Hillman Solutions (HLMN) 7 Nov 222022 Q3 Earnings call transcript

Good morning, and welcome to the Third Quarter 2022 Results Presentation for Hillman Solutions Corp. My name is Therese, and I’ll be your conference call operator today.

Before we begin, I would like to remind our listeners that today’s presentation is being recorded and simultaneously webcast. The company’s earnings release presentation and 10-Q were issued this morning. These documents and a replay of today’s presentation can be accessed on Hillman’s Investor Relations Web site at ir.hillmangroup.com.

to call like Koehler to now Hillman. with would turn over the Michael I

Good and of morning joining operator. you, Thank everyone am Treasury. Koehler, and us. thank Michael Vice Relations President Investor I for you

Joining me Cahill, President, our Chief and Kraft, are Officer; Rocky Financial our and Chairman, Executive Chief today’s on call Doug Officer.

begin highlights Rocky. by followed review from from today’s a with business a call will Doug We update quarterly and financial

may today’s applicable guarantees those that to we may begin, the statements. to many cause like forward-looking statements are certain to be of are call differ Before These other projected on subject and beyond factors, remind are of and our performance future risks, which considered statements certain in uncertainties, and Safe the made audience Harbor such securities I’d subject forward-looking actual materially and not to results provisions from assumptions laws. are control of company’s

contained could Some periodic of that reports factors and the results influence in with SEC. annual our filed the are our

risks regarding ir.hillmangroup.com. presentation, X slide Slide our more on in information see please call and is Web uncertainties, site earning available our at which For these

today’s refer non-GAAP measures. and earnings call to regarding In we financial GAAP of addition, measures reconciliations our available certain use to these in our call, Information of our on are will results slide presentation.

to President and Chairman, our CEO, it’s that, over Doug? turn pleasure my Cahill. call With the to Doug

update to and before to to I'm numbers. it an on an discuss turn healthy Today, Thanks, of good current quarter talk going provide the I everyone. Michael, guidance Rocky environment morning, and over give and third overview operating our

the one improvement and hardware at products hardware value-added providers North to For home our those new of who of story, largest across and Hillman leading America. solutions is retailers you of are

direct XXXX. since This with delivery our founding sourcing, in us store Our in-store has us sets from strategy our design, win our to and customers competition. apart merchandizing to allowed innovative unique approach to

our provided the which are commercial used innovating has repair, maintenance in products, constantly remodel against markets. construction majority new and which insulation downturns for We are years projects, and cyclical XX of for home

margin as the Our must-have Therefore, known Hillman. is products are for critical fill also keeping building our of customers. rates in products categories our customers stock to basket retail success in in high

Our to stocked, delivery to today's presence also in-store and store supply only and not unpredictable the direct markets certainly labor customers our keep the solutions challenging chains. shelves provides but

many of profits, product model strong them quarter. of And to our team and with partnering on Hillman advantage optimize strengthened our results for allowing our category hard finally, Hillman. yet mix, another This with we at and working drove competitive sales moat increase work management by differentiated closely customers the to executed

X,XXX is factors of sales to we members driving is win. and critical why and the moat Our one competitive to service our team as

during new that example, screws we anchors builders several won wall screw selling hanging, the concrete For like hardware, deck business and new quarter, patented in our well. picture categories very including are solid

Year the X.X retail by at in country; were Vendor in of the the New year. We awarded sales grew partner We the ours. adjusted family great quarterly also a chain by of Island, over X.X%, Ace York, largest owned EBITDA Long prior Costello's

significantly continue offset XXXX. during inventory dollar basis XXX completed And for the us also of million plans to price in the decrease dollar the cost a of maintaining while rates inventory quarter at $XX enabling fourth increases XX%, a to execution we coming We quarters. increase, in saw our to reduce the on over with million since fill total beginning

turning Now highlights quarter. the to for our financial

on price in up with the XX.X in quarter. last Street as million finalize XX of million million quarter's quarter from we EBITDA, During call. line we of expectations about talked Margins $XX the generated third year XXXX, prior we adjusted were increase

dedicated and the end team local traditional the over new labels hardware quarter. our XX million sales of stores at near finished Our service applying price

grew quarter marking increase the million, for sales XXXX. to a third XXX Net X.X% quarter over of the

X.XX X% past the year, the increases implementation were by These year, improvements billion. than the of lighter price to sales driven For which net offset grew over more volume.

