Exhibit 99.1 

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION

 

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Current Report on Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached (the “Form 8-K”)  or, if such terms are not defined in the Form 8-K, then such terms shall have the meanings ascribed to them in the proxy statement/prospectus filed with the Securities and Exchange Commission (the “SEC”) by Landcadia on June 11, 2021 (the “Proxy Statement”).

 

Introduction

 

Landcadia and Hillman are providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the business combination. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying notes, which are included elsewhere in the Proxy Statement and incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the unaudited condensed balance sheet of Landcadia as of March 31, 2021 with the unaudited condensed combined balance sheet of Hillman as of March 27, 2021, giving effect to the Merger.

 

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2021 combines the unaudited condensed statement of operations of Landcadia for the three months ended March 31, 2021 with the unaudited condensed combined statement of operations of Hillman for the thirteen weeks ended March 27, 2021. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 combines the audited condensed statement of operations of Landcadia for the year ended December 31, 2020 with the audited condensed combined statement of operations of Hillman for the year ended December 26, 2020, giving effect to the Merger as if it had been consummated on January 1, 2020, the beginning of the earliest period presented.

 

The unaudited pro forma condensed combined financial information was derived from, and should be read in conjunction with, the following historical financial statements and the accompanying notes, which are included elsewhere in the Proxy Statement and incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached:

 

•The historical unaudited condensed financial statements of Landcadia as of and for the three months ended March 31, 2021, and the historical audited financial statements of Landcadia as of and for the year ended December 31, 2020, which are included in the Proxy Statement and incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached; and

 

•The historical unaudited condensed consolidated financial statements of Hillman as of and for the thirteen weeks ended March 27, 2021 and the historical audited consolidated financial statements as of and for the year ended December 26, 2020, which are included in the Proxy Statement and incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached.

 

 

 

 

The foregoing historical financial statements have been prepared in accordance with GAAP. The unaudited pro forma condensed combined financial information has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed combined financial information. The pro forma adjustments reflect transaction accounting adjustments related to the Merger, which is discussed in further detail below. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to represent Landcadia’s consolidated results of operations or consolidated financial position that would actually have occurred had the Merger been consummated on the dates assumed or to project Landcadia’s consolidated results of operations or consolidated financial position for any future date or period.

 

The unaudited pro forma condensed combined financial information should also be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Landcadia” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Hillman,” and other financial information, which are included elsewhere in the Proxy Statement and incorporated by reference into the Form 8-K to which this Unaudited Pro Forma Condensed Combined Financial Information is attached.

 

Description of the Merger

 

On January 24, 2021, Landcadia and Hillman entered into the Merger Agreement. Pursuant to the Merger Agreement, and Landcadia has merged with and into Hillman. Upon Closing, Hillman became a wholly-owned subsidiary of Landcadia.

 

Upon Closing, the ownership distribution of the successor entity was as follows:

 

   $   Shares   % 
Hillman Holdco stockholders   914    91.4    48.7 
Landcadia Public Stockholders(1)   500    50.0    26.7 
PIPE Investors(2)   350    35.0    18.7 
SPAC Sponsors– JFG Sponsor(3)   72    7.2    3.8 
SPAC Sponsors – TJF Sponsor   40    4.0    2.1 
Total Shares   1,876    187.6    100.0 

 

(1)Includes 1,503,200 public shares held by Jefferies LLC, a subsidiary of JFG Sponsor.
(2)Excludes 2.5 million shares held by JFG Sponsor through additional investment in PIPE.
(3)Includes 2.5 million shares held by JFG Sponsor through additional investment in PIPE and excludes 1,503,200 public shares held by Jefferies LLC, a subsidiary of JFG Sponsor.

 

Accounting for the Merger

 

The Merger will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Landcadia has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the Hillman equity holders having a relative majority of the voting power of the combined entity, Hillman having the authority to appoint a majority of directors on the Board of Directors, and senior management of Hillman comprising the majority of the senior management of the combined entity. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of Hillman with the acquisition being treated as the equivalent of Hillman issuing stock for the net assets of Landcadia, accompanied by a recapitalization. The net assets of Landcadia will be stated at historical cost, with no goodwill or other intangible assets recorded.

 

Basis of Pro Forma Presentation

 

The historical financial information has been adjusted to give pro forma effect to the transaction accounting required for the Merger. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined entity upon the Closing.

