Good morning, welcome to the first quarter 2023 results presentation for Hillman Solutions Corporation. My name is Amber, and I'll be your conference call operator today. Before we begin, I'd like to remind our listeners that today's presentation is being recorded and simultaneously webcast. The company's earnings release, presentation, and 10-Q were issued this morning. These documents and the replay of today's presentation can be accessed on Hillman's investor relations website at ir.hillmangroup.com. I'd now like to turn the call over to Michael Koehler with Hillman. Thank you, Amber. Good morning, everyone. Thank you for joining us. I am Michael Koehler, Vice President of Investor Relations and Treasury. Joining me on today's call are Doug Cahill, our Chairman, President, and Chief Executive Officer, and Rocky Kraft, our Chief Financial Officer. We will begin today's call with a business update and quarterly highlights from Doug, followed by a financial review of the quarter from Rocky. Before we begin, I would like to remind our audience that certain statements made on today's call may be considered forward-looking and are subject to the safe harbor provisions of applicable 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 may cause actual results to differ materially from those projected in such statements. Some of the factors that could influence our results are contained in our periodic and annual reports filed with the SEC. For more information regarding these risks and uncertainties, please see slide two on our earnings call slide presentation, which is available on our website, ir.hillmangroup.com. On today's call, we will refer to certain non-GAAP financial measures. Information regarding our use of and reconciliations of these measures to our GAAP results are available in our earnings call slide presentation. It's my pleasure to turn the call over to our Chairman, President, and CEO, Doug Cahill. Doug? Thanks, Michael. Good morning, everyone. Today, I'm going to touch on a few highlights for the quarter, provide a quick overview of Hillman, then discuss the current environment before I turn it over to Rocky to talk numbers. First off, I wanna say how pleased I am with how Hillman team has executed so far this year in a dynamic operating environment. Our results for the quarter illustrate our strong performance. Net sales in the first quarter of 2023 were $349.7 million. When backing out COVID-related sales last year, our first quarter 2023 sales were essentially flat versus the first quarter of 2022. Adjusted EBITDA in the quarter totaled $40.2 million. We feel good about these results considering the high cost of goods still flowing through our income statement resulting from the record-high container costs from last summer. Free cash flow in the quarter totaled $13.4 million and allowed us to pay down debt during the quarter. This is noteworthy as we usually see our debt increase during the first quarter as we borrow for our spring build. Let me frame our results for the quarter and add a little context. Top line was consistent with our expectations in spite of the weather. We're pleased with our adjusted EBITDA results, even with the inventory cost at an all-time high. Lastly, our free cash flow exceeded our expectations for the quarter. Because of this, we are reiterating our full year guidance across all three metrics. We maintain our belief that during 2023, our net sales will be between $1.45 billion and $1.55 billion. Our adjusted EBITDA will be between $215 million and $235 million, and our free cash flow will be between $125 million and $145 million. We still believe 2023 will be the tale of two halves. Our expectations are unchanged from our last earnings call. We expect first half adjusted EBITDA to be down high single digits versus last year, and the second half adjusted EBITDA to be up just over 20% versus last year. We are in a great position with our customers and our suppliers. Our moat, which I'll touch on in a moment, is growing wider and deeper, and our end markets, which are repair, remodel, and maintenance, are healthy and resilient. The Hillman team is executing well. We believe we are the best partner for fasteners and other hardware solutions in North America. For those that are new to the Hillman story, we're one of the largest providers of hardware products and solutions to hardware stores, home improvement centers, and other big box retailers throughout North America. Our products are used by pickup truck pros and DIYers on repair, remodel, and maintenance projects. We were founded in 1964. We have a remarkable track record, having grown our top line in 58 of 59 years. Our record has been driven by the resiliency of the repair, remodel, and maintenance markets that we serve. Our competitive moat, which consists of three main differentiators. One, our in-store sales and service team. This group consists of 1,100 associates that deliver best-in-class service and industry-leading fill rates to our customers at the shelf. Two, we ship our products directly to our customers' retail locations. Our team distributes over 112,000 SKUs to over 40,000 locations. In total, approximately 80% of our shipments are delivered directly to the store. Three, importantly, 90% of our revenue comes from brands that we own. Maintaining control over innovation, marketing, and distribution allows us to quickly adapt to the