, I'll say supplier of choice, I would call it. We think there is opportunity to grow that. We know that they have a great product line, great service. They drop orders and turn them very quickly for their customers when needed. We can add some additional capability there. They operate in 2 locations today. We in the management team will evaluate what we can do in the future, but we think there's clearly an opportunity to grow this business, especially that long tail SKU portion of the opportunity. Yeah, there is definitely quite a bit of growth that we think we can help fuel with some investments.

Speaker #5: They are certainly the long-tail I'll say supplier of choice, I would call it. So we think there is opportunity to grow that. We know that there's they have a great product line, great service.

Speaker #5: They drop orders and turn them very quickly for their customers when needed. And we can add some additional capability there. They operate in two locations today.

Speaker #5: We in the management team will evaluate what we can do in the future, but we think there's clearly an opportunity to grow this business, especially that long like that long-tail SKU portion of the opportunity.

Speaker #5: So yeah, there is definitely quite a bit of growth that we think we can help fuel with some investments.

Speaker #6: Okay. And then I'm going to shift gears a little bit. There have been a couple of companies talking about some acceleration in the consumer segment in recent weeks—the last six to eight weeks—especially at the entry level.

Reuben Garner: Okay, I'm going to shift gears a little bit. There's been a couple of companies talking about some acceleration in the consumer in recent weeks, the last 6 to 8 weeks, especially at the entry level. Have you guys seen any signs of that in your business? Is any of that baked into the outlook, or would that be upside if it does indeed start to inflect?

Reuben Garner: Okay, I'm going to shift gears a little bit. There's been a couple of companies talking about some acceleration in the consumer in recent weeks, the last six to eight weeks, especially at the entry level. Have you guys seen any signs of that in your business? Is any of that baked into the outlook, or would that be upside if it does indeed start to inflect?

Speaker #6: Have you guys seen any signs of that in your business? Is any of that kind of baked into the outlook, or would that be upside if it does indeed start to inflect?

Speaker #5: Yeah, Ruben, I would say in general, we've seen more of the same from a market perspective. Our focus is really been on supporting our customers, making sure we continue to drive high service levels, keep the products in stock.

Jon Michael Adinolfi: Yeah, Reuben, I would say in general, we've seen more of the same from a market perspective. Our focus has really been on supporting our customers, making sure we continue to drive high service levels, keep the products in stock. I can't sit here and say that we've seen any outsized change in demand in recent weeks. We will be ready when it comes.

Speaker #5: I can't sit here and say that we've seen any outsized change in demand in recent weeks, so we will be ready when it comes.

Reuben Garner: Great. Congrats again, guys, and good luck.

Speaker #6: Great. Congrats again. Got some good luck. Thanks, Ruben.

Jon Michael Adinolfi: Thanks, Reuben.

Speaker #1: Thank you. Our next question comes from Matthew Boulay of Barclays. Your line is open.

Operator: Thank you. Our next question comes from Matt Bouley of Barclays. Your line is open.

Operator: Thank you. Our next question comes from Matthew Bouley of Barclays. Your line is open.

Elizabeth Langan: Good morning. You have Elizabeth Langan on for Matt this morning. I will continue on with the Cambridge. Congratulations on the acquisition. I think maybe stepping back a little bit, I was wondering if you could talk about, obviously this expands your industrial MRO pretty meaningfully. How are you thinking about your other strategic priorities with the pro expanding through specialty distribution on LBM?

Elizabeth Langan: Good morning. You have Elizabeth Langan on for Matthew this morning. I will continue on with the Cambridge. Congratulations on the acquisition. I think maybe stepping back a little bit, I was wondering if you could talk about, obviously this expands your industrial MRO pretty meaningfully. How are you thinking about your other strategic priorities with the pro expanding through specialty distribution on LBM?

Speaker #7: Good morning. You have Elizabeth Langen on for Matt this morning. I'll continue on with the Cambridge congratulations on the acquisition. I think maybe stepping back a little bit, I was wondering if you could talk about obviously this expands your industrial MRO pretty meaningfully.

Speaker #7: How are you thinking about your other strategic priorities with the pro, expanding through specialty distribution on LBM?