 

The unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined entity will experience. Landcadia and Hillman have not had any historical relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

 

 

 

Unaudited Pro Forma Condensed Combined Balance Sheet
(in thousands)
                 
   As of March 27,
2021		   As of March 31,
2021		         
   Hillman Historical   Landcadia III Historical   Pro Forma
Transaction
Adjustments		   Pro Forma Combined 
ASSETS                    
Current assets                    
Cash and cash equivalents   13,912    511    500,026(A)   143,521 
              375,000(B)     
              (1,593,652)(C)     
              944,000(D)     
              (96,276)(E)     
Accounts receivable, net   136,742    -         136,742 
Inventories, net   459,740    -         459,740 
Other current assets   12,093    120         12,213 
Total current assets   622,487    631    129,098    752,216 
                     
Property, Plant, and Equipment, net   175,321    -         175,321 
                     
Other assets:                    
Goodwill   816,678    -         816,678 
Other intangibles, net   811,496    -         811,496 
Operating lease right of use assets   77,479    -         77,479 
Deferred tax asset   3,650    -         3,650 
Other assets   12,522    -         12,522 
Cash and accrued interest held in trust account   -    500,026    (500,026)(A)   - 
Total other assets   1,721,825    500,026    (500,026)   1,721,825 
Total assets   2,519,633    500,657    (370,928)   2,649,362 
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Current liabilities                    
Accounts payable   220,323    72         220,395 
Current portion of debt and capital leases   11,442    -    (10,609)(C)   833 
Current portion of operating lease liabilities   11,528    -         11,528 
Accrued expenses   80,876    -    -    80,876 
Total current liabilities   324,169    72    (10,609)   313,632 
                     
Other liabilities                    
Long term debt, net of deferred financing costs   1,581,458    -    (1,579,620)(C)   945,838 
              944,000(D)     
Deferred underwriting fee payable   -    17,500    (17,500)(E)   - 
Warrant derivative liability        44,510         44,510 
Deferred tax liabilities   151,693    -         151,693 
Operating lease liabilities   70,419    -         70,419 
Other non-current liabilities   30,420    -         30,420 
Total other liabilities   1,833,990    62,010    (653,120)   1,242,880 
                     
Shareholders' equity                    
Class A common stock subject to possible redemption (J)   -    433,574    (433,574)(I)   - 
Class A Common stock (J)   5    1    4(B)   19 
              4(G)     
              1(H)     
              4(I)     
Class B Common stock (J)   -    1    (1)(H)   - 
Paid-in capital   573,523    23,169    374,996(B)   1,387,084 
              (18,170)(F)     
              (4)(G)     
              433,570(I)     
Treasury stock   (4,320)   -         (4,320)
Accumulated deficit   (180,819)   (18,170)   (3,423)(C)   (263,018)
              18,170(F)     
              (78,776)(E)     
Accumulated other comprehensive loss   (26,915)   -    -    (26,915)
Total shareholders' equity   361,474    5,001    726,375    1,092,850 
Total liabilities and shareholders' equity   2,519,633    500,657    (370,928)   2,649,362 

 

 

 

 

Unaudited Pro Forma Condensed Combined Statement of Operations 

(in thousands, except share and per share amounts)

 

   For the Quarter Ended
March 27, 2021		   For the Quarter Ended
March 31, 2021		   Pro Forma      
   Hillman Historical   Landcadia III
Historical		   Transaction
Adjustments		    Pro Forma
Combined		 
    Adjustment (BB)                 
Net sales   341,281    -    -     341,281 
Cost of sales   201,298    -    -     201,298 
Selling, general and administrative expenses   103,179    509    -     103,688 
Depreciation   16,341    -    -     16,341 
Amortization   14,909    -    -     14,909 
Management fees to related party   126    -    -     126 
Other (income) expense   (352)   -    -     (352)
Total operating expense   335,501    509    -     336,010 
Income (loss) from Operations   5,780    (509)   -     5,271 
Interest expense, net   19,019    (19)   (18,415)(AA)  8,125 
              7,521(BB)    
              19(CC)    
Change in fair value of warrant derivative liability        (11,210)         (11,210)
Interest expense on junior subordinated debentures   3,152    -    -     3,152 
Investment income   (95)   -    -     (95)
Loss on mark-to-market adjustment of interest rate swap   (673)   -    -     (673)
Income (loss) before income taxes   (15,623)   10,720    10,875     5,972 
Income tax expense (benefit)   (6,653)   -    7,907(DD)  1,254 
Net income (loss)   (8,970)   10,720    2,968     4,718 
Foreign currency translation adjustment   2,473    -    -     2,473 
Comprehensive income (loss)   (6,497)   10,720    2,968     7,191 
                      
Net earnings:                     
Basic earnings per share   (16.22)   0.54          0.03(EE)
Diluted earnings per share   (16.22)   0.54          0.02(FF)
                      
Average shares outstanding   553,183    19,850,545          187,569,511(EE)
Diluted shares outstanding   553,183    19,850,545          190,445,619(FF)

 

 

 

 

Unaudited Pro Forma Condensed Combined Statement of Operations 

(in thousands, except share and per share amounts) 

 

