Hillman Solutions Corp. · NASDAQ:HLMN
Hillman Solutions — SPAC Merger (January 2021)
39 slides from Hillman Solutions's SPAC merger presentation, January 2021
Slide 1: Investor Presentation
Investor Presentation January 2021
Slide 2: Disclaimer
Disclaimer This presentation (the “presentation”) is being delivered to a limited number of parties for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debtor other financial instruments of Landcadia
Slide 3: Transaction Summary
Transaction Summary Summary of Proposed Transaction Doug Cahill ▪ Hillman is the leading specialty distributor of hardware to winning retailers Chairman, Chief Executive Officer and President ▪ Landcadia III (NasdaqCM:LCY) is a publicly-listed special purpose acquisition company with $500mm cash hel
Slide 4: What We Like About Hillman
What We Like About Hillman 1 2 3 4 Favorable Market Leader Differentiated Demographic in Complex, 55 Years of Sales Platform Drives Tailwinds Supports Compelling Growth in the Share Gains and 6% Annual Organic Categories for Last 56(1) Widens Sales and 10% Best-in-Class Competitive Moat Adjusted EBI
Slide 5: Indicative Transaction Overview
Indicative Transaction Overview Estimated Sources & Uses Illustrative Pro Forma Valuation Sources: Share Price $10.00 Cash Held in Trust(1) $500 Shares Outstanding(3) 190 Existing Investor Rollover Equity 911 Equity Value 1,901 New Debt 835 Less: Cash (96) PIPE Proceeds(2) 375 Plus: Debt 837 Cash on
Slide 6: Top-Tier Financial Profile Relative to Peers
Top-Tier Financial Profile Relative to Peers Median *excludes Hillman 2017A – 2020E Revenue CAGR 2017A – 2020E Adjusted EBITDA CAGR Median: 5.0% *excludes Hillman Median: 9.0% *excludes Hillman 17.7% 22.2% 10.8% 12.3% 14.0% 14.6% 8.8% 1.8% 3.6% 9.0% 9.1% 1.8% 3.6% 4.1% 5.0% (0.2%) HD Supply Ferguson
Slide 7: The Hillman Group
The Hillman Group HILLMAN
Slide 8: Investment Highlights
Investment Highlights Indispensable partner embedded with winning retailers Customers love us, trust us and rely on us #1 Market and innovation leader across compelling categories Large, predictable, growing and non-cyclical end markets Significant runway for incremental growth: organic and via M&A
Slide 9: Hillman at a Glance
Hillman at a Glance Business Description By the Numbers Founded in 1964; HQ in Cincinnati, OH ~20 billion ~575 million ~116 million The leading distributor of hardware and home Fasteners Pairs of Gloves Keys Duplicated improvement products, personal protective equipment and Sold per Year Sold pe
Slide 10: Revenue and Adjusted EBITDA Snapshot
Revenue and Adjusted EBITDA Snapshot 2020E, % of Total ($ in millions) Sales by Category Sales by Channel Farm & Ranch Canada 6% 10% Hardware & Specialty Protective 7% Robotics & Solutions Mass Digital 75% Merchant Solutions 9% 15% ~$1,368mm Commercial ~$1,368mm 48% 2020E Sales Industrial 2020E Sale
Slide 11: Hillman-Owned Brands: Our Primary Business Segments
Our Primary Business Segments Hardware & Protective Solutions Hardware Solutions Protective Solutions Robotics and Digital Solutions Segment Position #1 #1 #1 Fasteners Construction &Specialty Fasteners Work Gear Gloves Key and Fob Duplication Hillman-Owned Brands Picture Builders Hardware Personali
Slide 12: Hardware Solutions Overview
Hardware Solutions Overview Broad and diversified product portfolio with ~61,000 SKUs ▪ Market leader across the fastening and hardware industry $2.2bn ▪ Customer-first culture serving end user needs ▪ Long-standing relationships with all key customers ▪ Highly sticky and deeply moated through a win
Slide 13: Protective Solutions Overview
Protective Solutions Overview Leader in PPE consistently delivering disruptive innovation ▪ Industry leading brands $1.9bn ▪ Leading supplier of personal protection equipment ▪ Design driven culture focused on product development with speed to market ▪ Serving all pro and DIYer’s needs ▪ Experienced
Slide 14: Robotics & Digital Solutions Overview
Robotics & Digital Solutions Overview Large network of robotic and digital technology delivers convenience, quality and recurring revenue ▪ Unique provider of robotic consumer solutions: ▪ Key duplication (full-service and self-service) ▪ Fob duplication $1.5bn ▪ Pet tags ▪ Knife sharpening ▪ Cuttin
