Hillman Solutions Corp. · NASDAQ:HLMN
Hillman Solutions — Q4 2022 Earnings Presentation
26 slides from Hillman Solutions's earnings presentation, Feb 23, 2023
Slide 1: Quarterly Earnings Presentation Q4 2022
Quarterly Earnings Presentation Q4 2022 February 23, 2023
Slide 2: Forward-looking statements
2Earnings Presentation Q4 2022 PresBuilder Placeholder - Delete this box if you see it on a slide, but DO NOT REMOVE this box from the slide layout This presentation contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and state
Slide 3: Q4 2022 Financial Review
3Earnings Presentation Q4 2022 • Net sales increased 1.8% to $351 million versus Q4 2021; excluding the 53rd week during 2022, net sales decreased (2.8)% to $335 million ◦ Hardware Solutions +15%; +10% excl. 53rd week ◦ Robotics and Digital Solutions ("RDS") (4)%; (10)% excl. 53rd week ◦ Canada (3)%
Slide 4: 2022 Financial Review
4Earnings Presentation Q4 2022 • Net sales increased 4.2% to $1,486 million versus the 52 weeks ended December 25, 2021; excluding the 53rd week during 2022, net sales increased 3.1% to $1,471 million ◦ Hardware Solutions +13%; +12% excl. 53rd week ◦ Robotics and Digital Solutions ("RDS") ~flat; (1)
Slide 5: 2022 Operational Review
5Earnings Presentation Q4 2022 2022 Operational Review • Successfully implemented price increases (finalized the fourth increase since beginning of 2021 in September of 2022) • Maintained average fill rates of approximately 96% for the year • Positioned for continued new business momentum ◦ Continue
Slide 6: Q4 2022 Financial Performance
6Earnings Presentation Q4 2022 Adjusted EBITDA (millions $ and % of Net Sales) Please see reconciliation of Adjusted EBITDA to Net Income in the Appendix of this presentation. Fiscal Q4 2022 consisted of 14 weeks compared to 13 weeks in fiscal 2021, which should be taken into account when comparing
Slide 7: 2022 Financial Performance
7Earnings Presentation Q4 2022 Adjusted EBITDA (millions $ and % of Net Sales) Top & Bottom Line Net Sales (millions $) Adjusted Gross Margin (millions $ and % of Net Sales) 2022 Financial Performance $207.4 $210.2 2021 2022 14.1%14.5% $604.4 $639.8 2021 2022 $1,426.0 $1,486.3 2021 2022 43.0%42.4% P
Slide 8: Q4 segment results
8Earnings Presentation Q4 2022 Hardware & Protective Q4 2021 Q4 2022 Δ Thirteen/fourteen weeks ended 12/25/2021 12/31/2022 Comments Revenues $249,460 $258,703 3.7% Price increases; pressure from COVID comps Adjusted EBITDA $17,958 $28,211 57.1% Caught Price/Cost; Low margin COVID comps in '21 Margin
Slide 9: Full year segment results
9Earnings Presentation Q4 2022 Hardware & Protective 2021 2022 Δ 52/53 weeks ended 12/25/2021 12/31/2022 Comments Revenues $1,024,974 $1,076,813 5.1% Price increases; decrease in volume; lower PPE sales (PS) Adjusted EBITDA $113,738 $108,780 (4.4)% Timing of price increases; low margin PPE sales Mar
Slide 10: Revenue by Business Segment (Q4)
10Earnings Presentation Q4 2022 Hardware & Protective Robotics & Digital Canada Revenue (QTD) Fourteen Weeks Ended December 31, 2022 Fastening and Hardware $208,956 $— $33,356 $242,312 Personal protective 49,747 — 177 49,924 Keys and key accessories — 43,732 733 44,465 Engraving and Resharp — 13,949
Slide 11: Revenue by Business Segment (YTD)
11Earnings Presentation Q4 2022 Hardware & Protective Robotics & Digital Canada Revenue 53 Weeks ended December 31, 2022 Fastening and Hardware $834,493 $— $155,066 $989,559 Personal protective 242,320 — 1,161 243,481 Keys and key accessories — 193,633 3,344 196,977 Engraving and Resharp — 56,264 47
Slide 12: Capital Structure and Total Net Leverage
12Earnings Presentation Q4 2022 Total Net Leverage (Net Debt / TTM Adj. EBITDA) Capital Structure Committed to Improving Leverage as Inventory Converts to Cash Please see reconciliation of Adjusted EBITDA to Net Income and Net Debt in the Appendix of this presentation. Figures in Millions of USD unl
Slide 13: 2023 Full Year Guidance
13Earnings Presentation Q4 2022 (in millions USD) Full Year 2023 Guidance Range Revenues $1.45 to $1.55 billion Adjusted EBITDA $215 to $235 million Free Cash Flow $125 to $145 million Assumptions • 1H-23 Adj. EBITDA down in the "high single digit" percent range vs. 1H-22 • 2H-23 Adj. EBITDA up in t