ever-changing needs of our customers and our end users. We help customers overcome labor, complexity, and supply chain challenges in these all-important high-margin traffic-generating product categories, so that when the pickup truck pro or the DIYer gets to the shelf, the experience in the store is better when Team Hillman is your supplier. Let me give you a quick example of why our moat's so wide and deep, and why our relationships are truly embedded with our customers. Unfortunately, three weeks ago in Shawnee, Oklahoma, a tornado touched down, causing significant damage to the community. The local Lowe's roof was damaged, which prevented customers from accessing the fastener aisle at a critical time for our products. The Hillman team sprung into action with Lowe's and set up a pop-up fastener section where we were able to get product ordered, picked, shipped, and delivered from the warehouse straight to the store within 12 hours. This allowed the local Lowe's store to take care of their Shawnee customers and help them begin to repair and rebuild their community. Service like this is why we have 20-plus year relationships with all five of our top customers. When you consistently and reliably bring your customers something that competitors can't, the result is a long-standing, growing partnership. Let me move to our results for the quarter. As I mentioned earlier, our total Q1 2023 net sales, excluding COVID, were flat versus 2022, reflecting a 4% decline in volumes and a 1% headwind from unfavorable FX in our Canadian business. This was offset by a 5% lift from price increases executed during 2022. Lighter volumes were driven by a 13% decline in foot traffic at home improvement centers versus 2022. Weather in the West, as you have already heard, was also a headwind. Our top-line results, in spite of the foot traffic declines, continue to illustrate the resilient demand driven by repair, remodel, and maintenance projects. Let's break down the net sales by business. Hardware Solutions is our biggest business and makes up over 50% of our overall revenue. For the quarter, HS led the way with an 8% increase in revenue compared to last year. The increase breaks down to approximately 6% in price, plus just under 2% in volume, which was driven by new business wins in the last 12 months. While hardware volumes were up low to mid-single digits during the first half of the quarter, the latter half slowed due to record rainfall, particularly out West. As a result, we assumed there would be some pent-up demand out West, and that appears to be true looking at sales over the past 6 weeks out there. Robotics and Digital Solutions, or RDS, make up about 20% of our overall revenue. During the quarter, RDS revenues were up slightly over Q1 of 2022, driven by an increase in sales from our self-serve key duplication machines, minuteKEY, which was offset by lighter sales in the other RDS categories like pet engraving and accessories. RDS is a key driver of highly profitable long-term growth. As we talked about in the past calls, 2023 is a transition year for the RDS as we invest in our growth. This year, we expect year-over-year top line growth in the mid-single digits and an attractive adjusted EBITDA margin profile of around 32%. As we look forward, we believe 2023 will set the stage for new accelerated profitable growth in RDS during 2024, driven by investments in the enhanced Quick-Tag 3 pet engraving machines, our next-generation minuteKEY 3.5 key duplication machines, and our Resharp knife sharpening machines. Rocky will shed more light on these 3 in just a minute. Our Canadian segment, which makes up about 10% of our overall revenue, decreased 5.1% compared to a year-ago quarter. Volumes in Canada came in about where we expected, up a little over 1%, which was more than offset by 6 points of negative FX headwinds during the quarter. Lastly, our Protective Solutions business makes up just under 20% of our business. Excluding COVID-related revenue from 2022, Protective Solutions revenues were down 21.1% compared to prior year quarter. Lighter foot traffic, the West Coast weather, and timing of promotional activities hurt us in the quarter. Despite PS's slow start to the year, we have all of our promotional activity locked in for the remainder of the year. We will launch our AWP brand through our traditional hardware channel in Q2, and a new piece of business with one of our top five customers will launch during Q4. As a result, we feel good about 2023 being up low single digits, excluding COVID. Our PS product offerings continue to push the envelope for innovation and performance. Recently, Better Homes & Gardens tested 17 of the top gardening gloves on the market over a 6-month timeframe. The result was that our Firm Grip branded gloves won Best Overall Glove. A regular topic of discussion with our investors has been our inventory. As lead times from Asia started to increase in 2021, we made the strategic decision to invest in inventory in order to protect fill rates and ensure we took great care of our customers. The result of this is twofold. First, we took great care of our customers. Our fill rates averaged more than 90% during 2021, 96% during 2022, and 97% on average for the 1st quarter of 2023. The second result is that we saw our inventory on hand increase throughout 2021 and peak during the summer of 2022 with about $180 million more than we would have