Lee Jagoda Got it. ThatÂ's very helpful. IÂ'll hop back in the queue. Thanks. Operator Thank you. Our next question comes from the line of Michael Hoffman from Stifel. Please ask your question, Michael. Michael Hoffman Thank you very much, good morning, Doug and Rocky. Can we talk about the cadence of revenue? You gave us a sense of the cadence of EBITDA, can we talk about the cadence of revenue hit the midpoint, given the -- we're slightly negative in the first quarter. I'm assuming we're a little bit nega ...

Part I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) Hillman Solutions Corp. is a leading North American provider of hardware products and merchandising services across retail markets - Hillman is a major provider of hardware products and services in North America, with **2022 net sales** of approximately **$1.486 billion**[15](index=15&type=chunk) - The company operates through **three business segments**: Hardware and Protective Solutions, Robotics and Digital Solutions, and Canada[25](index=25&type=chunk) - Hillman became a publicly traded company on Nasdaq (HLMN) in **2021** via a SPAC merger[21](index=21&type=chunk)[23](index=23&type=chunk) - Customer concentration is significant, with the **top two customers** (Home Depot and Lowe's) accounting for approximately **46% of total revenues** in 2022[56](index=56&type=chunk) [Business Segments](index=6&type=section&id=Business%20Segments) The company's operations are divided into three segments: Hardware and Protective Solutions, Robotics and Digital Solutions, and Canada Segment Revenue (2020-2022) | Segment | 2022 Revenue (in millions) | 2021 Revenue (in millions) | 2020 Revenue (in millions) | | :--- | :--- | :--- | :--- | | Hardware and Protective Solutions | $1,076.8 | $1,025.0 | $1,024.4 | | Robotics and Digital Solutions | $249.9 | $249.5 | $209.3 | | Canada | $159.6 | $151.5 | $134.6 | - The Hardware and Protective Solutions segment includes fasteners (Hillman, Power-Pro), builder's hardware (Hardware Essentials®), wall hanging products (OOK®, High & Mighty®), and personal protective equipment (Firm Grip®, Gorilla Grip®)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) - The Robotics and Digital Solutions segment features self-service (MinuteKey) and associate-assisted (KeyKrafter®) key duplication systems, as well as robotic engraving kiosks (Quick-Tag®)[42](index=42&type=chunk)[43](index=43&type=chunk)[48](index=48&type=chunk) [Markets and Customers](index=9&type=section&id=Markets%20and%20Customers) Hillman serves major national retailers and independent outlets, with Home Depot and Lowe's being critical top customers Top Customer Revenue Concentration (2022) | Customer | Revenue (in millions) | % of Total Revenue | | :--- | :--- | :--- | | Home Depot | $356.8 | 24.0% | | Lowe's | $321.9 | 21.7% | | **Total Top 2** | **$678.7** | **45.7%** | - The company serves a wide range of customers from national big-box retailers to independent stores via cooperatives like Ace Hardware and True Value[53](index=53&type=chunk)[54](index=54&type=chunk) [Human Capital Resources](index=10&type=section&id=Human%20Capital%20Resources) As of December 31, 2022, Hillman employed 3,773 full-time and part-time employees, none covered by collective bargaining - The company had **3,773 employees** as of year-end 2022, with none covered by a collective bargaining agreement[64](index=64&type=chunk) - The sales and service team consists of **1,101 full-time** and **122 part-time employees**, highlighting the company's focus on customer service[58](index=58&type=chunk) [Risk Factors](index=11&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces key risks including dependence on the home improvement industry, significant customer concentration, global supply chain reliance, and substantial indebtedness - Sales are highly dependent on the home improvement industry, and adverse economic factors like recessions or inflation could negatively impact financial performance[73](index=73&type=chunk)[74](index=74&type=chunk) - The company faces significant customer concentration risk, with its **two largest customers** accounting for **$678.7 million** in net sales for 2022[77](index=77&type=chunk) - A majority of products are imported from China and Taiwan, exposing the company to risks from tariffs, customs requirements, and supply chain disruptions[83](index=83&type=chunk) - As of December 31, 2022, total indebtedness was **$918.8 million**, which could make it difficult to satisfy obligations and fund operations[111](index=111&type=chunk) - A goodwill impairment risk exists for the Hardware Solutions and Protective Solutions reporting units, as their fair values exceeded carrying values by only **4%** and **6%**, respectively, in the 2022 test[124](index=124&type=chunk) [Unresolved Staff Comments](index=19&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[133](index=133&type=chunk) [Properties](index=20&type=section&id=ITEM%202.