Good morning, and welcome to the first quarter 2024 results presentation for Hillman Solutions Corp. My name is Tanya, and I will be your conference call operator today. Before we begin, I would 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 a replay of today's presentation can be accessed on Hillman's Investor Relations website at ir.hillmangroup.com. I would now like to turn the call over to Michael Koehler with Hillman. You may begin. Thank you, Tanya. Good morning, everyone, and 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, John Michael Adinolfi, our Chief Operating Officer, and Rocky Kraft, our Chief Financial Officer. Before we begin today's call, I would like to remind our audience that certain statements made may be considered forward-looking and are subject to 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 2 in our earnings call slide presentation, which is available on our website. In addition, 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. With that, it's my pleasure to turn the call over to our Chairman, President, and CEO, Doug Cahill. Doug? Thanks, Stretch. Good morning, everyone. I'll kick off today's call going through some of the highlights of our strong first quarter, during which we celebrated Hillman's 60th anniversary. After that, I will provide some additional color on what makes Hillman unique before I turn it over to our COO, Jon Michael Adinolfi, or JMA, as we call him. JMA will provide an update on our operations, the Koch acquisition we closed in January, and the M&A landscape. Rocky will then finish up with our financial results for the quarter before we turn it back to the operator for the question and answer session. During the first quarter of 2024, growth in both our top and bottom line demonstrated the resilient and consistent nature of our business. Our results were in line with our expectations for the quarter, which has resulted in us reiterating our annual guidance across all three metrics: net sales, adjusted EBITDA, and free cash flow. Net sales in the first quarter of 2024 increased slightly to $350.3 million from the year-ago quarter. Driving these results are the contribution of new business wins. The Koch acquisition was closed in January of this year. These were partially offset by the overall market and a 40 basis point headwind from price. Adjusted EBITDA increased 30% to $52.3 million, compared to $40.2 million during the first quarter of 2023. Our adjusted EBITDA margins for the quarter improved by 340 basis points to 14.9%. Similar to what we saw during the fourth quarter of 2023, in the first quarter of 2024, we had a relatively flat top line, but generated healthy bottom line expansion. Adjusted gross margins totaled 47.6%, marking a 610 basis point improvement over the 41.5% during the year-ago quarter. Free cash flow came in consistent with our expectations as we used $6.1 million during the quarter. This was driven by our inventory build for our spring and summer busy season, as well as a $5 million use of cash to fund working capital related to the Koch acquisition. Let me frame the macro before we jump into our top-line results by segment. The macroeconomic landscape in the home improvement sector continues to show muted signs of improving. As we've all heard, inflation continues to hang around, which has prevented the Fed from cutting rates. The result is that mortgage rates have remained elevated. These higher rates are limiting existing home sales, which does impact our business, as homeowners are unwilling to trade out of a 3% mortgage rate into a 7% mortgage. While pent-up demand for existing home sales continues to build, we agree with our customers. A strong increase in existing home sales is likely to happen when we start to see rates move downward. In the meantime, the pickup truck pro continues to be busy, albeit with smaller projects, and we did see the DIYers start to get more active as the weather improved throughout the quarter. That said, the overall market and foot traffic at our retailers were both negative compared to last year, which fell in line with our expectations. Our retailers are cautiously optimistic for the second half of this year, and if they're right, we will be ready. But until then, we'll continue to manage our cost structure and business for this environment. On top-line results, Hardware and Protective Solutions, or HPS, led the way with a 2.4% increase in net sales. To break that down a bit, Hardware, or HS, grew by 4.6%, while Protective, or PS, sales were down 6.9%. For the first quarter, PS net sales were impacted by the timing of our promotional off-shelf activity, which will pick up during the second quarter of 2024. PS had a solid year in 2023, and we expect a healthy 2024 for them as well.... Driving the increase in HS were new business wins in rope and chain accessories that we launched during the third quarter last year. We also benefited from nearly a full quarter worth of contribution from the Koch acquisition, which closed on January 11, 2024. Speaking of the Koch acquisition, which JMA will touch on more in a few minutes, our field sales and service teams are really excited to be selling the new product line, which will drive additional growth in hardware. We're working on some meaningful opportunities in this new rope and chain category that we and our customers are thrilled about. It fits Hillman perfectly. It's an important product line for our customers, and it's a complex category to ship and keep