Hillman Solutions (HLMN) 22 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to the Fourth Quarter 2023 Results and Full Year 2024 Guidance Presentation for Hillman Solutions Corp. My name is Towanda, and I will be your conference call operator today.

Before we begin, I would like to remind our listeners today's presentation is being recorded and simultaneously webcast. The company's earnings release, earnings presentation and 10-K were issued this morning. These documents and a replay of today's presentation can be accessed on Hillman's Investor Relations website at ir.hillmangroup.com.I would now like to turn the conference over to Michael Koehler with Hillman. begin. may you Sir,

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

harbor and me we Financial that are on safe securities assumptions Officer; These our John Michael our such Doug in certain are Executive Joining audience materially to Chief and certain Rocky of would and applicable subject call provisions today's of cause Operating control laws. statements. like company's many uncertainties, may our be and forward-looking differ of remind from Officer.Before Officer; Chief guarantees made President considered I which actual not call Chief those Cahill, future risks, our the to Kraft, are Adinolfi, and factors, today's on begin, projected statements subject statements are other performance forward-looking Chairman, beyond may and are to to results

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

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us. everyone, Michael. for you morning, joining Good Thanks, and thank

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meaningful.We year the by years, continue as approach $XX number wins X.X% year by XX We after product fuelled increased growth these This acquisitions This hardware channel, Solutions shelves. years, team coupled ensures pickup grew the ability that helps recently, the over years XXXX. team with and existing want HS business us on in stores great been that gives particularly consistent Pro believe win new other our that our won and over growth data-driven accretive Hardware traditional business. optimize continue hardware's the traditional partners. have last on years, for again to we versus new XX-year with million the we one.More X%, we'll convert to the XX% price, platform up Hillman space and execute. are grow for is moat business and growth where organically to organic CAGR believe what unparalleled, is up entire this legacy our the XXXX. makes We customers. to and X.X%, products XX,XXX we to past partnership X that exceed of X% hardware and demonstrated year customers' with products about XX leverage our business and mix shelf know with continues Combining type has runway customers. that future respectively. average during Hillman in hardware pick where truck Hillman continue stores into the and confidence our alone. the to In Our will performance about words, our Operationally, challenges an our the built is line DIYer no acquisitions past supplement new customers.Our XXXX X is of our the that This do of It per in top with of our we has matter we

wins schedule We reducing During by inventory some the of flawlessly sizable across these XX%, healthy new rates are of business. business multiple over we maintained our customers.On $XXX biggest launched ahead our year, fill over while their with million three own, of accomplishments.

and XX% home. We their new year of prepare of which by Digital, Protective and projects number season, helped launching Rocky adjusted on into sales. new details. Robotics that to However, and team sell business.U.S. soft bit take of before XX% distribution successfully busy decrease grew and sales existing environment their the done I'm And the results XXXX. our three XXXX turn a XXXX.Now from totalled nearly year.Net sales pleased Hardware while the turning to wins home the a it all full our $X.XXX offset just pickup a just in truck was Hardware XXXX projects so for hub to segments of in cyber and early sellers to drive highlights drive with midst in sales up home XX.X% a house At XXrd navigated decrease XXXX, our in nearly of & week from included on Kansas for for shy business was homebuyers EBITDA the all I'd Hillman, our and Pro, we while by $X.XX financial home City and remodel incident midyear. DIYer we moving repair, to our Solutions by hit totaled year our as did a of to our year. businesses, with million homes which our the our macro maintenance price how billion, Protective California from Rialto, the overcoming XXXX over their fix Existing like & dream importantly,

excluding XXXX. the flat extra However, grew our million XXXX, of adjusted EBITDA, time sales week top in XXth X.X% and line, our and the for company, increase exclude same XX.X% were margin throughout it X.X% gross generated With his XXXX, the business which business, revenue. business an adjusted Mick over heart is is third adjusted fourth from and our on over throughout performance X.X% years.For point healthy in each the XX-year way we the X.X% a maintain XX% XX% hardware on saw year, or increased as each section basis from $XXX.X of our margins to history.For by the of our net gross bottom of can from Max, for quarter, quarter the points XXrd XXXX.Further, XX.X% sequential XXXX. to during we compared year, XXX you our Rocky the 'XX, at increased adjusted our XXX and on.Now and week. XXXX guidance margins This basis gross believe line improved We touch later improved growth during ending improvement overall Hardware soul the let's the Solutions touch Rick up of quarter. the when biggest makes XX will for relatively

the our Solutions customers.Our business majority revenue. overall organically as of XX% with increase the makes drove share wins business our we of New about our up grew Protective