on hand in normal times. Since that peak, inventories have been reduced by $124 million, including a $38 million reduction during the first quarter. At quarter end, we were still carrying nearly $60 million of inventory more than normal. We believe it's realistic that we'll reduce inventory by an additional $35 million or a total of approximately $75 million for 2023. This is above our original expectation of $50 million. I have to say I'm really proud of how our global supply chain team has performed. Flexing inventories both up and down with over 100,000 is no small task. They've done all of this without missing a beat on our industry-leading fill rates. The inventory reduction enhances our free cash flow, which we will use to pay down debt. It is our expectation that we'll generate free cash flow and reduce our debt throughout the year, which Rocky will touch on shortly. Turning to price and cost. Since inflation started to rear its ugly head in 2020, we've seen $225 million of cost inflation, which we have passed on to our customers on a dollar-for-dollar basis through multiple price increases, the last of which went into effect in the fall of 2022. These costs break down to approximately $120 million of transportation and shipping costs, $90 million of commodities, and $15 million of labor. Over the past several months, we've seen some of these costs come down. Effective May 1, 2023, we secured our annual ocean container contracts at attractive rates, which will be a tailwind for us in 2024. While we are pleased with this, many costs still remain impacted by inflation, like steel, labor, and outbound freight. Our cost of goods sold for the quarter were some of the highest we have seen in the history of the company. The sequential 190 basis point reduction in gross margin percentage illustrates the impact inflation had on our results. For the quarter, because of how inventories flow through our income statement, our cost of goods sold for February and March included the high container costs we paid during the summer of last year. While these costs have fallen dramatically, they must work through inventory first before we see the benefit. When it comes to costs that we can control, I'm pleased with how the team has executed. For example, our new Kansas City distribution hub is open and operating and will fully replace our Rialto, California, distribution hub by the end of the second quarter. We avoided a multimillion-dollar cost increase by moving the facility to Kansas City, and this move will result in long-term network efficiencies. Over the past several years, we have invested in our North American distribution network, having opened new distribution facilities near Jonestown, Pennsylvania, Shannon, Georgia, which is north of Atlanta, and in Greater Toronto. This new infrastructure allows us to serve our customers in an efficient and effective manner, illustrated by our 97% fill rates for the first quarter. Provides us also efficiencies as we enhance our direct store delivery capabilities. As I've discussed, starting in the second half of the year, our business is set to benefit from several solid tailwinds. These, coupled with our organic growth plans and market share gains, improvements in our inventory and leverage, and the consistent performance of this company throughout all economic cycles, will lead to an even more exciting future for Hillman. With that, let me turn it over to Rocky. Thanks, Doug, good morning, everyone. Net sales in the first quarter of 2023 were $349.7 million, a decrease of 3.7% versus the prior year quarter. When backing out COVID-related sales from the first quarter of 2022, sales were essentially flat. Considering pent-up demand in West due to weather, our back half-loaded calendar for PS, and some new business in PS and HS coming online in the second half of the year, we feel very comfortable reiterating our original top-line guidance. The midpoint of our net sales guide assumes volume on existing products decline 1%. We benefit 2% from price that will roll from 2022, new business wins offset last year's COVID-related sales. Let me provide some more detail on our top line by business. Hardware Solutions was our best performing business during the quarter. Net sales increased 8% to $205 million. The improvement was driven by 6% of realized price increases that were implemented over the past 12 months and a volume increase of just under 2%. RDS net sales were up slightly to $61.1 million as foot traffic and discretionary spending offset a strong lift in sales at our minuteKEY self-service key duplication machines. We believe 2023 is a transition year for RDS as we have some exciting opportunities for 2024 and beyond that we are working on. We continue to work with our major key duplication and engraving customers to perfect our minuteKEY 3.5 next generation digital kiosk. This new self-service kiosk will duplicate not only home and office keys, but also auto keys and smart auto fobs, as well as RFID key cards and fobs. We believe this will be ready for the market late this year and into early 2024. Quick-Tag 3.0 is our new engraving machine that is being introduced throughout 2023. We plan to place around 700 new machines this year, which is down slightly from our original expectations of 800. These placements will match the pace of our mass retail partners renovation plans. We remain very excited about this new