8-K
Hillman Solutions Corp. (HLMN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2021
(July 29, 2021)
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.) |
10590 Hamilton Avenue
Cincinnati, Ohio 45231
(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<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br> 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<br> of each class | Trading<br> Symbols | Name<br> of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.0001 per share | HLMN | The Nasdaq Stock Market LLC |
| Warrants to purchase one share of common stock, each at an exercise price of $11.50 | HLMNW | The 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 July 29, 2021, The Hillman Companies, Inc. (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 twenty-six weeks ended June 26, 2021.
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.
| HILLMAN SOLUTIONS CORP. | |||
|---|---|---|---|
| Dated: | July 30,<br> 2021 | By: | /s/<br> Robert O. Kraft |
| Robert<br> O. Kraft | |||
| Title: | Chief<br> Financial Officer |
INDEX TO EXHIBITS
Exhibit 99.1
News Release
The Hillman Group Reports Second Quarter andYear-to-Date 2021 Results
CINCINNATI,July 29, 2021 -- The Hillman Companies, Inc. (NYSE-AMEX: HLM.PR) (the “Company” or “Hillman”) reported today selected financial results for the twenty-six weeks ended June 26, 2021.
Second Quarter 2021 Highlights
| • | Net sales for the second quarter of 2021 increased 8.4% to $375.7 million as compared to prior year quarter net sales of $346.7 million |
|---|---|
| • | Operating income decreased 5.9% to $19.5 million compared to $20.7 million in the prior year second quarter |
| --- | --- |
| • | Adjusted EBITDA^1^ increased 4.6% to $64.5 million compared to $61.6 million in the prior year quarter |
| --- | --- |
Year-to-Date 2021 Highlights
| • | Net sales for the twenty-six weeks ended June 26, 2021 increased 11.6% to $717.0 million as compared to $642.5 million in 2020 |
|---|---|
| • | Operating income for the twenty-six weeks ended June 26, 2021 decreased 16.2% to $25.3 million as compared to $30.2 million in 2020 |
| --- | --- |
| • | Adjusted EBITDA^1^for the twenty-six weeks ended June 26, 2021 increased 8.9% to $112.3 million compared to $103.1 million<br>in 2020 |
| --- | --- |
Doug Cahill, Chairman, President and Chief Executive Officer, stated “It has been an exciting time for Hillman with the closing of the transaction with Landcadia III and on July 15^th^ringing the bell and becoming a publicly traded company on Nasdaq under the symbol 'HLMN'. With the transaction complete and the recapitalization of our balance sheet, we are even better positioned to do what we do best, solved complexity, labor and logistics problems for best-in-class retailers from big box to your local hardware stores. I can't remember a time in the hardware and home improvement business when these were more important to our retailers than they are right now."
Conference Call and Webcast
The Company will host a conference call to discuss the financial results for the thirteen and twenty-six weeks ended June 26, 2021 on Friday, July 30, 2021, at 10:00 am Eastern time. Participants may join the call by dialing 1-(866)-673-2033, passcode: 8163153, a few minutes before the call start time. A live audio webcast of the conference call will also be available in a listen-only mode on the Investor Info page of the Company’s website, which is located at www.ir.hillmangroup.com. Participants who want to access the webcast should visit the company's website about five minutes before the call. The archived webcast will be available for replay on the company's website after the call.
About Hillman
Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman is a leading North American provider of complete hardware solutions, delivered with industry best customer service to over 40,000 locations. Hillman designs innovative product and merchandising solutions for complex categories that deliver an outstanding customer experience to home improvement centers, mass merchants, national and regional hardware stores, pet supply stores, and OEM & Industrial customers. Leveraging a world-class distribution and sales network, Hillman delivers a “small business” experience with “big business” efficiency. For more information on Hillman, visit www.hillmangroup.com.
1) Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Reconciliation of Adjusted EBITDA” section of this press release for additional information as well as reconciliations between the company’s GAAP and non-GAAP financial results.
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the federal securities law. All statements other than statements of historical fact included in this presentation are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ from their expectations, estimates and projections and consequently, 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," "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 inflation, recessions, instability in the financial markets or credit markets; (2) highly competitive markets that could adversely impact financial results (3) ability to continue to innovate with new products and services; (4) seasonality; (5) large customer concentration; (6) ability to recruit and retain qualified employees; (7) the outcome of any legal proceedings that may be instituted against the Company (8) adverse changes in currency exchange rates; (9) the impact of COVID-19 on the Company’s business; or (10) 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 will be included under the header “Risk Factors” set forth in Item 1A of the company’s annual report filed on Form 10-K. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements. 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 presentation to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. All estimates of financial metrics in this presentation for fiscal 2021 and beyond are current as of July 29, 2021.
