Good morning and thank you for standing by. Welcome to the Hillman 2021 fourth quarter and year-end results conference call. At this time, all participants are in a listen-only mode. After the presentation, there'll be a question-and-answer session. To ask a question during that session, you will need to press star one on your telephone. Today's conference is being recorded, and if you require any assistance during the call, please press star zero. I would now like to hand the conference over to Jennifer Hills, Vice President of Investor Relations. Mr. Koehler, please go ahead. Thank you, Chris. Good morning. This is Michael Koehler, Vice President of Investor Relations at Hillman. Thank you for joining us this morning to review and discuss Hillman's fourth quarter and year-end 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 the factors that could influence the company's results are contained in our periodic and annual filings, 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 and year. Now let me turn the call over to Doug. Thanks, Jen. Good morning, everyone. What a year 2021 was for Hillman. We accomplished a ton in a difficult operating environment, maybe the toughest our business has seen in 57 years. As difficult as 2021 was, we more than held our own and clearly strengthened our company, and I'm excited about 2022 and the future. Before I get too far into my remarks, I wanna thank all of our employees at Hillman. From our warriors in the field that help our customers win every day at the shelf, to our distribution center employees that keep the products flowing, and to all the support folks, we continue to outperform our competition and provide the best service model in the markets we compete, thanks to our people. Our moat's never been stronger as we continue to help our customers overcome labor, complexity, and supply chain challenges in categories that are critical to their businesses and ours. Today, I'll start with some of our accomplishments for 2021, then talk a bit about the current environment, then give my thoughts on our outlook for 2022 and the future before I turn it over to Rocky to talk numbers and our outlook in more detail. Let's do a quick run-through on some highlights from what we accomplished in 2021, along with why these accomplishments create that foundation for our future growth. First, we became publicly traded in July. This was a huge step in the evolution of our company, providing access to the public markets and importantly, significantly reducing our debt. This provided flexibility to our business when lead times nearly doubled in 2021 and inflation took off. Our new balance sheet allowed us to invest in inventory and additional storage to maintain industry-leading fill rates north of 90%, compared to our industry, estimated to be in the high 70s. That was an amazing accomplishment by our folks. This increased our moat and widened our lead as the clear partner of choice for our retail partners. Speaking of partner of choice, our performance in both 2020 and 2021 continued to generate new business wins as our customers allowed us to manage more of their shelf space. We won the entire fastener set at one of our top five retailers for a mid-year 2022 launch, and that is on plan. We continued to expand our construction fastener business. Remember, those are deck screws and drywall screws with all of our major customers. We're very excited to be introducing a new line of gloves, work gear, and job site storage under our AWP program. Our tool bags, pouches, and rigs all have our new patented TrapJaw technology. We continue our market share gains in builder's hardware with a flawless execution in late August with a major retailer, and we successfully expanded our Firm Grip branded core line and the new winter glove line set for 2022. We won this business at the same time we also took two rounds of price increases, totaling approximately 15% in the aggregate to offset cost inflation. More to come on pricing in just a minute. Finally, we launched Resharp knife sharpening and Instafob at scale and saw our Robotics and Digital Solutions business more than rebound from a tough COVID year in 2020. RDS had a great year in 2021. With 19.2% top-line growth and a 38% increase in Adjusted EBITDA and would have performed even better if we weren't held back by chip shortages that are integral to our RDS business and as you all know, impacting many industries today. All the great work in 2021 resulted in our Q4 being in line with our latest guidance. Despite headwinds from COVID comps and significant inflation in excess of our enacted price increases, we increased our revenue on a year-over-year basis 4%, and our Adjusted EBITDA was down 6%. It's important, I think, for me to put that into perspective. During 2021, even though we saw an annualized increase in inflation of $175 million and a COVID-related adjusted EBITDA drop of $15 million, we were still able to limit our Adjusted EBITDA decline to $14 million year-over-year. Let me spend a few minutes giving you my current view on the state of our business and how I see 2022 playing out at a high level. We continue to monitor lead times for our products from Asia and the situation at the ports in US as well as Canada. Today, from an order placement to our North American distribution network, our lead times are north of 200 days compared to that historical average in the 120s. However, unlike many of our competitors, we've maintained our industry-leading fill rates with customers and turned a difficult short-term environment into a very big long-term strategic advantage for Hillman. To that, I give credit to our daily pulse at the shelf with our over 1,100 sales and service folks, combined with our long-standing supplier relationships and the investment we made in additional inventory. We averaged 90.3% fill rate for 2021, and our year-to-date 2022 fill rate has improved to 93.4%. Hardware Solutions, our largest business, has really performed well over the past 24 months. Their top line rebounded nicely in Q4 with an 11.8% growth over prior year, and that puts top line for the year up 