organized at the shelf. During the quarter, net sales in our Robotics and Digital Solutions, or RDS, were down 9.2% to $55 million. Lighter foot traffic and discretionary spending, coupled with existing home sales near a 30-year low, weighed in on RDS during the quarter. As the consumer remains under pressure from inflation, our RDS business has been impacted more than our other businesses. Despite the softness in RDS, we remain optimistic about our long-term, high-margin growth opportunities, which I'll expand on in a moment. Gross margins and EBITDA margins remain healthy at 71.6% and 30.7%, respectively. Last week, we appointed Scott Moore as our new Divisional President of RDS. Scott was one of the early founding members of MinuteKey and joined Hillman following its 2018 acquisition. Most recently, Scott was our Chief Technology Officer and will make a fantastic leader for RDS as we look to its next phase of growth with the rollout of MinuteKey 3.5. Scott and his team were instrumental in designing the software and technology that powers our MinuteKey platform and the new technology behind our MinuteKey 3.5 launch. The platform leverages artificial intelligence via machine learning to identify key types used, using a state-of-the-art visual key identification system. Our machines are continuously gathering data in order to read, identify, and execute factory-original quality cuts, which ultimately result in a great customer experience. Scott's leadership, discipline, and respect throughout the Hillman organization make him a great fit for this role. Scott takes the reins from Randy Fagundo, who will retire following a long and successful career in the kiosk industry. Randy's been critical to the success of MinuteKey and RDS since joining Hillman following the 2008 acquisition of MinuteKey. We are grateful for his meaningful contributions to Hillman. Randy, we're gonna miss you, man. Best of luck in your retirement. As we think about RDS, we are working on a number of growth initiatives. Scott was critical in developing our K2 kiosk technology platform. K2 provides software updates, event logging, inventory management, pricing and promotions, data analytics, and remote troubleshooting for the entire RDS kiosk fleet. Think of it as the eyes and ears inside the machine. We believe that our proprietary K2 technology can add tremendous value with our vending and kiosk companies, and we are currently in discussions to license that technology. Another growth opportunity I'm excited about involves our RDS field service team. Today, we have a dedicated group of mechanically skilled folks that service our fleet of kiosks, replenish inventories in the machine, and keep the uptime at 98% for our entire fleet of kiosks. Recently, two brand-new customers selected Hillman to service their kiosks. For the first time, we will be servicing non-Hillman kiosks. These new accounts did their due diligence, driving along with our service reps, talking to our customers, and analyzing what our K2 technology and our Tempe, Arizona plant could do for their businesses. It's no surprise they picked Hillman. This is another example of Hillman solving complex needs for customers in the store. These accounts will begin to add additional profitability to RDS in the second half of 2024. Lastly, as you all know, the most exciting growth opportunity lies in front of us with MinuteKey 3.5. Currently, we have 101 machines in place in two test markets. These new kiosks offer home and office key duplication, like our existing kiosks, but additionally, they have the ability to read and identify smart auto fobs, duplicate transponder and metal car keys, as well as RFID fobs. We are building these machines with updated capability for three of the top customers, and the initial feedback's been excellent. We expect to end 2024 with approximately 800 MinuteKey 3.5 machines this year in the top retailers in America. MinuteKey 3.5 will begin to contribute to our performance during the back half of 2024 and have a more sizable impact on our 2025 results as the consumer, with support from our retailers, starts to experience what a new MinuteKey kiosk can do for them. Heading north of the border, our Canadian business net sales were up slightly compared to prior year quarter, but Team Canada had a great first quarter from a bottom-line perspective, increasing its adjusted EBITDA by over 70% from the first quarter of 2023. Now I'd like to touch on the moat and the consistency that Hillman delivers. What differentiates Hillman, allows us to produce healthy financial results, and makes us an embedded partner for our retail customers, is our ability to bring value and solve problems for our customers that others can't. Our competitive moat consists of three main pillars. First, we have 1,100 sales and service folks that are in the stores of our customers on a regular basis, providing top-notch customer service at the shelf. We've been taking care of our customers for 60 years, and the Hillman service team has been winning at the shelf and adding value to our customers for the past 28 years. Second, we ship direct to store of our retail customers. Said differently, our products typically do not flow through our customers' distribution centers. Our customers love that because they do not have to clutter their DCs with thousands of SKUs, and they know Hillman can ship it direct to the store and service the shelf. We shipped to over 46,000 locations across North America in 2023. And