Contact
VP Investor Relations
Jennifer Hills
jennifer.hills@hillmangroup.com
(513) 975-5248
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operating Income, GAAP Basis
(dollars in thousands)
Unaudited
| Thirteen Weeks<br><br> Ended<br><br> June 26, 2021 | Thirteen Weeks<br><br> Ended<br> June 27, 2020 | Twenty-six<br><br> Weeks Ended<br><br> June 26, 2021 | Twenty-six<br><br> Weeks Ended<br><br> June 27, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 375,715 | $ | 346,710 | $ | 716,996 | $ | 642,546 | ||||
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 215,967 | 196,402 | 417,265 | 362,813 | ||||||||
| Selling, general and administrative expenses | 111,662 | 94,970 | 214,841 | 184,723 | ||||||||
| Depreciation | 15,270 | 17,230 | 31,611 | 34,747 | ||||||||
| Amortization | 15,414 | 14,865 | 30,323 | 29,713 | ||||||||
| Management fees to related party | 88 | 196 | 214 | 321 | ||||||||
| Other (income) expense | (2,195 | ) | 2,319 | (2,547 | ) | 55 | ||||||
| Income from operations | 19,509 | 20,728 | 25,289 | 30,174 | ||||||||
| Interest expense, net | 19,159 | 23,878 | 38,178 | 47,058 | ||||||||
| Interest expense on junior subordinated debentures | 3,152 | 3,184 | 6,304 | 6,336 | ||||||||
| (Gain) loss on mark-to-market adjustment of interest rate swap | (751 | ) | (308 | ) | (1,424 | ) | 1,942 | |||||
| Investment income on trust common securities | (94 | ) | (94 | ) | (189 | ) | (189 | ) | ||||
| Loss before income taxes | (1,957 | ) | (5,932 | ) | (17,580 | ) | (24,973 | ) | ||||
| Income tax provision (benefit) | 1,428 | (895 | ) | (5,225 | ) | (5,132 | ) | |||||
| Net loss | $ | (3,385 | ) | $ | (5,037 | ) | $ | (12,355 | ) | $ | (19,841 | ) |
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
Unaudited
| December 26,<br> 2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | 16,255 | $ | 21,520 | ||
| Accounts receivable, net of allowances of 2,586 (2,395 - 2020) | 146,865 | 121,228 | |||
| Inventories, net | 482,645 | 391,679 | |||
| Other current assets | 22,125 | 19,280 | |||
| Total current assets | 667,890 | 553,707 | |||
| Property and equipment, net of accumulated depreciation of 260,692 (236,031 - 2020) | 174,466 | 182,674 | |||
| Goodwill | 826,969 | 816,200 | |||
| Other intangibles, net of accumulated amortization of 322,230 (291,434 - 2020) | 826,949 | 825,966 | |||
| Operating lease right of use assets | 85,312 | 76,820 | |||
| Deferred tax assets | 2,728 | 2,075 | |||
| Other assets | 12,739 | 11,176 | |||
| Total assets | 2,597,053 | $ | 2,468,618 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current liabilities: | |||||
| Accounts payable | 229,618 | $ | 201,461 | ||
| Current portion of debt and capital leases | 11,442 | 11,481 | |||
| Current portion of operating lease liabilities | 11,838 | 12,168 | |||
| Accrued expenses: | |||||
| Salaries and wages | 16,738 | 29,800 | |||
| Pricing allowances | 7,636 | 6,422 | |||
| Income and other taxes | 2,647 | 5,986 | |||
| Interest | 13,550 | 12,988 | |||
| Other accrued expenses | 33,935 | 31,605 | |||
| Total current liabilities | 327,404 | 311,911 | |||
| Long term debt | 1,651,476 | 1,535,508 | |||
| Deferred tax liabilities | 151,970 | 156,118 | |||
| Operating lease liabilities | 78,204 | 68,934 | |||
| Other non-current liabilities | 24,154 | 31,560 | |||
| Total liabilities | 2,233,208 | $ | 2,104,031 | ||
| Commitments and contingencies (Note 6) | |||||
| Stockholders' Equity: | |||||
| Preferred stock, 0.01 par, 5,000 shares authorized, none issued or outstanding at June 26, 2021 and December 26, 2020 | — | — | |||
| Common stock, 0.01 par, 5,000 shares authorized, issued and outstanding at June 26, 2021 and December 26, 2020 | — | — | |||
| Additional paid-in capital | 571,122 | 565,824 | |||
| Accumulated deficit | (184,204 | ) | (171,849 | ) | |
| Accumulated other comprehensive loss | (23,073 | ) | (29,388 | ) | |
| Total stockholders' equity | 363,845 | 364,587 | |||
| Total liabilities and stockholders' equity | 2,597,053 | $ | 2,468,618 |
All values are in US Dollars.