4.7, with Adjusted EBITDA coming in just above 2020. Our two-year CAGR for HS is 10.4% growth on top line and 18.3% growth in Adjusted EBITDA. This is a big reason why I'm so excited about the future. Our customers love us because we do things for them every day that others don't. We have also been able to get through the largest inflation and global supply chain imbalance most of us have ever seen, standing stronger today than we were 24 months ago. As I think about 2022, I really don't believe we'll see relief in lead times during the first half, but that should moderate in the second half of 2022. When we see lead times and inflation moderate, we believe we see outsized profitability and reduced working capital needs leading to outsized cash flow performance as well. Speaking of inflation, we have recently implemented a third round of price increases, our third increase in less than 12 months. Overall, we have increased prices in our Hardware Solutions business just over 20%, and our retailers have increased prices at the shelf as well. March will be the first month that we will have price caught up to cost inflation, assuming a container costs stay at current levels. We have passed price on dollar for dollar to our customers, which maintains our dollar gross profit, but as we've mentioned in the past, hurts our margin rates. We have done the same and more at Protective Solutions, where returning the business to profit growth is critical to our success. Another big effort at Protective Solutions includes an even greater integration with Hardware Solutions, which will drive efficiencies and make it easier to sell products across both platforms for all of our channels. During the first quarter, price will have caught up with cost, and this will provide a nice tailwind to produce growth in sales and Adjusted EBITDA in 2022, particularly in the second half. Now let me spend a minute on trends with our customers. As a reminder, our business is driven by repair and remodel and not new construction. In general, our products are recession-resistant and are relatively inexpensive, particularly as it relates to the total cost of a project. In our Hardware Solutions business, we have seen robust customer demand as trends in nesting, aging in place, outdoor living, and millennials buying homes has been a wind in our sails. While many factors such as store traffic and lumber prices and weather impact our business in the short term, the long-term trends are a tailwind to our business, and I love our position in the market. Looking beyond 2022, I continue to believe our differentiated model allows us to grow the top line of the business at least mid-single digits, leveraging the sales growth to 10%+ on an Adjusted EBITDA line. Let me finish my remarks by telling you why. One, our unrivaled field sales and service teams continue to give us the largest competitive advantage in our space. They help retailers with labor shortages, and we manage the aisle and long-standing category and merchandising expertise. The need for these value-added services has really only increased over the past 18 months as retailers struggle with labor and in-stock levels throughout their store. We are currently in discussions with two of our top five customers about increasing our service force numbers for both of them. Two, we have long-standing relationships with our suppliers, plus our volumes allow us to source better than the majority of our competition. This becomes even more important in these difficult times. Three, the sourcing capabilities, plus our distribution capabilities, enable us to maintain fill rates north of 90% in a very tough supply chain environment. We ship 80+% of our Hardware Solutions accounts directly to the store. We make logistics for our products easy, and we don't gum up our customer's distribution center. Four, innovation is a core strength, and we continue to invest behind our brands, which makes up over 90% of our sales. For example, we designed, developed, and patented a new concrete screw in the anchor category under our Power Pro brand that we rolled out for the first time in January. We have about 25% of the anchor category market today, and we have historically resold only other companies' products and brands in these categories, not our own. Our engineering investment and the new state-of-the-art ISO 17025-accredited lab, which opened in late 2020 in Toronto, allows us to create and validate anchor products at industry-recognized certifications like ICC and introduce them under our own respective brands like Power Pro. This gives us instant credibility and better margins in the category. The anchor category is next up for us to focus on market share growth, just like we've done in construction fasteners and builder's hardware. Five, another great example is our PS business. They are great innovators, and in 2021, launched the Dura-Knit glove under our market-leading Firm Grip brand. The material in this glove is equivalent to a Nike Flyknit shoe. It won a GDUSA Innovation Award in 2021, and last week, we were awarded a REGGIE Award, our first, which puts Firm Grip in shared company of many Fortune 500 mega brands. All in, Hillman won six GDUSA Innovation Awards in 2021. In our RDS business, we continue to roll out highly proprietary, digitally driven kiosk product offerings that are traffic drivers and flat-out money makers for our customers. Although some of our rollouts have been slowed by chip shortages, these are not demand issues, they're timing issues. This business is an annuity with great margins, and we'll continue to work with our customers to grow the installed base and product offerings that provide outstanding returns for our customers and Hillman. The combination of our unmatched service, logistics, and innovation has deepened our moat with our customers. Finally, the M&A pipeline is strong, and we are evaluating several opportunities. As we improve our leverage in the back half of 2022, and certainly into 2023, we expect to accelerate acquisitions in categories that are low risk and at attractive multiples. Think about the Hillman value proposition