Good day, and thank you for standing by. Welcome to the Hillman 2021 third quarter results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone keypad. Please be advised that today's conference is being recorded. If you require assistance during the conference, please press star zero. I would now like to hand the conference over to Jennifer Hills, Vice President of Investor Relations. Please go ahead. Thank you, Abigail. Good morning. This is Jennifer Hills, Vice President of Investor Relations at Hillman. Thank you for joining us this morning to review and discuss Hillman's third quarter 2021 earnings results. Joining me today are Doug Cahill, Chairman, President, and Chief Executive Officer, and Rocky Kraft, Chief Financial Officer. A copy of our earnings release and slide presentation can be found under the Investor Relations section of our website at ir.hillmangroup.com. Before we begin, we would like to caution you that certain statements made today may include forward-looking statements that are subject to the safe harbor provisions of the securities laws. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, assumptions, and other factors, many of which are beyond the company's control and which could cause actual results to differ materially from those projected in such statements. Some of those factors that could influence the company's results are contained in our periodic and annual reports filed with the Securities and Exchange Commission. Please see slide two in our earnings call deck for more information regarding these risks and uncertainties. We will begin the call with a business update from Doug, followed by Rocky, who will be providing a financial review of the quarter. Now let me turn the call over to Doug. Thanks, Jennifer. Let me start by breaking down our business by segment and review performance during the third quarter and year to date. To cut to the chase, our Hardware Solutions, Robotics and Digital Solutions, and Canadian businesses all performed well in the quarter in spite of the historic supply chain challenges and a very strong third quarter last year. The unwinding of our COVID-related products and Protective Solutions negatively impacted our earnings. Going deeper, our HS business net sales were down 6.4% during the third quarter versus 2020 and were up 2.6% year to date. The third quarter was a bit slower for HS business than we anticipated for two reasons. First, America said we're getting out of the house in July and August, and they did. Second, higher lumber prices slowed projects down during the quarter. Since mid-September, lumber is more affordable, kids are back to school, retailers' point-of-sale volume has rebounded at the shelf, and people are back to their home projects. You'll remember the very strong third quarter HS experience last year, up 22.7% at the height of the stay home and DIY projects timeframe. If you look at HS over a longer timeframe, you'll see a healthy growing business. On a two-year stack, it's up 15.9% in the third quarter versus 2019, and year to date, it's up 19.8% versus 2019. I'll talk much more about HS and hope you'll agree that this business is executing and well-positioned. Our RDS business net sales were up 14% in the third quarter versus 2020, and year to date, they're up 20.3%, so continued great performance by the RDS team. Canada's third quarter was very similar to HS, comparing a strong Q3 last year, and net sales were up 15.6% year to date and a very healthy 17.1% ahead of 2019. Our PS, or Protective Solutions net sales, were down 26.6% in the quarter and were down 8.9% year to date with COVID comp that they were up against. PS's net sales were up 21% in the quarter versus 2019, and year to date, their top line was up 17.4% versus 2019. I will explain in detail what it took to unwind COVID for the PS business in just a few minutes. What we did during COVID was help our retailers satisfy the needs of their consumers and protect their employees, so they could continue operating during these unprecedented times. Winning five Vendor-of-the-Year awards in 2020 was evidence we were there for them. I'm probably gonna spend less than one minute whining about supply chain and inflation issues because first of all, you pay us to figure this stuff out. Second, in a strange way, all this craziness is enabling us to separate ourselves with our performance from our competitors, so it will end up being a good thing for Hillman, and here's why. All retailers have three big concerns right now. Number one, labor, two, shipping issues and cost, and three, share loss to their competitors due to stockouts. Plain and simple, these are the top three, and we help them in all three, I think, better than anybody. We have 1,100 people in the stores every day. That's our in-store labor, so the retailer doesn't have to. We ship to over 42,000 locations, with 80% of our hardware products shipped directly to the stores, bypassing the retailers' distribution centers. That's us solving the shipping and distribution center problem, so the retailer doesn't have to. Their DCs are short-staffed and stuffed right now with things like lawnmowers that just arrived last month. Bad timing, yes, but they took them so they for sure would have them next spring. Third, if you're a retailer at Hillman, you're not losing share if it's just stock-outs. Chances are you're gaining share. Our year-to-date fill rate for HS is 91%. More importantly, Hillman's in-stock service level at the shelf for our top five customers reported from their systems is 95% over the past 30 days, which has been the toughest 30 days for fill rates probably ever. How are we doing that? First, we have invested in additional inventory and working capital, which you have to do when your lead times move from historically 120 days to over 200. Without that investment, our fill rates would be closer to the industry average of 70%. As a result, we're paying for lots of extra inventory as well as outside third-party warehouse space to store this additional inventory needed to service customers in the current lead time world. Secondly, our 1,100 folks in the store and our direct-to-store shipping model gives us the fastest port-to-shelf hardware model in North America. Finally, our 57 years of experience and long-term supplier relationships have enabled us to separate Hillman from our competitors during this global supply mess we're all experiencing. There is, of course, a cost to maintaining these service levels, and you see it on our balance sheet. I believe it's more than worth it as our differentiated model and our ability to outserve the competition during this period of supply chain disruptions has and will continue to lead to additional market share gains and outsized growth for our Hardware Solutions business. I can't wait to tell you about current wins in a minute, but before I do, let me address the historic inflation