HLMN Hillman Solutions

Nick Ruffing Vice President, Finance
Doug Cahill Chairman, President, and Chief Executive Officer
Rocky Kraft Chief Financial Officer
Call transcript
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Good morning, ladies and gentlemen and welcome to The Hillman Companies Conference Call to discuss First Quarter 2021 Results. At this time, all participants are in a listen-only mode. Hillman will not be fielding any questions on today’s call in light of its recently announced planned merger with Landcadia Holdings III. [Operator Instructions] I would now like to introduce your host for today’s conference, Nick Ruffing.

You may begin.

Nick Ruffing

Operator. you, Thank thank Group’s and results. dialing to in Good call you to Hillman conference XXXX discuss the morning for first quarter I is President line am Kraft, Chief President, Vice and Rocky Nick the Officer. on and of CEO; with Cahill, Doug Finance today Financial our Chairman, me Ruffing,

are to factors such in could materially beyond control are and to subject assumptions These we provisions differ certain and guarantees projected which many subject certain the to statements, not risks, Safe other you Harbor statements forward-looking including and statements cause uncertainties, made we begin, to those caution forward-looking are are Before today actual with the that laws. results securities of respect of statements would which from like performance COVID-XX. future that may include of the company’s to

expressly the further Some results Commission. reports with could otherwise. result the company’s Securities and information, whether of update as forward-looking are a statements, or contained company any of that Exchange annual the our periodic or revise filed disclaims new factors and any developments, obligation to influence in The

press addition, filed furnished measures In call, refer our may certain on financial of GAAP. this to measures. XXXX to refer Form we non-GAAP X-K for XX, on Please financial May to reconciliations in release non-GAAP

financial the will a quarter. followed of review Doug, providing begin call Rocky the We with a from business by update

update on Let me business. an now turn the for over the Doug call to

Doug Cahill

competitive truly This all-around our Hillman’s the morning, of our opportunity home Hillman customers demonstrates current to continue and of by reflecting am in operating products customers quarter, Good hardware win, us supply Nick. in-store that had the and growing exceptional execution XX% service, win. by us adjusted that the for four our and strength and marketplace. model the sales the retail U.S. exciting I improvement ahead helping strong Thanks cover We up with and and demand we and teams our Canada. in when continued an optimism each moat exceptional differentiates about performance going to in Today, our is start our everyone. EBITDA themes sales, XXXX and chain underpin to win first

not are everyday we distributor. First, your

supplier service, complex competitive array of to service We our service. full-service important are This and our are and of and critically a it that a customers. with starts SKUs is moat valuable

us and exceptional with our the innovation, during the strengthened our gain service and further pandemic retail supply Second, commitment our share. of chain relationships delivery market business sales, win has new and helped key and partners teams

of as and Third, seeing that rollout our Hardware rebounding we driving continuation our better are a began expected. is during vaccines faster the our business U.S. both business in Canada and of Solutions normalization growth the pandemic recedes. & mix and This pandemic flagship is the favorable business than Robotics expected and Solutions tailwinds in a the than Digital

the Equipment, performance we and our flipside, EBITDA long-term operating in single-digit On double-digit growth high away our than finally, with transitioning reinforced billion of sales retail are has for we our PPE market and of partners, within the together conviction sooner market underlying And opportunity. COVID-related $XX Protective Personal expected. our working expectations sales or from model growth our

brands. The are own and built our moat sold products, majority proprietary under foundation of competitive our of servicing XX%, the customers. Our our fully success our is on over

from XXX,XXX keep of our customers their We products our directly source reliable excited manufacturers. of an categories innovating over projects to SKUs ahead constantly demand. network extensive these We and DIY are about

