Financial Data and Key Metrics Changes - For 2025, net sales increased by 5.4% to $1.552 billion, and adjusted EBITDA increased by 13.9% to $275.3 million compared to 2024 [4][16] - The adjusted gross profit margin for the full year 2025 increased by 60 basis points to 48.7% from 48.1% in 2024 [16] - Free Cash Flow for 2025 totaled $35.1 million, down from $98.1 million in 2024, impacted by $65 million of tariff costs [17] Business Line Data and Key Metrics Changes - Hardware and Protective Solutions (HPS) net sales increased by 7.8% to $1.2 billion, with adjusted EBITDA rising by 26% to $196.3 million [10] - Robotics and Digital Solutions (RDS) net sales increased by 1.6% to $220.2 million, with nearly 3,500 MiniKey 3.5 machines installed [11][12] - Canadian business net sales decreased by 6.6% compared to the prior year, with adjusted EBITDA margins just shy of 10% [12] Market Data and Key Metrics Changes - Existing home sales remained soft at 4.06 million, unchanged from 30-year lows in 2024, impacting home improvement projects [8] - The company does not expect any meaningful changes in the macro environment that could provide tailwinds for growth in 2026 [7] Company Strategy and Development Direction - The company plans to focus on expanding its pro business, diversifying its customer base, and pursuing bolt-on acquisitions [14][13] - The M&A pipeline is healthy, with several exciting opportunities being explored [13] - The company aims to control costs and improve customer service while investing in growth opportunities [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving solid revenue and earnings gains throughout 2026, despite a challenging market environment [25] - The company anticipates full-year 2026 net sales between $1.6 billion and $1.7 billion, with adjusted EBITDA expected to grow by 1.7% [5][20] - Management highlighted the importance of new business wins and pricing strategies in driving growth [7][19] Other Important Information - The company expects to invest between $70 million and $75 million in capital expenditures in 2026, similar to 2025 [22] - The company plans to continue stock repurchases to offset dilution from employee equity grants [23] Q&A Session Summary Question: Can you walk through the cadence of the gross margins for Q1? - Management indicated that Q1 will likely be the low point for gross margins, with expectations slightly below the 46%-47% range due to high-cost inventory [29][30] Question: What gives you confidence in new business wins for 2026? - Management highlighted several initiatives and a strong sales team, along with participation in industry events to showcase new products [32][34] Question: What is the outlook for the Protective Solutions business? - Management noted near-term dynamics affecting sales but expressed confidence in new product launches and integration of the Intex DIY business [39][40] Question: How should we model expectations for RDS given the customer transition? - Management stated that the customer transition will continue into Q2, but they expect growth in RDS due to successful rollouts of new machines [43][45] Question: What are the long-term targets for organic revenue and EBITDA growth? - Management reaffirmed confidence in long-term targets of 6% and 10% organic growth, with an upcoming Investor Day to discuss these further [56][58] Question: How is the M&A environment compared to last year? - Management expressed optimism about the M&A environment, noting more opportunities are coming to the table and a busy M&A team [73]

Financial Data and Key Metrics Changes - For 2025, net sales increased by 5.4% to $1.552 billion, and adjusted EBITDA increased by 13.9% to $275.3 million compared to 2024 [4][9] - The adjusted gross profit margin for the full year 2025 increased by 60 basis points to 48.7% from 48.1% in 2024 [15] - Free Cash Flow for 2025 totaled $35.1 million, down from $98.1 million in 2024, impacted by $65 million of tariff costs [17] Business Line Data and Key Metrics Changes - Hardware and Protective Solutions (HPS) net sales increased by 7.8% to $1.2 billion, with adjusted EBITDA rising by 26% to $196.3 million [10] - Robotics and Digital Solutions (RDS) net sales increased by 1.6% to $220.2 million, with nearly 3,500 MiniKey 3.5 machines installed [11][12] - Canadian business net sales decreased by 6.6% compared to the prior year, with adjusted EBITDA margins just shy of 10% [12] Market Data and Key Metrics Changes - Existing home sales remained soft at 4.06 million, unchanged from 2024 and well below the 10-year average of 5 million, impacting home improvement projects [8] - Market volumes were down about 5% in 2025, contributing to challenges in sales growth [8] Company Strategy and Development Direction - The company plans to focus on new business wins and expanding its pro business, which is expected to diversify the customer base and provide growth opportunities [13][14] - The M&A pipeline is healthy, with several bolt-on acquisition opportunities being pursued [13] - The company aims to maintain a strong balance sheet to invest in organic growth and M&A opportunities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving growth in 2026, with net sales expected to be between $1.6 billion and $1.7 billion, representing a 6.3% increase compared to 2025 [5][19] - The company anticipates that 2026 will be a more normal operating year, with expectations for mid-single-digit growth in net sales [20] - Management noted that the first quarter of 2026 is expected to be the low point for gross margins due to high-cost inventory [29] Other Important Information - The company invested $70 million in capital expenditures in 2025, down from $85 million in 2024, with plans to invest between $70 million and $75 million in 2026 [18][21] - The company plans to continue stock repurchases to offset dilution from employee equity grants [22] Q&A Session Summary Question: Can you walk through the cadence of the gross margins for Q1? - Management indicated that Q1 will likely be the low point for gross margins, with expectations slightly below the 46%-47% range due to high-cost inventory [29][30] Question: What gives confidence in new business wins for 2026? - Management highlighted several initiatives and new products, along with a strong sales team, as reasons for optimism in securing new business [31][32] Question: What is the outlook for the Protective Solutions business? - Management noted near-term dynamics affecting sales but expressed confidence in growth due to new product launches in 2026 [37][39] Question: How does the company view the Canadian market for 2026? - Management expects the Canadian market to return to growth as the economy improves, particularly in the spring season [49] Question: What are the long-term growth targets for the company? - Management reaffirmed confidence in long-term targets of 6% organic revenue growth and 10% EBITDA growth, with discussions planned for the upcoming Investor Day [55][56] Question: How is the company positioned regarding potential chip shortages? - Management stated that they are in good shape regarding supply and do not anticipate challenges from chip shortages [57] Question: What is the current M&A environment? - Management expressed excitement about the M&A landscape, noting more opportunities are emerging and they expect to pursue 1-2 deals in 2026 [67][70]