and supply chain issues we're facing, then I'll talk about what we're doing about it. I've seen many things during my career, but I've never seen anything like what we're currently experiencing with supply chain disruptions and inflation, and I've never seen it as a top story in all outlets. Pre-COVID, it took Hillman on average 120 days from the time we would order product from Asia until it would arrive on the West Coast. Today, it is in excess of 200 days. We are experiencing inflation in commodity costs, inbound and outbound freight, as well as labor. To put in perspective, twenty-foot container costs that averaged us $1,500 in 2019, $2,000 in 2020, have been averaging $5,600 since July in the U.S. and much higher in Canada. Obviously, spot prices are well above these, but the increases are really staggering. The ships can't get into the ports, and when our container does get on land, we can't pick them up as quickly as we would like due to the congestion and appointment delays. To add insult to injury, after four days, they're charging all of us $250 per container per day demurrage on our product, many times they won't let us pick up. We hear it's going higher effective November 15th of this year. Okay, let me focus on what we're doing about it. Through all the challenges, I'm so proud of our 1,100 field service employees who work closely with our customers, helping to solve logistics and labor issues in the store and at the shelf. These unprecedented cost increases are being passed on to our retail customers and end consumers. Thankfully, our product categories are not seasonal, nor are they overly price-sensitive, and our customers are experiencing these type of increases across the board. Our issue is timing. As we discussed in our last earnings call, we successfully implemented our first price increase of roughly 7%-8% effective in June. Working together with our retail partners, we've been successful across the board with our second increase of roughly the same percentage, 7%-8%. That will go into effect in October, November of this year. That puts us up around 15% after the first two increases, and when we complete our planned third increase, which should go into effect January, February 2022, we will be above 20% price increase when you add the three together. That's what we think we will need with what we know today to cover our cost increases. Let me touch on a few highlights and new business wins. During the third quarter, we were busy continuing to execute on recent business wins. They're great examples of our competitive moat and the secret sauce of Hillman. In late July, we finished the 150 store reset of 32 linear feet shelf space at a major retailer for construction fasteners at 97% on time and complete. In September, we began to implement our latest win in builders' hardware. What a beautiful set. It's four 8-foot bays in over 1,500 stores, and we will be done next Wednesday. We also sent our hurricane recovery teams, which is a subset of our 1,100 team, to the most impacted areas and helped our retail partners get stores and hardware aisles back up and running in record time. We also bailed out one of our retail partners in the New Orleans area by providing cap nails that our competitor was unable to service for one of the top five retailers in the area post the hurricane. Cap nails are the number one needed fasteners to keep tarps on and the elements out. We shipped and they sold 18 million cap nails in 40 days. We were there for them, and last night we got an order for 6 million more cap nails. The great thing about our network is they will ship today. The next one may be my favorite win, and it's one that I've personally been working on with our almost 40-year veteran sales leader for over 5 years. It's near and dear to my heart. We've won the fastener business at one of our top five retailers for the first time ever. This is an exciting win that will change the hardware category for this important retailer with a completely new set. We, along with the retailer, will recreate the fastener aisle in every store during the last week of June 2022. One last tidbit about the story: we created a 20-foot modular with over 400 new SKUs and all new packaging, but we're so worried our shipping carrier would miss the ship window, we actually loaded Suburbans in Cincinnati, and our folks drove 11 hours to make sure it made it to the corporate layout room for a 10:00 A.M. senior management walkthrough. They unanimously approved the set and awarded us the business. The quote from senior management was, "This looks nothing like our current aisle, and it's about time we give our consumers what they want in this category." Stay tuned, because I think it's times like these when 5 years of work are paying off for Hillman. This win will generate $17 million in sales for 2022, and we're really looking forward to seeing what it'll do in 2023 and beyond with our people in the store managing this new fastener aisle. Our Robotics and Digital Solutions business, where we're the leader in key and fob duplication, pet engraving, and knife sharpening is having a great year. Remember, we've designed, developed, and manufactured now 35,000 machines located in retail stores throughout North America, and we continue to own and service every machine out there. These robotic and digital machines help drive in-store traffic, provide great margins, and are destination purchase items for our retailers. The RDS business grew net sales 14% in Q3 over prior year, and our EBITDA grew 30.5%. Year to date, that puts their net sales up 20.3% with EBITDA growth of 34.7% over 2020. We have significant runway to continue to roll out RFID fobs, Smart AutoFobs, knife sharpening machines, and further expand our product offering to take both share organically as well as through M&A. This is a great business for Hillman and our retailers, and we're really fired up about what's ahead. Now let's talk Protective Solutions. Let's discuss PS business pre- and post-COVID, and let me explain why we did what we did. Pre-COVID, disposable gloves were not a core retail category for PS, but part of our offering to several of our major customers. In 2019, it was approximately 10% of PS's sales. Of those, 80% of the volume was nitrile gloves. Those are the heavier gray, blue, and black gloves we've all seen. We sold every disposable glove we had when COVID hit, and our customers worked closely with our team to secure more ASAP. It really went from a buying frenzy to a global panic. First, globally, both medical community and governments consumed the nitrile glove supply, driving costs up 3x in a matter of weeks. This extended lead times from 90 days to 250 days at its peak. Second, in parallel to the explosive demand growth, overseas manufacturers were shut down or running at a fraction of their capacity due to increase in COVID cases. Third, retailers were struggling