the with hardware labor found into other business, customers. improvement stronger success. SKUs. Vendor this managing tailwinds competitor been the and trends more up can our business a Proof is that transformation first Trends people throughout as business We in have do and our our prior products of and first categories the evidenced no our record-breaking XX% volatility, and see last There Canadian in these know segment powerful and challenges model XXX,XXX demand In rates our business for global of an of quarter, from quarter shelves, time, were in gains and and some driver there. even at home an we hardware this. enduring is by XX% year outdoor operating our as key hardware supply filling of chain this ordering We fill our of prior the directly followed even over demand disruptions our the awards, and army that stores, that performance relationships market number a agree. fastener of have activities share XX% of over year. with over the at doing of the the the living personnel plus fact remained customers major past has stronger our fastener the and in year. new quarter even customers overall year, We them The retail the home was underlying remained and financial over tight pattern builders reward year for strong in Year for up wins first achieved and construction from inventory

of as our rebound it the start see end sales to open where see to XXXX, to will seeing and robotics are flat QX. happen are expected than and Digital were we digital segment note faster stores Robotics segment ramp pleased & I pre-pandemic in the a are in Solutions expected, performance. levels we to in by we that While accessible, more roughly sooner

with of sales half team the team sprays for and half pandemic, Instafob our shipping needed our supply not forward. and XXXX onset and the the June in our benefit on our more duplicating see XXXX, new rose solutions of fazed rollout major would has the consistent behind The in COVID-related could be worst national realized including The as PPE to new pandemic protective knife of quarter, and sharpening shipping digital customers. the Hillman our XXXX innovations the to of second the Resharp our look vaccine hopefully began and The XXXX. XXXX. track much them we would with PPE, rollouts launched. coming scramble completely the two machines planning the new quarters assumed our of wipes. masks, RFID expect and first rapid get we the be are end robotics customers began excited our put accruing of remain us In the to in occasion At ask solutions to and that out machines COVID by what we in in then we and to During the

the Americans thing. sales. vaccine a in imagined Fortunately, buying next saw rolled COVID-related that and the drop-off and than March good in early thus out PPE expected saw PPE COVID-related was stopped we a we than quicker that’s sooner What

our sales. We digital in outperformance in hardware robotics are the and make continued than solutions, will expected solutions COVID-related that Canadian drop-off businesses optimistic for PPE and earlier up

have And the my to this as immense had XXXX for will opportunity of no then. us. end these me fourth COVID for takes forecast our impact outlook before to point volumes our on that on Importantly, we in ahead planned already

within momentum organic $XX our terrific have billion We market.

larger that. are capturing share ever an winning We and of everyday

with remain of manufacturer U.S. hardware of OZCO product front. XX% innovators, in patents. on acquired superior the by leading sales we In the addition, a M&A we quality master are over OZCO covered In Products, outdoor April, their active Building

We OZCO’s will bolster distribution sales, and creativity a to across leverage profitability. service larger its innovation and platform much and growth

our all like additional bolt-on is opportunities pipeline of in OZCO Our segments. extensive of

core business We for will the the Rocky. far folks have continue to customers, XXXX long-term through value and competitive our ever are business, let to M&A our excited the and leverage at invest setup creation. profitable both and When our significant propel continue long-term me and direction turn accomplish our over growth growth with positive that, in with levers modest we using objectives. around executing been well-structured growth to accelerating our thrilled than I what it stronger of disposal, demand am the further organically relationships on and extremely account business our taking able to With on with into for future. accretive our moat to so our our

Rocky Kraft

sales year protective XXXX $XXX XX.X% sales, million, an a the were particularly the million, construction increase $XX sales in GAAP and On our by our for quarter. or The of of masks. strong in high along prior category, hardware was attributable growth strong Doug. Thanks, first versus quarter of to fastener demand gloves solutions basis, primarily with driven

recovered flat was the for it as pre-pandemic quarter Our levels. Digital to Robotics business &

was quarter to Our in over margin the million to The gross in difference product the freight margin to XX% prior high transportation. in quarter. our to year $XXX in representing increased We profit related prior to growth XX.X% compared gross business $XX and primarily of a of year QX double-digit segment & other in performance and mainly mix, Digital due Robotics modest experienced segments Solutions inflation in compared flattish XXXX. margin million,

