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 Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 3, 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 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 class | Trading Symbols | Name 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 per share | 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 November 3, 2021, 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 thirty-nine weeks ended September 25, 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.
99.1 Press Release, dated November 3, 2021, announcing the financial results of Hillman Solutions Corp. for its thirty-nine weeks ended September 25, 2021.
99.2 Supplemental slides provided in connection with the third quarter 2021 earnings call of Hillman Solutions Corp.
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: | November 3, 2021 | By: | /s/ Robert O. Kraft |
| Robert O. Kraft | |||
| Title: | Chief Financial Officer |
INDEX TO EXHIBITS
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release of Hillman Solutions Corp., dated November 3, 2021 |
| 99.2 | Supplemental slides provided in connection with the third quarter 2021 earnings call of Hillman Solutions Corp. |
Document
Exhibit 99.1
News Release
Hillman Solutions Corp. Reports Third Quarter and Year-to-Date 2021 Results
CINCINNATI, November 3, 2021 -- Hillman Solutions Corp. (Nasdaq: HLMN) (the “Company” or “Hillman”) reported today selected financial results for the thirty-nine weeks ended September 25, 2021.
Third Quarter 2021 Highlights
•Net sales for the third quarter of 2021 decreased 8.6% to $364.5 million as compared to prior year quarter net sales of $398.7 million
•Operating income decreased 137.9% to $(13.3) million compared to $35.1 million in the prior year third quarter
•Adjusted EBITDA1 decreased 24.6% to $56.5 million compared to $75.0 million in the prior year quarter
Year-to-Date 2021 Highlights
•Net sales for the thirty-nine weeks ended September 25, 2021 increased 3.9% to $1,081.5 million as compared to $1,041.2 million in 2020
•Operating income for the thirty-nine weeks ended September 25, 2021 decreased 81.6% to $12.0 million as compared to $65.3 million in 2020
•Adjusted EBITDA1 for the thirty-nine weeks ended September 25, 2021 decreased 5.2% to $168.8 million compared to $178.1 million in 2020
Doug Cahill, Chairman, President and Chief Executive Officer, stated “Our Hardware Solutions, RDS and Canadian businesses all performed well in the quarter, in spite of historical supply chain challenges and a very strong third quarter last year, but the unwinding of our Covid-related products in Protective Solutions negatively impacted our earnings." Cahill, went on to say "At Hillman, we are in the business of solving labor, logistics, and supply chain challenges for our customers so they can stay in stock and service their consumers. There has never been a time they've needed us more and we remain focused every day on delivering industry leading service and fill rates with our world class service team."
Conference Call and Webcast
The Company will host a conference call to discuss the financial results for the thirteen and thirty-nine weeks ended September 25, 2021 on Wednesday, November 3, 2021, at 8:30 am Eastern time. Participants may join the call by dialing 1(866)-673-2033, passcode: 3093168, 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, The Hillman Group, Inc., a wholly-owned subsidiary of the Company, 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.
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
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.
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” included in the S-1 filed on August 25, 2021 with the Securities and Exchange Commission (“SEC”). 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 November 3, 2021.
Contact
VP Investor Relations
Jennifer Hills
jennifer.hills@hillmangroup.com
(513) 975-5248
HILLMAN SOLUTIONS CORP.
