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    HLMN
    Earnings call· Jun 2026(Q2 FY26)

    Hillman Solutions Q2 FY26 earnings call HLMN

    Aug 4, 2026 Source

    Executive summary

    Hillman Solutions Corp. Q2 FY26 — Strong Growth Driven by Strategic Acquisition and New Business Wins

    Hillman Solutions delivered strong Q2 FY26 results, driven by robust net sales growth and healthy free cash flow, significantly boosted by the strategic acquisition of Cambridge Corporation. The company successfully refinanced its debt, strengthening its capital structure, and is seeing early traction in its "win the pro" initiatives, despite some margin compression and regional core performance challenges. Management remains optimistic about future growth and M&A opportunities.

    Highlights

    5

    • Net sales increased 10% to $442.3 million in Q2 FY26.

    • Free cash flow totaled a very healthy $70.2 million in Q2 FY26.

    • Adjusted EBITDA increased 2.5% to $77.1 million in Q2 FY26.

    • New business wins contributed 4.5 points of growth in Q2 FY26, including 1 point from the "win the pro" focus.

    • Successfully refinanced credit facilities, extending maturity to 2033 for term loan B and 2031 for ABL revolver.

    Concerns

    4

    • Adjusted gross margin decreased 120 basis points year-over-year to 47.1% in Q2 FY26.

    • Adjusted EBITDA to net sales margin decreased 130 basis points year-over-year to 17.4% in Q2 FY26.

    • Core performance in Canada was down 6% in Q2 FY26 due to soft market and FX headwinds.

    • Net debt to TTM adjusted EBITDA ratio is expected to increase by approximately one full turn post-Cambridge acquisition.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 Net Sales
    $1.67 billion to $1.72 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    around $285 million
    high materiality
    High
    Full-year 2026 Free Cash Flow
    $105 million to $115 million
    medium materiality
    High
    Cambridge Contribution to 2026 Net Sales
    approximately $15 million
    medium materiality
    High
    Cambridge Contribution to 2026 Adjusted EBITDA
    roughly $5 million
    medium materiality
    High
    New Business Wins Top Line Growth
    about 1% top line growth
    medium materiality
    High
    New Business Wins Top Line Growth
    at least 2% growth
    medium materiality
    High
    Long-term Net Sales Target
    $2.5 billion
    high materiality
    High
    Long-term Annual Growth Rate
    between 8% and 12% per year
    high materiality
    High
    Net Debt to TTM Adjusted EBITDA Ratio
    approximately 2.5 times
    high materiality
    Medium
    Minikey 3.5 Machines in Field
    over 5,000
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Hardware and Protective Solutions (HPS)
    Solid quarter driven by 4% core performance growth, 2% new business wins, and 4% from M&A.
    		increased 10%10%——
    Robotics and Digital Solutions (RDS)
    Highest margin segment, healthy top-line growth and meaningful bottom-line performance. Driven by Minikey 3.5 rollout.
    Minikey 3.5 machines in field: 4,500
    		up 11%11%—Adjusted EBITDA increased 10.4% to $19.6 million. Adjusted gross margins 77.4%, Adjusted EBITDA margins 31.9%.
    Canada
    Benefited from new business momentum (14% increase), but core performance down 6% due to soft market and FX headwinds. New business wins split between DIY and pro.
    		increased 7.8%7.8%——

    Operational metrics

    18
    Net sales
    $442.3 million+10% YoY
    Q2 FY26

    Strong top line performance in line with long-term growth expectations.

    Adjusted gross margin
    47.1%-120 bps YoY, +150 bps QoQ
    Q2 FY26

    Improving sequentially and consistent with expectations.

    Adjusted SG&A as percentage of sales
    29.6%relatively consistent YoY
    Q2 FY26

    Relatively consistent with a year ago.

    Adjusted EBITDA
    $77.1 million+2.5% YoY
    Q2 FY26

    Increased versus the year-ago quarter.

    Adjusted EBITDA to net sales margin
    17.4%-130 bps YoY, up from 13.5% QoQ
    Q2 FY26

    Margins improved sequentially, driven by RDS outsized growth and lessening tariff-related COGS impact.

    Net cash generated by operating activities
    $88 million
    Q2 FY26

    Strong operating cash flow.

    Net debt
    $665 millionimproved by $45 million from Q1 FY26
    Q2 FY26

    Total net debt outstanding, in line with end of 2025.

    Net debt to TTM adjusted EBITDA ratio
    2.4 timesunchanged vs. end of 2025
    Q2 FY26

    At quarter end.

    Share buyback
    $13.3 millionaccelerated vs. Q1 FY26
    Q2 FY26

    Opportunistically bought back stock given valuation share price. Future SRP spending will be reduced due to Cambridge acquisition leverage.

    Cambridge revenue
    $65 million
    LTM June 30th

    Generated by Cambridge Corporation for the 12 months ending June 30th.

    Cambridge adjusted EBITDA
    $30 million
    LTM June 30th

    Generated by Cambridge Corporation for the 12 months ending June 30th.

    Cambridge cost synergies
    $2 million
    expected

    Expected particularly in sourcing, with opportunity for more over time.

    Cambridge cash tax benefit
    $40 million to $45 million
    expected

    Material cash tax benefit from the transaction.

    Cambridge post-synergy multiple
    8.4 to 8.6 times
    expected

    Purchase price of $315 million represents this multiple given tax benefit and cost synergies.

    Industrial addressable market expansion
    50%
    current

    Expanded with the Cambridge acquisition.

    Hillman's industrial business (pre-Cambridge)
    $65 million
    current

    Approximately this size today, doubled by Cambridge acquisition.

