Hillman Q3 Sales Rise 7.7% as 2026 Revenue Outlook Narrows

Hillman (HLMN) narrowed its 2026 net sales guidance after third-quarter revenue rose 7.7%, while adjusted EBITDA growth lagged sales and profitability margins declined. The hardware products and retail solutions provider maintained its full-year adjusted EBITDA and free cash flow forecasts despite lowering the endpoints of its sales range.

For the 13 weeks ended September 26, net sales increased to $457.5 million from $424.9 million a year earlier. Adjusted EBITDA rose 2.4% to $90.2 million, but the adjusted EBITDA margin fell to 19.7% from 20.7%. Adjusted gross margin also narrowed, to 50.8% from 51.7%.

GAAP net income declined to $6.3 million, or $0.03 per diluted share, from $23.2 million, or $0.12 per share, in the prior-year quarter. The latest period included $13.5 million of refinancing costs and $8.6 million of transaction and integration expenses, primarily associated with acquisition activity.

Hillman now expects 2026 net sales of $1.66 billion to $1.68 billion, compared with its previous range of $1.67 billion to $1.72 billion. The company kept its adjusted EBITDA forecast at approximately $285 million and its free cash flow guidance at $105 million to $115 million.

Robotics and Canada Lead Segment Growth

Revenue increased across all three reporting segments, although two recorded lower adjusted EBITDA margins.

Hardware and Protective Solutions, Hillman’s largest segment, generated revenue of $347.0 million, up 5.4%. Adjusted EBITDA declined 4.1% to $63.2 million, and the segment margin contracted by 180 basis points to 18.2%.

The segment’s fastening and hardware sales increased, but personal protective products declined. Across the company, fastening and hardware revenue rose to $313.9 million from $282.4 million, while personal protective revenue fell to $70.8 million from $81.3 million.

Robotics and Digital Solutions revenue climbed 19.2% to $69.8 million. Adjusted EBITDA increased 13.4% to $20.9 million, while the margin decreased by 150 basis points to 29.9%. Keys and key fobs accounted for most of the category’s growth, with revenue reaching $63.2 million compared with $51.3 million a year earlier. Engraving and resharpening revenue was broadly stable at $9.7 million.

Canada reported revenue of $40.7 million, an increase of 9.2%. Adjusted EBITDA rose 61.6% to $6.1 million, and the margin expanded by 490 basis points to 15.1%.

For the first 39 weeks of 2026, consolidated revenue increased 7.0% to $1.27 billion. Adjusted EBITDA was nearly unchanged at $217.4 million, compared with $217.8 million a year earlier, while the margin declined to 17.1% from 18.3%. Year-to-date GAAP net income was $22.7 million, down from $38.7 million.

Cash Flow Improves as Acquisition Raises Leverage

Third-quarter free cash flow increased to $51.1 million from $9.1 million, reflecting net cash from operating activities of $69.9 million and capital expenditures of $18.8 million. Year-to-date free cash flow reached $87.0 million, up from $18.9 million.

Hillman completed its acquisition of Kanebridge, a master distributor of industrial fasteners, during the quarter. The company also refinanced its credit facilities, extending the maturity of its term loan B to 2033 and its revolving credit facility to 2031. The financing included a $735 million senior secured term loan B, a $375 million asset-based revolving credit facility and a $200 million term-loan addition used to fund the Kanebridge transaction.

Net debt stood at $932.6 million at quarter-end, up from $665.8 million at December 27, 2025. Net debt was 3.4 times trailing-12-month adjusted EBITDA, compared with 2.4 times at the end of 2025. Hillman estimated that leverage would have been about 3.1 times if it had owned Kanebridge for the entire trailing-12-month period.

The company also repurchased 600,000 shares during the quarter at an average price of $7.75, for a total of $5.0 million. Year-to-date customer fill rates remained in the high-90% range.

Management continues to target an 8% to 12% revenue compound annual growth rate over five years as part of the path to $2.5 billion in net sales outlined at its March 2026 investor day. Hillman also said it is pursuing its “Dual Faucet” supply-chain strategy to diversify sourcing, optimize costs and mitigate higher expenses.

The company identified economic conditions affecting repair, remodeling and construction spending, inflation, tariffs, raw-material and transportation costs, competition, customer concentration, currency movements and regulatory changes among the risks to its expectations. Its increased leverage following the Kanebridge acquisition also leaves results dependent on the acquired business’s contribution and the company’s ability to manage its expanded debt load.