lastly, approximately 90% of our revenue comes from brands that we own and control, which allow us to anticipate and meet the evolving needs of our retail customers and our end users. Another key component of Hillman brings to the table is our long-term standing relationship with our customers. From store managers to merchants, to VPs and up, we have been forging strategic partnerships with our customers that further strengthen our moat and have been working with our top five customers for over 25 years on average. As one of the largest providers of hardware products and solutions in North America, we offer 114,000 SKUs that serve the pickup truck pro and the DIY-er. We provide a wide variety of hardware and related products across multiple product categories. Our products are used for repair, maintenance, and remodel, and these projects cannot be completed without Hillman-type products. It's great to have the critical products that make up just a fraction of the overall project cost. The predictable nature of our end markets, repair and maintenance projects in particular, drive consistent demand for our products in both up and down economic cycles. The perfect example of this is demonstrated by Hardware Solutions, which makes up 60% of our business. Over the past 20 years, 10 years, and 5 years, HS has grown at a compounded annual growth rate of 7%, 7.3%, and 8.2%, respectively. Historically, we do not see the highs nor the lows of the market like many companies. During 2022 and 2023, the home improvement industry has been under pressure, yet Hillman continued to perform well like it has for the last 60 years. Despite a tough macro environment, we continue to win new business, deepen our partnerships with our customers, and strengthen our competitive moat. We feel very good about where we are with our customers right now and how Team Hillman is performing. We will continue to execute well during this cycle and control the controllables. That said, I know this team and our customers will be ready to ramp quickly when the market improves. With that, I'll turn it over to JMA to talk about freight costs, the integration of Koch Acquisition, and the M&A landscape. JMA? Thanks, Doug. Before I get into our operational highlights for the quarter, I first want to give a shout-out to our global operations team, who did a fantastic job in 2023, which has carried into 2024. From transferring our hub to Kansas City, working to get our products shipped to our customers, maintaining healthy fill rates, and reducing inventory. We have a very experienced team that knows how to take great care of our customers. They are the best in the business. Coming off a successful 2023, we continued that momentum into the first quarter of this year. We maintained our focus on executing our plan while controlling the controllables. Let me start by quickly hitting on inbound freight costs, which we locked in on May first. Given volatility in the spot market, following turmoil in the Red Sea and delays at the Panama Canal, we are pleased that we have locked in our base contracted container rates that are about 10% higher than what we contracted last year. This is about one half of the increase we were planning for. Many of our input costs, like steel from China, India, and Taiwan, increased slightly during the first quarter of 2024 versus the 2023 average, but remain below the 2022 averages. During January of this year, we closed on the acquisition of Koch Industries, a Midwestern-based supplier of rope and chain and related hardware products, with over 2,000 SKUs and a modest customer overlap. We've been courting Koch for several years now. That our leverage is improved and should continue to come down, the timing was right to acquire Koch. Koch was a great family-owned business and has a rich history. We are excited to welcome Koch to the Hillman family. From an integration standpoint, things have gone smoothly, and my hat's off to the Hillman and Koch team for doing a great job, and doing so ahead of schedule. Importantly, their customers, as well as ours, are on board and very excited to see Hillman enter this space. What we love about this acquisition is our ability to leverage Hillman's moat and resources with Koch's products. Let me walk you through several examples.... First, Koch sources most of their products from Asia, and we will leverage our sourcing network to be more efficient on this front. Second, Koch ships its products to distribution centers of its customers. It does not ship store direct like Hillman. We see this as a great opportunity to expand among the traditional hardware customer. Third, Koch previously used a third party to service its products at the shelf, which will now be serviced by the Hillman team. This has allowed us to save on costs and improve the quality of service at the shelf for a very tricky category to keep in stock and looking clean and organized each and every day. Fourth, Koch does not do any business with Home Depot nor Lowe's, and only has a rope business at Ace. Altogether, approximately 90% of the rope and chain market with these customers is white space, which we believe we can grow into. And fifth, Koch does not sell any of its products into Canada. With our market share and relationships north of the border, we believe we will grow in Canada as well. All in, we are excited about the organic growth opportunities with Koch once we apply the Hillman moat. Our sales team is thrilled to have this product category to sell and