8-K: Hillman Solutions Corp. Reports Modest Growth in Q1 2025, Reaffirms Guidance

Hillman Solutions Corp. announced a 2.6% increase in net sales for the first quarter of 2025, with adjusted EBITDA rising to $54.5 million.

Summary

• Hillman Solutions Corp. reported its financial results for the thirteen weeks ended March 29, 2025.
• Net sales increased by 2.6% to $359.3 million, compared to $350.3 million in the prior year quarter.
• The company reported a net loss of $(0.3) million, or $(0.00) per diluted share, compared to a net loss of $(1.5) million, or $(0.01) per diluted share, in the prior year quarter.
• Adjusted diluted EPS was $0.10 per diluted share, consistent with the prior year quarter.
• Adjusted EBITDA increased to $54.5 million, compared to $52.3 million in the prior year quarter.
• Net cash used by operating activities was $(0.7) million, a decrease compared to net cash generated by operating activities of $11.7 million in the prior year quarter.
• Free Cash Flow totaled $(21.3) million, compared to $(6.1) million in the prior year quarter.
• Gross debt was $740.0 million, up from $718.6 million on December 28, 2024.
• Net debt was $703.7 million, compared to $674.0 million on December 28, 2024.
• Liquidity available totaled $200.9 million, including $164.6 million of available borrowing under the revolving credit facility and $36.3 million of cash and equivalents.
• Net debt to trailing twelve month Adjusted EBITDA was 2.9x at quarter end, compared to 2.8x on December 28, 2024.
• The company reiterated its full-year 2025 guidance for net sales ($1.495 to $1.575 billion) and adjusted EBITDA ($255 to $275 million).
• However, the company withdrew its free cash flow guidance due to uncertainties around the timing and magnitude of tariffs.
• The company expects to end the year with a leverage ratio of around 2.5 times.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company reported a net loss, it also showed growth in net sales and adjusted EBITDA, and reaffirmed its full-year guidance; however, the withdrawal of free cash flow guidance and increased debt levels temper the positive aspects.

Positives

• Net sales increased by 2.6% to $359.3 million.
• Adjusted EBITDA increased to $54.5 million.
• The company reiterated its full-year 2025 guidance for net sales and adjusted EBITDA.
• Hillman is actively diversifying its supply chain to mitigate tariff impacts.
• Hillman Canada won the 2024 Vendor of the Year award from Kent Building Supplies.
• Hardware and Protective Solutions (HPS) revenues increased 5.6% driven by the Intex acquisition and new business.
• Robotics and Digital Solutions (RDS) revenues increased 1.9% supported by MinuteKey 3.5 rollout.

Negatives

• The company reported a net loss of $(0.3) million.
• Net cash used by operating activities was $(0.7) million, compared to net cash generated of $11.7 million in the prior year quarter.
• Free Cash Flow totaled $(21.3) million, compared to $(6.1) million in the prior year quarter.
• The company withdrew its free cash flow guidance for the full year 2025.
• Canada revenues decreased (18.7)% due to a soft market and economy, and FX headwinds.
• Robotics and Digital Solutions (RDS) Adjusted EBITDA decreased (9.4)%.

Risks

• Unfavorable economic conditions could affect operations, financial condition, and cash flows.
• Increased supply chain costs, including tariffs, raw materials, sourcing, transportation, and energy, pose a risk.
• The markets are highly competitive.
• The company's ability to innovate with new products and services is crucial.
• Seasonality can impact results.
• Large customer concentration presents a risk.
• The ability to recruit and retain qualified employees is important.
• Legal proceedings could have an adverse outcome.
• Adverse changes in currency exchange rates could impact financial results.
• Regulatory changes and potential legislation could adversely impact financial results.

Future Outlook

The company reiterated its full-year 2025 guidance for net sales ($1.495 to $1.575 billion) and adjusted EBITDA ($255 to $275 million) but withdrew its free cash flow guidance due to uncertainties around the timing and magnitude of tariffs; the company expects to end the year with a leverage ratio of around 2.5 times.

Management Comments

• Jon Michael Adinolfi, President and CEO of Hillman, stated that the company had a good start to 2025, driven by contributions from Intex DIY and new business wins.
• He also mentioned the company's focus on mitigating the impact from tariffs by working with customers and suppliers and diversifying the supply chain.
• Rocky Kraft, Hillman's chief financial officer, commented that the company remains confident in its topand bottom-line expectations for the year and is reiterating its Net Sales and Adjusted EBITDA full year guidance.
• He also stated that the company believes it can manage its business in order to end the year with a leverage ratio of around 2.5 times.

Industry Context

Hillman operates in the hardware and home improvement sector, which is influenced by factors such as economic conditions, housing market trends, and consumer spending on home renovation and construction projects; the company's focus on diversifying its supply chain reflects a broader industry trend of mitigating risks associated with tariffs and global trade uncertainties.

Comparison to Industry Standards

• Comparing Hillman's performance to companies like Fastenal, which also operates in the industrial and construction supply space, reveals that Hillman's revenue growth of 2.6% is relatively modest.
• Fastenal often achieves higher organic growth rates due to its extensive distribution network and focus on value-added services.
• In terms of profitability, Hillman's adjusted EBITDA margin of 15.2% is competitive but could be improved compared to companies like Stanley Black & Decker, which often have higher margins due to their brand strength and diversified product portfolio.
• Hillman's net debt to adjusted EBITDA ratio of 2.9x indicates a moderate level of leverage, which is comparable to other companies in the sector; however, companies with stronger balance sheets may have lower leverage ratios, providing them with more financial flexibility.

Stakeholder Impact

• Shareholders: The results provide insights into the company's financial performance and future outlook, which can influence investment decisions.
• Employees: The company's performance and strategic initiatives can impact job security and opportunities for advancement.
• Customers: The company's commitment to customer service and product innovation can affect the quality and availability of products and services.
• Suppliers: The company's supply chain diversification efforts can impact supplier relationships and sourcing strategies.
• Creditors: The company's debt levels and financial performance can influence credit ratings and borrowing costs.

Next Steps

• The company plans to host a conference call and webcast presentation on April 29, 2025, to discuss its results.
• Hillman's quarterly presentation and Form 10-Q are expected to be filed with the SEC and posted to its Investor Relations website.

Key Dates

Keywords

Hillman Solutions Corp., financial results, net sales, adjusted EBITDA, free cash flow, tariffs, supply chain, guidance, hardware, merchandising solutions