quarter first SG&A to and operating with professional Landcadia wages saw higher with on leverage higher pending was freight was at of year offset prior the and volume, a fees inflation by sales sales good as Our items, by merger in III flat percent XX.X%. our We quarter associated such costs. which as

representing increase for to and for year, start first the million costs, million XXXX to of XX, $XX press our release the compared Excluding adjusted EBITDA. to Please of other on refer income solid the EBITDA restructuring an Form $XX impact with quarter May of in reconciliations ‘XX was the net prior X-K adjusted year. to XX%, a furnished of

support activities million $XX of In year. the to change business Now, the driver turn growth. flow let sheet. an the prior me now and to wins of in The compared $XX sales operating and increase cash used of inventory was the balance quarter million first in as XXXX, primary cash new to

debt by as for up reminder, positive in CapEx outstanding capital in end flow both near a under consisted period our expected. compared consistent the sales, of years $XXX the and uses we of prior X% quarter and ramp of as first year for for of full remained seasonally investing our cash a our Cash working seasonally digital stronger Net of our as This and credit CapEx followed high-return expenditures million solutions million million we of of year. months. subsequent availability an XXXX, equipment billion robotics facility. $XX $X is capital was is Maintenance total quarters used initiatives. revolving the investment primarily had At a our racks, $X.X business. with cash is XXXX. first As expectations part to important of the That for quarter in activities our merchandising hit in

roughly are in related a additional to $XXX credit contingent XXXX. an a and will wrap on, will of point billion the million This in average we terms interest X-year result with rate and based commitments and better-than-expected be Landcadia a highly to Overall, pricing disclosed, closing The III. outlook. important we credit pleased deal up in basis these received extension on in some milestone previously XXX and term term are early on upon of and very merger we with million merging execution for approximately are March, to reduction our our I for loans III. facility maturity our The with $X.XXX like considerations liquidity, connection As accomplished $XXX our with of weighted asset facilities. road favorable would Landcadia received used loans. with, revolving the

end-market customers we helpful in signs our we discussed very us, to our core continuing solutions, area, more demand the our innovation teams our including every some Across with As seeing in with executing packaging. are efforts our commodities, almost have growing, segments, labor we with providing capture positive to opportunities. business integrating our closely in all and today, traffic with and are with customer resultant growth inflation seeing stores pickup freight, well with

covering retail at We be cost these increases. at price will our realizing soon increases partners aimed

Doug continued we DIY line continued strong seeing into hardware top trends our are and noted, As April. momentum projects strong and for

to return business Digital Our is U.S. hardware rebounded as solutions and Solutions have consumer retailers about our the to and & and pre-COVID our Robotics out operations. strong has started Canadian and businesses remain

our that sales, our these point optimistic expected drive sales a the EBITDA than look up will are performance but these XXXX see that modest his I experiencing we referenced in COVID-related core still and for continuing the sooner to offsetting We than in $XX million, $XX trends PP&E no remarks. impact purchased could see in pressure you falloff better from at together masks, these that with have recurring inventory we outlook at growth foresee We when items. potential working of reinforce will excluding and the businesses. that COVID of currently clear some these request Net-net, to approximately markets we retailers of sprays quite and strong there time. are headwind you summary, wipes strong this have expected to trends in continue help will on Doug EBITDA segments COVID-related be $XXX customer’s are in XXXX performance we million. our our In double-digit EBITDA we underlying our million

Beyond market and adjacent products we and to We well the Thank and At again success. we to call to have in listen in of me over products our on story the the continuing point, and new time meaningful capture look to as near speaking future. back M&A. to for with you taking our operator. record the growth, expanding let turn to this forward you new forward markets look with existing proven our with growth as organically track long


call Thank continued Hillman. you. interest the for and for for all Thank session joining this today. our [No Ladies in this you concludes your and call event] Q&A gentleman,