service at the shelf. As we think about the M&A landscape, we think there are many companies like Koch out there that would perform exceptionally well with our mode and our relationships. We have a dedicated M&A team. We understand project management and integration, and believe that we can execute multiple successful acquisitions per year that are of a similar size to Koch. Once the M&A flywheel gets turning, it will drive our long-term growth, including organic growth. We will leverage the Hillman mode as we seek more products to put on the truck to deliver directly to and service for our customers. For example, I would be disappointed if we don't grow Koch's net sales by at least 20% next year. With that, let me turn over to Rocky to talk financials. Rocky? Thanks, JMA. Let me jump right in. Net sales in the first quarter of 2024 grew to $350.3 million, an increase of 0.2% versus the prior year quarter of $349.7 million. First quarter adjusted gross margin increased by 610 basis points to 47.6% versus the prior year quarter of 41.5%. We have worked really hard to get here, and I am proud of our team and how we are performing in a challenging environment. Adjusted SG&A as a percentage of sales increased to 32.7% during the quarter, from 30.3% from the year ago quarter. Excluding the increase in our standard employee bonus expense, which was the result of a very strong bottom line during the first quarter, Adjusted SG&A as a percentage of sales would have been up just 50 basis points and should be around 30% for the remainder of the year. Adjusted EBITDA in the first quarter was $52.3 million, which grew 30.2% versus the year ago quarter. Adjusted EBITDA to net sales during the quarter was 14.9%, which compares favorably to 11.5% in the year ago quarter. Adjusted EBITDA was driven by a positive mix of price cost, which drove healthy margins, partially offset by a soft macro environment. Now let me turn to our cash flows. For the 13 weeks ended March 30, 2024, operating activities generated $12 million of cash as compared to $32 million in the year ago period. Capital expenditures were in line with our expectations, totaling $17.8 million for the quarter. This compared to $18.1 million in the prior year period. Free cash flow for the 13 weeks ended March 30, 2024, totaled a use of $6.1 million, compared to generating $13.4 million in the year ago period. After taking into consideration the Koch acquisition and our typical seasonal inventory build, this was in line with our expectations. Now let me turn to the balance sheet. We ended the first quarter of 2024 with $747.5 million of total net debt outstanding, an increase of $25.1 million from the end of 2023. We ended the first quarter of 2024 with approximately $242 million of liquidity, which consists of $212 million of available borrowings under a revolving credit facility and $31 million of cash and equivalents. Our net debt to trailing twelve months Adjusted EBITDA ratio at the end of the quarter was 3.2 times, compared to 3.3 times at the end of 2023, and a full turn better than 4.2 times a year ago. Looking forward, we maintain our expectation that we will end 2024 around 2.7 times net leverage, assuming we fall near the midpoint of our guidance. During the quarter, we also repriced our term note. In so doing, we lowered the interest rate spread by 36 basis points on our borrowing costs. Additionally, our first lien leverage ratio, as defined by the term loan credit agreement, has also dropped below 3 times following our Q1 results, which should result in another 25 basis points savings on the term note. All in, we expect to save about $2 million during 2024 as a result of these two reductions and are pleased with these savings considering the flattening of the forward curve. As Doug mentioned earlier, we are reiterating our full year 2024 guidance across all three metrics. We reiterate our full year net sales to be between $1.475 billion-$1.555 billion, with a midpoint of $1.515 billion. This midpoint assumes a 1% headwind from price, a 1% decrease from market volumes, a 2% lift from new business wins, and a 3% lift from the Koch acquisition. Altogether, the net sales midpoint implies a 2.8% increase over 2023. We are reiterating our full year 2024 adjusted EBITDA guidance to be between $230 million and $240 million, with a midpoint of $235 million. This midpoint represents an increase of about 7% versus 2023. We continue to expect our full year adjusted gross margins to come in above 45%, which is where we expect the business to perform over the longer term. Lastly, we are reiterating our full year 2024 free cash flow to be between $100 million-$120 million, with a midpoint of $110 million. This is slightly below our longer-term target as we over-indexed on free cash flow during 2023 due to our working capital benefit. Longer term, we expect normalized free cash flow to be around $130 million-$140 million for the next several years, starting in 2025, which is mainly driven by increased earnings with a minimal impact from working capital. The assumptions that have driven our guidance remain unchanged at this point and are available in our earnings call presentation. As we talked about on our last earnings call, if the market remains soft in 2024, our top line could look similar to 2023. If that is the case, we still feel very confident we will grow our EBITDA as we benefit from lower COGS and efficiencies as we continue to run our business well and control the controllables. Looking