to get enough to even supply store associate needs on a daily basis to keep their stores open and operating. Hillman and our retail partners didn't wanna take nitrile gloves from the medical community, so the clear thin vinyl gloves became the only option and were quickly sold out. Prices, as you can imagine, skyrocketed. Delivery times were consistently pushed, and when the music stopped March first, 2021, we had more disposable gloves, not to mention mask sprays and wipes than we needed with the delayed shipment of product in Asia and some still on the water heading our way. Given our customer support during COVID and the strength of our relationships, our retailers have partnered with us to alleviate any inventory issues on masks, sprays, and wipes, which were all three new products for Hillman. We synced up with our customers and have successfully sold excess inventory in these three product categories to our customers who have and will donate them to various charities. We will get our money back on these three by the end of the year and are happy with how our retail partners supported us throughout this period. On disposable gloves, we hope to sell them over time since they have a very long shelf life. The current global supply glut has collapsed the price of vinyl gloves from $6 for a 100-count box to below $2 per 100-count, and in recent sales being quoted as low as $0.30 per 100-count box. Fortunately, nitrile glove cost and retail prices have remained strong throughout. Even though this product has a long shelf life and our plan was to sell these over time, there is a glut of inventory at both retail and wholesale. The cost of outside warehouse storage continues to rise, and our landed average cost is well above market. Therefore, we will write this inventory off and donate the product. The outcome on disposable gloves did not work as we had planned during the unprecedented times. We are disappointed with the write-off and the negative impact on our 2021 sales and profit performance. Different day, same old strategy is not our go-forward game plan on disposable gloves. With the overseas capacity that's been added and the ongoing supply chain issues out there, we've been working with two of our major customers and have been successful securing the first made in the U.S.A. nitrile disposable glove exclusive supply agreement for retail. The made in U.S.A. factory will ship the first product toward the end of the year, and they're adding additional capacity scheduled to come online in mid-2022. Our retail partners are excited about the made in U.S.A. as well as the ability to onshore nitrile gloves for the first time. This will reduce lead times from over 200 days out of Asia to 30 days out of the United States. This gives us true differentiation and good margin and helps our customers with made in U.S.A. on-trend goods. Not to mention bypassing all the container and port craziness we're seeing every day. Our attempt to take care of our customers and the American consumers in need during COVID on the PS side just had a negative impact on our entire operation and our cost structure. We were forced to rent three outside warehouses to handle the volume and unprecedented unpredictable arrival times from overseas. Our single warehouse for PS, north of Atlanta, just got slammed as we tried to deal with this unprecedented volume and complexity. The base business for Protective Solutions, which includes the number one selling work glove brand, Firm Grip, continues to perform well with a three-year top-line CAGR of 7%. Our bottom line has suffered and impacted the profitability of the entire business due to COVID turmoil and inefficiencies at PS mentioned above. Our plan forward in PS is to continue to drive growth in our core product categories with continued innovation, new business wins, and new accounts, move into a new distribution center just after mid-year 2022, and improve execution by consolidating several supply chain and other business functions with our U.S. Hardware Solutions group. We believe these actions, along with a shift in the management team, will allow this business to grow top line in the mid-single-digit range and bottom line 10% organically, matching the rest of the business going forward. To summarize, our hardware, RDS, and Canadian businesses have continued to perform while managing crazy complexity and incurring much higher costs. We've made the working capital commitments to continue to service our customers at the same high level we always have, and we'll use this opportunity to strengthen our relationship and take share from our competitors. In 57 years, Hillman has never had to raise prices 3x in a 12-month period, so unprecedented is not an understatement. One quick comment on leverage in M&A before I turn it to Rocky. Leverage at the end of the quarter was 4.3. This was much higher, actually, than Rocky and I had planned for all the reasons I previously discussed. We remain committed to, over time, reducing our leverage to below 3x. On the M&A front, the pipeline still remains robust, and we're seeing more entrepreneurs looking to sell with all the press surrounding changes in tax laws. We continue to see an opportunity for 2-3 bolt-on acquisitions a year. With that, Rocky, why don't you take it over and provide more details on the quarter and outlook? Thanks, Doug. On a GAAP basis, our net sales for the third quarter of 2021 were $364.5 million, a decrease of $34.2 million or 8.6% versus the prior year. As we discussed on prior calls, the third quarter of 2021 was our toughest comparison with the prior year, as our retailers bought any and all COVID-related personal protection products we could ship them in Q3 2020, and our hardware businesses in the U.S. and Canada experienced significant growth as consumers repurposed their homes for COVID quarantine. The much faster than expected reduction in sales of COVID-related items drove an approximately $26 million reduction in our PS business, a decrease of 26.6% and an even bigger reduction to profitability because of the profit on PPE products in the prior year. In addition to having an extremely difficult comp in Hardware Solutions, the reduction in foot traffic at our retailers in July and August led to a year-over-year sales decline of $12.9 million or 6.4%. The first round of price and a rebound in foot traffic and demand in September were not enough to offset the headwinds early in the quarter. Similar to U.S. hardware, our Canadian business was up against extremely difficult comps and declined by $3.7 million or 9.3%. Our RDS business was the star of the quarter as we continue to see a rebound in this business post-COVID. RDS revenue was up $8.3 million or 14%. Year to date, revenues have grown 3.9% to nearly $1.1 billion, with hardware sales up 2.6%, RDS up 20.3%, and Canada up 15.6%, partially offset by the 8.9% decline in PS. With easier