Now let on overall the touch XX% during of is each solutions business me segment and over of our makes our quarter. biggest business performance revenue. Hardware up

hardware line increase increases to hardware compared ago of the were quarter, of Price in price the the traffic of is result at retailers the to For We business. volumes, saw the main were partially believe XXXX. solutions of bellwether offset lighter which foot segment third an top benefit, quarter revenue increase. the quarter. Lighter year mainly our our compared a the when driver XX%

you will that me this with what's some numbers happening segment. in illustrate Let share

volumes resiliency just the revenue down quarter This growth X.X% months XX%. of hardware the end for While comparative total of the quarter. for remodel of repair, XXXX third for volumes XXXX, demonstrates down X.X% six and saw a the with XX.X% improvement Price and was we were up a first consistency maintenance of during user. the

during Year-to-date during from an is XXXX fill XX% were XXXX. XX%. XX% rates and improvement This

shelves Importantly, environment. shy and the XX% overall our up partners solutions, Robotics no Hillman our of trust digital retail our of RDS makes revenue. just to stocked keep the business matter

in in in decline foot resulted lighter quarter, retail the traffic a revenue. our RDS X% During customers

used as lighter the were to shift profitability. to from a machines with last seeing Engraving compared our slowed Hillman’s office our full self adoptions year, and struggle of decreased This continue quarter manual pet home we're retailers and serve key serve third in improves minute duplication and key when kiosks. sales shift our to retailers’ labor, in-store XXXX. and auto car than key as duplication Also,

has our level been RDS interest is and for with and with had working Two remain developing Overall being strong. We productive business. excellent. margin duplication our very duplication our jointly RDS quarter healthy auto The our margins a our EBITDA feedback for smart next major for developed engraving new are in adjusted customers market our key machines fob and gross partners. machine share generation machines engraving new and and retail

Our in our on two duplication throughout engraving for next will key be machines generation will introduced minute our XXXX kiosk. machines the ready smart early XXXX, be self auto serve and new fob market

team has amazing were technology manufacturing eyes engineering just to it engineering Tempe partners this able their quarter. on Our in an see our facility job and own and this retail our with new done

kind supply, sporting Regarding test retailers, our in knife will sharpening retailers and year Canadian as the sharpening with Resharp, new one machine, across Ace machines will and XXXX, channels of recreation during retailer. locations X,XXX including QX country. around outdoor food and restaurant leading machine Hardware end And we select a service a specialty knife our the

just of our overall XX% revenue. makes business solution shy protective up of Our

of revenue quarter about quarter. third the was During ago the XX% year XXXX, protective down compared to

over excluding COVID-related growth X%, periods, is line when protective with the increased which revenues both from of However, just more expectations this segment. in PPE sales

the Lastly, line built our seen increase, results revenue, on and Canadian throughout our segment, overall momentum which makes about Canada a XX% strong strong line XX% is up as top posted well. year. of bottom drove which

doing Canadian great facility consolidation excellent job is done Our just portfolio. an realigning also and job project their they've a team and with the

consumers business higher being by know Now rates. inflation interest that We impacted model. turning and to our are

confidence of product our sales estimate recession that However, built of remodel relatively the is gives to This competitive and over into through our cycles growth the due resistance our maintenance track up that XX% economic matter record and us are no strong we environment. results moat market. the long can repair, achieve down we and

to U.S. a and Consumers XX deeper maintain dig old. Let's age the of years notion. U.S. repair that inventory over Housing need with will little on in homes. continues XX% these to homes

nesting, in living Additionally, More we expect from in remain to and working consumer invest the see trends home aging their in place, prominent. homes. outdoor

long One only are of in more recent conducive but United XX% to United aging to States stay the on the point in place, homes Americans Services place states their data as possible. than of in on that want homes aging in X% as Disability

preparing to Our of retail future demand are opportunity. advantage this partners take proactively

we As product make end the majority about of pros, contractors sales, think our DIYers users. vast pickup up and local truck our

is history is business our us helps our home our competition. channel strategy which unique prove construction. long model, driving confidence amongst that tied to and Our Further new business the not differentiate

over location. inventory to stores delivered Our moat do directly about components. means to customers worry our XX% consists our three SKUs we distribution centers Number the retailer's to number. in this directly one, their Hillman managing general, are of have of the ship In not main XXX,XXX because

specific high Number two, pro. shelf retailer associates, the three, our is It of X,XXX in margin products consisting our from to our not for our for own. the team have and number consumer our to tailor of service sales This service and XX% class allows that and important to only that their team, us are over stock, And and optimize products revenue must the This provides we Hillman's at customers. comes customers brands warriors of serve retail organize strategies. consumers. world

finalized the price fourth At the increase XXXX. quarter, end we of our since beginning of the

of million we've XX have All In commodities, to increases, approximately XXX million approximately increases been million XXX implemented cost. in labor. total, transportation our breaks in for in shipping, these in which to dollar down million price cover and dollar XX and

fall, during other During begun we've to the the which and great seen we've commodity crisis months. past see prices financial recent recessions,

as through Back second We the expect the many remember statement in of these beyond. margin tightened. our chain expansion XXXX, XXXX flow income increased and tides costs once in quarter beginning supply lead

flow the rates. made we invest in strategic to protect such, inventory to our As decision

off While end million the far we fill we environment. with more of to the the than deliver inventory in need third XXXX about investment this ended XX% paid from improved of were XXX year. normally XXXX, of quarter able quarter rate second this This so we and would

is result these Hillman We moat, new challenging care future. proud through some we retailers of our lived to have know memories, in was in we're business long and built wins have customers up that the say times. which taking very we to this will investment to our believe and on expectations core

and have the the which to lead our months, our leading inventory we've vastly plus to is around day delever result Asia we of in January industry cash days, from Over is this rates. that the as experienced turn year. past The XXX time balance times inventory we settle impact the improved our XXX lead from started bring to down seen industry levels several with beginning to sheet no we're fill

