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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 25, 2021
OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-39609
Hillman Solutions Corp.
(Exact name of registrant as specified in its charter)
Delaware85-2096734
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
10590 Hamilton Avenue45231
Cincinnati,Ohio
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (513851-4900
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. (Check one):
Large accelerated filer   Accelerated filer 
Non-accelerated filer 
  (Do not check if a smaller reporting company)
  Smaller reporting company 
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.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per shareHLMNThe Nasdaq Stock Market LLC
Warrants to purchase one share of common stock, each at an exercise price of $11.50 per shareHLMNWThe Nasdaq Stock Market LLC
On November 3, 2021, 187,569,511 shares of common stock, par value $0.0001 per share, were issued and outstanding.


Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
INDEX
 
PART I. FINANCIAL INFORMATIONPAGE
Item 1.
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

Page 2 

Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(dollars in thousands, except per share amounts)

 September 25,
2021
December 26,
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, net506,397 391,679 
Other current assets15,600 19,280 
Total current assets676,142 553,707 
Property and equipment, net of accumulated depreciation of $273,966 ($236,031 - 2020)
173,170 182,674 
Goodwill825,981 816,200 
Other intangibles, net of accumulated amortization of $337,361 ($291,434 - 2020)
810,559 825,966 
Operating lease right of use assets84,871 76,820 
Deferred tax assets2,016 2,075 
Other assets14,295 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 leases7,174 11,481 
Current portion of operating lease liabilities12,680 12,168 
Accrued expenses:
Salaries and wages11,893 29,800 
Pricing allowances9,878 6,422 
Income and other taxes4,252 5,986 
Interest940 12,988 
Other accrued expenses36,613 31,605 
Total current liabilities302,827 311,911 
Long term debt890,623 1,535,508 
Warrant liabilities81,180  
Deferred tax liabilities139,547 156,118 
Operating lease liabilities77,238 68,934 
Other non-current liabilities22,189 31,560 
Total liabilities$1,513,604 $2,104,031 
Commitments and contingencies (Note 6)
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 capital1,317,706 565,815 
Accumulated deficit(216,728)(171,849)
Accumulated other comprehensive loss(27,567)(29,388)
Total stockholders' equity1,073,430 364,587 
Total liabilities and stockholders' equity$2,587,034 $2,468,618 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Page 3 

Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(dollars in thousands, except per share amounts)


Thirteen Weeks Ended
September 25, 2021
Thirteen Weeks Ended
September 26, 2020
Thirty-nine Weeks Ended
September 25, 2021
Thirty-nine Weeks Ended
September 26, 2020
Net sales$364,480 $398,680 $1,081,476 $1,041,226 
Cost of sales (exclusive of depreciation and amortization shown separately below)236,999 227,481 654,264 590,294 
Selling, general and administrative expenses110,447 107,333 325,288 292,056 
Depreciation14,454 15,926 46,065 50,673 
Amortization15,504 14,883 45,827 44,596 
Management fees to related party56 130 270 451 
Other (income) expense315 (2,175)(2,232)(2,120)
Income (loss) from operations(13,295)35,102 11,994 65,276 
Loss on change in fair value of warrant liability3,990  3,990  
Interest expense, net11,801 20,688 49,979 67,746 
Interest expense on junior subordinated debentures1,471 3,219 7,775 9,555 
(Gain) loss on mark-to-market adjustments(261)(773)(1,685)1,169 
Refinancing charges8,070  8,070  
Investment income on trust common securities(44)(94)(233)(283)
Income (loss) before income taxes(38,322)12,062 (55,902)(12,911)
Income tax provision (benefit)(5,798)2,758 (11,023)(2,374)
Net income (loss)$(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 outstanding168,44089,745116,94589,673
Diluted income (loss) per share$(0.19)$0.10 $(0.38)$(0.12)
Weighted average diluted shares outstanding168,44090,525116,94589,673
Net income (loss) from above$(32,524)$9,304 $(44,879)$(10,537)
Other comprehensive income (loss):
Foreign currency translation adjustments(4,740)3,070 1,575 (4,500)
Hedging activity246  246  
Total other comprehensive income (loss) (4,494)3,070 1,821 (4,500)
Comprehensive income (loss)$(37,018)$12,374 $(43,058)$(15,037)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Page 4 

Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(dollars in thousands)
 Thirty-nine Weeks Ended
September 25, 2021
Thirty-nine Weeks Ended
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 amortization91,892 95,269 
Deferred income taxes(21,538)(1,963)
Deferred financing and original issue discount amortization3,036 2,805 
Stock-based compensation expense8,817 3,818 
Increase in fair value of warrant liabilities3,990  
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 assets3,003 (15,276)
Accounts payable12,896 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 loans883,872  
Proceeds from recapitalization of Landcadia, net of transaction costs455,161  
Proceeds from sale of common stock in PIPE, net of issuance costs363,301  
Repayments of senior notes (330,000) 
Repayment of Junior Subordinated Debentures (108,707) 
Financing fees(20,988) 
Borrowings on revolving credit loans246,000 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 options1,761  
Net cash (used by) provided by financing activities173,661 (24,580)
Effect of exchange rate changes on cash610 (63)
Net decrease in cash and cash equivalents(7,091)12,963 
Cash and cash equivalents at beginning of period21,520 19,973 
Cash and cash equivalents at end of period$14,429 $32,936 
Supplemental disclosure of cash flow information:
Interest paid on junior subordinated debentures, net$7,542 $9,272 
Interest paid55,624 59,147 
Income taxes paid1,990 475 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
Page 5 

Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
(dollars in thousands)
Common StockTreasury Stock
Shares AmountShares AmountAdditional Paid-in-capitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' Equity
Thirty-nine weeks ended September 25, 2021
Balance at December 26, 202090,934,930 $9 — $— $565,815 $(171,849)$(29,388)$364,587 
Net Loss— — — — — (8,970)— (8,970)
Stock-based compensation— — — — 1,741 — — 1,741 
Proceeds from exercise of stock options268,253 $— — $— 1,643 — — 1,643 
Change in cumulative foreign currency translation adjustment — — — — — — 2,473 2,473 
Balance at March 27, 202191,203,183 $9 — $— $569,199 $(180,819)$(26,915)$361,474 
Net Loss— — — — — (3,385)— (3,385)
Stock-based compensation— — — — 1,796 — — 1,796 
Proceeds from exercise of stock options17,718 — — — 118 — — 118 
Change in cumulative foreign currency translation adjustment — — — — — — 3,842 3,842 
Balance at June 26, 202191,220,901 $9 — $— $571,113 $(184,204)$(23,073)$363,845 
Net Loss— — — — — (32,524)— (32,524)
Stock-based compensation— — — — 5,280 — — 5,280 
Vesting of restricted shares88,305 — — — — — — — 
Proceeds from exercise of stock options— — — — — — — — 
Recapitalization of Landcadia, net of issuance costs and fair value of of assets and liabilities acquired58,672,000 6 — — 378,016 — — 378,022 
Shares issued to PIPE, net of issuance costs37,500,000 4 — — 363,297 — 363,301 
Hedging activity — — — — — — 246 246 
Change in cumulative foreign currency translation adjustment — — — — — — (4,740)(4,740)
Balance at September 25, 2021187,481,206 $19 — $— $1,317,706 $(216,728)$(27,567)$1,073,430 
Thirty-nine weeks ended September 26, 2020
Balance at December 28, 2019548,040 $5 (4,740)$(4,320)$557,674 $(147,350)$(32,040)$373,969 
Retroactive application of recapitalization89,001,575 4 4,740 4,320 (4,324)   
Balance at December 28, 2019 - Recast89,549,615 9   553,350 (147,350)(32,040)373,969 
Net Loss— — — — — (14,804)— (14,804)
Stock-based compensation— — — — 1,145 — — 1,145 
Vesting of restricted shares88,305 — — — — — — — 
Change in cumulative foreign currency translation adjustment — — — — — — (11,213)(11,213)
Balance at March 28, 202089,637,920 $9 — $— $554,495 $(162,154)$(43,253)$349,097 
Net Loss— — — — — (5,037)— (5,037)
Stock-based compensation— — — — 1,524 — — 1,524 
Change in cumulative foreign currency translation adjustment — — — — — — 3,643 3,643 
Balance at June 27, 202089,637,920 $9 — $— $556,019 $(167,191)$(39,610)$349,227 
Net Income— — — — — 9,304 — 9,304 
Stock-based compensation— — — — 1,148 — — 1,148 
Vesting of restricted shares88,305— — — — — — — 
Change in cumulative foreign currency translation adjustment — — — — — — 3,070 3,070 
Balance at September 26, 202089,726,225 $9 — $— $557,167 $(157,887)$(36,540)$362,749 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
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Table of Contents
HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
 