    Minikey 3.5 machines in field
    4,500+600 since April
    Q2 FY26

    Increase since last earnings call, contributing to improved growth in key business.

    Capital expenditure reduction
    nearly $6 million
    Q2 FY26

    Contributing to healthy free cash flow.

    Product announcements

    1
    ProductTypeDetails
    Minikey 3.5expansion

    Deals & partnerships

    3
    Cambridge CorporationLeading master distributor of fasteners in the industrial channel, specializing in long-tail unique specialty fastener SKUs and same-day shipping.$315 million

    Family-owned business with over 50 years of expertise, strong customer relationships, and a proprietary digital ordering platform (FastNet). The acquisition was a competitive bid.

    Campbell Chain and FittingsAcquisition to enter the industrial channel in the U.S.

    One of two deals closed during Q2 FY26, reflecting execution of long-term strategic initiatives.

    Delaney HardwareHardware company acquisition.

    One of two deals closed during Q2 FY26, reflecting execution of long-term strategic initiatives.

    Risks & headwinds

    3
    Tariff cost increases offsetting refundsrest of 2026

    Modest tariff refunds expected to be generally offset by cost increases and payback resulting from the adjustment in how Section 232 tariffs were being applied.

    Mitigation: Dual sourcing strategy allows flexibility to react to changes in geopolitical tariff landscape; will price for elevated costs if they continue.

    Soft market volumes and FX headwindsQ2 FY26

    Core performance in Canada down 6% due to soft market and FX headwinds.

    Mitigation: Continued focus on new business momentum and Hillman's value proposition in Canada.

    Increased leverage post-acquisitionshort term

    Net debt to TTM adjusted EBITDA ratio expected to increase approximately one full turn post-Cambridge acquisition.

    Mitigation: Plan to reduce SRP spending and focus on net leverage in the short term; target to end 2027 at approximately 2.5 times leverage.

    What to watch in Q3 FY26

    5

    Cambridge acquisition closing and initial contribution

    Next quarter (Q4 FY26)
    CurrentDefinitive agreement entered, expected Q4 FY26 close
    TargetClosed, contributing ~$15M net sales and ~$5M adjusted EBITDA

    Why it matters

    Verifies the completion of a major strategic acquisition and its immediate financial impact on guidance.

    The transaction is expected to close around the start of the fourth quarter. Assuming this deal closes in line with our expectations, Cambridge should contribute approximately $15 million of net sales and roughly $5 million of adjusted EBITDA to Hillman's overall 2026 results.

    Q&A highlights

    6

    How did the Cambridge deal come about, and was it a competitive bid or privately negotiated?

    JMA confirmed it was a competitive bid for a business Hillman had admired for a long time. They were impressed with Cambridge's team and felt the deal was a great fit, especially given Hillman's minimal presence in that specific US industrial space.

    “Yes, Lee, this is a business that we've admired from afar for quite some time. So we're excited when there was an opportunity to join a process, so this was a competitive bid.”

    asked by Lee Jagoda · answered by Jon Adinolfi

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Acquisition of Cambridge Corporation

    Hillman announced a definitive agreement to acquire Cambridge Corporation for $315 million, a leading master distributor of fasteners in the industrial channel. Cambridge generated approximately $65 million in revenue and $30 million in adjusted EBITDA for the 12 months ending June 30th. The acquisition is expected to close around the start of Q4 FY26, contributing an estimated $15 million in net sales and $5 million in adjusted EBITDA to Hillman's 2026 results. This deal is highly accretive to Hillman's margin profile and is expected to yield $2 million in cost synergies and a $40-$45 million cash tax benefit.

    02

    Q2 FY26 Financial Performance

    Net sales for Q2 FY26 increased 10% year-over-year to $442.3 million, driven by 2 points from core performance, 4.5 points from new business wins (including 1 point from "win the pro" initiatives), and 3.5 points from M&A. Adjusted EBITDA grew 2.5% to $77.1 million. Adjusted gross margin was 47.1%, improving 150 basis points sequentially from Q1, while adjusted EBITDA margin was 17.4%, up from 13.5% in Q1.

    03

    Capital Structure and Allocation

    The company ended Q2 FY26 with $665 million of total net debt, improving by $45 million from Q1, and a net debt to TTM adjusted EBITDA ratio of 2.4x. Hillman successfully refinanced its credit facilities, securing a new $735 million term loan B and a $375 million ABL revolver, extending maturities to 2033 and 2031 respectively. Share repurchases totaled $13.3 million (1.7 million shares at an average price of $7.62 per share) in Q2, but future buyback activity will be reduced due to increased leverage from the Cambridge acquisition.

    04

    Segmental Performance and Growth Drivers

    Hardware and Protective Solutions (HPS) net sales increased 10%, driven by core growth, new business wins, and M&A. Robotics and Digital Solutions (RDS), the highest margin segment, saw net sales up 11% and adjusted EBITDA up 10.4% to $19.6 million, with 4,500 Minikey 3.5 machines now in the field. Canadian net sales increased 7.8%, benefiting from new business momentum (up 14%), despite a 6% decline in core performance due to soft market and FX headwinds🌐.

    05

    Tariff and Market Outlook

    The net impact of tariffs remained neutral in Q2, with the expiration of Section 122 tariffs and implementation of Section 301 tariffs offsetting each other. While modest tariff refunds were received, they are expected to be offset by cost increases and adjustments to Section 232 tariffs. Management's guidance assumes continued execution of new business wins and core performance growth, along with a modest improvement in market volumes during the second half of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.