Core Viewpoint - Hillman Solutions Corp. (HLMN) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [4][6]. - For Hillman Solutions Corp., the recent upgrade reflects an improvement in the company's underlying business, suggesting that investor sentiment may drive the stock price higher [5][10]. Earnings Estimate Revisions - Hillman Solutions Corp. is projected to earn $0.55 per share for the fiscal year ending December 2025, with no year-over-year change expected [8]. - Over the past three months, the Zacks Consensus Estimate for Hillman Solutions Corp. has increased by 2.2%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% of stocks receiving a "Strong Buy" or "Buy" rating, highlighting their potential for market-beating returns [9][10]. - Hillman Solutions Corp.'s upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a favorable outlook for the stock in the near term [10].

Group 1 - Madison Small Cap Fund's second-quarter 2025 investor letter indicates a rebound in equities following a pause in tariff implementation, with the Russell 2000 Index up 8.5% for the quarter [1] - The Madison Small Cap Fund (class Y) returned 4.42% in the quarter, underperforming compared to the Russell 2000 and Russell 2500 indices [1] - Hillman Solutions Corp. (NASDAQ:HLMN) reported net sales of $402.8 million in Q2 2025, a 6.2% increase from Q2 2024 [3] Group 2 - Hillman Solutions Corp. (NASDAQ:HLMN) has experienced a one-month return of -1.34% and a 52-week loss of 10.32%, with a market capitalization of $1.889 billion as of September 17, 2025 [2] - The decision was made to exit Hillman Solutions Corp. in favor of GMS, which is perceived to have stronger competitive advantages and better long-term growth prospects [3] - Hillman Solutions Corp. is not among the 30 most popular stocks among hedge funds, with 24 hedge fund portfolios holding its stock at the end of Q2 2025, up from 21 in the previous quarter [3]

Core Viewpoint - Hillman Solutions Corp. (HLMN) has seen a 27.5% increase in share price over the past four weeks, closing at $9.88, with a potential upside indicated by Wall Street analysts' price targets suggesting a mean estimate of $12.5, representing a 26.5% upside [1]. Price Targets - The average price target consists of eight short-term estimates ranging from a low of $10.00 to a high of $15.00, with a standard deviation of $1.77, indicating variability among analysts [2]. - The lowest estimate suggests a 1.2% increase from the current price, while the highest estimate indicates a potential upside of 51.8% [2]. Analyst Sentiment - Analysts show a consensus that HLMN will report better earnings than previously estimated, which strengthens the outlook for the stock [4]. - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 3.1%, with two estimates moving higher and no negative revisions [12]. Zacks Rank - HLMN currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating a strong potential upside [13]. Caution on Price Targets - While price targets are a common metric for investors, relying solely on them may not be prudent due to concerns about analysts' biases and the accuracy of their estimates [3][7][10]. - A low standard deviation among price targets suggests a high degree of agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [9].

Core Insights - U.S. stock indices rose over 1.5% on August 22, 2025, following Federal Reserve Chair Jerome Powell's indication of a potential interest rate cut next month, leading to increased trader optimism and a notable rise in Wall Street [1][10] Investment Strategy - Investors are encouraged to consider low-leverage stocks such as NatWest Group, Sterling Infrastructure, Luxfer Holdings, Evercore, and Hillman Solutions Corp. as safer investment options due to their lower risk profile [2][10] - The focus on low-leverage stocks is based on the understanding that companies with excessive debt financing may face significant losses during economic downturns [5][6] Low-Leverage Stocks - Leverage refers to the practice of borrowing capital for operations and expansion, typically through debt financing, which can pose risks if returns do not exceed interest costs [4][5] - A lower debt-to-equity ratio indicates improved solvency and reduced financial risk for a company, making it a crucial metric for investors [7][9] Company Highlights - **NatWest Group (NWG)**: Announced a £140 million lending for essential upgrades to the UK's Haweswater Aqueduct, with a projected 20.1% sales improvement for 2025 and a long-term earnings growth rate of 10.9% [15][16] - **Sterling Infrastructure (STRL)**: Reported a 21% year-over-year revenue increase and a 40.8% surge in earnings per share for Q2 2025, with a projected 45.9% earnings improvement for 2025 [17][18] - **Luxfer Holdings (LXFR)**: Achieved a 5.8% increase in adjusted net sales and a 25% rise in adjusted earnings per share for Q2 2025, with a long-term earnings growth rate of 8% [19][20] - **Evercore (EVR)**: Reported a 20.7% increase in adjusted revenues and a 30.4% rise in earnings for Q2 2025, with a projected 15.9% sales improvement for 2025 [20][21] - **Hillman Solutions (HLMN)**: Experienced a 6.2% sales increase and a 6.3% growth in adjusted earnings per share for Q2 2025, with a projected 6.6% sales improvement for 2025 [22][23]

