The Hillman Group Reports Second Quarter and Year-to-Date 2021 Results
Exhibit 99.1
CINCINNATI, July 29, 2021 (GLOBE NEWSWIRE) -- The Hillman Companies, Inc. (NYSE-AMEX: HLM.PR) (the “Company” or “Hillman”) reported today selected financial results for the twenty-six weeks ended June 26, 2021.
Second Quarter 2021 Highlights
- Net sales for the second quarter of 2021 increased 8.4% to $375.7 million as compared to prior year quarter net sales of $346.7 million
- Operating income decreased 5.9% to $19.5 million compared to $20.7 million in the prior year second quarter
- Adjusted EBITDA1 increased 4.6% to $64.5 million compared to $61.6 million in the prior year quarter
Year-to-Date 2021 Highlights
- Net sales for the twenty-six weeks ended June 26, 2021 increased 11.6% to $717.0 million as compared to $642.5 million in 2020
- Operating income for the twenty-six weeks ended June 26, 2021 decreased 16.2% to $25.3 million as compared to $30.2 million in 2020
- Adjusted EBITDA1 for the twenty-six weeks ended June 26, 2021 increased 8.9% to $112.3 million compared to $103.1 million in 2020
Doug Cahill, Chairman, President and Chief Executive Officer, stated, “It has been an exciting time for Hillman with the closing of the transaction with Landcadia III and on July 15th ringing the bell and becoming a publicly traded company on Nasdaq under the symbol 'HLMN'. With the transaction complete and the recapitalization of our balance sheet, we are even better positioned to do what we do best, solved complexity, labor and logistics problems for best-in-class retailers from big box to your local hardware stores. I can't remember a time in the hardware and home improvement business when these were more important to our retailers than they are right now."
Conference Call and Webcast
The Company will host a conference call to discuss the financial results for the thirteen and twenty-six weeks ended June 26, 2021 on Friday, July 30, 2021, at 10:00 am Eastern time. Participants may join the call by dialing 1-(866)-673-2033, passcode: 8163153, a few minutes before the call start time. A live audio webcast of the conference call will also be available in a listen-only mode on the Investor Info page of the Company’s website, which is located at www.ir.hillmangroup.com. Participants who want to access the webcast should visit the company's website about five minutes before the call. The archived webcast will be available for replay on the company's website after the call.
About Hillman
Founded in 1964 and headquartered in Cincinnati, Ohio, Hillman is a leading North American provider of complete hardware solutions, delivered with industry best customer service to over 40,000 locations. Hillman designs innovative product and merchandising solutions for complex categories that deliver an outstanding customer experience to home improvement centers, mass merchants, national and regional hardware stores, pet supply stores, and OEM & Industrial customers. Leveraging a world-class distribution and sales network, Hillman delivers a “small business” experience with “big business” efficiency. For more information on Hillman, visit www.hillmangroup.com.
Forward-Looking Statements
This press release may contain “forward-looking statements” within the meaning of the federal securities law. All statements other than statements of historical fact included in this presentation are forward-looking statements made in good faith by the company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. The Company's actual results may differ from their expectations, estimates and projections and consequently, 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," "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 inflation, recessions, instability in the financial markets or credit markets; (2) highly competitive markets that could adversely impact financial results (3) ability to continue to innovate with new products and services; (4) seasonality; (5) large customer concentration; (6) ability to recruit and retain qualified employees; (7) the outcome of any legal proceedings that may be instituted against the Company (8) adverse changes in currency exchange rates; (9) the impact of COVID-19 on the Company’s business; 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 will be included under the header “Risk Factors” set forth in Item 1A of the company’s annual report filed on Form 10-K. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements. 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 presentation to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. All estimates of financial metrics in this presentation for fiscal 2021 and beyond are current as of July 29, 2021.
