Hillman Solutions Corporation

02/17/2026 | Press release | Distributed by Public on 02/17/2026 06:39

Annual Report for Fiscal Year Ending December 27, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion provides information which our management believes is relevant to an assessment and understanding of our operations and financial condition. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes to Consolidated Financial Statements and schedules thereto appearing elsewhere herein. In addition, see "Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information", as well as "Risk Factors" in Item 1A of this Annual Report.
Executive Overview and Trends in our Business
Net sales during 2025 increased by 5.4% when compared to 2024. Driving our performance for the year was the net sales contributions from new business wins, along with the contribution of net sales from the Intex DIY acquisition, which closed in August 2024, and the contribution of price increases, which were implemented during the year to offset an increase in costs related to tariffs. These contributions to net sales were offset by the soft home improvement market during the year. Hardware and Protective Solutions, our largest segment making up 76.9% of our net sales, led the way with an increase of 7.8%, while our Robotics and Digital Solutions segment returned to growth during 2025 contributing 1.6%. Partially offsetting this growth was a decline in our Canadian business segment.
Products across our business are primarily used by DIYers and professionals shopping at our customers' retail locations for repair, maintenance, and remodel projects. Because repair and maintenance projects are beneficial and often necessary no matter the economic environment, we believe our business is generally resilient to economic downturns. However, remodel projects are more dependent upon macroeconomic variables, including existing home sales. According to the National Association of Realtors, existing home sales in the U.S. for 2025 were unchanged from 2024, which marked a 30-year low, totaling 4.1 million. This was a headwind for our top line results during the year.
Our competitive moat, which consists of our 1,200 member field sales and service team, our ability to ship direct to the retail locations of our customers rather than their distribution network, and our 60+ years of experience set us apart from the competition. As such, we launched multiple new business wins during the year and we won vendor of the year awards from Do It Best and Home Depot Canada. We continue to focus on taking great care of our customers which has been a key focus on the company for over 60-years.
We are pleased with our top and bottom line results during 2025, as both were records for Hillman. Producing record top and bottom line results while successfully managing the dynamic and complex tariff situation is a testament to our team. Looking to 2026, we remain committed to driving value for our stakeholders, taking great care of our customers, and continuing to grow our business.
Impact of Global Economic Conditions on our Results of Operation
Our business is impacted by general economic conditions in the North American and international markets, particularly the U.S. and Canadian retail markets including hardware stores, home centers, mass merchants, and other retailers. Changes in current economic conditions, including inflationary pressures in the cost of inventory, transportation, and employee compensation, foreign currency volatility, and interest rates, have impacted consumer discretionary income levels and spending. Consumer discretionary income levels and spending impact the purchasing trends of our products by our retail customers. Any adverse trends in discretionary income and consumer spending could have a material adverse effect on our business or operating results.
We are exposed to the risk of unfavorable changes in foreign currency exchange rates for the U.S. dollar versus local currency of our suppliers located primarily in China and Taiwan. We purchase a majority of our products for resale from multiple vendors located in China and Taiwan. The purchase price of these products is routinely negotiated in U.S. dollar amounts rather than the local currency of the vendors and our suppliers' profit margins
22| December 27, 2025 Form 10-K
decrease when the U.S. dollar declines in value relative to the local currency. This puts pressure on our suppliers to increase prices to us. The U.S. dollar decreased in value relative to the CNY by approximately by 4.0% in 2025, increased by 2.8% in 2024, and increased by 2.9% in 2023. The U.S. dollar decreased in value relative to the Taiwan dollar by approximately 4.2% in 2025, increased by 7.1% in 2024, and decreased by 0.4% in 2023.
In addition, the negotiated purchase price of our products may be dependent upon market fluctuations in the cost of raw materials such as steel, zinc, and nickel used by our vendors in their manufacturing processes. The final purchase cost of our products may also be dependent upon inflation or deflation in the local economies of vendors in China and Taiwan that could impact the cost of labor and energy used in the manufacturing of our products. We identify the directional impact of changes in our product cost, but the quantification of each of these variable impacts cannot be measured as to the individual impact on our product cost with a sufficient level of precision. We may take pricing action, when warranted, in an attempt to offset a portion of product cost increases. The ability of our operating divisions to implement price increases and seek price concessions, as appropriate, is dependent on competitive market conditions.
