Annual report pursuant to Section 13 and 15(d)

Acquisitions

v3.20.1
Acquisitions
12 Months Ended
Dec. 28, 2019
Business Combinations [Abstract]  
Acquisitions
ST Fastening Systems
On November 8, 2017, the Company entered into an Asset Purchase Agreement with Hargis Industries, LP doing business as ST Fastening Systems and other related parties pursuant to which Hillman acquired substantially all of the assets, and assumed certain liabilities, of STFS. STFS, which is located in Tyler, Texas, specializes in manufacturing and distributing threaded self-drilling fasteners, foam closure strips, and other accessories to the steel-frame, post-frame, and residential building markets. Pursuant to the terms of the Agreement, Hillman paid a cash purchase price of $47,339. The transaction was financed with additional borrowings under the Company's revolving credit facility. The STFS business is included in the Company’s Fastening, Hardware, and Personal Protective Solutions segment.
The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the STFS acquisition:
Accounts receivable
 
$
3,975

Inventory
 
7,820

Property and equipment
 
16,281

Goodwill
 
9,045

Customer relationships
 
13,500

Other non-current assets
 
6

Total assets acquired
 
50,627

Less:
 
 
Liabilities assumed
 
(3,288
)
Total purchase price
 
$
47,339


The excess of the purchase price over the net assets has been allocated to goodwill and intangibles based on a valuation appraisal. The customer relationships have been assigned a useful life of 13 years based on the limited turnover and long-standing relationships STFS has with its existing customer base. The acquired customer relationships were valued using the discounted cash flow approach, and significant assumptions used in the valuation included the customer attrition rate assumed and the expected level of future sales.
Pro forma financial information has not been presented for STFS as the financial results of STFS were insignificant to the financial results of the Company on a standalone basis.
Minute Key Holdings, Inc.
On August 10, 2018, the Company completed the acquisition of Minute Key Holdings, Inc. ("MinuteKey"), an innovative leader in self-service key duplicating kiosks, for a total consideration reflecting an enterprise value of $156,289. The Company financed the acquisition with the unfunded delayed draw term loan facility of $165,000. MinuteKey is headquartered in Boulder, Colorado and has operations in the United States and Canada. MinuteKey will be included in the Company's Consumer Connected Solutions reportable segments.
The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the MinuteKey acquisition:
Cash
 
$
1,791

Inventory
 
3,952

Other current assets
 
766

Property and equipment
 
29,888

Goodwill
 
59,237

Customer relationships
 
50,000

Developed technology
 
19,000

Trade names
 
5,400

Other non-current assets
 
16

Total assets acquired
 
170,050

Less:
 
 
Liabilities assumed
 
(13,761
)
Total purchase price
 
$
156,289


Pro forma financial information has not been presented for MinuteKey as their associated financial results are insignificant to the financial results of the Company on a standalone basis.
Big Time Products
On October 1, 2018, the Company acquired NB Parent Company, LLC. and its affiliated companies including Big Time Products, LLC (collectively, "Big Time"), a leading provider of personal protective and work gear products ranging from work gloves, tool belts and jobsite storage for a purchase price of $348,834. Coinciding with the Big Time acquisition, the Company entered into an amendment (the "Amendment") to the Company's existing term loan credit agreement dated May 31, 2018 (the "Term Credit Agreement"). The Amendment provided approximately $365,000 of incremental term loans. Refer to Note 7 - Long-Term Debt for further details on the Term Credit Agreement and the associated Amendment. Big Time has business operations throughout North America and its financial results reside in the Company's Fastening, Hardware, and Personal Protective Solutions reporting segment.
The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the Big Time acquisition:
Cash
 
$
2,507

Accounts receivable
 
40,828

Inventory
 
40,216

Other current assets
 
1,623

Property and equipment
 
3,703

Goodwill
 
130,863

Customer Relationships
 
189,000

Trade names
 
21,000

Other non-current assets
 
159

Total assets acquired
 
429,899

Less:
 

Liabilities assumed
 
(81,065
)
Total purchase price
 
$
348,834


The following table provides unaudited pro forma results of the combined entities of Hillman and Big Time, had the acquisition occurred at the beginning of fiscal 2017:
 
(Unaudited)
Fiscal Year-ended
 
2018
 
2017
Net revenues
$
1,139,562

 
$
1,045,447

Net earnings (loss)
$
(74,976
)
 
$
52,010


The pro forma results are based on assumptions that the Company believes are reasonable under certain circumstances. The pro forma results presented are not intended to be indicative of results that may occur in the future. The underlying pro forma information includes historical results of the Company, the Company's financing arrangements related to the Big Time acquisition, and certain purchase price accounting adjustments, including amortization of acquired intangibles.
Sharp Systems, LLC
On August 16, 2019, the Company acquired the assets of Sharp Systems, LLC ("Resharp"), a California-based innovative developer of automated knife sharpening systems, for a total purchase price of $21,100, including a contingent consideration provision with an estimated fair value of $18,100, with a maximum payout of $25,000 plus 1.8% of net knife-sharpening revenues for five years after the $25,000 is fully paid. Contingent consideration to be paid subsequent to December 28, 2019 is contingent upon several business performance metrics over a multi-year period. An amount of of the acquisition consideration totaling $18,100 remains payable to the seller. Resharp has existing operations in the United States and its operating results reside within the Company's Consumer Connected Solutions reportable segment.
The following table reconciles the fair value of the acquired assets and assumed liabilities to the finalized total purchase price of the Resharp acquisition:
Property and equipment
 
218

Goodwill
 
9,382

Technology
 
11,500

Total assets acquired
 
21,100

Less:
 
 
Contingent consideration payable
 
(18,100
)
Net cash paid
 
$
3,000



Pro forma financial information has not been presented for Resharp as their associated financial results are insignificant to the financial results of the Company on a standalone basis.
Other Acquisitions
On July 1, 2019, the Company acquired the assets of West Coast Washers, Inc. for a total purchase price of $3,135. The financial results of West Coast Washers, Inc. reside within the Company's Fastening, Hardware, and Personal Protective Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.