Financial Data and Key Metrics Changes - Net sales for Q1 2025 totaled $359.3 million, an increase of 2.6% compared to Q1 2024, driven by the Intex acquisition and new business [16][21] - Adjusted EBITDA increased by 4.2% to $54.5 million, with adjusted EBITDA margins improving by 30 basis points to 15.2% [17][22] - Adjusted gross margins decreased to 46.9%, down from 47.6% in the prior year [17][22] Business Line Data and Key Metrics Changes - Hardware and Protective Solutions (HPS) segment net sales increased by 5.6%, with adjusted EBITDA rising by 15.8% to $37.4 million [18] - Robotics and Digital Solutions (RDS) net sales were up 1.9%, with adjusted gross margins and adjusted EBITDA margins slightly down [19] - Canadian business net sales decreased by 18.7% due to a 12% decline in existing home sales and economic uncertainty [20] Market Data and Key Metrics Changes - Approximately one-third of products are sourced from China, with plans to reduce this to about 20% by year-end 2025 [7][14] - The company anticipates a 17% decline in market volumes during the second half of 2025, which is considered a conservative estimate [10][46] Company Strategy and Development Direction - The company is implementing a dual faucet strategy to diversify its supply chain and reduce reliance on Chinese suppliers [14] - Focus on maintaining strong partnerships with customers and suppliers to navigate tariff impacts and optimize sourcing [11][32] - The company aims to manage through current challenges and believes it will emerge stronger [15][31] Management's Comments on Operating Environment and Future Outlook - Management reiterated full-year 2025 net sales and adjusted EBITDA guidance, citing ongoing monitoring of tariffs and economic conditions [6][25] - The company is confident in its ability to manage through tariff-related challenges and maintain service levels [62] - Future growth opportunities are anticipated as the home improvement market rebounds [65] Other Important Information - The estimated annualized impact of new tariffs is approximately $250 million, which the company plans to offset through price increases [7][26] - Free cash flow guidance has been withdrawn due to uncertainties surrounding tariffs [28] Q&A Session Summary Question: Impact of tariffs on RDS margins - Management acknowledged pressure on RDS margins due to the rollout and expects margins to improve to 30% EBITDA rate and 70% gross margins for the rest of the year [38] Question: Performance of Personal Protective business - No material pull forwards were noted, and promotional activity was strong, leading to better-than-expected performance [39] Question: Volume assumptions for the second half of the year - Initial guidance assumed a 1% decline in market volumes, but the current estimate is a conservative 17% decline [46] Question: Future sourcing strategy - The company is targeting a reduction in Chinese sourcing to 20% and is exploring opportunities in Southeast Asia and India [49] Question: Timing of price increases - Price increases are expected to be implemented by July 1, with a dollar-for-dollar approach to tariffs [54][56] Question: Comparison to COVID supply chain issues - Current supply chain performance is better than during COVID, with no significant disruptions reported [62] Question: M&A activity in the current environment - The M&A pipeline remains strong, but uncertainty around tariffs is impacting valuations [88]

Financial Data and Key Metrics Changes - Net sales in Q1 2025 totaled $359.3 million, an increase of 2.6% compared to Q1 2024, driven by the Intex acquisition and new business [16][17] - Adjusted EBITDA increased by 4.2% to $54.5 million, with adjusted EBITDA margins improving by 30 basis points to 15.2% [17][22] - Adjusted gross margins for the quarter were 46.9%, down from 47.6% in the prior year [17][22] Business Line Data and Key Metrics Changes - Net sales in the Hardware and Protective Solutions (HPS) segment increased by 5.6%, with adjusted EBITDA rising by 15.8% to $37.4 million [18] - Robotics and Digital Solutions (RDS) net sales were up 1.9%, with adjusted gross margins and adjusted EBITDA margins slightly down [19] - Canadian business net sales decreased by 18.7% due to a 12% decline in existing home sales and economic uncertainty [20] Market Data and Key Metrics Changes - The company expects market volumes to decline approximately 17% in the second half of 2025, which is a conservative estimate compared to historical performance [10][48] - The Canadian market is anticipated to return to profitable growth with the best retail partners and highest market share in hardware [20] Company Strategy and Development Direction - The company is implementing a dual faucet strategy to reduce reliance on Chinese suppliers from nearly 50% to approximately 20% by year-end 2025 [14] - The focus remains on optimizing the supply chain and maintaining strong partnerships with customers and suppliers [11][14] - The company is confident in navigating the current tariff environment and believes it will emerge stronger [15][32] Management's Comments on Operating Environment and Future Outlook - Management reiterated full-year 2025 net sales and adjusted EBITDA guidance, citing various external factors impacting the business [6][25] - The company is prepared for