%20PROPERTIES) As of December 31, 2022, Hillman operates 22 principal leased facilities across North America, with some distribution centers relocating in 2023 - All of the company's **22 principal facilities** are leased, not owned[136](index=136&type=chunk) - The company is relocating its Rialto, CA distribution center to a new facility in Belton, MO, and its Shannon, GA distribution center to a new, larger facility in the same city during 2023[135](index=135&type=chunk) [Legal Proceedings](index=21&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company resolved a significant patent infringement lawsuit with Hy-Ko Products Company LLC through an $18.5 million settlement and a 10-year covenant not to sue - Hillman and Hy-Ko entered into a settlement agreement resolving a patent infringement lawsuit, which includes an **$18.5 million payment** from Hillman to Hy-Ko[141](index=141&type=chunk) - The settlement also includes a **10-year covenant not to sue**, protecting Hillman from future patent infringement claims from Hy-Ko related to key duplication technology until December 2032[141](index=141&type=chunk)[142](index=142&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not Applicable[143](index=143&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchase of Equity Securities](index=21&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%2C%20AND%20ISSUER%20PURCHASE%20OF%20EQUITY%20SECURITIES) Hillman's common stock trades on Nasdaq under 'HLMN', has never paid cash dividends, and changed its comparison index to Russell 2000 in 2022 - The company's common stock is traded on The Nasdaq Stock Market under the ticker **'HLMN'**[144](index=144&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[146](index=146&type=chunk) - In 2022, the company changed its stock performance comparison index from the S&P 500 to the **Russell 2000 Index** for better alignment with its market capitalization[150](index=150&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) In fiscal year 2022, net sales increased 4.2% to $1.486 billion, net loss improved, and operating cash flow significantly improved due to inventory reduction Key Financial Results (Fiscal Year 2022 vs 2021) | Metric | 2022 | 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,486.3M | $1,426.0M | +$60.3M | +4.2% | | Net Loss | $(16.4)M | $(38.3)M | +$21.9M | +57.2% | | Adjusted EBITDA | $210.2M | $207.4M | +$2.8M | +1.4% | | Diluted EPS | $(0.08) | $(0.28) | +$0.20 | +71.4% | - The 2022 sales increase was primarily driven by **$153.3 million in price increases**, which were partially offset by lower demand for COVID-19 protective products and overall lower volume[176](index=176&type=chunk) - Net cash provided by operating activities was **$119.0 million** in 2022, a significant improvement from the **$110.3 million used** in 2021, mainly due to a strategic reduction in inventory[203](index=203&type=chunk)[204](index=204&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) For 2022, consolidated net sales rose 4.2% to $1.486 billion, driven by pricing actions, with improved gross margin and increased operating income Net Sales by Segment (2022 vs 2021) | Segment | 2022 Net Sales (in millions) | 2021 Net Sales (in millions) | % Change | | :--- | :--- | :--- | :--- | | Hardware and Protective Solutions | $1,076.8 | $1,025.0 | +5.1% | | Robotics and Digital Solutions | $249.9 | $249.5 | +0.1% | | Canada | $159.6 | $151.5 | +5.4% | | **Consolidated** | **$1,486.3** | **$1,426.0** | **+4.2%** | - Cost of sales as a percentage of net sales decreased from **60.3%** in 2021 to **57.0%** in 2022, primarily due to a **$32.0 million inventory valuation adjustment** in 2021 for COVID-related products[170](index=170&type=chunk)[178](index=178&type=chunk) - SG&A expenses in the Robotics and Digital Solutions segment increased by **$25.1 million (24.0%)**, primarily due to **$32.9 million in legal expenses** associated with the Hy-Ko litigation[183](index=183&type=chunk)[184](index=184&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA, a non-GAAP measure, to evaluate operational performance, which was $210.2 million in 2022 Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | 2022 | 2021 | | :--- | :--- | :--- | | Net loss | $(16,436) | $(38,332) | | Income tax expense (benefit) | 1,769 | (11,784) | | Interest expense, net | 54,560 | 68,779 | | Depreciation & Amortization | 120,010 | 120,729 | | **EBITDA (Calculated)** | **$159,903** | **$139,392** | | Stock compensation expense | 13,524 | 15,255 | | Litigation expense | 32,856 | 12,602 | | Inventory revaluation charges | — | 32,026 | | Other Adjustments | (1,034) | 8,143 | | **Adjusted EBITDA** | **$210,249** | **$207,418** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved in 2022 with