We are also exposed to risk of unfavorable changes in the Canadian dollar exchange rate versus the U.S. dollar. Our sales in Canada are denominated in Canadian dollars while a majority of the products are sourced in U.S. dollars. A weakening of the Canadian dollar versus the U.S. dollar results in lower sales in terms of U.S. dollars while the cost of sales remains unchanged. We have a practice of hedging some of our Canadian subsidiary's purchases denominated in U.S. dollars. The U.S. dollar decreased in value relative to the Canadian dollar by approximately 5.2% in 2025, increased by 9.0% in 2024, and decreased by 2.4% in 2023.
We import products which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions. U.S. tariffs on steel and aluminum and other imported goods has increased our product costs and required us to increase prices on the affected products. Recent tariffs against goods imported from China, Mexico, and Canada enacted since February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto, have also caused us to increase prices on affected products.
Recent developments
Tariff Environment
In 2025, the U.S. government announced tariffs on imports from countries from which we import products and components. Additionally, other countries have announced their own tariffs. We estimate we source approximately 33% of our products from China, 33% from suppliers based in North America, and 33% from all other countries. Tariffs have resulted in an increase in our net working capital and cost of sales. We have raised our prices to offset the tariff costs, although these price increases could impact future demand for our products. We continue to analyze the impact of these actions and what, if any, steps, including pricing actions, we may take to mitigate the impact of the tariffs. Consistent with our normal course of business, we will continue exploring alternative suppliers in other countries to source quality products that provide the best value for our customers.
Segment Realignment
In the second quarter of 2025, the Company realigned its Hardware and Protective Solutions segment to include the sales of accessories, which are now managed by the Hardware and Protective Solutions leadership team. Previously, accessories were included under the Robotics and Digital Solutions segment leadership team. See Note 18 - Segment Reporting and Geographic Information of the Notes to Consolidated Financial Statements for additional information.
Share Repurchases
On July 31, 2025, the Board of Directors of the Company authorized a share repurchase program of up to $100.0 million (the "Repurchase Program") of the Company's common stock. The company has repurchased a total of 1.4 million shares for $12.4 million as of December 27, 2025. See Note 10 - Equity and Accumulated Other Comprehensive Loss of the Notes to Consolidated Financial Statements for additional information.
Financial Summary and Other Key Metrics
Fiscal 2025 and 2024 consisted of 252 shipping days. Shipping days are defined as non-holiday week-days, Monday through Friday of each week of the fiscal year.
•Net sales for the year ended December 27, 2025 were $1,552.2 million compared to net sales of $1,472.6 million for the year ended December 28, 2024, an increase of approximately $79.6 million or 5.4%.
23| December 27, 2025 Form 10-K
•Net income improved to $40.3 million, or $0.20 per diluted share, compared to net income of $17.3 million, or $0.09 per diluted share for the year ended December 28, 2024.
•Adjusted EBITDA(1)totaled $275.3 million versus $241.8 million in the year ended December 28, 2024.
(1) Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures" section for additional information, including our definition and our use of Adjusted EBITDA, and for a reconciliation from net income (loss) to Adjusted EBITDA.
Results of Operations
The following table shows the results of operations for the years ended December 27, 2025, December 28, 2024 and December 30, 2023.