Core Viewpoint - Hillman Solutions Corp. (HLMN) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Revisions - The Zacks rating system is based on the Zacks Consensus Estimate, which reflects EPS estimates from sell-side analysts for the current and following years [2]. - For the fiscal year ending December 2025, Hillman Solutions Corp. is expected to earn $0.55 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 3.8% over the past three months [9]. Impact of Institutional Investors - Changes in a company's future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements. Institutional investors utilize these estimates to determine the fair value of shares, influencing their buying and selling decisions [5]. Business Outlook - The upgrade in rating for Hillman Solutions Corp. suggests an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively to this trend [6][11]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [8]. - Hillman Solutions Corp.'s upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10][11].

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with Hillman Solutions Corp. (HLMN) identified as a strong candidate due to its favorable growth metrics and Zacks Rank [2][8]. Group 1: Earnings Growth - Hillman Solutions Corp. has a historical EPS growth rate of 24.9%, with projected EPS growth of 12.9% for the current year, significantly outperforming the industry average of 8.6% [4][3]. Group 2: Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 12.5%, which is substantially higher than the industry average of 2.7% [5]. Additionally, the historical annualized cash flow growth rate over the past 3-5 years stands at 40.2%, compared to the industry average of 10% [6]. Group 3: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for Hillman Solutions Corp., with the Zacks Consensus Estimate for the current year increasing by 3.1% over the past month [7]. This trend is correlated with potential near-term stock price movements [7]. Group 4: Overall Assessment - Hillman Solutions Corp. has achieved a Growth Score of B and holds a Zacks Rank of 2, indicating it is a solid choice for growth investors [8][9].

Core Viewpoint - Hillman Solutions Corp. reported quarterly earnings of $0.17 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, and showing a slight increase from $0.16 per share a year ago, indicating a positive earnings surprise of +13.33% [1][2] Financial Performance - The company achieved revenues of $402.8 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 2.93% and reflecting a year-over-year increase from $379.43 million [2] - Over the last four quarters, Hillman Solutions has exceeded consensus revenue estimates three times [2] Stock Performance - Hillman Solutions shares have declined approximately 16.5% since the beginning of the year, contrasting with the S&P 500's gain of 7.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating expectations of outperforming the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.21 on revenues of $425.93 million, and for the current fiscal year, it is $0.54 on revenues of $1.55 billion [7] - The trend of estimate revisions for Hillman Solutions was favorable prior to the earnings release, suggesting potential positive adjustments in future earnings expectations [6] Industry Context - The Building Products - Miscellaneous industry, to which Hillman Solutions belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - For Q2 2025, net sales totaled $402.8 million, an increase of 6.2% compared to the same quarter last year [12][18] - Adjusted EBITDA increased by 10.1% to $75.2 million, with adjusted EBITDA margins improving by 70 basis points to 18.7% [13][18] - Adjusted gross margins for the quarter were 48.3%, down slightly from 48.7% year-over-year but improved sequentially from 46.9% [13][18] Business Line Data and Key Metrics Changes - The hardware and protective solutions (HPS) segment grew by 8.7% year-over-year, with adjusted EBITDA increasing by 14.7% to $51.5 million [14] - Robotics and digital solutions (RDS) saw a 2.3% increase in net sales, marking the second consecutive quarter of growth [14] - Canadian business net sales decreased by 5.6% compared to the prior year quarter, although sales volumes improved sequentially [15] Market Data and Key Metrics Changes - The company expects full-year 2025 net sales to be between $1.535 billion and $1.575 billion, reflecting a growth of 4% to 7% over 2024 [7] - Adjusted EBITDA guidance for 2025 is now between $265 million and $275 million, representing a growth of 10% to 14% over the previous year [7] Company Strategy and Development Direction - The company is focused on managing tariff-related cost increases and optimizing sourcing through a dual faucet strategy, reducing reliance on Chinese suppliers from nearly 50% in 2018 to approximately 20% by the end of 2025 [11] - Hillman aims to maintain a competitive edge through strong customer relationships and a flexible supply chain [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current economic environment while focusing on long-term growth [10][29] - The company anticipates that market volumes will remain flat in 2026, with expectations for net sales growth in the high single to low double digits [8][9] Other Important Information - The board approved a $100 million share repurchase program, marking the first such program since going public in 2021 [22] - The company maintains a long-term adjusted EBITDA to net debt leverage ratio target of 2.5 times or lower [21] Q&A Session Summary Question: Competitive advantages in the pro channel - Management highlighted that over 25% of business is pro-related, with successful product launches and support for customers serving the pro market [34][36] Question: Tariff impact and EBITDA cadence - Management indicated that tariff costs will start impacting in late Q3, with expectations for a strong Q3 due to pricing adjustments [38][39] Question: Guidance for next year and market conditions - Management expects to maintain new business wins at or above 2%, with a prudent outlook for flat market conditions in 2026 [45][46] Question: Pricing and volume outlook - Management confirmed that pricing is expected to be in the low teens for the hardware segment, with ongoing adjustments based on market conditions [100][101] Question: Mitigation efforts regarding sourcing - The company is on track to reduce sourcing from China to 20% by year-end, with alternative sourcing in countries like Thailand and Vietnam [104][105]

