Slide 1: Quarterly Earnings Presentation Q3 2023
Quarterly Earnings Presentation Q3 2023 November 8, 2023
Slide 2: Forward Looking Statements
Forward Looking Statements All statements made in this presentation that are consider to be forward-looking 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 Exc
Slide 3: Q3 2023 Financial Review
Q3 2023 Financial Review Highlights for the 13 Weeks Ended September 30, 2023 • Net sales increased 5.4% to $398.9 million versus Q3 2022 ◦ Hardware Solutions increased 8.3% ◦ Robotics and Digital Solutions ("RDS") down (1.4)% ◦ Canada down (9.4)% ◦ Protective Solution increased 13.5% • GAAP net inc
Slide 4: Q3 2023 Operational Review
Q3 2023 Operational Review Highlights for the 13 Weeks Ended September 30, 2023 • Updated full year 2023 guidance • Inventory reduced by $33 million during the quarter; bringing year-to-date total to $92 million; expects to reduce by another $5 - $10 million during Q4 2023 • Fill rates averaged appr
Slide 5: Q3 2023 Financial Review (Year to Date)
Q3 2023 Financial Review Highlights for the 39 Weeks Ended September 30, 2023 • Net sales decreased (0.6)% to $1,128.7 million versus the 39 weeks ended September 24, 2022 ◦ Hardware Solutions +5.2% ◦ Robotics and Digital Solutions ("RDS") (1.1)% ◦ Canada (7.6)% ◦ Protective Solutions (6.2)% (excl.
Slide 6: Quarterly Financial Performance
Quarterly Financial Performance Top & Bottom Line (vs Q3 2022) Net Sales Adjusted Gross Margin Adjusted EBITDA (millions $) (millions $ and % of Net Sales) (millions $ and % of Net Sales) $398.9 $378.5 $176.3 $163.7 $66.8 $59.0 44.2% 43.3% 16.7% 15.6% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023
Slide 7: Performance by Segment (Q3)
Performance by Segment (Q3) Hardware & Protective Q3 2022 Q3 2023 Δ Thirteen Weeks Ended 9/24/2022 9/30/2023 Comments Revenues $270,116 $295,553 9.4% Driven by new business and increase in volumes Adjusted EBITDA $28,838 $40,659 41.0% Improved price coverage for inflation Margin (Adj. EBITDA/Net Sal
Slide 8: Performance by Segment (YTD)
Performance by Segment (YTD) Hardware & Protective YTD '22 YTD '23 Δ Thirty-nine weeks ended 9/24/2022 9/30/2023 Comments Revenues $812,931 $818,198 0.6% New business and price offset soft volumes in PS Adjusted EBITDA $80,705 $87,385 8.3% Improved price coverage for inflation Margin (Adj. EBITDA/Ne
Slide 9: Revenue by Product Category (Q3)
Revenue by Product Category (Q3) Hardware & Robotics & Canada Revenue Protective Digital Thirteen Weeks Ended September 30, 2023 Fastening and Hardware $228,515 $— $35,497 $264,012 Personal Protective 67,038 — 1,933 68,971 Keys and Key Accessories — 50,408 2,477 52,885 Engraving and Resharp — 13,060
Slide 10: Revenue by Product Category (YTD)
Revenue by Product Category (YTD) Hardware & Robotics & Canada Revenue Protective Digital Thirty-nine weeks ended September 30, 2023 Fastening and Hardware $658,629 $— $111,462 $770,091 Personal Protective 159,569 — 5,474 165,043 Keys and Key Accessories — 147,976 6,510 154,486 Engraving and Resharp
Slide 11: Capital Structure
Capital Structure Leverage Continues to Improve September 30, 2023 Total Net Leverage ABL Revolver ($252 million capacity) $47.0 (Net Debt / TTM Adj. EBITDA) Term Note $754.0 4.7x Finance Leases and Other Obligations $10.1 4.5x 4.2x 4.2x 2023 Y/E Total Debt $811.1 4.0x Estimate 3.7x Cash $39.3 <3.5x
Slide 12: 2023 Outlook & Guidance
2023 Outlook & Guidance 2023 Full Year Guidance - Update On November 8, 2023, Hillman provided an update to its full year guidance, originally provided on February 23, 2023. (in millions USD) Original FY 2023 Guidance Updated FY 2023 Guidance Revenues $1.45 to $1.55 billion $1.455 to $1.485 billion
Slide 13: Key Takeaways
