Hillman Solutions Corp. ($HLMN)

Good morning, everyone. Welcome to Hillman's first ever Investor Day. I'm Michael Koehlor, Vice President of Investor Relations and Treasury. Thank you for joining us on the webcast, and a special thank you to those who traveled here to our customer support center in Cincinnati. We appreciate you taking the time to join us and your continued interest and engagement you show in Hillman. Please make note of the forward-looking statements and our presentation of non-GAAP financial metric disclosures on Slide 2. Today is about giving you a clear view of where we are, where we're going and how we plan to create long-term value for our shareholders. Over the course of the day, you'll hear from members of our executive leadership team about 4 key topics. First, you'll hear about Hillman Strong. We will talk about our vision, our strategy and the strength of this business. Second, you'll hear about owning and expanding the core, diving into how we win and grow our core business. Third, you will hear about how we plan to leverage our core competencies to win the Pro. And finally, you'll hear about how all of these work together to drive our compelling long-term financial framework. Our goal today is to provide transparency into our strategy, demonstrate the durability of our model and our right to win the Pro, and show how we are positioned to grow this business in the years ahead. With that, I'll turn it over to our President and CEO, Jon Michael Adinolfi. JMA, let's get started.

Well, good morning, everyone, and thank you for joining us. We're excited to have you here today to talk about our vision and our strategy. As Michael said, we've got a good solid morning for you here. We're really excited about where Hillman is today and where Hillman is going to be going in the next 5 years. And to share this strategy, we're excited to present that to everyone here today. So I'm Jon Michael Ladenoffi. I go by JMA. I've been in the industry for about 25 years, and I'm proud to say I've been with Hillman for about 7 years. So we're going to start and just talk a little bit about how we're a category leader. For some of you who know the story, you know how we take care of our customer. You know how we're actually #1 in many of the categories we serve. But if you're new to the story, it's important for you to understand that we focus on taking care of the customer. Since this company started over 62 years ago, we have focused on putting the customer first. When Max Hillman started the business, he focused on fasteners, putting the customer first and moving the business forward. We're proud to say over the last over 60 years, we've been able to do that by amassing close to $1.6 billion in revenue and driving EBITDA margins of 17.7%. What you'll hear today that's a bit different is the fact that we have a much larger TAM than we've talked about in the past. We focused our business on the retail side of our opportunities. We love our retail customers; we're going to continue to grow with them. Today, we're going to talk about the Pro and how we're going to continue to expand our TAM. In the past, we talked about a TAM of roughly $6.5 billion. I'll talk to you about it turning into almost $18 billion with our opportunities around retail, Pro distribution and industrial MRO. Our customers and their end users are very important to understand. We look at our business, it's 70% DIY and 30% Pro. So this is not us going into an area that we haven't been before, and we're going to share with you just how much progress we've made in the area of Pro and how we're going to continue to expand that as we go forward. And the strong financial performance should give you confidence that we're going to be able to continue to move this business forward. We've expanded our gross margins by over 600 basis points. We've improved net EBITDA by 300 basis points. And we've reduced our leverage down over 2x. That should give you confidence that we're going to continue to move this business forward and that we have the team in the field to be able to do just that. So let's talk a little bit about that progress. We have improved EBITDA by close to $70 million over the last 5 years, in a challenging market. Again, I already mentioned about the leverage improvement, but we've driven down net debt over $250 million. That should give you the confidence that this business can perform in good times and bad. And that's really what we're about to talk about here today, is about the opportunities we have to move forward. If you think about our profit and our improvement over that period of time, I think it's important to break down the different pieces. We're proud to say that we've doubled the net income CAGR compared to our peers over the last 5 years. At the same time, we've improved our EBITDA margins by over 150 basis points over our peers. And then we've driven this business to a nice profitable point to where we can grow off of as we go forward. The big question here, I think, for all of you and for us is: how do we continue to improve this business? It's going to be through growth. And we think that's why there's tremendous opportunity with this company, as you look that we trade to over a 50% discount to our peer set. What we're going to talk about here today between myself and the rest of the leadership team is about how we're going to actually do just that. We're going to show you how we're going to grow the business, we're going to continue to expand and move forward. To start there, we got to talk about the platform and the business. It's important to understand that we have 3 businesses that we focus on. The fastening and hardware business, close to 70% of our portfolio. It's where the company started, and we've continued to grow. It's the vast majority of our over 111,000 SKUs that we serve our customers with excellence day in and day out. But it's everything from common nuts and bolts to engineered fasteners that you -- those of you in person are going to be able to see later here today. We're proud of this portfolio; we're going to continue to build it. And we have the products to serve not only the DIY but also the Pro. Turning to protective solutions, another important part of our category. It is the gloves, the protective gear that you need to do whether it's a DIY project or a Pro project. And we'll talk about some of the advancements we have in that business as well. And then RDS, our robotic digital solutions. It's our key business. Scott is going to come up and talk to you about some of the exciting technology advances we have in that area. These 3 businesses are the platform that we're going to continue to build off of as we move forward. And then our end markets. As I mentioned, the Pro is an important part of our equation as we move forward. We want to continue to serve the DIY, but it's important that we'll break out here what we call Retail Pro, Pro Distribution, Industrial MRO. James Daly, our SVP of Pro; Chris Martin, our EVP of C&I. And I will come up and talk to you about those 3 businesses and explain to you how we're going to continue to advance those markets. And then the geography. We focus on North America and we're proud of that market. We believe we have a tremendous opportunity and a lot of runway for us to go after in those markets where we are today. So next, we'll turn to the blueprint. And this is something I'm really excited about. It's something that we've developed over the course of the last year as a team. We didn't just create it for Investor Day. But I'm proud to say this is not only what we're doing and sharing with you at Investor Day, but it's what we're doing and how we're running the business. We developed this in 2025 and we rolled it out in 2026. And the simple blueprint here, that we'll go into greater detail throughout the presentation, about how we own the core. We're going to focus on taking care of our customers, which we've been doing for over 60 years. We're going to show you and explain to you how we're going to grow that core through category expansion, both organic and inorganic. And then winning the Pro. It's where we are today with the Pro and how we extend that and grow it into the channels where we have permission to play and where we are today. And we're going to show you how we're going to do just that. The key here is the ROIC focus. It's the way we've been running the business for a while, but we've now expanded the way we look at ROIC. It's not just me and Rocky talking about projects and initiatives. It's how the leadership team looks at growth. Any growth capital, M&A, all goes through the lens of ROIC. And that's why we're confident that we're going to maintain the strong profitability, the improvement in the balance sheet and we're going to grow this business as we move forward. So now I'll talk to the value creation catalysts. So for us, it's very important. We have a very resilient business. For many of you who have been following the story for a long period of time, we do well in tough times. We're able to take care of our customers. We are resilient. It's what -- part is what makes Hillman such a great company. In tough times, this business does well. But what we have also is that resilience to grow when there's opportunities. And that's what we're going to explain to you here today. Our teams are focused on moving the business forward, and I'm excited about the path that we're going to share with you. We have a large untapped TAM. As I'll break down in the next couple of slides, you'll see that we have opportunity to grow in each of our markets. Integrated operations. I'm excited, we're going to -- Bob Davis is going to walk you through our operations and what we've been working on for many years to continue to strengthen our operations and get better and stronger and service our customers better each and every day. In 2025, we had one of the best, if not the best service year that we've ever had in our company's history, in a pretty challenging time. That should give you confidence, it gives us confidence, that we're ready to move this business forward and grow. And a solid balance sheet. As I mentioned, we're in the range of our target leverage. Rocky will go into much greater detail later. But that's an important thing. We have a solid balance sheet that we're going to continue to maintain and grow as we go forward, meaning we're going to continue to invest in this business and we have the ability to do so. And then a highly experienced team. We got Rocky will be up here. Many of the members of the leadership team are here going to be presenting, but they're also going to be out here for Q&A and doing product demos, different things. You that are in person are going to be able to interact with them firsthand to see that this leadership team is deep and strong. And that's what's going to give you the confidence that we're going to be able to grow this business and move it forward. We're excited to share that we have a path to grow this business to $2.5 billion over the next 5 years. That solid path and trajectory, as I outlined earlier, is because we've proven that we can run this business well. And these are the buckets that we're going to focus on as we go forward. We will talk in the future and update you on core growth. That's the day-to-day of how we run the business. It's things like market growth, it's customer footprint changes, it's category management, it's price. It's how we run the business. We'll update you on that on a quarterly basis as we go forward, but that is how we actually run the core. New business wins. The way we run the business day in and day out, you're going to be excited to see here today that we're going to increase our focus on new business wins. In the past, we've said we're be 2-plus percent. We're going to increase that to 4-plus percent over the next 5 years. And that's going to be largely driven by our focus on Pro and some of the great momentum we have in that business. And then M&A. While it's always been part of our history, we've done well over 20 deals. It's a part of how we believe we can augment and continue to grow our business. And Michael will walk you through great detail on what we're doing there and some of the exciting activity that we have in place. When we drive all these activities and deliver it, you're going to see that we're going to be a $2.5 billion-plus company. And we're really excited about the momentum we have. And today, we're going to walk through and share with you where we're going. So the 5-year financial objectives. On the previous page, I showed you that walk, that's averaging between 8% and 12% over the 5-year period. Rocky will go into more detail on how we actually get to that revenue CAGR, but we're excited we have a path, and we're going to continue to grow. Low double-digit EBITDA, we're going to continue to grow profitably. We are going to maintain our net leverage at 2.5 and below. If we do any deals that move us above 2.5, we'll have a path to get back to it. We're going to maintain that balance sheet discipline that we've put in place in the last several years. And newer for our story is we're going to focus on our ROIC. Rocky will walk you through the calculation in more detail, but our team is driven and incented to drive profitable growth, and ROIC is going to be our measure. So this is the team that you'll see that's going to execute. Very proud of this leadership team. We have years of industry experience, but we also bring experience from other parts of the world. It's very important that as you think about Hillman's evolution, we're continuing to grow through challenging times and good times. You've got to continue to build your business and bring in talent that can move you forward. This is a leadership team that's doing just that. I'm excited to share them with you today, and you'll be able to hear from the leaders firsthand on what they're doing to move the business forward. And I'm proud of this team that's on the field, and we look forward to winning in the next 5 years. And we're going to demonstrate the performance that we can deliver. So now many of you are probably thinking about, well, JMA, we've heard you talk about retail, we've heard you talk about all the great growth and partners that you have. How are you thinking about that $18 billion TAM? Well, here it is. We spent quite a bit of time in 2025, into 2026, really breaking down our business, thinking about our core, how we take care of our customers, how we actually grow them. But it was important to break down first and say, where do you play today and what are the channels you serve? We identified 3 areas that are very important for us. Retail. We love our retail business; we're focused on. This is not a shift away from retail. This is supporting our retail partners, continuing to support them on what they do today. They service DIY as well as Pro. James will walk you through how we're going to grow with them as they continue to shift and focus on the Pro. Pro distribution. Chris will come and talk to you about specialty distribution, and one of the businesses we have today, one of our solid businesses where we actually focus on the Pro day in and day out and how we're going to grow that and what it means to play and win in that area. I'll also talk about LBM, which is in part of our Pro distribution space. And then industrial MRO. Some may say, "Well, we didn't even know you were in that space." It's actually that we've been in that business for over 100 years. Our pollen industrial business in Canada that we acquired has actually been in that business for over 100 years servicing the industrial maintenance and repair professionals. That's another area where we have a common theme and what we can do. So we have leverage across these areas. We have great products. And in many cases, we have the products necessary to serve the Pro. It's about giving them the products the way they want, and we'll explain what that means as we go through the presentation. So with that, I think it's important to really look at where is the retail position and how do we grow into the Pro presence. This is how we break down the markets. So there's $6.5 billion that we have in retail, and we're going to grow with our retail partners. We're going to talk about that as we go throughout the day. I will thread back to this page numerous times throughout the presentation to make sure you understand that we have a 20% share there with opportunity to grow. And Brett is going to go into great detail what we're going to do there. Pro distribution. Again, we have a small share, $200 million business, 3% share in a massive market. No, this is not to say we're going to be able to go capture all that share, but we are going to make meaningful traction in our organic as well as inorganically in this space. And then industrial MRO, another area that we serve today and believe that we can serve in a greater way tomorrow. That will be organical, we will grow there. And also inorganically we have opportunities to grow. So this is how you should be thinking about the landscape that Hillman is going to be operating in and why we are going to have permission to grow. So we're excited about sharing this in more detail as we go throughout the presentation here today. So as we get ready to shift, I want you to get ready for Brett Hillman, who's going to come up here. He's our EVP of Sales. Brett is going to walk you through how we own the core and how we expand it. We're really excited about the opportunities we have to share with you here today. So with that, I would like to welcome Brett up to the stage. Brett?