for companies joining Team Hillman through acquisitions. We know all of the top retailers from the store level to the boardroom, and our 1,100 service and sales folks in the stores are unmatched as we ship products directly to the stores every day, bypassing their distribution centers. It's not hard to show a business how they get better on day one when they join Team Hillman. The future at Hillman is very bright. I'm excited about where we're taking this business and the value we will build for all of our shareholders. With that, let me turn it over to Rocky. Thanks, Doug. This morning, I'm going to provide a quick summary of our fourth quarter and year-end results and then turn to our outlook for 2022. On a GAAP basis, our net sales in the fourth quarter of 2021 were $344.5 million, an increase of 5.3% versus the prior year. Hardware Solutions sales increased 11.8%, driven by strong customer POS, new business wins, and the pricing actions taken to date. In our RDS segment, sales grew by a strong 15.9% as robust foot traffic at our retailers continued to improve from the COVID troughs. Canada contributed 3.4% growth in the quarter. Offsetting the gains in these three businesses was a 14.4% decline in Protective Solutions in the fourth quarter as we comped against still robust COVID-related sales in the prior year. For the full year, revenue grew 4.2% to $1.4 billion, led by RDS up 19.2%. Hardware Solutions sales of $740.1 million grew 4.7%, primarily driven by price increases. Excluding price, hardware volumes were up 1% for the year against really tough 2020 comps. The 19.2% increase in RDS to $249.5 million resulted primarily from a return to a more normal environment in 2021 compared to COVID-depressed sales in 2020, along with an increase in the installed base that drove approximately 20% of the increase. Canadian sales increased 12.5% in 2021 to $151.5 million due to reduced COVID restrictions in retail stores in 2021 compared to 2020 and the strengthening of the Canadian dollar. The 10.3% decline in Protective Solutions to $284.9 million was driven by a reduction in COVID PPE sales. In the fourth quarter, on an adjusted basis, gross profit increased by $4 million or 2.9% to $140.6 million, as the margin on higher sales was partially offset by a reduction of 100 basis points in gross margin rate due to low margin sales of remaining PPE products and inflationary pressures in Hardware and Protective Solutions. Growth in our high-margin RDS business and a strong performance in Canada were only able to offset a portion of the fourth quarter of 2021 pressure. For the full year, adjusted gross profit increased by $14.3 million to $604 million, while gross margin contracted by 80 basis points, driven by similar trends to those we experienced in the fourth quarter. For the year, SG&A, as a percentage of sales excluding certain restructuring and other costs, increased to 27.9% from 27.1%. Higher selling expenses drove this increase, particularly our revenue sharing arrangements with our customers as RDS achieved outsized growth. Other SG&A factors included inflation in wages and higher outbound freight and storage costs. Adjusted EBITDA in the fourth quarter was $38.6 million, a 10.4% decrease from $43.1 million in the prior year and in line with our revised expectations. For the year, Adjusted EBITDA decreased 6.2% to $207.4 million from $221.2 million. n The decrease in Adjusted EBITDA for the year for the entire company and the Hardware and Protective segment are attributable to Protective Solutions, as lower PS Adjusted EBITDA resulting from the 2020 COVID spike and related disruption to operations could not be fully offset by the strong performance in RDS in Canada and modest full-year Adjusted EBITDA growth in Hardware Solutions. Please refer to our investor deck for reconciliations of net income to Adjusted EBITDA. Now, let me turn to cash flow and the balance sheet. For the full year 2021, operating activities used $110 million of cash as compared to a $92 million source of cash in the prior year. We increased inventories almost $140 million in 2021. While inflation and new business wins are partial drivers of this increase, we also made strategic decisions to increase our inventory levels to allow us to maintain our industry-leading fill rates as the supply chain from Asia has stretched to historic highs of over 225 days. Capital expenditures were $52 million as we continued to invest in our Robotics and Digital Solutions equipment and merchandising racks, important parts of our high return CapEx initiatives. We had planned to spend around $65 million on CapEx in 2021, but ship shortages reduced our ability to produce machines at our planned pace. Maintenance CapEx remained near 1% of sales as expected. In connection with our going public transaction in mid-July, we recapitalized our balance sheet, and at the end of the fourth quarter of 2021, we had $931 million of total net debt outstanding, down from $1.6 billion of total net debt outstanding at the end of the second quarter. At the end of the year, we had approximately $124 million of available borrowing under our revolving credit facility. Our net debt to trailing 12 months Adjusted EBITDA ratio at the end of the year was 4.5x, down from 7.1x at the end of the second quarter. Now let me spend a few minutes talking about our outlook. To start, our long-term growth algorithm is intact. As we move past near-term headwinds, we have a high level of confidence in our business model that will allow us to grow organically mid- to high-single-digit% on the revenue line and 10% Adjusted EBITDA annually. Let's talk headwinds and tailwinds. Inflation in the form of commodities that go into our products, container costs, outbound freight, and labor were significant challenges in 2021 and will continue to be challenges in at least the first half of 2022. While labor inflation appears to be here to stay, it is manageable, and we have and will price for the high level of service we provide to our customers. Unlike labor, we believe that inflation in commodities, containers, freight, and other costs we have