Loading, Please Wait...

CST: 23/08/2019 01:20:27   

The Hillman Companies, Inc. Reports Second Quarter and Year-to-Date 2019 Financial Results

23 Days ago

CINCINNATI, July 30, 2019 (GLOBE NEWSWIRE) -- The Hillman Companies, Inc. (NYSE-AMEX: HLM.PR) (the “Company” or “Hillman”) reported today financial results for its thirteen and twenty-six weeks ended June 29, 2019.

Second Quarter Highlights:

  • Net sales increased 31.9% to $324.6 million compared to prior year net sales of $246.2 million
  • Income from operations was $6.8 million compared to the prior year income from operations of $13.4 million
  • Net loss was $19.5 million compared to the prior year net loss of $13.5 million
  • Adjusted EBITDA1 increased 46.9% to $57.2 million compared to the prior year Adjusted EBITDA1 of $38.9 million

Year-to-Date Results

  • Net sales increased 34.9% to $612.3 million compared to prior year net sales of $453.7 million
  • Income from operations was $5.9 million compared to the prior year income from operations of $22.5 million
  • Net loss was $54.8 million compared to the prior year net loss of $23.8 million
  • Adjusted EBITDA1 increased 48.0% to $96.3 million compared to the prior year Adjusted EBITDA1 of $65.1 million
  • Net working capital (current assets minus current liabilities) was $248.5 at June 29, 2019 compared to $280.0 at December 29, 2018

“We are pleased with the performance of the legacy Hillman business as well as the recent acquisitions that together produced strong cash flows from operations in the second quarter,” said Greg Gluchowski, President and CEO. “We are optimistic that the positive momentum that we generated in the first half will continue to produce profitable growth and healthy operating cash flows as we look to the future.”

Conference Call Information
Date/Time: 9:00 a.m. EDT, Wednesday, July 31, 2019
Dial-In for U.S. and Canada: 1-866-673-2033
Audience Passcode: 8669035

Replay
Webcast link: http://www.hillmangroup.com

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.

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 38,000 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.


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

  Thirteen Weeks Ended
June 29, 2019
  Thirteen Weeks Ended
June 30, 2018
  Twenty-six Weeks Ended
June 29, 2019
  Twenty-six Weeks Ended
June 30, 2018
Net sales $ 324,628     $ 246,154     $ 612,287     $ 453,749  
Cost of sales (exclusive of depreciation and amortization shown separately below) 181,309     134,027     347,230     243,617  
Selling, general and administrative expenses 96,883     78,797     188,718     149,873  
Depreciation 16,655     9,535     32,471     18,477  
Amortization 14,684     9,712     29,449     19,435  
Management fees to related party 125     134     256     262  
Other expense (income) 8,215     578     8,254     (403 )
Income from operations 6,757     13,371     5,909     22,488  
Interest expense, net 26,064     14,361     52,627     27,932  
Interest expense on junior subordinated debentures 3,152     3,152     6,304     6,304  
Investment income on trust common securities (94 )   (94 )   (189 )   (189 )
Refinancing costs     8,542         8,542  
Loss before income taxes (22,365 )   (12,590 )   (52,833 )   (20,101 )
Income tax (benefit) expense (2,869 )   941     1,931     3,747  
Net loss $ (19,496 )   $ (13,531 )   $ (54,764 )   $ (23,848 )
Net loss from above $ (19,496 )   $ (13,531 )   $ (54,764 )   $ (23,848 )
Other comprehensive income:              
Foreign currency translation adjustments 2,547     (3,643 )   5,326     (6,682 )
Total other comprehensive (loss) income 2,547     (3,643 )   5,326     (6,682 )
Comprehensive loss $ (16,949 )   $ (17,174 )   $ (49,438 )   $ (30,530 )


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

  June 29,
2019
  December 29,
2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 16,953     $ 28,234  
Accounts receivable, net of allowances of $1,097 ($846 - 2018) 125,056     110,799  
Inventories, net 324,585     320,281  
Other current assets 7,299     18,727  
Total current assets 473,893     478,041  
Property and equipment, net of accumulated depreciation of $149,434 ($131,169 - 2018) 203,037     208,279  
Goodwill 806,031     803,847  
Other intangibles, net of accumulated amortization of $202,561 ($176,677 - 2018) 900,273     930,525  
Operating lease right of use assets 70,854      
Other assets 10,498     10,778  
Total assets $ 2,464,586     $ 2,431,470  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 143,397     $ 135,059  
Current portion of debt and capital leases 11,235     10,985  
Accrued expenses:      
Salaries and wages 15,969     9,881  
Pricing allowances 6,959     5,404  
Income and other taxes 5,079     3,325  
Interest 10,217     15,423  
Current portion of operating lease liabilities 11,600      
Other accrued expenses 20,970     17,941  
Total current liabilities 225,426     198,018  
Long term debt 1,572,775     1,586,084  
Deferred income taxes, net 202,739     200,696  
Other non-current liabilities 11,422     7,565  
Operating lease liabilities 61,893      
Total liabilities $ 2,074,255     $ 1,992,363  
Commitments and contingencies (Note 5)      
Stockholder's Equity:      
Preferred stock, $.01 par, 5,000 shares authorized, none issued or outstanding at June 29, 2019 and December 29, 2018      
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at June 29, 2019 and December 29, 2018      
Additional paid-in capital 550,190     549,528  
(Accumulated deficit) retained earnings (127,595 )   (72,831 )
Accumulated other comprehensive loss (32,264 )   (37,590 )
Total stockholder's equity 390,331     439,107  
Total liabilities and stockholder's equity $ 2,464,586     $ 2,431,470  