1. Basis of Presentation:

Hillman Solutions Corp., its predecessor for accounting purposes HMAN Group Holdings Inc.., and wholly-owned subsidiaries are collectively referred to herein as the "Company." The accompanying unaudited financial statements include the condensed consolidated accounts of the Company for the thirty-nine weeks ended September 25, 2021. Unless the context requires otherwise, references to "Hillman," "we," "us," "our," or "our Company" refer to Hillman Solutions Corp. and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. The Hillman Solutions Corp. is the newly formed parent company of HMAN Group Holdings Inc. (previously known as “Holdco”).

The accompanying unaudited condensed consolidated financial statements present information in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and applicable rules of Regulation S-X. Accordingly, they do not include all information or footnotes required by U.S. generally accepted accounting principles for complete financial statements. Operating results for the thirty-nine weeks ended September 25, 2021 do not necessarily indicate the results that may be expected for the full year. For further information, refer to the consolidated financial statements for the year ended December 26, 2020 and notes thereto included in the S-1 filed on August 25, 2021 with the Securities and Exchange Commission (“SEC”).

On July 14, 2021, privately held HMAN Group Holdings Inc. ("Old Hillman"), and Landcadia Holdings III, Inc. (“Landcadia” and after the Business Combination described herein, “New Hillman”), a special purpose acquisition company ("SPAC") consummated the previously announced business combination (the “Closing”) pursuant to the terms of the Agreement and Plan of Merger, dated as of January 24, 2021 (as amended on March 12, 2021, the "Merger Agreement”) by and among Landcadia, Helios Sun Merger Sub, a wholly-owned subsidiary of Landcadia (“Merger Sub”), HMAN Group Holdings Inc., a Delaware corporation (“Hillman Holdco”) and CCMP Sellers’ Representative, LLC, a Delaware limited liability company in its capacity as the Stockholder Representative thereunder (the “Stockholder Representative”). Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Hillman Holdco with Hillman Holdco surviving the merger as a wholly owned subsidiary of New Hillman, which was renamed “Hillman Solutions Corp.” (the “Merger” and together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). Unless the context indicates otherwise, the discussion of the Company and its financial condition and results of operations is with respect to New Hillman following the closing date and Old Hillman prior to the closing date. See Note 3 - Merger Agreement for more information.

In connection with the closing of the Business Combination on July 14, 2021, Landcadia changed its name from “Landcadia Holdings III, Inc." to “Hillman Solutions Corp.” and the Company’s common stock and warrants began trading on The Nasdaq Stock Market under the trading symbols “HLMN” and “HLMNW,” respectively.

2. Summary of Significant Accounting Policies:
The significant accounting policies should be read in conjunction with the significant accounting policies included in the S-1 filed on August 25, 2021 with the Securities and Exchange Commission (“SEC”).
Use of Estimates in the Preparation of Financial Statements:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses for the reporting periods. Actual results may differ from these estimates.
The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors including, but not limited to: the magnitude and duration of COVID-19, the extent to which it will impact worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 25, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to the carrying value inventory and the carrying value of the goodwill and other long-lived assets.
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HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
In 2020, the pandemic had a significant impact on the Company's business, driving high demand for personal protective equipment, including face masks, disposable gloves, sanitizing wipes, and disinfecting sprays. During 2020, at the request of our customers, the Company began to sell certain categories of protective and cleaning equipment that are not a part of our core product offerings, including wipes, sprays, masks and bulk boxes of disposable gloves. High demand and limited supply of these products available for retail sale drove prices and cost up in 2020. In contrast, in 2021 the pandemic has had less of an impact on the Company's business, economic activity has generally recovered, and consumer access to personal protective equipment has normalized. By the end of the third quarter of 2021 the Company's product mix has begun to normalize back to near pre-pandemic levels. In 2021, demand for certain protective products softened as vaccines were rolled out and supply returned to a more normal level. In the third quarter of 2021, we evaluated our customers' needs and the market conditions and ultimately decided to exit certain protective product categories. In connection with the exit of these product lines, the Company recorded an inventory valuation charge of $32,026 thousand including the write off of inventory along with costs for donation and disposal of the remaining inventory on hand. Excluding the inventory valuation charge, there was not a material impact to the Company’s consolidated financial statements as of and for the quarter ended September 25, 2021, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s Consolidated Financial Statements in future reporting periods.