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited
| Twenty-six<br><br> Weeks Ended<br><br> June 26, 2021 | Twenty-six<br><br> Weeks Ended<br><br> June 27, 2020 | |||||
|---|---|---|---|---|---|---|
| Cash flows from operating activities: | ||||||
| Net loss | $ | (12,355 | ) | $ | (19,841 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 61,934 | 64,460 | ||||
| Deferred income taxes | (4,709 | ) | (4,771 | ) | ||
| Deferred financing and original issue discount amortization | 1,800 | 1,879 | ||||
| Stock-based compensation expense | 3,537 | 2,669 | ||||
| Asset impairment | — | 210 | ||||
| (Gain) on disposal of property and equipment | — | (337 | ) | |||
| Change in fair value of contingent consideration | (1,212 | ) | (1,300 | ) | ||
| Other non-cash interest and change in value of interest rate swap | (1,424 | ) | 1,942 | |||
| Changes in operating items: | ||||||
| Accounts receivable | (23,547 | ) | (61,318 | ) | ||
| Inventories | (73,049 | ) | 592 | |||
| Other assets | (15,786 | ) | 1,307 | |||
| Accounts payable | 22,443 | 4,475 | ||||
| Other accrued liabilities | (17,471 | ) | 21,690 | |||
| Net cash provided by (used for) operating activities | (59,839 | ) | 11,657 | |||
| Cash flows from investing activities: | ||||||
| Acquisition of business, net of cash received | (39,102 | ) | (800 | ) | ||
| Capital expenditures | (22,684 | ) | (22,196 | ) | ||
| Net cash used for investing activities | (61,786 | ) | (22,996 | ) | ||
| Cash flows from financing activities: | ||||||
| Repayments of senior term loans | (5,304 | ) | (5,304 | ) | ||
| Borrowings on senior term loans | 35,000 | — | ||||
| Financing fees | (1,027 | ) | — | |||
| Borrowings on revolving credit loans | 128,000 | 66,000 | ||||
| Repayments of revolving credit loans | (42,000 | ) | (50,000 | ) | ||
| Principal payments under finance and capitalized lease obligations | (460 | ) | (411 | ) | ||
| Proceeds from exercise of stock options | 1,761 | — | ||||
| Net cash provided by financing activities | 115,970 | 10,285 | ||||
| Effect of exchange rate changes on cash | 390 | (315 | ) | |||
| Net decrease in cash and cash equivalents | (5,265 | ) | (1,369 | ) | ||
| Cash and cash equivalents at beginning of period | 21,520 | 19,973 | ||||
| Cash and cash equivalents at end of period | $ | 16,255 | $ | 18,604 |
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
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 and Board of Directors 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.
