EX-99.2
Published on April 29, 2025
Quarterly Earnings Results Presentation Q1 2025 - April 29, 2025
2 PresBuilder Placeholder - Delete this box if you see it on a slide, but DO NOT REMOVE this box from the slide layout Forward Looking Statements This presentation contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. All forward-looking statements are made in good faith by the company and are intended to qualify for the safe harbor from liability established by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995.You should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," “target”, “goal”, "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable economic conditions that may affect operations, financial condition and cash flows including spending on home renovation or construction projects, inflation, recessions, instability in the financial markets or credit markets; (2) increased supply chain costs, including tariffs, raw materials, sourcing, transportation and energy; (3) the highly competitive nature of the markets that we serve; (4) the ability to continue to innovate with new products and services; (5) seasonality; (6) large customer concentration; (7) the ability to recruit and retain qualified employees; (8) the outcome of any legal proceedings that may be instituted against the Company; (9) adverse changes in currency exchange rates; or (10) regulatory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and readers should also refer to those risks that are included in the Company’s filings with the Securities and Exchange Commission (“SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 28, 2024. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements. Except as required by applicable law, the Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this communication to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Presentation of Non-GAAP Financial Measures In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) throughout this presentation the company has provided non-GAAP financial measures, which present results on a basis adjusted for certain items. The company uses these non-GAAP financial measures for business planning purposes and in measuring its performance relative to that of its competitors. The company believes that these non-GAAP financial measures are useful financial metrics to assess its operating performance from period-to-period by excluding certain items that the company believes are not representative of its core business. These non-GAAP financial measures are not intended to replace, and should not be considered superior to, the presentation of the company’s financial results in accordance with GAAP. The use of the non-GAAP financial measures terms may differ from similar measures reported by other companies and may not be comparable to other similarly titled measures. These non-GAAP financial measures are reconciled from the respective measures under GAAP in the appendix below. The company is not able to provide a reconciliation of the company’s non-GAAP financial guidance to the corresponding GAAP measures without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a reconciliation such as certain non-cash, nonrecurring or other items that are included in net income and EBITDA as well as the related tax impacts of these items and asset dispositions / acquisitions and changes in foreign currency exchange rates that are included in cash flow, due to the uncertainty and variability of the nature and amount of these future charges and costs.