All right. Well, thank you, JMA, and good morning, everyone. I'm Brett Hillman. I lead our retail sales business. I've been with Hillman for 21 years, spending 18 of those on the sales side and in front of customers. Selling at Hillman is literally in my blood, and I couldn't be more excited to share our retail growth strategy with all of you today. Let's start with how we win the core. First, let's define the core. The core are the existing categories that we sell into our existing customers today. This strong foundation has been built over 62 years, product by product, customer by customer and has provided us a differentiated solution that allows us to win. We are truly in a league of our own. Said differently, there's nobody quite like us. Our scale, from our product breadth to our direct-to-store distribution, to the people in the stores serving our customers every single day, we are the only true comprehensive solution in hardware. That moat starts with deep relationships with all of our customers, big and small. Our customers want to buy from Hillman. More importantly, they want to buy more from Hillman, because we offer a solution that manages their complexity while also growing their retail sales. Now let's talk about where we play. As you can see here, we span across a lot of categories. This extensive portfolio, as JMA mentioned, started with core fasteners 62 years ago. And it's evolved over time through a combination of M&A and new category launches. Our strategy has always been to enter new categories that we believe we can leverage that moat that you heard of so many times to be #1. We've developed categories like builders hardware because our customers asked us. We've developed categories like power screws or smart keys because we knew that's where the market was going. We've also acquired in the categories, like rope and chain and gloves, because we believe that our value proposition gives us the right to win, all while maintaining 90% brand ownership. All right. Why we win. These 6 core competencies are incredibly important. And in combination, we believe we have a distinct advantage versus the competition. Let's start with our product breadth. We manage over 111,000 SKUs, selling into 29,000 retail locations, with an average store carrying over 8,000 of our products. This breadth of product, especially in categories like fasteners, is critical for our retailer to win and to be able to provide that one-stop solution to meet the needs of their customers. The age-old slogan from our retailers, "If we don't have it, you don't need it" still exists today. Now not everywhere, but it is a real thing. And they count on Hillman to deliver that comprehensive solution. Next is innovation. We'll talk more about this in just a few minutes, but we invest heavily in new product development as the consumer continues to pursue better-performing products, especially the Pro, who's always looking to save on time and battery life for their tools. Our customers consistently ask us what's new and count on us to bring those innovative solutions. Category management. Because of our extensive product breadth and consistently bringing new products to the market, our customers heavily rely on us to manage those categories and drive their core. We partner every day with our customers in retail across all channels, from big box to local hardware store, to create customized and localized solutions, maximizing that customer experience. We base these decisions on data, whether it's point-of-sale data, shipment data or consumer insights to know where the market is going. Field sales team. Also known as the secret sauce, you've heard that, our 1,200 sales and service folks provide the ultimate differentiation from the competition. These folks are directly responsible for driving growth at the shelf in every retail location. They maintain our displays. They manage the inventory. They write orders. They do [ PK ] sessions. They train associates. They sell new products. Most importantly, they own the relationship for maybe the hardware store owner, the store manager or even the associate in the aisle. They are an invaluable asset to our retailers. The last 2: direct-to-store distribution and dual faucet global sourcing, look, we have a very unique operating model that allows us to do all that other stuff. But I don't want to steal Bob Davis' thunder, so I'll let him talk with all of you about those capabilities. In summary, all these superior capabilities provide us an overall value that nobody else can offer, grounded in customer relationships that go back decades. We are a strategic partner. We're the one-stop shop. We manage their complexity. We innovate. We deliver operationally every day. And we prioritize those customer relationships, from the senior executives at our largest customers down to the associate in a store. This is why we win. We put our customers first. And those relationships are diverse. Let me tell you what that means. We are entrenched with our retailers across dozens of categories, leveraging our portfolio and our field team. Said differently, we're very sticky in our customers across all retail channels. Example, both of our big box customers, in addition to our largest hardware chain customer, we are on average of 7 different departments. There are an average of 19 merchant buyers that we call on, managing thousands of SKUs every day. There's a little risk of lost business with only 1 category at a single customer representing more than 4% of our total revenue. But most importantly, this stickiness gives us a right to win new business, and we have significant runway with every one of our customers. Now let's talk about how we grow the core organically outside of the footprints that we serve today, through category expansion and new product innovation. Our strategy to expand categories will come in 2 forms. First, we're going to leverage existing categories and the moat and gain incremental shelf space, both with existing customers as well as new prospects. We call this new business. And this is part of our DNA as a sales-driven organization. Second, we're going to expand new categories to drive meaningful growth over the long haul. These categories are selected based on where we believe the moat can make the biggest difference and where we believe we can be #1. In some cases, like I said earlier, our customers will push us into a category like builders hardware, which we built and launched back in 2011. In other cases, we enter a category because that's where the market trends are going, like with the Pro where we launched structural screws, which is replacing commodity-type products like lag screws and carriage bolts. Again, we're leaning on both fronts because we have the broadest range of core competencies in our space that allows us to win. Some recent examples. Displacing a competitor in the hinge category, one of our big box customers. Partnering with a big box customer to create an innovative tool rig solution to meet the needs of the Pro, displacing a long-standing competitor in the rope and chain category at our largest hardware chain customer. And continually launching new products that help us maximize our performance on the shelf so our retailers can win. This innovation I talked about is critical. As the saying goes, innovate or die. We focus on the consumer, not where they'll be tomorrow, but where they'll be 3 to 5 years. Our goal is always to elevate our premium brands to ensure we stay one step ahead of the competition. The latest example is Power Pro 4.0. This is our fourth-generation Power Pro screw. Head and shoulders above any other screw out there. The development took 3 years. While Power Pro 3.0 was a great screw, we felt obligated to raise the bar and create something that both the DIY and the Pro could benefit from. This has been a great win since we launched in 2024 and continues to help us win the Pro. All of you here in Cincinnati are going to see this innovation come to life later today in our product demos. So where does all this category opportunity take us in expansion? Well, simple. We partner with our retailers. There happens to be a ton of runway with the customers and the channels that we serve today, both in categories that we already sell today as well as categories that we could potentially build and/or buy someday in the future. We could nearly double our share by expanding our footprint and leveraging the moat. This will be our North Star for growth in retail over the next 3 to 5 years. Thanks, everyone. I appreciate your time. Now I'm going to hand over to Scott Moore, our President of RDS.

Good morning, everyone. Thanks, Brett. My name is Scott Moore. I'm the Divisional President of Robotics and Digital Solutions, what we call RDS. I want to thank you all for being here today. Super excited to talk to you about the business, not only how we're going to own the core, but how we're going to leverage our reputation and our investments to grow the core. I have a deep history with this business. I was one of the early founders back in 2011, serving as the CTO essentially through the 2018 acquisition by Hillman in 2018. I went on to serve as the CTO for Hillman in 2022. And then in 2024, I was asked to return to lead the business, which I was super excited about because not only do I love the people, I love the products and I love what we have to offer our customers. You heard JMA talk about how we take care of our customers. You just heard Brett talk about how we define our core. Let me tell you about how we own the core at RDS. We've built our reputation on 4 things: quality products, convenience for our customer, competitive pricing and 100% money back guarantee. That's why we've cut over 300 million keys on many key machines. Our customers have come to know and trust our brand over the last 15 years. So let's take a look at the business. Today we have a very healthy and profitable organization that's generating $220 million revenue -- sorry, net sales for last year. We did that with over 30,000 machines in very high retail foot traffic locations. As you can see, MinuteKey is our flagship, 45% of our revenues. We're going to talk more about the MinuteKey machine in a minute. Second is our manual key business at 32% of revenues. This is roughly 9,000 machines out there that our store associate operated. They cut 150 different types of keys. It's a direct-to-store inventory model, serviced by our sales folks who are in these stores on a regular basis. This is a very consistent, very profitable business that we still consider a big piece of our core. Pet tag engraving is third, 18% of revenues. We have roughly 7,000 of these machines. We're in the top 3 pet brick-and-mortar retailers out there today. Rounding out the mix is our Resharp machines; we have roughly 1,000 of those. And then we do some third-party servicing for others. Regardless of what machine we're talking about in our fleet, they all have one thing in common, and that's unmatched quality. 100% assembled in the U.S.A., in our Tempe facility. We design, we engineer, we manufacture, we refurb there. We take great pride in what we do. We have unmatched accuracy on our machines. We cut keys to plus or minus 2 thou. We have excellent uptime, very high reliability and very low customer return rates. Helping us drive that is our technology behind the scenes. We do advanced remote management, predictive maintenance and a lot of data analytics. We designed our systems around one principle. And that's we like to think of kiosks like Mars Rovers. We build these things, you send them into space and you can never touch them again. So we do everything we can remotely. We even design them to be self-healing. So if they lose power, they lose cell connectivity, they can heal themselves. They can continue to talk to the mother ship, serve our customer. That's what's helped us, along with our 250 people out in the field, to maintain 99% uptime. Today we troubleshoot over 90% of our problems without a customer or a store even knowing. We track every single touch of every single screen, on every single machine 24/7. We generate 4.5 million events per day, and we use that data to improve our customer experience and to improve our reliability. So let's talk about the newest version of our Mars Rover. This one is opening up 4 new growth opportunities for us. The first is auto keys, not only the traditional keys, but also transponders and smartphones. We have over 1,200 auto keys in our catalog today, and we're constantly growing our coverage on a monthly basis. We also are offering a DIY dongle for our customers to do the programming themselves if they wish. It's about the size of this clicker here. You can use this thing paired with a smartphone, program it to your car. Exciting option for DIY. Next is endless aisle. This has really been fantastic for us. This gives our customer access to our entire catalog of keys regardless of where they are. So for example, if we don't have a key at the kiosk available to them, we can scan, we can cut and ship it to them directly from Tempe within 24 hours. So if you happen to be a Cincinnati Bingles fan or Ohio State fan living elsewhere in the U.S., we can get you that key sent to you in 24 hours. And although we still have 1,000 of these things to put out, we're already doing 18,000 orders per month of endless aisle. it's a big success for the old home and office key. RFID is our #3 capability here. We've got 90% coverage of this market. It's a pretty cool piece of engineering. You simply scan your RFID, [ file back ] the machine. We dispense it fully programmed and packaged. You'll get an opportunity to see it firsthand over here at lunchtime when we do a demo. Last but not least, our content management system, we can deploy ads to the kiosks, not only for our own services, but for others, for paid advertising. Now comes the exciting part. We talked about the auto keys. This new platform we get to leverage into this new TAM for us. It's a $250 million market, which we have less than 10% today. We are confident we can take to 30%. And let me tell you why. First, we've been in the auto business for a long time. We have a retail program with one of our largest partners, and we've been doing it for over 10 years. The catalyst here is we get to take that knowledge and experience of a retail program and combine it with the convenience of our kiosk in 5,000 new locations to drive this business. The second reason we're confident is this market is terribly underserved and we know there's a huge need. Think about locksmiths, think about dealerships. Right? These are painful experiences and very expensive. I have my own personal experience from several years ago. My daughter turned 16. I gave her my used SUV. Unfortunately, I only have one key for it. Well, come Saturday morning, about 3 minutes later, she's panicking, she's late for a soccer game and she can't find a key. She blocked me in to the garage, so mom gets to take her to the game. Dad has to stay behind and look for a key. Long story short, I looked all weekend for this thing along with the family, and we never found it. Come Monday morning, I have to go to work. We had to tow that thing to the dealership. I contact the dealership, they say, "Oh, it's going to be probably Thursday before we can get it to you. We've got to order -- special order this thing. We got to look up the din. We got to program it, cut it," et cetera. They were right. Thursday, I go pick it up. Guess what the bill was? Over $1,100. Guys, the blue book on this car was $2,400, right? Tell me I was a happy customer. Bottom line, there is a huge need for this. And we have an excellent solution. You can do a car key at our kiosk in less than 5 minutes. Up to 60% dealership savings and over 91% of our customers have said they would use us again or refer us to others. So let's talk about how we see the financials moving forward. We have spent the last 3 years investing significant capital, as many of you know, in this platform. We are now shifting our focus to driving excellent returns and free cash flow. Our goal is to generate steady, predictable revenue growth with a gross margin and EBITDA margin that you see here on this page. We're going to continue to leverage our [ 3-5 ] technology for the home and office market with these newer offerings. But where we're going is auto. And we're going to do for auto keys what we've done for home office keys. And I'm confident we can do that because we've done it with home office keys in the same way, right? Quality product, convenience, great pricing and 100% money back guarantee. With that, thank you again. We'll hand it over to Bob Davis.

Good morning. First, let me thank all of you for joining us today and learning more about Hillman and our global supply chain. I'm Bob Davis. I'm the Executive Vice President of Global Supply Chain. Some of you may know me as your Uber driver from last night. I appreciate the 5 stars that you guys gave me for getting back to the hotel safe. And just a little bit about me, I'm a veteran of the U.S. Navy. I spent 12 years at Target Corporation, 16 years at Home Depot, all in supply chain. And I'm on my fifth year here at Hillman and loving it here. So I know Jon Michael spoke a little bit about our margin expansion today. Those margin gains are directly tied to our structural supply chain actions here at Hillman. And we built these over the years rather than just temporary market forces. Hillman owns this core. We're going to spend some time talking about that this morning. We've constructed a structural moat here at Hillman that is a direct driver of the bottom line. The moat really begins with our integrated supply chain. So let's jump into it. Basically what this tells you is we own it from end to end. We own it from the sourcing piece of it that we work directly with the factories all across the globe. We own it from planning and procurement, the ocean transit, customs clearance, dray to our DCs and the final mile delivery from our distribution centers to our customers. We own the whole process from end to end. You're going to see down at the bottom, it talks a little bit about dual faucet, I'm going to get into that a little bit more on the next slide, and really enjoy talking about that because that's really where we win out there. The end-to-end logistics, when we look at this, we own this through our in-house team when I say that we own it. So we contract directly with our ocean carriers. We don't use a brokerage service for that. We contract directly with our dray agents. We contract directly with our LTL and our small package providers. We have an entire logistics team that does that for us. We also have our own booking team that handles our bookings across the globe located in Vietnam. Then on the customs and trade side, we've got 2 licensed custom brokers on staff. And we needed them this year, that's for sure. When you look at that, they keep us compliant, within the current volatile changes in customs that we've seen over the past 12 months. Finally, looking at our optimized distribution network, what that really means is having the DCs in the right location. We don't do this by accident. It's about keeping our DCs close to our customers so that we can take advantage of that final-mile delivery. As everyone knows in distribution, freight is the most expensive piece of it. So any way that we can reduce that, that gives us an advantage over the competition. So let's talk a little bit about dual faucet. What this really means to us is, years ago in sourcing, all the focus was on FOB costing. How much does it actually cost to buy the product at [indiscernible]? Today that's not what's important. Today what's important is what is the landed cost of the product with tariffs, with duties, with freight costs. All these things are important to us. So we look at it in its entirety. And that's how we solve for it. So when you look at the dual faucet, basically it's pretty simple. I've got a faucet on over here in one country of origin with a particular vendor or I may have multi-sources within that country that I've got to faucet on. Over here in another country, I've got that faucet as a trickle. In other words, I've already qualified the supplier there. If something happens that impacts capacity, it could be a geopolitical event, it could be a tariff, it could be some other cause, I can simply change the plumbing. I can turn the faucet on here and I can dial down the faucet over here. To give you a real-world example of that, that occurred this past year with everything going on with tariffs, we are a pretty large seller of umbrellas. If you've ever been out in one of our major retailers and a thunderstorm broke loose, you're going to find a box of our umbrellas right there by the front door, because it's very convenient to pick that up and be able to make it out to your car. Well, we produced all of our umbrellas out of China. When Liberation Day occurred, tariffs came in, and within about 4 days, they shot up to about 100% in China. Well, that impacted our cost on umbrellas. We were easily able to shut down that tap, open up a tap in India where there's a major manufacturer there, and be able to take advantage of that reduced landed cost and be able to do that quickly. What happened next? Tariffs went up in India, tariffs came down in China. We were able to shift again right back to China just by changing where we were cutting the POs to, again, to take advantage of that landed cost. Then tariffs came back down in India. And due to their FOB cost, we were able to shift back again. That gives us a unique advantage of having what we call our dual faucet strategy. And we've worked very hard on that. So we've done that all over Southeast Asia with our partners there. And one of the things that you can see when you look at the graphs up here from 2018 to 2025, and this is really talking more about the dependency that maybe exists from a China perspective, we went from 49% of our products sourced out of China to 32% of our products sourced out of China. What's even more important is if you look over to year ending this year, our capabilities, and I'm going to reiterate this, but our capabilities is we could reduce our sourcing impact coming out of China down to 10%. What I want to stress though is that is a capability. It's not a mandate. We're not going to box ourselves into a corner, right? Wherever we can provide a quality product at the most competitive price, to give Hillman and our customers a competitive advantage, that's where we're going to source from. So again, not a mandate. We have that capability, but I can easily move that volume across. All that's really coming through the partnerships that we've developed over the years with our suppliers. Jon Michael mentioned earlier in his presentation about the long-term partnerships we have with suppliers. Some of our suppliers we've been doing business with for over 60 years. That's very important to us because when we went down this road and said this is going to be very important to us to be able to have this dual faucet strategy, it's very difficult to bring new suppliers on board. You got to teach them about your product, you got to qualify them as a supplier. Several audits that these suppliers have to go through to meet the requirements of our customers. Then it's about the product. The product has to be qualified. Does it meet our specifications consistently from a quality perspective? Can they meet our packaging requirements? Can they ship on time? So in doing that, the easiest way to do that is you take partners that you got long relationships with. You work with them to open factories in other countries. Over the past 1.5 years, we've been successful in working with long-term suppliers and opened factory -- over 45 factories in other Southeast Asian countries. It gives us that quick ability to ship. What that means for us is they already know our product. They already know our business. They already know our packaging. We already know them as far as being able to qualify them. We can bring them up quickly. We'll be opening another 8 factories this year in those partnerships with those suppliers. When you have to go out and do that with a brand-new supplier, what happens to you is you have to go through that long, lengthy process of getting them on board. And more importantly, what happens to you is your first PO that you cut with a brand-new supplier, your lead time from PO to ship date is going to be roughly 150 days. That's what the average is. Our partners that we work with day-to-day, they can, from a PO to ship date, 45 days. So you think of that gap, that's a lot of inventory that I have to carry, which is not good for our cash flow, right? So by keeping these suppliers close to us, working with them, we improve our lead time, which means I have to hold less inventory, which that's a benefit to our cash flow. Okay. Let's talk a little bit about our network design. We have 24 distribution centers across North America. In those 24 distribution centers, 97% of our customers, we can reach in 2 days. 85%, we can reach in 1 day. Again, this isn't by accident. We can turn an order in 24 hours from the time we get the order to the time we ship the order, we can turn that order for them in 24 hours. And we do that at a 98% fill rate. I know Brett earlier mentioned stickiness. That gives you stickiness with the customer, where a competitor may come in and offer them something else, it's hard to give up a 98% fill rate and that consistency of receiving their orders to keep the product on their shelf. We're constantly optimizing our network. If you take a recent expansion that we just did in Bakersfield, we added 100,000 square feet to it. The reason we did that wasn't really due to capacity in Bakersfield. If we had opportunity for product that we had located in Dallas, that we could move that product closer to our customer by put it in Bakersfield. That's significant savings to us from a freight cost perspective. Again, freight cost is that #1 priority that we look at when we're looking at our distribution network. So that enabled to reduce our cost again by doing that and improved our service levels for that customer. We've done these same things in other DCs as far as expansions. We've applied the same logic in Kansas City, recent optimization that we did in Jacksonville. Again, I'm just going to remind you, nothing is more expensive in distribution than freight. So we keep a very close eye on that. And by doing that, that makes us the most efficient supplier in the aisle for our customers. So let's talk a little bit about building a smarter and faster supply chain. I know it was dark this morning when you came in. And I was hoping it would be a little bit lighter, because you would have noticed off to the right of the interstate, there's a large construction site going on over there. That was a former, and we say this with a lot of love, but a former Zombie Mall that we had here in Cincinnati that's been vacant, really an eyesore for the community. We work close with the local community and a national builder. They acquired that site. And what you're going to see going up there is a 715,000 square foot distribution site. We call it our DC of the Future. And so that's going up now. The construction is in process and we'll see that building up early next year. Now that will be a consolidation opportunity for us for multiple facilities that we have in the marketplace. This facility will be fully automated and it will be a multipurpose facility. When you think of this, it's going to be our flagship. Basically we'll be deploying state-of-the-art systems there. It will include goods to person. It will include auto-pallet retrieval and storage, autonomous vehicles, top-tier transportation management system. While all that will live here physically, it will benefit the entire network. We invest in our DCs based on what the needs of our customers are. So the investment in automation and robotics in the facility is a very attractive upgrade for us. That automation will drive efficiencies for the business. That's how they pay for themselves. And you'll have the opportunity today to actually walk one of our facilities, which is the Carillon, for those of you that are joining the tours. And my hats off to the Hillman family, because 25 years ago, they built a facility that was state-of-the-art at that time and that launched their business forward, which is why we're doing the same thing today. The only problem is it's 25 years old. The automation is antiquated. You can't keep up with it anymore. And it's time to evolve and move into the future. But I think you'll be quite impressed with the facility when you have a chance to walk it today. The biggest win is we get to consolidate multiple aging facilities into this one. It's going to be a modern hub, to be located right here in Cincinnati, which is where the majority of our volume ships out of to a lot of our current customers. And Cincinnati has been our home for over 60 years. It gives us an advantage as well since we're consolidating multiple facilities into this that I don't have to go out and rehire employees. We're only 2 miles down the road from where we'll be moving them from. So all of that expense goes away. We get to gain the experience that's valuable to us here. So that's a big win for us. This facility will be a true omnichannel facility. We can service the Pro out of it. We can service retail out of it. We can service e-commerce out of it. We can do it all out of this facility. So we're very excited about this facility coming online. Okay. That's where we're going to bring it all together. So everything I've talked about today, the integrated operations, the dual faucet sourcing, the automation at Cincinnati, it all culminates in Hillman being ready to take care of our customers. The smarter, faster supply chain, the DC of the Future is going to give us skill our scale and more efficiency. And the result of that, you can see right here. If you look at 2025, 49% gross margin, that's up 600 basis points. And 100% free cash flow conversion, that's our average from '22 to '25. These results speak to the power of our integrated approach. At Hillman, our global supply chain operation gives us a structural advantage over our competition. We don't just hope for stability. We engineered it. Our supply chain is a profit engine and it is the reason we're set to continue to outperform in the market. I'm going to turn it over to our next presenter now, Aaron Parker. So thank you very much, and I'll be around for Q&A later.