Contact
VP Investor Relations
Jennifer Hills
jennifer.hills@hillmangroup.com
(513) 975-5248
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Operating Income, GAAP Basis
(dollars in thousands)
Unaudited
|
Thirteen Weeks Ended June 26, 2021 |
Thirteen Weeks Ended June 27, 2020 |
Twenty-six Weeks Ended June 26, 2021 |
Twenty-six Weeks Ended June 27, 2020 |
|||||||||||||
| Net sales | $ | 375,715 | $ | 346,710 | $ | 716,996 | $ | 642,546 | ||||||||
| Cost of sales (exclusive of depreciation and amortization shown separately below) | 215,967 | 196,402 | 417,265 | 362,813 | ||||||||||||
| Selling, general and administrative expenses | 111,662 | 94,970 | 214,841 | 184,723 | ||||||||||||
| Depreciation | 15,270 | 17,230 | 31,611 | 34,747 | ||||||||||||
| Amortization | 15,414 | 14,865 | 30,323 | 29,713 | ||||||||||||
| Management fees to related party | 88 | 196 | 214 | 321 | ||||||||||||
| Other (income) expense | (2,195 | ) | 2,319 | (2,547 | ) | 55 | ||||||||||
| Income from operations | 19,509 | 20,728 | 25,289 | 30,174 | ||||||||||||
| Interest expense, net | 19,159 | 23,878 | 38,178 | 47,058 | ||||||||||||
| Interest expense on junior subordinated debentures | 3,152 | 3,184 | 6,304 | 6,336 | ||||||||||||
| (Gain) loss on mark-to-market adjustment of interest rate swap | (751 | ) | (308 | ) | (1,424 | ) | 1,942 | |||||||||
| Investment income on trust common securities | (94 | ) | (94 | ) | (189 | ) | (189 | ) | ||||||||
| Loss before income taxes | (1,957 | ) | (5,932 | ) | (17,580 | ) | (24,973 | ) | ||||||||
| Income tax provision (benefit) | 1,428 | (895 | ) | (5,225 | ) | (5,132 | ) | |||||||||
| Net loss | $ | (3,385 | ) | $ | (5,037 | ) | $ | (12,355 | ) | $ | (19,841 | ) | ||||
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
Unaudited
|
June 26, 2021 |
December 26, 2020 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 16,255 | $ | 21,520 | ||||
| Accounts receivable, net of allowances of $2,586 ($2,395 - 2020) | 146,865 | 121,228 | ||||||
| Inventories, net | 482,645 | 391,679 | ||||||
| Other current assets | 22,125 | 19,280 | ||||||
| Total current assets | 667,890 | 553,707 | ||||||
| Property and equipment, net of accumulated depreciation of $260,692 ($236,031 - 2020) | 174,466 | 182,674 | ||||||
| Goodwill | 826,969 | 816,200 | ||||||
| Other intangibles, net of accumulated amortization of $322,230 ($291,434 - 2020) | 826,949 | 825,966 | ||||||
| Operating lease right of use assets | 85,312 | 76,820 | ||||||
| Deferred tax assets | 2,728 | 2,075 | ||||||
| Other assets | 12,739 | 11,176 | ||||||
| Total assets | $ | 2,597,053 | $ | 2,468,618 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 229,618 | $ | 201,461 | ||||
| Current portion of debt and capital leases | 11,442 | 11,481 | ||||||
| Current portion of operating lease liabilities | 11,838 | 12,168 | ||||||
| Accrued expenses: | ||||||||
| Salaries and wages | 16,738 | 29,800 | ||||||
| Pricing allowances | 7,636 | 6,422 | ||||||
| Income and other taxes | 2,647 | 5,986 | ||||||
| Interest | 13,550 | 12,988 | ||||||
| Other accrued expenses | 33,935 | 31,605 | ||||||
| Total current liabilities | 327,404 | 311,911 | ||||||
| Long term debt | 1,651,476 | 1,535,508 | ||||||
| Deferred tax liabilities | 151,970 | 156,118 | ||||||
| Operating lease liabilities | 78,204 | 68,934 | ||||||
| Other non-current liabilities | 24,154 | 31,560 | ||||||
| Total liabilities | $ | 2,233,208 | $ | 2,104,031 | ||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $0.01 par, 5,000 shares authorized, none issued or outstanding at June 26, 2021 and December 26, 2020 | — | — | ||||||
| Common stock, $0.01 par, 5,000 shares authorized, issued and outstanding at June 26, 2021 and December 26, 2020 | — | — | ||||||
| Additional paid-in capital | 571,122 | 565,824 | ||||||
| Accumulated deficit | (184,204 | ) | (171,849 | ) | ||||
| Accumulated other comprehensive loss | (23,073 | ) | (29,388 | ) | ||||
| Total stockholders' equity | 363,845 | 364,587 | ||||||
| Total liabilities and stockholders' equity | $ | 2,597,053 | $ | 2,468,618 | ||||
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited
|
Twenty-six Weeks Ended June 26, 2021 |
Twenty-six Weeks Ended June 27, 2020 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (12,355 | ) | $ | (19,841 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 61,934 | 64,460 | ||||||
| Deferred income taxes | (4,709 | ) | (4,771 | ) | ||||
| Deferred financing and original issue discount amortization | 1,800 | 1,879 | ||||||
| Stock-based compensation expense | 3,537 | 2,669 | ||||||
| Asset impairment | — | 210 | ||||||
| (Gain) on disposal of property and equipment | — | (337 | ) | |||||
| Change in fair value of contingent consideration | (1,212 | ) | (1,300 | ) | ||||
| Other non-cash interest and change in value of interest rate swap | (1,424 | ) | 1,942 | |||||
| Changes in operating items: | ||||||||
