0001822492false00018224922024-05-072024-05-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
__________________________
  
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): May 7, 2024
hillmanlogo.jpg 
Hillman Solutions Corp.
(Exact name of registrant as specified in its charter)
Delaware 001-39609 85-2096734
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation)   Identification No.)
1280 Kemper Meadows Drive
Cincinnati, Ohio 45240
(Address of principal executive offices)

Registrant’s telephone number, including area code: (513) 851-4900

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))  

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common Stock, par value $0.0001 per shareHLMNThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 




Item 2.02 Results of Operations and Financial Condition.

On May 7, 2024, Hillman Solutions Corp. (the “Company”) issued a press release, furnished as Exhibit 99.1 and incorporated herein by reference, announcing the Company's selected summary financial results for its thirteen weeks ended March 30, 2024.

The information provided pursuant to Item 2.02, including the exhibit attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 7, 2024
Hillman Solutions Corp.


By:
/s/ Robert O. Kraft
Name:
Robert O. Kraft
Title:
Chief Financial Officer




hillmanlogo.jpg
Hillman Reports First Quarter 2024 Results
CINCINNATI, May 7, 2024 -- Hillman Solutions Corp. (Nasdaq: HLMN) (the “Company” or “Hillman”), a leading provider of hardware products and merchandising solutions, reported financial results for the thirteen weeks ended March 30, 2024.
First Quarter 2024 Highlights (Thirteen weeks ended March 30, 2024)
•Net sales increased 0.2% to $350.3 million compared to $349.7 million in the prior year quarter
•Net loss totaled $(1.5) million, or $(0.01) per diluted share, compared to net loss of $(9.1) million, or $(0.05) per diluted share, in the prior year quarter
•Adjusted diluted EPS1 was $0.10 per diluted share compared to $0.06 per diluted share in the prior year quarter
•Adjusted EBITDA1 totaled $52.3 million compared to $40.2 million in the prior year quarter
•Net cash provided by operating activities was $11.7 million compared to $31.5 million in the prior year quarter
•Free Cash Flow1 totaled $(6.1) million compared to $13.4 million in the prior year quarter
Balance Sheet and Liquidity at March 30, 2024
•Gross debt was $778.2 million, compared to $760.9 million on December 30, 2023; net debt1 outstanding was $747.5 million, compared to $722.4 million on December 30, 2023
•Liquidity available totaled approximately $242.3 million, consisting of $211.6 million of available borrowing under the revolving credit facility and $30.7 million of cash and equivalents
•Net debt1 to trailing twelve month Adjusted EBITDA improved to 3.2x from 3.3x at the end of 2023
Management Commentary
"We started 2024 off on the right foot with strong bottom-line results driven by healthy margins," stated Doug Cahill, Chairman, President, and Chief Executive Officer of Hillman. “Hillman’s differentiated strategy and competitive moat continue to demonstrate resilience in the current market environment. Our performance has been the result of our operational execution, our commitment to taking care of our customers and the resilience of our end markets."
"Early in the first quarter, we finalized the acquisition of Koch Industries, which marks an important milestone for Hillman. This not only expands our product portfolio and enhances
1) Denotes Non-GAAP metric. For additional information, including our definitions, use of, and reconciliations of these metrics to the most directly comparable financial measures under GAAP, please see the reconciliations toward the end of the press release.
1

our leading position in the market, but it also marks our first recent acquisition of what we expect to be many over the coming years. M&A will be an important part of our growth strategy as we believe we can make accretive acquisitions and then leverage our moat to create additional value for our customers and shareholders.
"As we celebrate our 60th year in business in 2024, we remain steadfast in our commitment to taking care of our customers, our people, and driving profitable growth for years to come. With a solid foundation in place and a focused strategy, we are confident in our ability to deliver strong results throughout 2024 and beyond."

