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CST: 24/06/2019 16:29:27   

The Hillman Companies, Inc. Reports Fourth Quarter and Full Year 2018 Financial Results

96 Days ago

CINCINNATI, March 20, 2019 (GLOBE NEWSWIRE) -- The Hillman Companies, Inc. (NYSE-AMEX: HLM.PR) (the “Company” or “Hillman”) reported today financial results for its fourth quarter and year ended December 29, 2018.

Fourth Quarter Highlights:

  • Net sales increased 34.0% to $276.6 million compared to prior year net sales of $206.4 million
  • Loss from operations was $2.6 million compared to the prior year income from operations of $1.4 million
  • Loss before income taxes was $35.2 million compared to the prior year loss before taxes of $14.7 million
  • Adjusted EBITDA1 increased 46.6% to $43.1 million compared to the prior year Adjusted EBITDA1 of $29.4 million

Year-to-Date Results

  • Net sales increased 16.2% to $974.2 million compared to prior year net sales of $838.4 million
  • Income from operations was $26.8 million compared to the prior year income from operations of $37.0 million
  • Loss before income taxes was $67.6 million compared to the prior year loss before taxes of $26.3 million
  • Adjusted EBITDA1 increased 10.1% to $146.0 million compared to the prior year Adjusted EBITDA1 of $132.6 million
  • Net working capital (current assets minus current liabilities) was $280.0 million at December 29, 2018 compared to $191.0 million at December 30, 2017

“We completed the acquisition of Big Time Products in the fourth quarter of 2018 and are thrilled that Hillman will now provide the most comprehensive selection of personal protection and work gear products in addition to our vast selection of innovative hardware solutions and merchandising systems,” commented Greg Gluchowski, President and CEO.  “We are confident that the integration of the recent strategic acquisitions will benefit our customers and position Hillman well for future success.”

Conference Call Information
Date/Time: 10:00 a.m. EDT, Thursday, March 21, 2019
Dial-In for U.S. and Canada: 1-866-673-2033
Audience Passcode: 1545579

Replay
Date/Time: Available until 10:00 a.m. EDT, March 21, 2020
Webcast link: http://www.hillmangroup.com

Forward-Looking Statements

This press release includes certain statements related to acquisitions, refinancing, capital expenditures, resolution of pending litigation, and realization of deferred tax assets that involve substantial risks and uncertainties and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements include statements regarding our future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” “project,” or the negative of such terms or other similar expressions.

These forward-looking statements are not historical facts, but rather are based on our current expectations, assumptions, and projections about future events. Although we believe that the expectations, assumptions, and projections on which these forward-looking statements are based are reasonable, they nonetheless could prove to be inaccurate, and as a result, the forward-looking statements based on those expectations, assumptions, and projections also could be inaccurate. Forward-looking statements are not guarantees of future performance. Instead, forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions that may cause our strategy, planning, actual results, levels of activity, performance, or achievements to be materially different from any strategy, planning, future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Actual results could differ materially from those currently anticipated as a result of a number of factors, including the risks and uncertainties discussed under the caption “Risk Factors” set forth in Item 1A of our 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.

All forward-looking statements attributable to the Company or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this press release; they should not be regarded as a representation by the Company or any other individual. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this press release might not occur or might be materially different from those discussed.

The Hillman Companies, Inc.

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 26,000 customers. 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 the Company, please visit our website at http://www.hillmangroup.com or call Investor Relations at (513) 851-4900, ext. 68284.

1 Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Reconciliation of Adjusted EBTIDA” section of this press release for additional information as well as reconciliations between the company’s GAAP and non-GAAP financial results.


THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Comprehensive Income (Loss), GAAP Basis
(dollars in thousands)
Unaudited

  Thirteen Weeks
Ended
December 29,
2018
  Thirteen Weeks
Ended
December 30,
2017
  Year Ended
December 29,
2018
  Year Ended
December 30,
2017
Net sales $ 276,587     $ 206,374     $ 974,175     $ 838,368  
Cost of sales (exclusive of depreciation and amortization shown separately below) 163,947     114,402     537,885     455,717  
Selling, general and administrative expenses 87,096     70,953     320,543     274,044  
Depreciation 15,580     8,543     46,060     34,016  
Amortization 14,700     9,667     44,572     38,109  
Management fees to related party 150     129     546     519  
Other (income) expense (2,328 )   1,281     (2,267 )   (1,022 )
Income (loss) from operations (2,558 )   1,399     26,836     36,985  
Interest expense, net 26,491     13,058     70,545     51,018  
Interest expense on junior subordinated debentures 3,152     3,152     12,608     12,608  
Investment income on trust common securities (94 )   (94 )   (378 )   (378 )
Refinancing costs 3,090         11,632      
Loss before income taxes (35,197 )   (14,717 )   (67,571 )   (26,263 )
Income tax (benefit) expense (112 )   (80,152 )   2,070     (84,911 )
Net (loss) income $ (35,085 )   $ 65,435     $ (69,641 )   $ 58,648  
Net (loss) income from above $ (35,085 )   $ 65,435     $ (69,641 )   $ 58,648  
Other comprehensive income:              
Foreign currency translation adjustments (7,161 )   (2,189 )   (11,053 )   7,845  
Total other comprehensive (loss) income (7,161 )   (2,189 )   (11,053 )   7,845  
Comprehensive (loss) income $ (42,246 )   $ 63,246     $ (80,694 )   $ 66,493  
                               
                               

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
Unaudited

  December 29, 2018   December 30, 2017
ASSETS      
Current assets:      
Cash and cash equivalents $ 28,234     $ 9,937  
Accounts receivable, net of allowances of $846 ($1,121 - 2017) 110,799     78,994  
Inventories, net 320,281     219,479  
Other current assets 18,727     11,850  
Total current assets 478,041     320,260  
Property and equipment, net of accumulated depreciation of $131,169 ($98,674 - 2017) 208,279     153,143  
Goodwill 803,847     620,503  
Other intangibles, net of accumulated amortization of $176,677 ($132,659 - 2017) 930,525     693,195  
Other assets 10,778     12,116  
Total assets $ 2,431,470     $ 1,799,217  
LIABILITIES AND STOCKHOLDER'S EQUITY      
Current liabilities:      
Accounts payable $ 135,059     $ 74,051  
Current portion of debt and capital lease obligations 10,985     5,706  
Accrued expenses:      
Salaries and wages 9,881     9,784  
Pricing allowances 5,404     5,908  
Income and other taxes 3,325     4,146  
Interest 15,423     9,717  
Other accrued expenses 17,941     19,911  
Total current liabilities 198,018     129,223  
Long-term debt 1,586,084     989,674  
Deferred income taxes, net 200,696     145,728  
Other non-current liabilities 7,565     7,189  
Total liabilities 1,992,363     1,271,814  
       
Commitments and Contingencies      
Stockholder's Equity:      
Preferred stock, $.01 par, 5,000 shares authorized, none issued and outstanding at December 29, 2018 and December 30, 2017      
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at December 29, 2018 and December 30, 2017      
Additional paid-in capital 549,528     551,518  
Retained earnings (accumulated deficit) (72,831 )   2,422  
Accumulated other comprehensive loss (37,590 )   (26,537 )
Total stockholder's equity 439,107     527,403  
Total liabilities and stockholder's equity $ 2,431,470     $ 1,799,217  
               
               

