Hillman Solutions Corp. Q2 FY2025 earnings call

• Strong second quarter results with net sales up 6.2% and adjusted EBITDA up 10.1%.
• Raised full-year 2025 net sales guidance to $1.535 billion to $1.575 billion (midpoint $1.555 billion) and adjusted EBITDA guidance to $265 million to $275 million (midpoint $270 million).
• Expect 2026 net sales to grow in high single to low double digits and adjusted EBITDA to grow in low to mid-single digits in a flat market.
• Executed dual faucet strategy to reduce exposure to Chinese suppliers, aiming to source ~20% of products from China by end-2025 (vs ~50% in 2018).
• Strong supply chain and operations execution, delivering orders on time and in full with excellent fill rates.

Hardware and Protective Solutions (HPS) had 8.7% growth in net sales versus the comparable period, with adjusted EBITDA increasing by 14.7% to $51.5 million. Robotics and Digital Solutions (RDS) had net sales up 2.3% versus the year ago quarter, marking the second consecutive quarter of growth. Canadian business had net sales down 5.6% compared to the prior year quarter, but sales volumes and adjusted EBITDA improved sequentially. HPS contributed significantly to top line growth from Intex acquisition, new business wins, and price, offset by a small decline in market volume. RDS showed growth confirming the MinuteKey 3.5 strategy is working.

• Full-year 2025 net sales now between $1.535B to $1.575B (midpoint $1.555B), representing 4%-7% growth over 2024.
• Full-year 2025 adjusted EBITDA now between $265M to $275M (midpoint $270M), representing 10%-14% growth over 2024.
• 2026 net sales expected to grow in high single to low double digits, adjusted EBITDA in low to mid-single digits in a flat market.
• Annualized run rate for tariffs estimated at ~$150 million, with confidence in covering exposure.

• Tariff-related uncertainties and fluidity, which could impact pricing and margins.
• Potential changes in market volumes and their effect on business performance.
• Disconnect between price increases to customers and shelf price changes at retailers, with each retailer reacting differently.
• Uncertainty around future tariff policies and their impact on supply chain and costs.

Q: On the pro channel, how competitive advantages in retail translate to pro channel and recent success?

A: Jon Michael Adinolfi stated 25%+ of business is pro related, products like Power Pro launched, focusing on supporting customers where they serve pro, with area continuing to grow.

Q: Back half cadence regarding tariff impact?

A: Robert O. Kraft said tariff cost will start being felt late in third quarter, strong third quarter expected as most price in place, tariff cost felt in fourth quarter.

Q: Guidance for 2026 and market flat assumption?

A: Rocky Kraft said 2026 net sales growth in high single to low double digits, adjusted EBITDA in low to mid-single digits assuming flat market, noting markets hard to predict in early August.

Q: Elasticity of volumes and pricing?

A: Robert O. Kraft said repair and maintenance has limited elasticity, but markets hard to predict; Jon Michael Adinolfi mentioned expecting markets to return to 5 million existing home sales for better business performance.

Q: Tariff expectations and fluidity?

A: Robert O. Kraft said $150 million tariff impact has fluidity, customers understanding tariff price as tax, and pricing with customers will adjust if fluidity changes.

Q: Back half pricing and volume?

A: Robert O. Kraft said guide assumes ~6.5% full-year price, Jon Michael Adinolfi mentioned pricing in marketplace at different times, and expecting existing home sales to return to 5 million for better business impact.