comparisons in the fourth quarter and an improvement in traffic at retail, Hardware Solutions should finish the year strong, and we should achieve our long-term mid-single-digit revenue growth target for the year. In the third quarter, on an unadjusted basis, gross profit declined by $43.7 million, including a $32 million write-off of PPE inventory that has a market value well below our cost as demand for the product declined and the market became flooded with product. Excluding the inventory write-down, our gross profit decreased by $11.7 million over the prior year quarter to $159.5 million, driven by lower net revenues. Gross margin rate, excluding the inventory write-down, expanded 90 basis points to 43.8% from 42.9%, as the growth and margin expansion in our higher-margin RDS categories, coupled with moderate margin expansion in HS, was partially offset by rate pressure in Protective Solutions from the slight loss of high-margin PPE sales. Year to date, on an unadjusted basis, gross profit decreased $23.7 million - $427 million. Excluding the inventory write-down, gross profit was $459.2 million, an increase of $8.3 million. Gross margin, excluding the inventory write-down, contracted 80 basis points to 42.5% from 43.3% due to the significant decline in PS margins only being partially offset by margin expansion in RDS. Year to date, margins in HS were essentially flat with the prior year. SG&A expense on a GAAP basis in the third quarter increased slightly to $110 million from $107 million, and as a percentage of sales was 30.3% versus 26.9% in the prior year. Excluding certain restructuring and other costs, SG&A increased 1.9% to $103 million, and as a percentage of sales increased to 28.3% from 25.3%. The primary drivers of the increase were higher outbound freight cost and reduced leverage of our selling costs, which include our field service teams in our customer stores, the revenue-sharing arrangements we have with our customers in RDS, and an increase in travel compared to 2020, when most of our teams were grounded due to COVID. Year to date, SG&A, excluding certain restructuring and other costs, increased by 7.3% to $296 million, and as a percentage of sales, increased to 27.3% from 26.5%. Higher selling expenses and inflation in warehouse and delivery costs were the primary drivers of the increase. Excluding the inventory write-down, certain restructuring and other costs, adjusted EBITDA was $56.5 million in the third quarter, a 24.6% decrease from $75 million in the prior year. PS accounted for this reduction, with minor decreases in HS in Canada, wholly offset by an increase in RDS. Year to date, adjusted EBITDA decreased 5.2% to $168.8 million from $178.1 million. Please refer to our 10-Q and investor deck for reconciliations of net income to adjusted EBITDA. Now let me turn to cash flow in the balance sheet. Year to date in 2021, operating activities used $105 million of cash as compared to a $68 million source of cash in the prior year. An increase in inventory to maintain fill rates as the supply chain is stretched from approximately 100 days to over 200, inflation, and inventory investments to support new business wins and anticipated sales growth have driven our use of operating cash flow in 2021. Year to date, net cash used for investing activities was $76 million as compared to $30 million in the prior year, and included the acquisition of OZCO Building Products in the second quarter. Capital expenditures were $37 million and approximately $8 million higher year-over-year as we continued to invest in Robotics and Digital Solutions equipment and merchandising racks, important parts of our high return CapEx initiatives. As a reminder, we reduced our growth CapEx quite significantly for a period of time in 2020 because of the uncertainty caused by COVID. Maintenance CapEx remains near 1% of sales as expected. Post the transaction with Landcadia in mid-July, we have recapitalized our balance sheet and at the end of the third quarter of 2021, we had $925 million of total debt outstanding, down from $1.7 billion of total debt outstanding at the end of the second quarter. At the end of the quarter, we had approximately $150 million of available borrowing under our revolving credit facility. Our net debt to trailing twelve months adjusted EBITDA ratio at the end of the quarter was 4.3x, down from 7.1x at the end of the second quarter. COVID had both positive and negative impacts on our business over the past seven quarters. It has often been difficult to separate COVID impact from base business trends. To cut through this COVID noise, we, like many of our peers and retail customers, believe comparisons of 2021 to the pre-COVID 2019 is helpful. It also better reflects the strength in our underlying businesses. We have provided a two-year growth comparison of our results for the third quarter in our slide presentation, which shows that overall sales in the third quarter increased 14.9% from 2019. We also showed strong revenue growth across each of our segments, with Hardware and Protective Solutions up 17.3%, Robotics and Digital Solutions up 9.2%, and Canada up 9.2%. Similarly, we experienced growth of 11.2% in adjusted EBITDA. At the segment level, adjusted EBITDA from 2019 grew 2.6% in Hardware and Protective Solutions, 18.3% in Robotics and Digital Solutions, and over 115% in Canada. Importantly, adjusted EBITDA in our hardware business is up high teens compared to 2019. As Doug highlighted in his opening remarks, cost pressures have not abated and have intensified over the past quarter. Working with our retail customers, we increased price in the high single digits in the second quarter based on what we saw in April. As we discussed in our second quarter call, the cost pressures continued, so we have gone back and are currently implementing another round of increases in the fourth quarter. Over the past several months, we have seen a significant increase in both inbound and outbound freight. We are now paying approximately 3 x what we paid for a container a year ago, but still well below spot prices. Additionally, due to the backup at the ports, we have incurred unplanned third-party warehouse storage costs when we haven't been able to pick up product and move it out of the port, which have added an additional cost pressure to the business. We anticipate these costs will continue into 2022. Commodity costs have also risen and have added an incremental expense in 2021, but due to the lead time in supply chain, most of the higher commodity costs will hit us in 2022. We plan to take additional pricing action in early 2022, as Doug discussed earlier. As we think about the cost pressure across our businesses, we now expect 2021 adjusted EBITDA to be in the range of $205 million-$210 million. About 40% of the step down is due to the third quarter results, and the remaining is split between higher freight, third-party