   For the Year Ended
December 26, 2020		   For the Year Ended
December 31, 2020		   Pro Forma      
   Hillman Historical   Landcadia III
Historical		   Transaction
Adjustments		    Pro Forma
Combined		 
Net sales   1,368,295    -    -     1,368,295 
Cost of sales   781,815    -    -     781,815 
Selling, general and administrative expenses   398,472    1,279    -     399,751 
Depreciation   67,423    -    -     67,423 
Amortization   59,492    -    -     59,492 
Management fees to related party   577    -    -     577 
Other (income) expense   (5,250)   -    -     (5,250)
Total operating expense   1,302,529    1,279    -     1,303,808 
Income (loss) from Operations   65,766    (1,279)   -     64,487 
Interest expense, net   86,774    (79)   (83,513)(GG)  42,520 
              35,836(HH)    
              3,423(II)    
              79(JJ)    
Change in fair value of warrant derivative liability        27,690          27,690 
Interest expense on junior subordinated debentures   12,707    -    -     12,707 
Investment income   (378)   -    -     (378)
Other (income) expense   -    -    (325)(KK)  (325)
Loss on mark-to-market adjustment of interest rate swap   601    -    -     601 
Income (loss) before income taxes   (33,938)   (28,890)   44,500     (18,328)
Income tax expense (benefit)   (9,439)   -    5,590(LL)  (3,849)
Net income (loss)   (24,499)   (28,890)   38,910     (14,479)
Foreign currency translation adjustment   2,652    -    -     2,652 
Comprehensive income (loss)   (21,847)   (28,890)   38,910     (11,827)
                      
Net earnings:                     
Basic earnings per share   (44.92)   (2.99)         (0.08)(MM)
                      
Average shares outstanding   545,370    9,654,569          187,569,511(MM)

 

 

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1. Basis of Presentation

 

The pro forma adjustments have been prepared as if the Merger had been consummated on March 31, 2021, in the case of the unaudited pro forma condensed combined balance sheet, and as if the Merger had been consummated on January 1, 2020, the beginning of the earliest period presented in the unaudited pro forma condensed combined statements of operations.

 

The unaudited pro forma condensed combined financial information has been prepared assuming the following methods of accounting in accordance with GAAP.

 

The Merger will be accounted for as a reverse recapitalization in accordance with GAAP. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of Hillman with the acquisition being treated as the equivalent of Hillman issuing stock for the net assets of Landcadia, accompanied by a recapitalization. The net assets of Landcadia will be stated at historical cost, with no goodwill or other intangible assets recorded.

 

The pro forma adjustments represent management’s estimates based on information available as of the date of this proxy statement/prospectus and are subject to change as additional information becomes available and additional analyses are performed. Management considers this basis of presentation to be reasonable under the circumstances.

 

One-time direct and incremental transaction costs incurred prior to, or concurrent with, the Closing are reflected in the unaudited pro forma condensed combined balance sheet as a direct reduction to the combined entity’s additional paid-in capital and are assumed to be cash settled.

 

2. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2021

 

The adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2021 are as follows:

 

(A)Reflects the reclassification of cash and marketable securities held in the trust account that became available in conjunction with the business combination.
   
(B)Represents the pro forma adjustment to record the net proceeds of $375.0 million from the private placement and issuance of 37.5 million shares of Class A common stock to the PIPE Investors.
   
(C)Represents the pro forma adjustment to remove Hillman's previously held debt. This debt was paid down and new debt was issued, as represented by the adjustment at (D). The existing debt was and new debt has been issued via syndication with several lending institutions. Management performed a debt modification versus extinguishment analysis on the basis of each lending institution included in the syndication, and the paydown was determined to be partially a modification and partially an extinguishment, depending on the facts and circumstances related to the particular lending institution. The recognition of expenses related to deferred financing costs of the previously held debt, as represented by the adjustment at (II), were recorded as a reduction in retained earnings.

 

 

 

 

(D)Represents the pro forma adjustment to record new debt in line with the paydown of previously held debt and issuance of new debt discussed further at (C).
   
(E)Represents transaction costs of $96.3 million, including $6.6 million in ticking fees. Of the total amount shown $17.5 million in deferred underwriter fees were incurred and accrued for on the balance sheet as of March 31, 2021.
   
(F)Reflects the elimination of Landcadia’s historical accumulated deficit.
   
(G)Represents issuance of 91.4 million shares of Class A Common Stock to existing Hillman equity holders as consideration for the reverse recapitalization.
   
(H)Represents adjustment to present 8.7 million shares of Class A Common Stock held by the Landcadia Sponsors.
   
(I)Reflects the reclassification of approximately $433.6 million of Class A Common Stock subject to possible redemption to permanent equity.
   