incurred to maintain industry-leading fill rates will begin to moderate in the second half of 2022. Keep in mind the benefit of that moderation won't flow through our P&L until 2023, as it takes several months for inventory to be realized in our results. To offset these inflationary pressures, we have increased prices on our products on a dollar-for-dollar basis. While this approach will result in some margin rate degradation in 2022, historically, we have not given price back dollar for dollar when inflation moderates, resulting in a recovery in margins over time. We are also modernizing and automating facilities to help mitigate the long-term labor pressure every company is facing. Our business continues to have several structural tailwinds, and we don't see going away for the foreseeable future. We are very well-positioned in the repair and remodel space. The repurposing of the home fueled by COVID should provide tailwinds in that end market for many years to come. Our ability to out-service our competition over the last several years has led to new business wins that Doug spoke about earlier and we believe allow us to continue growing above market. In RDS, while some of our newer programs are rolling out slower than anticipated due to chip shortages, this is a delay in timing, not demand, and we are as optimistic about these opportunities as we have ever been. What does this all mean for 2022? For the full year, we expect revenue to be $1.5 billion-$1.6 billion and Adjusted EBITDA to be in the range of $207 million-$227 million. The range for 2022 reflects the uncontrollable nature and timing around commodity inflation and freight costs, both inbound and outbound. We expect revenue growth in the high single digits throughout the year. On the other hand, Adjusted EBITDA will be a year of two halves, with our profit improvement largely weighted towards the back half. Our first half will be tough as we anticipate inflation continues. Price does not catch up to cost until March, and we are comping high-margin COVID-related sales from the first quarter of 2021. Accordingly, we anticipate Adjusted EBITDA down mid-teens% in Q1 year-over-year, followed by a more modest decline in Q2. Based on this cadence, our first half Adjusted EBITDA will be down mid-single-digit% on a year-over-year basis. When we get to the second half, we are poised to have full price coverage, new business wins in place, and relatively lighter comps. We anticipate adjusted EBITDA to be up in the mid-teens% in the second half of 2022. From a cash flow perspective, we anticipate generating $120 million-$130 million of free cash flow. This number assumes $60 million-$70 million of capital expenditures for both maintenance and growth and approximately $35 million-$45 million of interest payments. We anticipate modest cash tax payments in 2022. We have also assumed we have a modest benefit from working capital in 2022 coming off the big use in 2021, and this assumes very little, if any, improvement in lead times from Asia. When lead times normalize and inflation moderates, we anticipate a commensurate reduction in working capital that will generate additional free cash flow. Our long-term target for net leverage remains unchanged below 3x. As I said earlier, longer term, we continue to believe that our unique model will allow us to organically grow our revenue 6% and our Adjusted EBITDA 10% consistent with our history. Doug, back to you. Thanks, Rocky. While we're still adapting to the impacts from inflation and supply chain dynamics, our confidence in the long term remains strong. Our investments to maintain our fill rates continue to pay off. While the supply chain pressures haven't improved, they seem to have stabilized. Finally, we'll continue to work with our retail customers and have been able to achieve a third round of pricing that I mentioned earlier. This is testament to our 1,100 field sales and service folks, combined with our direct-to-store delivery model, which have created tremendous value for our customers as they have faced immense logistical and labor challenges. The willingness of our customers to accept our pricing action, as well as awarding us additional shelf space, shows how they value our partnership. While the current environment is still uncertain, we will continue to control what we can and focus as we always have on our customers and our own people. We remain well-positioned to drive 6% revenue and 10% Adjusted EBITDA growth over the long term and to building meaningful value for all of our shareholders. Chris, can you open up the call for questions? Yes, sir. As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw your question, please press the pound key. Stand by as we compile the Q&A roster. Our first question comes from David Manthey of Baird. Your line is open. Thank you. Good morning, everyone. Hi, David. Rocky, the assumptions for future inflation trends and pricing in your new guidance, it sounded like you were implying those were static relative to the current situation. Is that a true statement? Yeah, David. For 2022, we're anticipating that the costs around the inflation that we've seen remain consistent throughout the year. Assuming that inflation continues to run hot like it appears it might, what are the mechanisms that you have in place with your retail partners to affect additional price increases? Are there triggers or trip points that would make those in effect? You know, David, it's amazing. Two weeks ago, I wouldn't even have thought about that, but obviously the world's moving around. When we talked to you last, we talked about our third price increase. I thought we could get it done by the end of January. We actually will have it completed everywhere, as we hoped, by middle of March. That's because, again, merchants have to cover their you know what with their boss. They've gotta go to finance, they gotta run through the numbers and all, but no big pushback. I'll tell you know, historically, you know, when we talked about the second price increase, David, you remember me saying we might do it on a temporary basis. Well, we've done three price