For revenues the year, protective XX.X%. decreased

However, PPE protective XXXX's week, revenue sales X.X%. in XXrd just COVID-related excluding decreased

& The period, key the week, encouraged Digital a flat increase up the a revenue strong talk RDS, this about in especially year second finished for X% year the versus up comparable very we forward, new essentially XX% XXrd self-serve, offset soft and kiosks. remain business, our revenue was about in XX% half market.Looking time from high-margin COVID.Robotics last makes RDS or excluding minuteKEY Solutions. the RDS overall Protective was X.X of should we our or minuteKEY the revenue. our duplication Solutions, kiosk be we of XXXX nearly Thankfully, our up XX% relatively

RFID about include during retailer, middle of duplicated. XXXX. minuteKEY for to top We only now minuteKEY endless-aisle leveraging that are this year. We XX believe not duplication initial This results office X.X smart means Fob self-serve effectively are great for and We the are to out that minuteKEY can we their our auto the home the #X that field for rollout this customers services currently and our very user in our encouraging.Our machines self-serve roll consumers.Additionally, key excited any are capability. X.X transponder and and and anxious machines machine expect are capabilities new for have technology minuteKEY capabilities and these machine the the enables X.X machine on get our but during

key. will machines scan Our the

mail customers the duplicate days. seeking key. the and the plant Arizona to in boat, few will unique get directly aisle unique the riding an customer a a to Tempe, out-of-market key endless lock problem like solves We cut keys lawnmower at to and for that keys.Further, key allows customer This our just in

someone example, will get be Red Los For in living Cincinnati able key. to now Angeles a

inventory, team, service There, which store in service-related basis. maintenance field routine on cash on customer of and part X,XXX replenish and a our perform machines. collect RDS Our our our regular is is they

which which for leverage makes drive line of up profitability saw RDS versus revenue, half top several have X% in about the XXXX. new Canadian technicians our revenue our XX% for opportunities team of a of in We 'XX.Lastly, the skilled will to space, this segment, second decrease and kiosk other companies

for important service but sales like share it's their It's Following us have on again. a a economy this which and business.Our no since results. market mid-'XX, XX% on which has the the 'XX drag continues volumes business, Canadian strong now of exchange Canada in before, makes has strong on were market XX% been think well XXX XXXX, secret sluggish, a and foreign touch to has roughly for over provide year our years.You they retailers Canadian major all about talk that I in to have about been retail heard up drag the

beginning total million increases break amount cumulative inbound a includes million approximately flowed since products of and to and down transportation cost experienced gross implemented of XXXX, inflation. price lower cost statement and of of of our ocean million $XXX to which the in shipping, $XX in inventory have labor.As margin. cover costs the like commodities 'XX approximately a of through These our We $XX income containers, out of million improvement during sequential of $XXX we

and are We the above like see we there.Having remain of port expect side at to we the some now our the freight stubbornly margins charges. costs and stay with or which drayage, said curve outbound service historical right getting rates, continue power includes local that, at labor, to high,

again year, meant customers which X.XXx tuck-in capital flow, that resulting The down leverage million of year-end take the of we to tailwind the ratio by product of Midwestern-based chain January, marks that to and a first. during $XXX disruption of the of that during of the pay as well is our to doing the at customers, on January, as small our majority discussed, yield Sea acquisition way, ocean in cash to come realizing we the growth of increase are Red we from Panama we've sourcing as seen shipping, debt. in our way. of products Canal believe long-standing from products M&A customers acquired working to move example to inventory hardware we advantage Coast, through via will already Suez generating their so decision but fill have to uncertainty wins.With Industries, we outstanding. to logical Asia we're into with team relationship supplier we used of level the the during is Canal. making top five saw our the M&A free fill West our with there a turn and We been and customers market obsolete strategic the product care global are Hillman discussions Additionally, our our week grow. once of has new worked existing situation.Let's could have our Board products. report products Since news impact rope each taking invested recently feedback of impact network, to minimal inventory won rope on containers to the this related our the new at cost has with supply real and and expansion reaction category yet on chain chain times bring we year.As store been Having strong our are Since closing level. rope go opportunity the Koch place and keeping we is lead our in we the inventory protect inventory.This these acquisition second a tighten service, why a or there. our grow in had for the excess I'm and of no end is our This and one expansion out while in the meaningful us. have balance We the close as Back from benefited has XXXX, This new gears opportunity a to sheet. flows, rates and and to subsequent out a chain accessories change the our proud continue business service.Customer the we Koch rates can and for dramatically. and great of synergies The to another things negative on sell all into eye