Full Year 2024 Guidance - Reiterated
Hillman reiterated the following guidance based on its current view of the market and its performance expectations during the fifty-two weeks ended December 28, 2024. This guidance was originally provided on February 22, 2024 with Hillman's fourth quarter 2023 results.
Full year 2024 Guidance
Net Sales$1.475 to $1.555 billion
Adjusted EBITDA1
$230 to $240 million
Free Cash Flow1
$100 to $120 million
First Quarter 2024 Results Presentation
Hillman plans to host a conference call and webcast presentation today, May 7, 2024, at 8:30 a.m. Eastern Time to discuss its results. Chairman, President, and Chief Executive Officer Doug Cahill, Chief Financial Officer Rocky Kraft, and Chief Operating Officer Jon Michael Adinolfi will host the results presentation.
Date: Tuesday, May 7, 2024
Time: 8:30 a.m. Eastern Time
Listen-Only Webcast: https://edge.media-server.com/mmc/p/ogiyyfvu/
A webcast replay will be available approximately one hour after the conclusion of the call using the link above.
Hillman’s quarterly presentation and Form 10-Q are expected to be filed with the SEC and posted to its Investor Relations website, https://ir.hillmangroup.com, prior to the webcast presentation.
About Hillman Solutions Corp.
Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman Solutions Corp. (“Hillman”) and its subsidiaries are leading North American providers of complete hardware solutions, delivered with outstanding customer service to over 46,000 locations. Hillman is celebrating 60 years of service this year, a significant milestone achieved by maintaining strong company values, an innovative culture, and delivering a “small business” experience with “big business” efficiency. Hillman designs innovative product and merchandising solutions for complex categories that deliver an outstanding customer experience to home improvement centers,
1) Denotes Non-GAAP metric. For additional information, including our definitions, use of, and reconciliations of these metrics to the most directly comparable financial measures under GAAP, please see the reconciliations toward the end of the press release.
2

mass merchants, national and regional hardware stores, pet supply stores, and OEM & industrial customers. For more information on Hillman, visit www.hillmangroup.com.
Forward Looking Statements
All statements made in this press release that are consider to be forward-looking are made in good faith by the Company and are intended to qualify for the safe harbor from liability established by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. You should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," “target”, “goal”, "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable economic conditions that may affect operations, financial condition and cash flows including spending on home renovation or construction projects, inflation, recessions, instability in the financial markets or credit markets; (2) increased supply chain costs, including raw materials, sourcing, transportation and energy; (3) the highly competitive nature of the markets that we serve; (4) the ability to continue to innovate with new products and services; (5) direct and indirect costs associated with the May 2023 ransomware attack, and our receipt of expected insurance receivables associated with that cyber security incident; (6) seasonality; (7) large customer concentration; (8) the ability to recruit and retain qualified employees; (9) the outcome of any legal proceedings that may be instituted against the Company; (10) adverse changes in currency exchange rates; or (11) regulatory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and readers should also refer to those risks that are included in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K filed on February 22, 2024. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements.
Except as required by applicable law, the Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this communication to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
Contact:
Michael Koehler
Vice President of Investor Relations & Treasury
513-826-5495
IR@hillmangroup.com
1) Denotes Non-GAAP metric. For additional information, including our definitions, use of, and reconciliations of these metrics to the most directly comparable financial measures under GAAP, please see the reconciliations toward the end of the press release.
3

HILLMAN SOLUTIONS CORP.
Condensed Consolidated Statement of Net Loss, GAAP Basis
(dollars in thousands) Unaudited

Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Net sales$350,305 $349,707 
Cost of sales (exclusive of depreciation and amortization shown separately below)183,434 204,509 
Selling, warehouse, general and administrative expenses118,565 111,065 
Depreciation16,338 16,705 
Amortization15,254 15,572 
Other expense, net410 767 
Income from operations16,304 1,089 
Interest expense, net15,271 18,077 
Refinancing costs3,008 — 
Loss before income taxes(1,975)(16,988)
Income tax benefit(483)(7,856)
Net loss$(1,492)$(9,132)
Basic loss per share$(0.01)$(0.05)
Weighted average basic shares outstanding195,365 194,548 






