machine and expect to see a lift in both units and revenue per day on Quick-Tag 3.0 versus the legacy Quick-Tag machine. Regarding our one-of-a-kind knife sharpening machine, Resharp, we have approximately 1,000 machines at select Ace Hardware stores across the country and have been working to optimize the marketing, economics, and location of each machine. Outside of hardware, we're testing Resharp in new channels like specialty retailers, food service and restaurant supply stores, and outdoor and recreational retailers. We are currently having ongoing dialogue with multiple stores about Resharp and remain very optimistic about its potential. Our Canadian business saw net sales down 5.1% compared to the prior year. Volumes were up, and considering the weather in Canada so far this year, we are pleased with those results. FX dragged down our top line and profitability. For the year, we continue to think that we will get our adjusted EBITDA margin goal of 10% for Canada. For the quarter, Protective Solutions revenues were off $26.4 million, of which $13.4 million related to 2022 COVID PPE sales. Doug mentioned some of the other headwinds PS had during the quarter earlier, we are expecting a solid second half for PS and that the business will grow low single digits over 2022 when excluding COVID-related sales. Adjusted earnings per diluted share for the first quarter of 2023 was $0.06 per share compared to $0.09 per diluted share in the prior year quarter. First quarter adjusted gross profit margin improved by 30 basis points to 41.5% versus the prior year quarter as we were still chasing costs last year. Sequentially, margins were 190 basis points lower than last quarter due to the higher cost of goods sold now flowing through our income statement. That said, we expect to see margins expand sequentially by more than 100 basis points next quarter. During the second half of 2023, we anticipate margins in excess of our historical rate of 44%-45%. The result will be a 20%+ increase in adjusted EBITDA during the second half of 2023 versus the second half of 2022. Q1 2023 adjusted SG&A as a percentage of sales increased to 30.3% from 29.4% from the year ago quarter. This analysis backs out stock compensation, acquisition and integration expenses, certain legal fees and restructuring costs, which we feel gives us a better analysis of our base expenses. At a high level, increases were driven by revenue sharing arrangements in RDS due to outsized growth in our kiosk business and inflation related to outbound freight and labor. Adjusted EBITDA in the first quarter was $40.2 million compared to $44 million in the year-ago quarter. Adjusted EBITDA reflected higher cost of goods sold coupled with the decline in net sales. We think about the opportunities that lie ahead for the remainder of the year, we feel very comfortable reiterating our original adjusted EBITDA guidance. Turning to our cash flow and balance sheet. For the first quarter of 2023, operating activities provided $32 million of cash as compared to a $4 million use in the prior year quarter. Capital expenditures were $18.1 million compared to $12.5 million in the prior year quarter. We continue to invest in our RDS equipment and merchandising racks, important parts of our high return CapEx initiatives. Net inventories were $450.9 million, down $38 million sequentially from $489.3 million last quarter. We ended the first quarter of 2023 with $876.9 million of total net debt outstanding, down $11 million from the $887.7 million at the end of 2022. Free cash flow for the quarter totaled $13.4 million compared to a cash burn of $16.1 million in the prior year quarter. Over the last three years, our net debt has increased by an average of $35 million during the first quarter. For Q1 of this year, it's decreased by $11 million. This positive swing was driven by converting our prior investments in inventory to cash. Similar to our net sales and adjusted EBITDA, we feel very comfortable reiterating our original free cash flow guidance. We ended the first quarter of 2023 with approximately $244 million of liquidity, which consists of $209 million availability to borrow under a revolving credit facility and $35 million of cash and cash equivalents. Our net debt to trailing 12-month adjusted EBITDA ratio at the end of the quarter was 4.2 times, consistent with the end of 2022, which was a strong achievement for the first quarter, given typically ex-it experiences a seasonal uptick in leverage in the first quarter. Looking forward, we expect to end 2023 under 3.5 times, that assumes we come in near the midpoint of our guidance. The majority of the delevering will occur in the second half of the year as margins expand and we use our free cash flow to pay down our ABL revolver and term note. We look further out, our long-term growth target of 6% organic net sales and high single to low double-digit organic adjusted EBITDA growth before M&A remains intact. From a leverage standpoint, our goal is to run the business below 3x. With that, I'll turn it back to Doug. Thanks, Rocky. As I've expressed today, I'm very confident about our business heading into the remainder of 2023 and 2024. We continue to stay humble and take great care of our customers. Our differentiated business model with 1,100 field sales and service folks, combined with our direct store delivery model, creates tremendous value for our customers, value that we think they recognize. We know the opportunity that is ahead of us, and we've got a great team excited to capitalize on that, which we believe will drive long-term growth and meaningful value for all of our stakeholders. With that, we'll begin the Q&A portion of the call. Amber, can you please open up the call for questions? Certainly. To ask a question, please press star one one on your telephone. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our 1st question comes from the line of Lee Jagoda from CJS Securities. Please ask your question, Lee. Hi, good morning. Hey, Lee. Rocky, can you just start with may on the Personal Protective side, maybe just quantifying the impact of the promotional stuff in Q1 on a year-over-year basis, and how we should think about the revenue in Personal Protective on a sequential basis over the next few quarters? I think you had mentioned high single digit growth ex-COVID. Do you have the 2022 total revenue for Personal Protective ex-COVID that we can build off of? Yeah. Let me answer it this way, Lee Jagoda. I mean, when you think about COVID last year, in our total results, it was between $16 million and $17 million. In the first quarter, it was just over 13, so 13.4. I think you can back that out of the numbers and get to the results. When you think about promotional activity, really, the impact in the first quarter was timing around promotional activity. As Doug Cahill said in his prepared remarks, as we think about the rest of the year, not only is the promotional activity positive in that business, but more importantly, it's all locked in for the remainder of the year. I think this year is the earliest our team had that fully locked in for the year, which makes us feel really good about it. Quite frankly, our team, in PS is now working on promotional activity for 2024. Got it. Just switching gears to Canada. I think I remember the like the Canadian business inventory turns a little bit differently than it turns in the US, so you have a different timing of when things hit the P&L. Can you just remind us how that works and how we should expect the highest cost inventory to flow through Canada versus the stuff that's coming through the US P&L today? Yeah. You're correct, Lee. Remember, the Canadian business is about a third commercial industrial, and so we're required in that space to hold more inventory, and it does turn quite slower. You know, as you think about the U.S., and as we've said, you know, kind of that February, March, April, May timeframe is when we'll experience the highest cost inventory in the U.S. As we think about Canada, it kinda comes almost right after that. Think late Q2, flowing through Q3 and maybe even a little bit into Q4. It's more about nine months of inventory in Canada that we maintain versus the five to six in the U.S. Got it. I guess extrapolating that, the 10%-ish EBITDA margins you're targeting for this year, all else equal should have growth in 2024? Yeah. I think as you think about here's the easy way that I would think about Canada. You know, when you think about new container rates as an example that we have in the US that we just contracted for in May, obviously those will flow through early. Even the benefits that we saw from container rates earlier, you know, in the fall of last year, those really aren't gonna flow through in Canada till late 2023, early 2024. You're right. We would expect that we'll see a little bit of pressure this year in Canada because of the timing of those higher costs, and we'll see some of the benefits that we're gonna see sooner in the US a little later in Canada from reduced container costs. Got it. That's very helpful. I'll hop back in queue. Thanks. Thanks. Thank you. Our next question comes from the line of Michael Hoffman from Stifel. Please ask your question, Michael. I do. Thank you very much. Good morning, Doug and Rocky. Hey, Michael. Can we talk about the cadence of revenue? You gave us a sense of the cadence of EBITDA. Can we talk about the cadence of revenue to hit the midpoint given the, you know, we're slightly negative in the first quarter. I'm assuming we're a little bit negative, slightly positive in 2Q and then so on and so forth. How do we get to the midpoint cadence-wise? Yeah. I mean, the first thing I think we would comment there, Michael, is, you know, there's seasonality in the business. You know, from a seasonal perspective, our first and fourth quarters are always the softest compared to second and third. I would start with that comment as you think about modeling. I think as we look at the second quarter, we would say we'll probably be pretty consistent, slightly up to slightly down compared to prior year. Q3 and Q4, we're gonna see a pretty nice benefit for a couple reasons, the biggest of which is launching of new products, promotional calendar in PS. I think the other thing to add, Michael, is remember last year, we did have in our PS business inventory brought down because we go through distribution centers, and we did see some destocking, not a whole bunch, but our comp in the second half is gonna be easier. One of the things I wanted to tease out. You have talked about new business wins a lot over the time since you've been public, and you've had some great successes. How do we think about the impact of new business wins as we go into the second half and into 2024? Believe it or not, we're already