long XXX,XXX diverse sell locations that value-added Our SKUs confident on serve, of certain you to of encouraging and happens business day.Now because get Hillman. years us our believing sheet to something XX,XXX until across product and record with the at with of every XX ready to North nothing into we and categories our We're because customers track offense. about each are its the services Xx, we're resilient we below end markets provide way play America balance the shipping to XXXX

are turn customers, differentiation that, value-added our We let for talk and moat partner it me numbers. our embedded an competition.With Rocky to provides our to versus

everyone. and Doug, morning, good Thanks,

over nature XXX increased critical by highs gross the don't Sequentially, relatively during top basis line XXXX, our some and of lows that quarter. XXXX.For products demand versus is quarter $XXX.X extra XXXX, year the to going to of Before our and XXXX versus of consistent. quarter the when XXrd Net gross XXXX. improved products points I part provide adjusted decreased is summary of everyone revised fourth the XXXX fourth that but week of which million came slightly end results. year, into adjusted often quick a maintenance our included remind in our the customers XX.X% XXXX. excluding full from towards our for XXX compared the totalled because during billion, basis get the would do quarter top our and range.Remember, year week.Net nor sales these full projects, slightly full in sales of XXX our year guidance to I that I'm experience customers.Fourth fourth prior margins third profit versus resilient the year from outpaced up of to for XX% the guidance over our a biggest X.X% XXXX the down XXXX, basis year-end to $X.XXX an profit XX.X% We like full net quarter and XXXX are year quarter repair prior margin points points increased sales margin the quarter. to of

to historic in to finally margin a increased second sales of adjusted SG&A the of to the is and as XX.X% pig As rates.QX Doug returned the python during say, from normal quarter. year half XXXX through ago XXXX, XX.X% the we percentage likes

driven of to SG&A investment For off ahead our positive which XX.X% XXXX had million in exceeding a a for $X quarter price and coming second full for year ago and our IT from the $XX.X during periods to environment, in Adjusted EBITDA RDS to XX.X%. soft expense which Adjusted was talk were disappointing EBITDA increase in cost, by quarter by increased million. $XXX.X driven quarter Canadian offset revised XX.X% million comparable the increases $XXX.X was of XXXX, range, of percentage employee adjusted X.X% mix both a Adjusted year increased in increased full the bonus an fourth EBITDA businesses.Let's a impacts sales standard year million, guidance during partially as bonus XXXX a the a balance payout.Adjusted XXXX the in row. the came by our midpoint and sheet. increased macro and flow on outsized cash of SG&A

versus During $XXX improvement Driving in XXXX, for management.Capital generated million $XXX to XXXX. million $XX and a in reduction net in were XXXX. operating million cash compared $XXX $XX of year expenditures activities inventories the million cash million was the prudent

$XXX end down with debt. million continue and Quick and X.X the $XXX benefit, guidance $XXX $XXX.X Tag Driven important free versus pay and cash meaningful high ended to are X.X parts in flow debt XXXX. year CapEx at totalled accelerated for million minuteKEY of million cash working year, million the flow which machines, We our capital of million used a We initiatives.Free free initial our of the end invest by $XX.X surpassed of versus our to internal in XXXX. net cash our expectations.During XXXX exceeded of the we flow

new we of plus X.X%.In that the market fixed an the end the expire. yield swaps all-in entering January These existing XX go point debt end our end for million points, swaps. $XXX expire spread at third XXX of about swaps adjusted quarter at swaps fixed into at advantage December, QX, from for will new spread day have was expire at of the $XXX our swap an basis the quarter X.Xx borrowing XXXX.Our we Xx to basis about borrowing our swaps XXXX. and million cost new entered XX, all-in into a effect cost plus on for at XX, the on that curve basis X.XX%, XXX are point the into swaps the These These net ratio agreements of set existing EBITDA July swap of of the of trailing same X.X%. we which end QX. of on XX-month by the of Towards X.XXx, Currently, took and improved are inverted