Year Ended December 27, 2025 Year Ended December 28, 2024 Year Ended December 30, 2023
(dollars in thousands) Amount % of
Net Sales 		Amount % of
Net Sales 		Amount % of
Net Sales
Net sales $ 1,552,224 100.0% $ 1,472,595 100.0% $ 1,476,477 100.0%
Cost of sales (exclusive of depreciation and amortization shown separately below) 795,875 51.3% 764,691 51.9% 828,956 56.1%
Selling, warehouse, general and administrative expenses 502,000 32.3% 488,702 33.2% 452,110 30.6%
Depreciation 79,870 5.1% 68,766 4.7% 59,331 4.0%
Amortization 61,232 3.9% 61,274 4.2% 62,309 4.2%
Other (income) expense, net (722) -% 361 -% 12,843 0.9%
Income from operations 113,969 7.3% 88,801 6.0% 60,928 4.1%
Interest expense, net 56,467 3.6% 59,241 4.0% 68,310 4.6%
Refinancing costs 906 0.1% 3,008 0.2% - -%
Income (loss) before income taxes 56,596 3.6% 26,552 1.8% (7,382) (0.5)%
Income tax expense 16,291 1.0% 9,297 0.6% 2,207 0.1%
Net income (loss) $ 40,305 2.6% $ 17,255 1.2% $ (9,589) (0.6)%
Adjusted EBITDA (1)
275,317 17.7% 241,753 16.4% 219,360 14.9%
(1) Adjusted EBITDA is a non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures" section for additional information, including our definition and our use of Adjusted EBITDA, and for a reconciliation from Net income (loss) to Adjusted EBITDA.
Net Sales
Net Sales by Product Line
2025 vs. 2024 2024 vs. 2023
2025 % of Net Sales 2024 % of Net Sales $ Change % Change 2023 % of Net Sales $ Change % Change
Fastening and Hardware $ 1,051,361 67.7 % $ 1,016,483 69.0 % 34,878 3.4 % $ 1,021,803 69.2 % (5,320) (0.5) %
Personal Protective 270,937 17.5 % 229,925 15.6 % 41,012 17.8 % 216,403 14.7 % 13,522 6.2 %
Keys and Key Fobs
188,954 12.2 % 178,083 12.1 % 10,871 6.1 % 186,031 12.6 % (7,948) (4.3) %
Engraving and Resharp 40,972 2.6 % 48,104 3.3 % (7,132) (14.8) % 52,240 3.5 % (4,136) (7.9) %
Consolidated $ 1,552,224 $ 1,472,595 $ 79,629 $ 1,476,477 $ (3,882)
See Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for a reconciliation of net sales by product line to net sales by operating segment.
24| December 27, 2025 Form 10-K
Net Sales by Segment
2025 vs. 2024 2024 vs. 2023
2025 % of Net Sales 2024 % of Net Sales $ Change % Change 2023 % of Net Sales $ Change % Change
Hardware and Protective Solutions $ 1,193,957 76.9 % $ 1,107,993 75.2 % $ 85,964 7.8 % $ 1,090,473 73.9 % $ 17,520 1.6 %
Robotics and Digital Solutions 220,157 14.2 % 216,701 14.7 % 3,456 1.6 % 229,546 15.5 % (12,845) (5.6) %
Canada 138,110 8.9 % 147,901 10.0 % (9,791) (6.6) % 156,458 10.6 % (8,557) (5.5) %
Consolidated $ 1,552,224 $ 1,472,595 $ 79,629 $ 1,476,477 $ (3,882)
Hardware and Protective Solutions revenues consist primarily of the delivery of fasteners, anchors, specialty fastening products, and personal protective equipment such as gloves and eye-wear as well as accessories and in-store merchandising services for the related product category.
Robotics and Digital Solutions revenues consist primarily of sales of keys and identification tags through self-service key duplication and engraving kiosks. It also includes our associate-assisted key duplication systems.
Canada revenues consist primarily of the delivery to Canadian customers of fasteners and related hardware items, threaded rod, keys, key duplicating systems, accessories, personal protective equipment, and identification items as well as in-store merchandising services for the related product category.
Net sales increased $79.6 million in total during 2025. The increase in net sales was primarily driven by the factors described below:
Hardware and Protective Solutions increased $86.0 million due to the following:
•Hardware sales increased $45.9 million primarily driven by $59.4 million in price increases offset by $13.9 million in reduced volume driven by market softness.
•Protective equipment sales increased by $40.0 million primarily driven by $40.5 million of net sales added by the acquisition of Intex. Additionally, sales were impacted by price increases of $9.5 million offset by $9.5 million in reduced volume.
Robotics and Digital Solutions sales increased $3.5 million primarily driven by $14.3 million in price increases offset by $11.2 million in reduced volume.
Canada net sales decreased by $9.8 million primarily due to volume decreases of $4.8 million, an unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars of $2.8 million, and price decreases of $2.2 million.
