Hillman Solutions Q2 Earnings Call Highlights

Key Points

• Hillman agreed to acquire Kanebridge Corporation for $315 million, a deal expected to close around the start of Q4 2026. Kanebridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA over the past 12 months, and the acquisition is expected to double Hillman’s industrial business.
• Second-quarter net sales rose 10% to $442.3 million, while adjusted EBITDA increased 2.5% to $77.1 million. Robotics and Digital Solutions delivered 11% sales growth and a 31.9% adjusted EBITDA margin.
• Hillman raised its 2026 outlook to $1.67 billion-$1.72 billion in sales and approximately $285 million in adjusted EBITDA, reflecting the expected Kanebridge contribution. Leverage is projected to increase by about one turn after closing, while the company plans to prioritize debt reduction over share repurchases.

Hillman Solutions NASDAQ: HLMN reported second-quarter 2026 net sales growth of 10% and raised the midpoint of its full-year sales and adjusted EBITDA outlook following an agreement to acquire industrial fastener master distributor Kanebridge Corporation.

President and Chief Executive Officer Jon Michael Adinolfi said the company entered a definitive agreement to acquire Kanebridge for $315 million. The transaction, subject to regulatory approval and customary closing conditions, is expected to close around the start of the fourth quarter.

Kanebridge Expands Industrial Fastener Presence

Kanebridge is a family-owned, privately held master distributor of specialty fasteners serving the industrial channel. Adinolfi said the company has more than 50 years of experience and differentiates itself through long-standing customer relationships, its FastNet digital ordering platform, specialty SKU inventory and same-day shipment capabilities in custom pack sizes.

For the 12 months ended June 30, Kanebridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA, according to Hillman. Hillman expects the acquisition to double the size of its industrial business, which currently totals about $65 million, including its Canadian Paulin operations and the recently acquired Campbell Chain business in the U.S.

Adinolfi said the acquisition expands Hillman’s industrial addressable market by 50% to $3 billion, where the company currently estimates it has approximately 3% market share. Kanebridge serves customers across industrial and commercial applications, including manufacturing, construction-related uses, maintenance and repair, and data centers.

Hillman expects approximately $2 million in cost synergies, particularly from sourcing, as well as a transaction-related cash tax benefit of between $40 million and $45 million. Including the tax benefit and expected cost synergies, the company said the purchase price represents a post-synergy multiple of 8.4x to 8.6x.

Assuming the deal closes on schedule, Kanebridge is expected to contribute approximately $15 million in net sales and roughly $5 million in adjusted EBITDA during 2026. Adinolfi said Hillman also sees opportunities to cross-sell products, apply its global sourcing capabilities and support Kanebridge’s growth investments.

Second-Quarter Results

Hillman reported second-quarter net sales of $442.3 million, up 10% from the prior-year period. The company attributed the increase to approximately two percentage points of core performance growth, 4.5 percentage points from new business wins and 3.5 percentage points from acquisitions.

Adjusted EBITDA rose 2.5% to $77.1 million, compared with $75.2 million a year earlier. Adjusted EBITDA margin was 17.4%, down 130 basis points year over year but improving from 13.5% in the first quarter.

Chief Financial Officer Rocky Kraft said adjusted gross margin was 47.1%, down 120 basis points from the prior year but up 150 basis points sequentially. He cited outsized growth in the higher-margin Robotics and Digital Solutions business and a reduction in the impact of tariff-related cost of goods sold as factors behind the sequential margin improvement.

Free cash flow totaled $70.2 million during the quarter, while operating cash flow was $88 million. Kraft said cash flow benefited from inventory spending during 2025, which included tariffs that were now turning to cash, along with net tariff refunds and a nearly $6 million reduction in capital expenditures.

• Hardware and Protective Solutions sales increased 10%, driven by 4% core growth, 2% from new business wins and 4% from acquisitions.
• Robotics and Digital Solutions sales increased 11%, while adjusted EBITDA rose 10.4% to $19.6 million.
• Robotics and Digital Solutions adjusted gross margin was 77.4%, and adjusted EBITDA margin was 31.9%.
• Canadian sales rose 7.8%, supported by a 14% increase in new business wins, partly offset by a 6% decline in core performance amid soft markets and foreign-exchange headwinds.

Hillman had approximately 4,500 MinuteKey 3.5 kiosks in the field at quarter-end, up more than 600 machines since its April earnings call. The company expects to exceed 5,000 MinuteKey 3.5 machines by the end of 2026.

Guidance Raised for Kanebridge Contribution

Hillman raised the midpoint of its 2026 net sales outlook by $15 million, reflecting the anticipated contribution from Kanebridge. The company now expects full-year sales of $1.67 billion to $1.72 billion, with a midpoint of $1.695 billion, representing 9% growth over 2025.

The company now expects adjusted EBITDA of approximately $285 million, up $5 million from the previous midpoint of $280 million. Hillman narrowed its free-cash-flow outlook to a range of $105 million to $115 million while maintaining the midpoint at $110 million.

The outlook assumes continued execution on new business wins, core growth and a modest improvement in market volumes in the second half. It also assumes no meaningful change in tariffs for the remainder of the year.

Capital Structure and Leverage

Hillman ended the quarter with $665 million in total net debt, a $45 million improvement from the first quarter. Its net debt-to-trailing-12-month adjusted EBITDA ratio was 2.4x, unchanged from year-end 2025.

Following quarter-end, the company refinanced its credit facilities with a new $735 million Term Loan B maturing in 2033 and a $375 million asset-based lending revolver maturing in 2031. Hillman said the revolver is currently undrawn.

Kraft said leverage is expected to rise by about one full turn immediately after the Kanebridge closing. Assuming no additional meaningful acquisitions, the company expects leverage to return to approximately 2.5x by the end of 2027. Hillman plans to fund the Kanebridge purchase using cash on hand, an ABL draw and an add-on Term Loan B.

During the quarter, Hillman repurchased 1.7 million shares for $13.3 million, or an average price of $7.62 per share. Kraft said the company expects to reduce share-repurchase spending in the near term and prioritize net leverage following the Kanebridge acquisition.

About Hillman Solutions (NASDAQ:HLMN)

Hillman Solutions NASDAQ: HLMN is a leading provider of hardware and related products to the home improvement, retail, industrial and manufacturing markets. The company's portfolio encompasses key duplication systems and security solutions, hardware essentials such as fasteners and anchors, signage and labeling products, and outdoor and seasonal items. Hillman's product offerings are sold through a network of major home improvement retailers, wholesalers, independent distributors and other specialty outlets.

Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman grew from a family-run enterprise into a global supplier of hardware solutions.

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