4

HILLMAN SOLUTIONS CORP.
Condensed Consolidated Balance Sheets
(dollars in thousands)
Unaudited
 March 30, 2024December 30, 2023
ASSETS
Current assets:
Cash and cash equivalents$30,672 $38,553 
Accounts receivable, net of allowances of $2,433 ($2,770 - 2023)
127,332 103,482 
Inventories, net404,060 382,710 
Other current assets25,130 23,235 
Total current assets587,194 547,980 
Property and equipment, net of accumulated depreciation of $345,363 ($333,875 - 2023)
205,025 200,553 
Goodwill828,279 825,042 
Other intangibles, net of accumulated amortization of $485,751 ($470,791 - 2023)
643,359 655,293 
Operating lease right of use assets87,334 87,479 
Other assets15,155 14,754 
Total assets$2,366,346 $2,331,101 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$156,827 $140,290 
Current portion of debt and financing lease liabilities10,061 9,952 
Current portion of operating lease liabilities15,288 14,407 
Accrued expenses:
Salaries and wages16,083 22,548 
Pricing allowances8,002 8,145 
Income and other taxes5,981 6,469 
Interest864 343 
Other accrued liabilities23,059 20,966 
Total current liabilities236,165 223,120 
Long-term debt751,315 731,708 
Deferred tax liabilities131,636 131,552 
Operating lease liabilities78,852 79,994 
Other non-current liabilities7,086 10,198 
Total liabilities$1,205,054 $1,176,572 
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.0001 par, 500,000,000 shares authorized, 195,942,200 issued and outstanding at March 30, 2024 and 194,913,124 issued and outstanding at December 30, 2023
20 20 
Additional paid-in capital1,427,120 1,418,535 
Accumulated deficit(237,698)(236,206)
Accumulated other comprehensive loss(28,150)(27,820)
Total stockholders' equity1,161,292 1,154,529 
Total liabilities and stockholders' equity$2,366,346 $2,331,101 



5


HILLMAN SOLUTIONS CORP.
Condensed Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited

 Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Cash flows from operating activities:
Net loss$(1,492)$(9,132)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization31,592 32,277 
Deferred income taxes(386)(2,594)
Deferred financing and original issue discount amortization1,330 1,332 
Stock-based compensation expense2,829 2,637 
Loss on debt restructuring3,008 — 
Cash paid to third parties in connection with debt restructuring (1,554)— 
Loss on disposal of property and equipment56 82 
Change in fair value of contingent consideration332 1,715 
Changes in operating items:
Accounts receivable, net(25,095)(33,963)
Inventories, net(2,341)38,871 
Other assets(4,014)(5,934)
Accounts payable14,632 11,406 
Other accrued liabilities(7,221)(5,190)
Net cash provided by operating activities11,676 31,507 
Net cash from investing activities
Acquisition of business, net of cash received(23,956)(300)
Capital expenditures(17,759)(18,111)
Other investing activities(67)(113)
Net cash used for investing activities(41,782)(18,524)
Cash flows from financing activities:
Repayments of senior term loans(2,128)(2,128)
Financing fees(33)— 
Borrowings on revolving credit loans45,000 39,000 
Repayments of revolving credit loans(27,000)(44,000)
Principal payments under finance lease obligations(875)(494)
Proceeds from exercise of stock options5,899 — 
Payments of contingent consideration (72)(1,079)
Other financing activities(380)(58)
Net cash provided by (used for) financing activities20,411 (8,759)
Effect of exchange rate changes on cash1,814 (555)
Net (decrease) increase in cash and cash equivalents(7,881)3,669 
Cash and cash equivalents at beginning of period38,553 31,081 
Cash and cash equivalents at end of period$30,672 $34,750 

6

Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
The Company uses non-GAAP financial measures to analyze underlying business performance and trends. The Company believes that providing these non-GAAP financial measures enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance. These non-GAAP financial measures are provided as supplemental information to the financial measures presented in this press release that are calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures determined or calculated in accordance with GAAP. The Company’s definitions of its non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, reconciliations to GAAP financial measures are not provided for forward-looking non-GAAP measures. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.
Non-GAAP financial measures such as consolidated adjusted EBITDA and Adjusted Diluted Earnings per Share (EPS) exclude from the relevant GAAP metrics items that neither relate to the ordinary course of the Company’s business, nor reflect the Company’s underlying business performance.

Reconciliation of Adjusted EBITDA (Unaudited)
(dollars in thousands)
Adjusted EBITDA is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our businesses as well as to assist in the evaluation of underlying trends in our businesses. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital and tax structures, as our management excludes these results when evaluating our operating performance. Our management use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies.