talking about 2024. Yeah. I mean, we've said many times as you think about new business wins, they should add 2%-3% to our top line in the business. As you model, you know, it's 2%-3% each year that we believe we can grow through those new business wins in categories we're already in, you know, as existing customers. You know, this year, I would say they're a little more back-half loaded than they've been over the last couple years. As we think about 2024, I think at least as we see visibility right now, it's probably gonna be more consistent throughout the year. Okay. When we're thinking about the... I'm sorry. I just had a brain fart there. When we think about the business, your confidence in the business outlook, Doug, what is it you're seeing beyond new business across the data, across the customer base in the face of lower foot traffic, all those pieces? What's the thing that you're hanging on your hat on that's giving you that incremental confidence? Yeah. I think, Michael, if you just I mean, I always hate when CEOs talk about weather, at the end of the day, anybody in North America knows that there just wasn't much of a spring yet. It looks like it's starting to, you know, to open up. We're seeing that. We're seeing that pent up on the West Coast. For us, I tell you the pro is still booked. They still feel very good. You know, one of the things that makes our business hum is the price of lumber couldn't be better right now. That's gonna drive, you know, the whole nail, power screw side of the business. Just, you know, talking with our customers and how we see them looking at the year, as we've said, yeah, footsteps are down. We do have a few discretionary things like pet engraving and like key accessories, which are impacted by the consumer tightening the belt. Again, we're not, you know, we're not in that category for the repair or remodel. I'd say the general sense from our customers, the fact that lumber is very attractive and again, we do see things opening up a bit 'cause the weather's just been awful. The move-up market is basically shut. Are you seeing positive benefit of that as well? 'Cause basically you're not selling, moving into a bigger house. You're taking this thing in the existing house and adding the rec room or the kitchen or doing the bathroom modification. Yeah. I think when you think about our repair and maintenance, no issue remodel, you could argue that in the move-up market, we're not seeing quite that where people are hunkered down. You know, both our big customers have said people have decided if they're not going to make the move, then they're going to do this or that. I'd say it's a little bit of a headwind in the remodel side of things. You know, when you do decide you're not moving, you might make the decision to do that project as well. Not a big difference for us. All right. I realize I'm circling around the same topics, but your long-term goals of 6 sales, high single-digit EBITDA to low double-digit. If we have an outsized second half of 2023, I'm assuming it's outsized first half 2024. Is it second half of 2024 we hit, we're back to normal? Yeah. I would say that's probably directionally right. Normal to us would be, you know, a 6-10, like you said, outsized during that period. you know, I would say you might be through 3 quarters next year. Okay. Maybe not. Great. All right. Thank you. Okay. Good talking to you, Michael. You too. Thank you. Our next question comes from the line of David Manthey from Baird. Please ask your question, Dave. Hi. Hey, Doug, Rocky, good morning. Hey, Dave. Hey, wonder if you could talk to us about the availability of semiconductors and your ability to ship your robotic solutions today. Any shortages that are lingering now? Yeah, Dave, I would, you know, I'm happy to report we are not, at this point, seeing that as a gating issue. That's good news. You know, it was chips, as you know, then it became boards. Now we don't see any issue. You know, we're excited about what we think is gonna happen with Resharp, two things as a result. One, we've taken this lull and this opportunity to talk to a bunch of new channels, if you will, about Resharp. You know what that machine can do. I mean, we've got a customer looking at, basically 500 machines to replace a ton of labor they're currently dealing with, and we're in test mode with them right now. We've got probably four to five different opportunities. The good news is, when we ramp back up, we won't have an excuse or any issues with what we've been dealing with on the semiconductor chip and board side. Okay, thanks. second on the CapEx run rate in the first quarter was right on plan for this year. How should we think about 2024? Are there any other facilities or big buckets we should know about, or should we just see a similar percentage of revenues in 2024? Yeah. I would say as you think about 2024 at this point, Dave, I would. This is Rocky. I would stick with where we are from a dollar perspective around capital. The only thing that could change that is, you know, if we caught fire in a bottle around one of the products and needed to produce more machines or, you know, the opposite would be obviously if something wasn't performing to expectation, we may slow it down a bit. The $65 million-$75 million is a good number, I think, as you think about out years. Yeah. Dave, the only thing I would add is we probably sped up or spent a bit