Q2 2026 Hillman Solutions Corp Earnings Call Transcript
Key Points
- Hillman Solutions Corp (HLMN) reported a strong second quarter with net sales up 10% to $442 million, in line with its long-term growth targets.
- The company announced the acquisition of Cambridge Corporation, a leading master distributor of fasteners in the industrial channel, which doubles its industrial business and expands its addressable market by 50% to $3 billion.
- Cambridge's high-margin business (approximately $30 million adjusted EBITDA on $65 million revenue) is expected to be accretive to Hillman's margin profile and generate strong free cash flow conversion.
- The company is raising its full-year 2026 net sales guidance midpoint to $1.695 billion (9% growth) and adjusted EBITDA to $285 million, reflecting the expected contribution from Cambridge.
- New business wins, particularly in the Pro channel, contributed 4.5 points of growth in the quarter, with the company confident these wins will generate at least 2% top-line growth next year.
- The Robotics and Digital Solutions (RDS) segment, the company's highest-margin business, saw net sales up 11% and adjusted EBITDA up 10.4%, driven by the successful MiniKey 3.5 rollout.
- Free cash flow was strong at $70.2 million in the quarter, and the company successfully refinanced its credit facilities, extending maturities to 2033 and 2031.
- The Cambridge acquisition is expected to provide a material cash tax benefit of $40-$45 million, reducing the effective purchase price multiple to 8.4-8.6 times post-synergies.
- Adjusted gross margin declined 120 basis points year-over-year to 47.1%, and adjusted EBITDA margin fell 130 basis points to 17.4%, though both improved sequentially.
- Core performance growth was only 2% in the quarter, indicating modest organic demand, with the company noting no outsized change in consumer demand recently.
- The Canadian business saw core performance down 6% due to soft market conditions and FX headwinds, partially offset by strong new business wins.
- The Cambridge acquisition will increase leverage by approximately one full turn, and the company plans to reduce share repurchase spending to focus on deleveraging in the short term.
- The company's guidance assumes no meaningful change in tariffs for the rest of the year, and while tariff impacts were neutral this quarter, there is uncertainty and potential for cost increases.
- The company expects only a modest improvement in market volumes in the second half, relying on softer comps rather than a strong demand recovery.
- Transaction-related expenses for Cambridge will flow through operating income, and the company does not expect a material free cash flow benefit from the acquisition in 2026.
We want to introduce you to the Hillman Group, who we are, what we do, and the customers we serve.
Founded in 1,964 and headquartered in Cincinnati, Hillman is a leading provider of hardware and related products serving retail, pro-distribution, and industrial MRO customers.
Over the last six decades, Hillman has built a legacy of service and growth by forming strategic partnerships with North America.
Good morning and welcome to the second quarter 2026 results presentation for Hillman Solutions Corp. My name is Amber and I will 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 and presentation were issued yesterday and 10-Q was 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 call over to Michael Kaler with Hillman.
Please go ahead
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