Hillman Solutions Corp.

issued this morning. These documents and a replay of today's presentation can be assessed on Hillman's Investor Relations website at ir.hillmangroup.com. I would now like to turn the call over to Michael Kaler with Hillman.

Thank you, Gigi. Good morning, everyone, and thank you for joining us. I'm Michael Kaler, Vice President of Investor Relations and Treasury. Joining me on today's call are Hillman's President and Chief Executive Officer, John Michael Adenolfi, or JMA as we call him, and Hillman's Chief Financial Officer, Rocky Kraft. Before we get into today's call, 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 certain 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 two in our earnings call slide presentation, which is available on our website, ir.hillmangroup.com. 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 providing some commentary on tariffs and our guidance. He will then get into our first quarter highlights. Following his comments, Rocky will give a more detailed walk through our financials 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 my pleasure to turn the call over to our president and CEO, John Michael Adonofi. JMA? Thanks, Michael.

Good morning, everyone, and thank you for joining us. The first quarter of 2025 was a very good quarter for Hillman. We delivered both top and bottom line results that were in line with our expectations, and we took great care of our customers. We continue to operate well and believe our business is well-positioned. Given the current environment, I wanted to touch on our top and bottom line guidance before going further. Based on our first quarter results and the progress we've made since the end of the quarter, we are reiterating our full year 2025 net sales and adjusted EBITDA guidance. Since the end of the quarter, several things have changed. Tariffs, the geopolitical environment, expectations about economic growth, and the health of the consumer, to name a few. Our team has been monitoring and addressing the impacts of tariffs on our costs and how they will impact our overall business. Let me share some of the math that has gone into our top line assumptions. Today, a third of our products come from suppliers based in China, a third come from suppliers based in North America, and a third comes from suppliers from the rest of the world. Depending on the product type in the country it is sourced from, the amount of these new tariffs vary greatly. Altogether, Based upon what we know today, we estimate the impact of all new 2025 tariffs will be approximately $250 million on an annualized basis. We believe we can mitigate the additional tariff-related costs through price increases. At the same time, we are working together with our customers and suppliers to optimize the country of origin where we source our products. Conversations with our customers have been ongoing, and we are gaining clarity. We are executing our plan. We expect to cover higher costs on a dollar for dollar basis like we did during the first Trump administration. The midpoint of our top line guidance assumes that the list we get from price will be offset by volumes. This assumes market volumes are down approximately 17% during the second half. For context, the worst year in the history of Hillman saw volumes down 10%. While the resilience of our Hillman business should prove our volumes will be better than our guide, we are holding our guidance to be prudent and conservative as we are clearly in uncharted waters. Rocky will provide a deeper dive into these numbers and our guidance ranges in a bit. Having been in business for over 60 years, Hillman has successfully managed through multiple market cycles, and this business has proven resilient time and time again. We are confident that we can manage through this current set of challenges. What differentiates Hillman is the strength of our competitive moat. the resilience of repair and maintenance demand, and the healthy, long-term partnerships we have with our top customers. Hillman products tend to be small ticket items that are critical parts of home improvement jobs done by both pros and DIYers. This makes our business less susceptible to the swings in the economy. Whether the pack of fasteners costs $0.50 or $2, it's relatively small versus the cost of most everyday items, and it enables you to complete a project. and many times fix a problem. What I love about Hillman is that we bring so much more to the table than a typical vendor or distributor. We have 1,200 folks in the field managing the aisles for our customers. We have the ability to pick, pack, and ship products directly to the customer, and we have over 60 years of experience and relationships throughout our customers' organizations. has been built over the past six decades has allowed us to become a trusted partner. And being a trusted partner helps when you're dealing with some of the world's largest retailers. On the other side of the equation, we have our long-term supplier partners. In 2018, we sourced nearly 50% of our products from China. Since then, we've worked hard to diversify our global supply chain, including working with new suppliers who source throughout the world. Given the current environment, we are accelerating our dual faucet strategy and believe we can reduce our exposure to suppliers based in China to approximately 20% by the end of the year. The dual faucet strategy is the concept of buying product not only from multiple suppliers, which has always been our strategy, but from multiple suppliers in multiple countries. Our goal is to have a flexible supply chain that allows us to deliver quality products at the best overall value for our customers. Our world-class logistics and operations team will continue bringing best in class products to our customers and importantly deliver orders on time and in full. The core team at Hillman has worked side by side with very little turnover over the past several years. We've been battle tested, COVID, rampant inflation, supply chain disruptions. We have seen our challenges and our results prove that we can execute. Our approach to these tariffs will be straightforward. our customers understand what is going on, our suppliers do too. We are confident we will manage through this and believe we will come out a stronger company on the other side. Now let's jump into a more detailed look at the quarter. Net sales in the first quarter of 2025 totaled 359.3 million, which increased 2.6% versus the first quarter of 2024. Driving our top line sales, from the in-tax acquisition, which closed at the end of 2024. This added about four points of growth versus last year. Also contributing to our net sales during the quarter was two points of growth from new business, a three-point headwind from market volumes, and a neutral impact from price and FX. For the quarter, adjusted EBITDA increased 4.2% to 54.5 million compared to 52.3 million last year and our adjusted EBITDA margins improved by 30 basis points to 15.2%. Adjusted gross margins for the quarter totaled 46.9%, which were down slightly from 47.6% during the year-ago quarter, and sequentially from 47.7% during the fourth quarter of 2024. Weighing on margins for the quarter was mixing in more Cook and Intex, which have margin rates slightly below our overall hardware and protective solution segments. We continue to grow and integrate these businesses and expect to see margin improvement in both as we continue to realize synergies. Net sales in hardware and protective solutions, or HPS, which is our biggest segment, increased by 5.6% over the comparable period, while our adjusted EBITDA increased by 15.8% to $37.4 million. Our results were driven by contributions from the Intex acquisition and new business wins. Net sales in robotics and digital solutions, or RDS, were up 1.9% versus the year-ago quarter. We are pleased to see RDS return to growth during the quarter, which is a positive reflection of our Minikey 3.5 rollout. Adjusted gross margins and adjusted EBITDA margins were down slightly, totaling 70.9% and 27.3% respectively. As of today, we have over 1,700 Minikey 3.5 machines in the field, and we expect to finalize our rollout to our two largest customers by the end of 2026. Turning to Canada, net sales in our Canadian business was down 18.7% compared to the prior year quarter. Driving our results was the 12% decline in existing home sales during the quarter, political and economic uncertainty, and a challenging retail environment. FX headwinds weighed on Canada's results as well. For the full year, we expect adjusted EBITDA margins to remain above 10%. We have the best retail partners and the highest market share in hardware in Canada, and we are confident this business will return to profitable growth when we get help from the macro. As we look at Hillman overall, we believe we are in great position with our customers and can successfully execute in this environment. With that, let me turn it over to Rocky to talk financials and guidance. Rocky? Thanks, JMA.