further out to a more healthy macro environment, we believe our longer-term growth algorithm remains intact. Historically, our business has seen organic growth of 6% per year and high single- to low double-digit organic adjusted EBITDA growth before M&A. And now that the M&A switch is turned on, we think long-term top line growth of high single- to low teens is realistic and adjusted EBITDA growth in the low- to mid-teens is achievable. With that, let me turn it back to Doug. Thanks, Rocky. As we navigate through this dynamic market landscape, I want to thank the Hillman team for their dedication and most importantly, for taking great care of our customers. Whether it's the seamless operation of our distribution centers, the tireless effort of our sales and service teams, or exceptional service provided by our customer support team, your commitment to our customer is commendable. Thank you. Our foremost focus and commitment moving forward is to strengthen our competitive moat, execute our growth strategy profitably, and maintain discipline across the business. We firmly believe that this approach will ensure Hillman's success in the years to come. With that, we extend our appreciation to our valued customers, dedicated associates, and supportive shareholders. This concludes our prepared remarks, and we'll begin the Q&A portion of the call. Tanya, please open the call for questions, if you would. Certainly. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question with one follow-up and hop back into queue. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will be coming from Reuben Garner of Benchmark. Your line is open. Thank you. Good morning, everybody. Hey, Reuben. So we've seen or heard big box destocking, or at least maybe not ramping purchasing seasonally like they normally would in a couple of categories. Can you talk about your markets and what you're kind of seeing and hearing, what's the inventory like in the channel? Any risk of destock as the year progresses? Yeah, I mean, I think, Reuben, the destocking makes total sense for most people because they ship, you know, to plan, and it goes through the DCs, and then when POS is slower, they've got too much. We don't have that problem because we ship direct to store, so there's no real pipe there, and there's nothing in the DC, so I'm not worried about that. Okay, great. And then, one of your larger customers made a splash into the pro distribution space, since we last spoke. I guess, can you talk about what your exposure is today to kind of, you know, the roofing or lumberyards or any other kind of pro categories? And maybe does this present an opportunity longer term for you to kind of play in that market in a bigger way? Yeah, I mean, I think, you know, it really strengthens the Depot's offering to serve that residential pro customer. You know, this SRS is a hell of a platform. You know, they focus right now on roofing and landscape and the pool contractors, so I wouldn't want to be in that business. But no, they're very strong. This is their dedication to the pro, and it's a big deal because they'll be able to leverage that. And really, we think it helps us because we have a great relationship with Depot, and as they grow, we think we will find ways to help them. Great. Congrats on the strong results, guys, and good luck going forward. Thanks, Reuben. One moment for our next question. Our next question will come from Matthew Bouley of Barclays. Your line is open. Good morning. You have Elizabeth Langan on for Matt today. I just wanted to ask, could you speak a little bit about your expectations around transport costs? I know that you said that you locked in your contract base rates. How much of that, you know, what does that reflect as far as your total freight costs? And would you be able to speak to the implications for gross margins through the rest of the year, or, you know, whether or not that could impact your gross margins into 2025? Yeah, so I'll start with, this is John Michael, I don't know if you hear. I'll start by answering the question around, you know, contract rates. So, you know, we've locked in our rates. As we mentioned, we ship well over 95% on contract, so we actually feel very good about our contracted rates for 2024. We feel like we're in a good position, and we're able to continue to flow our product. I'll let Rocky speak to the impact on margins. Yeah, I think, you know, Elizabeth, what we would tell you is consistent with what we said last quarter, is that, you know, we expect to be above historic margins for the full year. So those numbers, if you go back in time, were 44%-45%. We expect to be at or above that 45% for the remainder of the year, and that's driven by the mix of product, coupled with what we're seeing from freight. But you also have to understand, as we think about some of our product costs, they remain stubbornly high. So when, you know, products, as an example, get to the U.S., that inbound freight from our initial DC to... I should say, actually, from the port to our DCs, coupled with outbound, is still high and continues to go up. We continue to see labor rates go up. So it's a nice balance, but I would say, on balance, we're happy that we'll be consistent with what we've said, which is we'll remain at or above that 45% rate. Okay, thank you. And then as you're thinking about, you know, kind of volumes through the second half, you know, with rates kind of seeming to be higher for longer, you know, how are you thinking about