working capital increasing and cash from operations providing $119.0 million, reversing prior year's use - As of December 31, 2022, the company had **$197.6 million** of available borrowings under its ABL Revolver[215](index=215&type=chunk) - Capital expenditures for 2022 were **$69.6 million**, with an expected range of **$65-$75 million** for 2023[206](index=206&type=chunk)[215](index=215&type=chunk) - Working capital increased by **$25.2 million** to **$416.2 million** at the end of 2022[217](index=217&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from variable interest rates and foreign currency fluctuations, particularly from Canadian and Mexican operations - A **one percent (1%) change** in the weighted average interest rate would change annual interest expense by approximately **$3.4 million**[231](index=231&type=chunk) - The company has exposure to foreign exchange rate changes related to its Canadian and Mexican subsidiaries, which had a combined net asset value of **$174.2 million** as of December 31, 2022[232](index=232&type=chunk) [Financial Statements and Supplementary Data](index=37&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section contains the company's consolidated financial statements for 2022 and prior years, with goodwill impairment testing noted as a critical audit matter Consolidated Balance Sheet Summary (as of Dec 31, 2022) | Category | Amount (in thousands) | | :--- | :--- | | Total Current Assets | $631,619 | | Total Assets | $2,470,690 | | Total Current Liabilities | $215,412 | | Total Liabilities | $1,313,951 | | Total Stockholders' Equity | $1,156,739 | Consolidated Statement of Comprehensive Loss Summary (Year ended Dec 31, 2022) | Category | Amount (in thousands) | | :--- | :--- | | Net Sales | $1,486,328 | | Income from Operations | $39,893 | | Net Loss | $(16,436) | | Comprehensive Loss | $(10,306) | - The independent auditor, Deloitte & Touche LLP, identified the impairment evaluation of goodwill for the Hardware Solutions and Protective Solutions reporting units as a critical audit matter due to the significant judgments involved in estimating their fair values[247](index=247&type=chunk)[250](index=250&type=chunk) [Controls and Procedures](index=84&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[475](index=475&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[482](index=482&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting[485](index=485&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=89&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%2C%20AND%20CORPORATE%20GOVERNANCE) Information regarding the company's directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Required information is incorporated by reference from the 2023 Proxy Statement[495](index=495&type=chunk) [Executive Compensation](index=89&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Required information is incorporated by reference from the 2023 Proxy Statement[498](index=498&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=91&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section provides information on equity compensation plans, with additional security ownership details incorporated by reference from the 2023 Proxy Statement Equity Compensation Plan Information | Plan Category | Number of securities to be issued upon exercise | Weighted-average exercise price | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity Compensation plans approved by shareholders | 14,609,656 | $8.25 | 6,119,890 | - Additional information regarding security ownership is incorporated by reference from the 2023 Proxy Statement[501](index=501&type=chunk) [Certain Relationships and Related Transactions](index=91&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS) Information regarding related person transactions and director independence is incorporated by reference from the company's 2023 Proxy Statement - Required information is incorporated by reference from the 2023 Proxy Statement[502](index=502&type=chunk) [Principal Accounting Fees and Services](index=91&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information regarding the independent auditor, Deloitte & Touche LLP, and their fees and services is incorporated by reference from the 2023 Proxy Statement - The company's independent auditor is Deloitte & Touche LLP. Required information on fees and services is incorporated by reference from the 2023 Proxy Statement[503](index=503&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=92&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - This section contains the index of all financial statements, schedules, and exhibits filed with the 10-K[505](index=505&type=chunk) [Form 10-K Summary](index=98&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) The company indicates that there is no Form 10-K summary - None[512](index=512&type=chunk)

