PRESS RELEASE
Published on November 16, 2010
Exhibit 99.1
Hillman Reports Financial Results for its 2010 Third Quarter
CINCINNATI, Nov. 15 /PRNewswire-FirstCall/ The Hillman Companies, Inc. (the Company or Hillman), today announced financial results for its third quarter and nine months ended September 30, 2010.
For the third quarter of 2010, net sales were $122.7 million, which is unchanged from the comparable quarter of 2009. Adjusted EBITDA decreased $3.2 million in the quarter ended September 30, 2010 compared to the same prior year period. The decrease in Adjusted EBITDA was primarily the result of a decline in gross margins, higher transportation costs and an increase in legal expenses.
Net sales for the nine months ended September 30, 2010 were $356.1 million, a $2.6 million or .7% decline from the nine month period ended September 30, 2009. Adjusted EBITDA for the nine month period decreased $.5 million or .7% to $66.1 million from the comparable prior year period.
Capital expenditures were $10.1 million for the first nine months of 2010 compared to $9.1 million in the same period in 2009. Capital spending has increased as the Company expands the rollout of next generation key cutting and engraving technology. The revolving credit facility of $30 million remains undrawn at September 30, 2010 with an additional $14.1 million of cash and equivalents on hand at quarter end.
For additional information on the 2010 third quarter financial results see Hillmans quarterly report on Form 10-Q by visiting www.hillmangroup.com or www.sec.gov.
Non-GAAP Financial Measures
A reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure presented in accordance with GAAP, is set forth in the attachment to this release.
Conference Call
Management will host a conference call to discuss the financial results on Wednesday November 17, 2010 at 10:00 a.m. Eastern Time. Participants may join the call by dialing 1-800-860-2442 a few minutes before the call start time and referring to conference ID #445824. Additionally, an archived webcast of the conference call will be available on the Companys website, www.hillmangroup.com.
About Hillman
Hillman sells to hardware stores, home centers, pet suppliers, mass merchants, and other retail outlets principally in the U.S., Canada, Mexico, and South America. Their product line includes thousands of small parts such as fasteners and related hardware items, keys, key duplication systems, and identification items, such as tags, letters, numbers and signs. Services offered include design and installation of merchandising systems and maintenance of appropriate in-store inventory levels.
For more information about Hillman, please visit our website or call Investor Relations at (513) 851-4900 ext. 2084
This document contains forward-looking statements, based on numerous assumptions and subject to risks and uncertainties. Although the Company believes that the forward-looking statements are reasonable, it does not and cannot give any assurance that its beliefs and expectations will prove to be correct. Many factors could significantly affect the Companys operations and cause the Companys actual results to differ substantially from the Companys expectations. Those factors include, but are not limited to: (i) general economic and construction business conditions; (ii) customer acceptance of the Companys products; (iii) relationships with key customers; (iv) materials and manufacturing costs; (v) the financial condition of customers, competitors and suppliers; (vi) technological developments; (vii) increased competition; (viii) changes in capital and credit market conditions; (ix) governmental and business conditions in countries where the Companys products are manufactured and sold; (x) changes in trade regulations; (xi) the effect of acquisition activity; (xii) changes in the Companys plans, strategies, objectives, expectations or intentions; and (xiii) other risks and uncertainties indicated from time to time in the Companys filings with the U.S. Securities and Exchange Commission. Actual results might differ materially from results suggested by any forward-looking statements in this report. The Company does not have an obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.