Consolidated Statement of Operating Income, GAAP Basis
(dollars in thousands)
Unaudited
| Thirteen Weeks Ended<br>September 25, 2021 | Thirteen Weeks Ended<br>September 26, 2020 | Thirty-nine Weeks Ended <br>September 25, 2021 | Thirty-nine Weeks Ended<br>September 26, 2020 | |||||
|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 364,480 | $ | 398,680 | $ | 1,081,476 | $ | 1,041,226 |
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 236,999 | 227,481 | 654,264 | 590,294 | ||||
| Selling, general and administrative expenses | 110,447 | 107,333 | 325,288 | 292,056 | ||||
| Depreciation | 14,454 | 15,926 | 46,065 | 50,673 | ||||
| Amortization | 15,504 | 14,883 | 45,827 | 44,596 | ||||
| Management fees to related party | 56 | 130 | 270 | 451 | ||||
| Other (income) expense | 315 | (2,175) | (2,232) | (2,120) | ||||
| Income (loss) from operations | (13,295) | 35,102 | 11,994 | 65,276 | ||||
| Loss on change in fair value of warrant liability | 3,990 | — | 3,990 | — | ||||
| Interest expense, net | 11,801 | 20,688 | 49,979 | 67,746 | ||||
| Interest expense on junior subordinated debentures | 1,471 | 3,219 | 7,775 | 9,555 | ||||
| (Gain) loss on mark-to-market adjustments | (261) | (773) | (1,685) | 1,169 | ||||
| Refinancing charges | 8,070 | — | 8,070 | — | ||||
| Investment income on trust common securities | (44) | (94) | (233) | (283) | ||||
| Income (loss) before income taxes | (38,322) | 12,062 | (55,902) | (12,911) | ||||
| Income tax provision (benefit) | (5,798) | 2,758 | (11,023) | (2,374) | ||||
| Net income (loss) | $ | (32,524) | $ | 9,304 | $ | (44,879) | $ | (10,537) |
| Basic income (loss) per share | $ | (0.19) | $ | 0.10 | $ | (0.38) | $ | (0.12) |
| Weighted average basic shares outstanding | 168,440 | 89,745 | 116,945 | 89,673 | ||||
| Diluted income (loss) per share | $ | (0.19) | $ | 0.10 | $ | (0.38) | $ | (0.12) |
| Weighted average diluted shares outstanding | 168,440 | 90,525 | 116,945 | 89,673 |
HILLMAN SOLUTIONS CORP.
Consolidated Balance Sheets
(dollars in thousands)
Unaudited
| September 25,<br>2021 | December 26,<br>2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 14,429 | $ | 21,520 |
| Accounts receivable, net of allowances of $2,210 ($2,395 - 2020) | 139,716 | 121,228 | ||
| Inventories, net | 506,397 | 391,679 | ||
| Other current assets | 15,600 | 19,280 | ||
| Total current assets | 676,142 | 553,707 | ||
| Property and equipment, net of accumulated depreciation of $273,966 ($236,031 - 2020) | 173,170 | 182,674 | ||
| Goodwill | 825,981 | 816,200 | ||
| Other intangibles, net of accumulated amortization of $337,361 ($291,434 - 2020) | 810,559 | 825,966 | ||
| Operating lease right of use assets | 84,871 | 76,820 | ||
| Deferred tax assets | 2,016 | 2,075 | ||
| Other assets | 14,295 | 11,176 | ||
| Total assets | $ | 2,587,034 | $ | 2,468,618 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 219,397 | $ | 201,461 |
| Current portion of debt and capital leases | 7,174 | 11,481 | ||
| Current portion of operating lease liabilities | 12,680 | 12,168 | ||
| Accrued expenses: | ||||
| Salaries and wages | 11,893 | 29,800 | ||
| Pricing allowances | 9,878 | 6,422 | ||
| Income and other taxes | 4,252 | 5,986 | ||
| Interest | 940 | 12,988 | ||
| Other accrued expenses | 36,613 | 31,605 | ||
| Total current liabilities | 302,827 | 311,911 | ||
| Long term debt | 890,623 | 1,535,508 | ||
| Warrant liabilities | 81,180 | — | ||
| Deferred tax liabilities | 139,547 | 156,118 | ||
| Operating lease liabilities | 77,238 | 68,934 | ||
| Other non-current liabilities | 22,189 | 31,560 | ||
| Total liabilities | $ | 1,513,604 | $ | 2,104,031 |
| Commitments and contingencies | ||||
| Stockholders' Equity: | ||||
| Common stock, $0.0001 par, 500,000,000 shares authorized, 187,569,511 issued and 187,481,206 outstanding at September 25, 2021 and 90,934,930 issued and outstanding at December 26, 2020 | 19 | 9 | ||
| Additional paid-in capital | 1,317,706 | 565,815 | ||
| Accumulated deficit | (216,728) | (171,849) | ||
| Accumulated other comprehensive loss | (27,567) | (29,388) | ||
| Total stockholders' equity | 1,073,430 | 364,587 | ||
| Total liabilities and stockholders' equity | $ | 2,587,034 | $ | 2,468,618 |
HILLMAN SOLUTIONS CORP.
Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited
| Thirty-nine Weeks Ended <br>September 25, 2021 | Thirty-nine Weeks Ended<br>September 26, 2020 | |||
|---|---|---|---|---|
| Cash flows from operating activities: | ||||
| Net loss | $ | (44,879) | $ | (10,537) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||
| Depreciation and amortization | 91,892 | 95,269 | ||
| Deferred income taxes | (21,538) | (1,963) | ||
| Deferred financing and original issue discount amortization | 3,036 | 2,805 | ||
| Stock-based compensation expense | 8,817 | 3,818 | ||
| Loss on fair value adjustment of warrant liabilities | 3,990 | — | ||
| Write off of deferred financing fees, premiums and discounts associated with debt refinancing | (8,372) | — | ||
| Asset impairment | — | 210 | ||
| (Gain) on disposal of property and equipment | — | (23) | ||
| Change in fair value of contingent consideration | (1,110) | (1,300) | ||
| Other non-cash interest and change in value of interest rate swap | (1,685) | 1,245 | ||
| Changes in operating items: | ||||
| Accounts receivable | (17,097) | (60,470) | ||
| Inventories | (110,065) | (16,793) | ||
| Other assets | 3,003 | (15,276) | ||
| Accounts payable | 12,896 | 42,201 | ||
| Other accrued liabilities | (24,193) | 28,402 | ||
| Net cash provided by (used for) operating activities | (105,305) | 67,588 | ||
| Cash flows from investing activities: | ||||
| Acquisition of business, net of cash received | (39,102) | (800) | ||
| Capital expenditures | (36,955) | (29,182) | ||
| Net cash used for investing activities | (76,057) | (29,982) | ||
| Cash flows from financing activities: | ||||
| Repayments of senior term loans | (1,072,042) | (7,956) | ||
| Borrowings on senior term loans | 883,872 | — | ||
| Proceeds from recapitalization of Landcadia, net of transaction costs | 455,161 | — | ||
| Proceeds from sale of common stock in PIPE, net of issuance costs | 363,301 | — | ||
| Repayments of senior notes | (330,000) | — | ||
| Repayment of Junior Subordinated Debentures | (108,707) | — | ||
| Financing fees | (20,988) | — | ||
| Borrowings on revolving credit loans | 246,000 | 78,000 | ||
| Repayments of revolving credit loans | (244,000) | (94,000) | ||
| Principal payments under finance and capitalized lease obligations | (697) | (624) | ||
| Proceeds from exercise of stock options | 1,761 | — | ||
| Net cash used by (provided by) financing activities | 173,661 | (24,580) | ||
| Effect of exchange rate changes on cash | 610 | (63) | ||
| Net decrease in cash and cash equivalents | (7,091) | 12,963 | ||
| Cash and cash equivalents at beginning of period | 21,520 | 19,973 | ||
| Cash and cash equivalents at end of period | $ | 14,429 | $ | 32,936 |
HILLMAN SOLUTIONS CORP.
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.
Non-GAAP financial measures such as consolidated adjusted EBITDA and adjusted 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 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 Ended<br>September 25, 2021 | Thirteen Weeks Ended<br>September 26, 2020 | Thirty-nine Weeks Ended <br>September 25, 2021 | Thirty-nine Weeks Ended<br>September 26, 2020 | |||||
|---|---|---|---|---|---|---|---|---|
| Net loss | $ | (32,524) | $ | 9,304 | $ | (44,879) | $ | (10,537) |
| Income tax benefit | (5,798) | 2,758 | (11,023) | (2,374) | ||||
| Interest expense, net | 11,801 | 20,688 | 49,979 | 67,746 | ||||
| Interest expense on junior subordinated debentures | 1,471 | 3,219 | 7,775 | 9,555 | ||||
| Investment income on trust common securities | (44) | (94) | (233) | (283) | ||||
| Depreciation | 14,454 | 15,926 | 46,065 | 50,673 | ||||
| Amortization | 15,504 | 14,883 | 45,827 | 44,596 | ||||
| Mark-to-market adjustment on interest rate swaps | (261) | (773) | (1,685) | 1,169 | ||||
| EBITDA | $ | 4,603 | $ | 65,911 | $ | 91,826 | $ | 160,545 |
| Stock compensation expense | 5,280 | 1,149 | 8,817 | 3,818 | ||||
| Management fees | 56 | 130 | 270 | 451 | ||||
| Restructuring (1) | 462 | 651 | 571 | 3,361 | ||||
| Litigation expense (2) | 487 | 2,980 | 10,769 | 5,654 | ||||
| Acquisition and integration expense (3) | 802 | 1,054 | 8,941 | 2,044 | ||||
| Buy-back expense (4) | 650 | — | 2,000 | — | ||||
| Anti-dumping duties (5) | — | — | 2,636 | — | ||||
| Facility closures (6) | — | 3,108 | — | 3,541 | ||||
| Loss on change in fair value of warrant liability | 3,990 | — | 3,990 | — | ||||
| Refinancing charges(7) | 8,070 | — | 8,070 | — | ||||
| Inventory valuation related charges(8) | 32,026 | — | 32,026 | — | ||||
| Change in fair value of contingent consideration | 102 | — | (1,110) | (1,300) | ||||
| Adjusted EBITDA | $ | 56,528 | $ | 74,983 | $ | 168,806 | $ | 178,114 |
(1)Restructuring includes restructuring costs associated with restructuring in our Canada segment announced in 2018, including facility consolidation, severance, sale of property and equipment, and charges relating to exiting certain lines of business. Also included is restructuring in our United Stated business announced in 2019, including severance related to management realignment and the integration of sales and operating functions Finally, includes consulting and other costs associated with streamlining our manufacturing and distribution operations.
