The Hillman Companies, Inc. Reports First Quarter 2018 Financial Results
The Hillman Companies, Inc. Reports First Quarter 2018 Financial Results
CINCINNATI, May 2, 2018 /PRNewswire/ -- The Hillman Companies, Inc. (NYSE-AMEX: HLM.PR) (the "Company" or "Hillman") reported today financial results for its first quarter ended March 31, 2018.
First Quarter Highlights:
-- Net sales increased 10.0% to $207.6 million compared to prior year net
sales of $188.8 million
-- Income from operations was $9.1 million compared to the prior year
income from operations of $3.1 million
-- Loss before income taxes was $7.5 million compared to the prior year
pre-tax loss of $12.4 million
-- Adjusted EBITDA(1) increased 2.5% to $26.2 million compared to the prior
year Adjusted EBITDA(1) of $25.5 million
-- Net working capital (current assets minus current liabilities) was
$189.6 million at March 31, 2018 compared to $214.0 million at April 1,
2017
-- Net cash provided by (used for) operating activities was $2.4 million
compared to the prior year of $(4.6) million
"We had a strong start to fiscal year 2018 with top line growth of 10.0% as we benefited from the acquisition of ST Fastening Systems in late 2017, as well as the rollout of our key program to a significant new customer," commented Greg Gluchowski, President and CEO. "Operationally, integration activities are well underway with ST Fastening Systems, and our teams continued delivering superior customer service through the first quarter of 2018."
In addition, the Company expects to pursue a refinancing of some of its outstanding debt securities. Completion of any refinancing transaction is subject to uncertainties, including market conditions and other factors and there can be no assurance that the Company will be able to complete a refinancing transaction on the anticipated terms or at all.
Conference Call Information
Date/Time: 8:30 a.m. EDT, Wednesday, May 2, 2018
Dial-In for U.S. and Canada: 1-888-346-3470
Conference call ID number: The Hillman Companies
Replay - Conference Call
Date/Time: Available until 8:00 a.m. EDT, Wednesday, May 9, 2018
Dial-In for U.S. and Canada: 1-877-344-7529
Conference call ID number: 10120108
Webcast link: http://www.hillmangroup.com
(1) Adjusted EBITDA is a non-GAAP financial measures. Refer to the "Non-GAAP Financial Measures Reconciliation" section of this 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 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. 60292
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Comprehensive Income (Loss), GAAP Basis
(dollars in thousands)
Unaudited
Thirteen Weeks Thirteen Weeks
Ended Ended
March 31, 2018
April 1, 2017
-------------
Net sales $207,595 $188,779
Cost of sales (exclusive of depreciation and amortization 109,590 101,594
shown separately below)
Selling, general and administrative expenses 71,076 66,546
Depreciation 8,942 8,718
Amortization 9,723 9,472
Management fees to related party 128 133
Other income (981) (784)
Income from operations 9,117 3,100
Interest expense, net 13,571 12,477
Interest expense on junior subordinated debentures 3,152 3,152
Investment income on trust common securities (95) (95)
Loss before income taxes (7,511) (12,434)
Income tax expense (benefit) 2,806 (5,750)
Net loss $(10,317) $(6,684)
Net loss from above $(10,317) $(6,684)
Other comprehensive income:
Foreign currency translation adjustments (3,039) 2,038
Total other comprehensive (loss) income (3,039) 2,038
Comprehensive loss $(13,356) $(4,646)
======== =======
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
Unaudited
March 31, December 30,
2018 2017
---- ----
ASSETS
Current assets:
Cash and cash equivalents $5,234 $9,937
Accounts receivable, net of allowances of $917 ($1,121 - 2017) 84,797 78,994
Inventories, net 240,241 219,479
Other current assets 7,071 11,850
----- ------
Total current assets 337,343 320,260
Property and equipment, net of accumulated depreciation of $103,964 ($98,674 - 2017) 164,780 153,143
Goodwill 619,976 620,503
Other intangibles, net of accumulated amortization of $142,275 ($132,659 - 2017) 682,904 693,195