potential challenges and is optimistic about long-term demand in the home improvement market [67] Other Important Information - The estimated impact of new tariffs for 2025 is approximately $250 million on an annualized basis [8][27] - The company ended Q1 2025 with $703.7 million in total net debt and liquidity of $200.9 million [24] Q&A Session Summary Question: Impact of tariffs on RDS margins - Management acknowledged pressure on RDS margins due to the rollout and expects margins to improve to 30% EBITDA rate and 70% gross margins for the rest of the year [39] Question: Performance of Personal Protective segment - Management confirmed no material pull forwards in the Personal Protective segment and expressed satisfaction with its performance [40][41] Question: Volume assumptions for the second half of the year - Management stated that the current guidance assumes a conservative 17% decline in market volumes, which is unprecedented [48][49] Question: Future sourcing strategy - The company aims to diversify sourcing away from China, focusing on Southeast Asia and India for better supply chain flexibility [51][52] Question: Shipping container pricing and country of origin - Management confirmed that shipping container pricing is based on ports and country of origin, and they feel well-positioned for 2025 [69][70] Question: Pricing strategy in response to tariffs - Management indicated that price increases will be implemented to cover tariff costs, with ongoing discussions with customers [81][82] Question: M&A activity in the current environment - Management noted a strong M&A pipeline but indicated that uncertainty around tariffs makes it challenging to determine business valuations [90][91]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 totaled $359.3 million, an increase of 2.6% compared to Q1 2024, driven by the Intex acquisition and new business [15][16] - Adjusted EBITDA increased by 4.2% to $54.5 million, with adjusted EBITDA margins improving by 30 basis points to 15.2% [16][21] - Adjusted gross margins decreased to 46.9%, down from 47.6% in the prior year [16][21] Business Line Data and Key Metrics Changes - Hardware and Protective Solutions (HPS) segment net sales increased by 5.6%, with adjusted EBITDA rising by 15.8% to $37.4 million [17] - Robotics and Digital Solutions (RDS) net sales were up 1.9%, with adjusted gross margins and adjusted EBITDA margins slightly down [18] - Canadian business net sales decreased by 18.7% due to a 12% decline in existing home sales and economic uncertainty [19] Market Data and Key Metrics Changes - The company expects market volumes to decline approximately 17% in the second half of 2025, which is a conservative estimate given historical performance [9][45] - The impact of tariffs is estimated to be approximately $250 million on an annualized basis, with expectations to mitigate costs through price increases [7][25] Company Strategy and Development Direction - The company is implementing a dual faucet strategy to reduce reliance on Chinese suppliers from nearly 50% to approximately 20% by the end of 2025 [13] - Hillman aims to diversify its supply chain by sourcing from multiple countries, including Southeast Asia and India, to enhance flexibility and quality [48][49] - The company is focused on maintaining strong partnerships with customers and suppliers to navigate current challenges effectively [10][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in handling the tariff situation and believes the company is well-positioned to manage through current challenges [30] - The company anticipates a strong recovery in the home improvement market in the long term, despite short-term volume pressures [65] Other Important Information - The company has a strong M&A pipeline but is cautious about pursuing acquisitions due to current market uncertainties [87] - Free cash flow guidance has been withdrawn due to uncertainties surrounding tariffs and their impact on working capital [27] Q&A Session Summary Question: RDS business margins and future growth - Management acknowledged pressure on RDS margins due to the rollout but expects to return to a 30% EBITDA rate and 70% gross margins for the rest of the year [37] Question: Personal Protective business performance - Management confirmed no material pull forwards in the Personal Protective business and expressed satisfaction with its performance [38][39] Question: Volume assumptions for the full year - Management held guidance despite expecting a 17% decline in market volumes, emphasizing the unprecedented nature of the current tariff environment [45][46] Question: Future sourcing strategy - Management aims to reduce reliance on China and diversify sourcing to ensure quality and timely delivery [48][49] Question: Impact of tariffs on margins - Management indicated that pricing adjustments will be made dollar for dollar to cover tariff costs, which may impact long-term margin rates [55][56] Question: Comparison to COVID supply chain issues - Management noted that the current supply chain situation is better than during COVID, with strong service levels and supportive suppliers [63] Question: Shipping container pricing - Management confirmed that shipping container pricing is based on country of origin and expressed confidence in their contracts for 2025 [66][68]