7



Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Net loss$(1,492)$(9,132)
Income tax benefit(483)(7,856)
Interest expense, net15,271 18,077 
Depreciation16,338 16,705 
Amortization15,254 15,572 
EBITDA$44,888 $33,366 
Stock compensation expense2,829 2,637 
Restructuring and other (1)
991 1,408 
Litigation expense (2)
— 260 
Transaction and integration expense (3)
274 800 
Change in fair value of contingent consideration332 1,715 
Refinancing costs (4)
3,008 — 
Total adjusting items 7,434 6,820 
Adjusted EBITDA$52,322 $40,186 
(1)Includes consulting and other costs associated with severance related to our distribution center relocations and corporate restructuring activities.
(2)Litigation expense includes legal fees associated with our litigation with Hy-Ko Products Company LLC.
(3)Transaction and integration expense includes professional fees and other costs related to the Koch Industries, Inc acquisition and the CCMP secondary offering in 2023.
(4)In the first quarter of 2024, we entered into a Repricing Amendment (2024 Repricing Amendment) on our existing Senior Term Loan due July 14, 2028.

Reconciliation of Adjusted Diluted Earnings Per Share
(in thousands, except per share data)
Unaudited

We define Adjusted Diluted EPS as reported diluted EPS excluding the effect of one-time, non-recurring activity and volatility associated with our income tax expense. The Company believes that Adjusted Diluted EPS provides further insight and comparability in operating performance as it eliminates the effects of certain items that are not comparable from one period to the next. The following is a reconciliation of reported diluted EPS from continuing operations to Adjusted Diluted EPS from continuing operations:

8



Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Reconciliation to Adjusted Net Income
Net loss$(1,492)$(9,132)
Remove adjusting items (1)
7,434 6,820 
Remove amortization expense15,254 15,572 
Remove tax benefit on adjusting items and amortization expense (2)
(2,236)(1,661)
Adjusted Net Income$18,960 $11,599 
Reconciliation to Adjusted Diluted Earnings per Share
Diluted Earnings per Share $(0.01)$(0.05)
Remove adjusting items (1)
0.04 0.03 
Remove amortization expense0.08 0.08 
Remove tax benefit on adjusting items and amortization expense (2)
(0.01)(0.01)
Adjusted Diluted Earnings per Share $0.10 $0.06 
Reconciliation to Adjusted Diluted Shares Outstanding
Diluted Shares, as reported195,365 194,548 
Non-GAAP dilution adjustments:
Dilutive effect of stock options and awards2,287 845 
Adjusted Diluted Shares197,652 195,394 
Note: Adjusted EPS may not add due to rounding.
(1)Please refer to "Reconciliation of Adjusted EBITDA" table above for additional information on adjusting items. See "Per share impact of Adjusting Items" table below for the per share impact of each adjustment.
(2)We have calculated the income tax effect of the non-GAAP adjustments shown above at the applicable statutory rate of 25.1% for the U.S. and 26.2% for Canada except for the following items:
a.The tax impact of stock compensation expense was calculated using the statutory rate of 25.1%, excluding certain awards that are non-deductible.
b.The tax impact of acquisition and integration expense was calculated using the statutory rate of 25.1%, excluding certain charges that were non-deductible.
c.Amortization expense for financial accounting purposes was offset by the tax benefit of deductible amortization expense using the statutory rate of 25.1%.
Per Share Impact of Adjusting Items
Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Stock compensation expense$0.01 $0.01 
Restructuring and other costs0.010.01
Litigation expense0.000.00
Transaction and integration expense 0.000.00
Change in fair value of contingent consideration— 0.01
Refinancing costs0.02— 
Total adjusting items$0.04 $0.03 
Note: Adjusting items may not add due to rounding.
9