| Thirteen Weeks<br><br> Ended<br><br> June 26, 2021 | Thirteen Weeks<br><br> Ended <br><br>June 27, 2020 | Twenty-six<br><br> Weeks Ended<br><br> June 26, 2021 | Twenty-six<br><br> Weeks Ended<br><br> June 27, 2020 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net loss | $ | (3,385 | ) | $ | (5,037 | ) | $ | (12,355 | ) | $ | (19,841 | ) |
| Income tax benefit | 1,428 | (895 | ) | (5,225 | ) | (5,132 | ) | |||||
| Interest expense, net | 19,159 | 23,878 | 38,178 | 47,058 | ||||||||
| Interest expense on junior subordinated debentures | 3,152 | 3,184 | 6,304 | 6,336 | ||||||||
| Investment income on trust common securities | (94 | ) | (94 | ) | (189 | ) | (189 | ) | ||||
| Depreciation | 15,270 | 17,230 | 31,611 | 34,747 | ||||||||
| Amortization | 15,414 | 14,865 | 30,323 | 29,713 | ||||||||
| Mark-to-market adjustment on interest rate swaps | (751 | ) | (308 | ) | (1,424 | ) | 1,942 | |||||
| EBITDA | $ | 50,193 | $ | 52,823 | $ | 87,223 | $ | 94,634 | ||||
| Stock compensation expense | 1,796 | 1,524 | 3,537 | 2,669 | ||||||||
| Management fees | 88 | 196 | 214 | 321 | ||||||||
| Restructuring ^(1)^ | — | 980 | 109 | 2,710 | ||||||||
| Litigation expense ^(2)^ | 6,322 | 1,893 | 10,282 | 2,674 | ||||||||
| Acquisition and integration expense ^(3)^ | 3,299 | 661 | 8,139 | 990 | ||||||||
| Buy-back expense ^(4)^ | 1,350 | — | 1,350 | — | ||||||||
| Anti-dumping duties ^(5)^ | 2,636 | — | 2,636 | — | ||||||||
| Facility closures ^(6)^ | — | 433 | — | 433 | ||||||||
| Change in fair value of contingent consideration | (1,212 | ) | 3,100 | (1,212 | ) | (1,300 | ) | |||||
| Adjusted EBITDA | $ | 64,472 | $ | 61,610 | $ | 112,278 | $ | 103,131 | ||||
| (1) | Restructuring includes restructuring costs associated with restructuring in our Canada segment announced in 2018, including facility<br>consolidation, severance, sale of property and equipment, and charges relating to exiting certain lines of business. Also included is<br>restructuring in our United Stated business announced in 2019, including severance related to management realignment and the integration<br>of sales and operating functions (see Note 9 - Restructuring of the Notes to Condensed Consolidated Financial Statements for additional<br>information). Finally, includes consulting and other costs associated with streamlining our manufacturing and distribution operations. | |||||||||||
| --- | --- | |||||||||||
| (2) | Litigation expense includes legal fees associated with our ongoing<br>litigation with KeyMe, Inc. (see Note 6 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements<br>for additional information). | |||||||||||
| --- | --- | |||||||||||
| (3) | Acquisition and integration expense includes professional fees,<br>non-recurring bonuses, and other costs related to the pending merger along with historical acquisitions. | |||||||||||
| --- | --- | |||||||||||
| (4) | Infrequent buy backs associated with new business wins. | |||||||||||
| --- | --- | |||||||||||
| (5) | Anti-dumping duties assessed related to the nail business for<br>prior year purchases. | |||||||||||
| --- | --- | |||||||||||
| (6) | Facility exits include costs associated with the closure of<br>facilities in San Antonio, Texas. | |||||||||||
| --- | --- |
Exhibit 99.2
Investor Presentation Second Quarter 2021
Safe Harbor Statement Forward Looking Statements 1 This presentation may contain “forward - looking statements” within the meaning of federal securities laws. All statements other t han statements of historical fact included in this presentation are forward - looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. The Company's actual results may d iff er from their expectations, estimates and projections and consequently, 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," "may," "will," "could," "sh ould," "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 sign ificant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are o uts ide the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable econom ic conditions that may affect operations, financial condition and cash flows including inflation, recessions, instability in the financial markets or credi t m arkets; (2) highly competitive markets that could adversely impact financial results (3) ability to continue to innovate with new products and services; (4) se asonality; (5) large customer concentration; (6) ability to recruit and retain qualified employees; (7) the outcome of any legal proceedings that may be instituted against the Company (8) adverse changes in currency exchange rates; (9) the impact of COVID - 19 on the Company’s business; or (10) regula tory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and rea ders should also refer to those risks that will be included under the header “Risk Factors” set forth in Item 1A of the company’s annual report filed o n F orm 10 - K. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking stateme nts . The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward - looking statem ents in this presentation to reflect any change in its expectations or any change in events, conditions or circumstances on which any such st atement is based. All estimates of financial metrics in this presentation for fiscal 2021 and beyond are current as of July 29, 2021. Presentation of Non - GAAP Financial Measures In addition to the results provided in accordance with U.S. generally accepted accounting principles (“GAAP”) throughout this pr esentation 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 th e non - GAAP financial measures terms may differ from similar measures reported by other companies and may not be comparable to other similarly titl ed 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 measu res without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a re con ciliation 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 t hese items and asset dispositions / acquisitions and changes in foreign currency exchange rates that are included in cash flow, due to the uncerta int y and variability of the nature and amount of these future charges and costs.