a net of, during fall top to our we X% ratio has anticipate lift which adjusted do $X.XXX me the midpoint predominantly The near long-term and a year This from headwind and X.Xx, full we growth. talking market of outlook midpoint acquisition.As with Koch is any Our the EBITDA growth business wins.As line volume new guide, decrease GDP assumes relates to like looks customers, you X% around X% XXXX.Speaking minutes make expect, up a billion business the X% XXXX X% dependent grown to is growth end we which market billion. top X% between upon price, Xx, our sales consists from volume X% our target our our from unchanged XXXX approximately to to lift driven sales a spend volume it assuming We wins a below from X% lot X% their guidance, midpoint net for of sizable line and a line would going POS. by billion at growth, X% few a will price is new volumes, to to of made Historically, top be from $X.XXX X% be our $X.XXX at annually. about guidance expect remains remainder and our of we debt of acquisitions X% and XXXX. not let about and

our X% economy adjusted $XXX The total million. consumer Our the health year $XXX of million of between strength an million ability midpoint bottom impact of full and line, to we represents market housing $XXX business, our the expect results.For EBITDA the versus about increase XXXX the new XXXX. of win will and and will

come interest XXXX, to we lower in to expect offset XX% come from of for of XXXX, year, over we a to XXXX less in is expect full products expect purchase free patterns, we a commodity business benefit During gross above vendors of Keep a guidance the than flow to $XX to the adjusted expected $XX that the for we because Cash expect will margin cash prices, million where is our our the the $XX be and year be There between be forward year in material $XXX midpoint full cash long million provide by following which these term.Lastly, some able flow with to perform to figures of $XXX from purchasing $X anticipate full in $XXX $XX to the made level pull working to will million. the we which $XXX $XX to be next to bit cash expensively of between are and of 'XX XXXX, be modest return 'XX did years between million. range more million. $XXX million a partially range but normal the raw flow million this several was assumptions.Interest in into normalized and with million expense for million free in our capital mind following XXXX.During million. year million will

or play paying acquisitions expenses adjusted million will us XXXX approximately inventory to other taxes execute has million. $XXX $XX our excuse cash be low-risk approximately me. for pay our Koch. count and XXXX success between $XX We $XX improved of restructuring to put and share debt average $XX diluted during sheet down offense related balance position weighted million like in remain the million. between and million million.Our CapEx reducing expect and million, And use will $XX We anticipate -- $XX to

As at competitive above our us that, term.With back we over believe and to win historic moat growth continue we with customers our rate perform or and look the long will you, to forward, Doug. to long-standing to allow relationships

leveraging one We've our progress that moat, we can with new the M&A.As distribution we year.Looking through debt made additional transitioning California results the about add our truly Rialto, fired value we excellent we from made to machine either during winning Hillman reducing bringing ready Rocky. and inventory the to and customers down and to and from the we're XXXX about progress team's main paying forward, up of believe I'm are with our City, excited and M&A impressed during Kansas XXXX. business to M&A. Thanks, hubs think We via capitalize by Koch categories organically XXXX, started or on tremendous during

Q&A This customers we'll members all look We investors. our that, history.Our disappoint. suppliers, forward matters stakeholders and call. we believe control environment, with guiding we you portion XXXX.Our are during you macro, our service the and XX-year our only gain profit but year share can't commitment you happens drive team updating be of in until We as continues of to progress.With positioned steadfast. in not much our north healthy as well true to the don't principle While that something a Hillman. includes and once during increase live the model has our the the know nothing remains the we of it ever We do, very that's to to by sell our begin today's

open the call? Let's up Towanda, you can see, please

Thank you. of first Our [Operator Jagoda line the comes CJS Instructions] question from Lee Securities. with

Your line is open.

Hi, Lucas quarter. the It's Congrats on good Pete for Lee. morning.

placements in the I versus forecast the both and wanted year? then assumptions of Just ramp guess, of engraving throughout in to terms machine keys in into of growth are question, in growth built the first terms what robotics, know,

Yes.