Slide 15: Indispensable Partner Embedded with Winning Retailers
Indispensable Partner Embedded with Winning Retailers Trusted partner that provides mission-critical sourcing and in-store and online inventory, category management and in-store services Ship direct to store: 112,000 SKUs to Diversification across buying departments and 42,000 locations categori
Slide 16: Customers Love Us, Trust Us and Rely on Us
Customers Love Us, Trust Us and Rely on Us Consistently recognized by customers and well-positioned to capture additional categories throughout the store 95%+ ~1,100 29 ~42,000 ~112,000 82% Fill Rates(1) Field Service Network Facilities Store Direct SKUs Products Shipped Team Members Locations Manag
Slide 17: Steady, Long-Term, Predictable Growth
Steady, Long-Term, Predictable Growth Long-term sustainable growth with only one down sales year in the Company’s 56-year history Track Record of Growth Hillman Sales $1.4bn During the Great Recession (’08-’09), Sales declined by only 5%, while Adj. EBITDA grew 10% and margins expanded 250bps ~$200m
Slide 18: Multiple Levers to Drive Growth
Multiple Levers to Drive Growth
Slide 19: Multiple Levers to Drive Growth
Multiple Levers to Drive Growth Unique platform and significant recent investments support accelerating growth 5 4 3 2 1 DRIVE ADJ. EBITDA MARGIN EXECUTE IMPROVEMENT M&A INNOVATION ENGINE ▪ Favorable margin ▪ Acquire forward- mix shift due to GROW WITH looking innovative EXISTING ▪ Capitalize on fas
Slide 20: Attractive Market Dynamics Support Strong Future Growth
Attractive Market Dynamics Support Strong Future Growth ~$45 billion Total Addressable Market Existing Products Product and and Channels Channel Expansion Adjacent Categories ($ in billions) ($ in billions) ($ in billions) $6bn Opportunity $20bn Opportunity $20bn Opportunity $20.0 $20.0 $2.5 $5.0 $5
Slide 21: Hardware Solutions Innovation: Driving Into the Future
Hardware Solutions Innovation: Driving Into the Future Accelerated recent growth with anticipated opportunity to reach $150mm in sales and beyond Highly Successful Launch… …Poised for Continued Future Growth ▪ Hillman developed premium PowerPro line in 2001 ▪ Channel and Market Focus: Launch new Con
Slide 22: Case Study: User-Driven Innovation
Case Study: User-Driven Innovation… Through extensive in-field research, Protective Solutions develops patent protected products that resonate with the core consumer Maximum Dexterity Reinforced Finger Continuous Lycra Palm Design Dual Impact Stretch Panels Design Zone Protection Ergonomic Palm Desi
Slide 23: Case Study: New Product Development
Case Study: New Product Development ✓ Quickly restores knife to factory sharpness ✓ Same day on demand accessibility ✓ No skill required, just watch ✓ Patented system ReSharp Poised to Open Doors to New Market Opportunities 2021P Medium-Term Market Size ~1,000+ $20mm+ Units Sales Installed $1.1bn 70
Slide 24: M&A is, and Will Be, a Key Tool For Our Expansion
M&A is, and Will Be, a Key Tool For Our Expansion Hillman has a proven M&A platform with a strong track record of identifying, executing and integrating acquisitions $550mm+ spent on strategic acquisitions since 2017 2017 2018 2019 2020 Recent management / Aggregate sales Pipeline of 150+ 150+ targe
Slide 25: Case Studies: M&A and Integration
and Case Studies: M&A and Integration History of building out the business through strategic tuck-ins and transformative acquisitions, growing categories and adding leading, recognized brands Strategic Enter gloves / Enter new self-service / Rationale: PPE category robotic key cutting category Purch
Slide 26: Management Team with Proven Operational and M&A Expertise
Management Team with Proven Operational and M&A Expertise Management team brings a results-driven approach to innovation and growth Doug Cahill Rocky Kraft Jon Michael Adinolfi Kim Corbitt Chairman, CEO, and President Chief Financial Officer U.S. Divisional President Chief Human Resources Officer ▪
Slide 27: Financial Overview
Financial Overview
Slide 28: Strong Financial Profile with 56-year Track Record