XX end. million Sequentially, XX by our XX expect compared million inventory to million down we year inventory another to to decreased and bring QX by

As we by XXXX. more of improve normalized we level us position, it the at a will looked our which believe will inventory at put inventory 'XX, further end that

As working balance such, bring benefit delevering which sheet. will in capital and we will costs, lower our down result from

to EBITDA debt pay to the down to expect adjusted of look we down. the fourth will end we range we as that our low fall inventory and guidance towards our As quarter, continue original bring

line top our and traffic cash which volumes the into and the during softer quarter impacted momentarily. retailers get However, will flow at timing, have Rocky

provide focus million XXXX. EBITDA and said, implemented challenging successfully on the Hillman to this remains opportunity future and The That stage performance of our margin price improve $XXX increases navigating an for adjusted environment really during our for expansion. gross setting

we We as the inventory higher expect cost this second quarter see sometime sell through read start XXXX to through of to lower our begin flow our during will P&L. and cost

that safe It special have customers' a X,XXX saying rebuilding immensely like team been of every disaster products to be our our are in members locations without proud natural a retail Hurricane team have we in goes sure terrible truly is Florida Ian that stock shines associates Hillman The resilience at the this communities the Everyone team when of be loyal, based day. and hardworking our so have tirelessly can process. their customers begin working hits.

thoughts with those displaced. impacted the by hurricane, have Our who been those are especially

the rebuild. help to thankful to Florida in position are We be

hardworking uniquely our have customers. Looking forward, remains taking confident talented can team believe that challenge comes positioned of successfully for and that we I our our navigate and care I'm we're associates success proven any that our focus way.

the past to and has Our our value couple employees beyond. us positioned and real shareholders in over years performance for for of our drive XXXX customers our

that, With to over let me Rocky. turn it

everyone. Thanks, Doug, good and morning,

last results, price maintained quick earnings of call additional fill our our I'll increases, jump we guidance in rates our remainder quarter for August, Since provide executed costs. on summary into our the have XXXX. leading of and updated controlled a third I Before

million to we such, XXX are which to million, nearing full As year with is in EBITDA line our adjusted previous XXX guidance. our guidance range

only to will us of our in our PS impacted million our our this the by for due about primarily sales traffic. The of remainder the Relative the partners timing impact net expectations free Altogether, quarter been effect flow $XX sales for and cash the year. of business. first retail during year, foot of lower half the our have to slightly lower destocking the to

With low sales visibility, range $X.XX updates. come billion. quarter, Last that come we in that was We billion. net billion and the told near the we providing you of our this year will end improved now are $X.X between anticipate full would X.X the following in which we original XXXX

year We in adjusted between at expect million. of which quarter, XXXX the and total adjusted million was told you EBITDA $XXX we Last would $XXX original end full come guidance, the to XXX low million. EBITDA

putting in we August. some simply directional language provided are we So around numbers the

is Hy-Ko cash free between in lastly, XX from inventory guidance Note to the any range driven litigation as is sales. resulting the payment the million And uncertain. of flow cash to softer come settlement our of that this excludes This timing by original compared reductions expected and range. million the one-time guidance to XX timing is relating that

year due timing next year, first invest working during numbers past. less cash lighter to the the we in the moving are expect inventory first the of versus Given XXXX of primarily into reductions of the the the remainder of to quarter quarter years for capital flow

This in is buy order noteworthy quarter to spring considering on typically is inventory our the when for bill. more debt we first take

we three during the about increased first over past example, XX years, quarter. capital million For the working

of half quarter we we first that confident that will than less figure. the are XXXX, During need of

let Now a in a Marshall, After verdict one-time a $XX form third on quarter royalty the of Hy-Ko. charge minute October, in a related spend in trial jury Texas a the Hy-Ko payment. awarded million to me

legal fees results. our the verdict GAAP We have included related and in

flow is unclear it currently the expectations our of or amount free as executed We timing the settlement. final cash verdict have any from

defend patents in across continue and our and will RDS our company. to property protect We intellectual and business the

X% quarter. and the Net the let sales With outlook. that, year million quarter million. of to $XXX.X was solutions partially by increase, XXX.X XXXX for quarter XX% results offset prior X.X% to which in a our main decline was me the Overall, the contributor volume. turn the by versus to the a to financial was realization increased improvement future driven in Hardware third up price XX%

X% of down by resulting were the Protective fob XX% $XX.X sales foot decreased to fewer activity main Wider pet sales duplications the and auto million or lighter and from RDS decline. were million. traffic, solution engraving smart volume. less drivers $XX.X