| Accounts receivable | (23,547 | ) | (61,318 | ) | ||||
| Inventories | (73,049 | ) | 592 | |||||
| Other assets | (15,786 | ) | 1,307 | |||||
| Accounts payable | 22,443 | 4,475 | ||||||
| Other accrued liabilities | (17,471 | ) | 21,690 | |||||
| Net cash provided by (used for) operating activities | (59,839 | ) | 11,657 | |||||
| Cash flows from investing activities: | ||||||||
| Acquisition of business, net of cash received | (39,102 | ) | (800 | ) | ||||
| Capital expenditures | (22,684 | ) | (22,196 | ) | ||||
| Net cash used for investing activities | (61,786 | ) | (22,996 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayments of senior term loans | (5,304 | ) | (5,304 | ) | ||||
| Borrowings on senior term loans | 35,000 | — | ||||||
| Financing fees | (1,027 | ) | — | |||||
| Borrowings on revolving credit loans | 128,000 | 66,000 | ||||||
| Repayments of revolving credit loans | (42,000 | ) | (50,000 | ) | ||||
| Principal payments under finance and capitalized lease obligations | (460 | ) | (411 | ) | ||||
| Proceeds from exercise of stock options | 1,761 | — | ||||||
| Net cash provided by financing activities | 115,970 | 10,285 | ||||||
| Effect of exchange rate changes on cash | 390 | (315 | ) | |||||
| Net decrease in cash and cash equivalents | (5,265 | ) | (1,369 | ) | ||||
| Cash and cash equivalents at beginning of period | 21,520 | 19,973 | ||||||
| Cash and cash equivalents at end of period | $ | 16,255 | $ | 18,604 | ||||
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (Unaudited)
(dollars in thousands)
Adjusted EBITDA is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our businesses as well as to assist in the evaluation of underlying trends in our businesses. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital and tax structures, as our management excludes these results when evaluating our operating performance. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies.
|
Thirteen Weeks Ended June 26, 2021 |
Thirteen Weeks Ended June 27, 2020 |
Twenty-six Weeks Ended June 26, 2021 |
Twenty-six Weeks Ended June 27, 2020 |
|||||||||||||
| Net loss | $ | (3,385 | ) | $ | (5,037 | ) | $ | (12,355 | ) | $ | (19,841 | ) | ||||
| Income tax benefit | 1,428 | (895 | ) | (5,225 | ) | (5,132 | ) | |||||||||
| Interest expense, net | 19,159 | 23,878 | 38,178 | 47,058 | ||||||||||||
| Interest expense on junior subordinated debentures | 3,152 | 3,184 | 6,304 | 6,336 | ||||||||||||
| Investment income on trust common securities | (94 | ) | (94 | ) | (189 | ) | (189 | ) | ||||||||
| Depreciation | 15,270 | 17,230 | 31,611 | 34,747 | ||||||||||||
| Amortization | 15,414 | 14,865 | 30,323 | 29,713 | ||||||||||||
| Mark-to-market adjustment on interest rate swaps | (751 | ) | (308 | ) | (1,424 | ) | 1,942 | |||||||||
| EBITDA | $ | 50,193 | $ | 52,823 | $ | 87,223 | $ | 94,634 | ||||||||
| Stock compensation expense | 1,796 | 1,524 | 3,537 | 2,669 | ||||||||||||
| Management fees | 88 | 196 | 214 | 321 | ||||||||||||
| Restructuring (1) | — | 980 | 109 | 2,710 | ||||||||||||
| Litigation expense (2) | 6,322 | 1,893 | 10,282 | 2,674 | ||||||||||||
| Acquisition and integration expense (3) | 3,299 | 661 | 8,139 | 990 | ||||||||||||
| Buy-back expense (4) | 1,350 | — | 1,350 | — | ||||||||||||
| Anti-dumping duties (5) | 2,636 | — | 2,636 | — | ||||||||||||
| Facility closures (6) | — | 433 | — | 433 | ||||||||||||
| Change in fair value of contingent consideration | (1,212 | ) | 3,100 | (1,212 | ) | (1,300 | ) | |||||||||
| Adjusted EBITDA | $ | 64,472 | $ | 61,610 | $ | 112,278 | $ | 103,131 | ||||||||
| (1) | Restructuring includes restructuring costs associated with restructuring in our Canada segment announced in 2018, including facility consolidation, severance, sale of property and equipment, and charges relating to exiting certain lines of business. Also included is restructuring in our United Stated business announced in 2019, including severance related to management realignment and the integration of sales and operating functions (see Note 9 - Restructuring of the Notes to Condensed Consolidated Financial Statements for additional information). Finally, includes consulting and other costs associated with streamlining our manufacturing and distribution operations. |
| (2) | Litigation expense includes legal fees associated with our ongoing litigation with KeyMe, Inc. (see Note 6 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements for additional information). |
| (3) | Acquisition and integration expense includes professional fees, non-recurring bonuses, and other costs related to the pending merger along with historical acquisitions. |
| (4) | Infrequent buy backs associated with new business wins. |
| (5) | Anti-dumping duties assessed related to the nail business for prior year purchases. |
| (6) | Facility exits include costs associated with the closure of facilities in San Antonio, Texas. |
Released July 29, 2021