Hillman Solutions Corp. ((HLMN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Hillman Solutions Corp’s recent earnings call sheds light on the company’s resilience and strategic prowess amidst a challenging market environment. While the sentiment was generally positive, highlighted by exceptional operational efficiency and strategic growth via acquisitions, the company also acknowledged ongoing challenges due to market softness impacting sales and specific business segments. Despite these headwinds, Hillman’s strategic initiatives and robust financial management appear to position the company well for future growth.
Vendor of the Year Awards
Hillman Solutions Corp received significant accolades in 2024, being named Vendor of the Year by both Home Depot and Lowe’s, their largest customers. This recognition underscores the company’s strong partnerships and exceptional service quality in the industry.
Record EBITDA
The company reported its highest EBITDA in history, reflecting robust financial performance and efficient operations. This milestone illustrates Hillman’s ability to optimize its processes and leverage its resources effectively.
Accretive Acquisitions
Hillman’s strategic acquisitions of Koch Industries and Intex DIY in 2024 were pivotal, contributing 4% to the top line. These acquisitions are expected to provide organic growth opportunities, enhancing the company’s market position.
Adjusted Gross Margin Improvement
Hillman achieved a remarkable increase in adjusted gross margins by 390 basis points, reaching 48.1% for 2024. This improvement indicates enhanced operational efficiencies and a strategic focus on a higher-margin product mix.
Debt Reduction
The company significantly reduced its debt, paying down over $900 million in the past four years. Hillman ended 2024 with $674 million of net debt, a notable improvement from $722 million at the end of 2023, showcasing disciplined financial management.
Impact of Market Softness
Despite the company’s achievements, net sales for 2024 were slightly down compared to 2023, due to a 6% decline in foot traffic at retail customers and a 5% reduction in market volume, highlighting ongoing market challenges.
RDS Business Challenges
The RDS segment faced challenges with capital investment returns. However, optimism remains as the segment is anticipated to return to growth with the upcoming rollout of MinuteKey 3.5.
True Value Receivables Write-off
An $8.6 million write-off of receivables from True Value was necessary due to their Chapter 11 filing in October 2024, impacting Hillman’s adjusted EBITDA.
Free Cash Flow Decline
Free cash flow saw a decline to $98.1 million, down from $172.3 million in 2023, influenced by increased capital expenditures and a soft top line.
Forward-Looking Guidance
Hillman Solutions Corp provided optimistic guidance for 2025. The company projects full-year net sales to range from $1.495 billion to $1.575 billion, anticipating a 10% increase in adjusted EBITDA from 2024. Despite planned capital expenditures for strategic initiatives, Hillman expects to maintain strong adjusted gross margins and aims to end 2025 with a net leverage ratio of approximately 2.2x, excluding any M&A impacts.
In conclusion, Hillman Solutions Corp’s earnings call reflected a company navigating challenges while achieving significant milestones. With record EBITDA, strategic acquisitions, and industry accolades, the company is poised for growth. Continued focus on operational efficiency and strategic initiatives promises a favorable outlook despite market headwinds.