Hillman Solutions (NASDAQ:HLMN) reported first-quarter 2026 net sales growth of 3% while profitability declined as higher-cost tariff-impacted inventory flowed through results, according to management’s prepared remarks and Q&A on the company’s earnings call.
Investor Day targets and pro-channel expansion
President and CEO Jon Michael Adinolfi, who goes by “JMA,” opened the call by recapping Hillman’s first-ever Investor Day, where the company outlined a five-year plan centered on its core Hardware and Protective Solutions business, expansion into adjacent categories, and growth in the pro channel.
Adinolfi described growing the pro channel as a “new critical initiative” that adds “meaningful new white space” and expands Hillman’s addressable market by $12 billion to over $18 billion. In Q&A, he said about “30%-ish” of Hillman’s business is already pro today, and that the company recently added a residential pro team that has “already gotten some nice wins.” He also said pro for the overall company is growing faster than DIY.
First-quarter results: sales up, margins pressured by tariffs and mix
For the first quarter, Hillman reported net sales of $370.1 million, up 3% from the year-ago period. Adinolfi said the quarter ended strongly, with improvement in March, but that wasn’t enough to offset a slow January and February that were impacted by weather and customer destocking. He also said consumer uncertainty in the current economic environment weighed on results.
Adinolfi said growth in the quarter was driven by nearly 5% from new business wins, offset by a 2% headwind from “core performance,” which he defined as including market volume, customer footprint expansion, category management, FX, product mix, and price.
On profitability, the company posted first-quarter adjusted EBITDA of $50.1 million, down 8% from $54.5 million a year earlier. CFO Rocky Kraft said adjusted gross margin declined 130 basis points to 45.6%, while adjusted SG&A held steady at 32% of sales. Adjusted EBITDA margin decreased 170 basis points to 13.5%.
Kraft said the first quarter should be the “low water mark” for margins in 2026 due to the timing of tariff costs flowing through inventory. He said margins should step up sequentially as the year progresses, with full-year adjusted gross margin expected to be 46% to 47%. In response to an analyst question, Kraft said it would be “a good way to think about” reaching the higher end in the second half of the year, with a potential to run “a little bit above that” depending on how the year unfolds.
Segment performance: strength in hardware and RDS, pressure in protective solutions
Adinolfi said Hillman’s largest segment, Hardware and Protective Solutions (HPS), increased 1.2% year over year. Within HPS:
- Hardware Solutions grew 7%, driven by a 3% lift from new business wins and a 4% lift in core performance.
- Protective Solutions declined 17%, which management attributed to reduced promotional off-shelf activity, destocking, and lower sell-through of gloves.
Adinolfi said the company expects Protective Solutions to improve through the year but “remain below 2025 levels for the full year.” In Q&A, he said the biggest driver of the Q1 decline was promotional activity, which he also expects to pressure full-year results. Kraft added that excluding the promotional impact, the business would be “at worst case, flat to slightly up.”
Robotics and Digital Solutions (RDS) delivered what Adinolfi called a “great quarter,” with net sales up 6% and adjusted EBITDA up 11.4% to $16.2 million. He said the business posted adjusted gross margin of 74.7% and adjusted EBITDA margin of 28.9%. Adinolfi credited the performance to traction from the MinuteKey 3.5 rollout, noting the company has about 3,900 MinuteKey 3.5 machines in the field—up more than 400 since the last earnings call—and expects to end 2026 with over 5,000.
In Canada, Adinolfi said net sales rose 15.1%, driven by a 15% increase in new business wins and flat core performance. He attributed growth to specialty fasteners, builder’s hardware, and pro wins at a top customer.
Tariffs, cash flow, and acquisitions drive 2026 outlook update
Adinolfi said Hillman’s annual tariff exposure remains “around $150 million,” and described the timing of tariff impacts on earnings and cash flow as “choppy.” He said price increases were rolled out in the second half of 2025, but higher tariff costs began hitting the P&L in the first quarter of 2026. He also said Hillman began initiating IEPA tariff refunds on April 20 through the Consolidated Administration and Processing of Entries platform, but emphasized “lots of unknowns” and said the net impact is neutral because new tariffs were implemented quickly after certain IEPA tariffs were deemed illegal.
In Q&A, Adinolfi said the elimination of IEPA tariffs created a tailwind, but that was largely offset by headwinds from Section 232 and “122,” resulting in “nearly a wash in totality” and an immaterial change in overall exposure.
On cash flow, Kraft said net cash used in operating activities was $19.5 million and free cash flow was negative $34.3 million, which he said aligned with expectations as Hillman built working capital ahead of spring and summer while trimming a “modest amount of net inventory.”
Hillman ended the quarter with $710 million of net debt, up $44 million from year-end 2025, and liquidity of $282 million (including $255 million of revolver availability and $28 million of cash). Net debt to trailing twelve-month adjusted EBITDA was 2.6x, compared with 2.4x at the end of 2025. Kraft also noted the company repurchased 1.2 million shares for $10.1 million at an average price of $8.29 per share, and said Hillman plans to continue buying back shares to offset employee equity dilution and “opportunistically” repurchase stock when valuation is attractive.
After the quarter, Hillman closed two acquisitions—Campbell Chain & Fittings and Delaney Hardware. Adinolfi said Campbell expands Hillman’s chain offering into higher-grade industrial products, strengthens its industrial MRO position, and builds on the company’s 2024 Koch acquisition. He said Delaney adds door hardware such as lock sets, deadbolts, and smart locks to support Hillman’s pro distribution strategy, primarily in the Southeast U.S.
Adinolfi said Hillman expects Campbell to contribute over $20 million in net sales and Delaney over $10 million in net sales in 2026, with a “very modest” bottom-line contribution this year. As a result, Hillman raised full-year net sales guidance by $30 million to $1.63 billion to $1.73 billion (midpoint $1.68 billion) while reiterating adjusted EBITDA guidance of $275 million to $285 million and free cash flow guidance of $100 million to $120 million.
About Hillman Solutions (NASDAQ:HLMN)
Hillman Solutions (NASDAQ:HLMN) is a leading provider of hardware and related products to the home improvement, retail, industrial and manufacturing markets. The company’s portfolio encompasses key duplication systems and security solutions, hardware essentials such as fasteners and anchors, signage and labeling products, and outdoor and seasonal items. Hillman’s product offerings are sold through a network of major home improvement retailers, wholesalers, independent distributors and other specialty outlets.
Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman grew from a family-run enterprise into a global supplier of hardware solutions.