Speaker #5: Yeah, good morning, Elizabeth. Yeah, we actually feel like this fits directly and is right down the fairway of what we talked about when we during Investor Day, we shared publicly that we will continue to grow our core, grow our pro distribution channel as well as industrial.

Jon Michael Adinolfi: Good morning, Elizabeth. We actually feel like this fits directly and is right down the fairway what we talked about when during Investor Day, we shared publicly that we will continue to grow our core, grow our pro distribution channel as well as industrial. This business clearly fits that narrative and strategy, doubles our industrial business, and we feel like it's a great fit, complements what we do in Canada. For us, we're really excited about the fact that we've actually been able to grow our pro initiatives organically by 1%. That was one thing I highlighted earlier in the presentation because we're really excited we've got traction. We got a team dedicated who's going after the pro. We've got the industrial team now with this business in the US because we didn't have a foundation to start, so we believe and we're really excited.

Speaker #5: I mean, this business clearly fits that narrative and strategy, doubles our industrial business, and we feel like it's a great fit complements what we do in Canada.

Speaker #5: So for us, we're really excited about the fact that we've actually been able to grow our pro initiatives organically by 1%. That was one of the things I highlighted earlier in the presentation because we're really excited.

Speaker #5: We've got traction. We've got a team dedicated who's going after the pro. We've got the industrial team now with this business in the US, because we didn't have a foundation to start.

Speaker #5: So we believe and we're really excited. We've got nice pro distribution start in both the US and Canada. In Mexico, we have the same in the industrial side now that we have this US business.

Jon Michael Adinolfi: We've got nice pro distribution start in both the US and Canada. In Mexico, we have the same in the industrial side now that we have this US business. We feel like this fits really well in where we're going, and we feel like we have proof points to prove that this is where we should continue to put our energy. We can't wait to get started with Cambridge business and welcome it to the team.

Speaker #5: So we feel like this fits really well in where we're going. And we feel like we have proof points to prove that this is where we should continue to put our energy.

Speaker #5: So we can't wait to get started with Cambridge business and welcome it to the team.

Elizabeth Langan: No, that makes a lot of sense. On Canada, you mentioned, obviously you saw some really nice growth with the new business wins there. Could you talk a little bit more about that, what the process has been like going into market there, launching new things, and just any detail around that?

Speaker #7: No, that makes a lot of sense. And then on Canada, you mentioned, obviously, you saw some really nice growth with the new business wins there.

Speaker #7: Could you talk a little bit more about that—kind of like what the process has been like going into market there, launching new things, and just any detail around that?

Speaker #5: Yeah, I mean, I would say our Canadian team on the retail and the pro side have had a great year. I think it's one where they've demonstrated when you've got one good brand name, for instance, Paulin, you've got great products, you've got great service and delivery, you take care of your customers, you're able to win new business.

Jon Michael Adinolfi: I would say our Canadian team on the retail and the pro side have had a great year. I think it's one where they've demonstrated when you've got one good brand name, for instance, Paulin, you've got great products, you got great service and delivery, you take care of your customers, you're able to win new business. I'm excited about what that team has done on both the retail and the pro side. That's an example where you see Canada in total is clicking nicely. They're battling a challenging market. It's one where I think the Hillman value proposition overall, taking care of its customers, comes to fruition, and they've done a nice job, and I cited a few of those wins.

Speaker #5: So I'm excited about what that team has done, both on the retail and the pro side. So that's an example where you see Canada in total is clicking nicely.

Speaker #5: And they're battling a challenging market, so it's one where I think the Hillman value proposition overall—of taking care of its customers—comes to fruition.

Speaker #5: And they've done a nice job and I cited a few of those wins. We expect more of those to continue in the back half of the year and that team is just going to continue to focus on taking care of their customers.

Jon Michael Adinolfi: We expect more of those to continue in the back half of the year, that team is just going to continue to focus on taking care of their customers.

Elizabeth Langan: All right. Thank you very much.

Speaker #7: All right. Thank you very much.

Speaker #5: You're welcome. Thanks, Elizabeth.

Jon Michael Adinolfi: You're welcome. Thanks, Elizabeth.