the trends there, you know, into 2Q, and through the second half, relative to, you know, what you were thinking previously? Yeah, you know, toward the end of the year and when we talked about 2024, Elizabeth, we basically said down 4 to plus 1. You know, we're certainly hoping that it does better than that, but we set everything up this year with that assumption, and at this point, you might see that get a little better toward the end of the year. But we're planning our cost structure and the way we're gonna run our business with it continuing to be in that range. Yeah, I think the only thing I would add is we've been really purposeful about what we've said, which is even in that kind of down 4 market, we still expect to generate nice profitability above prior year because of what we see from a cost perspective and our ability to manage our costs below, you know, the gross profit line. Yeah, this is a situation where it really does help not to be loaded up with a bunch of manufacturing operations and fixed costs, because you can be more agile with volume than a lot of companies can. So we like our position. Great. Thank you for all the color. Sure. One moment for our next question. Now our next question will be coming from Lee Jagoda of CJS Securities. Your line's open. Hey, good morning. Hey, Lee. Good morning, Lee. So you had mentioned earlier that your, I guess, your sales associates are now gonna be working on other kiosks that are not yours. Can you speak to exactly, you know, what kind of kiosks that they're servicing, the leverage in the model related to this, and then maybe just the, like, some sense of the addressable market that you're looking at or going after here? Yeah, Lee, we've signed NDAs and contracts with folks, so I can't go into detail other than to say, what's exciting about this is it's in retailers that we're already in, and one company has a glide path of very solid kiosk growth. The other company is just getting started and has big ambitions. So both are exciting and Rocky's happy because we're gonna grow RDS profitability without capital. It's a nice model to flex, and what I have been really pleasantly surprised with is, as they've kicked the tires on us, they can see that we could also refurb their machines at Tempe. We could certainly have K2 be their platform if they so chose, and then we could make their machines if they wanted us to. And so, pretty interesting opportunity for us. You know, I've been talking about it for a bit, but we've just signed up two, and we'll see. Yeah. The only thing, Lee, I would add is it to the second part of your question, we would expect that it would be at or above, you know, incremental to fleet margin in the RDS business. Otherwise, you know, we wouldn't be looking at it. No, that... I would assume that would have been correct. I guess, just, I mean, can we get a sense for the categories that these kiosks are in and the installed base of the two customers combined today? You know, Lee, if I give you any piece, you'll be able to figure things out, so I'd probably... you know, This is an important new partnership. I'm gonna stay away from that. I apologize. Okay. And then just one more on M&A, Doug. It sounds like you guys have started this, you know, the flywheel, now that we've got the leverage back in line. What are the categories you guys are focused on in the short and medium term? And maybe Rocky, just remind us how you think about return metrics when you look at M&A. Yeah, I think if you think about categories, it's really interesting. There are a half a dozen that we think make sense. We've got about 7 companies that we're looking at right now. And the funny part of it is, every time we open up a book or a deck, we just laugh because it's in that same ZIP code of EBITDA that just makes total sense for us. And those are kind of, you know, the Koch-type sweet spot. We've got about three that I feel good, and I think, Lee, you know, my sense is you kind of bat what you'd bat in the Major Leagues if you were a Hall of Fame. If you've got three, you'll probably get one that you're working on. It's about 300%, you know, out of 1,000. So I feel good about that, and I think, Rocky, maybe you can touch on the returns. Yeah, I mean- The arbitration's there. Yeah. I mean, if you think about these, we, as we've said, you know, we expect to pay mid- to high- single-digit type multiples for these businesses, Lee. And, you know, as we run return on investment metrics, they're all well in excess, you know, high teens-low 20s at this point. And I—you know, we don't think there's a better way to spend capital, particularly if they fit the moat, not that sizable to where they impact our leverage. And, you know, again, as you've heard me say many times, the real exciting piece of these deals, like a Koch acquisition, is in year two, because they help us turbocharge the organic growth. You heard JMA commit to up 20% Koch. He would be very disappointed if we weren't next year. That's a prime example. From a guy that just took his training wheels off, which is good. I appreciate that. Yeah, excited. There you go. Go big or go home. That's right. Well, thank you, guys. One moment for our next question. Our next question will be coming from Stephen Volkmann of Jefferies. Stephen, your line is open. Hi, good morning, guys. Sorry if I missed this. Are you able to say what you're expecting Koch to contribute on the top line this year? Yeah, yeah. Koch, Koch, we expect to be, call it $40 