Reconciliation of Net Debt
We define Net Debt as reported gross debt less cash on hand. Net debt is not defined under U.S. GAAP and may not be computed the same as similarly titled measures used by other companies. The Company believes that Net Debt provides further insight and comparability into liquidity and capital structure. The following is a the calculation of Net Debt:
March 30, 2024December 30, 2023
Revolving loans$18,000 $— 
Senior term loan, due 2028749,725 751,852 
Finance leases and other obligations10,453 9,097 
Gross debt $778,178 $760,949 
Less cash 30,672 38,553 
Net debt$747,506 $722,396 
Reconciliation of Free Cash Flow
We calculate free cash flow as cash flows from operating activities less capital expenditures. Free cash flow is not defined under U.S. GAAP and may not be computed the same as similarly titled measures used by other companies. We believe free cash flow is an important indicator of how much cash is generated by our business operations and is a measure of incremental cash available to invest in our business and meet our debt obligations.
Thirteen Weeks Ended
March 30, 2024		Thirteen Weeks Ended
April 1, 2023
Net cash provided by operating activities$11,676 $31,507 
Capital expenditures(17,759)(18,111)
Free cash flow$(6,083)$13,396 
Source: Hillman Solutions Corp
###
10
Quarterly Earnings Presentation Q1 2024 May 7, 2024

 
2Earnings Presentation Q1 2024 PresBuilder Placeholder - Delete this box if you see it on a slide, but DO NOT REMOVE this box from the slide layout All statements made in this presentation that are consider to be forward-looking are made in good faith by the Company and are intended to qualify for the safe harbor from liability established by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. You should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," “target”, “goal”, "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable economic conditions that may affect operations, financial condition and cash flows including spending on home renovation or construction projects, inflation, recessions, instability in the financial markets or credit markets; (2) increased supply chain costs, including raw materials, sourcing, transportation and energy; (3) the highly competitive nature of the markets that we serve; (4) the ability to continue to innovate with new products and services; (5) direct and indirect costs associated with the May 2023 ransomware attack, and our receipt of expected insurance receivables associated with that cyber security incident; (6) seasonality; (7) large customer concentration; (8) the ability to recruit and retain qualified employees; (9) the outcome of any legal proceedings that may be instituted against the Company; (10) adverse changes in currency exchange rates; or (11) regulatory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and readers should also refer to those risks that are included in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K filed on February 22, 2024. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements. Except as required by applicable law, the Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this communication to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Presentation of Non-GAAP Financial Measures In addition to the results provided in accordance with U.S. generally accepted accounting principles (“GAAP”) throughout this presentation the company has provided non-GAAP financial measures, which present results on a basis adjusted for certain items. The company uses these non-GAAP financial measures for business planning purposes and in measuring its performance relative to that of its competitors. The company believes that these non- GAAP financial measures are useful financial metrics to assess its operating performance from period-to-period by excluding certain items that the company believes are not representative of its core business. These non-GAAP financial measures are not intended to replace, and should not be considered superior to, the presentation of the company’s financial results in accordance with GAAP. The use of the non-GAAP financial measures terms may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. These non-GAAP financial measures are reconciled from the respective measures under GAAP in the appendix below. The company is not able to provide a reconciliation of the company’s non-GAAP financial guidance to the corresponding GAAP measures without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a reconciliation such as certain non-cash, nonrecurring or other items that are included in net income and EBITDA as well as the related tax impacts of these items and asset dispositions / acquisitions and changes in foreign currency exchange rates that are included in cash flow, due to the uncertainty and variability of the nature and amount of these future charges and costs. Forward Looking Statements

 
3Earnings Presentation Q1 2024 • Net sales increased 0.2% to $350.3 million versus Q1 2023 ◦ Hardware Solutions increased 4.6% ◦ Canada up 0.5% ◦ Protective Solution decreased (6.9)% ◦ Robotics and Digital Solutions ("RDS") down (9.2)% • GAAP net loss totaled $(1.5) million, or $(0.01) per diluted share, compared to net loss of $(9.1) million, or $(0.05) per diluted share, in Q1 2023 • Adjusted Gross Margins were 47.6% compared to 41.5% in Q1 2023 • Adjusted EBITDA totaled $52.3 million compared to $40.2 million in Q1 2023 • Adjusted EBITDA margins were 14.9% compared to 11.5% in Q1 2023 • Net Debt / Adjusted EBITDA (ttm): 3.2x at quarter end, improved from 3.3x from December 30, 2023 Q1 2024 Financial Review Please see reconciliation tables in the Appendix of this presentation for non-GAAP metrics. Highlights for the 13 Weeks Ended March 30, 2024