Financial Performance - Net sales increased by 62% to $4028 million in Q2 2025 compared to Q2 2024[7] - GAAP net income totaled $158 million or $008 per diluted share compared to $125 million or $006 per diluted share in Q2 2024[7] - Adjusted EBITDA increased to $752 million compared to $684 million in Q2 2024[7] - Adjusted EBITDA margins were 187% compared to 180% in Q2 2024[7] - YTD fill rates averaged 95%[8] Segment Performance (Q2 2025 vs Q2 2024) - Hardware and Protective Solutions (HPS) revenues increased by 87% to $305924 thousand[12] - Robotics and Digital Solutions (RDS) revenues increased by 23% to $55520 thousand[12] - Canada revenues decreased by 56% to $41359 thousand[12] Full Year 2025 Guidance - Revenues are projected to be in the range of $1535 billion to $1575 billion[24] - Adjusted EBITDA is projected to be in the range of $265 million to $275 million[24] - Expects to end 2025 with 24x Net Sales / TTM Adj EBITDA[8] Supply Chain and Capital Structure - The company aims to reduce China-based supplier exposure to approximately 20% by the end of 2025[8, 18] - Net Debt / Adjusted EBITDA (ttm) was 27x at quarter end compared to 28x on December 28 2024[7] - Hillman's Board of Directors approved a $100 million share repurchase program[8]

Core Viewpoint - Hillman Solutions Corp. has authorized an initial share repurchase program for up to $100 million of its outstanding common stock, marking its first such program since going public in 2021 [1][2]. Company Overview - Hillman Solutions Corp. is a leading provider of hardware-related products and solutions to home improvement, hardware, and farm and fleet retailers across North America, with over 60 years of industry experience [3]. - The company is recognized for its commitment to customer service and has built a competitive advantage through direct-to-store shipping and a dedicated in-store sales and service team of over 1,200 professionals [3]. - Hillman's product portfolio includes hardware solutions (fasteners, screws, nuts and bolts), protective solutions (work gloves, jobsite storage and protective gear), and robotic and digital solutions (key duplication and tag engraving) [3]. Share Repurchase Program Details - The share repurchase program allows for the repurchase of common stock at management's discretion through various methods, including a 10b5-1 trading plan and open market purchases [2]. - The program is seen as a prudent step following improvements in the company's balance sheet, allowing for stock buybacks while continuing to invest in growth opportunities and debt reduction [3].