(2)Litigation expense includes legal fees associated with our litigation with KeyMe, Inc.
(3)Acquisition and integration expense includes professional fees, 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 prior year purchases.
(6)Facility exits include costs associated with the closure of facilities in San Antonio, Texas and Parma, Ohio.
(7)In connection with the merger,we refinanced our Term Credit Agreement and ABL Revolver. Proceeds from the refinancing were used to redeem in full senior notes due July 15, 2022 (the “6.375% Senior Notes”) and the 11.6% Junior Subordinated Debentures.
(8)In the third quarter of 2021, we recorded an inventory valuation adjustment in our Hardware and Protective Solutions segment of $32.0 million primarily related to strategic review of our COVID-19 related product offerings. We evaluated our customers' needs and the market conditions and ultimately decided to exit the following protective product categories related to COVID-19; cleaning wipes, disinfecting sprays, face masks, and certain disposable gloves.
Reconciliation of Adjusted Earnings per Share (Unaudited)
(in thousands, except per share data)
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:
| Thirteen Weeks Ended<br>September 25, 2021 | Thirteen Weeks Ended<br>September 26, 2020 | Thirty-nine Weeks Ended <br>September 25, 2021 | Thirty-nine Weeks Ended<br>September 26, 2020 | |
|---|---|---|---|---|
| Diluted EPS, as reported | $(0.19) | $0.10 | $(0.38) | $(0.12) |
| Adjustments: | ||||
| Stock compensation expense | 0.03 | 0.01 | 0.07 | 0.04 |
| Management fees | — | — | — | — |
| Restructuring (1) | — | 0.01 | — | 0.04 |
| Litigation expense (2) | — | 0.03 | 0.09 | 0.06 |
| Acquisition and integration expense (3) | — | 0.01 | 0.08 | 0.02 |
| Buy-back expense (4) | — | — | 0.02 | — |
| Anti-dumping duties (5) | — | — | 0.02 | — |
| Facility closures (6) | — | 0.03 | — | 0.04 |
| Loss on change in fair value of warrant liability(7) | 0.02 | — | 0.03 | — |
| Refinancing charges(8) | 0.05 | — | 0.07 | — |
| Inventory valuation related charges(9) | 0.19 | — | 0.27 | — |
| Change in fair value of contingent consideration | — | — | (0.01) | (0.01) |
| Income tax adjustment (10) | (0.07) | (0.02) | (0.14) | (0.05) |
| Total Adjustments | $0.23 | $0.08 | $0.51 | $0.15 |
| Adjusted EPS | $0.04 | $0.18 | $0.13 | $0.03 |
| Diluted Shares, as reported | 168,440 | 90,525 | 116,945 | 89,673 |
| Non-GAAP dilution adjustments | ||||
| Dilutive effect of stock options and awards | 2,442 | — | 1,432 | 817 |
| Dilutive effect of warrants | 539 | — | 180 | — |
| Adjusted Diluted Shares | 171,421 | 90,525 | 118,557 | 90,491 |
Note: Adjusted EPS may not add due to rounding.
(1)Restructuring includes restructuring costs associated with restructuring in our Canada segment announced in 2018, including facility consolidation, severance, sale of property and equipment, and charges relating to exiting certain lines of business. Also included is restructuring in our United Stated business announced in 2019, including severance related to management realignment and the integration of sales and operating functions. Finally, includes consulting and other costs associated with streamlining our manufacturing and distribution operations.
(2)Litigation expense includes legal fees associated with our litigation with KeyMe, Inc.
(3)Acquisition and integration expense includes professional fees, 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 prior year purchases.
(6)Facility exits include costs associated with the closure of facilities in San Antonio, Texas and Parma, Ohio.