Thanks, Bob. Good morning. I'm Aaron Parker, and I serve as the Chief People Officer. Now don't worry, this isn't a training session. No icebreakers or personality assessments today. I'm here to talk about our talent and culture that gives us a competitive advantage. Prior to Hillman, I held HR leadership roles in the banking and retail industries. I'm entering my sixth year at Hillman. And from my experience, what sets Hillman apart is that we recognize our greatest impact starts with the people in the field who directly serve our customers. So far today, you have heard about our strategic blueprint to own the core and expand categories. Delivering on this strategy starts with a strong foundation, one rooted in service. And as we have shifted and became a public company in 2021, we've also streamlined our organization and improved SG&A discipline. Recently, we refreshed our vision, mission and values to reflect who we are, where we're going and what we expect of our employees. JMA mentioned earlier how we are a resilient company. In fact, one of our core values is resilience. It's truly a part of our DNA. Whether navigating the pandemic and, most recently, tariffs in 2025, we have shown time after time our business is ready for whatever comes our way. As we focus on strategic growth and building for the future, we have intentionally invested in bringing in talent into our field sales, business development and Pro leadership teams with a focus on growing now and into the future. Now the power of our company starts with our people. Brett shared earlier the ways we win. It starts with our 1,200 field sales and service team members. Our focus on safety and retention continues to outperform industry benchmarks with lower incident rates and higher average tenure, which all helps to fuel our strong EBITDA margin performance. We truly believe our people make the difference in giving us the ability to successfully execute our blueprint strategy. Now as we enter year 5 of being publicly traded, we are excited to share we are being recognized as a USA Today top workplace. Only 100 organizations with 2,500-plus employees will be recognized with this award. Last year, 83% of our employees chose to share their experience at Hillman through our survey, which I see as a strong indicator of the engagement and commitment across our workforce. This recognition strengthens our employer brand and helps us further attract and retain high-quality talent. Ultimately, this recognition validates that our culture is a competitive advantage. Next, I will turn it over to JMA and Michael Koehler for Q&A.

Thanks, Aaron. We'll open it up for Q&A for about 15 minutes or so. Just some housekeeping. Andrew, I see you've already got your hand up. So please raise your hand. I'll bring you the microphone. And we ask that you limit your question to one question and a follow-up. And let's keep our questions on topic with the speakers we've got up here.

Andrew Carter, Stifel. Curious on the RDS. I really appreciate the presentation and the granularity there. But in terms of, number one, you said kind of steady growth from here. That was kind of something that I believe used to be a double-digit grower. I want to confirm what you're thinking about that business. And obviously, it's a great business, the placement you have, the technology. As far as keeping it within Hillman, do you think that you have the necessary resources for R&D to keep up from tech, also potential for capital, whatever to really get everything you need out of this business to really fully realize its potential?

Thanks, Andrew. Thank you for that question. I think the first part was where do you see it going in terms of growth? Yes, I think that's going to be in line, obviously, with what you're going to see here for the overall business. We're going to be in step with that. I don't want to give exact numbers. But I'm going to be happy with it, let's put it that way. Second of all, in terms of being under Hillman and having access to all the resources, certainly. We are -- we have already made, as I suggested, a significant investment in this platform. We're where we need to be to leverage it. And I think we have a bright future in terms of everything R&D, everything Tempe, everything we need to do. So I'm super excited about where we're going.

Scott, good answer to the question, Andrew. I appreciate the interest there. I mean one of the things I'll turn to is Scott talked a lot about 3.5. We're really excited about the technology. I think you know how my approach is. We're going to tell you about it as it continues to exceed expectations. We're pleased with how we performed in 2025. We're excited because we're going to improve on that even in 2026. I'll say firsthand, Brett and I were just actually out in the field with our 3.5, I'll call it, team with -- where our West Coast Blitz is, just a few weeks ago. And to see the action and the power of the Hillman, I'll say, what machine, what we can do, that's bringing all of our people in the field together with our product teams and seeing the action out there and getting excitement, it just gives you an example of where and how that fits with the portfolio and how we're going to be able to build on it. So Andrew, I think there's some really good opportunities. A lot of that was driven around automotive. And we're going to continue to lean into it. So we think we got some exciting days ahead. We really believe in the technology and the path forward.

Brett, I was wondering if you could talk about the similarities or differences between you guys getting into different categories 15 years ago within the hardware aisle and expanding into the Pro channel. Is this something that's going to be more driven by organic like you did in, say, builders hardware or more of a broken chain situation where you've got to buy more access to that customer base?

I'll start and I'll let Brett add on to it. So it is a mix of the 2, Reuben. And you're going to hear a lot more about Pro here in the next section where we're going to go pretty deep on how we break it down. On retail, I mean, Brett's team has done a great job. I'll let him expand on it. But for us, we really believe that this is one where we've got the products. And a matter of fact, I'll start out my presentation talking a little bit about what we have in the core, the moat we have today and how we're going to expand that and take care of the Pro. So be patient on that part of the answer. But Brett, anything you want to add a little bit...

I would agree. I would say it depends on the category. It depends on whether it's retail or whether it's Pro. I think the larger the category, the more likely we'll have to buy our way into that. And there's going to be some, call it, bolt-on categories that we'll build, different than maybe what it was 15 years ago when we got in the builders hardware. But the good news is our customers are encouraging us to explore those opportunities.

Okay. I'm going to change my follow-up then since I think I got ahead of myself. So Bob, I was going to be disappointed if you didn't say dual faucet today. Can you walk through I guess, how that's -- how the competition has reacted, if you have insight, meaning are the others also pivoting like you are? Or how big of a differentiator is it for you that you're able to kind of move with your suppliers to other countries?

Well, I would assume the competition is doing similar things. It's hard for me to know that because, unfortunately, they don't share a lot of that information with us. I do feel comfortable that we've been out in front and leading in this area. And the reason that I can say that is because as we're on boots on the ground, I'll be leaving again for Asia at the end of this month, that's what we're hearing from the factories there. So I do feel like that we got to jump on this to be able to get out in front of it. And this wasn't something that we took on immediately when tariffs were announced. We started this road 2 years ago. I've always been a firm believer that you have to be multi-sourced because you just never know what's going to happen in the marketplace. The expansion and pushing that across to other countries of origin have been a benefit for our suppliers as well as because it gives them the opportunity to grow as well. So they've been very anxious to meet us there because you got to think about it, the alternative to that is when somebody imposes 150% tariff on you, you're out of business. So it's been very good for us.

Lee Jagoda, CJS. I guess one for Scott, one for Bob. For Scott, just on the 3.5 rollout, in particular with the auto key FOBs, can you give us some real-world examples on how you plan to market it to the consumer to drive adoption other than just having the picture on the side of the machine?

Sure. Great question. So we've been doing market blitzes to raise awareness. Because for years, we did not offer auto keys on the machine, right? So we have been attacking this by market as we get density of our machine conversions. And that's one of the things that JMA alluded to. It's been going extremely well. We've done Dallas. We've done L.A. We've done in Florida. We're now moving to North Carolina and others. So we're taking it market by market, but we also have a large digital campaign as well: e-mail marketing, influencers, the whole nine, that are driving awareness in the market, and we're seeing results.

And then for Bob, obviously, the DC of the Future is pretty exciting with all the automation and robotics. What kind of opportunity is there in those areas with your legacy DCs? Or is it just a build strategy and then consolidate from there?

Actually, we do look at all of our DCs as far as what opportunity we can bring to improve our efficiency. So we talk about the DC of the Future, but Jacksonville as an example, we use robotics in our Jacksonville DC. We have more automation there. So we are automating in other facilities based on the need to serve the customer. So it's not just a one big bang. The big bang is just because of the sheer volume that we do out of this marketplace. But we look at all of our DCs for opportunities to improve our efficiency.

Sam Darkatsh, Raymond James. By the way, thank you for all this. I know it's a lot of work that goes on behind the scenes. This is terrific. I think this question is for Brett. So you mentioned some of the categories that you're not in yet at retail: electrical, plumbing, sealants, adhesives, there may have been a couple of others. It's exciting. First off, what's the TAM of those? Are they included within the $6.5 billion or are they incremental to that? Second part of that would be, we've heard about some of these categories for a while being opportunities. Does this imply that the ability to get into them organically is challenged? Or which of them maybe in particular might make sense to go organically?

I'll start, Sam, and then I'll let Brett add on to it. So the electrical and plumbing, as you see it there, those are not included in the TAM that we have. So Sam, those are ones that we think are still attractive categories for us. We've been talking about that since we went public. We believe that those are -- those would be acquisition opportunities. So those would be ones where, as Brett talked about on that page, he framed up that some of this is category expansion organically, some of it could be inorganic, those would be inorganic opportunities for us. So to your point, that is consistent with our thesis. We've not changed our positioning there. And we'll look for opportunities when they arise. We look at deals. Candidly, we looked at one not that long ago that could have gotten us into the plumbing side. It wasn't the right fit for us. So we still maintain that discipline, looking through ROIC lens and making sure that we're doing deals that are right for Hillman. Sometimes the best deals are the ones you don't do. We've looked at several of those in the last couple of years, and we feel like when the right deal comes up, we'll go for it. So I think that's really how you want to think about those areas. We like -- when we did our market study, and we spent quite a bit of time and effort on really identifying what makes sense for Hillman. Adhesives is something that came up higher on the radar. We think that as you think about everything fastening, we're very proud of our DNA in fastening and what we do, it is at the core, and it's something that really connects the entire business, no pun intended. We think the fastening, as the evolution of fasteners and building materials go, we are looking at opportunities in the adhesive area. That's something that we think is very interesting to us. Especially as the advancements in construction and those materials move forward, we think we have to be looking at them. So that would be, again, acquisition oriented. We're not going to go -- we have looked at some opportunities, and Chris and his team have explored some opportunities for us to do maybe some partnerships. But I think that would be acquisition, joint venture if we went down that road. I mean they're sizable. So as you know, some of the big players in the space, we think there's an opportunity, especially in the Pro side of our business where we can expand it, especially with the brand Power Pro because as you'll hear me talk a little bit later about it, Power Pro is a brand that started with fastening. We think it can extend beyond that. That would be an what we can do there. So more to come on what that would look like in the future.

I mean not much to add. I mean categories like plumbing and electrical, high SKU count, low line value, complex, difficult to manage. That's why it's attractive. But we're going to enter in the categories that we can be #1, and that one is most likely going to be a build.

Yes, Brian McNamara, Canaccord here. I want to -- I guess, can you expound upon doubling your kind of contribution of new business wins from 2% to 4%? What gives you confidence in that? And I love the fact that there's not one housing-related slide in your deck today because it's something easy to kind of blame. So it's great to see that. But what gives you confidence on that? Maybe Brett can kind of speak on like some of the sales cycles of some of these new business wins that you expect.