Speaker #1: Thank you. As a reminder, to ask a question during your session, you will please press star 11 on your telephone. And wait for a name to be announced.

Operator: Thank you. As a reminder, to ask a question during your session, you will please press star one one on your telephone and wait for a name to be announced. To withdraw your question, please press star one one again. Our next question comes from David Manthey of Baird. Your line is now open.

Speaker #1: To withdraw your question, please press star 11 again. Our next question comes from David Manthey of Baird. Your line is now open.

David Manthey: Thank you. Yeah. Good morning, everyone.

Speaker #6: Thank you. Yeah, good morning, everyone. Yeah, first question, Rocky, I think you said three and a half percent contribution from acquisitions. That was a little higher than we thought based on the revenues of the two companies coming in.

Jon Michael Adinolfi: Good morning, David.

David Manthey: Yeah, first question, Rocky, I think you said 3.5% contribution from acquisitions. That was a little higher than we thought based on the revenues of the two companies coming in. That would calculate to, I think, $14 million. We were looking for, like, $10 million. I'm just wondering if there was anything unusual there that made the revenues come in stronger than expected. Related to that, as we're looking at the core business and stripping out Campbell and Delaney, and looking strictly at HPS segment contribution margin, ex those acquisitions, what was the sort of organic growth and contribution margin on the core business excluding acquisitions?

Speaker #6: So that would calculate to, I think, $14 million. We were looking for, like, $10 million. I'm just wondering if there was anything unusual there that made the revenues come in stronger than expected.

Speaker #6: And then related to that, as we're looking at the core business and stripping out Campbell and Delaney, and looking strictly at HPS segment contribution margin, those acquisitions, what was the sort of organic growth and contribution margin on the core business, excluding acquisitions?

Speaker #5: Yeah, so lots of questions there, Dave. Campbell and Delaney did come out of the gates a little stronger than we anticipated. So they performed very nicely in the quarter and we were pleased with that.

Jon Michael Adinolfi: Yeah, lots of questions there, Dave. Campbell and Delaney did come out of the gates a little stronger than we anticipated. They performed very nicely in the quarter, and we were pleased with that. Secondarily, I just think as you think about the whole business and what we said at Investor Day is we expected the core to grow above zero. We grew it two. We expect over the long term new business to be four-plus. It was four four. We expect M&A to get us between eight and 12, which we did nine eight for the quarter. We feel like we were kind of clicking on all cylinders. Now, obviously, that's not going to happen every quarter. It's not a straight line, but Q2 looked a lot like what we've set out to achieve from a longer-term perspective.

Speaker #5: Secondarily, I just think, as you think about the whole business and what we said at Investor Day is we expected the core to grow above zero.

Speaker #5: We grew it too. We expected over the long-term new business to be four plus. It was 4.4. And then we expect M&A to get us between 8 and 12, which we did 9.8 for the quarter.

Speaker #5: So we feel like we were kind of clicking on all cylinders. Now, obviously, that's not going to happen every quarter. It's not a straight line, but Q2 looked a lot like what we've set out to achieve.

Speaker #5: From a longer-term perspective. When you think about just the HPS business kind of on a standalone basis, good top-line results in the quarter and from a contribution perspective, the business performed as we expected in the quarter.

Jon Michael Adinolfi: When you think about just the Hardware and Protective Solutions business on a standalone basis, good top-line results in the quarter. From a contribution perspective, the business performed as we expected in the quarter, about 16% EBITDA, which again, in line with what we expect. When you look at the contribution across all of our businesses in the quarter, while we had a really nice improvement sequentially, when you look year-over-year, down a bit, that was planned and anticipated because of what we're seeing from a cost perspective on inventory. We expect the H2, actually, contribution to be better than we saw in the H1, and that's what we've talked about on prior calls.

Speaker #5: About 15 sorry, about 16% EBITDA, which again, kind of in line with what we expect when you look at the contribution across all of our businesses in the quarter, while we had a really nice improvement sequentially when you look year over year down a bit, that was planned and anticipated because of what we're seeing from a cost perspective on inventory.

Speaker #5: We expect the second half actually contribution to be better. Then we saw in the first half and that's what we've talked about in prior calls.