earlier our capital in our distribution network expansion with what we needed to do in Kansas City, what we did in Toronto, what we did in Shannon, with the inventory and all the moving pieces. We might have a little bit of grace there because we, you know, we've probably put more money quicker than I thought we'd need to there. That might help us a little bit. Got it. Appreciate it, guys. Thank you. Yep. Thank you. Our next question comes from the line of Stephen Volkmann from Jefferies. Please proceed with your question, Stephen. Great. Good morning, guys. Thank you. Hey, how you doing? Good morning. I am well, thank you for asking. Doug, I think you mentioned that you had renegotiated your transportation costs for 2024 now, and that it was a $120 million increase, last time you did it. I guess I'm curious, did you get the $120 back? It seems like most of the things we see around overseas transportation we're kind of back to 2019 levels. Hey, Stephen, it's Rocky Kraft. Here's what we would tell you there. The $120 million is not only inbound, but also outbound freight. Two things on the inbound, when you think about containers, we're pretty close to where we were at 2019 levels, and so nice benefit there. As you think about container costs, I would say back at 2019 levels, but some of still the inbound things around dray and getting it into our distribution network are still elevated. A little tempered there when you think about the total number. On the outbound side, which we said about 20% of that number, we've not seen much benefit there at all to date from a costing perspective. I think the one other thing, Stephen, it is crazy what the container costs have done versus where they were. The other advantage we have with Kansas City that we actually didn't see coming, we hoped, but we didn't know, is we're now able to bring containers from Asia all the way to Kansas City without touching them. The shipping companies are taking that responsibility, whereas before, you would have had to unload, put in a different container and bring them across. That is another benefit we'll see with the way we're looking at our network, and we've got that going into Dallas, and we've got that now quoting into Cincinnati. I think with the availability and them being more aggressive and having container shortage issues no longer, that's gonna help us as well with our entire network. Great. Okay, that's great color. Maybe just the same question. I think you said, Doug, $90 million on commodities. Is that probably not back down to the 2019 levels? You know, it's funny because if you take steel, and we look obviously at Taiwanese and Chinese steel, if you look at that, it was looking pretty good until about Thanksgiving, right? China Steel is up 10% since November, pretty flat year to date. Taiwan Steel is up 7% in Q2, you know what's going on in US Steel. I mean, it went up 33% from February to March and another 6% March to April. That's been rearing its ugly head. That increase in China that I talked about, up 10% from November. That is up from a down. It had gone down, let's call it 24%, 25%, then back up 10%. It's kind of being stubborn right now, but it isn't back to 19 levels, but it is better than the high that we saw. Got it. The final sort of piece of this thread is just as we look out to 2024, are we still thinking there's no real reason to think about any price deflation on your part on any of your product? Yeah, I think as we look at this year, that's a good assumption, based on, you know, where the net of all this is and the fact that, you know, we've been on the wrong side of the power curve for a good bit. Super. Thank you, guys. Sure. Thank you. Our next question comes from the line of Matthew Bouley from Barclays. Please ask your question, Matthew. Good morning. You have Elizabeth Langan on for Matt today. I had a follow-up on Resharp. Would you mind talking a little bit about the timeline of the rollout that you're kind of looking at right now, and what you're kind of expecting through 2023 and 2024? I know you'd mentioned that you're working on footprint optimization. What does that usually mean for, you know, margins or sales? You know, if you could give us an idea of how meaningful that could be. Yeah. The way I would look at it, Elizabeth, is we're at 1,000 machines with Ace Hardware right now, and we're working inside that right now. The best example I can give you is, there are Ace Hardwares who are doing an unbelievable job, and there are Ace Hardwares who love this machine, but they are not sharpening the number of knives we need them to sharpen. When we go in and say, "Hey, we got a bunch of Ace Hardwares that want these machines," and we go to move it, they're like, "Wait a minute, that's my," you know. It's like you're stealing their long lost son. What we've done is work with Ace on making sure that you sharpen knives or you don't get a machine. That's the footprint that we're working on now. We've got a bunch of Ace Hardwares. I mean, we're only in 1,000, and there's over 4,000 Ace Hardware stores. That's being optimized right now. I think the best way to think about the launch of Resharp based on what we're doing is we're trying to figure out where's the best next place to go because we have multiple options. I'd put us down for this product to really take off and start to grow in the middle of 2024. By the time we make machines and