Excluding sales COVID-related up were X%. PPE sales, protective

of COVID-related sales for million XXXX. $X.X compared during were million quarter the QX to $XX.X

for do COVID sales meaningful fourth million quarter and XXXX. XXXX, were the of PPE of remainder the For XX.X anticipate COVID-related we not PPE sales

we quarter in the quarter. Canadian were the $XX.X Sales improved Our to terrific a profitability XX% the business third to performance compared up had row. million significantly prior in year. for And

As throughout we driven price, improvements, nice year, have operational Canada. improvement have exiting profit in unprofitable business seen and mix the product

settlement $XX legal or loss prior include quarter $X.XX to diluted or expenses in GAAP million per that for the like would litigation. On additional share third the results diluted of our $XX.X XXXX a million to from net loss quarter. point of GAAP the basis, $X.X I million net Hy-Ko a compared the in out $X.XX totaled share per year related

third for was third XXXX year diluted the per adjusted share $X.XX adjusted quarter points XX.X% XX per declined by gross basis, prior per compared in earnings margin quarter. of diluted share $X.XX profit quarter to year basis share On prior quarter. the the versus to Adjusted an

dollar offset have pressure to As performance and for driver RDS businesses by on by inflation, was increases hardware margin offset driven primary our and Canada. of discussed the margin prior protective in the we in price calls, partially dollar strong

forward basis inflation the points traditional the our in yet was XX second offset of adjusted local of increase PS quarter. to and not the basis price activity hardware the with margins be pull business stores compressed a due QX fourth of third to XXXX, On anticipate compared our fully the promotional as timing business a rates experienced sequential in quarter we this portion We of quarter of margins to gross by in our the to XXXX. consistent in

out for acquisition to compared analysis Adjusted legal the our Hy-Ko fees a integration This For driven compensation, quarter. litigation and the and expenses. related SG&A million which gives $XXX.X the the to prior $XXX.X expenses, GAAP million million we to of and totaled better backs in million year costs restructuring quarter analysis feel stock XXX.X SG&A year was XXX.X legal base prior expenses compared quarter, settlement. by

Adjusted sales to SG&A as from fell a percentage XX.X% of XX.X%.

the as prior beat of costs percentage million XXXX in and $XX.X the million nice EBITDA. since second to compared SG&A third the While EBITDA during that quarter. quarter year inflation a first increased in costs ago of time impacted X.X% a fixed we sales, $XX we did This job have year to is the quarter. managing Adjusted the quarter

driven our final increase. of the our partially higher of to price strong driving was lift COGS, our adjusted gross was volumes, increase by of mix Similar cost business. timing lighter from EBITDA our healthy offset the a margins, price Further a adjusted by from and piece earnings Canadian

to cash Now and our sheet. turning balance flow

operating generated year cash million For the to year-to-date the of in XX.X in as compared XXX.X using XXXX, quarter. prior million activities

we last earlier, to in is As cash. decision inventory beginning and to into now strategic convert the Doug investment made our discussed invest this year

quarter To continue expect by in inventory end. to inventory position million quarter. bring expect year XXXX, recap, improve were year compared inventory will $XX expenditures the to another normalized of level million the And XXXX. by prior more million a down we and Capital by $XX.X our end to to for we million for $XX the $XX.X

invest parts of continue kiosk high our and in important initiatives. We CapEx racks, RDS our to return merchandizing

expected. X% remained near as CapEx of sales Maintenance

forward, to market we RDS shortages priorities Looking dynamics. chip and within have shifted due some

seeing generation demand engraving major one Quick-Tag at our next retail are machines our We X for meaningful partners. of

be will tests. during store, located within has performed machines the Quick-Tag in attractive which location well We a in-cap expect very the very

will seeing machines, with machines these machines opportunity. to X.X at bring key will outfitted begin auto we smart our Resharp future Beginning to Ace. on also fob duplication XXXX, for growth we technology, service first self a continue believe to which demand minuteKEY while critical ever we which are data kiosk be our gather meaningful be We will in market

the we customers in Additionally, with and testing will restaurant goods be other Resharp sporting sectors.

for strategic very chip growth to high XXXX which beyond. are produce initiatives, ability to continue to we as how and fuel machines. We our we look components we opportunities must we demand, believe excited be deploy margin of three Considering hinder and all shortages into meet in about the will kiosks robotic these source

believe in testing are will smaller new a implementing a widen we improve XXXX, machines. strategy that of availability While to number we chip customer with

We ended of total credit the of million down end million our outstanding, $XXX equivalents. under net from XXXX. at available At of of liquidity, the revolving which third million of we $XXX had consists quarter and of the XXXX and the third quarter, with $XXX of end cash cash borrowing of approximately facility million $XXX debt million $XX