increases on a permanent basis right now. Retail prices have been adjusted up several times, and if it goes again, we'll raise price. I can tell you they're ready for it if it happens. I don't think we'll have to, but if it goes again, we'll raise the price. You know, it's everybody's conditioned for it. We've got all the processes in place. That's one of the reasons, you know, going into the assumptions for 2022, you would assume we would say things would settle down a bit and normalize back toward history. Rocky and I just said, "Let's leave them where they are," because nobody knows. Thanks, Doug. To be clear on that statement, previously you were saying that if and when inflation calmed down and maybe prices went down as well, you would be rolling back those price increases. But what you said just now is these are no longer sort of temporary price increases, these are permanent. If pricing does settle down a bit, you don't plan on just going back to the retail partners with that give back on price. Is that what you're saying? That's correct. Think about the past. There's been price increases since I've been here in seven years. Retails have gone up. We've not seen ever retails come down. We've not had to give back pricing that we've gotten. If you think about this time, we basically did. We had $60 million costs, David, in 2021 that hit our P&L. We priced for $40 million of it, so we lost about $20 million during the year as it came through our P&L. That $40 million that we priced in 2021 was the equivalent of $115 million of annualized price. Our inflation guess, but as we got toward the latter part was $175 million, as I mentioned. The price action that we took in this latest round was $60 million. That gets our $115 up to $175, and we finally caught this damn thing. You know, retailers have adjusted. We've never seen retailers take pricing down. This is a bit of a different time, but as I've said over time, if it normalizes back to where, you know, traditionally it's been, you know, we'll probably hang on to half of it because we're gonna do the right thing for our customer, we're gonna do the right thing for our shareholder, but we're not obligated to give any of it back. Got it. All right. Thanks a lot, Doug. Appreciate it. Sure. Thanks, David. Thank you. Our question comes from the line of Brian Butler of Stifel. Your line is open. Hi. Good morning, guys. Can you hear me? Yeah. Hey, Brian. Hi, Brian. Hi. I just wanted to ask on the RDS chip shortage that you talked about, you know, and you saw this kind of limit some of the growth, is what's built into the 2022 guidance for this coming back? Is it expectation that the chip shortage improves or, I mean, you know, gets better here, or is expectations in 2022 that this remains a big headwind? Yeah. This is Rocky, David. I mean, our expectation- Brian. Brian, sorry. Our expectation is that it does remain a headwind. We've got in our plan what we believe the machines we can build will be. RDS, we think, still can grow top line around 10% or, you know, what we think is the normal growth level in that business. But it is unfortunate that it is, you know, from a timing perspective, slowing down some of the, what we think are really terrific opportunities for the company. Again, as Doug and I both said in our remarks, it's not a demand problem. It's really about timing. As soon as we can get the chips and the boards that we need, those machines will be installed, and they'll begin to generate revenue and cash for the business. Yeah. Brian, I would just add that we've decided to play to win there, and we've got all the rest of the pieces we need to make the machines take it, for example, Resharp, that Ace would want, or could handle over a, you know, period of time. We're only waiting on one thing. We're not sitting back saying, "Well, we'll just order the other stuff if we see the chip availability." To answer your question, we don't have any chip availability coming, additional chips coming our way in Randy's numbers. We're hoping that changes, but right now, we just don't know. You know, what's going on in the world right now, the one thing I'm worried a little bit about is that Russia and China are the two big rare earth mineral miners, not because it's not other places, but it's really tough environmentally to get that stuff out of the ground, and I'm a little concerned because who knows what happens there, and those are important to the chip manufacturer. We've just decided to say, we're not going to budget that we're going to get more. Okay. That's, that's helpful. Just out of curiosity, can you give color on what that magnitude of pent-up demand might be, whether that's 2023 or even beyond? I would just say one example is we're at about 1,000 Resharp machines, and we've got an order for 3,000. That's with one customer before we go anyplace else. It's pretty big. Okay, that's helpful. Then, just kind of bookkeeping. Can you kind of run through the capital structure now after all the kind of moving pieces with the warrants? You know, what's the right share count for 2022, and is there any remaining items out there to be converted that could dilute it? No. The warrants were all taken out before year-end. Right now, including, you know, on a fully diluted basis, including management options, as an example, it's about 196 million shares is what we would use. Really, the only things that exist now are management options and restricted stock that are, you know, typical and not very significant. I think they're less than 2% of the capital structure. Okay, great. Thank you. Thank you. Our next question comes from Reuben Garner of Benchmark. Your line is open. Thanks. Good morning, everybody. Hey, Reuben. Let's see. I wanted to pick at the guidance a little bit or try to break it down. Can you walk through some of your assumptions on both the top and bottom line, I guess specifically looking at volume and price? Then maybe, Rocky, on the EBITDA side, it seems like you're being pretty conservative, but maybe I'm missing some components. Can you kinda walk through what the bridge looks like to get you from 2021 to