(7)The warrant liabilities are marked to market each period end.
(8)In connection with the merger,we refinanced our Term Credit Agreement and ABL Revolver. Proceeds from the refinancing were used to redeem in full senior notes due July 15, 2022 (the “6.375% Senior Notes”) and the 11.6% Junior Subordinated Debentures.
(9)In the third quarter of 2021, we recorded an inventory valuation adjustment in our Hardware and Protective Solutions
segment of $32.0 million primarily related to strategic review of our COVID-19 related product offerings. We evaluated our customers' needs and the market conditions and ultimately decided to exit the following protective product categories related to COVID-19; cleaning wipes, disinfecting sprays, face masks, and certain disposable gloves.
(10)Unless specified in this footnote, we have calculated the income tax effect of the non-gaap adjustments shown above at the applicable statutory rate of 25.2% for the U.S. and 26.5% for Canada. The tax impact of stock compensation expense was calculated using the statutory rate of 25.2%, excluding certain awards that are non-deductible. There is no tax impact related to the acquisition and integration expense due to the fact that these costs are all non-deductible. There is no tax impact to adjusted EPS related to the warrant mark to market adjustment.
hillmanfy3q21presentatio
235 235 235 56 115 144 36 90 87 61 61 61 180 180 180 147 183 201 30 140 130 Investor Presentation Third Quarter 2021
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Safe Harbor Statement Forward Looking Statements PresBuilder Placeholder - Delete this box if you see it on a slide, but DO NOT REMOVE this box from the slide layout 2 This presentation may contain “forward-looking statements” within the meaning of federal securities laws. 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” included in the S-1 filed on August 25, 2021 with the Securities and Exchange Commission (“SEC”). 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 November 3, 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 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.
3Q21 Review
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 3Q21 & YTD Highlights 4 • Completed merger with Landcadia III; began trading on NASDAQ under “HLMN” ticker • Recapitalized balance sheet reducing leverage from 7.1x to 4.3x TTM Adjusted EBITDA at 9/25/21 • Continued to implement new business wins on time and complete thanks to field service teams • Secured additional business wins for 2022 • Achieved fill-rates > 90%; above competitors ~70% fill rates • Second round price increases effective Q4; will implement third round in Q1 2022 • 3Q21 Sales of $364.5 million (-8.6% y/y) and Adjusted EBITDA of $56.5 million (-24.6% y/y) • YTD Sales of $1,081.5 million (+3.9% y/y) and Adjusted EBITDA of $168.8 million (-5.2% y/y) Financial Highlights Note: Adjusted EBITDA is a non-GAAP measure. Please see page 17 for a reconciliation of Adjusted EBITDA to Net Income.
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Revenues on Track, Cost Environment Challenging 5 Third Quarter 9-Month YTD Sales Adjusted EBITDA Sales Adjusted EBITDA ▪ On tough comparisons, sales decreased 8.6% in 3Q21 ▪ HS (6.4)% PS (26.6)% ▪ RDS +14.0% Canada (9.3)% ▪ Adjusted EBITDA decreased 24.6% and margin contracted -330 basis points primarily due to loss of higher margin PPE sales and higher operating expenses ▪ 2-Year Growth: Revenue +14.9%, Adjusted EBITDA +11.2% ($ in millions) Note: Adjusted EBITDA is a non-GAAP measure. Please see page 17 for a reconciliation of Adjusted EBITDA to Net Income. ▪ Sales increased 3.9% 9-month YTD ▪ HS +2.6% PS (8.9)% ▪ RDS +20.3% Canada +15.6% ▪ Adjusted EBITDA decreased 5.2% and margin contracted -150 basis points primarily due to loss of higher margin PPE sales and higher operating expenses ▪ 2-Year Growth: Revenue +16.3%, Adjusted EBITDA +17.6% Third Quarter Highlights 9-Month YTD Highlights 399 364 Sales 3Q20 3Q21 75 57 Adj. EBITDA 3Q20 3Q21 18.8% 15.5% Adj. EBITDA Margin 1,041 1,081 Sales 2020-YTD 2021-YTD 178 169 Adj. EBITDA 2020-YTD 2021-YTD 17.1% 15.6% Adj. EBITDA Margin