million-$45 million of top line revenue. Got it. Okay. And then also, since the flywheel seems to be starting up here again, how should we think about these acquisitions? Are these—do they come in at kind of lower margins, and then you get a chance to sort of buff them up? Or are these kind of niche-y, high-margin businesses that you don't really have to sort of fix up? How do we think about that? Yeah, let me start, Steve. I mean, the interesting thing is, the gross margin can vary depending on structure and how they get to market, just like PS varies from HS, but the EBITDA margin tends to be similar to our fleet on the ones that we're looking at right now. Okay, great. That's helpful. And then finally, I think you mentioned in the outset that the price headwind this quarter was, like, 40 basis points or something. I think I got that. But just, how's that playing out relative to expectations? Yeah, I mean, I think it's playing out like we thought. You know, we're working with our customers on that. T he great news about this industry and our category is that it's not an elastic category. It's not, you have to be at a price point. And, you know, if price reductions are given, the retailer uses that to help their margins. You don't normally see it show up at retail. So that's really a, I think, a structural thing that's helpful. But we're working with our customers, and as we said, I think, Rocky, for the year, about 1%. Yeah, that's what inside the guide, Stephen, is 1%, 40 basis points in the first quarter. And obviously, as you think about different categories, different customers, it's different rates, but that's what it blends out to across the base. Understood. Thank you. Thank you. One moment for our next question. Our next question will be coming from Brian McNamara of Canaccord Genuity. Your line is open. Hey, good morning, guys. Thanks for taking the questions. First, I'm curious how sustainable the impressive Q1 gross margins are in the context of some of your retail partners being pretty aggressive about asking for price back? How should we think about the cadence of gross margins for Q2 and the balance of the year? Yeah, again, Brian, as we said, I mean, it's our expectation that the gross margin remains above that 45% for the full year. The back half, we would anticipate, would be a little lower just because of the timing of some of the price give backs. But, you know, as we think about the whole year, we feel really good about where we are. We feel good about where we are with our customers, and that, you know, we've been fair, and we've done the right thing, and that we'll hang on to most of the price that we have and come in at or slightly better than what our expectations are. Got it. And then maybe another one on M&A. Is the restart of this M&A flywheel simply a function of just seeing more opportunities in the marketplace, your overall comfort with your current leverage, or a combination of both? And can you remind us of your capital allocation priorities and how you balance M&A opportunities while keeping leverage in check, particularly for investors who might be a little more sensitive to the leverage level? Yeah, I think first part of that, Brian, is the opportunities have been there because there hasn't really been a debt market for the private equity folks. We've just been lucky that we haven't lost any, and continue to, you know, talk to the folks about it. Now that we're ready, and that answer to your question is, our leverage is at a point and heading in a direction where I'm very comfortable now, us doing that. You know, the debt markets still haven't really opened up much, so we feel like we're in a really nice spot right now. And I think what the entrepreneurs have learned is that private equity comes and goes with the debt markets, and they would much rather entrust us with their business, I think, than they would private equity. I think we've got a real advantage, and I think timing's good for us right now, but it, it's our leverage that really is determining that. Yeah, I mean, and then just to add on with capital allocation, you know, our first priority is always gonna be CapEx, if we think, you know, there, there's the right machine builds, as an example, or racking to do with a new customer. Those are always high returns, so we're gonna spend money there first. Our next is we're either gonna pay down debt, but for when there is opportunities around M&A, but you're gonna see us be very prudent around that. Koch was a great example, really didn't move the leverage needle and has provided a great platform for us to grow the business at a reasonable multiple. If we can find, you know, a couple more of those over the remainder of this year, you'll see us do those. But I think that doesn't bring us off our goal and the expectation that the Street has, that we'll get the leverage below three, even with those acquisitions. Got it. Thanks a lot, guys. Best of luck. Thanks, Brian. Thank you. One moment for our next question. Our next question will be coming from Ryan Merkel of William Blair. Your line is open. Hey, good morning, everyone. Thanks for taking the question. Hey, Doug, can you talk about the start to 2Q? Did April come in, you know, in line with what you were thinking? And should we assume normal seasonality into 2Q, up sort of 10%-11% from 1Q? Yeah, I mean, I think, you know, what we've seen so far is about the continuation. I mean, basically for the year, Ryan, January was tricky for everybody. It