XX adjusted which at quarter. of trailing X.Xx X.Xx, ended to ratio at the EBITDA the 'XX with end net an was in end Our and of from improvement debt months the last was line quarter we the where

net unchanged remains leverage the ratio at level XXXX. at our lighter low the to target free of below guidance, Xx. end Considering to Our debt we plan long-term our adjusted EBITDA to flow reduce cash Xx

were price the finalized end about we As we of towards implementing fourth successful quarter. talked today, our which the third increase was in

Our degradation. has dollar resulted in approach some rate dollar covering for margin to costs

other begin cools. costs dollar have dollar moderate. given for we container, freight price to and we Today, when back historically, seeing are However, inflation commodities, not

We benefit through flow dynamic this XXXX. expect second once begin will believe of quarter P&L, we these the during which lower from to costs our

to we environment of high our in we a some economic and X% seeing EBITDA adjusted out, EBITDA organic see growth cost growth growth have organic intact. excess further with horizon. this the that level algorithm Looking we and net XX% GDP confidence X% adjusted algorithm long-term may where are in of price growth, of X% on remains an In tailwinds sales

in and that market continues home the benefit Over maintenance repair, the remodel our business macro term, the to tailwinds long Doug meaningful from earlier. spoke to

allow stated that long we forward, drive growth business, our us moat perform believe to term. new we competitive allow sales continue the at look or algorithm us and our win to over above to will As

that, With you. Doug to back

macro of Thanks, its continues Rocky. choppy foremost. first take the Despite care Hillman environment, to and customers

pleased customer the and and and continues Our differentiate our our challenges the customers. with environment, offering have with moat Considering executed at competitive shelf maintained our in inventory really we're deepen relationships. supply how strong chain to we performance

service sales us is The year. solutions customers our with shelf bring Our us X,XXX store we've we really by actions, space, direct and field combined our competition. complex accept of additional award our bring to pricing our needs to unmatched to offering which seen new and willingness delivery all our this customers' an our business, reflected folks customers' grant by value

differentiated As our we long-term value shareholders. confident remain can model all we our we in look believe of forward, and for drive

call. that, With up Q&A open for question? of the begin we'll the can call portion Therese, you the

Instructions]. Thank you. [Operator

Our first question David from Manthey from be David? today will Baird.

everyone. morning, Good you. Thank Yes.

Hi, David.

level, First theoretical go if a costs what annually? of and your target are to decline increases moving do where seasonality is implemented and input I all we they representative to But immediately that assuming come us now, just question sort and it's looking pricing some have have right of there's then costs Help business. on a would the the improve with catch down. off, fully, from already and input don't as your It's your announced and been try your that that from we you'll through here. be I type up know XX calculus? price margin at EBITDA we side there

It's David. Hi, Yes. Rocky.

think numbers I directionally are right. your

guidance remainder particularly over I than and rate we think higher obviously, the higher give RDS the is much as this not the of we I a about to for business, quarter, And think XX-ish as But to growth time, would the that XXXX. fourth point think obviously we're we where expect into at it's at if we stay which visibility business. are, current in you levels. going drive EBITDA have

kiosks? you your side. any actions also pricing on on robotics talked the lot about of hardware you've Okay. Have adjusted robotic the of And the pricing solutions, speaking any a

look is the We David, also serve not of But cost some, at self full between we serve done a what and difference we've the and lot. machines. have. the

coming you an future for and ironically self opportunity in can serve because of as in machinery full our with up. is us the And some both of that see the most as machines well there's certainly of having cost retailers, So they today that that than make labor the cut key that think And you plays the really store. have to is a them more consumer it sense. themselves by map, one the for in doesn't when cut about

So that as we're on working well.

for And And update container your last do us Okay. here. think just Could us rates? question to contracted you, tell spot but one versus contracts you before, container you've those I us. when more renew? told

unless renews Everything almost everybody, in XXXX. May year two did David, Yes. for of they a

As dropped soft spot a dramatically. we've lose know, used the the position has container for to because market our in rates contract and volume. you carriers years have that We're don't good gotten want many

small penalty to the they lose we because a container get the on doing don't exit from sure make thing basis monthly a they're go contract and the buy-in to very spot. to So have right of out

kind it's And no-brainer. a so of

a if much knows right pretty market, but percentage has everybody. which we're at it's So going, is man definitely who where now, great. will, for softened the you And within it few

sounds Thanks, Yes, Doug. good. right. Rocky. Thanks, All

Dave. Thanks,

David. you, Thank

Securities. CJS from Lee next Lee? from question Jagoda comes Our

Hi. Good morning.