2Q21 Review
2Q21 & YTD Highlights 3 2Q21 Sales of $375.7 million (+8.4% y/y) and Adjusted EBITDA of $64.5 million (+4.6% y/y) YTD Sales of $717.0 million (+11.6% y/y) and Adjusted EBITDA of $112.2 million (+8.9% y/y) Completed merger with Landcadia III, began trading on NASDAQ under “HLMN” ticker Recapitalized balance sheet reducing leverage to 3.8x TTM adjusted EBITDA from 7.1x Achieved fill - rates >90%, above competitors Implemented initial price increase end of second quarter Rolled - out new business wins Financial Highlights Outlook ($ millions) 2019 2020 2021E 2022E Revenues $1,214.4 $1,368.3 $1,400 $1,500 Adjusted EBITDA $178.7 $221.2 $220 - $230 $245 - $255 Note: Adjusted EBITDA is a non - GAAP measure. Please see page 14 for a reconciliation of Adjusted EBITDA to Net Income.
Solid Start to 2021 4 Second Quarter 6 - Month YTD 8.4 % $347 $376 2Q20 2Q21 Sales $62 $64 17.8% 17.2% 2Q20 2Q21 Adj. EBITDA Adj. EBITDA Margin 4.6 % 11.6% $643 $717 2020-YTD 2021-YTD Sales $103 $112 16.1% 15.7% 2020-YTD 2021-YTD Adj. EBITDA Adj. EBITDA Margin 8.9 % Sales Adjusted EBITDA Sales Adjusted EBITDA ▪ Sales grew 8.4% in 2Q21 ▪ HS +5.6% PS - 21.5% ▪ RDS +57.2% Canada +32.1% ▪ Adjusted EBITDA grew 4.6% and margin contracted 60 basis points primarily due to mix and higher operating expenses ▪ 2 - Year Growth: Revenue +15.7%, Adjusted EBITDA +19.0% ($ in millions) Note: Adjusted EBITDA is a non - GAAP measure. Please see page 14 for a reconciliation of Adjusted EBITDA to Net Income. ▪ Sales grew 11.6% 6 - month YTD ▪ HS +7.9% PS +3.2% ▪ RDS +24.1% Canada +31.5% ▪ Adjusted EBITDA grew 8.9% and margin contracted 40 basis points primarily due to mix and higher operating expenses ▪ 2 - Year Growth: Revenue +17.1%, Adjusted EBITDA +21.1% Second Quarter Highlights 6 - Month YTD Highlights
2Q21 Segment Results Summary 5 Hardware & Protective 2Q20 2Q21 $ For Quarter Ended 6/27/2020 6/26/2021 Change Comments Revenues $269,499 $263,129 ($6,370) Lower gloves & mask sales partially offset by hardware growth Adjusted EBITDA $45,704 $36,114 ($9,590) Lower mask sales, higher operating expenses Margin 17.0% 13.7% (330 bps) Higher freight & material cost, sales mix Robotics & Digital Solutions 2Q20 2Q21 $ For Quarter Ended 6/27/2020 6/26/2021 Change Comments Revenues $42,198 $66,351 $24,153 Recovery from weak demand during covid lock - downs Adjusted EBITDA $12,373 $23,696 $11,323 Stronger sales Margin 29.3% 35.7% 640 bps Operating leverage from stronger sales Canada 2Q20 2Q21 $ For Quarter Ended 6/27/2020 6/26/2021 Change Comments Revenues $35,013 $46,235 $11,222 Strong demand from big box retailers Adjusted EBITDA $3,533 $4,662 $1,129 Margin 10.1% 10.0% (10 bps) Sales leverage offset by higher variable labor & delivery costs Note: Adjusted EBITDA is a non - GAAP measure. Please see page 15 and 16 for a reconciliation of Adjusted EBITDA to Net Income. $ Thousands