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Container Costs & Lead Times 6 Average Container Costs (US$)* 2019 2020 1H21 3Q21 $— $2,000 $4,000 $6,000 Average Lead Times (Days)** 2019 2020 1H21 3Q21 0 50 100 150 200 250 • Average container costs are currently ~3x 2019 and nearly double from 1H21 • Lead times have increased from historically ~120 days to well over 200 days *Twenty foot equivalent **Measured from order placement to West Coast
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 3Q21 Segment Results Summary 7 Hardware & Protective 3Q20 3Q21 $ For Quarter Ended 9/26/2020 9/25/2021 Change Comments Revenues $300,307 $261,456 $(38,851) HS: lower retail demand, PS: less Covid product sales Adjusted EBITDA $52,623 $30,634 $(21,989) Lower demand and higher expenses Margin 17.5 % 11.7 % (580) bps PS: lack of higher margin PPE sales and higher operating costs Robotics & Digital Solutions 3Q20 3Q21 $ For Quarter Ended 9/26/2020 9/25/2021 Change Comments Revenues $59,186 $67,499 $8,313 Recovery from weak demand during covid lock-downs Adjusted EBITDA $17,995 $23,483 $5,488 Strong sales growth and margin expansion Margin 30.4 % 34.8 % 440 bps Operating leverage from stronger sales Canada 3Q20 3Q21 $ For Quarter Ended 9/26/2020 9/25/2021 Change Comments Revenues $39,187 $35,525 $(3,662) Softer retail sales and supply chain disruptions Adjusted EBITDA $4,365 $2,411 $(1,954) Lower sales on tough comparisons Margin 11.1 % 6.8 % (430) bps Higher freight and material costs Note: Adjusted EBITDA is a non-GAAP measure. Please see page 18 and 19 for a reconciliation of Adjusted EBITDA to Net Income. $ Thousands
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Year-To-Date Segment Results 8 Robotics & Digital Solutions YTD YTD $ For Six Months Ended 9/26/2020 9/25/2021 Change Comments Revenues $157,691 $189,729 $32,038 Recovery in key and engraving sales post Covid Adjusted EBITDA $47,938 $64,596 $16,658 Strong sales growth and margin expansion Margin 30.4 % 34.0 % 360 bps Operating leverage from sales growth Hardware & Protective YTD YTD $ For Six Months Ended 9/26/2020 9/25/2021 Change Comments Revenues $782,983 $775,514 $(7,469) Strong demand for HS + price offset by reduced Covid sales Adjusted EBITDA $123,989 $95,780 $(28,209) Inflation, higher freight costs, lower sales Margin 15.8 % 12.4 % (340) bps PS: lack of higher margin PPE sales and higher operating costs Canada YTD YTD $ For Six Months Ended 9/26/2020 9/25/2021 Change Comments Revenues $100,552 $116,233 $15,681 Recovery from weaker 1H20 sales due to Covid Adjusted EBITDA $6,187 $8,430 $2,243 Strong sales growth Margin 6.2 % 7.3 % 110 bps Operating leverage partially offset by inflation & freight costs Note: Adjusted EBITDA is a non-GAAP measure. Please see page 18 and 19 for a reconciliation of Adjusted EBITDA to Net Income. $ Thousands
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Strong Two-Year Revenue Growth Trends 9 Third Quarter 2019 versus 2021 9-Month YTD 2019 versus 2021 Hardware Protective RDS Canada ($ in millions) +9.2% Growth 62 67 3Q19 3Q21 +21.0% Growth 59 72 3Q19 3Q21 +15.9% Growth 164 190 3Q19 3Q21 +9.2% Growth 33 36 3Q19 3Q21 Hardware Protective RDS Canada +5.8% Growth 179 190 2019-YTD 2021-YTD +17.4% Growth 185 218 2019-YTD 2021-YTD +19.8% Growth 466 558 2019-YTD 2021-YTD +17.1% Growth 99 116 2019-YTD 2021-YTD