for for -- question, on think the the quarter. Thanks compliments and as Pete. we So thanks the

better to we And what We're a about bit. to we've in economy, you is seen about half be expect But in we anything little That Doug, continue economy discretionary the areas we of areas you in Robotics want to spending people turns Digital, rollout? we we Robotics struggle think kind prepared given a a performing to And said just of some then half. the for would year. see retailers like ramp the going be As anticipating, spend, his this pet back don't on flattish think say unless year, as comment with that's in back the the first the performing see minuteKEY relatively Doug as engraving tough. the worse. would remarks, do towards overall, & such in half.So when

that. to lead as a more said auto not the as think to a as When performance. we're that we've got than again, roll about we're RDS, and these I with with we with Pete, do We're aisle and endless care have thing But you it.I Pod.So new to there X.X, transponder and support we're the the going taking office we're well Yes. lot service. RFID, capability end as excited that our out is for about can of think make just out -- the for and home about as capability and machine have the frustrated we But the obviously, Smart well back going excited one chin. retailer every about run the that repeatedly, and sure going are

engraving X.X%. if the keys, biggest one And RDS self-serve about is of full at rest So you that fits, up Walmart. given take ] customer the That's about makes keys, let we a growing is have on total pet way know discretionary, it But XXXX, and upfront. RDS, and when accessories. and look we it off. think you was customers part that's when But quicker. both that sense wish that's and us me in serve say which of that was -- and [ you I the

we a all at those that of full So of is And the they lot what good happened to machines a they machines serve elected to didn't out. that We then Walmart a out. to sell throughout XXX% take do had business. work the key relocated self-serve get of store. machines had We had year.And

machines self-serve front We to to saw we have sporting And goods go to share. the of XX% about unfortunately, painting the from vestibule ACC.

year. good So had getting at Lowe's, Walmart but ops they're -- places in machines around. the year and of we issues.So look and that companies with aces wants not even tough other we their like the to and Walmart customers key Depot and of out world and our when had lots and And a the with a major store you

we second of side And going should this turn and so 'XX half again. thing that get

follow-up. just And quick then one

the Any your talked the that making to introducing adds services new on about You next-generation what machines. sense key you're TAM?

can what, really, good a it vary question, you tell dramatically. really and it's I'll

about a today, consumer talking in you'll big we XX. you do, machine $XX what's going average key in and variability.What interesting first future to about the keys know have would don't ranging $X cut a minuteKEY be that's probably to versus what's key the and about the $XXX, so If is think the you're to $XX.XX the that from

that different that kinds we'll yet. So trades Pete, do as geographics, what based And as areas. and numbers little what it's on a how far of I see believe it's store different also early out, around

little us around average but to great for learning. key say. you us a doing get cut capital, is And what take standpoint heads percent for work, number excited so to be, get tell little a price they're we're the well, going around to new up It spending we're and we're probably it's that's there me early the all But key and need on. higher the retailer for -- to we're we our going about from XXX they us average are cut just so a it, will machines to as that. out It's work news about a of price and will U.S. and a early the was

queue. in I'll Thanks. jump helpful. Very back the

Thanks, Pete.

you. Thank for next question. stand Please by our

comes Our with from line William question Merkel Blair. of next the Ryan

line Your open. is

Good everyone. morning. Hey,

Hi, Ryan.

'XX. assumptions for start revenue with to wanted off I of the some

Can price X%. little bit? you I think you just that a mentioned down unpack

Yes. you get that going million. Ryan, it's I you if price about expect some we're over price mean there, about obviously, our do I time, said, we of think $XX in the back we've -- math seen what the down, deflation we've mean as you of we to can X% revenue, because and that. as on hold think we'll is expect we'll to that costs that business, we some would said come consistently we've as we're that.I half anticipating about do take

where the pretty that We're gross We've out. above little back historically. proud been the able we fourth like of far, Obviously, we so bit a we the margin that maintain it where gotten margin as we've to live. we expand about excited but are think XXXX, to we we're fact we playing year, what that's historic throughout And to really in were business that's about not But at, think think only quarter. the gross we needs and have. is

Got it.

Okay.

should more the kind the of that year? terms back price even In Or give that about is of timing, think through we second half?

I would our loaded, more speak. we're say but retailers as back-end it's obviously those having with conversations we

Yes.

my Okay. down the market And question, second then X%.

these things business guess turnover?And doing mainly you think Is you're how part interest question, the X-part question. I again? all So the do some there's just of the projects think that's demand? Is Doug, your start rates do What second turnover then fair. it increases, watching? if and people housing I that pent-up are of a works? pretty

Yes.