I'll start [indiscernible] because that's one where, Brian, to that point, it's an excellent question, and you're welcome for not putting the housing slides in there. I mean we really feel about the resilience of this business, we use it sometimes as through bad times. We think our resilience in the positive areas. I mean Brett's team is doing a great job of going out there winning new business, taking care of our customers. That's why we have confidence of moving that 2% to 4%. A lot of that growth will be on the Pro side, and we'll talk about that in more detail shortly. But Brett, why don't you give us some examples of some of the things you guys are doing on winning new business, even some of the BD things.

Yes. I mean we recently launched a business development team, folks that are completely focused, dedicated on going out and driving our top initiatives and selling the most important things, working with our sales teams, our customers. And we need that 2% to obviously get to 4%. A lot of it is going to be the Pro. But we do believe that we have opportunities to lean into even bigger ways and categories with our customers that are out there. And this business development team, we have focused -- folks that are focused on new channels, getting into things like convenience and grocery and areas that we're just not in today. And then obviously, partnering with our existing channel customers and looking at those category opportunities. Or when we launch new products and we displace a competitor, having that business development team has been a great asset.

Add about -- even give a little feel for national sales meeting and what you guys kind of gotten revved up on.

Yes. So we had our traditional hardware national sales meeting in Denver, Colorado a few weeks ago, and this is when we had all 275 people that call in the hardware store channel, in one room. And we were able to not only share where we want to go with the business, but also what our plans are for '26, what are those new products, what are the areas that we really want them to focus on and sell into the hardware store channel. And we spent 2 days. We trained on them. We had business development there to help train them, things like Power Pro and how we really want to go after the LBM yards that we've been calling on for 40 years and really expanding our moat in some of these other areas. And it was a great 2 days. I think, JMA, you would agree with that. The team was really fired up. And they look at this business development team as now a new resource that they have to break down walls, whether it be internally, candidly, or externally, so that they can go out there and do what they do best, which is sell.

It was so powerful. I mean Brett's being modest. I mean that's what gives me confidence, is see that team revved up and fired up, starting on Friday, going Friday, Saturday, Sunday and talking about all the great stuff we're doing. I mean it was really, really amazing. So Brett and team did a great job. That's an example of what gives us confidence we're going to go out there and crush it in '26 and beyond.

If I squeeze a quick one in for Scott on RDS. I know you guys have had your techs in the stores servicing other kiosks. I'm just curious what learnings you've gotten there. And anything to make of that, any opportunities there, good or bad?

Yes. That's a great question. What we have learned is basically how good we are. I mean I hate to be that, but it's true. We have learned, as I had mentioned, our exceptional uptime, our engineering, all the things that have gone on behind the scenes to make our fleet as reliable and as efficient as we can, we now have opportunities in front of us because of our excellent servicing and what they've seen with our fleet, there's opportunities there for us to do more of that business. They're asking us, and I've quite frankly said, when we're ready, because we don't want to overdo it in that area. Our uptime is what matters. And to the extent that we can service others, great, but only when it makes most sense for us. But we've learned a lot. We really have.

It's Jamie Simonson from Jefferies. I guess my first question is probably for Bob, on the dual faucet side of things. How quickly are you able to sort of shift the supply chain from one country to another? And then on sort of looking at that decision, is it really just pure looking at the total landed cost and going with the cheaper one? Or is there any other factors that would go into that decision?

Well, definitely the -- good question. But definitely the landed cost is where our focus is because that's how we provide a competitive advantage for the business. As far as how quickly we can shift, it's a matter of we make that change and the next PO can go to the next vendor. And when you look at the scope of what we have set up in that, and I'll just give you an example. Last October, we had our vendor conference in Ho Chi Minh City in Vietnam. We had over 200 suppliers in attendance at that conference from 11 different countries. Those are all suppliers that we do business with and have the ability to move spend back and forth with. So it's very fast for us. It's simply a matter of we put it into our table and the next PO that goes out goes to the vendor with the most competitive cost.

Perfect. And then maybe just switching gears slightly to the RDS side. I'm curious, obviously, the automotive example that you gave is pretty clear in terms of the high cost of going with the dealership. I guess, over time, as you guys grow penetration on that business, is there any risk that the dealerships might come down in price? Or are you not really worried about that?

I personally don't worry about that. I think that's not a big piece of their business. And I think they take advantage of the consumer because of it, but that's my opinion. Yes, I think we're where we need to be there, and I'm not worried at all about that. There's a big market for us to address, and we're going after it.

You have Elizabeth Langan from Barclays. I had a question for Bob. So specifically, you touched on your ability to kind of move suppliers very quickly. Just in light of recent events, could you talk a little bit about where your rest of world exposure is just generally outside of China?

Exposure, that's a tough question. I didn't bring my crystal ball with me again today, so I don't know what's coming tomorrow. We are constantly monitoring what's going on with tariffs. We all know what the Supreme Court decision was. That's still unsettled as far as how that's going to work. We know that immediately 122s were imposed, which could go up another 5%. But so far, that's been globally so it hadn't individually picked out any particular country. I think the thing that we'll be focused on most looking into the future is where the new 301 tariffs focus at. That's where they'll be able to pinpoint tariffs on any particular country, on any particular product. And that will lead us to shift based on where that guides us to.

Let's have one more question, and then we'll go to break. All right. We'll wrap it up. We'll have about a 15-minute break. So it's about 9:40 right now. So we'll be back here at 5 to the hour. Thanks. [Break]

All right. Thank you, everyone. We're going to get started with the next section. Everybody ready? I know I do. All right. We're going to get started with Win the Pro. So thank you, everybody, for rejoining the presentation here today. We're excited to walk you through this section and really unpack what winning the Pro means. Hopefully, out of the last section, you understood a bit more about owning the core, and you heard from Brett about how we're going to continue to expand our business through category expansions. You heard from Bob, and talked about operations. You heard from Scott, talked about our RDS business. And Aaron wrapped up the people portion, which is very important for us. It's one of our core values, our people first. And I think when you bring all that together, the idea that you want to take away from there is we have a solid core business, and we're ready to grow. And that's how I want to really start off where we are today. We've built this $1.6 billion company by taking care of our customers. You heard me say that, you're going to hear me continue to say. It's that important for us to make sure that, that's the foundation. And as we move into the Pro markets, it's really important for us to understand a few things. Because when I talk about the Pro internally, we get our teams excited. Brett shared about the national sales meeting where we talked about Power Pro for hours with our teams, and they rotated through. And when you show them the power of the product, and no pun intended there, it's really important that they understand that they have that Pro product that they can build off of. We focused our Pro businesses on Pro products, but we've really done it from a retail lens in most cases. And what you're going to see, and for those who are in person, you got these Power Pro screws and fasteners and a sample in your package, it's really important because what you're going to hear us talk about is the planned and the unplanned purchase. So you think about the unplanned purchase, that is when somebody comes into a location, could be a retailer, could be an LBM yard and they pick up something because they got to finish up a job or a product. They're buying a -- it's a Pro product, that's this Power Pro screw that you all here in person see, but it's merchandise for a retail application. It's not for [indiscernible] hear us talk about different terms, but that is important for us when you [ think about ] the Pro and the opportunity, it's about having the right products and the infrastructure to deliver to them. And I want you to start with that foundation. I hope you felt that and saw that from our original presentation. So as we move into it here, unlocking that Pro and really building off of that foundation is very important. So with our core secure, that's why we believe Hillman is ready to capitalize on this opportunity. What you're going to hear over this section is from the leaders of the business about how we're going to grow the Pro opportunity. So as we expand, let's start with where we play and where we'll grow. I already framed up the fact that we have a large, strong, solid retail business. We're not going to waver there. We're going to continue to build on that solid foundation. Part of that retail business is serving the Pro. That is very important for us to understand. So we're already in that market today, again, with the retail packages, the fasteners I just explained and shared with you is how we get there. But as we move forward, it's really about the untapped opportunity that we're exploring and we'll exploit in the Pro distribution side. And that's where we'll start to give you some insight as to how we're breaking down the market in the business. And to this section, we'll really focus in on that retail Pro, Pro distribution and then industrial MRO about how we're going to continue to take share. So we have the products today. We have the infrastructure and the team to go drive it. Now it's about powering those resources and going after that growth. So enlarging our core markets is about how we actually take that center of the core, the $6.5 billion market that I shared earlier, and we expand it by looking at the categories where we can expand and grow outside into the Pro. You take builders' hardware, it's an example that Brett shared earlier. Pros are buying builder hardware product today. They're not buying them from us because we focus on retail packaging. That's an opportunity for us to explore and give that Pro the product they need in the future. Pro distribution is -- you're going to hear us talk a little bit more about how going through Pro distribution going purely to Pros the way they want to be served is important and different. And we'll unpack and share with you exactly how we're going to go after and do that. But that $9.5 billion market as you expand away from the center is not a different market that we're not in today. We're already serving that Pro. We're going to do it in a more meaningful way, and we'll explain to you how we're going to do it -- and then industrial MRO. And while it's a smaller market share opportunity, it is a big piece of our business and an area where we believe the focus on fastening and as I shared in the Q&A, adhesives in some of those different areas, that's where we can actually bring all these pieces together and give our end users what they need through our partners, whether it's in retail, pro distribution or industrial MRO. So with that, I'll move over to market framing. So this is where I'll go a little bit deeper. There's a lot on this slide. I understand. But the big takeaway here is you understand that there's the markets that we serve, retail, pro distribution, industrial MRO. It's the customers we're going to support in those areas, they are going to continue to service the end users. This is not about a new strategy of us going direct to customer. We are going to continue to focus on the concept of a master distributor, which we already have that model in our industrial MRO, but that's really how we operate in our retail business as well. We want to bring our customers all the products they need to serve their end users. And that's where I turned to the end users. So you think about retail, we've got DIY customers. You know that. You understand that today. Many of us in this room are DIY customers of those channels buying our products. But we also have the small, medium remodelers, the homebuilders that are on the small side, they are buying from Pro, Pro-oriented products in retail today. Some -- many of those Pros are also buying through Pro distribution, but we're not getting them the products they need because we've not focused on those -- and we're going to explain to you how we're going to do that. So this is a shift in focus from a Pro product perspective, but it's not a shift in focus on taking care of our customers and ultimately the end users that they serve. So as we really break this down, you're going to see some of the retail partners that we serve there today, how they're going after the Pro. You can see examples of Pro distribution partners that some that we do business with today and some that we will do business with in the future. And that's really what we want to understand here today is that we are going to continue to take the products we have today and sell them more of those products to the customers that we're already serving. Now back to the overall market share. So as we connect these 2 pieces, so we have the markets that we frame the 3 that we have, retail, Pro distribution, industrial MRO. And then we have the share in each of those areas. The 20% share that we have in the core, again, Pro products will help us continue to expand and grow there. Brett gave you numerous examples of how we're going to grow. We got to support the DIY and the Pro because retail will continue to expand in those areas, and we believe we have a right to continue to grow there. The real exciting opportunity that we're going to focus on in this section is going to be Pro distribution. We have a relatively small piece of the portfolio, and that's where we're going to show you how we're going to unpack that and break it down into the different pieces. And that to me is what's most exciting about the opportunity that's in front of us. So I'll turn here to what you're probably all asking is, okay, what does this business really look like that you say you're serving the Pro? So you know we're a $1.6 billion company, about $1.1 billion is our DIY business and over $400 million of it is in Pro today. And that's made up of the 3 buckets. So our retail Pro is over $215 million. We have our Pro distribution piece over $200 million that we have there and then another $35 million industrial MRO. So we're already servicing those customers today and ultimately, those end users through that channel. So what you should be excited about is this is not where Hillman is going to uncharted territories. We're there today. We have -- and that's really what you're going to hear us is we've been putting investments in, in '25 into '26 to be able to go after these opportunities. You saw the team. I know I flashed it very quickly earlier in the presentation. Shortly, you're going to hear from James Daley and Chris Martin. Both are now have Pro responsibilities on our leadership team. Those roles did not exist a year ago. That is our commitment. So it's not just those 2 individuals, the teams that they have that they're focused on and taking care of the Pro. And that's why we know we're going to be -- we're confident, and that's why we know we're going to be successful in these areas because we're already starting to see the flywheel turn. So we're already servicing these markets today. This is about us building on it. We're going to go into greater detail about those pieces of how we actually do that in the splits in a moment. But it's really about you take away from this page is we are making and creating the products necessary to serve these channels. I'm really excited about what Chris and Tim and some of our product teams are going to share with you and some of you on the demo, taking the example, the Power Pro product that we have today. We're designing and engineering those products in our facilities. We have great engineers up in Canada and in the U.S. here working together to innovate screws and fasteners. So we're not just taking things off the shelf and throw them into this channel. We're driving innovative products that we're selling through our channels today that we're going to sell more of in the future. So this extension in where we are, I hope you can see not only the confidence, but the passion I have behind this because this is an area that is not being served the way they need to be served today, and I know that the Hillman team can go capitalize on that. So moving forward, we'll turn into what do these buckets really look like. So first, scaling with our retail partners. We said earlier how our retail partners are continuing to grow in Pro. Many of you cover them and spend time on them today. They are going not only in their core 4 walls of the big retailers there today, they're acquiring businesses in this space. They are asking for true partners to continue to move forward with them. That's what we're doing. So we're supporting them today in their Pro initiatives, and we're going to even support them more greatly in the future. James is going to go really deep on this. I'll just touch the surface. Then specialty distribution. We don't talk about it publicly in great detail, but we have, for example, our ST fastener business down in Texas, where we design, develop and manufacture innovative hardware products and fasteners for the metal roofing metal siding industry. Chris will go really deep on what it takes to win there. We're already in this space here today with great products, and we lead our categories in that area. and we'll build on it. Then I'll talk to you a little bit about LBM. And this is not us about selling building materials into the LBM channel. This is about selling fasteners and our other hardware products toward the LBM channel. We already do $100 million of business there today. Our men and women out in the field that we love that go drive our business are out there servicing the showroom. We don't spend the time on the yard and the planned purchase, and that's what's going to change in the future. We're putting resources to go after it. So that gives you a road map of where we're going, and now we'll go into more detail about where we -- how we're going to capitalize on it. So though you might be asking, okay, you have the competencies to win in retail. Brent did a great job of framing this up earlier. But how does it translate to Pro? We'll break this down in each of the sections. But what's really important here is the foundation we have, as I started out this section and what we've accomplished and what we put in place from our global sourcing and our operations team to our sales team, to our product teams are out there servicing and developing the products and getting to our customers. We're going to build on that. We're going to use those competencies like our product breadth, things like innovation, our ability to category manage and give them the product they need, drive sales, distribution and operations. But the idea is we're going to cross that over and we're going to actually make it make sense inside of each of the channels because they do operate differently. We're not going to just take a retail playbook and think we're going to go win with the Pro. This is about tailoring the resources and making sure that we capitalize on the capability we have today. I want to bring up the point here also is that we have businesses that have been serving the Pro for decades. I mentioned Poland up in Canada, over 100 years servicing the Pro. We've been doing the same thing here in the Hillman business for over 60 years. That's where some of our first sales started was in the LBM channels. So this is not us about starting out in an area where we haven't been before. That's why we're excited about it because we gained traction. Our customers in those channels are excited. We want to bring them more products and more services and capability. So as we move into the next chapter here, I wanted to really focus on Power Pro. Really passionate about this brand, and it is a brand that's been built over 20 years. Our teams have designed and innovative products. You all have samples here, those here in the room of PowerPro fasteners. Their industry's best. You're going to see this in action on the product demo tours. And it's not just one fastener or one idea. Our team has been really leaning into this category and developing innovative products that we can actually bring to the market to be able to give pros and DIYers alike what they need and the great performance. Just last month, we were at IVS, so the International Builder Show, we're proud to show off Power Pro. It's the second time we've ever been there. This is something we leaned into. We got to interact with customers, with end users and different people, show them the comprehensive scale and breadth of that category. It's not just one set of screws. We've got structural screws. And as you -- if you went through the demo, you can see all the different parts of a structure where our fasteners come into play. And that's what's really exciting about this brand that we've grown from what it started at 0 to $100 million. We've really only leaned into it in the last 3 or 4 years. And what I'm really excited in the last year, we grew this at 9% because of the product marketing teams really driving this brand. We're going to continue to power it with our focus on the Pro, and we have the positioning to do it. So that's our overview of where we are and how -- hopefully, you can take away from this section how we have the capability, the foundation we're taking care of the customers today and how we're going to translate that and grow with the Pro in different. So with that, I'd like to welcome up to the stage, James Daly, our SVP of Pro, and he's going to walk you through the residential Pro and how he's going to expand in those areas. Thank you.