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited

  Year Ended
December 29,
2018
  Year Ended
December 30,
2017
Cash flows from operating activities:      
Net income (loss) $ (69,641 )   $ 58,648  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:      
Depreciation and amortization 90,632     72,125  
(Gain) loss on dispositions of property and equipment (5,988 )   1,140  
Impairment of long lived assets 837     1,569  
Deferred income taxes 394     (85,874 )
Deferred financing and original issue discount amortization 2,455     2,530  
Loss on debt restructuring 11,632      
Stock-based compensation expense 1,590     2,484  
Gain on disposition of Australia assets     (638 )
Other non-cash interest and change in value of interest rate swap 607     (1,481 )
Changes in operating items:      
Accounts receivable 7,934     (2,777 )
Inventories (68,978 )   13,800  
Other assets (1,496 )   517  
Accounts payable 41,092     9,305  
Other accrued liabilities (3,523 )   11,562  
Net cash provided by operating activities 7,547     82,910  
Cash flows from investing activities:      
Acquisitions of businesses, net of cash acquired (500,989 )   (47,188 )
Capital expenditures (71,621 )   (51,410 )
Other investing activities     (1,500 )
Net cash used for investing activities (572,610 )   (100,098 )
Cash flows from financing activities:      
Borrowings on senior term loans, net of discount 1,050,050      
Repayments of senior term loans (532,488 )   (5,500 )
Borrowings of revolving credit loans 165,550     35,500  
Repayments of revolving credit loans (76,850 )   (16,000 )
Financing fees (20,520 )    
Principal payments under capitalized lease obligations (235 )   (124 )
Dividend to Holdco (3,780 )    
Proceeds from exercise of stock options 200      
Proceeds from sale of Holdco stock     500  
Net cash provided by financing activities 581,927     14,376  
Effect of exchange rate changes on cash 1,433     (1,357 )
Net increase (decrease) in cash and cash equivalents 18,297     (4,169 )
Cash and cash equivalents at beginning of period 9,937     14,106  
Cash and cash equivalents at end of period $ 28,234     $ 9,937  
               
               

THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED EBITDA (Unaudited)
(dollars in thousands)

EBITDA and Adjusted EBITDA are not measures made in accordance with U.S. generally accepted accounting principles (“GAAP”), and as such, should not be considered a measure of financial performance or condition, liquidity, or profitability. It should not be considered an alternative to GAAP-based net income or income from operations or operating cash flows. Further, because not all companies use identical calculations, amounts reflected by Hillman as EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is included to satisfy a reporting obligation under our indenture. Adjusted EBITDA as presented herein does not include certain adjustments and pro forma run rate measures contemplated by our senior secured credit facilities and our indenture and may also include additional adjustments that were not applicable at the time of the offering of the senior notes governed by our indenture. Adjusted EBITDA is also one of the performance criteria for the Company's annual performance-based bonus plan. The reconciliation of Net income (loss) to Adjusted EBITDA is presented below.

       
    Thirteen Weeks Ended Year Ended
    December 29, December 30, December 29, December 30,
    2018 2017 2018 2017
Net income (loss)   $ (35,085 ) $ 65,435   $ (69,641 ) $ 58,648  
Income tax provision (benefit)   (112 ) (80,152 ) 2,070   (84,911 )
Interest expense, net   26,491   13,058   70,545   51,018  
Interest expense on junior subordinated debentures   3,152   3,152   12,608   12,608  
Investment income on trust common securities   (94 ) (94 ) (378 ) (378 )
Depreciation   15,580   8,543   46,060   34,016  
Amortization   14,700   9,667   44,572   38,109  
EBITDA   24,632   19,609   105,836   109,110  
           
Stock compensation expense   371   459   1,590   2,484  
Management fees   150   129   546   519  
Acquisition and integration expense   5,180   881   12,358   934  
Canada Restructuring (1)   5,587     8,261    
Restructuring and other costs (2)   1,528   8,833   9,016   14,794  
Refinancing costs   3,090     11,632    
Anti-dumping duties   300     (3,829 ) 6,274  
Mark-to-market adjustment on interest rate swaps   2,284   (497 ) 607   (1,481 )
Adjusted EBITDA   $ 43,122   $ 29,414   $ 146,017   $ 132,634  
                           
  1. Includes charges related to a restructuring plan announced in our Canada segment in 2018, including facility consolidation, stock keeping unit rationalization, severance, sale of property and equipment, and charges relating to exiting certain lines of business.
  2. Includes restructuring and other costs associated with the implementation of a new pricing program, cost associated with implementing our ERP system in Canada, costs to relocate our distribution center in Edmonton, Canada, costs associated with relocating our distribution center in Dallas, Texas, and start up costs for the hub facility located on the U.S. West Coast.

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