your full year 2022 outlook? If you wanna start on revenue, Doug, and then I'll hit. I think, Reuben, we obviously have, if you think about Hardware Solutions as an example, we essentially have in our assumptions the price that will flow through the new business that is going to happen or will flow from what happened in 2021 and be annualized and essentially 1% unit market growth. We're being pretty conservative from a volume standpoint. Rocky, you can fill in the blanks on the cost side and what we've assumed. Yeah. Reuben, I mean, I think the way to reconcile is to think through the way we talked about the quarters. In the first quarter because of price cost, because of inflation, because of difficult comps with COVID, particularly in the PS business, we do expect that our EBITDA will be down, and down kind of mid-teens. As you flow into the second quarter, we perform much better. You know, you begin to see, you know, we've caught price cost. We have the nice benefit from some of the new business wins, but those are really towards the end of the quarter. That's how you see the second half be up kind of mid-teens. Again, we've assumed in our modeling that there's no benefit around, you know, inflation coming back or us realizing any benefit from that in 2023. You know, as you think about that, and we're not gonna guess that that's gonna happen. If it does happen, we do think it could moderate in 2022. We would feel that in 2023, which provides some growth outside of our normal algorithm. You know, at this point, as we sit in March and start thinking about the second half, we're just not gonna put any of that into our P&L. When you do that, it's really, you know, the comps of the prior year and the new business wins that allow you to have nice growth, you know, again, kind of mid-teens on the EBITDA side in that back half. Again, we're not gonna predict that it gets better than that at this point. Okay. Thanks for that, guys. Two quick follow-ups on that. On 1% market growth, you're looking for high single-digit revenue growth this year. 1% market growth, your business wins that you already have in hand, maybe add another couple of points, and then the remaining 5 points or so are price for the business overall. Is that the right way to think about what you're- No, I think the way you need to think about it, Reuben, is, you know, the COVID sales going away are an offset to the numbers you're looking at. Price is higher than you're thinking about. As we think about the total company for 2022, right, price is gonna be, call it, high single digits% across the entire company. You're gonna have COVID come out, which is probably gonna be in the range of $55 million-$60 million of COVID sales. Then you're gonna see nice growth in the business through those new business wins and market of, call it, you know, 5%, mid-single digits. That's how we're thinking about the year on the top line. Okay. On the second follow-up is on the inflation side. Just to be clear, maybe this is an impossible question to answer, but can you tell us, like, roughly what kinda steel and freight level you're assuming? In other words, steel has, you know, if you just look at the futures market, it's been cut in half the last couple of months. Are you guys still baking in your guidance steel from two months ago when it was, you know, closer to 2,000? Or have you already assumed, you know, some of the recent pullback will hit you? I know it's not a perfect metric, but just can you give us any color on what numbers to look for where there might be upside to your outlook or downside for that matter? Two things. Talk about steel. Obviously, we've seen the pullback, particularly in the US China and Taiwan have not pulled back quite as much because I don't think they're impacted with the auto side quite as much. To answer your question, we've assumed that steel prices stay where they were in the fourth quarter, and as we saw them in the second half of the year. We've not assumed that they're coming down. On the freight side, container side, Rueben, this is the interesting part that as you really think about it, historically, we would be 90% contract on our 45 containers a day from Asia, and 10% spot, and the only reason we did spot is sometimes that was lower than contract. If you look at the math last year and why it was so hard to predict, is that we were roughly only got 60% of our stuff on contract and 40% of our stuff was spot, and that varied every month, and you couldn't predict it. Because if they sold first-class tickets, then they cut your contract rate back. We had months where we were at 39% contract, and we had a month where we were at 68% contract. 60 contract, 40 spot, and obviously, we think that should improve, and we would not get back to 90/10, but we should be at 80/20 when this thing settles down. There's a significant difference between spot and contract, but the way they did it last year was just impossible to predict. We've assumed that the blend of 60/40 and the prices stayed constant through 2022 from where they were. Yeah. Okay, perfect. Reuben, just one thing to add to what Doug said, and remember, in our hardware business that is the most impacted by both the commodities and the inbound freight, you know, we have five months of inventory. When that's part of the reason you don't see us putting that into the 2022 guidance. While we do believe a lot of these costs, again, who knows with the world where it is today, but we believe that those costs begin to moderate, we don't begin to really feel it in our P&L until about five, six months later. Got it. I hate to be greedy, but I'm gonna sneak one more in. The robotics segment or your assumptions within this guidance, are you assuming any of these kind of initiatives you ha ve going kind of start to take off in the second half? In other words, you know, the locksmith community, anything like that, or is this, you know, just blocking and tackling type stuff, and there would be upside if you get those up and running faster than you expected? Yeah. Reuben, no, we're not assuming we catch lightning in a bottle anywhere. We're gonna