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 3Q21 Two-Year Growth Comparison 10 Hardware & Protective 3Q19 3Q21 % YTD 2019 YTD 2021 % For Quarter Ended 9/28/2019 9/25/2021 Change 9/28/2019 9/25/2021 Change Revenues $222.9 $261.5 17.3% $651.0 $775.5 19.1% Adjusted EBITDA $29.8 $30.6 2.6% $81.5 $95.8 17.6% Margin 13.4% 11.7% (170) bps 12.5% 12.4% (10) bps $ Millions Note: Adjusted EBITDA is a non-GAAP measure. Please see page 18 and 20 for a reconciliation of Adjusted EBITDA to Net Income. Robotics & Digital Solutions 3Q19 3Q21 % YTD 2019 YTD 2021 % For Quarter Ended 9/28/2019 9/25/2021 Change 9/28/2019 9/25/2021 Change Revenues $61.8 $67.5 9.2% $179.4 $189.7 5.8% Adjusted EBITDA $19.9 $23.5 18.3% $55.7 $64.6 15.9% Margin 32.1% 34.8% 270 bps 31.1% 34.0% 290 bps Canada 3Q19 3Q21 % YTD 2019 YTD 2021 % For Quarter Ended 9/28/2019 9/25/2021 Change 9/28/2019 9/25/2021 Change Revenues $32.5 $35.5 9.2% $99.2 $116.2 17.1% Adjusted EBITDA $1.1 $2.4 115.7% $6.3 $8.4 33.6% Margin 3.4% 6.8% 340 bps 6.4% 7.3% 90 bps Consolidated 3Q19 3Q21 % YTD 2019 YTD 2021 % For Quarter Ended 9/28/2019 9/25/2021 Change 9/28/2019 9/25/2021 Change Revenues $317.3 $364.5 14.9% $929.6 $1,081.5 16.3% Adjusted EBITDA $50.8 $56.5 11.2% $143.5 $168.8 17.6% Margin 16.0% 15.5% (50) bps 15.4% 15.6% 20 bps
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Strong Capital Structure Supports Growth & Enables All Important Industry Leading Fill Rates 11 Total Net Leverage Based on TTM Adj. EBITDA Total Leverage Based on TTM Adj. EBITDA Note: Adjusted EBITDA is a non-GAAP measure. Please see page 17 for a reconciliation of Adjusted EBITDA to Net Income. ($ millions) 9/25/21 Cash $ 14 ABL Revolver ($250 million) 74 New Term Note 851 Total Debt $ 925 Net Debt $ 911 TTM Adjusted EBITDA $ 211.9 Net Debt/ TTM Adjusted EBITDA 4.3x 06/26/2021 09/25/2021 7.1x 4.3x
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Outlook 12 Long-term Growth • Revenue +6% • Adj EBITDA +10% Other • SGA: 75%-80% driven by revenues • Interest Expense: ~$30 million/year • Income Tax: cash taxpayer in 2023, then ~25% cash taxpayer • Capital Expenditures: ~$60 million/year, $40 million growth • Shares outstanding: 187.6 million, 24.7 million warrants outstanding at $11.50 strike price Note: Adjusted EBITDA is a non-GAAP measure. Please see page 17 for a reconciliation of Adjusted EBITDA to Net Income. Outlook ($ millions) 2019 2020 2021E Revenues $1,214.4 $1,368.3 $1,400 Adjusted EBITDA $178.7 $221.2 $205-$210 As of November 3, 2021
Appendix
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 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 14 #1
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Hillman at a Glance 15 • 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 17 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 ~35,000 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 2020 Sales 22% 2017-2020 Adj. EBITDA Growth 16% 2020 Adj. EBITDA Margin Business Description
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 16 Se gm en t Po si tio n #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 H ill m an -O w ne d B ra nd s Representative Top Customers
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 Adjusted EBITDA Reconciliation 17 1 2 3 4 5 7 6 8 10 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 3Q20 09/26/20 3Q21 9/25/21 2020-YTD 09/26/20 2021-YTD 9/25/21 Income from Operations $35,102 $(13,295) $65,276 $11,994 D&A 30,809 29,958 95,269 91,892 EBITDA 65,911 16,663 160,545 103,886 Stock Compensation 1,149 5,280 3,818 8,817 CCMP Management Fees 130 56 451 270 Facility Exits 3,108 — 3,541 — Restructuring 651 462 3,361 571 Litigation Fees 2,980 487 5,654 10,769 Acquisition & Integration 1,054 802 2,044 8,941 Buy-back Expense — 650 — 2,000 Anti-Dumping Expense — — — 2,636 Inventory Valuation 32,026 — 32,026 Change in Fair Value — 102 (1,300) (1,110) Adjusted EBITDA $74,983 $56,528 $178,114 $168,806 $ Thousands Note: Adjusted EBITDA is a non-GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Net Income. 9 10 Inventory valuation charge taken in connection with the exit of certain COVID-19 product lines