 
4Earnings Presentation Q1 2024 Q1 2024 Operational Review Highlights for the 13 Weeks Ended March 30, 2024 • Acquired and successfully integrated Koch Industries into Hillman ◦ Acquisition marks Hillman's entrance into rope and chain ◦ Signals Hillman is actively pursuing accretive M&A opportunities that leverage its unique moat • Inventories normalized - maintained appropriate inventory levels following supply chain disruption that led to excess inventory levels (which peaked in Q2 2022; normalized in Q4 2023) • Reiterated full year 2024 guidance

 
5Earnings Presentation Q1 2024 Quarterly Financial Performance Adjusted EBITDA (millions $ and % of Net Sales) Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Adjusted Gross Margin in the Appendix of this presentation. Not to scale. Top & Bottom Line (vs Q1 2023) Net Sales (millions $) Adjusted Gross Margin (millions $ and % of Net Sales) $40.2 $52.3 Q1 2023 Q1 2024 14.9%11.5% $145.2 $166.9 Q1 2023 Q1 2024 $349.7 $350.3 Q1 2023 Q1 2024 47.6% 41.5%

 
6Earnings Presentation Q1 2024 Hardware & Protective Q1 2023 Q1 2024 Δ Thirteen Weeks Ended 4/1/2023 3/30/2024 Comments Revenues $253,851 $259,874 2.4% Driven by new business and Koch acquistion Adjusted EBITDA $18,879 $32,266 70.9% Margin expansion from price/cost dynamic Margin (Adj. EBITDA/Net Sales) 7.4% 12.4% 500 bps Robotics & Digital Q1 2023 Q1 2024 Δ Thirteen Weeks Ended 4/1/2023 3/30/2024 Comments Revenues $61,066 $55,472 (9.2)% Soft volumes across RDS Adjusted EBITDA $19,524 $17,013 (12.9)% Mix of product sales Margin (Adj. EBITDA/Net Sales) 32.0% 30.7% (130) bps Canada Q1 2023 Q1 2024 Δ Thirteen Weeks Ended 4/1/2023 3/30/2024 Comments Revenues $34,790 $34,959 0.5% Driven by new business Adjusted EBITDA $1,783 $3,043 70.7% Margin expansion from price/cost dynamic Margin (Adj. EBITDA/Net Sales) 5.1% 8.7% 360 bps Consolidated Q1 2023 Q1 2024 Δ Thirteen Weeks Ended 4/1/2023 3/30/2024 Revenues $349,707 $350,305 0.2% Adjusted EBITDA $40,186 $52,322 30.2% Margin (Adj. EBITDA/Net Sales) 11.5% 14.9% 340 bps Performance by Segment (Q1) Please see reconciliation of Adjusted EBITDA to Net Income in the Appendix of this presentation. Figures in Thousands of USD unless otherwise noted.

 
7Earnings Presentation Q1 2024 Hardware & Protective Robotics & Digital Canada Total Revenue Thirteen Weeks Ended March 30, 2024 Fastening and Hardware $214,390 $— $31,589 $245,979 Personal Protective 45,484 — 1,408 46,892 Keys and Key Accessories — 43,637 1,952 45,589 Engraving and Resharp — 11,835 10 11,845 Total Revenue $259,874 $55,472 $34,959 $350,305 Revenue by Product Category (Q1) Hardware & Protective Robotics & Digital Canada Total Revenue Thirteen Weeks Ended April 1, 2023 Fastening and Hardware $204,974 $— $31,221 $236,195 Personal Protective 48,877 — 1,613 50,490 Keys and Key Accessories — 48,548 1,941 50,489 Engraving and Resharp — 12,518 15 12,533 Total Revenue $253,851 $61,066 $34,790 $349,707 Figures in Thousands of USD unless otherwise noted.

 
8Earnings Presentation Q1 2024 Total Net Leverage (Net Debt / TTM Adj. EBITDA) Capital Structure March 30, 2024 ABL Revolver ($212 million capacity) $18.0 Term Note $749.7 Finance Leases and Other Obligations $10.5 Total Debt $778.2 Cash $30.7 Net Debt $747.5 TTM Adjusted EBITDA $231.5 Net Debt/ TTM Adjusted EBITDA 3.2x Leverage Continues to Improve Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Net Debt in the Appendix of this presentation. Figures in Millions of USD unless otherwise noted. 4.2x 4.0x 3.7x 3.3x 3.2x 4/ 01 /2 02 3 07 /0 1/2 02 3 09 /3 0/ 20 23 12 /3 0/ 20 23 03 /3 0/ 20 24 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x