set this thing up and be loaded for bear for 2023. For example, we've got five new machines in what's called Quick-Tag 3 at a major retailer for our pet engraving, and so far, it's doing great. It's an example of going from giving the consumer 6 pet engraving tag options to 26 options. We've also talked to this major retailer about putting it actually in the pet aisle. We're doing a lot of that. We're doing a lot of groundwork. We're still working really hard on the lockout strategy, working really hard on the smart auto, but we're not assuming any of these take off. But trust me, we're working like hell to see if we can get a couple to take off. We just haven't assumed that for 2022. Great. Thanks, guys. Good luck this year. Thanks, Reuben. Thank you. Next question comes from Hamzah Mazari of Jefferies. Your line is open. Hey, good morning. Thank you. My first question is just on robotics. Maybe if you could just talk about, you know, you mentioned 1,000 Resharp machines. Maybe just talk about overall your installed base today, how to think about penetration and where that could go, and have competitive dynamics at all changed in this business just given the higher high returns? Yeah. Rocky can talk about the numbers. Let's talk about knife sharpening. Again, we'll say it will get to 1,000 this year with the chips we have. Our first order from Ace is to get to 3,000 machines. We've not gone to Bass Pro, Cabela's, Williams-Sonoma and the others, as you know, 'cause we don't wanna get out in front of ourself there. The one trend that is changing a little bit is that our full serve machines. Then if you think about it, we've got an example being Walmart and Home Depot and Lowe's, both full serve machines and self-serve machines. One in the back that does 140 keys, one in the front that does 25 keys. What we're seeing is with the labor issues that are everywhere at retail, we've got one of our retailers saying, "Hey, let's do more self-serve in both sides of the store because we're just not able to man or woman this to get cut keys when the consumer wants them. And if we do that, we'll be open longer periods of time." We're seeing a little trend in labor leaning into more self-serve. But no changes, Rocky, that you know, based on the question of no dynamic changes. Obviously the retailers love this business 'cause it's a destination purchase and it's you know, it's something that brings consumers back, and they do really well as we do. I think the last thing I would just add is our vision and our whole attempt here is to make sure that in the future, you can go into a store, go to a MinuteKey machine, type in your car's make, and get a smart fob programmed at your house or at your office or wherever you'd like. The key stumbling block for that is really the locksmith community that was decimated in 2020 that has not yet come back full. What we're testing right now is really our people, and we've got 1,150 of them, programming for retailers, for the consumer. We've got tests going with locksmith. Again, none of that is catching lightning in a bottle in 2022, but we're working really hard on that, and we think that's a great opportunity. 'Cause up until now, Ace does the smart fob auto. For the most part, the other retailers have yet to have that as an offer. They'll do the older car, typical boring transponder, but not the smart auto key. Got it. Very helpful. My follow-up, and I'll turn it over, is just, you know, around the 2022 guidance, you know, give a lot of color on revenue, and EBITDA. But just on free cash flow conversion, how do you think about free cash flow through the quarters? I know you mentioned working capital gets better as supply chain does, but is it gonna follow EBITDA, or is there sort of any other dynamics to be aware of? Yeah, in general, it will, Hamza. Again, you know, as you think about the cash cycle in our business, in the first quarter, we are typically a user of cash because we're buying inventory for the spring build. Obviously, because of where we exited the year-end, we believe that spring build inventory build will be less than it's been historically, but we'll still build inventory and be a user of cash. We'll go through the second and third quarter, and we think, you know, generate decent amounts of cash in both quarters. Quite frankly, we would anticipate, you know, sometime in the fourth quarter, we would be fully out of our line of credit, assuming all things stay constant. Hamzah, I think the thing that as you know, when your EBITDA goes down and your need for working capital goes up because of the inventory, that's a bad combination and direction which we've been dealing with. If you think about the future, you obviously have this massive price that we will see our margins improve and expand as things normalize. We've got $140 million of inventory that we're holding that we don't need long term, of which half is inflation-based and half is units. We'll get both those going the right direction when these things really settle down. That's. I'm looking forward to the other end of that. Right. Gotcha. Thank you so much. Thanks. Thank you. Next, we have a question from CJS Securities. Your line is open. Hi, good morning. Hey, Lee. Good morning. Just starting with Rocky, a comment you made earlier on the RDS business growing 10%. I assume that's sort of 2022, just given the headwinds we're seeing with the chip shortage. Is that right? Yeah, correct. Yeah, we believe that business grows, you know, like we've said, low in the low teens in 2022, consistent with what we've said historically. Okay. Then, other than the chip shortage limiting your ability to kind of ship those 3,000 machines, assuming the chip shortage got better, at some point, what are the other gating factors to kind of getting those out into the market with Ace pretty quickly? Then beyond that, what do you think the TAM is for those Resharp machines? Obviously, you talked about a bunch of the other players that you're not ready to go into just yet. I tell you what, Lee, I don't know that anybody knows what the TAM is, and I say that because if you think about