The Hillman Companies, Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
As of September 30, 2010 |
As of December 31, 2009 |
|||||||
(unaudited) | (audited) | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and equivelents |
$ | 14,064 | $ | 17,164 | ||||
Accounts, receivable, net |
67,537 | 51,757 | ||||||
Inventory, net |
88,757 | 83,182 | ||||||
Other |
11,407 | 11,091 | ||||||
181,765 | 163,194 | |||||||
Property and equipment, net |
52,147 | 47,565 | ||||||
Intangibles, net |
793,858 | 404,446 | ||||||
Other assets |
22,799 | 13,276 | ||||||
Total assets |
$ | 1,050,569 | $ | 628,481 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) |
||||||||
Total current liabilities |
$ | 56,469 | $ | 52,584 | ||||
Long term debt less current maturities |
436,516 | 198,295 | ||||||
Junior subordinated debentures |
115,943 | 115,716 | ||||||
Mandatorily redeemable preferred stock |
| 111,452 | ||||||
Deferred income taxes |
132,422 | 50,169 | ||||||
Accrued dividends on preferred stock |
75,580 | |||||||
Other long term liabilities |
5,700 | 27,793 | ||||||
Common stock with put options |
12,397 | 7,451 | ||||||
Stockholders equity (deficit) |
291,122 | (10,559 | ) | |||||
Total liabilities and stockholders equity (deficit) |
$ | 1,050,569 | $ | 628,481 | ||||
The Hillman Companies, Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 122,715 | $ | 122,673 | $ | 356,131 | $ | 358,699 | ||||||||
Cost of sales |
60,050 | 57,580 | 172,845 | 176,965 | ||||||||||||
Gross Profit |
62,665 | 65,093 | 183,286 | 181,734 | ||||||||||||
Selling, general and administrative expense |
39,024 | 41,412 | 136,173 | 121,628 | ||||||||||||
Depreciation and amorization |
9,355 | 6,166 | 22,353 | 18,595 | ||||||||||||
Non-recurring expenses |
385 | | 22,130 | | ||||||||||||
Management fees to a related party |
| 250 | 438 | 759 | ||||||||||||
Total operating expenses |
48,764 | 47,828 | 181,094 | 140,982 | ||||||||||||
Other income (expense), net |
399 | 151 | 149 | (316 | ) | |||||||||||
Income from operations |
14,300 | 17,416 | 2,341 | 40,436 | ||||||||||||
Interest expense, net |
11,723 | 10,374 | 35,462 | 29,905 | ||||||||||||
Investment income on trust common securities |
(95 | ) | (95 | ) | (284 | ) | (284 | ) | ||||||||
Income (loss) before income taxes |
2,672 | 7,137 | (32,837 | ) | 10,815 | |||||||||||
Income tax provision (benefit) |
1,222 | 4,396 | (3,280 | ) | 9,558 | |||||||||||
Net income (loss) |
$ | 1,450 | $ | 2,741 | $ | (29,557 | ) | $ | 1,257 | |||||||
The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown: |
|
|||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income |
$ | 1,450 | $ | 2,741 | $ | (29,557 | ) | $ | 1,257 | |||||||
Add back: Depreciation and amortization |
9,355 | 6,166 | 22,353 | 18,595 | ||||||||||||
Interest expense, net |
11,723 | 10,374 | 35,462 | 29,905 | ||||||||||||
Investment income on trust common securities |
(95 | ) | (95 | ) | (284 | ) | (284 | ) | ||||||||
Income tax provision (benefit) |
1,222 | 4,396 | (3,280 | ) | 9,558 | |||||||||||
EBITDA (1) |
$ | 23,655 | $ | 23,582 | $ | 24,694 | $ | 59,031 | ||||||||
Management fees to a related party |
| 250 | 438 | 759 | ||||||||||||
Stock compensation expense |
| 3,288 | 19,053 | 7,088 | ||||||||||||
Exchange rate (gain) loss |
(237 | ) | (135 | ) | (233 | ) | (305 | ) | ||||||||
Non-recurring expenses |
385 | | 22,130 | | ||||||||||||
Adjusted EBITDA (1) |
$ | 23,803 | $ | 26,985 | $ | 66,082 | $ | 66,573 | ||||||||
NOTE
(1) - EBITDA, a non-GAAP measure, is defined as net income (loss) before income tax expense (benefit), interest expense (net), investment income on trust common securities, depreciation and amortization. Adjusted EBITDA, also a non-GAAP measure, is defined as EBITDA plus share based compensation expense, foreign exchange gains and losses and non-recurring expenses. The Company believes that EBITDA and Adjusted EBITDA (collectively, EBITDA-Based Measures) provide useful information to holders of the Companys securities regarding the Companys operating performance, capacity to incur and service debt, make distribution to holders of the Companys trust preferred securities and fund capital expenditures. The Company believes that EBITDA-Based Measures are used by many investors, analysts and rating agencies as a measure of performance. In addition, Adjusted EBITDA approximates Consolidated Adjusted EBITDA as defined in our senior credit facility and indentures relating to the Companys senior notes. Neither of the EBITDA Based Measures is defined by GAAP and neither should be considered in isolation or as an alternative to other financial data prepared in accordance with GAAP or as an indicator of the Companys operating performance. EBITDA and Adjusted EBITDA as defined in this release may differ from similarly titled measures presented by other companies.