that's $X probably think drag and way.I 'XX. in is number it a help to And will think had start really volume but We put other. go in a perfect. see wanted always there they biggest that and our about products get of confusing of home February Lowe's We turn half second feel is think that, consistent on do then it probably a but could one second I you out $X being that sales, try you'll weather, not they January begin, really we we like Harbor a because to get volume existing trade, business.So see we number the see until being that guess use stores want. man, you'll And they help business better, think to our that ends million versus in Ryan, half, but there right? and tailwind. we this new 'XX and put helped the us their and million solve I into both that, Depot, really want People our think ready for million that's on number a that didn't and in what to to in house that sides hopefully $X I when out up the their why that it's our

thing really super tied for Depot would good to that good like great spring year. We're and them. partners been them probably we're for started I just I at into that really But think would think then and help It's Lowe's obviously us, help I would have years and think second are, a are they're thing X is for before get to and our 'XX. things moving this It prepared be hoping a it. starts because not spring, a half look good for, trying to to too. a without but It retail they the us spring.

Yes. Makes right. All sense. Best luck. of

Ryan. Thanks,

stand Thank question. you. our Please next by for

Our of Manthey question line David next comes from Baird. with the

Your line is open.

Thank you. Good morning, everyone.

So wins. my on is business question new

how year. had you million like you Is plan? more that? wrote Doug, your for current focusing ] this on you're referenced and is [ you check of think, the this on And is line that the $XX to is net in, exited secondarily, wanted that million. -- quarter? number that is I based $XX X% guess, discussions having, this mathematically, concrete off and that to I than X% X%, X% Rocky, said I And just

much line the that, we that of actually on Yes, weren't we selling Dave. wrote,

to And occurred. write-off that of led where so the kind

baked say, I has that north you to nothing of the about is probably already with that retailers. would do think So our and business of X/Xrds math. it, as done with

And so that of. we you rollover think new plus wins business know impact about the

we've still as numbers work years, a good the able last and at those been think today. to we've each to as spot hit got year least in as would about we do.But in And some I so couple we've say of been we're

our speak, the we in confident we working as we'll are on more. and field out pick up are Even new guys business,

better for that is actually That their got they because to have tells years. that we I been that reason directly some our themselves. haven't historically free complicated to me categories.And us. talking they as us feel did X even conversations than seen customers, things three of want in seen the them haven't we're Dave, and an here I having warehouses service I interesting I've imported that with -- opportunity they've about up that of these front that. doing

sell So the through that are how the to again, as they right and it maybe but with honestly, it's three COVID. tricky not that be And product. the change price we understand who us category about for discussions a them could with people maybe who we differently And it doesn't can they do importing we the category. and it them meet to going thinking us could have on going now able get, we're actually merchant really servicing to than show grow quite

exceed you'll this us like feel year. see I why that that's So number

That great. sounds

you overlap currently? do thinking you when chain. Second with I'm versus of those mean overlap question, on is And is opportunity. cross-sell number about think rope their the locations? What with in Koch and percentage the have here you're about what I locations

in over Or If you incremental you to that it the an are is X Koch's to at million looking multiples look revenues, $XX capture X years? of opportunity? of more

that. all Yes. to anything I three just add? first, Koch customers let That's I'll of our their start. But he's X% to turn one. Dave, me to this say JMA JMA, love share. has because top a over it place good

our really rope Koch. accessories, with little that, overlap. the bring bit accessories, Dave, to of product we're we're mentioned, then little about opportunity. bulk bring it. now Doug in and overlap, just together and because acquisition, to excited the solutions And question Yes, chain really Tiny a grow Doug. as package and it's to I'll add excellent able in very But merchandising huge a

'XX So that, about accelerating feel growth our we good really beyond. really in and

major customer. on had announcement about We say, call saw One, a and review. the a decision to line a they we're make

If to delay And something you that this, says me. we'll it. guys are own going to

you're our service.This the can we I when and really the a ready, had now players relationships great you be, know it growth pain But is over regional didn't because have, say, how don't take you've [ got we're listen, know in chain nice a we've the with I going take you let but category product some several service. us rope ass Dave, and here. think when ] Midwest see company. have and to will It's Koch service that big of

is just like Hey, was make clear. sure everyone talking the category. JMA Dave, to Yes. about What that is listening

they that customers, probably already aren't think you little about And overlap. But servicing. have very a don't we when so customer

put has this goose. the So it through

That great. Thanks, guys. Yes. all sounds

question. Thank by next stand Please you. for our

comes the Stifel. line question Michael from Next with Hoffman of

open. is line Your

for morning question. Hi. and Good thanks taking the

Michael. Hey,

so transition get and year, of just puts this of and of the through cadence inventory out the Hi. rebalancing the all of Can your of in the we end COVID talk we gross about margin and the that? XXX the takes sort all

