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]