Strong Financial Profile with 56-year Track Record Exceptional Strong Cash Attractive Adj. EBITDA Superior Growth & Flow Growth Margin Performance Stability Generation Prospects Improvement ▪ Positive sales ▪ 17.7% sales CAGR ▪ Attractive free cash ▪ Targeting $1.4 ▪ Expanding margins growth in 55 o
Slide 29: Recent Developments – Strong Finish to 2020
Recent Developments – Strong Finish to 2020 ($ in millions) Full Year Q4 Sales Adjusted EBITDA Sales Adjusted EBITDA 12% 24% 14% 23% $1,368 $1,222 $221 $327 $43 $179 $286 $35 14.6% 16.2% 12.3% 13.2% 2019A 2020E 2019A 2020E 2019A 2020E 2019A 2020E Adj. EBITDA Adj. EBITDA Sales Sales Adj. EBITDA Margi
Slide 30: Infrastructure in Place to Drive Future Growth
Infrastructure in Place to Drive Future Growth Strategic capital investments position Hillman for long-term, sustainable growth Capability-Enhancing, Low Maintenance CapEx with High-Return Growth CapEx Examples Investment in High ROI Initiatives (1)(2) ($ in millions, % of Total Sales) Strategic tec
Slide 31: Strong Capital Structure and Free Cash Flow Support Growth
Strong Capital Structure and Free Cash Flow Support Growth Total Leverage Based on 2020E Adj. EBITDA Total Net Leverage Based on 2020E Adj. EBITDA ($ millions) Current(1) Pro Forma(2) Cash $ 22 $ 96 6.9x ABL Revolver ($250.0 million) $ 72 First Lien Term Loan 1,037 Capital Leases 2 2 6.375% Senior U
Slide 32: A Clear Roadmap for Future Growth
A Clear Roadmap for Future Growth Long-range (5-year) growth targets: 10% Sales and 15% Adjusted EBITDA CAGR Sales Growth ($ in millions) 5-yr 10% CAGR 6% Rollout of new Continued Customer robotics and strategic M&A $1,368 penetration and digital programs Market growth product innovation 2020E 2025P
Slide 33: Hillman Is In a League of Its Own
When It Comes To Distributing Fasteners, Hardware, Keys, Tags & PPE to Winning Retailers, Hillman Is In a League of Its Own Best In Class Specialty Distributor and Partner ✓ Long standing, deeply embedded strategic partner to winning omni-channel retailers ✓ Unmatched ability to source, deliver, man
Slide 34: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Historical & Preliminary 2019 2020 ($ millions) 2017A 2018A Q1A Q2A Q3A Q4A 2019A Q1A Q2A Q3A Q4E 2020E Net Income $58.6 ($69.6) ($35.3) ($19.5) ($14.5) ($34.1) ($103.4) ($9.8) ($4.2) $10.7 ($14.0) ($17.4) Interest 63.2 82.8 29.6 29.1 27.9 27.2 113.8 26.2 27.0 23.8 22.
Slide 35: Adjusted EBITDA Reconciliation: Hardware and Protective Solutions
Adjusted EBITDA Reconciliation: Hardware and Protective Solutions Historical & Preliminary 2019 2020 ($ millions) 2017A 2018A Q1A Q2A Q3A Q4A 2019A Q1A Q2A Q3A Q4E 2020E Reported Income from Operations $7.8 $18.6 ($2.6) $10.9 $8.0 ($2.2) $14.2 $8.9 $24.4 $30.1 $3.9 $67.3 Depreciation & Amortization
Slide 36: Adjusted EBITDA Reconciliation: Robotics & Digital Solutions
Adjusted EBITDA Reconciliation: Robotics & Digital Solutions Historical & Preliminary 2019 2020 ($ millions) 2017A 2018A Q1A Q2A Q3A Q4A 2019A Q1A Q2A Q3A Q4E 2020E Reported Income from Operations $24.8 $17.7 $3.0 ($3.4) $4.2 ($0.5) $3.4 $5.9 ($4.5) $3.0 ($1.3) $3.2 Depreciation & Amortization 25.7
Slide 37: Adjusted EBITDA Reconciliation: Canada
Adjusted EBITDA Reconciliation: Canada Historical & Preliminary 2019 2020 ($ millions) 2017A 2018A Q1A Q2A Q3A Q4A 2019A Q1A Q2A Q3A Q4E 2020E Reported Income from Operations $2.9 ($8.8) ($0.2) $1.0 ($2.3) ($8.4) ($9.9) ($5.3) $0.8 $1.9 ($2.2) ($4.7) Depreciation & Amortization 3.8 4.6 1.3 1.7 1.5 1
Slide 38: Adjusted Net Sales Reconciliation by Segment
Adjusted Net Sales Reconciliation by Segment Historical & Preliminary 2019A 2020E ($ millions) Q1A Q2A Q3A Q4A 2019A Q1A Q2A Q3A Q4E 2020E Hardware & Protective Solutions Net Sales (Reported) $201.6 $226.4 $222.9 $202.1 $853.0 $213.2 $269.5 $300.3 $241.4 $1,024.4 Buy-back Expense 4.1 2.0 - 1.1 7.2 -
Slide 39: Adjusted Gross Margin Reconciliation
Adjusted Gross Margin Reconciliation Historical & Preliminary Forecast ($ millions) 2017A 2018A 2019A 2020E 2021P 2022P Net Sales (Reported) $838.4 $974.2 $1,214.4 $1,368.3 $1,443.6 $1,503.5 Buy-back Expense - - 7.2 - - - Net Sales (Adjusted) $838.4 $974.2 $1,221.6 $1,368.3 $1,443.6 $1,503.5 Cost of