Yes.

or I about think all we said, is we be way above to the our it, to Michael, at historic as margins expect think year.

a expect like quarter that pretty happen, profitable. about a remain fourth think you price to look start give just I margins second the you be. year the we seasonality. usually at profitable that with again, and kind historically It's sets of levels. this the see again exception that of that bit, historic to back margin to going most being et as some about quarter, or but believe where Obviously, think quarters And we that third our when did. And lot a the we to are to think will floor still the will come you because probably Hillman, of So going would you down anticipate cetera, our is above first then be expect

Okay.

at So and we're the XQ XQ even be higher, below and year, actually all may XQ XX, just maybe to were it to and -- then XX get balance?

above said, I all be restate year Again, level. to I'll I'll Michael, what historic every or we -- that quarter at just expect

keep are traffic? your Okay. issues. And foot real is pace then business having you doing traffic despite to What -- customer differently foot your so on their

Yes.

move They're business, you strong service doing Depot product load. of and in the just little, [Technical Difficulty] year. when a these to and foot and I and as hardware the they've of some say think traffic fleet, this of that in got the refuse this and and think got XX% farm XX,XXX represent they've them and they had really if not I past much partake clearly they double-digit about seeing you have little Lowe's, your stores, We're kind they well issues.

around. kind three think Depot not impacted But are foot both spring traffic. that as are so Lowe's And it's hoping the with that years. And X turns and been for I those by and of areas midyear, certainly being tough

Okay. one And look I squeeze like? more. could What's pipeline your if M&A

Yes.

dozen this there And have all guys They can be has brothers wanted and things with well ] and -- for inventory. fit lucky, we Koch because we had face ago just we they to the great their the to happening And feel do we've was the what come ear with didn't we stopped One debt not a got know it. we on a of time helped the right like honestly, spent But [ owners got retire it let's will buy. two couple and that we half for in We private of them this company, of years and honest buy told the and really And a Michael. know, two equity sharpening again, the genuinely time I ended they we during we about stock we wanted will And run to wanted care of.So love company us got us.Ironically, that market build were buy just already could, Hillman it, us. together. brothers and XX great those, they them. who no fact got when they was Minnesota very also the to had what's and just time. thought for know waited this We is buying that a to up that very people think them, when in a know and we're We've week. to integrated team. taken they

Got it. Thank you.

Please stand question. for you. Thank by next our

Benchmark. question comes Garner of the from with Reuben next Our line

Your is open. line

everybody. Good Thanks. morning,

Hey, Reuben.

been you guys. resilient for hardware has fairly So

the Walmart you embedded with Solutions, of kind changed at about category Protective quarters? talked couple for maybe in in outlook the And what's 'XX? of what's Can issues RDS. talk You about that in your last

feel new years. proud We've really focused business got we've good been some excited We've, and It's in the into which nice is say, products. good about space, Reuben, we've half that We've year.We part to that positioned led of new of shelf team a got bit. place. we're the done 'XX, incremental in And really at rebuilt a referenced introduced yes, couple that back that rebalanced the we mix. back half I'll glove some business mean growth about and I opportunities, the it. We've team's has earlier. off-shelf what Doug look remixing last able of of the to that of our where opportunities on 'XX, what maximize

with about So we feel to really grow. continue our good being category, can a that go-forward we

gardening there. expand our interesting line I digs in we've ] it's wants into got starting like really positioning partner hold.So think And female that to for really is other take thing, a retail because [ we've products now is to the Reuben, great name the us things other got a the side. some

the tool first We also if the introducing will, time you but high, fantastic. that the a higher there bag pros up pretty and the price of a are want. points quality end, And is it's lot

to we're Pro, think bragging in differently like don't the like the fact it they don't they hit can work trying that have buying to now that So And if goods. point, get the X hit point buying they we lasts these about want one know know and years. year. gear the pads interview that five retailers of or four They because and more right they that knee these them a and to price price them, historically,

Yes.

without overall guide people thing the lot we PS is, as only pressure. I modeling the look I will for price add would like think, a are year, probably the the just Reuben, think

hardware part of that chain Got get kind there M&A from you of to rope to grow the starting like Can while it. you of are bolt-on story. other outside been to since left kind a and it's perspective of has where are remind us areas point And got maybe then you've are little Or aisle? of the hardware the a in business? go the been to

about outside. say nothing obviously, plumbing which looking more an Koch we electrical, looking with at, is business, probably crazy. would Xx there's think anything not we business just to call are equal and consider service would the from hardware. able Reuben, amount But consider the to historically. cost with a again, add at line our then then capability, I and both.And going inside zip and with like always the it, do I what something but that and we're that corner and would you a we're standpoint, code we buying has that it like around No, relationship Yes. through pre-synergy, not say that thinking our we you when what than look top But -- in just

Okay. Congrats guys. year, and year, last luck this to good strong on the close

Thanks, Reuben.