Slide 14: Key Takeaways
14Earnings Presentation Q4 2022 Key Takeaways Resilient Business; Inventory turning to cash; Focused on delevering Long-term Annual Growth Targets (Organic): Revenue Growth: +6% & Adj. EBITDA Growth: +10% Long-term Annual Growth Targets (incl. Acquisitions): Revenue Growth: +10% & Adj. EBITDA Growth
Slide 15: Appendix
15 Appendix
Slide 16: Investment Highlights
16Earnings Presentation Q4 2022 Significant runway for incremental growth: Organic + M&A Management team with proven operational and M&A expertise Strong financial profile with 59-year track record Market and innovation leader across multiple categories Indispensable partner embedded with winning re
Slide 17: Who We Are
17Earnings Presentation Q4 2022 Who We Are *Third-party market study - 2019 Adjusted EBITDA is a non-GAAP measure. Please see Appendix for a reconciliation of Adjusted EBITDA to Net Income ~20 billion Fasteners Sold ~400 million Pairs of Gloves Sold ~120 million Keys Duplicated ~112,000 SKUs Managed
Slide 18: Top Customers and Primary Product Categories
18Earnings Presentation Q4 2022 #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
Slide 19: Adjusted EBITDA reconciliation (Q4)
19Earnings Presentation Q4 2022 Thirteen/Fourteen weeks ended December 25, 2021 December 31, 2022 Net income (loss) $6,547 $(13,899) Income tax benefit (expense) (761) 1,916 Interest expense, net 11,258 15,703 Depreciation 13,335 16,077 Amortization 15,502 15,551 EBITDA $45,881 $35,348 Stock compens
Slide 20: Adjusted EBITDA reconciliation (full year)
20Earnings Presentation Q4 2022 52/53 Weeks Ended 12/25/2021 12/31/2022 Net loss $(38,332) $(16,436) Income tax benefit (expense) (11,784) 1,769 Interest expense, net 61,237 54,560 Interest expense on junior subordinated debentures 7,775 — Investment income on trust common securities (233) — Depreci
Slide 21: Footnotes to Adjusted EBITDA reconciliation
21Earnings Presentation Q4 2022 Footnotes in reference to previous slide: 1. Restructuring includes severance, consulting, and other costs associated with streamlining our operations. 2. Litigation expense includes legal fees associated with our litigation with KeyMe, Inc. and Hy-Ko Products Company
Slide 22: Adjusted Gross Profit Margin Reconciliation
22Earnings Presentation Q4 2022 Thirteen/Fourteen weeks ended December 25, 2021 December 31, 2022 Net Sales $344,491 $350,663 Cost of sales (exclusive of depreciation and amortization) 205,293 198,330 Gross margin exclusive of depreciation and amortization $139,198 $152,333 Gross margin exclusive of
Slide 23: Adjusted SG&A Expense Reconciliation
23Earnings Presentation Q4 2022 Thirteen/Fourteen weeks ended December 25, 2021 December 31, 2022 Selling, general and administrative expenses $112,587 $114,980 Adjusting Items (1): Stock compensation expense 6,438 2,735 Restructuring 339 1,136 Litigation expense 1,833 3,889 Acquisition and integrat
Slide 24: Net Debt & Free Cash Flow Reconciliations
24Earnings Presentation Q4 2022 As of December 25, 2021 December 31, 2022 Revolving loans $93,000 $72,000 Senior term loan 851,000 840,363 Finance leases and other obligations 1,782 6,406 Gross debt $945,782 $918,769 Less cash 14,605 31,081 Net debt $931,177 $887,688 Net Debt & Free Cash Flow Reconc
Slide 25: Segment Adjusted EBITDA reconciliation (Q4)
25Earnings Presentation Q4 2022 Fourteen Weeks Ended December 31, 2022 HPS RDS Canada Consolidated Operating Income (Loss) $5,629 $(582) $(1,327) $3,720 Depreciation & Amortization 19,107 11,431 1,090 31,628 Stock compensation expense 2,364 231 140 2,735 Restructuring 985 151 — 1,136 Litigation expe
Slide 26: Segment Adjusted EBITDA reconciliation (full year)
26Earnings Presentation Q4 2022 53 Weeks ended December 31, 2022 HPS RDS Canada Consolidated Operating Income (Loss) $20,884 $3,616 $15,393 $39,893 Depreciation & Amortization 72,266 43,185 4,559 120,010 Stock Compensation Expense 11,057 1,479 988 13,524 Restructuring 2,342 275 — 2,617 Litigation ex