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

  Twenty-six Weeks Ended
June 29, 2019
  Twenty-six Weeks Ended
June 30, 2018
Cash flows from operating activities:      
Net loss $ (54,764 )   $ (23,848 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 61,920     37,912  
Deferred income taxes 1,326     3,847  
Deferred financing and original issue discount amortization 1,859     1,142  
Stock-based compensation expense 662     992  
Loss on debt restructuring     8,542  
Asset impairment 6,800      
(Gain) loss on disposal of property and equipment (121 )   53  
Other non-cash interest and change in value of interest rate swap 2,902     (1,418 )
Changes in operating items:      
Accounts receivable (13,394 )   (17,687 )
Inventories (2,000 )   (33,069 )
Other assets 9,485     (5 )
Accounts payable 7,540     46,237  
Other accrued liabilities 2,558     (6,828 )
Net cash provided by operating activities 24,773     15,870  
Cash flows from investing activities:      
Capital expenditures (27,771 )   (40,065 )
Proceeds from sale of property and equipment 7,612      
Net cash used for investing activities (20,159 )   (40,065 )
Cash flows from financing activities:      
Repayments of senior term loans (7,956 )   (530,750 )
Borrowings on senior term loans     530,000  
Financing fees     (11,752 )
Borrowings on revolving credit loans 12,500     92,000  
Repayments of revolving credit loans (20,200 )   (54,500 )
Principal payments under finance and capitalized lease obligations (283 )   (73 )
Proceeds from exercise of stock options     200  
Net cash (used for) provided by financing activities (15,939 )   25,125  
Effect of exchange rate changes on cash 44     (208 )
Net (decrease) increase in cash and cash equivalents (11,281 )   722  
Cash and cash equivalents at beginning of period 28,234     9,937  
Cash and cash equivalents at end of period $ 16,953     $ 10,659  
Supplemental disclosure of cash flow information:      
Interest paid on junior subordinated debentures, net $ 6,115     $ 6,115  
Interest paid 54,072     24,364  
Income taxes paid 400     632  


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 loss to Adjusted EBITDA is presented below.

    Thirteen Weeks Ended Twenty-six Weeks Ended
    June 29,   June 30, June 29,   June 30,
    2019   2018 2019   2018
Net loss   $ (19,496 )   $ (13,531 ) $ (54,764 )   $ (23,848 )
Income tax provision (benefit)   (2,869 )   941   1,931     3,747  
Interest expense, net   26,064     14,361   52,627     27,932  
Interest expense on junior subordinated debentures   3,152     3,152   6,304     6,304  
Investment income on trust common securities   (94 )   (94 ) (189 )   (189 )
Depreciation   16,655     9,535   32,471     18,477  
Amortization   14,684     9,712   29,449     19,435  
EBITDA   38,096     24,076   67,829     51,858  
               
Stock compensation expense   301     505   662     992  
Management fees   125     134   256     262  
Acquisition and integration expense   1,370     2,368   2,468     2,462  
Retention and long term incentive bonuses   2,030       4,059      
Canada Restructuring (1)   1,301       1,237      
Restructuring and other costs (2)   5,396     3,667   10,122     6,513  
Asset impairment costs(3)   6,800       6,800      
Refinancing costs       8,542       8,542  
Anti-dumping duties             (4,128 )
Mark-to-market adjustment on interest rate swaps   1,789     (361 ) 2,902     (1,418 )
Adjusted EBITDA   $ 57,208     $ 38,931   $ 96,335     $ 65,083  
  1. Includes charges related to a restructuring plan announced in our Canada segment in 2018, including facility consolidation 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 one time charges associated with new business wins.
  3. Impairment losses for the disposal of FastKey self-service key duplicating kiosks and related assets.

Is your business listed correctly on America’s largest city directory network of 1,000 portals?