warehouse costs, and other supply chain-related costs across all of our businesses. In addition, we now anticipate that we will use approximately $100 million of working capital in 2021 to maintain our fill rates at industry-leading levels of above 90%. We plan to reduce leverage during Q4, but at a lower level than previously expected and anticipate that we will end the year with only a modest reduction in leverage from current levels. As Doug stated earlier, we are committed to reducing leverage to below 3x, but given the inventory and supply chain challenges in 2021, it will take us a little longer than originally planned to get there. As we think about 2022, it is very difficult to predict when we will see a return to normalcy around commodity costs, both inbound and outbound freight, and the supply chain craziness we are currently experiencing along with all industries. As such, we won't be providing formal guidance for 2022 on this call. That said, we are very comfortable that our revenue for 2022 will be consistent with our 6% organic growth algorithm and exceed $1.5 billion, as we have visibility into our markets, new business wins, and pricing actions to date. Similar to revenue, we believe our growth algorithm is intact, both in the near and longer term for EBITDA, so we expect that we will grow EBITDA at our organic target of 10%, although off a revised 2021 base. Longer term, we continue to believe that our unique model will allow us to organically grow our revenue 6% and our EBITDA 10% consistent with our history. The M&A pipe should allow us to expand those numbers to 10% revenue and 15% EBITDA. With that, let me turn the call back over to Doug. Thanks, Rocky. Let me just wrap up. While near term, you know, we're definitely feeling the sales and profit impact of the sudden falloff in demand for COVID-related PPE, together with the historical supply chain cost pressures, our confidence in the long term is strong, and we have a really good company, thanks to our 3,800 associates. In our category, you don't win or lose business just on price. Fill rates are critically important to all retailers, especially now, that it's the quickest way for a retailer to lose market share. Our 1,100 folks in the field, combined with our direct-to-store delivery model and our investment in additional inventory, enable us to keep the industry-leading fill rates above 90%. This puts us in a great position to gain additional shelf space with our retailers and achieve our long-term CAGR targets of 6% organic revenue growth and 10% EBITDA. A lot going on. With that, let's turn it to the operator and open it up for questions. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone keypad. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Reuben Garner with Benchmark Company. Your line is open. Thank you. Good morning, everybody. Hey, Reuben. First off, Doug, congrats on your Vanderbilt buddy winning the World Series last night. Thanks. Jumping into it here. I just wanna get clarity on the 2022, and apologies, I got kicked off the call a couple times, technical difficulties, so if you spoke to this, I'm sorry. You pulled the outlook. I think I heard Rocky say 10% growth off the lower base, that's your standard algorithm. Is there any reason why you know we wouldn't, a lot of the issues this year are sort of one-time or seem to be one-time. You've got new pricing actions in place. Is there any reason why you kinda wouldn't grow substantially faster than your typical 10% next year? Or is it, you know, is the reason you pulled it just 'cause it's too early? What are the factors that you're looking at that leads you to make those comments for next year? Yeah. Reuben, this is Rocky. I mean, as we think about next year and as we sit today, obviously there's a lot of craziness going on in the ports. I mean, November 15, you know, there's even expectations of the costs around things like demurrage and detention going up higher and going up potentially exponentially. We're committed to that 10% growth algorithm and feel really good about doing that next year. At this point in time, we just don't believe it's prudent to go out with a number higher than that, especially when you think about a business like hardware, that is a normal, steady growth type business on an annual basis. We feel good about the 10%. Our going forward plan will be, you know, in our year-end call, we'll give more specific guidance with a range. Just at this point in time, saying anything other than we're gonna grow at our standard algorithm, we think wouldn't be prudent. Yeah, Reuben, the only other thing I'd add is September, October, November and December, you know, we will see these demurrage, you know, and detention charges for, again, in many cases, we're trying to get in and can't. While those aren't going to be with us forever, we're just not sure when they go away, and we just need to let some rope out here and just see. Because, you know, again, this November fifteenth extra $100 going up $100 every day, you know, nobody's ever heard anything like that. That's why we're trying to, you know, do the right thing as we sit today on where we are. Understood. Just a quick follow-up on that. New pricing actions that you have, and I think you're moving to kind of a 90-day model, checking the costs. I mean, that would incorporate some of those pressures, right? You're still having to. I mean, is that a negotiation or when you're seeing those freight ocean freight rates go up, are those sort of in that basket of goods that you're telling your customers that, you know, you've gotta pay for, so they need to pay for? It's all part of it. If you think about it, let's just assume, Reuben, that we get that third price increase, one, I think, and let's say it's effective February first, 2022. That's essentially three price increases over 20% in 290 days. That's about 97 days per. The way that breaks down is we need about 25 or so days to get all the math because we have to go by product, by SKU, by steel, by freight, by demurrage, all that. It's not hard to do, but it takes a while for us to put it together. It's about averaging just around 95 days right now for the three, the third one coming. Got it. On the Protective Solutions impact this year, and again, if you said this, I apologize, but can you just talk to us about what the one-time hit was this year from the actions you've had to take altogether, the masks, gloves, everything? What's the drag that that had on the business this year that we won't see going forward? Yeah. As you think about the business, Reuben, obviously we had the charge in the period. But even when you look at the actual results, our PS business in the third quarter was down, you know, even year to date, down from an EBITDA perspective, it was about cut in half. You know, we're gonna baseline off that. We do believe the core business is solid. If you look over the