3 • Net sales increased 2.6% to $359.3 million versus Q1 2024 ◦ Hardware and Protective Solutions ("HPS") increased 5.6% ◦ Robotics and Digital Solutions ("RDS") increased +1.9% ◦ Canada decreased (18.7)% • GAAP net loss totaled $(0.3) million, or $(0.00) per diluted share, compared to $(1.5) million, or $(0.01) per diluted share, in Q1 2024 • Adjusted Gross Margins totaled 46.9% compared to 47.6% in Q1 2024 • Adjusted EBITDA increased to $54.5 million compared to $52.3 million in Q1 2024 • Adjusted EBITDA margins were 15.2% compared to 14.9% in Q1 2024 • Net Debt / Adjusted EBITDA (ttm): 2.9x at quarter end, compared to 2.8x on December 28, 2024 Q1 2025 Financial Review Please see reconciliation tables in the Appendix of this presentation for non-GAAP metrics. Highlights for the 13 Weeks Ended March 29, 2025
4 Q1 2025 Operational Review Highlights for the 13 Weeks Ended March 29, 2025 • Continued taking great care of customers: ◦ YTD fill rates averaged 96% • During the quarter, Hillman Canada won 2024 "Vendor of the Year" from Kent Building Supplies • Continue to pursue accretive, tuck-in M&A opportunities that leverage the Hillman moat • During the quarter, Hillman continued to optimize its supply chain and diversify the country of origin where its products are sourced ◦ Current: 1/3 China; 1/3 North America; 1/3 rest of world ◦ Hillman has the ability to reduce China exposure to 20% by year end • Reiterated FY 2025 Net Sales and Adj. EBITDA guidance; withdrawing FY 2025 Free Cash Flow guidance ◦ Expects to end 2025 with 2.5x Net Sales / TTM Adj. EBITDA
5 Quarterly Financial Performance Adjusted EBITDA (millions $ and % of Net Sales) Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Adjusted Gross Margin in the Appendix of this presentation. Not to scale. Net Sales (millions $) Adjusted Gross Margin (millions $ and % of Net Sales) $52.3 $54.5 Q1 2024 Q1 2025 15.2%14.9% $166.9 $168.6 Q1 2024 Q1 2025 $350.3 $359.3 Q1 2024 Q1 2025 46.9%47.6%
6 Hardware & Protective Q1 2025 Q1 2024 Δ Thirteen weeks ended 3/29/2025 3/30/2024 Comments Revenues $274,407 $259,874 5.6% Driven by Intex acquisition in August 2024 and new business Adjusted EBITDA $37,380 $32,266 15.8% Margin (Adj. EBITDA/Net Sales) 13.6% 12.4% 120 bps Robotics & Digital Q1 2025 Q1 2024 Δ Thirteen Weeks Ended 3/29/2025 3/30/2024 Comments Revenues $56,512 $55,472 1.9% Supported by MinuteKey 3.5 rollout Adjusted EBITDA $15,416 $17,013 (9.4)% Margin (Adj. EBITDA/Net Sales) 27.3% 30.7% (340) bps Canada Q1 2025 Q1 2024 Δ Thirteen Weeks Ended 3/29/2025 3/30/2024 Comments Revenues $28,424 $34,959 (18.7)% Soft market and economy; FX headwinds Adjusted EBITDA $1,730 $3,043 (43.1)% Margin (Adj. EBITDA/Net Sales) 6.1% 8.7% (260) bps Consolidated Q1 2025 Q1 2024 Δ Thirteen Weeks Ended 3/29/2025 3/30/2024 Revenues $359,343 $350,305 2.6% Adjusted EBITDA $54,526 $52,322 4.2% Margin (Adj. EBITDA/Net Sales) 15.2% 14.9% 30 bps Quarterly Performance by Product Category Please see reconciliation of Adjusted EBITDA to Net Income in the Appendix of this presentation. Figures in Thousands of USD unless otherwise noted. • Top Row: ◦ 27 point height ◦ 16 font (work sans) ◦ 4 point white bottom line • First Column green ◦ Dark: CFD9D1 ◦ Light: D9E1DA • Other Columns gray ◦ Dark: D9D9D9 ◦ Light E0E0E0 ◦ 1 point white bottom and inside lines
7 Hardware & Protective Robotics & Digital Canada Total Revenue Thirteen Weeks Ended March 29, 2025 Fastening and Hardware $205,947 $— $25,050 $230,997 Personal Protective 68,460 — 1,231 69,691 Keys and Key Accessories — 46,582 2,136 48,718 Engraving and Resharp — 9,930 7 9,937 Total Revenue $274,407 $56,512 $28,424 $359,343 Quarterly Revenue by Product Category Hardware & Protective Robotics & Digital Canada Total Revenue Thirteen Weeks Ended March 30, 2024 Fastening and Hardware $214,390 $— $31,589 $245,979 Personal Protective 45,484 — 1,408 46,892 Keys and Key Accessories — 43,637 1,952 45,589 Engraving and Resharp — 11,835 10 11,845 Total Revenue $259,874 $55,472 $34,959 $350,305 Figures in Thousands of USD unless otherwise noted.