Speaker #6: Got it. And next, yeah, congrats on the Cambridge deal. Could you talk about the customer base there, like number of customers? Are these mostly fasteners specialists?

David Manthey: Got it. Next, congrats on the Cambridge Corporation deal. Could you talk about the customer base there, like number of customers? Are these mostly fastener specialists? Are they generalists? What sort of end markets do they serve? Any sort of context there would be helpful.

Speaker #6: Are they generalists? What sort of end markets do they serve? Any sort of context there would be helpful.

Speaker #5: Yeah, excellent. Yeah, so we're excited about their customer base. They have thousands of customers. They are the long tail, so they are supporting all different parts of the economy, candidly.

Jon Michael Adinolfi: Yeah. Excellent. We're excited about their customer base. They have thousands of customers. They are the long tail, so they are supporting all different parts of the economy, candidly. You've got everything from manufacturing to they do provide some products into the construction channels. Think about industrial and commercial, really outside of the core of what we do in the US. That's what's exciting about it. They are the ones where they can ship on demand. They can drop orders in minutes and literally turn them out. They are very good at getting orders out the same day when needed. They are touching many different customers across the spectrum. These are mostly folks that we don't touch at all, so it's truly incremental. Think about all the different verticals in industrial, they're touching the different areas.

Speaker #5: So, you've got everything from manufacturing to provide some products into the construction channels, but think about industrial and commercial—really outside of the core of what we do in the U.S.

Speaker #5: That's what's exciting about. They are the ones where they can ship on demand. They can drop orders in minutes and literally turn them out.

Speaker #5: So they are very good and a very good at getting orders out the same day when needed. So they are touching many, many different customers across the spectrum.

Speaker #5: And these are mostly folks that we don't touch at all, so it's truly incremental. So think about all the different verticals in industrial—they're touching the different areas.

Speaker #5: I mean, they have everything from military-grade screws to things that could go into a construction environment and commercial building to maintenance and repair in a small, medium, or on data centers.

Jon Michael Adinolfi: They have everything from military-grade screws to things that could go into a construction environment and commercial building, to maintenance and repair in a small, medium, or large factory. We commented on data centers. They are serving all parts of the, I'll say, economy outside of retail. Hopefully that gives you a broad spectrum of what they are doing today and why we're so excited about the business.

Speaker #5: I mean, they are serving all parts of the—I'll say—economy outside of retail. So, hopefully that gives you kind of a broad spectrum of what they are doing today and why we're so excited about the business.

Speaker #6: Yeah, and if I could get one more here. It sounds like you're referring to shipping direct to customer and I'm wondering if that's the primary model here where as you said, there's a long tail here.

David Manthey: Yeah, if I could get one more here. It sounds like you're referring to shipping direct to customer, and I'm wondering if that's the primary model here where, as you said, there's a long tail here. Other distributors are procuring these for their customers. You're direct shipping those to end customers. Is that the model here?

Speaker #6: Other distributors are procuring these for their customers. You're direct-shipping those to end customers. Is that the model here?

Jon Michael Adinolfi: I want to be clear. Part of the reason we put in master distributor, just like we are in retail, they are a master distributor. While they can drop to an end user, they are selling through distribution. I want to be perfectly clear that everybody understands that is an important part of our business model, why Hillman could be the best fastener company in the world, is the fact that we will go out there and be able to continue to support our customers as they support the end user. I want to be clear there that we are selling through distribution while they can

Speaker #5: So I want to be clear. Part of the reason we put in master distributor, just like we are in retail, they are a master distributor.

Speaker #5: So while they can drop to an end user, they are selling through distribution. I want to be perfectly clear that everybody understands that is an important part of our business model why we think, why Hillman could be the best fastener company in the world is the fact that we will go out there and be able to continue to pour our customers as they support the end users.

Speaker #5: So I want to be clear there that we are selling through distribution. While they can, we can drop ship, yes, but no.

David Manthey: Right

Jon Michael Adinolfi: drop ship. Yes.

David Manthey: Okay. That's what I was asking. Yeah, I didn't mean you're selling to end users. I meant you're sending to end users in a drop ship on behalf of the other distributors. Okay. Very good. Thank you.