improved slightly off of that, but has not jumped from there. It's just kind of what we had expected, and that's kind of how we're planning it. So you'll see some seasonality, as we have historically, but I, you know, I think it's... I still think our down 4 plus 1 is not a bad peg for the year, unless the rates change and the consumer starts to feel more confident than they do right now. Yeah, the only thing I'd add, Ryan, the only thing I would add there, it's Rocky, is that, yeah, as you think about Q1 to Q2, we do believe we'll see kind of the seasonal jump, and then the same thing from a profitability perspective, right? Our second and third quarters are always our most profitable because, you know, we're putting more product through the machine. Perfect. Got it. Okay. And then, just a question on RDS. That was where you missed our model in 1 Q, and one of the comments was it's impacted more than the other businesses. You know, I'd just like to dig into that a little bit, 'cause that felt like a business where you were taking share, putting a lot of machines out there. You know, why isn't RDS doing better, and why is it, why is it more impacted than the other businesses? Ryan, it's a great question, and we're disappointed with RDS. I would say the first answer to your question is, if you look at, for example, engraving in pet, you know, 70% of pet-owning households owned a pet in 2020, and now it's 63%, and dog ownership's down 6%. I mean, if you look at PetSmart, Petco, anybody in the pet side, they're selling food, they're not selling the trinkets and trash and all the other things that go with it, because it's discretionary. So footsteps do also drive that, and footsteps do drive people going into, you know, cutting the key. And we know footsteps have been down 11, 8, and 8 year to date. That has impact. So that's what we mean when we say it has impact. I think the other thing is used car sales. I mean, we really like our, our business on Smart Fob, but when used car sales are, are where they are, people just aren't going out to get the fob. And so not an excuse. Our biggest issue is the same one as I said last time. You've basically got a situation where, the folks in Bentonville have relocated from the front of the store in the front vestibule or the front wall by the register. They've taken machines and kiosks, and they've moved them to the auto center, the sporting goods, and the paint department. And quite honestly, you could be a consumer there in the future, you could make four or five visits to that store and may not know they cut keys, versus you'd run into it, either on your way out or your way in. I don't disagree with McMillon’s strategy there. I think it's probably a good one for them, but it doesn't help the kiosk business. So we should pick up those keys at our other retailers, but that's our biggest problem, and it has been our biggest problem, and we've got to let that thing sort out as they move those machines, and we see what the new normal is there. So, you know, it's a little worse than we thought, but as we said, for 2022, that's why we're really pushing the 3.5, so the capabilities are different for the consumer on that MinuteKey machine. But that's what's going on there. Yeah. Hey, Doug- Okay. Let me, let me add just real quick there. When you think about RDS, so what Doug said, the entire business is impacted either by discretionary, we believe, or by existing homes. When you think about our other businesses, repair, maintenance, remodel, the repair and maintenance is done pretty much regardless of what is happening with existing home sales or discretionary spending. It's the remodel that's gonna have the bigger impact. So again, to your question about why a bigger impact in RDS, it's because the entire business is impacted by these macro factors, whereas our Hardware, Protective Canadian businesses are parts are, but not all. Very helpful. Thank you. Pass it on. Thanks, Ryan. Thanks. One moment for our next question, which will come from Quinn Fredrickson of Baird. Quinn, your line is open. Hi, good morning, guys. Hey, Quinn. Good morning. First, just wanted to ask on SG&A. Rocky, I think you said around 30% of sales the rest of the year, if I got that right. Is that where you were in 1Q, maybe some of the one-timers that you called out? Just any color there? Yeah, we were a little bit over that in the first quarter, but that's where we expect the remainder of the year to be. Okay. Thank you. Very helpful. And then secondly, the Canada margin strength in the quarter, can you maybe unpack just what drove that and kind of the sustainability from here? Yeah, for them, they've picked up some new business and the margin profile is better than their fleet. They've also started, and it's one of the bright spots for our key business. They've started to install MinuteKey machines, which will help their mix. And then, you know, Quinn, I'd love to say they smoked it, but their first quarter in 2023 was underwhelming, so it was an easier comp. Great. All right. Thank you, guys. Thanks, Quinn. Thanks. Again, as a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. I'm showing no further questions. I would now like to turn the call back to Mr. Cahill for closing comments. Thanks again, everyone, for joining us this morning. We look forward to updating you on our progress this summer, and congrats to JMA on getting through his first earnings call. Good job, bud. Thanks, Doug. Thank you, everyone. You may now disconnect.