8 Hillman’s Diversified Supply Chain ◦ Over the past several years, Hillman has lowered its exposure to suppliers based in China ◦ Accelerating “Dual Faucet” strategy; sourcing from multiple suppliers in multiple countries ◦ This flexible supply chain allows Hillman to deliver quality products at the best overall value for its customers; mitigating potential tariff impact ◦ Hillman has a path to reduce its China-based supplier exposure to ~20% by end 2025 2018 SUPPLIER COUNTRY OF ORIGIN Approximates China 49% North America 24% Rest of World 27% 2025 SUPPLIER COUNTRY OF ORIGIN Approximates China 33% North America 33% Rest of World 34% Management estimates
9 Total Net Leverage (Net Debt / TTM Adj. EBITDA) Capital Structure March 29, 2025 ABL Revolver ($164.6 million available) $80.0 Term Note $643.3 Finance Leases and Other Obligations $16.6 Total Debt $740.0 Cash $36.3 Net Debt $703.7 TTM Adjusted EBITDA $244.0 Net Debt/ TTM Adjusted EBITDA 2.9x Leverage holding below 3x; will continue to use cash to delever and/or execute M&A Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Net Debt in the Appendix of this presentation. Figures in Millions of USD unless otherwise noted. 3.2x 2.9x 2.9x 2.8x 2.9x 03 /3 0/ 20 24 06 /2 9/ 20 24 09 /2 8/ 20 24 12 /2 8/ 20 24 03 /2 9/ 20 25 0.0x 1.0x 2.0x 3.0x 4.0x
10 2025 Full Year Guidance (in millions USD) Original FY 2025 Guidance Range Updated FY 2025 Guidance Range Revenues $1.495 to $1.575 billion Reiterated Adjusted EBITDA $255 to $275 million Reiterated Free Cash Flow $90 to $110 million 2.5 times leverage at year end On April 29, 2025, Hillman updated its guidance most recently provided on February 18, 2025 with Hillman's fourth quarter 2024 results. Please see reconciliation of Non-GAAP metrics Adjusted EBITDA and Free Cash Flow in the Appendix of this presentation.
11 Key Takeaways Resilient Business; Focused on Diversifying Supply Chain Historical Long-term Annual Growth Targets (Organic): Revenue Growth: +6% & Adj. EBITDA Growth: +10% Historical Long-term Annual Growth Targets (incl. Acquisitions): Revenue Growth: +10% & Adj. EBITDA Growth: +15% • Business has 60+ year track record of success; proven to be resilient through multiple economic cycles • Great long-term partnerships with customers • Hillman products are utilized for repair, maintenance and remodel projects; products are generally low-cost and a very small percentage of a given project • 1,200-member distribution (sales and service) team and direct-to-store fulfillment continue to provide competitive advantages and strengthen competitive moat - drives new business wins • Given the tariff environment, Hillman working to diversify its supply chain to optimize costs and value; working to mitigate higher costs via price on a dollar for dollar basis
Appendix
13 Investment Highlights Significant runway for incremental growth: Organic + M&A Management team with proven operational and M&A expertise Strong financial profile with 60+ year track record Market and innovation leader across multiple categories Indispensable partner embedded with winning retailers Customers love us, trust us and rely on us Large, predictable, growing and resilient end markets
14 Hillman: Overview Who We Are *Management Estimates Adjusted EBITDA is a non-GAAP measure. Please see Appendix for a reconciliation of Adjusted EBITDA to Net loss ~19 billion Fasteners Sold ~222 million Pairs of Work Gloves Sold ~106+ million Keys Duplicated ~111,000 SKUs Managed ~29,000 Direct Shipping Retail Locations ~31,500 Kiosks in Retail Locations #1 Position Across Core Categories* 7.4% Sales CAGR over past 10 years 61-Year Track record of success $1.5 billion 2024 Sales 9.6% CAGR 2018-2024 Adj. EBITDA Growth 16.4% 2024 Adj. EBITDA Margin 2024: By The Numbers • We are a leading North American provider of hardware products and solutions, including; ◦ Hardware and home improvement products ◦ Protective and job site gear – including work gloves and job site storage ◦ Robotic kiosk technologies (“RDS”): Key duplication, engraving & knife sharpening • Our differentiated service model provides direct to-store shipping, in-store service, and category management solutions • We have long-standing strategic partnerships with leading retailers across North America: ◦ Home Depot, Lowes, Walmart, Tractor Supply, and ACE Hardware • Founded in 1964; HQ in Cincinnati, Ohio