Thanks, Jamie. Good afternoon. Let's talk a little Pro, okay? We've been talking about it all day a little bit here and there. We're going to get into some more detail. We're pretty excited about the Pro, as you can hear from John Michael and the team. And then Chris Martin will get up and talk a little bit about specialty, and then we'll do some Q&A. So we'll start with James Daly, Senior Vice President of Pro. I bring extensive experience in the fastening and hardware industry channels, 7 years with AC Supply, 6 years with Home Depot, a couple of years with Mohawk Industries. I joined Hillman in 2021, best decision ever made. Fantastic. I've been here since 2021. I've managed several areas of the business, business development, sales, product category, all focused on driving sales, expanding margins. But throughout my career, I've had an interest in the Pro, either through the retail channel or through distribution. I've always had to take retail programs and then tailor them to the Pro, so it's a dual sourcing or dual sales channel. The Pro has been part of what we do since the beginning. And now we're really leaning in. We're going to really focus on that Pro, and I am excited to leverage all of that experience to lead us into the Pro channel. So let's begin. Let's take a look at the Pro landscape with our retail partners. Today, we already do $215 million in Hillman retail Pro revenue, serving Pro customers through our retail partners. We support in-store unplanned Pro purchases through our Pro product assortments on retail shelves, capturing that ever important last mile purchase. That is an important part for the Pro because they cannot finish the job unless we are there in stock on shelf with the Pro materials they need to finish that job, okay? And this service has made our retail Pro business very strong and very respected. So we own the shelf. We're there to support our Pro partners as they need that last mile run. Now we will take those learnings and those capabilities to start to expand them. The opportunity at retail continues to grow. Our customers are adding dedicated Pro divisions to better serve medium to large-sized Pros, fulfilling purchases through flatbed and bulk distribution centers. Increasingly, they're also delivering direct to the job site, completing that circle. This creates significant opportunity for Hillman to expand our share of wallet, support our retail partners and grow rapidly into the expanding Pro market. Hillman is a trusted partner to the largest retailers in home improvement with more than 60 years of leadership in fastening and hardware categories. We built this business by supporting retail channel and partnering closely with our customers. Now we are extending those capabilities into the residential Pro channel, continuing to support our valued partners while unlocking new sales potential for Hillman. To unlock here is what's key, okay? Because we have the last -- now we're unlocking new opportunities and new ways to get at that existing Pro customer. We have won 17 Vendor of the Year awards from our retail partners over the last several years. Our track record, we aim to continue as we expand into Pro. Our dedicated residential Pro sales team works daily to drive results for Hillman and our customers. With strong positioning across primary categories at key retailers, this extension is a natural evolution for us to continue to grow this company, okay? This is not that different than what we do today. We're just expanding these capabilities, okay? Our retail partners trust Hillman to expand Pro with them because of our product depth, sourcing capabilities, credibility and our service mindset. We see 4 main advantages that position us to win in the Pro market. First and most importantly, product is always king. You have to have the products. We already have nearly all the products contractors need. Historically, these were packaged for retail shelves, as John Michael mentioned. Now we are reconfiguring pack sizes and piece counts with our engineering and sourcing teams to align with how Pro customers buy at competitive price points. Second, I'm sorry, we also bring brands. For example, Power Pro has been in the market for over 20 years. Contractors know and trust it. It started in the Pro space, okay? We already have a full line of professional-grade products from trim screws and structural screws in our portfolio for the professional customers. We will continue to expand that product category and that brand. Second, sourcing. As Bob Davis shared earlier, we bring in thousands of containers annually, moving freight at competitive rates, and negotiating directly with our factories. Our sourcing offices across Southeast Asia, combined with some of the most experienced teams in the industry, provide scale and cost advantages. As John mentioned, he'll be in Asia next month, hand-to-hand combat, making sure we're getting the best prices, the best qualities with some of the best factories that are out there. Our dual faucet strategy allows us to react quickly to changing market conditions, ensuring product flows through our distribution centers that Pro customers get what they need when they need it. There's no option to not be in stock when a Pro customer needs an item, okay? We are the job completers. We are the hardware department. So we will be there for them. Once product lands, we move them efficiently through our national network of 24 DCs shipping directly to our customers, flatbed and their bulk DCs, ensuring consistent supply, competitive pricing and job lot quantities that Pros require. Third, most near and dear to my heart is our sales team. Our sales team for the Pro averages more than 20 years of industry experience, retail Pro, residential Pro construction experience over 20 years and they call directly on Pro merchants and field selling teams in the market teams are selling to the end users. We are supporting the folks that are selling to those end users. Think about everything we're covering here, they have a big basket of stuff that they can do and leverage to go sell to those customers. We are also supported by over 4,000 employees, more than 1,000 service, logistics and operations, ensuring that when a Pro calls and picks up the phone, somebody at Hillman is here to answer the phone. If they can't get a hold of somebody, they can call me directly. Our Pro sales team adapts quickly to customer needs and resolve issues as they arrive by combining deep product knowledge with a world-class operations model, and they deliver a seamless solution-based approach that supports all of our Pro customers' needs. Finally, our financial strength. Hillman's strong balance sheet positions us to scale effectively as we grow in the Pro channel, providing the resources to capture opportunities and drive incremental growth. The opportunity here is clear. We have the products, operational infrastructure and the trusted brands that Pros know backed by an experienced sales team, and well positioned -- we are well positioned to capture the market and accelerate our growth in this space. I will give one example. how this works. One example of how we're entering the Pro market is with a complete bulk product offering. This approach simplifies procurement for Pro distribution and increases fastener attach rate. As a reminder, attach rate is how often a customer buys a secondary item with a primary item, think drywall screws and drywall. It's a very important part of our business. Our bulk products are configured to Pro expectations and volumes, okay, those volumes that support wholesale pricing. A simple brown box with a practical piece count can drive attach rates upward, driving more revenue and value for us and our customers and our distributors. Currently, the average Pro attach rate is a fraction of what it is in store. By ensuring fasteners become a well-adapted planned purchase, we can grow sales, gain market share from local suppliers and unlock long-term stable growth. As I conclude my section, several key points stand out to me. First, our large retail customers have already moved and they will continue to move into this Pro space. We are uniquely positioned to support them. Second, we have the products that Pros want, the supply chain to support the business and a dedicated Pro sales team ready to drive incremental sales for both Hillman and our customers. And then third, significant growth opportunities already exist within the channel, such as bulk offering, which can increase attach rates in Pro and Pro distribution. Overall, Hillman is well positioned to capture Pro market share and drive meaningful growth. We are locked in, we are ready to go. Thank you very much for your time today. I'll hand it over to Chris Martin to talk about specialty Pro distribution.

Thanks, James. I'm Chris Martin. I lead Hillman's Specialty distribution and industrial MRO business. Before I joined Hillman, I spent time at HD Supply, Beacon Roofing Supply, Stanley Black & Decker and Kurd Dr. Pepper. I was primarily focused on supply chain, distribution, acquisition integration and professional contractor markets. Our team at Hillman serves professional contractors, specialty distributors and industrial customers with fastening and supply solutions used in various applications. So an example of this is our ST fastening business, which John Michael mentioned earlier. It's a $100 million specialty fastener platform, and it supports demanding applications like metal roofing and other building systems. What's important to understand is that in the professional fastener market, there's 2 different product needs. First, our high-volume construction fasteners. These are products used in large quantities for applications like drywall, framing and the building envelope. Second, our specialized fasteners that are engineered for specific materials, coatings, environments or performance requirements like metal roofing screws. Hillman's advantage is that our platform supports both. For construction fasteners, customers value availability, price and sourcing scale. For specialty fasteners, customers value engineering expertise, product breadth and application knowledge. What connects both segments is Hillman's ability to manage tens of thousands of SKUs, source globally at scale and deliver reliably through our distribution network. Those are the same core capabilities that made Hillman the category leader in retail, and they translate directly into the professional market. So as we expand further into professional distribution, the dynamic becomes even more important. So distributors who are serving contractors, they need a partner who's going to reliably supply both those high-volume construction fasteners and a wide range of specialized products. So for construction fasteners, priority is simple. It's availability and cost competitiveness. Contractors can't afford any job site delays, so distributors need confidence that those core products are always going to be available. Hillman's global sourcing scale and logistics network are going to allow us to deliver that availability consistently. At the same time, contractors require thousands of specialized fasteners designed for specific materials, environments and installation requirements. So managing that breadth of SKUs can be extremely difficult for distributors to handle internally. This is where Hillman becomes such an important partner. We bring global sourcing scale, extensive product breadth, reliable distribution infrastructure and trusted contractor brands. So these capabilities allow Hillman to support both bulk volume construction fasteners and of course, the highly specialized long-tail products within that same platform. Importantly, many of our large retail partners have invested in or acquired professional distribution businesses that are serving contractors directly. This creates a natural opportunity for Hillman to grow alongside them as they expand their business further into the Pro channel. So the strategy James described earlier around expanding with Pro customers translates quite naturally into these distribution channels. The bottom line is we're not building a new operating model. We're just extending the capabilities that Hillman's been developing for decades. So I want to demonstrate this with a real example from our ST Fastening business. So in a market like metal roofing, the fastener is a critical component of the whole building system. So for a given job, a contractor is going to need thousands of color matched fasteners for a single installation. Fastener has to provide structural strength, maintain a watertight seal, withstand decades of environmental exposure and match the aesthetic color of the roofing panel itself. If the contractor runs short of that correct fastener during installation, the project just stops. So their crews are idle, their schedule slip and the cost of downtime quickly exceeds the cost of the fasteners themselves. So in these markets, availability and reliability are in essence, the product. The person who has the product is the one who gets the order. So through our ST fastening operation in Tyler, Texas, Hillman finishes these fasteners that are designed specifically for this application. We support thousands of specialized SKUs. We can color match virtually any roofing panel, and we deliver these fasteners in job-specific quantities aligned to the contractor installation requirements typically in less than a few days. Today, this specialty fastener platform is a $100 million business for us, and it continues to grow as the adoption of metal roofing and other specialty building systems expand. More importantly, this illustrates the broader point. When Hillman combines its product engineering, global sourcing, manufacturing capabilities and reliable distribution, we can serve these highly specialized markets that many competitors simply can't. These types of product-led specialty solutions represent a meaningful and growing component of Hillman's Pro strategy. Importantly, the capabilities that allow us to win in these specialized applications are the same capabilities that allow Hillman to expand more broadly in the Pro market. Our ability to manage a complex assortment, source globally at scale and deliver with extremely high service levels creates a platform that's very, very difficult to replicate. We believe that platform positions Helman extremely well to capture additional share with our contractors and professional customers over time. So with that, I'm going to turn it over to John Michael to discuss our lumber and building materials Pro strategy and how we plan to leverage these capabilities across that channel.

Thanks, Chris. All right. So now we'll turn into the LBM business. So we're excited about this area because it's one we play there today. I think, hopefully, you've taken away from a couple of these different areas. I shared with you the Power Pro example about the great brand that we have. But I think it's really important to understand that we have a solid foundation in base here. What I'm going to share with you over the next handful of slides is a couple of key. One is that we're in this channel, but even more importantly, we're in a portion of the channel, and I'll explain that in more detail. We focus on the showroom today, and we believe we have an opportunity to expand the yard. And I think that's what's exciting. What we heard from James and Chris is we have unique capabilities in each part of this business that give us permission to play and that we also gives us permission to win, and that's why we're winning in these categories. The retail Pro and the Resi Pro piece of it, the opportunity we have there, that natural extension, those ideas and capabilities, plus what Chris outlined really give us the ability to win in all of these channels. So as we break it down and we think through where we're going, I'm going to walk you through what a location could look like. Now many of these locations in the LBM channel look different. This is obviously just an illustration to give you an idea. The takeaway from this is focus on there is the front or the showroom. That's where anyone can walk in. Typically, you have a Pro comes in, they may be working on a takeoff or design for a remodeling project or a build. But when they walk in, they see actually some retail merchandise. It could be all different types, depending on the outlet, it's going to vary. In many of those installations, the $100 million business we have today, it could be 4, 6, 8, 12 feet of merchandise product that we have in there. Our people and we leverage the category management, the products we have to optimize that space to be able to capture that unplanned purchase. So I want to make that point clear. That unplanned purchase is where we actually win today. We're going to continue to win. That's part of our model. That's what extends. So I think that's an important point for you to take away. The exciting thing is, as you can see here, not only depicted in size and scale, but a lot of the activity from some of these lumber building material locations is activity out from the yard. It is that planned purchase where somebody is putting together a job, the value that those locations create and the value that they deliver for their customers is they can package the job and give them the building materials, the fasteners and everything to go extend the project and complete it. So what we're doing in the front is we make sure that those Pro packs, that merchandise solution that I shared earlier, we outfit in the front. Brett's team and the traditional folks that service those locations, they do a great job taking care of that showroom, making sure that, that product show. And then we have some of our people with their own focus have said, "Hey, we're going to go win some of those opportunities in the yard and get some of that planned purchase -- but that's not an area that we focus because we typically focused on the actual showroom itself. So when you think through what does it take to take care of the yard and to actually deliver the products necessary for that Pro, I thought it was important to think about all the things that we do on the left here in the showroom, think about product, innovation, category management, the things that we do well at Hillman that we invest in each and every day, they translate to the showroom. That's probably not a surprise for anybody in the audience or listening in. That's what we do today. But they do correlate, and I think they connect to what we're doing in the yard and the loading area. To be able to operate there, you got to make sure you have job lot quantities. We've touched on that numerous times through the presentation. Some of that is different pack size, some of it is different packaging. We have that capability. We introduce thousands of SKUs each year. This is about how we run the business. Some of you may ask, is that a heavy lift for Hillman? This is what we do each and every day. So by focusing on it, by having James' team, our LDM team focused on those areas, we're now going to work with the product teams to be able to add those job lot quantities, make sure we have building code-compliant products, making sure we have the application specific. It's part of the reason Chris walked up here, what did he talk about? Having the fasteners for the application of attaching that metal roof. That is about having the Pro quantities for the projects that these LDM yards perform. It's also about having LBM specialists. We've been adding some resources, brought someone in to actually focus on LBM. And that's something that, that team is building some momentum. We'll be adding those resources as we scale this area. The just-in-time delivery, I think, and I hope you see that not only do we have a world-class operations team, Bob and his team are upgrading that and making sure we have the capabilities for not only today but also tomorrow. And that high-quality competitive cost. We all know to be able to win in the channel, you got to give them the quality they want at the cost that's competitive. And we can do that. We're doing it today, and that's where we really see the opportunity. So to me, this page really summarizes and really encapsulates why we're going to win in this section in this area. And then there are some of the examples of some of the partners that we're going to go out there. We sell some of these folks today. This is not, again, all new call cycles. This is about bringing and extending the products we have today into those channels and building on it. And that's why we're really excited about where we're going because it is really thinking about the convenience buys in the showroom, unplanned purchase. It is the opportunity for the orders and the volume from the yard, that planned purchase. It's about changing the mindset and empowering our people to go after those different opportunities. It is going to take some time. That's why this is going to be a build for us. But we're already doing it today in some locations where we have some, I'll say, really aggressive and capable salespeople. We're already doing it where we serve them and bring them what they need. So we've got to be able to make sure that we add those products expand the quantities and the pack sizes and then power that team to go forward. So that's why we know we can be successful in this area. What gives me the high confidence that we're going to go take share here in that $9.5 billion market and those over 3,000 locations that we're already calling on today. So this is about focus and making sure you don't let your core slip. That's very important to us. That will be one of my points when we close and then capitalize on this opportunity in this market. So that's a little bit about where we're going and why we're excited. So we think about LDM coming together, the simple message is we have the capabilities. We have the people in the stores today. We're going to add the resources necessary in the pack sizes, and we're going to go focus on this and do what we do, we take care of the customer. This is another example where we're going to be able to do just that. So with that, I want to take it and get it ready here to bring Michael up here. He's going to talk to you a little bit about our M&A opportunities and how we're going to continue to augment this growth strategy. With that, I'll introduce Michael Koehler, our VP of Investor Relations and M&A.