Year - To - Date Segment Results 6 Robotics & Digital Solutions YTD YTD $ For Six Months Ended 6/27/2020 6/26/2021 Change Comments Revenues $98,505 $122,230 $23,725 Recovery in key and engraving sales post Covid Adjusted EBITDA $29,943 $41,113 $11,170 Margin 30.4% 33.6% 320 bps Operating leverage from sales growth Hardware & Protective YTD YTD $ For Six Months Ended 6/27/2020 6/26/2021 Change Comments Revenues $482,676 $514,058 $31,382 Strong hardware demand and PPE contribution Adjusted EBITDA $71,366 $65,146 ($6,220) Margin 14.8% 12.7% (210 bps) Inflation costs and negative mix Canada YTD YTD $ For Six Months Ended 6/27/2020 6/26/2021 Change Comments Revenues $61,365 $80,708 $19,343 Strong demand from big box retailers Adjusted EBITDA $1,822 $6,019 $4,197 Margin 3.0% 7.5% 450 bps Operating leverage from sales growth Note: Adjusted EBITDA is a non - GAAP measure. Please see page 15 and 16 for a reconciliation of Adjusted EBITDA to Net Income. $ Thousands
2Q21 Two - Year Growth Comparison 7 Hardware & Protective 2Q19 2Q21 % YTD 2019 YTD 2021 % For Quarter Ended 6/29/2019 6/26/2021 Change 6/29/2019 6/26/2021 Change Revenues $226.4 $263.1 16.2% $428.0 $514.1 20.1% Adjusted EBITDA $31.4 $36.1 15.0% $51.6 $65.1 26.2% Margin 13.9% 13.7% (30 bps) 12.1% 12.7% 60 bps $ Millions Note: Adjusted EBITDA is a non - GAAP measure. Please see page 15 and 17 for a reconciliation of Adjusted EBITDA to Net Income. Robotics & Digital Solutions 2Q19 2Q21 % YTD 2019 YTD 2021 % For Quarter Ended 6/29/2019 6/26/2021 Change 6/29/2019 6/26/2021 Change Revenues $60.2 $66.4 10.3% $117.6 $122.2 3.9% Adjusted EBITDA $18.6 $23.7 27.4% $35.9 $41.1 14.5% Margin 31.0% 35.7% 470 bps 30.5% 33.6% 310 bps Canada 2Q19 2Q21 % YTD 2019 YTD 2021 % For Quarter Ended 6/29/2019 6/26/2021 Change 6/29/2019 6/26/2021 Change Revenues $38.0 $46.2 21.5% $66.7 $80.7 19.9% Adjusted EBITDA $4.2 $4.7 11.9% $5.2 $6.0 15.4% Margin 11.1% 10.0% 110 bps 7.8% 7.5% (30 bps) Consolidated 2Q19 2Q21 % YTD 2019 YTD 2021 % For Quarter Ended 6/29/2019 6/26/2021 Change 6/29/2019 6/26/2021 Change Revenues $324.6 $375.7 15.7% $612.3 $717.0 17.1% Adjusted EBITDA $54.2 $64.5 19.0% $92.7 $112.3 21.1% Margin 16.7% 17.2% 50 bps 15.1% 15.7% 60 bps
Strong Capital Structure Supports Growth 8 Total Net Leverage Based on TTM Adj. EBITDA 7.1x 3.8x 6/26/2021 7/14/2021 Total Leverage Based on TTM Adj. EBITDA Note: Adjusted EBITDA is a non - GAAP measure. Please see page 14 for a reconciliation of Adjusted EBITDA to Net Income. ($ millions) 7/14/2021 Cash $ 58 ABL Revolver ($250 million) 93 New Term Note 851 Total Debt $ 944 Net Debt $ 886 TTM Adjusted EBITDA $ 230.4 Gross Debt/ TTM Adjusted EBITDA 4.1x Net Debt/ TTM Adjusted EBITDA 3.8x
Outlook 9 Long - term Growth Revenue - +6% Adj EBITDA - +10% Other SGA – 25% fixed, 75% driven by revenues Interest Expense - ~$30 million/year Income Tax – cash taxpayer late 2022, then ~25% effective tax rate Capital Expenditures - ~$60 million/year, $40 million growth Shares outstanding – 187.6 million, 24.7 million warrants outstanding at $11.50 strike price Note: Adjusted EBITDA is a non - GAAP measure. Please see page 14 for a reconciliation of Adjusted EBITDA to Net Income. Outlook ($ millions) 2019 2020 2021E 2022E Revenues $1,214.4 $1,368.3 $1,400 $1,500 Adjusted EBITDA $178.7 $221.2 $220 - $230 $245 - $255 As of July 29, 2021
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Significant runway for incremental growth: organic and via M&A Management team with proven operational and M&A expertise Strong financial profile with 56 - year track record Market and innovation leader across compelling categories Indispensable partner embedded with winning retailers Customers love us, trust us and rely on us Large, predictable, growing and non - cyclical end markets Investment Highlights 11 #1