Cost of Sales (excluding depreciation and amortization)
The following table summarizes cost of sales by segment:
2025 vs. 2024 2024 vs. 2023
2025 % of Segment Net Sales 2024 % of Segment Net Sales $ Change % Change 2023 % of Segment Net Sales $ Change % Change
Hardware and Protective Solutions $ 654,836 54.8% $ 617,689 55.7% $ 37,147 6.0% $ 667,072 61.2% $ (49,383) (7.4)%
Robotics and Digital Solutions 59,817 27.2% 60,233 27.8% (416) (0.7)% 64,389 28.1% (4,156) (6.5)%
Canada 81,222 58.8% 86,769 58.7% (5,547) (6.4)% 97,495 62.3% (10,726) (11.0)%
Consolidated $ 795,875 $ 764,691 $ 31,184 $ 828,956 $ (64,265)
Hardware and Protective Solutions cost of sales as a percentage of net sales decreased primarily due to the timing of price increases driven by higher tariff costs. During 2025, we began taking pricing actions with our customers to align with the additional tariff costs we paid in 2025. We expect higher tariff expense to be included in our cost of sales as we sell through the inventory purchased prior to the new tariffs and transition to selling inventory purchased after the new tariffs. These were partially offset by a higher mix of Protective Solutions sales which generally have higher costs than Hardware Solutions products.
Our Robotics and Digital Solutions cost of sales as a percentage of net sales decreased primarily due to the impact of price increases and sales mix.
Canada cost of sales as a percentage of net sales was comparable to prior year.
25| December 27, 2025 Form 10-K
Selling, Warehouse, and General and Administrative Expenses
The following table summarizes selling, warehouse, and general and administrative expense ("SG&A") by segment:
2025 vs. 2024 2024 vs. 2023
2025 % of Segment Net Sales 2024 % of Segment Net Sales $ Change % Change 2023 % of Segment Net Sales $ Change % Change
Hardware and Protective Solutions $ 360,570 30.2 % $ 348,532 31.5 % $ 12,038 3.5 % $ 317,177 29.1 % $ 31,355 9.9 %
Robotics and Digital Solutions 95,600 43.4 % 92,813 42.8 % 2,787 3.0 % 90,239 39.3 % 2,574 2.9 %
Canada 45,830 33.2 % 47,357 32.0 % (1,527) (3.2) % 44,694 28.6 % 2,663 6.0 %
Consolidated $ 502,000 $ 488,702 $ 13,298 $ 452,110 $ 36,592
Hardware and Protective Solutions SG&A increased in 2025 due to the following:
•Selling expense increased by $9.6 million primarily due to increased compensation and benefit expense.
•Warehouse expense increased $1.9 million due to inflation in shipping costs along with rent and maintenance. Additionally, warehouse expense includes $1.0 million in costs incurred related to our Cincinnati, Ohio distribution center consolidation project.
•General and administrative ("G&A") increased by $0.5 million. The increase was primarily driven by an increased investment into information technology along with increased compensation and benefit expenses and legal fees. These current year increases were partially offset by lower bad debt expense in 2025 relative to 2024. The year ended December 28, 2024 included a write off of $8.4 million of accounts receivable, net, due to True Value declaring bankruptcy.
Robotics and Digital Solutions SG&A increased in 2025 due to the following:
•Selling expense increased by $6.4 million primarily due to the shift from full-service keys to self-service keys, which have a higher variable selling cost.
•Warehouse expense increased by $1.4 million due to inflation in labor and shipping costs.
•G&A decreased by $5.0 million. The decrease was primarily due to a $5.0 million settlement agreement with a kiosk development partner in 2024 (see Note 15 - Commitments and Contingencies).
Canada SG&A decreased in 2025 due to the following:
•Selling expense decreased $0.3 million primarily due to lower severance costs in the current year as relative to 2024.
•Warehouse expense decreased $0.9 million primarily due to lower sales volumes along with improved operational efficiencies in addition to lower severance costs in the current year as relative to 2024 due to restructuring activities in the prior year.
•G&A was comparable to prior year.
