Form: 8-K

Current report filing

November 16, 2010

 

Exhibit 99.1

LOGO

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 Hillman’s 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 Company’s 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 Company’s operations and cause the Company’s actual results to differ substantially from the Company’s expectations. Those factors include, but are not limited to: (i) general economic and construction business conditions; (ii) customer acceptance of the Company’s 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 Company’s products are manufactured and sold; (x) changes in trade regulations; (xi) the effect of acquisition activity; (xii) changes in the Company’s plans, strategies, objectives, expectations or intentions; and (xiii) other risks and uncertainties indicated from time to time in the Company’s 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 Company’s securities regarding the Company’s operating performance, capacity to incur and service debt, make distribution to holders of the Company’s 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 Company’s 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 Company’s operating performance. EBITDA and Adjusted EBITDA as defined in this release may differ from similarly titled measures presented by other companies.