Hillman at a Glance 12 Founded in 1964; HQ in Cincinnati, OH The leading distributor of hardware and home improvement products, personal protective equipment and robotic kiosk technologies to a broad range of winning retailers in the U.S., Canada and Mexico The predominance of our sales come from Hillman - owned brands Highly attractive ~$6 billion direct addressable market with strong secular tailwinds Long - standing strategic partnerships with winning retailers including Home Depot, Lowes, Walmart, Tractor Supply, ACE and independent hardware stores Provide highly complex logistics, inventory, category management and differentiated in - store merchandising services via ~1,100 person field sales and service team ~3,600 non - union employees across corporate HQ, 22 N.A. distribution centers, and Taiwan sourcing office Note: Figures may not tie due to rounding and corporate eliminations. Adjusted EBITDA is a non - GAAP measure. Please see page 14 for a reconciliation of Adjusted EBITDA to Net Income. Operational metrics based on 2020 management estimates. By the Numbers ~20 billion Fasteners Sold per Year ~575 million Pairs of Gloves Sold per Year ~116 million Keys Duplicated per Year ~112,000 SKUs Managed ~42,000 Store Direct Locations ~32,500 Kiosks in Retail Locations #1 Position Across Core Categories 10% Long - Term Historical Sales CAGR 55 Years Sales Growth in 56 - Year History ~$1.4bn 2020E Sales 22% 2017A - 2020 Adj. EBITDA Growth 16% 2020 Adj. EBITDA Margin Business Description
13 Segment Position #1 #1 #1 Hardware Solutions Protective Solutions Robotics and Digital Solutions Our Primary Business Segments 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 & Protective Solutions Hillman - Owned Brands Representative Top Customers
Adjusted EBITDA Reconciliation 14 1 2 3 4 5 7 6 8 9 1 Stock compensation 2 CCMP management fees 3 Costs associated with the closure of facility in San Antonio, Texas 4 Inventory write - offs, severance, rent, labor costs, etc. related to restructuring initiatives 5 Professional fees related to non - recurring litigation 6 Professional fees, non - recurring bonuses, severance and other costs related to merger and acquisition activity including merger with LCY 7 Remove infrequent buy - backs associated with new business wins 8 Prior year anti - dumping duties related to nail business 9 Change in fair value of contingent consideration for acquisitions For Period Ending 2Q20 6/27/20 2Q21 6/26/21 1H20 6/27/20 1H21 6/26/21 Income from Operations $20,728 $19,509 $30,174 $25,289 D&A 32,095 30,684 64,460 61,934 EBITDA $52,823 $50,193 $94,634 $87,223 Stock Compensation 1,524 1,796 2,669 3,537 CCMP Management Fees 196 88 321 214 Facility Exits 433 ----- 433 ----- Restructuring 980 ----- 2,710 109 Litigation Fees 1,893 6,322 2,674 10,282 Acquisition & Integration 661 3,299 990 8,139 Buy - back Expense ----- 1,350 ----- 1,350 Anti - Dumping Expense ----- 2,636 ----- 2,636 Change in Fair Value 3,100 (1,212) (1,300) (1,212) Adjusted EBITDA $61,610 $64,472 $103,131 $112,278 $ Thousands Note: Adjusted EBITDA is a non - GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Net Income.