Other Operating Expenses
Depreciation expense increased $11.1 million due to increased capital spend on merchandising racks along with key duplication kiosks.
Amortization expense was comparable to prior year.
In the year ended December 27, 2025, other (income) expense, net consisted primarily of a $0.2 million gain on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note 14 - Fair Value Measurements of the Notes to Consolidated Financial Statements for additional information) along with income from certain rebates received. In the year ended December 28, 2024, other expense (income), net consisted primarily of an exchange rate loss of $0.9 million and a $0.2 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob. Offsetting these losses was income from certain rebates received.
26| December 27, 2025 Form 10-K
Income from Operations
2025 vs. 2024 2024 vs. 2023
2025 2024 $ Change % Change 2023 $ Change % Change
Hardware and Protective Solutions $ 90,553 $ 60,138 $ 30,415 50.6 % $ 11,644 $ 48,494 416.5 %
Robotics and Digital Solutions 17,322 20,549 (3,227) (15.7) % 39,676 (19,127) (48.2) %
Canada 6,094 8,114 (2,020) (24.9) % 9,608 (1,494) (15.5) %
Total segment income from operations $ 113,969 $ 88,801 $ 25,168 28.3 % $ 60,928 $ 27,873 45.7 %
Income from operations in our Hardware and Protective Solutions segment increased $30.4 million due to the changes in net sales, cost of sales, SG&A expense, and other (income) expense, net described above. Depreciation expense increased by $6.3 million due to increased capital spend on merchandising racks and facility relocations completed in the prior year.
Income from operations in our Robotics and Digital Solutions segment decreased by $3.2 million primarily due to the changes in net sales, cost of sales, and SG&A expenses described above and a $4.8 million increase in depreciation expense associated with increased capital spend on key machines. Offsetting this increased expense was a gain of $0.5 million in other (income) expense driven by the changes in revaluation of the contingent consideration.
Canada's income from operations decreased by $2.0 million primarily due to the changes in net sales, cost of sales, and SG&A expenses described above. Canada also recorded exchange rate loss of $0.1 million in 2025 compared to a loss of $0.7 million in 2024.
Income (Loss) Before Income Taxes
Interest expense, net, decreased $2.8 million primarily due to a reduction in outstanding debt and a reduction in interest rate spreads driven by the debt repricing in the first quarter of 2025 (see Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information).
Income Taxes:
For the years ended December 27, 2025 and December 28, 2024 the effective income tax rate was 28.8% and 35.0%, respectively. The Company recorded an income tax provision for the year ended December 27, 2025 of $16.3 million, and an income tax provision for the year ended December 28, 2024 of $9.3 million.
In 2025, the Company's effective tax rate differed from the U.S. federal statutory tax rate due to certain non-deductible expenses. In addition, the effective tax rate differed due to state and foreign income taxes and our federal research and development credit.
In 2024, the Company's effective tax rate differed from the U.S. federal statutory tax rate primarily due to certain non-deductible expenses. In addition, the effective tax rate differed due to state and foreign income taxes and withholding taxes on distributions from our Canadian subsidiary.
Year Ended December 28, 2024 vs Year Ended December 30, 2023
For a comparison of our results of operations for fiscal 2024 to fiscal 2023, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for fiscal 2024.
27| December 27, 2025 Form 10-K
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP financial measure and is the primary basis used to measure the operational strength and performance of our businesses, as well as to assist in the evaluation of underlying trends in our businesses. This measure eliminates the significant level of noncash depreciation and amortization expense that results from the capital-intensive nature of our businesses and from intangible assets recognized in business combinations. It is also unaffected by our capital and tax structures, as our management excludes these results when evaluating our operating performance. Our management and Board of Directors use this financial measure to evaluate our consolidated operating performance and the operating performance of our operating segments and to allocate resources and capital to our operating segments. Additionally, we believe that Adjusted EBITDA is useful to investors because it is one of the bases for comparing our operating performance with that of other companies in our industries, although our measure of Adjusted EBITDA may not be directly comparable to similar measures used by other companies.
