Executive Summary

Hillman delivered a solid Q2: revenue $402.8M (+6.2% YoY), Adjusted EBITDA $75.2M (+10.1% YoY), with sequential margin improvement as tariff-related pricing began to flow ahead of most cost recognition and RDS margins improved .
Management raised FY25 guidance midpoints: Net Sales to $1.535–$1.575B (midpoint +$20M) and Adjusted EBITDA to $265–$275M (midpoint +$5M); leverage now expected ~2.4x vs prior 2.5x, and a new $100M share repurchase program was authorized; both are key stock catalysts in the near term .
HPS led growth (+8.7% YoY) aided by Intex, new wins and price; RDS posted its second consecutive growth quarter with 32.0% adj. EBITDA margin as MinuteKey 3.5 rollout gains traction; Canada remained soft (-5.6% YoY) amid macro/FX headwinds but is expected to return to top-line growth in H2 .
Tariff cadence: most pricing is in place by Q3 while tariff costs start hitting late Q3; expect a Q3 timing tailwind and parity by Q4; annualized tariff run-rate revised to ~$150M from ~$250M earlier in the year .
Consensus estimates from S&P Global were unavailable at query time; we therefore cannot quantify beats/misses versus Street for Q2 or forward periods (S&P Global data not returned).

What Went Well and What Went Wrong

What Went Well
- Strong execution and sequential margin lift: Adjusted EBITDA margin improved to 18.7% (+70 bps YoY; +340 bps vs Q1) with sequential adjusted gross margin expansion to 48.3% as RDS margins recovered and tariff price began to flow .
- HPS outperformance: Revenue +8.7% YoY and adj. EBITDA +14.7% with margin +80 bps to 16.8% on contributions from Intex, new wins, and price; market volume down only ~1% in HPS .
- Confidence and capital returns: Raised FY25 revenue/EBITDA midpoints; Board approved first-ever $100M buyback since 2021—management plans $20–$25M annual deployment, targeting dilution offset and opportunistic repurchases .
What Went Wrong
- Canada softness: Q2 Canada revenue -5.6% YoY with FX headwinds; adj. EBITDA margin -40 bps YoY to 14.3%; market volumes soft, though H2 top-line growth is expected .
- Gross margin YoY down modestly: Adjusted gross margin 48.3% vs 48.7% in Q2’24, driven by mix (Intex lower gross margin) despite sequential improvement .
- Tariff cash headwind and H2 volume pressure: Q2 cash from ops included ~$32.5M tariff cash drain; H2 implied market volumes down ~9% as price rolls through—management remains prudent on elasticity and macro .

Financial Results

Metric	Q2 2024	Q4 2024	Q1 2025	Q2 2025
Net Sales ($M)	$379.4	$349.6	$359.3	$402.8
GAAP Diluted EPS ($)	$0.06	-$0.01	-$0.00	$0.08
Adjusted Diluted EPS ($)	$0.16	$0.10	$0.10	$0.17
Adjusted Gross Margin %	48.7%	47.7%	46.9%	48.3%
Adjusted EBITDA ($M)	$68.4	$56.3	$54.5	$75.2
Adjusted EBITDA Margin %	18.0%	16.4%	15.2%	18.7%

Segment performance (Q2 2025 vs Q2 2024):

HPS: Revenue $305.9M vs $281.4M (+8.7%); Adj. EBITDA $51.5M vs $44.9M (+14.7%); Margin 16.8% vs 16.0% .
RDS: Revenue $55.5M vs $54.3M (+2.3%); Adj. EBITDA $17.8M vs $17.0M (+4.7%); Margin 32.0% vs 31.3% .
Canada: Revenue $41.4M vs $43.8M (-5.6%); Adj. EBITDA $5.9M vs $6.5M (-8.4%); Margin 14.3% vs 14.7% .

Product category revenue (Q2 2025 vs Q2 2024):

Category	Q2 2024 ($K)	Q2 2025 ($K)
Fastening & Hardware	274,957	281,967
Personal Protective	48,197	63,011
Keys & Key Fobs	43,946	48,349
Engraving & Resharp	12,332	9,476
Total	379,432	402,803

Balance sheet and liquidity KPIs:

KPI	Q4 2024	Q1 2025	Q2 2025
Gross Debt ($M)	$718.6	$740.0	$708.9
Net Debt ($M)	$674.0	$703.7	$674.7
Liquidity ($M)	$233.0	$200.9	$246.9
Net Debt / TTM Adj. EBITDA (x)	2.8x	2.9x	2.7x

Cash flow KPIs:

Q2 2025: CFO $48.7M; FCF $31.2M; tariff cash headwind ~$32.5M in Q2 .
Q1 2025: CFO $(0.7)M; FCF $(21.3)M (seasonal inventory build, RDS rollout) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2025	$1.495–$1.575B	$1.535–$1.575B	Raised low end; midpoint +$20M
Adjusted EBITDA	FY 2025	$255–$275M	$265–$275M	Raised low end; midpoint +$5M
Year-end Leverage	FY 2025	~2.5x	~2.4x	Improved
Share Repurchase	N/A	None	New $100M authorization	New program

Management also outlined preliminary 2026 directional thinking: net sales growth high-single to low-double digits; adjusted EBITDA growth low- to mid-single digits, assuming flat market volumes; tariff timing implies some 2025 windfall normalizes in 2026 .