2021 Segment Adjusted EBITDA Reconciliations 15 Note: Adjusted EBITDA is a non - GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended June 26, 2021 HPS RDS Canada Consolidated Operating Income (Loss) $9,995 $6,546 $2,968 $19,509 Depreciation & Amortization $17,397 $11,593 $1,694 $30,684 Stock Compensation Expense $1,552 $244 ----- $1,796 Management Fees $76 $12 ----- $88 Restructuring ----- ----- ----- ----- Litigation Expense ----- $6,322 ----- $6,322 Acquisition & Integration Expense $3,108 $191 ----- $3,299 Buy - Back Expense $1,350 ----- ----- $1,350 Anti - dumping Duties $2,636 ----- ----- $2,636 Change in Fair Value of Contingent Consideration ----- ($1,212) ----- ($1,212) Adjusted EBITDA $36,114 $23,696 $4,662 $64,472 Twenty - Six Weeks Ended June 26, 2021 HPS RDS Canada Consolidated Operating Income (Loss) $16,045 $6,700 $2,544 $25,289 Depreciation & Amortization $34,520 $23,974 $3,440 $61,934 Stock Compensation Expense $3,056 $481 ----- $3,537 Management Fees $185 $29 ----- $214 Restructuring $64 $10 $35 $109 Litigation Expense ----- $10,282 ----- $10,282 Acquisition & Integration Expense $7,290 $849 ----- $8,139 Buy - Back Expense $1,350 ----- ----- $1,350 Anti - dumping Duties $2,636 ----- ----- $2,636 Change in Fair Value of Contingent Consideration ----- ($1,212) ----- ($1,212) Adjusted EBITDA $65,146 $41,113 $6,019 $112,278
2020 Segment Adjusted EBITDA Reconciliations 16 Note: Adjusted EBITDA is a non - GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended June 27, 2020 HPS RDS Canada Consolidated Operating Income (Loss) $24,423 ($4,510) $815 $20,728 Depreciation & Amortization $17,608 $12,749 $1,738 $32,095 Stock Compensation Expense $1,379 $145 ----- $1,524 Management Fees $176 $20 ----- $196 Restructuring ----- ----- $980 $980 Litigation Expense ----- $1,893 ----- $1,893 Acquisition & Integration Expense $498 $163 ----- $661 Buy - Back Expense $433 ----- ----- $433 Anti - dumping Duties ----- ----- ----- ----- Change in Fair Value of Contingent Consideration ----- $3,100 ----- $3,100 Corporate & Intersegment Adjustments $1,187 ($1,187) ----- ----- Adjusted EBITDA $45,704 $12,373 $3,533 $61,610 Twenty - Six Weeks Ended June 27, 2020 HPS RDS Canada Consolidated Operating Income (Loss) $33,276 $1,386 ($4,488) $30,174 Depreciation & Amortization $34,462 $26,398 $3,600 $64,460 Stock Compensation Expense $2,330 $339 ----- $2,669 Management Fees $280 $41 ----- $321 Restructuring ----- ----- $2,710 $2,710 Litigation Expense ----- $2,674 ----- $2,674 Acquisition & Integration Expense $632 $358 ----- $990 Buy - Back Expense $433 ----- ----- $433 Anti - dumping Duties ----- ----- ----- $0 Change in Fair Value of Contingent Consideration ----- ($1,300) ----- ($1,300) Corporate & Intersegment Adjustments ($47) $47 ----- ----- Adjusted EBITDA $71,366 $29,943 $1,822 $103,131
2019 Segment Adjusted EBITDA Reconciliations 17 Note: Adjusted EBITDA is a non - GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended June 29, 2019 HPS RDS Canada Consolidated Operating Income (Loss) $10,914 ($3,412) $1,044 $8,546 Depreciation & Amortization $16,228 $13,405 $1,703 $31,336 Stock Compensation Expense $246 $55 ----- $301 Management Fees $125 ----- ----- $125 Restructuring $42 $9 $1,467 $1,518 Litigation Expense ----- $297 ----- $297 Acquisition & Integration Expense $2,110 $1,289 ----- $3,399 Buy - Back Expense $2,014 ----- ----- $2,014 Anti - dumping Duties ----- ----- ----- ----- Corporate & Intersegment Adjustments ($312) $312 ----- ----- Impairment ----- $6,686 ----- $6,686 Adjusted EBITDA $31,367 $18,641 $4,214 $54,222 Twenty - Six Weeks Ended June 29, 2019 HPS RDS Canada Consolidated Operating Income (Loss) $8,361 ($384) $834 $8,811 Depreciation & Amortization $32,270 $26,696 $2,954 $61,920 Stock Compensation Expense $541 $121 ----- $662 Management Fees $256 ----- ----- $256 Restructuring $42 $9 $1,403 $1,454 Litigation Expense ----- $297 ----- $297 Acquisition & Integration Expense $4,280 $2,248 ----- $6,528 Buy - Back Expense $6,083 ----- ----- $6,083 Anti - dumping Duties ----- ----- ----- ----- Corporate & Intersegment Adjustments ($205) $205 ----- ----- Impairment ----- $6,686 ----- $6,686 Adjusted EBITDA $51,628 $35,878 $5,191 $92,697