Ace, and we did this in two markets, because we don't have enough machines, Ace is not going to turn on their national advertising and tell the consumer, "Hey, get your dull knife sharpened at Ace and this cool machine and cool experience." What we've done is we've taken a couple markets and we've jacked them with some digital and some advertising to let the consumer know. What we know is when we get to, I think, probably 1,500 machines, the CEO of Ace is gonna support that move, and I think that's gonna be very interesting. The TAM, the reason it's so difficult to say it is today it's so fragmented. It's not a good consumer experience, and this is the absolute opposite. The TAM really depends on when the consumer figures out they can get a really easy, fun experience at their Ace Hardware for their knives to be as sharp as they've ever seen it, their scissors, whatever they tend to sharpen over time. There have been reports that this is a billion-dollar market. I honestly don't think we have any idea. I would say no one is solving this at retail with the consumer in an elegant way the way we are, and we're super excited about it. I'm frustrated as hell because this thing's ready to go. Ace is ready to go. I didn't really think it'd be this hard to get chips. As I've said, I thought we could buy them on eBay. It is really shut down right now and tough to get. You can see that with, you know, cars and everything else. It will open up. We won't need a lot of them. We'll get them, and we'll get it going. We will train the stores. We will then drive digital and other advertising. We will have this on TV when we get the right thing, you know, the right mixture of machines and support. That probably doesn't start until you get at least to 1,500-1,600. Got it. Just switching over to the pricing discussion, and I know we've had a lot of discussion about that. I assume that the 20% price in total is predominantly on the hardware side. I guess my question is, does all of that price get realized at all of the customers, or is that sort of the headline price increase and then less gets realized on average? If that's the case, what have you seen in terms of the average realized price increase versus the headline number? Yeah, no, Lee, this has been one that has been driven by the math. We have to justify these increases. If you think about that $175 million that I mentioned that we now, as of the middle of March, will have caught, that's about $160 million basically, commodities are about $80 million, container and freight's about $80 million. So $160 of the $175 are those two buckets, and the rest is kinda labor. I don't see labor coming back, but it's pretty much across the board. Now, if a customer buys more, say, threaded rod and steel sheet, then the increased% will be slightly higher than it would be for a different material. Luckily, I think it's pretty close across the board, the you know, 21%-22% is almost across the board pretty close because the mix isn't all that different. There's a few customers with a little different mix, Lee, and that will cost maybe a little higher. I think in general, that's that number's across the board, and retailers have moved a couple of times across the board as well. It's just something you know, you just cannot not move retails when you see this kinda increase. We feel pretty good about the way it's structured right now. Well, I guess the easy follow-up to that is, you know, in a distribution model, you know, if you were more of an industrial distributor, price increases are good things. Are you seeing, because the retailer is able to raise price, that the retailer's margins on your products are also expanding? And is that sort of a reason for the retailers to push back less in this process? Super excited about that one because the margins for our retailers in our category have always been good. They're even better now. We do not have a food fight. We do not have a fight between retailers. We do not have an egg, bread, milk, you know, kind of thing where people are using it to get in. I mean, again, when you think about the project of a deck or, you know, a pergola or some kind of project, our products you can't do without, but they're not really driving the elasticity of the cost of that project. We're in great shape, we feel really good about it. I would say that this pricing environment will not be good for us, it will be great for us long term. Okay, one more for me, if I can. You'd mentioned earlier you were in discussions with two of your top five customers about increasing your service levels. I assume this means just kinda adding more labor and increasing the number of times that your people go to the stores. On the surface, it would seem that would increase your cost. How do you view that sorta from a return perspective? Yeah, no, it does. I mean, it's real. Again, you know, we know what the temporary pool of labor looks like. Nobody would wanna send that into the store right now and have a Hillman shirt on. We won't do a test. For example, we're doing a 55-store test at one retailer to see if the math works. We were paid for that test before we did it on the people we hired because we basically said, "We're not gonna hire part-time." We never do. That's just not our shtick. We're not gonna do this unless you're willing to participate on the cost. We laid out the exact cost, and they know it should pay for itself. Hopefully, we'll expand it. No, there's no, "Hey, we'll both make it up on volume." You just can't do that when you're hiring full-time people today, with cars, with benefits. Again, if you were you know, if we wanted college kids looking for beer money, that's a different story. That's not what we're gonna do in a store at Hillman. Got it. Thanks very much. Yep. Thanks, Lee. Thank you. I see no further questions in the queue. I will turn the call back to Jennifer Hills for closing comments. As a reminder, a replay of this call will be available on our website. Thank you for joining us this morning. This concludes today's conference call. Thank you all for participating. You may now disconnect. Have a pleasant day.