Lee. Hi,

stuff terms close of the today, or hit in of So lag rates. a Can question, to going contract terms remind benefit spot just P&L of on us benefit? rates just to that the you you're last does from as margin that spot obviously in your you actually that when to you're getting spot at to go piggyback

Yes.

the quarter, we're So and you through into first the cost fourth to the of lag have quarter going go time. we as May, contracts entering we highest we the actually about think given as Lee in -- some new just into see inventory the

But a place in got us. we've full challenge it's So for now. price

And come the -- said, going it, believe margin we has and you couple a then of fourth It's as a the second so a that. really think it is rate when And we months quarter. in inventory. to we the we saw look offset when boat, lot quarter like we'll about float pay to what it's as bill, we through

average months probably five on that. think after So

so and of as we'll costs, that And middle kind remarks, as think in the begin when of begin from the in year to in thinking year was we've we second right, we'll our see of next said some quarter of we second happening we the what about versus to what of benefit containers. would some that quarter about timing paid you're expect that of current see given this XXXX. just benefit prepared And that

year? it some it. to stuff like then it making and relates RDS the And at Ace good out Resharp, as just getting then sounds hopper, machines there's testing new Got and to other companies terms you're And pretty is, in the some progress some or more how you program? the for to next turning we in If of where national customers. other it many where advertising are machines can current supply chain manufacture related the chip on stays Ace environment

Yes.

let's and with not Ace So great in. been him And this Lee, had thing a said, conversation listen, has we awesome. hey drip

service Let's move so machines take the different folks talked accounts that and is our machines to of stores while have we'll testing kind those to And what about. X,XXX. do we gets everybody do that feel, we'll chips we Lee we have get the make a in

and let's those when those in chips second So the become around, use the for let's rock roll. Then that's Ace tasks. and to pivoted start it moving plan. specialty sporting half we And available, let's can within machines the to let's restaurant. supply say, optimize goods, in test we just chips food say the and And retailers, kind 'XX, of at of

Got it.

of half advertising, we second thinking So as that? are than more it relates to national or 'XX sooner

X,XXX, I need at -- tough still us. for We've them X,XXX. it's Yes, don't to said think at and be I we math

of think year about cool So rollout like about us get and We is when that you're I and to now you've was do become don't others I Ace that. that the available, What machine. the strategy we change chips part latter try really want get a talking it. Why to very this saying, to better then can given know you going. do listen,

probably really what chips So are have level to fourth with we X,XXX think that you're I enough doing quarter that because going get to about to for we're talking in test other locations. not to

And it. one last for one Got then me.

early test retailer? at service the that large the Just commentary to with started any has extent

delivered interesting. with set. it's the really Yes, have crazy. have remember, crushed in Their store. execution today They are stores XXX They we labor that XXX, just in still not It's it. -- struggled

that category retailer, it's this story of And so execution overall their been they about with initial only labor him store rate. there's because to really yesterday goes execution back and we the if that, it says XX% makes actually talked a it, was this a an ever struggled shortage some it but to and have sense for

working together the they're test. start see that. it. like We're to you'll And come think for So that I'm in something I on working 'XX. hopeful

great. All very Got it. much. sounds Thanks

Lee. Okay,

Our from next Butler question comes Stifel. with Brian? Brian

taking my Hi, guys. question. Thanks for

problem. do you big when you're Brian, the guy? No wear bowtie hitting a pinch for

You that helps. can me it like if imagine

So piece. I the inventory guess on

of out. some on color good kind how it plays gave You

So fourth is in XXX I understand million XX million, quarter. it if about to the have correctly, you million XX

million quarter comes over of guess XX I the leaves right then leaves it? million the in that that XX of million. to that you of of that part XXX additional, maybe And rest way first and that So is another a Is you think 'XX the off. 'XX,

Yes.

the is you think, business. the I have to grown have one thing we remember Brian,

we're back to we need had more beginning. going So the in than inventory

of we'd guidance going minimum. think 'XX, very $XX give XXXX, about I inventory didn't another to million not think at disappointed this we're we we But take point. if be as in out So

Okay.

the the back point? grown not business to million XXX because you're So that get to you've going whole actually

Yes. anything about but it And Hillman. balance making mind, other Brian, with said quarter, business got we've we last I we've this to thing these Rick back in that is been we I think, keep Mick the doing all suppliers haven't mentioned to and have it way partner the quarter sure XX-year to

we're sales we is XXX, But still of to we'd have remain suppliers weren't strong quite our why So part part as other the like. healthy. mentioned as managing make sure the Rocky

by have suppliers don't afford to Because don't let just we -- to go. spigot again, can't turning keep can't roll their the when act up. and want start balancing a crushing them key it's to off rock be our We So and we not them it. them. want hurt to employees we able We

balancing this with our working act suppliers. of part So key is

helpful. guess And I week on the that's on and color you big perspective? the can EBITDA in from some revenues fourth one extra that? quarter, Okay, then the How magnitude of give

that week Yes. they're slammed us about with I it That's in just so was But the think thinking spring, there's wish unfortunately. week really much about There you going Christmas, an extra the screws. for always deck that isn't if on not retailers, handy. Rocky.

about Brian, Yes, actually a. b, just I of is would you then agree. days I only And it's a lot think when holidays, activity. you what three tell not there's

ship week. we're that benefit are for not So that bit really top not it's because stores of only RDS very open, but product a to really us The meaningful from line going there, that machines business is gets much those little perspective. are a

metal then one. talked the the quarter maybe And down that probably in through I maybe lower and As how XXXX? the work P&L We more comes Okay. last fourth container important the prices? guess or about in What down, about benefits. does coming that cost one

We've see some softness. to Yes. begun

is relative we way in China the the to Taiwanese And the commodities would still is that's you norms. it's And lead have PO. If our work then placed XXX at inventory. historic through steel, days tell flow to you we about business pretty we for look you steel think time actually got that when our high

I'll call So five we feel six XXX benefit. before is, days months it it or that plus really

in half we're going And so the placing half not benefit any this to the of second we've into year, of the POs feel second of been some even that 'XX.