Warrant Liabilities:
The Company accounts for the warrants in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company's statement of operations. See Note 11 - Warrants for additional information.

Revenue Recognition:
Revenue is recognized when control of goods or services is transferred to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue.
The Company offers a variety of sales incentives to its customers primarily in the form of discounts and rebates. Discounts are recognized in the consolidated financial statements at the date of the related sale. Rebates are based on the revenue to date and the contractual rebate percentage to be paid. A portion of the cost of the rebate is allocated to each underlying sales transaction. Discounts and rebates are included in the determination of net sales.
The Company also establishes reserves for customer returns and allowances. The reserve is established based on historical rates of returns and allowances. The reserve is adjusted quarterly based on actual experience. Returns and allowances are included in the determination of net sales.
The following table displays our disaggregated revenue by product category:

Thirteen weeks ended September 25, 2021
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
Fastening and Hardware$189,935 $ $34,648 $224,583 
Personal Protective71,521  79 71,600 
Keys and Key Accessories 52,586 778 53,364 
Engraving 14,853 20 14,873 
Resharp 60  60 
Consolidated$261,456 $67,499 $35,525 $364,480 
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HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
Thirteen weeks ended September 26, 2020
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
Fastening and Hardware$202,876 $ $38,383 $241,259 
Personal Protective97,431  12 97,443 
Keys and Key Accessories 44,974 790 45,764 
Engraving 14,205 2 14,207 
Resharp 7  7 
Consolidated$300,307 $59,186 $39,187 $398,680 

Thirty-nine weeks ended September 25, 2021
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
Fastening and Hardware$557,745 $ $114,565 $672,310 
Personal Protective217,769  270 218,039 
Keys and Key Accessories 144,969 1,345 146,314 
Engraving 44,635 53 44,688 
Resharp 125  125 
Consolidated$775,514 $189,729 $116,233 $1,081,476 

Thirty-nine weeks ended September 26, 2020
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
Fastening and Hardware$543,832 $ $98,430 $642,262 
Personal Protective239,151  78 239,229 
Keys and Key Accessories 119,001 2,039 121,040 
Engraving 38,666 5 38,671 
Resharp 24  24 
Consolidated$782,983 $157,691 $100,552 $1,041,226 

The following table disaggregates our revenue by geographic location:

Thirteen weeks ended September 25, 2021
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
United States$256,407 $66,563 $ $322,970 
Canada1,866 936 35,525 38,327 
Mexico3,183   3,183 
Consolidated$261,456 $67,499 $35,525 $364,480 

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HILLMAN SOLUTIONS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
Thirteen weeks ended September 26, 2020
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
United States$295,689 $58,566 $ $354,255 
Canada2,292 620 39,187 42,099 
Mexico2,326   2,326 
Consolidated$300,307 $59,186 $39,187 $398,680 

Thirty-nine weeks ended September 25, 2021
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
United States$760,946 $187,602 $ $948,548 
Canada5,145 2,127 116,233 123,505 
Mexico9,423   9,423 
Consolidated$775,514 $189,729 $116,233 $1,081,476 

Thirty-nine weeks ended September 26, 2020
Hardware and Protective SolutionsRobotics and Digital SolutionsCanadaTotal Revenue
United States$771,064 $156,249 $ $927,313 
Canada4,833 1,442 100,552 106,827 
Mexico7,086   7,086 
Consolidated$782,983