(J)Authorized, issued and outstanding shares for each class of common stock and preferred stock as of March 31, 2021 and on a pro forma basis is as follows:

 

   March 31, 2021   Pro Forma Combined Company 
   Authorized   Issued   Outstanding   Authorized   Issued   Outstanding 
Landcadia Preferred Stock   1,000,000    -    -    1,000,000    -    - 
                               
Landcadia Class A common stock subject to possible redemption   50,000,000    43,355,173    43,335,173    -    -    - 
                               
Landcadia Class A Common Stock   380,000,000    6,644,827    6,644,827    500,000,000    187,569,511    187,569,511 
                               
Landcadia Class B Common Stock   20,000,000    12,500,000    12,500,000    -    -    - 
                               
Hillman Preferred Stock   200,000    -    -    N/A    N/A    N/A 
                               
Hillman Class A Common Stock   1,800,000    548,592    548,592    N/A    N/A    N/A 

 

As a result of the Business Combination, Landcadia common stock was issued for Hillman’s issued and outstanding common and preferred stock. There is no longer any Hillman common or preferred stock issued and outstanding after the Business Combination; thus, subsequent to the merger, all Hillman share totals are noted as not applicable in the table above.

 

 

 

 

3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Operations for the Three months ended March 31, 2021

 

The adjustments included in the unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2021 are as follows:

 

(AA)Represents the pro forma adjustment to remove interest expense associated with the paydown of Hillman's existing debt.

 

(BB)Represents the pro forma adjustment to record interest expense associated with new debt. The new debt has a variable interest rate, which for the new term loan is 275 basis points over the greater of LIBOR and a floor of 0.5% and for the asset-based loan ("ABL") is 150 basis points over LIBOR. The effective interest rate was determined using the actual 1-month LIBOR for 2021 reset on a monthly basis, resulting in interest expense of $7.3 million. A change in LIBOR of 1/8 of a percent would not result in an increase or decrease in interest expense for the quarter. Additional interest expense related to incremental amortization of OID of $0.1 million and commitment fees of $0.1 million, resulted in total interest expense of $7.5 million for the quarter ended March 31, 2021.

 

(CC)Reflects the elimination of interest earned on marketable securities held in the trust account.

 

(DD)Represents the adjustment to taxes such that the effective pro forma tax rate for the three months ended March 31, 2021 is equal to the relevant statutory income tax rate of 21%.

 

(EE)Represents net loss per share computed by dividing net loss by the weighted average number of common shares outstanding for the three months ended March 31, 2021.

 

(FF)Represents diluted net income per share computed by dividing net income by the weighted average number of common shares outstanding for the year ended March 31, 2021, inclusive of 2.6 million stock options outstanding under the treasury stock method (13.6 million total stock options at a weighted average strike price of $8.12) and 0.3 million RSUs. The dilutive impact of 24.7 million outstanding warrants were excluded as these were out of the money as of March 31, 2021.

 

4. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined Statement of Operations for the Year ended December 31, 2020

 

The adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 are as follows:

 

(GG)Represents the pro forma adjustment to remove interest expense associated with the paydown of Hillman's existing debt.

 

(HH)Represents the pro forma adjustment to record interest expense associated with new debt. The new debt has a variable interest rate, which for the new term loan is 275 basis points over the greater of LIBOR and a floor of 0.5% and for the ABL is 150 basis points over LIBOR. The effective interest rate was determined using the actual 1-month LIBOR for 2020 reset on a monthly basis, resulting in interest expense of $34.9 million. A change in LIBOR of 1/8 of a percent would result in an increase or decrease in interest expense for the quarter of $0.9 million. Additional interest expense related to amortization of original issue discount of $0.4 million, commitment fees of $0.4 million, and agent fees of $0.2 million, resulted in total interest expense of $35.8 million for the year ended December 31, 2020.

 

(II)Represents the recognition of nonrecurring expenses related to deferred financing costs in the amount of $3.4 million related to previously held debt. The recognition of these expenses was accelerated as a result of the debt modification versus extinguishment analysis associated with the paydown of debt discussed further at (C).

 

 

 

 

(JJ)Reflects the elimination of interest earned on marketable securities held in the trust account.

 

(KK)Represents the recognition of a nonrecurring net gain on the extinguishment of debt in the amount of $0.3 million, which was comprised of a loss of $13.3 million related to the discount on the previously held debt and a gain of $13.6 million related to the premium on the associated trust preferred debt, inclusive of certain fees written off as a result of the extinguishment. The recognition of this gain and loss, respectively, were determined as a result of the debt modification versus extinguishment analysis associated with the paydown of debt discussed further at (C).

 

(LL)Represents the adjustment to taxes such that the effective pro forma tax rate for the year ended December 31, 2020 is equal to the relevant statutory income tax rate of 21%.

 

(MM)Represents net income per share computed by dividing net income by the weighted average number of common shares outstanding for the year ended December 31, 2020.