The following table presents a reconciliation of Net income (loss), the most directly comparable financial measures under GAAP, to Adjusted EBITDA for the periods presented:
(dollars in thousands) Year Ended December 27, 2025
Year Ended
December 28, 2024
Year Ended December 30, 2023
Net income (loss) $ 40,305 $ 17,255 $ (9,589)
Income tax expense 16,291 9,297 2,207
Interest expense, net 56,467 59,241 68,310
Depreciation 79,870 68,766 59,331
Amortization 61,232 61,274 62,309
EBITDA $ 254,165 $ 215,833 $ 182,568
Stock compensation expense 14,246 13,463 12,004
Restructuring and other costs(1)
4,058 2,978 3,031
Litigation expense (2)
1,950 5,000 339
Transaction and integration expense (3)
232 1,243 1,754
Change in fair value of contingent consideration (240) 228 (4,936)
Refinancing costs(4)
906 3,008 -
Impairment charges(5)
- - 24,600
Adjusted EBITDA $ 275,317 $ 241,753 $ 219,360
(1)Restructuring and other costs includes consulting and other costs associated with severance related to our distribution center relocations and corporate restructuring activities. 2024 and 2023 include costs associated with the Cybersecurity Incident that occurred in May 2023, see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information.
(2)Litigation expense includes an accrual for the tentative settlement of a California wage-hour class action / Private Attorneys General Act (PAGA) claim in 2025 along with a settlement and legal fees paid in association with a dispute with a kiosk development partner in 2024, and litigation with the Hy-Ko Products Company LLC litigation (see Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements for additional information).
(3)Transaction and integration expense includes professional fees and other costs related to acquisition activity, including without limitation the Koch Industries, Inc. and Intex DIY, Inc acquisitions and the CCMP secondary offerings in 2023.
(4)In the first quarters of 2025 and 2024, we entered into a Repricing Amendment (2025 Repricing Amendment and 2024 Repricing Amendment) on our existing Senior Term Loan due July 14, 2028 (see Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information).
(5)In the fourth quarter of 2023, we recorded an impairment charge in our Hardware and Protective Solutions segment of $24.6 million, primarily related to review of certain product offerings. In the fourth quarter of 2023, we evaluated a specific product line and decided to exit certain retail locations and markets, which reduced the future cash flows from this product line and impacted the lower of cost or market valuation of inventory. As a result of this review we impaired $19.6 million of intangible assets and recorded inventory revaluation charges of $5.0 million.
The following tables present a reconciliation of segment operating income, the most directly comparable financial measures under GAAP, to segment Adjusted EBITDA for the periods presented (amounts in thousands). Certain amounts in the prior year presentation between segments were reclassified to conform to the current year's presentation:
28| December 27, 2025 Form 10-K
Year Ended December 27, 2025 Hardware and Protective Solutions Robotics and Digital Solutions Canada
Operating income $ 90,553 $ 17,322 $ 6,094
Depreciation and amortization 88,829 47,390 4,883
Stock compensation expense 12,080 1,144 1,022
Restructuring and other costs 2,783 120 1,155
Litigation expense 1,780 170 -
Transaction and integration expense 225 7 -
Change in fair value of contingent consideration - (240) -
Adjusted EBITDA $ 196,250 $ 65,913 $ 13,154
Year Ended December 28, 2024 Hardware and Protective Solutions Robotics and Digital Solutions Canada
Operating income $ 60,138 $ 20,549 $ 8,114
Depreciation and amortization 82,446 42,661 4,933
Stock compensation expense 11,562 1,117 784
Restructuring and other costs 340 689 1,949
Litigation expense - 5,000 -
Transaction and integration expense 1,212 31 -
Change in fair value of contingent consideration - 228 -
Adjusted EBITDA $ 155,698 $ 70,275 $ 15,780
Year Ended December 30, 2023
Hardware and Protective Solutions Robotics and Digital Solutions Canada
Operating income $ 11,644 $ 39,676 $ 9,608
Depreciation and amortization 76,757 40,055 4,828
Stock compensation expense 10,204 1,035 765
Restructuring and other costs 2,582 339 110
Litigation expense - 339 -
Transaction and integration expense 1,594 160 -
Impairment charges 24,600 - -
Change in fair value of contingent consideration - (4,936) -
Adjusted EBITDA $ 127,381 $ 76,668 $ 15,311
Liquidity and Capital Resources:
The following table presents the key categories of our consolidated statements of cash flows:
Year Ended December 27, 2025 Year Ended December 28, 2024 $ Change Year Ended December 30, 2023 $ Change
Net cash provided by operating activities $ 105,185 $ 183,336 $ (78,151) $ 238,035 $ (54,699)
Net cash used for investing activities (70,351) (143,397) 73,046 (67,852) (75,545)
Net cash used for financing activities (52,220) (39,268) (12,952) (161,976) 122,708
Net (decrease) increase in cash and cash equivalents (17,234) 5,957 (23,191) 7,472 (1,515)
29| December 27, 2025 Form 10-K
Operating Cash Flows:
Operating cash flows for the year ended December 27, 2025 were unfavorably impacted by increases in the costs of inventory and other accrued liabilities due to the recently enacted tariffs.