Thanks, Jamie. As you know, I'm Michael Koehler and run Investor Relations, Treasury, and I also co-lead the M&A team. I spent the last 15 years doing Investor Relations and capital markets consulting, having worked with over 35 public companies. I sit at a busy street corner and have my fingers close to the pulse of what's happening in the markets. Today, I'll walk through our M&A strategy, how it acts as a powerful accelerator for our growth and why it's an important part of our long-term strategy to expand the core and win the Pro. Our M&A expertise is rooted in over 6 decades of execution. Throughout our history, Hillman has built value by compounding accretive growth, both organically and via acquisition. The focus has always been prioritizing returns over purely buying growth at any cost. We've expanded categories and acquired capabilities at disciplined multiples, ensuring near-term accretion with a long-term strategic fit. Our M&A track record is built on around 30 successfully integrated transactions. We provide the scale and the platform that can turn a small or specialty business into a category leader. In many cases, we are the buyer of choice because we're a strategic buyer that has the market access, customer relationships, a 1,200-member field sales team and supply chain leverage. Our history of successful integration gives us the confidence to expand across channels that we have discussed today. We categorize our targets into 3 different areas: expand categories, Pro distribution and industrial MRO, like you've heard today. We prioritize targets that are a logical fit for Hillman, ones that our sales team can grow, ones where our category management can add value, ones where our global supply chain can lower costs and targets that are a good cultural fit, those that align with Hillman's core values. In retail, the objectives are driving sales and category management. We want to expand the core by acquiring fastener-related categories or categories in adjacent aisles. As Brett mentioned earlier, near neighbor categories like plumbing, electrical and even protection and safety gear are high on our radar. In Pro distribution, we target distributors with strong customer relationships where we can leverage our global sourcing network and national distribution capabilities. Today, we're underrepresented in the Pro, and there's a lot of white space for us to grow, as you've heard. Examples of Pro distribution product categories include collated fasteners and adhesives, where we have minimal to no presence today. You've heard the team today talk about how we can grow organically with our customers in Pro distribution and LDM. But M&A can help win that Pro by acquiring the specialty -- by acquiring into the specialty Pro distribution space, which has many unique product niches that make M&A particularly attractive. Industrial MRO, the focus here is centered on the master distributor model. Our value proposition is built on scale and long-tail SKU complexity, something Hillman has done very well for a long time. Gaining meaningful traction in industrial will be M&A driven. Across the vast number of end markets in the industrial space, we're looking for master distributors with long-tail complexity and high-spec SKU requirements. Here, we can achieve synergies with our enhanced scale and dependable global sourcing network. As I mentioned, in addition to hardware and fastening, we are currently seeking opportunities to acquire new adjacent categories like adhesives, door hardware and plumbing. We believe these categories make a lot of sense for us from a strategic and product offering standpoint. We can add tremendous value and synergies, applying our core competencies to distributors and/or suppliers in this space. More broadly, our primary focus remains on a number of high-margin key product categories. We maintain a robust pipeline representing healthy growth opportunities. Today, our pipeline consists of several candidates within our typical deal range. Well, what does that mean? Well, in 2024, we paid in the mid-$30 million range for both Cook and Intex, and we have the ability to flex up several times over that for the right deal, if necessary. Staying in this range allows us to avoid bidding wars over larger assets, maintain attractive EBITDA multiples and keep our leverage in check. We've got the financial guardrails in place, and we've proven to be patient to keep for the right -- we've proven to be patient for the right deals. Taking a bit of a step back, our M&A strategy exists within a balanced capital allocation plan that you will hear Rocky talk more about in a few minutes. We're able to invest in the business to capture organic growth, both in retail and in the Pro. We can buy back stock under our share repurchase program and execute our M&A strategy. We can do all 3 at the same time. While our growth is not dependent on M&A, it is a key part of our strategy to grow share within our expanded $18 billion target market. We're confident this will accelerate our earnings growth and deliver high-quality returns for our shareholders. Let me give you an example. We acquired Cook Ropenhain in January of 2024, and it's a great one that showcases our M&A capabilities. We identified this company and patiently waited for over 3 years for this deal to come to us at the right multiple open chain are heavy complex products. So this category was perfect adjacency to our existing hardware categories and at the time, our recently launched Ropen chain accessory line. Upon the closing, we got to work to integrate Cook and the results were transformative. Within a short period, we leveraged the combined strength of Hillman and Cook into a new win resulting in 20% top line growth for Cook via a nationwide rollout at just one major retailer. And we are confident that there are more wins to come in this category. With our foundation in Ropen chain established, we now have the ability to drive additional benefits in this space from an M&A standpoint. Today, we source 100% of products sold in this category from overseas. Currently, there are additional M&A targets in this vertical that can allow us to expand into the industrial MRO channel and in-source production, which can give us supply chain flexibility as well as potentially capture additional margin in this category. Coke has been a great acquisition for us, and we believe we can replicate that model going forward. The playbook is simple: identify a category that we want to expand in, successfully acquire an attractive player in the space and leverage Hillman's core competencies to drive profitable top and bottom line growth. So this concludes the M&A session, and we'll now open it up for Q&A. We'll have Rodney run the mic, and we'll ask the speakers to come up.

Andrew Carter, Stifel. So a question on the kind of Pro going into this. Do you believe that you can accomplish kind of the ambitions you've laid out here with the current capabilities in hand? Or do you need to take another step change in the sales force? Obviously, M&A out there would give you a thing. But just anything incremental to that like to kind of contextualize resources in hand versus incremental investments you might need to turbocharge this?

So I'll start. So Andrew, thank you for the question. So we believe we've got the, I'll say, investments in place for us to build the, I'll say, long-term objectives that we framed there. Rocky will go into more details about how we break out the pieces. So Andrew, that was part of my putting James in the role hiring his team up at the end of 2025 to be able to get that framework on the retail Pro. Chris' team has already got a team in place. I think LDM is an area where we've got resources in place and Brett's team. So we feel like we have the feet on the street to be able to drive that incremental growth. And we'll throttle those investments and add to it, we hope to, as we gain more traction there. So Andrew, we think we have it baked in. This is not about us coming out and changing our financial, I'll say, objective because of these initiatives. We feel like we are absorbing them, and that's what we're driving inside of our guide today. So I don't know if anything you guys want to add?

Yes. I mean I think the only thing I would add is the team that we're bringing on is very experienced, deep relationships, and they have hit the ground running. As Jamie mentioned, in '25, we were hired, and they are in market, in field today with customers trying to drive sales. So really proud of the team we assembled. It's a good experienced team.

Reuben Garner with Benchmark. So, just a follow-up on that. How does it work, the $100 million in LBM business you have today? Is that entirely through a dedicated sales force? You mentioned hiring LBM specialists. Like long term, is this a distinct separate sale process from the retail customer?

So we have actually our field sales team that actually is out in the field that runs in one organization. They actually call on different hardware stores and lumber yards today. So Reuben, those are the folks that are actually calling on them today. The LBM specialists that we're putting on Brett's team, we brought in 2 professionals that are fully dedicated to LBM. We haven't done that before. They're the leadership. And now we're evaluating the strategy to go infill the resources necessary to go after the yard opportunity that we framed up. So that will be an evolution of where we're going and how we see it going as we move forward here.

Lee Jagoda, CJS. So going back, I guess, way back to Slide 61, I guess, there was a whole bunch of logos around potential Pro opportunities. And there was 5 of them where they're owned by your current customer base. How much of the growth that we're projecting through 2030 is going to come from growth within the existing channel where the customers are saying to you, if you had more different form factor, different ways that we can buy this, we want to do more with you versus you having to go out and displace somebody less willingly?

Yes. That's a great question. So '25 is all about -- '26 is all about laying the foundation with the folks that we talked about in my presentation, okay? And then as we build with those customers, we build those capabilities, we expand into the folks that are in the box here. As you know, these folks were acquired by these large retail Pros. It is certainly on our road map. We're very excited about it. We're going to build this stable foundation and then build upon that with expansion. And when I talk about unlocking sales potential, this screen certainly would represent that. Does that answer your question?

Yes. Is there a way to quantify some of that? So in the framework of if it's a point or 2 a year of Pro growth on average from now through 2030, how much of that growth comes from existing relationships versus going out and beating the street where you're not?

Sure. I mean I would think at least 1 point, 1.5 points would come from existing relationships and then potentially another 0.5 point from these folks as we expand. But the key here is the capability, the product, that sales team is all the current capabilities that we have. So we don't need to add incremental to do that. It's just as we pace ourselves here.

And Lee, it's going to be a mix. I mean it's a great question. I mean I think it's going to be -- we already got some great trajectory and momentum with some of these Pro customers today. They get into that channel. We want to make sure we have the service model that they need. That's why we think we have the capabilities to do it. So it's going to be an evolution, and we'll certainly update you on that journey.

Sam Darkatsh, Raymond James. I know how to ask this question, but what are the current service gaps that the Pro customers are seeing in their planned categories. I think steel and wire products, prime stores, they are getting serviced right now. So where are the service gaps that you feel you're really being differentiated?

So I'm going to give you a small example to give you an idea. So we had a -- and I won't go into the name of the customer, but we are on a West Coast walk a month ago with Brett and I were out there. We went to one of our customers, great retail partner that we have today that's in there supplying the Pro. They are selling product out the back, and we have one of our top sales people in that store, great guy, great walk. We asked them about some of the products we sell at the back, and he's like, I don't even know that you guys can do bulk packaging and quantity. That's the kind of opportunity that we have out there, Sam. He's buying today from a local supplier, and he's like, I'll let you guys quote the entire mix. So to me, I think, Sam, it's about going out there and unlocking where there's either opportunity because they don't know that we have the capability or there's an unmet need. You're right, we have viable competitors in the space. This isn't going to be where people are going to be knocking down our door saying, take my orders. But to me, awareness is huge. I'll give you another example, we were at a show with a large partner not that long ago in the last couple of weeks, totally different individual. They didn't know that we did what we did in B2B. And that person came out and said, "Hey, we'd like you to quote our entire mix and show us pictures of the warehouse that they stock all their P grade product. The didn't even know we did bulk quantity. So I'm not saying it's going to be easy, Sam, but a lot of it is awareness. We never focused on those areas before. That's not what we put in our retail catalog. So our salespeople don't even aware of some of the capabilities we have. So it's going to be building awareness and putting programs in place, and that's what James, Brett and their teams are doing today.

I've got a follow-up. So are you currently servicing the unplanned category with your existing retail sales team? And if so, I'm guessing the new team -- the nascent, but new team will maybe do both unplanned and planned, which might either free up that retail space or maybe allow for a little more leverage?

Yes. Very good question. So Brett's organization today, which he has all just to break this down. So we have our retail sales organization. Brett's got several different teams that he focus on his traditional team, which was the national sales meeting we just mentioned, those folks are calling on LBM locations, hardware stores and the like across the nation. So we believe that it will be adding more resources within that pool and then augmenting them with LBM specialists. We're not really prepared to walk through the detailed strategy of what that's going to be because we got competitors listening to this. But that is how we're thinking about framing this up, Sam, is it going to be leveraging our core resources and then adding resources where we think there's growth opportunities. So hopefully, that answers enough of your question to get a sense of where we're going.

Kind of following up a little bit there. Can you help me on the LBM side? How does the Pro purchase, particularly on the fasteners in the -- right now at an LPM? Are they currently getting that product in the back at an LPM? Are they getting it somewhere else? Or how does it generally work today for that Pro?

Yes. I mean in many of the markets, the yard is supplied by, if you will, what the needs are and the demands are in the marketplace. So that Pro today that's buying those full quantities, contractor lot sizes, they're actually specifying, hey, here's my build. They're working with that professional in that location and saying, "Hey, you need XYZ quantity of type whatever fastener. So there is a spec component to it, meaning there's a specific need of a size fastener for that application, and that's driven by what's going on in that market. Each market is different. That's why we have people in each market. So today, that is being driven by the contractors' needs. Some of that's driven by the lumber yard and what they're specified. Some of it can be driven by the designs and the plans. And that's part of what our teams are out there working on is giving them availability if they've got a -- they need an inch quarter drywall screw as an example, that we have that product in the quantity that they want to purchase it. So we're working with them, and we'll be working with them to supply them in the quantities they purchase. That is part of the curve. That's why this isn't going to be overnight, if you win $50 million of business, we will build this over time by meeting the needs of that customer, similar to what Sam asked is this is about making it aware that they have -- we have the products and the capability and then be able to fulfill their needs and what they're actually delivering for the Pro.

And just a quick follow-up. That's helpful. How about the gross margin for that type of business for a planned bulk purchase like an LBM or something, I'm assuming that industry generally has a lower gross margin than your normal business. Is that directionally the right way to think about it?

Directionally, and I'd ask you to save some time here for Rocky. He'll walk you through a way to think about that. So I'll save that for the financial section next good question.

[indiscernible] with Baird here. Kind of following up on the previous question. As you are leaning into these specified structural applications in the Pro, how should we think about the changes in terms of like the sales approach, required expertise, the risk liability profile of the business, maybe some of the hurdles you foresee and maybe the competitive landscape as well? Just any additional commentary.