Okay, that's my awesome. questions. That was Thank you.

Thanks, Brian. Okay.

Thank you, Brian.

question next from Bouley Our from Barclays. comes Matthew? Matthew

taking everyone. Hi. for Good questions. Thanks morning, my

Hi, Matt.

guys So long-term XX% stuck annual growth. in to EBITDA of you guide obviously the terms

these we of seemingly year? that XXXX next second quarter? is shipping input As perhaps pieces, has guess is kind volume outlook My larger growth dynamic. costs Could ago. costs Thanks. in that we're as talking are outlook than you since in greater I expect of XX moving input to question about -- XX% ball EBITDA days changed what or more speaking given the and costs of your light guys crystal the come tailwind down

Yes.

from again, we you that to the as think call. flow I But in quarter. benefits to think guidance Matt, speak through, how our give going to about said we're tailwinds going second going not as you the right, of on this are they're remarks, prepared in begin the

less first containers to highest see expect see P&L. we're frankly, May, there And from the that you're that. suggest. the two in half to our algorithm of feel going would excess seen would a half benefit the tailwinds tale should some quite we've some we flow timeframe costs think what in I we halves, quarter, of the benefit June as So some going have yes, second the through with said, probably -- That of we are and of first that

in there think half our said prepared XX%, second business those we years and bullish of taken we I given talk we're that above term about with 'XX, there be that 'XX we together. into where and we're as we've slightly that seeing we below expect commodities. again, feel it. put again, are pretty You we're that price remarks, about the will long more the the and is, And, we slightly And about years what as think that

Thanks super it. got one helpful. through. costs That's that, Rocky. then so Got lower second -- you And for the on coming

actions, about expect that of foot price would retail customers to Hillman a kind result past to traffic? think about at earlier categories, spoke pushing would any back the kind you've would And your obviously of try in perspective? reduce price to you these accept on all category When you price from your in any taken. different customer drive willingness prices four increases that You

Yes.

part you price mute you're XXX. it. think to any of pretty it's is to really a or pricing hardware not project, of for either you about nice you'll an way. need they will talking driving But That's don't makes that we've competitive of business, some that not gloves kind sell, the about any pair when part really the that with example, remain the project, but things the able retailers daily have to hit activity three direction. We in have for a of I their with any of They competition. It's when being such solutions competitive volume world customer. And either that it the volume promotional seen sense. volume category benefits through from as combat. it, part our hand In of and see part being that project. go expensive will point all remain case, just based And the price can't Matt, do their we really drive of that think sure -- on normally exception it's just make that versus versus a job. of hand They small part

helpful, one last then it. And Got That's for Doug. me.

think more in I perhaps impact a scenario you you or were the we hardware Should going that Thank destocking see the protective just recessionary there the side. speak to mentioned in in on, some destocking to of you. kind on either there? side term Can category? expect near any

much, at Matt, not Yes, all.

movers, weeks. that As would slow some XX them got I take I weeks say, XX SKUs to from time, are that can oh, I somebody down last said there's

reason, product time retailer's see any the some other get to Asia haven't follow And the other reason front is now been that ship from able distribution distribution the seen they've to in the that some And impact you're that with you that's back the things days. days to centers was about their than through XX XX from center. change it obvious companies it big is what through get to PS We there the much your of and it Matt, in HS. one that really you do seeing we of would

going they don't if what's and down out store, that XX the And it's of way, there's had. side, about the because majority have they to there's be a figure Also, to reposition anticipate some few that we HS screws so not on to is folks can product just a to down in Florida, same in the I they they're on the and direct need insurance that lot much, retailers math, a of to or of don't drywall out do. going talked straight So amount lot once sold with there's PS, whether deck because there going stuff demand we're we not. that be just business the any, going help whole may

right. Well, luck, Good thanks, Doug. All Thanks, Rocky. guys.

Matt. Okay. Thanks,

question Blair? next to lost from coffee. from do Merkel She Operator, get you Ryan want take Therese. We went to the

was sorry. on am I I so mute.

Stephen? is Our James question Volkmann of from Instructions]. next Jefferies. coming [Operator Raymond Stephen

Great. Good morning, guys.