Hillman Solutions Corp. (NASDAQ:HLMN) Q4 2022 Earnings Conference Call February 23, 2023 8:30 AM ET Company Participants Michael Koehler - VP, IR and Treasury Doug Cahill - Chairman, President, and CEO Rocky Kraft - CFO Conference Call Participants Lee Jagoda - CJS Securities Reuben Garner - Benchmark Ryan Merkel - William Blair Stephen Volkmann - Jefferies Brian Butler - Stifel Operator Good morning and welcome to the Fourth Quarter 2022 Results and Full-Year 2023 guidance presentation for Hillman Solution ...

Earnings Presentation Q4 2022 2 February 23, 2023 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. Q4 2022 Financial Review Quarterly Earnings Presentation Q4 2022 This presentation contains certain forward-looking sta ...

HILLMAN® Quarterly Earnings Presentation Q3 2022 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 ar ...

Start Time: 08:30 January 1, 0000 9:29 AM ET Hillman Solutions Corp. (NASDAQ:HLMN) Q3 2022 Earnings Conference Call November 03, 2022, 08:30 AM ET Company Participants Doug Cahill - Chairman, President, and CEO Rocky Kraft - CFO Michael Koehler - VP, IR and Treasury Conference Call Participants David Manthey - Baird Lee Jagoda - CJS Securities Brian Butler - Stifel Matthew Bouley - Barclays Stephen Volkmann - Jefferies Ryan Merkel - William Blair Operator Good morning, and welcome to the Third Quarter 2022 ...

Hillman Solutions Corp. (NASDAQ:HLMN) Q2 2022 Results Conference Call August 3, 2022 8:30 AM ET Company Participants Michael Koehler - VP, IR and Treasury Doug Cahill - Chairman, President, and CEO Rocky Kraft - CFO Conference Call Participants Reuben Garner - Benchmark Lee Jagoda - CJS Brian Butler - Stifel Ryan Merkel - William Blair Elizabeth Langan - Barclays Operator Good morning, and welcome to the Second Quarter 2022 Results Presentation for Hillman Solutions Corp. My name is Shannon, and IÂ'll be yo ...

Start Time: 08:30 January 1, 0000 9:19 AM ET Hillman Solutions Corp. (NASDAQ:HLMN) Q1 2022 Earnings Conference Call May 03, 2022, 08:30 AM ET Company Participants Douglas Cahill - Chairman, President and CEO Robert Kraft - CFO Michael Koehler - VP, IR Conference Call Participants David Manthey - Robert W. Baird Brian Butler - Stifel Nicolaus Lee Jagoda - CJS Securities Ryan Merkel - William Blair Matthew Bouley - Barclays Reuben Garner - The Benchmark Company Operator Good morning, and welcome to the First ...

30 140 130 30 140 130 56 115 144 56 115 144 180 180 180 180 180 180 61 61 61 61 61 61 147 183 201 147 183 201 36 90 87 36 90 87 235 235 235 235 235 235 HILLMAN. Quarterly Earnings Presentation Q1 2022 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 30 140 130 30 140 130 56 115 144 56 115 144 180 180 180 180 180 180 61 61 61 61 61 61 147 183 201 147 183 201 36 90 87 36 90 87 235 235 235 235 235 235 This presentati ...

Financial Data and Key Metrics Changes - In Q4 2021, net sales were $344.5 million, a 5.3% increase year-over-year [35] - For the full year, revenue grew 4.2% to $1.4 billion, with adjusted EBITDA decreasing 6.2% to $207.4 million [41][46] - Adjusted EBITDA in Q4 was $38.6 million, down 10.4% from $43.1 million in the prior year [40] Business Line Data and Key Metrics Changes - Hardware Solutions sales increased 11.8% in Q4, with a full-year growth of 4.7% [35][37] - RDS segment sales grew 15.9% in Q4 and 19.2% for the full year, driven by improved foot traffic and an increase in the installed base [36][37] - Protective Solutions saw a 14.4% decline in Q4, attributed to a reduction in COVID PPE sales [36] Market Data and Key Metrics Changes - Canadian sales increased 12.5% in 2021 to $151.5 million due to reduced COVID restrictions [37] - The company maintained an industry-leading fill rate of 90.3% for 2021, improving to 93.4% year-to-date in 2022 [18] Company Strategy and Development Direction - The company aims to grow revenue organically by mid to high single digits and adjusted EBITDA by 10% annually [46][55] - A focus on integrating Protective Solutions with Hardware Solutions to drive efficiencies and sales growth [22] - The company is evaluating several M&A opportunities to accelerate growth in low-risk categories [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth despite current inflation and supply chain challenges [57] - Anticipated inflationary pressures will continue in the first half of 2022, with expectations for moderation in the second half [47][50] - The company expects revenue for 2022 to be between $1.5 billion and $1.6 billion, with adjusted EBITDA ranging from $207 million to $227 million [50] Other Important Information - The company recapitalized its balance sheet, reducing total net debt from $1.6 billion to $931 million by the end of Q4 2021 [45] - Operating activities used $110 million of cash in 2021, compared to a $92 million source of cash in the prior year [43] Q&A Session Summary Question: Future inflation trends and pricing mechanisms - Management anticipates inflation costs to remain consistent throughout 2022, with mechanisms in place for potential additional price increases [60][61] Question: Impact of chip shortages on RDS growth - Management expects chip shortages to remain a headwind in 2022, but does not anticipate demand issues [74][75] Question: Guidance assumptions for revenue and EBITDA - Management provided insights on volume and price assumptions, indicating a conservative approach to revenue growth expectations [84][86] Question: Free cash flow conversion through the quarters - Free cash flow is expected to follow EBITDA trends, with the first quarter typically being a user of cash due to inventory build [105][106]