Thank next you. Please stand by question. for our

Our with next Brian question comes from the line of McNamara Canaccord.

line is Your open.

have minus year retail price customers, particularly lock materially your a in? the been ask that haven't or the What to pretty goes for on? place to shy could Good of foreshadowed this X% bit probably On would but XXXX some morning, as price a X% is little know taking the time, guys. have pricing, minus than I expected Thanks for questions. is in heard, you we've some better as that better I home make back. worse Doug, for Or good centers

it's think I those here's bigger Brian, you the about for about the use -- X% as an Yes. little a it. That so way just let's little think than a and X% timing to think example. decreases is

in first then in it our as June. say such, It into be goes effect Let's 'XX into but impacting something rolls the may 'XX half.

the So to a little that, as accurate, is question how X% answer than but bigger it's things your roll.

commodity Brian, benefit mean I a seeing product and while it's States, as thing we that every on not seen last bit you think virtually, But -- it.I containers, about United Rocky see dramatically. into today, cost at, And a other we've we've there's Once China when cheaper. seen I about you mean did we benefit, category in cost, get get and only the we to getting year steel isn't and see talked up -- that. continue we've Taiwan would sit add, is we The it's getting labor inflation. the bit go a look Yes. of of nice and cheaper. we're all pretty

Chinese explain they going business we New a helps happens the New to about there's and why think we of so direction get to to profit. happens going into future, about Year, a and a our Chinese that need of us lot think after Year.But we'll our prices as what different typically be lot what prices fair need be, that see Now

business? larger materially guess and fair. projects, this to year Depot your impact plan guide That's customers another Does projects. expecting smaller I with of deferring on Home taking the ability

don't think so. I

they've DIYer halls, I backyard. truck think of so pickup I been. people of of up want they're pick And off at don't looking The that's or Ryan, where in we out hoping tickets DIYer, and back that get truck pickup look -- going ships DIYer, we're little Pros the about for normalize and to the cruise is thing when now. mean one we'll they airline play know that the you off. into and bit. the the concert the the get see we're start is probably how that the to they do to I what to do price right a

improve. So see that's part like we'd to the

last After of a investors one And sustainable last the just generation really haven't a few last one, normal? years been flow given year, one. flow business the generation particularly cash nice quick cash it. in year in Got about how to free think should squeeze

Yes.

to I of we think I said $XXX remarks, think free prepared this million benefit. $XXX cash flow, Brian, kind of normal million in is my

XXX X year. look last million year. about the this last years, XXX to If you We're we guiding over did

we we're north we normal EBITDA. flow you as of just If of $XXX that's We'll million, around the the in time those that in we as the is taxpayer probably &XXX kind that average grow should today. because U.S. over what business think think taxes challenge have that, the full generation grow bit that's about will out, so one million.And cash cash The a not a we be. future

down We flip pay to do, bring eventually. as we continue we'll down interest the side And obviously debt. well. then will be And we as that is expect to line

that better a to obviously, be feels go as XXX we if this the don't And would guided than like to disappointed XXX year. We've So number. year. do XXX good we we through

a of Got lot, luck. Best it. Thanks guys.

Brian. Thanks,

Thanks, Brian.

I remarks. the call Mr. Thank Q&A turn would Ladies now for over the portion call. like back that to Cahill closing you. and of concludes gentlemen, to today's

more. to do find particularly grow the customers for day, in do. Thank to continue store allows team to customers you. things for us We everyone, ways morning. lucky joining Hillman be for us every we our each us importantly, to us And vendor partners. to and this we're importantly, continues the most Again, do great that Thanks, got at allows have this and to

So you and to future, we forward joining in updating look again you near for the this thank us morning.

this you and call. Thank Ladies gentlemen, today's for your conference participation. concludes

now You disconnect. may