Yes. I mean I'll give you a couple of nuggets. So I think I'm going to go back to the sales name we talked about earlier. I think actually educating on how to sell into that channel is a really important element. That's why we have 2 people specializing it today, and we'll continue to add research. So I think the sales cycle is a little bit different. The way that we actually sell is different. And then we are spending a lot more time with Chris Patterson, who's here and his team as far as building going after application-specific products. It's a lot of what we displayed at IBS show, and we've gotten great feedback in by having structural screws for a needed application. We've had to build out that product range. That's what we've been working on. So I think that's part of the product equation. We're working on the sales equation, which I shared that we drove at the national sales meeting. So those would be areas that we have to be able to be successful in. And we're putting feet on the street now. So we'll update you on that progress as we go forward. But sales, product, I'm very comfortable with where we are from a delivery perspective. We have a world-class operations team. So I feel like that's in check and aligned. So I think this is going to be about building the capability and adding the resources that are focused on that type of sales because it is different than what we do today. When you're selling into the showroom, it's a different sales cycle and a different process than the yard, and we're going to have to build some momentum there. What again gives me confidence in this is we have some really talented territory managers in the field that are doing this today that sell pallets of our product out the back because they have a relationship. We're going to now empower that team and really open up the opportunity, and that's why we're excited and confident it's going to work.

Just a real quick question on the TAM is big in the Pro distribution side. Your share is really small. Can you talk a little bit more about the competitive set out there? Is this a super fragmented market? Are there big players that you're competing against? And when you compete, -- do you think -- is your advantage that you've got this wonderful product that's been created on the retail side with a great brand, and therefore, you have a better brand opportunity? Is it a pricing advantage that you might have? Maybe just talk about that.

You gave me a lot of good nuggets here. So I'll try and hit those the way I think about it. So it is a very fragmented market, and there are some very capable competitors. I mean PrimeSource's name is brought up. We respect those guys. They have a good business model. There are a lot of regions as we go out there where there are small regional players that are driving and delivering bulk contractor grade quality fasteners. That is an area for us. And then it's where we have partnerships where we have already the fastener set in the front of the store. That's part of the extension of natural. And that was not a made-up story. I'm not going to go into the name. I was blown away, Brett and I were blown away. This is one of our best guess, hardware locations we go to the store was amazing. We just got into the conversation with Pro. He's like, I didn't even know you guys have the quantities. I went to lunch with us, meaning this wasn't like he never seen us before. He loves our sales guy there. I'm not saying that's every location in America or North America, but that gives me the confidence that there's connectivity when you take care of the customer, that will only give you other opportunities. So that's fragmented, yes, and opportunities that we need to lean into. Now let's not underestimate the fact you got to have the pack sizes, you got to have the demand, you got to be able to bring it in. I'm really confident with the guys sitting in the back of the room and his team that are out there. We have a world-class sourcing organization and great manufacturing partners that we're able to build and line that up. It's going to take some time. It's why we're not coming out here and saying, hey, there's an incremental 10% growth in this category. So I really think it's about making sure we have the right product making sure we have the right sales strategy and then putting the right resources to it. And you got to give us a little bit of time to get the traction, but there's opportunity there. And that's -- hopefully, that gives you a little bit more. I know that was somewhat redundant to the last question, but that's really how we think about it, and that's why we believe it works. And when you get the sales team fired up and you give them something to go sell and then you give them the training so they have the confidence is super important. For me, I believe in this story and this vision. That's why I can get up here in front and talk about it. It's the same idea that's in front of a customer. You go out there and you give them the product and they have the company behind them to back it up, they can go out there and execute. And that's what's really exciting about it. That's why we love our sales force and what they do. We got to go give them the ammunition to fire the gun.

Just, I guess, on the back of that question. So on the large format stuff, -- is the market today rational in general? How big a differentiator is a quality brand in large format versus pack size in the front of the store, both to your buyer and then to their customer?

Yes. A couple of things there. So will we expand our category into some of the more bulk products that may be more price sensitive? We are going to evaluate that over time. Michael mentioned COLA. James has talked about COLA before. We're going to evaluate that. This is not about trying to be everything to everybody. We're not going to go out there and say, "Hey, our business is growing $0.12 penny nails out there in the marketplace. That's a commodity type item. Where you see the difference is as we've seen the evolution, and I'm going to get geek out for a second, but fasters, you go from lag bolts, which is a big part of our business today, to construction fasteners by driving innovation, lag bolts have declined over time. because people are using structural screws to complete their applications. By us focusing our product development there, that's where we think we can win. And that's where the Pro brand that you referenced where it means something. It's exciting to see when you can give people a good Power Pro product, and I'm shamelessly plugging that again because when you get people's hand and they see the use case of it, they go drive it. That's what put -- that brand really grew out 10-plus years ago when we launched Power Pro 1 because it's a great fastener, multipurpose P-grade prep fastener that everybody can use. Once you got in their hands, people started, "Hey, I need Power Pro. That's what they thought of. So it's going to take time. This is an evolution, not a revolution. But that's, I think, where there is a space for branded product, Lee, and I think there's an opportunity for us to grow. And there's a massive market for us to go take share.

Thanks, everyone. That will conclude our Q&A session for W the Pro and M&A. We'll take a 10-minute break. We want to stay on time here. So let's do 10 minutes, and then we'll turn it over to Rocky for the financial section. [Break]

We've got almost everybody back. Take a second to let some people wander in.

All right. We're good to go. Welcome back. Obviously, the part that you've all been waiting for, the financial piece. It is interesting. Somebody said this to me earlier, I think Sam, and he said, everybody always does the financial piece last at their Investor Day. And so we had to do the same thing. So again, I'm glad to finally be up here. Thank you for not asking me any questions until now, which is good. I'm going to start by giving you a little bit of my background. I think everyone in the room knows me pretty well. Rocky Kraft, I'm the CFO here at Hillman. I've been here for 8 years. I started my career actually at PwC. I was an auditor. I was there 18 years, 6 years as an audit partner. After that went to a company called Omnicare. Some of you in the room probably invested in Omnicare, $6 billion public company here in Cincinnati. I was there as the CFO for 5 years. We sold the business to CVS. I went to CVS for 2 years and actually ran the Omnicare business. And then people like Doug Cahill convinced me to come to Hillman, and I've been here for 8 years, having a great time. So I'm going to talk about our financial framework as we think about the future. I would characterize it, and JMA used this earlier as kind of an evolution, not a revolution. A couple of clear takeaways that I want you to have from my part of the presentation. First, you heard Brett talk about the core retail business. We heard Bob talk about operations. Scott talk about RDS, Aaron talk about our people. We're running this business really well, and we're going to continue to run it well. Next, you heard James, Chris and JMA talk about the Pro. The Pro opportunity outside of the retail box is a big deal. And what you're going to hear me talk about is it's going to change our historic algorithm. We're going to add 2-plus percent, we believe, a year of new business from the Pro outside of retail. Finally, you heard stretch, as we affectionately call them, talk about M&A. What's different with M&A today? M&A is going to become part of the algorithm. It's not just an adder. We're convinced and convicted to do M&A. And finally, you're going to hear me talk a lot about ROIC. We're going to use it in all of our financial decisions going forward. All right. So I'm going to start and I'm going to close with our financial framework that we're committed to. You heard this earlier from JMA, 8% to 12% revenue growth that includes M&A. I'm going to break this down in a couple of slides in a little more detail. Revenue growth, along with us running the business well, will allow us to leverage our fixed cost and deliver low double-digit adjusted EBITDA growth. Our target, 100% free cash flow conversion compared to adjusted net income. To be clear, that's consistent with what we've done since the IPO. And we intend to maintain our net leverage at our current target at or below 2.5x. Before I get more into the future, I'm going to talk a little bit about the past. So since '21, when we became public, we're really proud of our performance. We've increased annual adjusted EBITDA by almost $70 million. Since 2022, we've added $0.15 per share to our adjusted annual EPS. And from the peak in 2022, we reduced leverage by 2 full turns. I think we all know in a really tough economic environment for our business. Again, I'm really proud, JMA is really proud. Doug is really proud. Our leadership team is really proud of what we've done in this environment. Again, before I get into the new stuff, let's just reiterate our 2026 guide. This is no different than what you heard a couple of weeks ago on our year-end call, $1.6 billion to $1.7 billion in revenue, up about 6 points at the midpoint or 6% at the midpoint. Adjusted EBITDA of $275 million to $285 million, up about 2% at the midpoint and $110 million of free cash flow at the midpoint. Clearly, this is consistent with that target of about 100% free cash flow conversion compared to adjusted net income. All right. Fun stuff. This is the same slide you saw earlier from JMA. I'm going to unpack it a little bit. So as we think about revenue going forward, this is how we're going to talk about revenue. This is how we expect you to measure us whether we're hitting our targets on revenue. We're going to talk about and report core, new business and M&A. So the first question is probably, all right, what is core? Think of this as comparable sales for Hillman. It's a combination of price, the market, product mix, all the stuff that we do every day in the stores. It's the thing that our 1,200 folks in the stores are doing every day. It's what Bob is doing every day. We expect core to grow every year. And quite frankly, if you think about our biggest customers, if you think about a Depot or you think about a Lowe's coming out and saying, in 2027, we expect X to Y, our numbers should probably look a lot like that. The second piece is new business. What's different here? Pro outside of the retail box. So since we went public, we've generated about 2% new business wins each year on average. If you look over the last 5 years, 3 of those years, our hardware business was closer to 3%. So what's our commitment going forward? 4-plus percent. I think we already got a bit of a question about it earlier. I'm sure we'll have more questions about it going forward. But here's the simple math, 2% historic, 2-plus percent from Pro outside of the retail box, 2 plus 2 plus, 4 plus. That's our commitment to you. Finally, M&A. Given where our balance sheet is, we're now making M&A part of the algorithm, not an adder. So what does that mean? We all know M&A is going to be lumpy, but the tuck-in bolt-on machine that Michael talked about is ready, and we're committed to it. Look, when you look at this algorithm, we know every year is going to be different. But the simple math is that we expect 8% to 12% revenue growth annually, which means by 2030, we're a $2.5 billion company, as we told you earlier, and we'll continue to tell you. All right. I don't remember who asked, but somebody asked the question about the Pro. How are we thinking about the contribution from the Pro? And so we've laid it out on a slide. Remember, we expect that when we think about the Pro, we're talking about 20-pound boxes of deck screws and larger pallet size quantities, but they don't require the high touch that happens inside a retail box. So what does that mean? We think the EBITDA rate from that business is consistent with our current business today, but we get there in a very different way. We believe retail -- the gross margin will be lower than our existing business, our current business. Again, we're selling bigger quantities, pallet sizes don't demand the same gross margin rate, but much lower SG&A. What do we mean by that? Again, Bob and team are shipping pallets, pallets into the back of a lumber yard, pallets into a distribution center, not detailed boxes on a retail shelf. The bottom line is as we think about the Pro, it's going to add revenue and profit dollars that we're not capturing today. All right. Next couple of slides, I'm going to talk about cash flow and capital allocation. As we said earlier, free cash flow conversion, our target is that we expect to be 100% of adjusted net income. How do we define free cash flow? It's pretty simple in this business, guys. It's operating cash flow off the cash flow statement, less CapEx. Very simple calculation. Again, 100% of free cash flow conversion compared to adjusted net income. That's consistent with what we've done since we went public. Going forward over the next several years, we do expect a relatively significant step down in the capital that we need in RDS as we finish the rollout of 3.5. All of this CapEx goes through our ROIC model. Now let me be clear. Maintenance CapEx at times is not going to meet those hurdles. At times, you just have to do things to keep the business running. But any growth capital goes through the ROIC model, and it's got to hit the hurdles. So since we've been talking so much about ROIC, we're now using all of our capital allocation decisions. Let me talk about capital allocation. We've got our debt at our target levels, just below 2.5x as we sit today. So what are we going to do going forward? First, we're going to invest in the business through maintenance and growth CapEx. You obviously want us to do that, and we'll continue to do that. But that leaves us plenty of cash to do other things. As Michael talked about, we think a great use of capital is strategic M&A. We intend to do this. We also intend to buy back our shares to offset the dilution from employee stock plans, and we will be opportunistic around buying our stock. Many of you know, we've been doing that for the last couple of quarters. We're probably even doing that today. Leverage is in a great spot. Don't see a need to come down dramatically from where we are. Over time, leverage will come down as there aren't other uses for capital at times. The one thing we will commit to, if we do M&A that takes the leverage up, we will give you strict time lines on how quickly we'll bring that leverage back down to target levels, which we believe are in the low 2s. Again, any capital allocation we do will go through our ROIC model. So someone asked me earlier, I think it was at a break. Where are you today? 2025, 13.7%, our calculation. If you want to see our calculation of ROIC, it's in the appendix of the deck that's on our website that went out with the news release this morning. The only real adjustment that we make to that is goodwill and intangibles and related amortization from a private equity firm buying us over 10 years ago. We don't think this management team or you should judge us based on those numbers. So we exclude those. Otherwise, it's a NOPAT model, very consistent with what you'll see in other places. We've talked about ROIC today just below 14%. Our goal over the next 3 to 5 years is to get that into the high teens, and we believe we're on a path to do that. All right. Before we go to Q&A, I'm going to wrap up the same way I started talking about our 5-year financial objectives. Same slide that you saw earlier from JMA. There's no tricks here where we tried to run one past you. So revenue growth, 8% to 12% a year. We're going to talk about core. We're going to talk about new business. The Pro is going to take that new business number from a historic 2% number to 4% plus, and M&A is now part of the algorithm. We expect to leverage our fixed costs so that we can provide low double-digit adjusted EBITDA growth, and we will keep our leverage below 2.5x. If we have to take it up for a period of time, again, we're committed, and we will give you time frames to bring that down to our target leverage level. And finally, ROIC is going to drive all of our decisions. With that, I'm going to open it up to questions. Rodney, we'll probably do 20 minutes of Q&A and then off the lunch.

All right. We'll begin the Q&A session. It looks like we have a few hands.

Brian McNamara, Canaccord. I'm curious, how does this algo look if we're at $4 million in existing home sales 5 years from now? In terms of the controllables versus the noncontrollables.

Yes. So here's the way to think about it. That algorithm has no tailwind from housing or from existing home sales or anything like that. And so we believe where you should measure us, when you think about the core, a logical question is, what's that number? I think in our minds, it's low single digits in a current environment. At some point in the next 3 to 5 years, I believe we believe there will be a turn in existing home sales, but we're not counting on it.

Great. And then just a quick follow-up on cash flow. You guys have -- you've done a lot in the business. You invested in inventories when supply chain issues and you've maintained those high fill rates. You had bankruptcies, you've had tariffs, you had higher leverage before you were public. That's all impacted your cash flow. So if you're looking at your cumulative cash flow over the last 7 years doesn't look that great. Should investors expect some kind of catch-up? Or how should we think about consistent cash flow generation moving forward in that lens?

Yes. Again, I think our expectation, what you should expect from us is 100% conversion or more of adjusted net income. It's a simple way to think about it. We think that's a great metric. It actually is what we've generated over the last several years, although it's been lumpy. The one thing I will tell everyone in the room, when you think about 2026, I think some of the sell-side analysts think that we're going to get money back from tariffs. When you think about $65 million of cash tied up in the balance sheet at year-end, unless tariffs change dramatically, that is not a windfall. And so as we think about 2026, no changes to tariffs, let's assume it should be a normal cash flow year, which, again, our midpoint is $110 million of free cash flow.

Reuben Garner, Benchmark. What's the price assumption in the new algorithm out to 2030?