Other assets 9,455 12,116
----- ------
Total assets $1,814,458 $1,799,217
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $101,079 $74,051
Current portion of debt and capital leases 5,696 5,706
Accrued expenses:
Salaries and wages 12,475 9,784
Pricing allowances 4,709 5,908
Income and other taxes 3,571 4,146
Interest 4,549 9,717
Other accrued expenses 15,637 19,911
------ ------
Total current liabilities 147,716 129,223
Long term debt 1,004,292 989,674
Deferred income taxes, net 148,706 145,728
Other non-current liabilities 7,051 7,189
Total liabilities $1,307,765 $1,271,814
========== ==========
Commitments and contingencies
Stockholder's Equity:
Preferred stock, $.01 par, 5,000 shares authorized, none issued or outstanding at March 31, - -
2018 and December 31, 2017
Common stock, $.01 par, 5,000 shares authorized, issued and outstanding at March 31, - -
2018 and December 31, 2017
Additional paid-in capital 552,020 551,518
(Accumulated deficit) retained earnings (15,751) 2,422
Accumulated other comprehensive loss (29,576) (26,537)
------- -------
Total stockholder's equity 506,693 527,403
------- -------
Total liabilities and stockholder's equity $1,814,458 $1,799,217
========== ==========
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(dollars in thousands)
Unaudited
Thirteen Weeks Thirteen Weeks
Ended Ended
March 31, 2018 April 1, 2017
-------------- -------------
Cash flows from operating activities:
Net loss $(10,317) $(6,684)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization 18,665 18,190
Deferred income taxes 3,068 (5,888)
Deferred financing and original issue discount amortization 616 642
Stock-based compensation expense 487 598
Other non-cash interest and change in value of interest rate swap (1,057) (459)
Changes in operating items:
Accounts receivable (5,752) (6,711)
Inventories (22,208) (11,624)
Other assets (346) (1,720)
Accounts payable 27,423 13,097
Other accrued liabilities (8,160) (4,027)
------ ------
Net cash provided by (used for) operating activities 2,419 (4,586)
----- ------
Cash flows from investing activities:
Capital expenditures (20,994) (10,386)
------- -------
Net cash used for investing activities (20,994) (10,386)
------- -------
Cash flows from financing activities:
Repayments of senior term loans (1,375) (1,375)
Borrowings on revolving credit loans 22,500 4,286
Repayments of revolving credit loans (7,000) -
Principal payments under capitalized lease obligations (42) (54)
Net cash provided by financing activities 14,083 2,857
------ -----
Effect of exchange rate changes on cash (211) (7)
Net decrease in cash and cash equivalents (4,703) (12,122)
Cash and cash equivalents at beginning of period 9,937 14,106
----- ------
Cash and cash equivalents at end of period $5,234 $1,984
====== ======
Supplemental disclosure of cash flow information:
Interest paid on junior subordinated debentures, net $3,057 $3,057
Interest paid 18,343 17,014
Income taxes paid 417 52
THE HILLMAN COMPANIES, INC. AND SUBSIDIARIES
Reconciliation Statement, Non-GAAP Basis
(dollars in thousands)
Unaudited
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 Thirteen
Weeks Ended Weeks Ended
March 31, April 1,
2018 2017
---- ----
Net loss $(10,317) $(6,684)
Income tax provision (benefit) 2,806 (5,750)
Interest expense, net 13,571 12,477
Interest expense on junior subordinated debentures 3,152 3,152
Investment income on trust common securities (95) (95)
Depreciation 8,942 8,718
Amortization 9,723 9,472
EBITDA 27,782 21,290
Stock compensation expense 487 598
Management fees 128 133
Acquisition and integration expense 94 -
Restructuring and other costs (1) 2,846 3,611
Anti-dumping duties (4,128) 350
Mark-to-market adjustment on interest rate swaps (1,057) (459)
------ ----
Adjusted EBITDA $26,152 $25,523
======= =======
1. Includes restructuring and other
costs associated with the
implementation of a new pricing
program, restructuring our network
of facilities in Canada, and start
up costs for the hub facility
located on the U.S. West Coast.
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SOURCE The Hillman Companies, Inc.