 
9Earnings Presentation Q1 2024 2023 Outlook & Guidance (in millions USD) Full Year 2024 Guidance Range Midpoint Revenues $1.475 to $1.555 billion $1.515 billion Adjusted EBITDA $230 to $240 million $235 million Free Cash Flow $100 to $120 million $110 million Assumptions • Net Debt / Adj. EBITDA leverage ratio expected to be around 2.7x at the end of 2024 • Interest expense: $55-$65 million • Cash interest: $50-$60 million • Cash tax expense: $10-$20 million • Capital expenditures: $65-$75 million • Restructuring / Other: Approx. $10 million • Working Capital benefit: $5 - $15 million • Fully diluted shares outstanding: ~199 million On May 7, 2024, Hillman reiterated the following guidance (originally provided on February 22, 2024) based on its current view of the market and its performance expectations for the fifty-two week period ended December 28, 2024. 2024 Full Year Guidance Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Free Cash Flow in the Appendix of this presentation.

 
10Earnings Presentation Q1 2024 Key Takeaways Actively Executing M&A; Winning New Business; Strong Margin Profile Historical Long-term Annual Growth Targets (Organic): Revenue Growth: +6% & Adj. EBITDA Growth: +10% Historical Long-term Annual Growth Targets (incl. Acquisitions): Revenue Growth: +10% & Adj. EBITDA Growth: +15% • Business has 60-year track record of success; proven to be resilient through multiple economic cycles • Repair, Remodel and Maintenance industry has meaningful long-term tailwinds; expected increase in future home spending as 90% of homes pass 20 years of age during 2024 and 2025.1 • 1,100-member distribution (sales and service) team and direct-to-store fulfillment continue to provide competitive advantages and strengthen competitive moat - drives new business wins • Cost of goods peaked in May 2023, margins expanding to normal rates, should expand and hold through 2024 • Now that leverage has come down, executing tuck-in M&A that leverage the Hillman moat in order to fuel long-term growth 1) Jefferies Research Services: July 10, 2023

 
11 Appendix

 
12Earnings Presentation Q1 2024 Investment Highlights Significant runway for incremental growth: Organic + M&A Management team with proven operational and M&A expertise Strong financial profile with 60-year track record Market and innovation leader across multiple categories Indispensable partner embedded with winning retailers Customers love us, trust us and rely on us Large, predictable, growing and resilient end markets

 
13Earnings Presentation Q1 2024 Hillman: Overview Who We Are *Management Estimates Adjusted EBITDA is a non-GAAP measure. Please see Appendix for a reconciliation of Adjusted EBITDA to Net loss ~20 billion Fasteners Sold ~245 million Pairs of Work Gloves Sold ~115+ million Keys Duplicated ~114,000 SKUs Managed ~46,000 Direct Shipping Locations ~31,000 Kiosks in Retail Locations #1 Position Across Core Categories* 8.0% Sales CAGR over past 10 years 60-Year Track record of success $1.5 billion 2023 Sales 9.4% CAGR 2018-2023 Adj. EBITDA Growth 14.9% 2023 Adj. EBITDA Margin 2023: By The Numbers • We are a leading North American provider of hardware products and solutions, including; ◦ Hardware and home improvement products ◦ Protective and job site gear – including work gloves and job site storage ◦ Robotic kiosk technologies (“RDS”): Key duplication, engraving & knife sharpening • Our differentiated service model provides direct to-store shipping, in-store service, and category management solutions • We have long-standing strategic partnerships with leading retailers across North America: ◦ Home Depot, Lowes, Walmart, Tractor Supply, and ACE Hardware • Founded in 1964; HQ in Cincinnati, Ohio

 
14Earnings Presentation Q1 2024 Primary Product Categories #1 in Segment#1 in Segment #1 in Segment Key and Fob Duplication Personalized Tags Knife Sharpening Fasteners & Specialty Gloves Builders Hardware & Metal Shapes Safety / PPE Construction Fasteners Work Gear Picture Hanging Source: Third party industry report. Hardware Solutions Protective Solutions Robotics & Digital Solutions Hillman has been selling its top customers for 25 years on average