Speaker #6: Okay, okay. That's what I was asking. Yeah, I didn't mean you're selling to end users. I meant you're sending to end users in a drop-ship on behalf of the other distributor.

Speaker #6: So, okay. Very good. Thank you.

Speaker #5: Thank you very much. Appreciate it.

Jon Michael Adinolfi: Thank you very much. Appreciate it.

Speaker #1: Thank you. Our next question comes from Brian McNamara from Canaccord. Your line is now open.

Operator: Thank you. Our next question comes from Brian McNamara from Canaccord. Your line is now open.

Speaker #7: Hey, good morning, guys. Congrats on the acquisition and the strong results two quick ones from me. First, Rocky, just a clarification on leverage. Did I hear you correctly?

Brian McNamara: Hey, good morning, guys. Congrats on the acquisition and the strong results. Two quick ones from me. First, Rocky, just a clarification on leverage. Did I hear you correctly? You said you expect this acquisition to take it up a turn, but you expect to be at 2.5 at the year end, or did I mishear that?

Speaker #7: You said you expect this acquisition to take it up a turn, but you expect to be at 2.5 at the year-end. Did I mishear that?

Jon Michael Adinolfi: At the end of 2027, Brian.

Speaker #5: At the end of '27. At the end of '27, Brian. We expect to be back at or below two and a half turns assuming that would assume we don't do any other M&A between now and then.

Brian McNamara: Got it. All right.

Jon Michael Adinolfi: At the end of 2027, expect to be back at or below 2.5 turns. That would assume we don't do any other M&A between now and then.

Speaker #7: Understood. Thank you. JMA on new business wins, can you talk about your progress there? I think you mentioned a win particularly obviously in pro in the Pacific Northwest.

Brian McNamara: Understood. Thank you. JMA, on new business wins, can you talk about your progress there? I think you mentioned a win, particularly obviously in pro, in the Pacific Northwest. How are those sales discussions overall going, particularly with current customers who maybe didn't know you had that capability, but also the new ones, too? Any thoughts or comments on progress there would be helpful. Thank you.

Speaker #7: How are those sales discussions overall going, particularly with current customers who maybe didn't know you had that capability? But also the new ones, too.

Speaker #7: Any thoughts or comments on progress there would be helpful. Thank you.

Jon Michael Adinolfi: Yeah, absolutely. New business, as we shared, 4.5%, a bit above where we were expecting to be. Really pleased with overall new business. It was across, I would say, DIY, pro, and industrial. All three channels had some nice wins for the period. I think on the pro side is where you're going to one point that we're really excited about because those are truly new opportunities that we've been working on for the better part of this year. We're starting to see where you bring them good solid value, you take care of the customer, you make sure you get the product through, which we do really well in retail. When we're able to demonstrate that on the pro side, we started to see the wins that gave you a couple of proof points in the prepared comments.

Speaker #5: Yeah, absolutely. So yeah, new business as we shared four and a half percent. So a bit above where we were expecting to be. So really pleased with overall new business and it was across I would say DIY pro and industrial.

Speaker #5: So all three channels had some nice wins for the period. I think on the pro side is where you're going the 1. That we're really excited about because that is our truly new opportunities that we've been working on for better part of, I guess, this year.

Speaker #5: We're starting to see where you bring in good, solid value. You take care of the customer, you make sure you get the product through, which we do really well in retail.

Speaker #5: And when we're able to demonstrate that in the pro side, we started to see the wins that we that gave you a couple of proof points in the prepared comments.

Speaker #5: So I think it's really that boots on the ground, if you will—boots on the ground, being with the customer, making sure you get them what they need. And we are, I'll say, changing and adapting our model to be able to do that.

Jon Michael Adinolfi: I think it's really that on the ground, if you will, boots on the ground, being with the customer, making sure you get them what they need. We are, I'll say, changing and adapting our model to be able to do that. We actually just had a new business pro review yesterday, we're hearing a number of different stories of where you got the right products, you're able to take care of the customer and turn them, you can actually get that business that we weren't getting before. That flywheel is starting to turn, and we're really excited about the early results. I think when you get good people, you got great products, and you take care of the customer, good things happen, and we're seeing that.

