Hillman Solns Q2 2026 Earnings Call: Complete Transcript

Hillman Solns (NASDAQ: HLMN ) held its second-quarter earnings conference call on Tuesday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

1 million. The company announced the acquisition of Cambridge Corporation, doubling its industrial business and expanding its addressable market by 50%, with strategic synergies expected. 72 billion, anticipating 9% growth and a full-year adjusted EBITDA of approximately $285 million. The company highlighted its focus on expanding the Pro distribution and industrial channels, contributing to new business wins and increased market share.

Hillman Solns continues to pursue its strategic blueprint involving core business growth, Pro distribution expansion, and accretive M&A activities, aiming for long-term growth rates of 8% to 12% per year. Full Transcript Amber, Operator Good morning and welcome to the second quarter 2026 results presentation for Hillman Solns. 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, and the 10-Q was issued this morning. com. I would now like to turn the call over to Michael Koehler with Hillman Solns. Please go ahead.

Michael Koehler, VP Corporate Development, Investor Relations & Treasury Thank you, operator. Good morning, everyone, and thank you for joining us for Hillman Solns' second quarter 2026 results presentation. I'm Michael Koehler, Vice President of Corporate Development, Investor Relations, and Treasury. Joining me on today's call are Hillman Solns' President and Chief Executive Officer, John Michael Adenolfi, or JMA, and our Chief Financial Officer, Rocky Craft.

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.

For more information regarding these risks and uncertainties, please see slide 2 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.

Then he will provide commentary on our quarterly results and guidance, followed by a discussion on our performance by business. 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. It's now my pleasure to turn the call over to our President and CEO, John Michael Adenolfi, JMA.

John Michael Adenolfi, President & CEO Thanks, Michael. Good morning, everyone, and thank you for joining us. The second quarter was a great quarter for Hillman Solns, which I'll 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 Solns, 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 Solns. Let me tell you why Cambridge is a great fit for Hillman Solns.

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. Let me outline some of the similarities between Cambridge and Hillman Solns. Today, Hillman Solns 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 Solns 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. As you know, Hillman Solns 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 it 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 Solns. This business is not tied to just one market, 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 Paulin brand.

S. with our acquisition of Campbell Chain & Fittings. Altogether, our industrial business today is approximately $65 million. S.

serving the same industrial channel. As I've explained, the Cambridge playbook is very similar to what is 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%.

For the 12 months ending June 30, Cambridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA. These robust margins will be accretive to Hillman Solns' margin profile, and given Cambridge's light capex model, we expect very healthy free cash flow conversion. Because of Hillman Solns' 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. 6 times. Further, we are confident there is meaningful organic growth and 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 the fourth quarter.

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 Solns' 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 Solns. Interestingly, this acquisition takes Hillman Solns back to its roots.

During the late 90s, Hillman Solns 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 mass 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 & 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: 1) Fortify and grow our core DIY business; 2) Win the Pro across industrial specialty distribution and LBM; and 3) 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% per year. 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.

This performance is right in line with our long-term growth targets we just discussed. 2 million during the year-ago quarter. 2 million. 5 points of growth from M&A.

5 points of new business wins, we are really excited that approximately one point of growth came from our Win the Pro focus. 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, 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 in 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 Solns this year and are confident that will grow to at least 2% next year. 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 the fourth quarter. 72 billion. 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, an increase of $5 million over the previous midpoint.

5% over last year. Our guidance assumes the continued execution of new business wins and 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. 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 that, now for a quick update on tariffs. The net impact of tariffs was relatively consistent this quarter, like it was in the previous.

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 IPA 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 Solns 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-sourcing is not a response to tariffs. It is the best 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 determined by the lowest total landed cost.

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.

6 million. 9%, respectively. 5 rollout. 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 MinuteKey business. The economics per machine improve as the installed base scales and customer awareness of our new machines and new offerings increases. 5 machines in the field, an increase of over 600 machines since our last earnings call in April. 5 machines in the field and are on track to finish the rollout of these kiosks.

8% compared to the prior-year quarter. S. Our goal is to be a leader at retail in Canada while we win the Canadian PRO and LBM specialty distribution and industrial. 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 HPS categories with an existing customer at retail, and the expansion of 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. 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 Solns continues to perform. The way we serve our customers, the products we offer, and the consistency of demand for our products make Hillman Solns 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—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; an 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.