last three years, the organic growth in the core is about 7%. Again, we'll baseline off kind of that new EBITDA number, and then we expect that business to grow with our algorithm, so mid-single digits top line and kinda call it 10% bottom line into 2022 and into the future. Great. Thanks, guys. I know this is a challenging period. Good luck. Thanks. Thank you. Our next question comes from the line of Hamzah Mazari with Jefferies. Your line is open. Hey, good morning. It's actually Ryan Gunning filling in for Hamzah. On my first question, could you guys just talk about how we should think about the penetration opportunity in robotics, maybe where you're at today and what the addressable market looks like? As part of that, what the competitive dynamics look like? Sure. Yeah, Ryan, I think if you break it down, first of all, minute KEY continues to roll out, but we probably have another 1,000 machines, Rocky, would be my guess. Yeah on minuteKEY that we're gonna roll through of visibility that we kinda see. Maybe a few more. Ryan, the reason I say that is this whole labor thing is making minuteKEY even more popular and in more demand because of the store labor. Let's just say 1,000 unless the labor thing continues to get worse. That's first. On knife sharpening, we will end up at about 500 at the end of the year. We have orders for 3,000. That's first customer. We haven't gone to anybody else, but obviously, the chip shortage is limiting that. We did get 500 more chips last night, so I was happy about that. I don't know if we bought them on eBay or what, but we got them. You know, we'll be rolling those out, and I assume that chip shortage will work its way through. On InstaFob, we're rolling those machines out. On the Smart AutoFob or AutoKey, we've had great luck there in store. We just started our second account there and are shipping the fobs. We're working on the future where you can buy that fob of yours that you're used to paying $3.54 at a minuteKEY kiosk, and then our locksmith community will program it for you at your home or office or wherever you like. I think there's a lot of good things that can happen there. On pet, you know, we're seeing great progress there on the pet engraving. We've got a new machine that is looking to do more than pet engraving, like luggage tags and pharmacy. I just think there's a huge opportunity for us with the consumers we have and the great customers we have, like Walmart and PetSmart and Petco and Pet Supplies Plus, to take this AirTag from Apple, embed it into our pet tag, engrave the number and name and literally, like you can find your phone. I think in the fairly near future, you'll be able to find your pet just like that. Lots of things going on. From a competitive set, we're not seeing a whole lot. You know, we do 132 million keys a year we duplicate, and our closest competitor is under 10 million. On pet tags, we're gonna do about $11.1 million this year, and our close competitor are gonna do about $1.3 million. Not a whole lot there, but a lot going on with our customers and our team's doing a great job. Great. That's super helpful. Then for my follow-up, I know you talked about labor in your prepared remarks, but could you maybe walk us through how to think about SG&A leverage going forward and just hiring plans given where labor issues are today? Yeah. As you think about, we're spending a lot of time around how do we make sure that we keep the 1,100 folks motivated in the field. You know, we'll think about how we compensate them and do some creative things, so when they perform well, they do better over time. The interesting thing is, you know, we're not gonna take out folks in the stores. As a matter of fact, just given the competitive advantage, we would see, if anything, we would increase the number of associates we have in the stores, and we've got our retailers asking for that. You know, as we thought about the quarter, one of the areas that we don't deleverage well is there, and we're not ever going to because we're gonna make sure we take care of our customers. The other big item in the quarter really was around RDS. As we see that outsized growth in RDS, and we pay a rev share to, you know, that's anywhere between 25%-30% to the retailers on our kiosks. Obviously, you get some outsized growth in SG&A when the RDS business grows well. But overall, on the EBITDA line, we love the leverage as it's, you know, north of 30% from an EBITDA rate. Again, over time, I think you're gonna see inflation in the wages that we're paying to our employees, not only in the field, but also in our DCs, but that's part of our price algorithm that we'll include as we start to think about price over time. Great. That's it for me. Thank you so much. Thank you. Our next question comes from the line of David Manthey with Baird. Your line is open. Thank you. Good morning. Hey, Dave. Yeah. Good morning. First off, on the 7%-8% price increase in the fourth quarter, when did you say that went into effect specifically? That second 7-8, Dave, is effective last month and this month will be. That'll be all implemented by the end of November. Really, the past two months, this month and last. Okay. When you're referring to that 7%-8% type number, is that just on the Hardware Solutions? Is that across the board at the company? I'm trying to understand how that, what that number means relative to the numbers you report. Yeah. When I talk about the 7% to. Let's call it 7.5% + 7.5%, and then eventually getting over 20% by February, Dave, that's intact, you know, the hardware business. We're also raising price on things like keys. We're raising price on things like everyday work gloves, but not as significant. If you really just think about the math, you know, when you've got a 3-inch screw, I mean, or a 3-inch bolt, there's just not a whole lot of other costs other than steel and freight. So that one is what I was referring to when I said 7.5%, 7.5%, and eventually getting over 20%. Other businesses are raising, but not at that level. Yeah. Okay. Then as it relates to the price increases, I know some of this is real-time, but the ones that you have implemented and are implementing this year, is that to catch up to where inventories are now? The one you're expecting in February of next year, is that trying to get ahead of inflationary pressure that you see in your supply chain pipeline? I'm trying to understand your current level of inventory versus these price increases. Essentially, does the fourth quarter look incrementally better because you sort of have a glide path from your prior price increases plus a new one, which is catching up to the current level of inventory, which itself is moving higher? Can you just help me balance those issues in the supply chain, if you would? Yeah, let me take the first part, Dave, 'cause it's a good question. It's complicated, but here's how we do it with retailers. We sit