 
15Earnings Presentation Q1 2024 Thirteen weeks ended April 1, 2023 March 30, 2024 Net loss $(9,132) $(1,492) Income tax benefit (7,856) (483) Interest expense, net 18,077 15,271 Depreciation 16,705 16,338 Amortization 15,572 15,254 EBITDA $33,366 $44,888 Stock compensation expense 2,637 2,829 Restructuring and other (1) 1,408 991 Litigation expense (2) 260 — Transaction and integration expense (3) 800 274 Change in fair value of contingent consideration 1,715 332 Refinancing costs (4) — 3,008 Adjusted EBITDA $40,186 $52,322 Adjusted EBITDA Reconciliation Footnotes: 1. Includes consulting and other costs associated with severance related to our distribution center relocations and corporate restructuring activities. 2. Litigation expense includes legal fees associated with our litigation with Hy-Ko Products Company LLC 3. Transaction and integration expense includes professional fees and other costs related to the Koch Industries, Inc acquisition and the CCMP secondary offerings in 2023. 4. In the first quarter of 2024, we entered into a Repricing Amendment on our existing Senior Term Loan due July 14, 2028.

 
16Earnings Presentation Q1 2024 Thirteen weeks ended April 1, 2023 March 30, 2024 Net Sales $349,707 $350,305 Cost of sales (exclusive of depreciation and amortization) 204,509 183,434 Gross margin exclusive of depreciation and amortization $145,198 $166,871 Gross margin exclusive of depreciation and amortization % 41.5 % 47.6 % Adjusted Gross Margin Reconciliation

 
17Earnings Presentation Q1 2024 Thirteen weeks ended April 1, 2023 March 30, 2024 Selling, general and administrative expenses $111,065 $118,565 SG&A Adjusting Items (1): Stock compensation expense 2,637 2,829 Restructuring 1,408 991 Litigation expense 260 — Acquisition and integration expense 800 274 Adjusted SG&A $105,960 $114,471 Adjusted SG&A as a % of Net Sales 30.3 % 32.7 % Adjusted SG&A Expense Reconciliation 1. See adjusted EBITDA Reconciliation for details of adjusting items

 
18Earnings Presentation Q1 2024 As of December 30, 2023 March 30, 2024 Revolving loans $0 $18,000 Senior term loan 751,852 749,725 Finance leases and other obligations 9,097 10,453 Gross debt $760,949 $778,178 Less cash 38,553 30,672 Net debt $722,396 $747,506 Net Debt & Free Cash Flow Reconciliations Thirteen Weeks Ended April 1, 2023 March 30, 2024 Net cash provided by operating activities $31,507 $11,676 Capital expenditures (18,111) (17,759) Free cash flow $13,396 $(6,083) Reconciliation of Net Debt Reconciliation of Free Cash Flow

 
19Earnings Presentation Q1 2024 Thirteen weeks ended March 30, 2024 HPS RDS Canada Consolidated Operating income $9,248 $5,757 $1,299 $16,304 Depreciation & amortization 19,869 10,376 1,347 31,592 Stock compensation expense 2,337 280 212 2,829 Restructuring and other 549 257 185 991 Transaction and integration expense 263 11 — 274 Change in fair value of contingent consideration — 332 — 332 Adjusted EBITDA $32,266 $17,013 $3,043 $52,322 Thirteen weeks ended April 1, 2023 HPS RDS Canada Consolidated Operating (loss) income $(3,836) $4,462 $463 $1,089 Depreciation & amortization 18,543 12,564 1,170 32,277 Stock compensation expense 2,205 282 150 2,637 Restructuring 1,257 151 — 1,408 Litigation expense — 260 — 260 Transaction and integration expense 710 90 — 800 Change in fair value of contingent consideration — 1,715 — 1,715 Adjusted EBITDA $18,879 $19,524 $1,783 $40,186 Segment Adjusted EBITDA Reconciliations

 
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May 07, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 07, 2024
Entity Registrant Name Hillman Solutions Corp.
Entity Incorporation, State or Country Code DE
Entity File Number 001-39609
Entity Tax Identification Number 85-2096734
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Entity Address, Address Line One 1280 Kemper Meadows Drive
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Local Phone Number 851-4900
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