Yes. So we're not going to give that number. We were pretty clear on the last call that one of the challenges that we have with price is with our customers. It can be very noncompetitive if we go out and say the amount of price that we have, and that allows a competitor, as an example, to go to a retail customer and ask for that same price. What I would say about price is it's a lever we control. When you think about the last several years, the biggest challenge we've had in the business is predicting the true market. That's why if you have the core, let's assume like the last several years, the market is down 3% to 4%. We believe you should judge us if we can mix the product work with our customers on their footprint, better mix and go get price to get us back above 0. And so we get to a couple of points in that environment. We believe that's really good performance. We get a tailwind of 2 or 3 market, you should be able to add a couple of points on to that. But again, not going to get into those details going forward.

Got it. And then one of the slides in the EBITDA progression mentioned favorable product mix. What exactly is the favorable EBITDA or favorable product mix that you're kind of embedding in the outlook?

I mean we've done quite a bit on the mix side of it. I mean part of it ties back to the operational piece that Bob shared earlier. I mean we've been able to drive cost out by moving product around and be able to improve that over time. Plus we've seen -- continue to see things like our specialty fastener business has actually done quite well. So those be subtle demand changes inside of the footprint has helped us maximize it and then cost...

Let me use another example real quick, Reuben. I think today, you all, hopefully, everybody can stick around and we'll go visit the Lowe's store with Brett. You're going to see the fastener set of the future at Lowe's. We've spent the last couple of years. We're going to spend the next year or 2, I'm looking at Brett, remixing the entire set at Lowe's in their fastener bay that's generated great results for us. We're not going to give you the exact numbers around that, but let's just be clear that the comp is much better than comparable stores when we reset these stores. That's an example of mix that adds to our growth.

And our customers as well. That's a win-win.

So you reiterated FY '26 guidance today. Obviously, the oil price spike over the past couple of weeks has been a big deal. There's more uncertainty on the geopolitical. Could you just kind of outline your exposures there and kind of any incremental steps? Do you have surcharges in your business? Anything else to just kind of give comfort around the macro headwinds?

Yes, you're right. The backdrop or, I'll say, the geopolitical landscape is challenging. We reiterate guidance because we navigate inflation and different challenges, and you've seen that in the last 5 years. We'll manage it and mix it with our vendors first and then obviously, with our customers where needed. As far as specific surcharges, that's not typically how our largest customers do business. So that would be price. Impact is going to be things that you all think about, right? It's going to be freight and distribution. We have a relatively small percentage of our core materials or products that are driven by oil. So that's a little bit less on the COGS side of it. But it is an impact for our overall business. We're not going to break out that detail and give it to specifically, but it is something we believe we can manage within our guidance.

The only thing I would add there is, remember, if inbound oil costs, freight costs are all included in inventory. And so typically, those are going to hit our P&L 4 to 6 to 7 months after we've actually incurred the cost. So a little bit of a drain quicker from a cash flow perspective, but we do have time to react to see if it's permanent and not transitory. And if it is, typically, we work with our customers to make sure that we maintain at least a cost for cost benefit from that.

Elizabeth Langan with Barclays. I just had a question just to clarify the general like growth algorithm. So obviously, M&A can be like a little bit lumpy, but if you're saying like low single digits for core growth and then around like 4% for new business wins, that leaves like 1 to 2 points for M&A on the average year? Is that the right way to think about it?

I think if you think about M&A, I think we're saying 8% to 12%. So using your math, 1 to 2 plus 4 or 6, a couple of points of M&A. When we think about M&A going forward, again, it will be lumpy. That said, we love what happened in 2024, a year where we could do 2 to 3 deals that are tuck-ins that we believe are very synergistic would be a perfect year for Hillman. What does that mean in general, probably somewhere between $50 million and $100 million of total revenue from that M&A. But that's kind of how we're thinking about it. Again, every year is going to be different depending on what comes to market, what we like, what the valuations are.

So I know you guys love midpoints. So if I'm thinking about the midpoint of the revenue guide, it looks like the EBITDA growth algo is a little bit lower than it historically would. So I guess the questions are, first and foremost, how much of that is just conservatism about the unknown? How much of that is the idea that the Pro doesn't really leverage the EBITDA? Because I would assume the M&A component should make that leverage greater.

So there's a lot of points. Let me unpack this, Lee. Let's start with the top line, 6.3%. So if you put that into our current algorithm, to be clear, there's no M&A in that 6.3% midpoint. So let me just say that again to be clear, there's no M&A contemplated in that 6.3% midpoint. If you sit today and you try to unpack that, it's probably half core, half new business as we think about this year. And you may say, well, Rocky, you just told me 4-plus percent. Why is it 3%? Well, you just heard us guys. We just started on the Pro journey. So this year, probably not as big a contribution. But quite frankly, I think if you get 3 or 4 years out, probably a bigger contribution. Again, it's an average number. When you come to the bottom in EBITDA, there are a couple of things. First off, there's no M&A in that number. And so there is no leverage from M&A that could happen. Secondarily, as you'll recall, in 2025, we did have a windfall from the timing of tariffs that doesn't repeat. And so that kind of depresses a bit the growth in adjusted EBITDA in '26.

So I was actually referring to the growth algo of 2030. So that 10% to -- whatever, 12% to 14% that's implied there, like the 300 bps increase between revenue and EBITDA at the midpoint doesn't -- like if you look back to when you started this journey before the tariffs and all the stuff, the growth algorithm was more leverage than we're seeing now.

Correct. So I think the answer to that, Lee, is it's 1 year. And so if you think over a 5-year period, we would expect there is more leverage in the adjusted EBITDA than there is in '26. Got it. Again, every year is going to be different. There's a unique reason why we're not leveraging as much in '26, and it's because we had a bit of a windfall in '25.

I got 3 questions, but they're quick. So hopefully, I'm allowed. So 2030 gross margin. You said that Pro was dilutive to gross margin. We're just trying to get a sense of to what degree -- or I'm trying to get a sense of to what degree that means for 2030.

Yes. I mean that's a tough number to predict 5 years out. That's why we said we believe adjusted EBITDA is at least the same from the Pro, and it means that we can leverage it over the 5-year period. What happens in gross margin is a little tougher to predict 5 years out just because it depends how successful we are in Pro. So I'm not going to get into that number today.

Does the Pro gross margin start with a 3? Just trying to get a sense.

To be clear, it's not dramatically different.

That's what I was going to say I don't think it's a material difference. Not dramatically.

All right. That was question one. Question two, you mentioned 2.5% CapEx is maintenance. Are we going to be running at maintenance after '26? I'm just trying to get a -- because you're at $70-some-odd million of CapEx now, but you have a lot of RDS spend that's going to be ending at the end of this year, at least $3.5 billion end this year. So what's a reasonable $27 million to $30 million CapEx number versus that maintenance number?

The easy way that I would -- yes, is the short answer. The longer answer, I would think as we think about RDS, we'll probably cut the CapEx about in half at the maintenance level from where we've been the last several years, which is around $50 million. And so as you're modeling it, that's how I think about it.

Okay. And the last question, the return on capital metrics, excluding intangibles, especially when you know you're going to be going into an M&A period. For a distributor, I mean, everything is intangible.

To be clear, we're not excluding any intangibles from any acquisition we've done since the time that the only intangibles we're excluding are the intangibles that were created and the goodwill that was created when CCMP private equity bought Hillman. We believe measuring us based upon a private equity firm buying Hillman 11 years ago, doesn't make 12 years ago, doesn't make any sense in the math.

So you're adding -- I'm sorry, the weeds here. So if you were to make a deal tomorrow...

It will be included.

You would add the intangible to the ROIC?

It is just the private equity transaction that happened 12 years ago.

So for instance, I mean, Cook is in the numbers...

Jamie Simonson, Jefferies. Maybe I do have a question on margins, but maybe just sticking with the ROIC for a quick second. I do obviously appreciate the focus there. But if you will be growing more with M&A, I know sometimes just mathematically with -- to the goodwill point, there can be a risk, obviously, of that impacting ROIC. So I guess what gives you confidence? And what will be the drivers of that expansion over the next 5 years?

Yes, I'll start and then Rocky add on. I mean the way we're looking at deals, I mean, we're going to continue to look at bolt-on activity. I mean, candidly, we've got some things that are in our line of sight that we feel would not be a material impact because we're going to buy them the right way. So we are going to consider deals in that lens. So I can't go too deep into that, but we do understand that we have to make sure we manage that accordingly, and that's our plan to do so. So Rocky, any?

Yes. The only thing I would say, and I don't think it will surprise anyone. Clearly, the full first year of an acquisition, we will include in the ROIC calc. We'll probably give some numbers. If we buy a company in -- on December 1, that's not going to go into the full calculation because it would be completely distorted. But that following year, full year clearly will be included.

Okay. Perfect. All right. Maybe switching gears a bit for my follow-up here. So looking at the margin story, obviously, I get the point with the Pro and the leverage is going to offset similar margin rate. I guess since we will be having a lot of growth from the Pro, should we be thinking about incrementals being similar to what we've seen historically since the margin rate sort of cancels out? Or how should I think about that in the algo?

Yes. Again, just clarifying, as you think about adjusted EBITDA margin incremental, we still expect kind of like the retail business that it would be at 20-plus. If you go back up to the gross margin, I'll clarify because Jamie, you made a good point, Sam, it was a good question, but we're not talking about 10% degradation in gross margin from the Pro. We're talking a couple of hundred basis points, both at the gross margin line and then making it back up in SG&A. Great question.

Yes, really good. One for Michael. I didn't want to preempt it with your M&A conversation before as it relates to the algo. But I'm curious how you guys would characterize the current M&A environment. You did cook and INTEX in '24. Last year was the doldrums, I think more tariff driven, things like that. And I know typically, you guys have long courtship processes. So I'm curious how would you characterize that? And how does that play into obviously your algo longer term?

Yes. If you look at where we were during the doldrums, the pipeline was pretty empty. -- stepping into the M&A role with the pipeline that was empty like, all right, cool. As I think of where the pipeline exists today, I'm very confident this will help us achieve the algorithm that we've laid out. You heard Jamie talk on the earnings call back in February that he thinks we can do 1 to 2 deals this year. I think we'll do 2 deals that we hopefully can announce here sooner than later. That gives us some runway to hopefully do a third deal in the latter half of the year. We're seeing some good deals, some interesting companies for sale that are both retail as well as Pro and industrial. So we feel good about the pipeline now, and it will be in lockstep with what you've heard today about our growth. With that, we'll turn it back to JMA for closing comments.

Excellent. Well, thank you, everybody, for joining us today. I'm going to leave you with a handful of points. So we're excited about where we are. But I think the big thing that we hope you took away from today, whether you're new to the story or you've been around is that over the last 5 years, we made a solid business better. I think we've been able to articulate the fact that we've been able to improve our balance sheet, improve profitability and drive growth in a challenging market. Now we know we have tons of opportunity. Hopefully, you can also see that the growth perspective and what we can do as we move forward is tremendous. I think if you think about the business we are today, I think something that's very important to me near and dear to my heart is you can't go and grow and do something else if you're not taking care of what you have today. And hopefully, you saw from what the team is demonstrating what they've shown that we are taking care of our customers. We're taking care of our business. We've got a great leadership team that's doing it. And that gives us the confidence and the ability to continue to not only service the DIY and the Pro that we have today, but to grow them. Third, the blueprint. It's not just something that we framed up for today because we needed a clever way to present this. This is really how we're building the business. Now any blueprint, you're going to make, you're going to make some changes to and tweaks over time. That's not to back off anything we said today. But this business is just like we've been resilient. It's one word that's very important to me. We're resilient in good times and in bad. We're going to continue to adjust, but we have a blueprint that is a set of plans. We've got an execution path, and we've demonstrated that we can go execute in a challenging market that should give you confidence that we have a path to that $2.5 billion. And then last but certainly not least, that we have the team in place. Now you met some of the folks today, but it's not just the leadership team here. We got 4,000 strong at Hillman. I'm super proud of this organization and how we've continued to do our best work when the times are tough and challenges are there. We're prepared for whenever this market changes. And as we talked about today, today was not about framing up why the market has been bad and why we haven't performed. I know that comment came up earlier. This is about whatever the market conditions are, we're going to adjust. And to me, I think great companies have to be able to do just that. You've got to be able to put the team on the field, adjust to the environment, continue to make investments in your business, whether they're in footprint, and Bob walked you through some of that technology through AI, we got some exciting things that we're doing in that space and that we'll continue to build on. You've got to make sure you've got the leadership team that's going to adapt and evolve because this market is going to continue to move very quickly. So if you take those 4 points, I'll then just flash forward here and just give you a little bit, hit the blueprint again. You should understand here today that we own the core and that we're going to continue to do that. And that's not an arrogant statement. That is a statement where we know we have to get up each and every day and take care of our customers and give them what they need to take care of the right users. That's how this business started, and that's how this business will run as long as me and the leadership team are here. Expanding categories. We are never satisfied with me and where we are today. We need to work with our partners to find opportunities to grow, whether it's through organically, as Brett articulated, things like builder hardware starting from scratch to a $75 million business over time or it's through M&A, things like Cook that Michael walked you through. We're excited. We have some more of those opportunities inside the 4 walls and outside the 4 walls that we will expand. And then win the Pro. I hope you see that this is not just a new idea and something that we're going to test out and we're going to do, we're doing it today. And that should be something that you should have confidence that we can go grow this at a faster rate because we're going to put the focus and we've got the we're putting in place to do just that. And with the lens, I'll reinforce, it's already been covered quite a bit in the last section with that ROIC, we think that's really important to us and important to you as shareholders and people of interest in our company is that we're going to make sure we have that growth discipline in place. And then to me, that's all great. But if you don't have a market that you can go grow and make a material difference, then what's it for. And anything worth doing is going to be hard and challenging. We know that's going to be hard and challenging. We love that about our business. But when we do what we say we're going to do, we're going to be able to go grow our share 9% today of that $18 billion TAM to what we believe to be 14% over that $2.5 billion. So that should be something for you to take away and saying there is a lot of opportunity and runway for this company. And that's why as we evolve and as we share here, we want to give you an idea of how we're going to update you and report out on this business, we're going to continue to stay focused on this market that we've defined and our teams are focused on delivering growth against it. And last but certainly not least, the value creation catalysts. I already covered this in great detail, but I'll leave you with we've got a resilient, solid company that's ready to go face the challenges in front of us. We've got a huge TAM that we're going to continue to go after, and we've got disciplined approaches to break it down and digest it. We've got a solid integrated operations team that's there to fulfill what we're going to do for the DIY as well as the Pro. We got a solid balance sheet and discipline that Rocky took you through in great detail. And then we have the highly experienced team that's going to go get it done. So with that, we really thank you all for taking the time to spend with us here today to hear our story and more importantly, talk about where we're going and we're taking this company in the future. So with that, we'll say thank you for joining us. I'm going to hand it over to Michael for some housekeeping comments. I hope everybody has a great day.

It is almost 1:45 we have lunch in the kitchen where you guys came in. You know where the restrooms are, yourself for lunch, try ice cream for. In the same room at 12:15, we'll have 2:3012:40. And I hit on this earlier, but make sure you're on the bus with your luggage. If you -- those buses at the end of the 3 tours go to the airport. So if you're not planning to go to the airport after the tours, let one of us know, and we'll get you a ride back here to our customer support center. With that, thank you, and enjoy your lunch.