down and justify what we call entitlement, I don't like the word, but that's the word they use, on everything that's happening or that has happened to justify the increase. Again, we've been really happy with what we've been able to do. It's what's happened, not what we think is going to happen. This last one is, we know there's a lot more happening in the, you know, second half of the year with these additional surcharges on the front end, and then you only get 10 days to bring the container back or your detention starts clicking there. That's a new element that's part of this model. Rocky, maybe you can talk about the way the inventory flows because it, I wish we were ahead of it, but we're not. Yeah. Importantly, you know, given the nature of our business, we carry about six months of inventory. You know, we've talked about the lead times going up, which means, you know, we're carrying a little more inventory today than we did a year ago to deal with the fill rates. As I kind of said in my prepared remarks, Dave, you know, a lot of that inflation is still hung up in inventory and will come through in 2022. We start beginning to see some of the, I'll call it higher cost containers and inventory begin to hit in the fourth quarter, and that is some pressure on the fourth quarter. We do believe once we get that third price increase in place, we will have kind of got the price cost differential fixed, and we'll be whole on a dollar for dollar basis. Again, that as Doug just said, you know, we're talking to our retailers today about the cost justification, so it's as of today. If costs continue to go up, then we'll still be chasing it a bit. Got it. Okay. Thanks, guys. Sure. Thank you. Our next question comes from the line of Ryan Merkel with William Blair. Your line is open. Hey, guys. Good morning. Hey, Ryan. You know, Doug, a lot going on here. I was hoping we could focus on the change in guidance. You were at $240 million for EBITDA, now we're lower by $30 million-$35 million. Can you break out the impact of slower hardware, PPE falloff, and supply chain, just so we can bucket it? Here's how I would characterize it at a high level, Ryan. As you think about what we said in the second quarter call, there was $20 million-$25 million of pressure in our PS business around COVID going away sooner than expected and cost pressure in that business. That was offset by our RDS business performing better than expected. Call that +$5 million-$10 million relative to what we had expected for the year in that business. What we've seen now coming into the third quarter is I would put it into kind of two buckets. The first would be around our HS business, and as you think about that, July, August timeframe, that probably cost us, you know, a little over $5 million in profitability with those sales going away. You know, again, we've seen return of the foot traffic in POS in September and into the fourth quarter, but it isn't like that return is catching up those lost kind of sales in July and August. It's really just back to what our expectation was. You know, you got to call it, you know, just over $5 there. I think there's another $10-$15 amongst all of the businesses, both PS, HS, and Canada primarily, a little bit in RDS, around all the craziness that's going on in the fourth quarter from a cost perspective, both supply chain, freight costs, and some of the outside storage that we talked about in the prepared remarks. That, that's how we would kind of bucket it. We feel like we've captured pretty much all of the cost as we go into the fourth quarter. Obviously disappointed, but you know, it's a lot of uncontrolled costs and a lot of craziness that's going on. Got it. That's helpful. Just back on Hardware and what you saw this summer and the pickup. Any way you can sort of give us a sense of the cadence for sales? I mean, did you go significantly negative and now we're slightly positive, or what's that trend line look like, and Yeah. Feel better about '22 now? If you think about HS or hardware, Ryan, we were up 13% in the first quarter, 5% in the second quarter off of a pretty strong, obviously last year. You know, our retailers, as we said, we're continuing to say, "Guys, don't take your foot off the gas." We were thinking 5% in the third quarter, roughly, and it was down 5%. That'll give you a sense for the difference. Then, you know, we're probably gonna inch into double digit in the fourth quarter for what we're seeing right now. That's basically the magnitude. It was, you know, as one retailer said, "KO, we should have been selling plane tickets and parking tickets at the airport in July and August," because it just really did slow down. I think it was a bit of lumber for sure, but I think people just said, "Screw it, we're getting out of the house." Foot traffic did decline. We thought HS would be up about 5% over a 22.7% increase last year, and it was down about 5%. Rough math, Rocky? Yeah. No, no, that's right. Ryan, the only thing I, you know, that I would point to when you think about taking all the COVID noise out, you know, up 16% in the quarter versus 19. You know, when you look year to date, up almost 19% over 19. You know, in line or quite frankly, slightly above how we think about HS being a kind of mid-single digit top line grower on an annual basis. Got it. Okay, that's helpful. Then one more, if I could. Just the outlook for price cost in 2022, right? Based on what you know today, I know things could move around. Is the goal to be neutral, or should we think about you lagging a little bit in the first half and then maybe recovering in the second half? I would say recovering in the second half. I would say the first half. You know, my guess is flat, but honestly, it could get a little worse. With this thing that's going in right now, Ryan, November 15th, with the $100 a day after day 10 and then it going up $100 each day, you know, you're talking about, in not such a long period of time, stuff getting to a demurrage charge of $10,000 or $15,000 per container. If you've got seasonal goods and you miss the season, I mean, you're just gonna say, "Take it." I'm worried that the intent behind this latest move is gonna actually slow things down more. That's my concern. I'm not concerned about our sales, I'm not concerned about what we control, but that one could get a little dicier before it settles. I would say flat net in the first half, and we should see some improvement in the second half. Honestly, you know, we're definitely gonna have inventory adjustments back to normality when we see the ability to do that. Rocky and I are not planning on that in the first half, just because when you're at 70, you can't catch up right now. When you're at 90 and 95 at the shelf, you just gotta keep the foot on. We've got the foot on right now for that one. Understood. Thanks, guys. Passing on. All right, thanks. Thank you. Our next question