Speaker #5: We actually just had a new business pro review yesterday and we were hearing a number of different stories of where you got the right products, you've been able to take care of the customer and turn them, you can actually get that business that we weren't getting before.

Speaker #5: So that I'll say flywheels starting to turn and we're really excited about the early results. And I think when you get good people, you got great products and you take care of the customer, good things happen and we're seeing that.

Speaker #7: And if I could just squeeze in one last one on M&A, it sounds like there are still opportunities out there. We had thought you’d do three deals this year.

Brian McNamara: If I could just squeeze one last one on M&A. It sounds like there's still opportunities out there. We had thought you'd do three deals this year. We didn't expect a deal of this size, how does the market look overall? It seems like it's a lot more active than this time last year.

Speaker #7: We didn't expect a deal of this size, but how does the market look overall? It seems like it's a lot more active than this time last year.

Speaker #5: Yeah, there's definitely some more activity out in the marketplace now, we see. And I think it comes down to depending on which bucket they fall in, right?

Jon Michael Adinolfi: Yeah, there's definitely some more activity out in the marketplace now. We see, I think it comes down to depending on which bucket they fall in, right? Whether it's a tuck-in or smaller deal, then some of the strategic, which is what we just did with Cambridge. We think there's nice opportunities on both sides of that, I'll say, equation. Yeah, we're seeing more things come to market, we're seeing more interesting deals. I'd say the market is warming up, if you will.

Speaker #5: Whether it's a tuck-in or a smaller deal, and then some of the strategic—which is what we just did with Cambridge—we think there are nice opportunities on both sides of that.

Speaker #5: I'll say equation. And yeah, we're seeing more things come to market and we're seeing more interesting deals. So I'd say the market is warming up, if you will.

Brian McNamara: Got it. Very helpful. Best of luck, guys.

Speaker #7: Got it. Very helpful. Best of luck, guys.

Jon Michael Adinolfi: Thanks. Appreciate it.

Speaker #5: Thanks. Appreciate it.

Speaker #1: Thank you. Our next question comes from Lee Jagada of CJS Securities. Your line is open.

Operator: Thank you. Our next question comes from Lee Jagoda of CJS Securities. Your line is open.

Speaker #7: Hey, I'm back. So just in case I don't think I missed it, but can you talk to the seasonality if any around Cambridge versus the core business?

Lee Jagoda: Hey, I'm back. Just in case, I don't think I missed it, but can you talk to the seasonality, if any, around Cambridge versus the core business? Also maybe touch on the inventory needs compared to your core business, just because they're going to be shipping some more proprietary SKUs. Lastly, just maybe a look back on the trajectory of that business the last couple of years in terms of the growth rate.

Speaker #7: And also, maybe touch on the inventory needs compared to your core business, just because they're going to be shipping some more proprietary SKUs. And then, lastly, just maybe a look back on the trajectory of that business over the last couple of years in terms of the growth rate.

Speaker #5: Yeah. So from a seasonality perspective, much less than our core business. I know we don't have a major seasonality, but we do have a curve.

Jon Michael Adinolfi: Yeah. From a seasonality perspective, much less than our core business. I know we don't have a major seasonality, but we do have a curve. I would say flat-ish to small seasonality. They do a nice, steady business. If you look back over time, Cambridge has had a nice run. COVID and long tail filled in very nicely. They've had, over the last 5 years, there's been modest growth. We think we can actually really turn that and move it forward, Lee. We're really excited about what we can do with it and focusing on that growth. That team's done a great job taking care of their customers. We need to give them a little bit more, I'll say, firepower to go after some new business, and we will do that with that team.

Jon Michael Adinolfi: Yeah. From a seasonality perspective, much less than our core business. I know we don't have a major seasonality, but we do have a curve. I would say flat-ish to small seasonality. They do a nice, steady business. If you look back over time, Cambridge has had a nice run. COVID and long tail filled in very nicely. They've had, over the last five years, there's been modest growth. We think we can actually really turn that and move it forward, Lee. We're really excited about what we can do with it and focusing on that growth. That team's done a great job taking care of their customers. We need to give them a little bit more, I'll say, firepower to go after some new business, and we will do that with that team.