15 #1 in Segment Representative Top Customers #1 in Segment #1 in Segment Key and Fob Duplication Personalized Tags Knife Sharpening Fasteners & Specialty Gloves Builders Hardware & Metal Shapes Safety / PPE Construction Fasteners Work Gear Picture Hanging Source: Third party industry report and management estimates. Primary Product Categories Hardware Solutions Robotics & Digital SolutionsProtective Solutions
16 Thirteen weeks ended March 29, 2025 March 30, 2024 Net income $(317) $(1,492) Income tax expense (benefit) (34) (483) Interest expense, net 14,460 15,271 Depreciation 19,395 16,338 Amortization 15,415 15,254 EBITDA $48,919 $44,888 Stock compensation expense 3,278 2,829 Restructuring and other (1) 1,691 991 Transaction and integration expense (2) 58 274 Change in fair value of contingent consideration (326) 332 Refinancing costs (3) 906 3,008 Adjusted EBITDA $54,526 $52,322 Adjusted EBITDA Reconciliation Footnotes: 1. Includes consulting and other costs associated with severance related to our distribution center relocations and corporate restructuring activities. 2. Transaction and integration expense includes professional fees and other costs related to the Koch Industries, Inc. and Intex DIY, Inc acquisitions. 3. In the first quarters of 2025 and 2024, we entered into a Repricing Amendment (2025 Repricing Amendment and 2024 Repricing Amendment) on our existing Senior Term Loan due July 14, 2028.
17 Thirteen weeks ended March 29, 2025 March 30, 2024 Net Sales $359,343 $350,305 Cost of sales (exclusive of depreciation and amortization) 190,740 183,434 Gross margin exclusive of depreciation and amortization $168,603 $166,871 Gross margin exclusive of depreciation and amortization % 46.9 % 47.6 % Adjusting Items: — — Adjusted Gross Profit $168,603 $166,871 Adjusted Gross Margin % 46.9 % 47.6 % Adjusted Gross Margin Reconciliation
18 Thirteen weeks ended March 29, 2025 March 30, 2024 Net sales $359,343 $350,305 Selling, general and administrative expenses 119,052 118,565 SG&A as a % of Net Sales 33.1 % 33.8 % SG&A Adjusting Items (1): Stock compensation expense 3,278 2,829 Restructuring 1,691 991 Acquisition and integration expense 58 274 Adjusted SG&A $114,025 $114,471 Adjusted SG&A as a % of Net Sales 31.7 % 32.7 % Adjusted SG&A Expense Reconciliation 1. See adjusted EBITDA Reconciliation for details of adjusting items
19 As of March 29, 2025 December 28, 2024 Revolving loans $80,000 $62,000 Senior term loan 643,343 645,470 Finance leases and other obligations 16,629 11,085 Gross debt $739,972 $718,555 Less cash 36,309 44,510 Net debt $703,663 $674,045 Net Debt & Free Cash Flow Reconciliations Thirteen Weeks Ended March 29, 2025 March 30, 2024 Net cash (used for) provided by operating activities $(655) $11,676 Capital expenditures (20,658) (17,759) Free cash flow $(21,313) $(6,083) Reconciliation of Net Debt Reconciliation of Free Cash Flow
20 Thirteen weeks ended March 29, 2025 HPS RDS Canada Operating income $11,031 $3,495 $489 Depreciation & amortization 21,755 11,874 1,181 Stock compensation expense 2,736 343 199 Restructuring and other 1,803 27 (139) Transaction and integration expense 55 3 — Change in fair value of contingent consideration — (326) — Adjusted EBITDA $37,380 $15,416 $1,730 Thirteen weeks ended March 30, 2024 HPS RDS Canada Operating income $9,248 $5,757 $1,299 Depreciation & amortization 19,869 10,376 1,347 Stock compensation expense 2,337 280 212 Restructuring 549 257 185 Transaction and integration expense 263 11 — Change in fair value of contingent consideration — 332 — Adjusted EBITDA $32,266 $17,013 $3,043 Segment Adjusted EBITDA Reconciliations