comes from the line of Brendan Popson with CJS Securities. Your line is open. Hi, good morning. Just wanted to ask. Yes. You addressed this a little bit. I just wanted to clarify on pricing. You talked about 20% plus after the third increase. You said essentially you've done about 7.5 twice now. When I'm looking at the third quarter results, how much pricing was in there year-over-year? Is that just that first 7.5%? Just trying to get an idea of, like, pricing versus volume, if that makes sense. Yeah. That first 7.5 went into effect end of June. That would be all we'd really see in the third quarter, with the second one all in basically October, November. Yeah, that's exactly right. Okay, great. Thank you. Diving into that retailer win that you had, you mentioned $17 million for next year. On like a normalized full year, where do you think that can go if it performs, you know, like you think it can? Yeah, I think. Well, this is interesting. Think about it, the shelf's gonna be empty and the great news is that they're gonna pay for getting rid of the old stuff. We're really super excited we don't have to pay for slotting for this one. We're gonna fill the shelf and the pipe and then sell for half a year. You'll see that thing grow but not double because of the load in. What I'm most excited about is we've never had this account. I thought I was a good salesperson. It took me five frigging years to get this one with our 40-year veteran, so we must not be as good as we think. Honestly, it's gonna be what's gonna be really interesting is when their consumers, and they have a ton of them, see that they're actually in the fastener business, that, what was, they call it, $21 million-$22 million piece of business, $23 million piece of business annually, it could be a lot better. That's what I'm most excited about. 'Cause with our people in the store and the selection that we're giving them, it's not even gonna be close. I feel really good about it. To answer your question, the 17 is probably a $21 million-$22 million annual until we start to rock and roll at the shelf, so because of the load in. You said that customer is doing like low 20s with their old fastener offering? Yeah. They would say it would be about a $21 million-$22 million annual with what they know, because it is a very different set than the one they had. That is their guess based on the velocity right now. Okay. All right. That's great. Thank you. Appreciate it. Sure. Thank you. Our next question comes from the line of Brian Butler with Stifel. Your line is open. Hey, good morning. Thanks for squeezing me in here. I'll try to be quick. Hey, Brian. Just, I guess we talked a lot about the supply noise that's out there. Can you give maybe some color on demand? Is that now back at some normalized level now that, you know, you're looking at kind of that two-year stack? You know, can we talk about where that is and how that splits out across, you know, your allocation of the 6% revenue and 10% EBITDA growth for the segments. Yeah. It is. Brian, it is. As you think about, you know, that two-year stack that we talked about in HS, you know, in the quarter, up 16, year to date, up 19. As we're looking today, you know, our algorithm assumes we do 2% market. You know, we've said the macro environment that we're in today, we believe that's actually higher than that. It's more around 4%. Over the next several years, just given the trends in the age of housing and you know, people aging in place, millennials buying their first homes, et cetera. We believe that is intact today as we think about coming through you know, the end of the year and going into 2022. You know, we'll keep 2%, but we think that you know, there is a little bit of upside as you think about what's happening in the markets. Now, the one item that we will tell you as you think about north of 20% price, there's always some pressure on the market when you do that. You think about a local hardware store, they've got you know, a limited amount of money to buy. Now, that isn't gonna mean they buy 20% less. It might mean they buy a couple% less. We feel, as you think through it and you think about only 1% price in our normal algorithm, we feel real confident that our top line can be at or above, you know, that mid-single digits as we think about 2022 and 2023 with all the price we're taking. Okay, great. Then, on a follow-up, when you think about free cash, how should we think about near term and maybe long term kind of that conversion of EBITDA to cash, especially considering, you know, the supply chain issues and the working capital requirements? You know, obviously you're not gonna have another $100 million use of cash for inventory build, but I'm guessing it's also not gonna flow out. So what's the right way to think of cash kind of near term as well as kind of longer term? We still believe $125 million for 2022 is a good free cash flow number, even off the rebased EBITDA level. You know, we won't likely be a cash taxpayer in 2022, so that's an important component. Obviously, you guys have the math around interest. You know, we'll be in the $30 million-$35 million range from an interest perspective versus what we've paid historically. We're not today, and it's probably unlikely even in our year-end call that we're gonna anticipate bringing those inventories down in 2022. You know, at some point when lead times go back to normal, even if it's not back to 120 days, but call it back in the mid-100s, that's gonna allow us to free up inventory. Obviously inflation in any period that we've seen significant commodity inflation periods after that, we've seen nice working capital pickup. There will be a pent-up, nice working capital benefit at some point in the next, you know, year or two. We're probably not gonna predict it happens in 2022. If it does, that would be a nice windfall. Probably more likely, you know, we would tell you that that's a 2023 type item as our inventory unwinds. Okay, great. Maybe one last quick one. You talked about leverage kind of target of 3x and maybe that's slipping a little bit. When do you think you can hit that target like that 3x? Yeah. If we just took our free cash flow and paid down debt over the next couple years by the end of 2023, we would be kind of in that mid-2x range. I think that'll still be our target. I think inside 2023, we can do some moderate M&A, you know, buy at good multiples with nice synergy. I think you can see us hit that kind of in that end of 2023 timeframe, we can be, call it 2.7-ish. Great. Thanks for taking my questions. Sure. Thank you. I'm showing no further questions at this time. I would like to turn the conference back to Jennifer Hills. Thank you for joining us this morning. A replay of this call will be available on our website. Thank you. Thanks. Thanks for joining us. This concludes today's conference call. Thank you for participating. You may now disconnect.