get them in, get the training in for the next ramp, Rocky, that's probably the timing I would think. Yeah. I mean, we don't plan to build a lot of machines this year. We have about 300-350 that are available, and we've not decided exactly where those are gonna go yet. We probably will not ramp production of Resharp machines till later this year. Yeah as we focus on Quick-Tag 3 and minuteKEY 3.5. Elizabeth, we obviously are looking at our capital spend in total. That's important as part of our debt. The other thing is not that we haven't used any of the machines of the 300, 350, but we are giving this person 5 to test, this person 3 to test, this person 7 to test. We're doing the testing to make sure that we understand who really is the right place to go next. Okay. Got it. Thank you. That's really helpful. I had another question regarding the Forced Labor Protection Act that's gone into effect. Does that mean anything for you guys, whether it's for steel or chips or anything else, you know, if that impacts your material chain of custody? No. No, it doesn't. I'm very familiar with that from some of my past experience of being very careful what, you know, what and where. But our folks, as an example, we've got four of our team members in Asia for the next three weeks, and we obviously are very keen on making sure that we don't get caught up in any of that. We're fortunate because it tends to be more, at least my experience in the textile side of things and the cut and sew, so we do pay attention to that on our gloves. But our mills that manufacture and make a lot of the carriage bolts and different kinds of things are in the main areas, and we've been working with those folks for, you know, well over 20 years. It's a real issue for the world, and we do. It's part of our audit that we do on all of our suppliers. Okay. Thank you very much. That's all for me. Sure. Yep. Thank you. Our next question comes from the line of Reuben Garner from Benchmark. Please ask your question, Reuben. Thank you. Good morning, everybody. Hey, Reuben. Hey, Reuben. Most of my question's been answered. I just have one. Can you talk about where inventory kind of stands in the channel? You know, you had the destock towards the end of last year. Just curious, we've seen some other building products where that's started to reverse already, and I didn't know if you'd seen any of that or heard any of that from your customers or if that's if there's the potential for kind of a restock as we move through the year if the economy and the consumer holds up better than expected. Yes. So for us, let's talk about Hardware Solutions, Reuben. The fact that we go direct to store, there's just no place to put it, right? We don't have it in any of the distribution centers for our retailers, so nothing there. I will say West Coast, as we start to see the... Truly, I mean, we had hardware stores, local hardware stores closed for six or seven days because of the rain, the mudslides, the different things going on with the crazy weather out there. There will be pent-up demand. My guess is we'll be chasing a little bit both on gloves and on fasteners out there, but with the exception of that, we don't see a situation where all of a sudden we've gone one way too far, now the other way, just because we just don't have product in the distribution centers of our retailer because of our direct store model. Yeah. The only thing I would add there, Reuben, if you think about the Protective Solutions, which is where we did see some destock last year because we do go through our big customers' distribution, you know, they're kind of back at normal levels, historic. While we don't see a bounce back restock, what we do see is that we'll have, as we said in our earlier comments, you know, much lighter comps in the back half because of the destock that they did. Got it. I said I only had 1, but I'm gonna sneak 1 more in. Last 5 or 6 weeks or the first 5 or 6 weeks of this quarter, can you kinda compare the run rate? I think you were flattish in Hardware and Protective year-over-year in Q1, kinda ex COVID related stuff. Have you seen a bump up because of some catch up out west, or is it kind of in that same range? Yeah, nothing's really changed in the majority of the country. It's kinda been what it's been. We do see a change in the West. There's no question we're seeing some pent up out there. I, you know, personally, I'm hoping that people get out of their house and get out in the yard and get, you know, get to doing things. We should see some tailwind there. So far, it's about the same with the exception of the West 'cause it was down for 28 straight days. They really didn't have a chance to do much of anything. That's the only place we're really seeing a change. Got it. Thanks, guys. Good luck going forward. Okay. Thanks, Reuben. Thank you. This concludes the Q&A portion of today's call. Thank you very much for all your questions. I would like to turn the call back to Mr. Cahill for some closing comments. Thanks, Amber. Thanks everyone for joining us this morning. Also I'd like to thank our suppliers and our vendors and our customers and importantly, our hardworking team at Hillman for their contributions to the quarter. We look forward to updating you again in the near future, and thanks a lot for joining us this morning. Concludes today's conference call. Thank you for participating. You may now disconnect.