Key Takeaways Inventory Turning to Cash; Delivering Well Underway; Margins Returning to Historical Norms • Business has 59-year track record of success; proven to be resilient through multiple economic cycles • Repair, Remodel and Maintenance industry has meaningful long-term tailwinds; expected inc
Slide 14: Appendix
Appendix 14
Slide 15: Investment Highlights
Investment Highlights Indispensable partner embedded with winning retailers Customers love us, trust us and rely on us Market and innovation leader across multiple categories Large, predictable, growing and resilient end markets Significant runway for incremental growth: Organic + M&A Management tea
Slide 16: Hillman: Overview
Hillman: Overview Who We Are 2022: By The Numbers • We are a leading North American provider of ~20 billion ~400 million ~120 million hardware products and solutions, including; Fasteners Pairs of Gloves Keys ◦ Hardware and home improvement Sold Sold Duplicated products ◦ Protective and job site gea
Slide 17: Primary Product Categories
Primary Product Categories Hardware Solutions Protective Solutions Robotics & Digital Solutions #1 in Segment #1 in Segment #1 in Segment Fasteners Construction Work Gear Gloves Key and Fob Duplication & Specialty Fasteners Personalized Knife Picture Builders Hardware Tags Sharpening Hanging & Metal
Slide 18: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Thirteen weeks ended September 24, 2022 September 30, 2023 Net (loss) income $(9,466) $5,057 Income tax (benefit) expense (5,679) 12,957 Interest expense, net 14,696 16,728 Depreciation 14,312 14,434 Amortization 15,557 15,583 EBITDA $29,420 $64,759 Stock compensation
Slide 19: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Thirty-nine weeks ended September 24, 2022 September 30, 2023 Net (loss) income $(2,537) $470 Income tax (benefit) expense (147) 3,278 Interest expense, net 38,857 52,880 Depreciation 41,738 44,939 Amortization 46,644 46,733 EBITDA $124,555 $148,300 Stock compensation
Slide 20: Adjusted Gross Margin Reconciliation
Adjusted Gross Margin Reconciliation September 24, September 30, Thirteen weeks ended 2022 2023 Net Sales $378,538 $398,943 Cost of sales (exclusive of depreciation and amortization) 214,802 222,644 Gross margin exclusive of depreciation and amortization $163,736 $176,299 Gross margin exclusive of d
Slide 21: Adjusted SG&A Expense Reconciliation
Adjusted SG&A Expense Reconciliation September 24, September 30, Thirteen weeks ended 2022 2023 Selling, general and administrative expenses $133,246 $113,359 (1) SG&A Adjusting Items : Stock compensation expense 2,485 3,069 Restructuring 916 179 Litigation expense 25,255 79 Acquisition and integrat
Slide 22: Net Debt & Free Cash Flow Reconciliations
Net Debt & Free Cash Flow Reconciliations Reconciliation of Net Debt As of December 31, 2022 September 30, 2023 Revolving loans $72,000 $47,000 Senior term loan 840,363 753,980 Finance leases and other obligations 6,406 10,118 Gross debt $918,769 $811,098 Less cash 31,081 39,262 Net debt $887,688 $7
Slide 23: Segment Adjusted EBITDA Reconciliations
Segment Adjusted EBITDA Reconciliations Thirteen weeks ended September 24, 2022 HPS RDS Canada Consolidated Operating income (loss) $7,259 $(14,052) $6,344 $(449) Depreciation & amortization 18,440 10,214 1,215 29,869 Stock compensation expense 2,130 197 158 2,485 Restructuring 831 85 — 916 Litigati
Slide 24: Segment Adjusted EBITDA Reconciliations
Segment Adjusted EBITDA Reconciliations Thirty-nine weeks ended September 24, 2022 HPS RDS Canada Consolidated Operating income $15,391 $3,655 $17,127 $36,173 Depreciation & amortization 53,159 31,542 3,681 88,382 Stock compensation expense 8,693 1,248 848 10,789 Restructuring 1,357 124 — 1,481 Liti