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 2021 Segment Adjusted EBITDA Reconciliations 18 Note: Adjusted EBITDA is a non-GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended September 25, 2021 HPS RDS Canada Consolidated Operating Income (Loss) $(24,901) $11,158 $448 $(13,295) Depreciation & Amortization 17,615 10,842 1,501 29,958 Stock Compensation Expense 4,535 745 — 5,280 Management Fees 47 9 — 56 Restructuring — — 462 462 Litigation Expense — 487 — 487 Acquisition & Integration Expense 662 140 — 802 Buy-Back Expense 650 — — 650 Inventory Valuation 32,026 — — 32,026 Change in Fair Value of Contingent Consideration — 102 — 102 Adjusted EBITDA $30,634 $23,483 $2,411 $56,528 Thirty-nine weeks ended September 25, 2021 HPS RDS Canada Consolidated Operating Income (Loss) $(8,856) $17,858 $2,992 $11,994 Depreciation & Amortization 52,135 34,816 4,941 91,892 Stock Compensation Expense 7,591 1,226 — 8,817 Management Fees 232 38 — 270 Restructuring 64 10 497 571 Litigation Expense — 10,769 — 10,769 Acquisition & Integration Expense 7,952 989 — 8,941 Buy-Back Expense 2,000 — — 2,000 Inventory Valuation 32,026 — — 32,026 Anti-dumping Duties 2,636 — — 2,636 Change in Fair Value of Contingent Consideration — (1,110) — (1,110) Adjusted EBITDA $95,780 $64,596 $8,430 $168,806
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 2020 Segment Adjusted EBITDA Reconciliations 19 Note: Adjusted EBITDA is a non-GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended September 26, 2020 HPS RDS Canada Consolidated Operating Income (Loss) $30,107 $3,046 $1,949 $35,102 Depreciation & Amortization 17,146 11,898 1,765 30,809 Stock Compensation Expense 1,003 146 — 1,149 Management Fees 114 16 — 130 Facility Exits 3,108 — — 3,108 Restructuring — — 651 651 Litigation Expense — 2,980 — 2,980 Acquisition & Integration Expense 886 168 — 1,054 Buy-Back Expense — — — — Corporate & Intersegment Adjustments 259 (259) — — Adjusted EBITDA $52,623 $17,995 $4,365 $74,983 Thirty-nine weeks ended September 26, 2020 HPS RDS Canada Consolidated Operating Income (Loss) $63,383 $4,432 $(2,539) $65,276 Depreciation & Amortization 51,608 38,296 5,365 95,269 Stock Compensation Expense 3,333 485 — 3,818 Management Fees 394 57 — 451 Facility Exits 3,541 — — 3,541 Restructuring — — 3,361 3,361 Litigation Expense — 5,654 — 5,654 Acquisition & Integration Expense 1,518 526 — 2,044 Change in Fair Value of Contingent Consideration — (1,300) — (1,300) Corporate & Intersegment Adjustments 212 (212) — — Adjusted EBITDA $123,989 $47,938 $6,187 $178,114
38 79 78 76 158 155 57 118 116 254 180 38 PPS 193 207 51 CCS 38 79 78 FHS 56 115 144 214 220 229 191 191 191 199 243 239 2019 Segment Adjusted EBITDA Reconciliations 20 Note: Adjusted EBITDA is a non-GAAP measure. Please see above for a reconciliation of Adjusted EBITDA to Operating Income .. Thirteen Weeks Ended September 28, 2019 HPS RDS Canada Consolidated Operating Income (Loss) $8,000 $4,243 $(2,290) $9,953 Depreciation & Amortization 16,236 13,187 1,511 30,934 Stock Compensation Expense 1,016 228 — 1,244 Management Fees 140 — — 140 Restructuring 1,085 243 1,897 3,225 Litigation Expense — 515 — 515 Acquisition & Integration Expense 3,656 1,054 — 4,710 Corporate & Intersegment Adjustments (288) 288 — — Impairment — 96 — 96 Adjusted EBITDA $29,845 $19,854 $1,118 $50,817 Thirty-nine Weeks Ended September 28, 2019 HPS RDS Canada Consolidated Operating Income (Loss) $16,361 $3,859 $(1,456) $18,764 Depreciation & Amortization 48,506 39,880 4,468 92,854 Stock Compensation Expense 1,557 349 — 1,906 Management Fees 396 — — 396 Restructuring 1,127 253 3,186 4,566 Litigation Expense — 812 — 812 Acquisition & Integration Expense 7,937 3,301 — 11,238 Buy-Back Expense 6,083 — — 6,083 Corporate & Intersegment Adjustments (492) 492 — — Impairment — 6,782 114 6,896 Adjusted EBITDA $81,475 $55,728 $6,312 $143,515