Speaker #5: So I would say flattish to small seasonality. They do a nice steady business. If you look back over time, Cambridge has not had a had a nice run COVID and long tail filled in very nicely.

Speaker #5: They've had over the last five years, there's been modest growth, but we think we can actually really turn that and move it forward, Lee.

Speaker #5: So we're really excited about what we can do with it and focusing on that growth. That team's done a great job taking care of their customers.

Speaker #5: We need to give them a little bit more, I’ll say, firepower to go after some new business, and we will do that with that team.

Speaker #5: Yeah, I think, Lee, when you think about inventory, clearly a slower-turning business than kind of the core of Hillman, but the business looks a lot like our specialty business.

Robert Kraft: Yeah. I think, Lee, when you think about inventory, clearly a slower turning business than kind of the core of Hillman, but the business looks a lot like our specialty business. Think of the drawers that you see inside traditional hardware stores. Slower turning inventory, but also command a much higher rate because of that, and you can obviously see that in the Cambridge results.

Speaker #5: So think of the drawers that you see inside traditional hardware stores. Slower turning inventory, but also command a much higher rate because of that.

Speaker #5: And you can obviously see that in the Cambridge results.

Lee Jagoda: I guess based on that, you're assuming some dis-synergies in Q1 out of the box then? Just given that the EBITDA you're including is below the run rate?

Speaker #7: So, I guess based on that, you're assuming some DISC synergies in the first quarter out of the box then? Just given that the EBITDA you're including is below the run rate?

Lee Jagoda: I guess based on that, you're assuming some dis-synergies in Q1 out of the box then? Just given that the EBITDA you're including is below the run rate?

Speaker #5: Yeah. Now, again, we're assuming that this is bought kind of Lee around the beginning of the fourth quarter. So we're just being conservative around what the number will look like.

Robert Kraft: Yeah.

Jon Michael Adinolfi: No. Again, we're assuming that this is bought kind of, Lee, around the beginning of Q4. We're just being conservative around what the number will look like. I don't expect to see any negative synergies associated with it. We're buying the inventory of a business that's in good shape, that's serving their customers very well. There's not a need to buy a bunch of inventory to get this up to standard. They're there. They're performing very well as we sit today.

Robert Kraft: No. Again, we're assuming that this is bought kind of, Lee, around the beginning of Q4. We're just being conservative around what the number will look like. I don't expect to see any negative synergies associated with it. We're buying the inventory of a business that's in good shape, that's serving their customers very well. There's not a need to buy a bunch of inventory to get this up to standard. They're there. They're performing very well as we sit today.

Speaker #5: And I don't expect to see any negative synergies associated with it. We're buying the inventory of a business that's in good shape, that's serving their customers very well.

Speaker #5: So there's not a need to buy a bunch of inventory to get this up to standard. They're there, they're performing very well as we sit today.

Speaker #7: Okay. So then the run rates that you kind of list—the trailing revenue and EBITDA of that business—should be the same or greater going forward, not anything different than that?

Lee Jagoda: Okay. The run rates that you kind of list, the trailing revenue and EBITDA of that business, that should be the same or greater going forward, not anything different than that?

Speaker #5: Correctly. Yeah, yeah. We're going to grow the business.

Jon Michael Adinolfi: Correct, Lee. Yeah. We're going to grow the business.

Speaker #7: Perfect.

Lee Jagoda: Perfect.

Speaker #1: Thank you.

Operator: Thank you.

Speaker #5: Thanks.

Jon Michael Adinolfi: Thanks.

Speaker #1: This concludes the question and answer session. I would now like to turn it back over to Mr. Adinolfi for closing remarks.

Operator: This concludes the question and answer session. I would now like to turn it back over to Mr. Adinolfi for closing remarks.

Speaker #5: Thanks again, everyone for joining us this morning. We look forward to updating you on our progress in the near future. Have a great day.

Jon Michael Adinolfi: Thanks again, everyone, for joining us this morning. We look forward to updating you on our progress in the near future. Have a great day.

Speaker #1: Thank you for your participation in today's conference. This does conclude the program and you may now disconnect.

Operator: Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.

[Company Representative] (Hillman Solutions): Founded in 1964 and headquartered in Cincinnati, Hillman is

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