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
Tariffs & Pricing	Preparing for inflationary inputs; contracts and pricing discipline; not yet guiding for tariffs in FY25	Annualized tariff impact initially estimated ~$250M; plan to price dollar-for-dollar; cadence: price in by July 1; costs flow through starting Q3/Q4	Annualized tariff run-rate revised to ~$150M; most price in by Q3; costs begin late Q3; Q3 tailwind then parity in Q4	Clarity improving; magnitude lower; execution on price tracking well
Supply Chain / “Dual Faucet”	Continued diversification; contracts on containers; solid service levels	Accelerating shift out of China toward ~20% by YE25; multiple countries strategy	On track for ~20% China by YE25; moving to Thailand/Vietnam/India; resilient logistics	Executing as planned; risk mitigation
RDS / MinuteKey 3.5	Strategy reset to ROIC focus; growth expected in 2025; capex peaks in 2025	Return to growth expected; 30%+ EBITDA margin target maintained	Second straight growth quarter; 32.0% margin; >2,200 kiosks in field; rollout to largest customers through 2026	Positive momentum
HPS & New Business	HPS margin expansion; multiple new product rollouts planned (e.g., screws)	New wins ~2.5% contribution implied; solid pipeline	HPS +8.7% YoY; new wins +2 pts; price +2 pts; volume -1% in HPS	Strength sustained
Canada	Macro/FX pressure; profitability preserved	Continued pressure; expect >10% EBITDA margin	Q2 revenue -5.6%; expect H2 top-line growth; FY EBITDA margin >10%	Gradual improvement expected
Capital Allocation	Deleveraging; repriced term loan	Target leverage ≤2.5x LT; M&A pipeline active but cautious	New $100M buyback; expected annual deployment $20–$25M; YE25 leverage ~2.4x	More flexible; shareholder returns initiated

Management Commentary

“We are raising the midpoint of both of our full year 2025 net sales and our full year 2025 adjusted EBITDA guidance” .
“We calculate the annualized run rate for tariffs to be approximately $150,000,000... We are confident we will end the year around 2.4 times leverage... even after... a modest share repurchase” .
On supply chain: “We... can end 2025 with the ability to source approximately 20% of our products from China... down from ~50% in 2018” .
RDS: “This is our second consecutive quarter of growth for RDS… Adjusted... EBITDA margins... 32%... over 2,200 MinuteKey 3.5 machines in the field” .
Buyback: “Board approved a $100,000,000 share repurchase program… intend to buy stock back to offset dilution… and when we believe there is a disconnect...” .

Q&A Highlights

Tariff timing and margin cadence: Costs start late Q3; price largely in by Q3; expect a “very strong third quarter” due to timing, with parity by Q4; full-year EBITDA margin up ~100 bps YoY, with some tariff timing windfall .
Price elasticity and H2 volumes: Management assumes H2 volumes down ~9% to prudently reflect elasticity and macro; products are low-ticket/repair-driven, limiting elasticity, but not zero .
Pricing magnitude: Full-year price contribution ~6.5%; more pricing in HPS; roll-in timing varies by product/customer .
Pro channel opportunity: >25% of business already Pro; brands like PowerPro, structural products expand right to win; more detail to come .
Revised tariff magnitude: Annualized impact now ~$150M (down from ~$250M); pricing covers net exposure; retail shelf pricing cadence varies by customer .

Estimates Context

S&P Global (Capital IQ) consensus for quarterly revenue/EPS/EBITDA and target price was unavailable at query time; we could not determine beats/misses versus Street for Q2 2025 or provide near-term consensus trend. If you’d like, we can re-query later or cross-check alternative sources. (S&P Global data not returned.)

Key Takeaways for Investors

Raised FY25 revenue/EBITDA midpoints and a new $100M buyback are the dominant near-term catalysts; YE25 leverage now ~2.4x, creating room for balanced capital returns and M&A .
Tariff impact is better quantified and smaller than initial fears ($150M run-rate vs prior $250M); execution on pricing and supply chain diversification underpins 2H resilience, with a Q3 timing tailwind and parity in Q4 .
HPS strength (Intex, new wins, price) and RDS improvement (MinuteKey 3.5 rollout, 32% margin) support margin durability, offsetting softer Canada; watch continued kiosk rollout through 2026 .
Expect sequential momentum in Q3, followed by normalization in Q4 as tariffs fully flow; monitor elasticity in H2 given management’s prudent volume assumptions .
2026 setup: topline growth high-single to low-double digits with EBITDA growth low- to mid-single digits as tariff timing windfalls normalize; mix and efficiency remain levers .
Without current consensus data, trading into the print likely keys off raised guidance and the repurchase authorization; re-check consensus before making event-driven bets (S&P Global data not returned).

Sources: Q2’25 earnings press release and 8-K (incl. slides), earnings call transcript; prior quarters’ releases/transcripts .

Hillman Solutions Corp. (HLMN)·Q2 2025 Earnings Summary