Hillman Solutions Q3 Earnings Call Highlights

Key Points

• Record third-quarter performance: Net sales rose 8% year over year to $457.5 million, while adjusted EBITDA increased 2.4% to $90.2 million and free cash flow climbed to $51.1 million.
• Growth supported by acquisitions and RDS: New business wins and acquisitions each contributed roughly 5 percentage points of sales growth, while the Robotics and Digital Solutions segment grew sales 19% as MinuteKey 3.5 kiosk deployments expanded into automotive keys.
• Outlook reflects weaker market volumes: Hillman narrowed its 2026 sales outlook to $1.66 billion–$1.68 billion but maintained its approximately $285 million adjusted EBITDA and $105 million–$115 million free cash flow forecasts.

Hillman Solutions NASDAQ: HLMN reported record third-quarter net sales and adjusted EBITDA, supported by new business wins, acquisitions and growth in its Robotics and Digital Solutions business, while management narrowed its full-year sales outlook to reflect a slower-than-expected improvement in market volumes.

Third-quarter net sales increased 8% from a year earlier to $457.5 million, the highest quarterly sales result in the company’s 62-year history. Adjusted EBITDA rose 2.4% to a record $90.2 million, while free cash flow increased to $51.1 million from $9.1 million in the prior-year period.

“The third quarter was another strong quarter for Hillman, highlighted by our record top line and record bottom line results,” President and Chief Executive Officer Jon Michael Adinolfi said. He added that results were achieved despite a challenging environment for the company’s DIY and residential professional customer businesses.

Sales Growth Driven by Wins and Acquisitions

Adinolfi said approximately 5 percentage points of third-quarter sales growth came from new business wins, while acquisitions contributed another 5 percentage points. Those gains were partly offset by a 2-point headwind in core performance, which includes market volumes, customer footprint expansion, category management, foreign exchange, product mix and pricing.

Retail wins accounted for about 3.5 percentage points of growth, including a Builders Hardware expansion at one of Hillman’s largest customers. New business in the professional, or Pro, channel contributed nearly 1.5 percentage points.

Hillman generated more than $460 million of sales with Pro customers last year, according to Adinolfi. He said the company is gaining share through new lumberyard customers, direct shipments from retail partners to their professional customers, and growth in commercial and industrial operations.

The company expects Pro-related new business wins to contribute roughly 1% of Hillman’s overall sales growth in 2026, or approximately $16 million. For 2027, management expects Pro wins to accelerate and contribute more than $33 million, or about 2% of companywide sales growth.

Kanebridge Acquisition Adds Industrial Reach

During the quarter, Hillman completed its acquisition of Kanebridge, a master distributor of fasteners serving industrial distribution customers. Kanebridge stocks more than 44,000 SKUs, including hard-to-find and lower-turnover products, and can ship orders the same day, according to management.

Adinolfi said the transaction closed ahead of schedule and that Kanebridge has performed ahead of Hillman’s expectations since the acquisition. Hillman did not separately disclose Kanebridge’s revenue or adjusted EBITDA contribution during the partial quarter.

Management said Kanebridge’s business model complements Hillman’s retail fastener operations, expanding the company’s reach across retail, professional and industrial channels. CFO Rocky Kraft said the acquired company generated approximately $29 million of EBITDA over the prior 12 months for leverage-calculation purposes.

Hillman completed three acquisitions in 2026, Kraft said. For 2027, management expects already completed acquisitions to contribute 3% to 4% of sales growth, excluding any future transactions. Adinolfi said the company continues to see a full pipeline of acquisition opportunities and believes high-quality businesses remain available at attractive prices.

RDS Growth Led by MinuteKey 3.5 Rollout

Robotics and Digital Solutions, Hillman’s technology-enabled kiosk business, reported a 19% increase in third-quarter sales and a 13% rise in adjusted EBITDA. The segment’s adjusted gross margin was 79% and its adjusted EBITDA margin was 30%.

The company said the growth was driven by deployment of MinuteKey 3.5 kiosks, which expand the platform’s capabilities from home and office keys into automotive keys. Hillman had approximately 4,800 MinuteKey 3.5 machines in the field at quarter-end, including more than 1,700 installations completed during 2026.

Hillman plans to complete deployment of the upgraded kiosks at its two largest customers in the fourth quarter. Kraft said the company targets a roughly 30% EBITDA margin for RDS, and he expects the business to grow at a double-digit rate in 2027 as the benefits of the rollout are reflected over a full year.

Canada also delivered strong results, with sales up 9%. The increase was driven by 8 percentage points from new business wins—primarily in the Pro channel—and 1 percentage point of core growth. New programs included additional product categories at an existing retail customer and a bulk fastener program with a major Canadian customer.

Guidance Narrowed as Market Volumes Lag Expectations

Hillman now expects 2026 net sales of $1.66 billion to $1.68 billion, compared with its prior outlook, as market volumes improved during the year but remained below management’s expectations. The midpoint of $1.67 billion would represent nearly 8% growth from 2025.

The company maintained its expectations for approximately $285 million in full-year adjusted EBITDA and free cash flow of $105 million to $115 million. It also continued to project capital expenditures of $70 million to $75 million.

• Third-quarter net sales: $457.5 million, up 8% year over year.
• Third-quarter adjusted EBITDA: $90.2 million, up 2.4%.
• Third-quarter free cash flow: $51.1 million, versus $9.1 million a year earlier.
• 2026 sales outlook: $1.66 billion to $1.68 billion.
• 2026 adjusted EBITDA outlook: Approximately $285 million.

Third-quarter adjusted gross margin was 50.8%, down 90 basis points from a year earlier but up 370 basis points sequentially. Kraft said tariffs have significantly influenced margin performance in recent quarters, though modest net tariff-related refunds during the third quarter were mostly offset by adjustments associated with Section 232 steel tariffs.

Hillman ended the quarter with $933 million of total net debt following the Kanebridge acquisition. On a pro forma basis including Kanebridge’s trailing 12-month EBITDA, the company’s net debt-to-adjusted EBITDA ratio was 3.1 times. Management said it expects leverage to decline to roughly 2.5 times by the end of 2027 if it does not complete another meaningful acquisition.

During the quarter, Hillman refinanced its debt structure with a $735 million Term Loan B and a $375 million asset-based lending revolver, then added $200 million to the term loan to finance Kanebridge. The refinancing extended term loan maturities to 2033 and ABL maturities to 2031. The company also repurchased 639,000 shares for $5 million during the quarter at an average price of $7.75 per share.

About Hillman Solutions (NASDAQ:HLMN)

Hillman Solutions Corp. NASDAQ: HLMN provides hardware products and related merchandising solutions to home improvement centers, mass merchants, hardware stores and other retailers. Its product offerings include house and vehicle keys, key duplication services, key accessories, fasteners, wall-hanging hardware, identification products, engravable tags and other everyday hardware items.

The company also operates automated key-copying kiosks through its MinuteKey business and supplies in-store fixtures, displays and inventory-management services designed to help retailers merchandise and replenish hardware products.

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