Raymond a James know morning, Stephen, and big I there didn't this merger Jefferies. was

still 'XX demand? year a you beyond? guys maybe directionally, Most Yes, you into think considering for I SG&A knows, XXXX sort an been actually. kind need to that is idea. and would to either. probably it just you SG&A say investments or Thanks question. them the curious should sort making -- Do make you're of a But do answered drive about of who But of I'm sort typically a of on bit be was it that back taking going of of I growth wasn't we would how of aware choppier pull to -- overall have of my of sort

historically, that marketing other and know cover, the you that the Yes. a companies hit spend, and you from they Stephen, some SG&A big before have ad first they bucket. of who folks hit

we don't that us, bucket. For have

So We're can or can control. to we of marketing advertising we'll what we not -- network organization. can bucket to control. control or promos to we we're to going to have people a year do But to control big everything in going what hit. next service we actually don't But to adding our our we're going be everything service do we

So this? you thing. see Rocky, dramatic right increases anything on the you'll see cost But or do us savings won't either direction. cost

second and third would should did we call add thing quarter, second more the I to flexibility, the end pull on No. actions quarter our ability our some only of we around The talked about costs that that and I the in think say, we our SG&A take early some provide levers. this at

performance we in quarter. in nice see had the can You third SG&A a

sales don't make right the in to sure business in help we areas to but organization the into areas the continue continue And said, in going fuel fourth. organization, the forward, service benefit business. to like we've not to we're the in that to spending the that it spending got in provide cost that that drive see expect We Doug the growth

sort whatever might with then that isn't customers sort of about maybe of sort question, going just new super. adding layer just for by sort define any how expansion this driven SKU existing that, does Okay, I of forward? should just guy we trends, XXXX? or of I in that volume or think customers be market how new end guess business but would a And as And new of

Yes.

historically, and So X% X% products as that's top to business year. existing algorithm existing the with wins think about customers. line growth, new that's organic the we principally X% every And

about. of it's items additional space share There where construction, we're of in sit competitors. we're today play new from So taking as us that couple concrete a are lot for like taking we a area really shelf our excited screws,

sight about think seen our 'XX. we what about 'XX that think we've expect to and as got line X% we of in plus and be to to would last As years, XXXX revenue that we've the of similar few we

Super. much. Thank you very

Stephen. Thanks, Sure.

Thank Ryan? Instructions]. question our with And Merkel from you. Ryan comes Blair. next William [Operator

Hi, guys. morning. Good

Hi, Ryan.

the if it's quarter So And trended trend the and through my curious is if stable line question what first about trends. declining? on about just is really is sort into sort I'm of talk volume of volume Can or you how October?

bellwether, When improvement Yes. thing. retailers Ryan which look, actually you QX first over of at did the I our HS the an the several see business, half, best and is same said our we and think in

as XX% is had. screwy remember, their that spring this they of of down part result Now a

them But seem that up to definitely was they quote a little retailer, July pick see things one amazing weekend, got that X to I'll better. after it So better. bit the

seeing what we're they're I now. slightly right been So than would say better they've is

it little half gross of XX%. XX well. the the a was for the XQ, It we sounds as cost or inventory. the view half, due that That is kind right? better? first in like like then my maybe high second it. below maybe And sounds 'XX? it to about 'XX then But Got of that baseline the as Can Is on margin, think that

I baseline is believe Yes, for business. we good XX our a think

And the Ryan, quarter you so that. as be think it, below may first slightly about yes,

rest or we think second, rate. we expect would as the the year, the maintain grow I of to go through into that

And last I through about of Okay. you costs. million put me, think then one for XXX

curious, over as Just do you can costs deflate to how keep months? the next think you XX much of that XX

Yes, that's me know. a -- that out, if anybody figures let

never we've the look we it here that think been way I is at before.

Now been if would you time a there's retails Ryan, price never and go where to price. up back up, past go would times, we've go given back

there's going lead say the we of We us and it That's I reduction certainly America a naive our with and -- happen with we to supposed what's time. happen say happened. And term honest, changes worked it over be momentum retailers to very we as you'd to what's We is of about to on. will and then customers. price I be we'd that But if inventory I of what think this customers working long look know to that not that's the guys. don't our some big this one those see be say, that worked have What continuing, the place was probably happen. know know know to of for what's normalizes back would to so pricing the we Ryan, retailers justification North most fuel. part with as be is to there's times. that know should one, fact container our would would say what downward that's say that do back -- we The taken let's the the I eye that with crossed don't that's result be in would it talked that in nor given going suspect in going would back one worthy I say

Thanks, right. All sense. makes that Doug. Yes,

Okay. Thanks, Ryan.

would Q&A turn portion And Cahill call. Mr. the This over back today's to closing you, of to the Thank Ryan. call concludes comments. like I for some

customers and that us joining day quarter. the Hillman suppliers, every to joining contributed forward thanks it today. you do And I everyone our thanks future. us the near folks at for again again, And updating We for want thank the this for look morning. to really to Thanks. us importantly that in

program. does This our conclude

wonderful now disconnect. Have may You day. a