Operating cash flows for the year ended for the year ended December 28, 2024 were unfavorably impacted by increases in accounts receivable due to accounts receivable generated by the Koch business post acquisition. Additionally, we saw increased accrued liabilities due to the timing of inventory purchases and payments. Finally, in 2024 we saw increases in accrued incentive compensation which favorably impacted our cash flow from operating activities.
Investing Cash Flows:
Capital Expenditures:
Cash of $70.1 million, $85.2 million, and $65.8 million, was used in the years ending December 27, 2025, December 28, 2024 and December 30, 2023, respectively, to invest in new key duplicating kiosks and machines and merchandising racks.
Acquisitions:
In 2025, the Company did not complete any new acquisitions. In 2024, the Company completed its acquisitions of Koch Industries, Inc and Intex DIY, Inc for a total purchase price of $23.8 million and $34.1 million, respectively (see Note 5 - Acquisitions of the Notes to Consolidated Financial Statements for additional information).
Financing Cash Flows:
Term Loan:
The Company used $8.5 million of cash for principal payments on the senior term loan. As of December 27, 2025, we have outstanding borrowings of $637.0 million on the term loan. In 2024 the Company used $106.4 million of cash for principal payments on the senior term loan, including a $100.0 million prepayment against the outstanding term loan balance without payment of a premium or penalty. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.
ABL Revolver:
Our revolver draws, net of repayments, used cash of $26.0 million in the year ended December 27, 2025 primarily used to fund the additional tariff costs in the current year. During the year ended December 28, 2024, our revolver repayments, net of draws, provided cash of $62.0 million as part of the Company's initiative to pay down the term loan along with the acquisitions of Koch and Intex.
Treasury Stock:
In the year ended December 27, 2025, the Company repurchased $12.4 million of its common stock, see Note 10 - Equity and Accumulated Other Comprehensive Loss of the Notes to Consolidated Financial Statements for additional information.
Stock Option Exercises:
In the years ended December 27, 2025, December 28, 2024, and December 30, 2023, the Company received $1.2 million, $9.7 million, and $2.2 million, respectively, from the exercise of stock options.
Liquidity:
We believe that projected cash flows from operations and ABL Revolver availability will be sufficient to fund working capital and capital expenditure needs for the next 12 months. As of December 27, 2025, the ABL Revolver had an outstanding balance of $36.0 million and had outstanding letters of credit of $3.3 million, leaving $279.1 million of available borrowings as a source of liquidity. Our material cash requirements for known contractual obligations include, debt, and lease obligations, each of which are discussed in more detail earlier in this section and in the footnotes to consolidated financial statements, along with capital expenditures. Our future investments
30| December 27, 2025 Form 10-K
will depend primarily on the builds of new key duplicating kiosks and machines, merchandising racks, and IT projects that we undertake and the timing of these expenditures.
We also have cash requirements for purchase orders and contracts for the purchase of inventory and other goods and services, which are based on current distribution needs and are fulfilled by our suppliers within the short term.
Our working capital (current assets minus current liabilities) position of $388.9 million as of December 27, 2025 represents an increase of $69.4 million from the December 28, 2024 level of $319.5 million driven primarily by the impact of tariff costs and related increases in receivables driven by increased prices. We expect to generate sufficient operating cash flows to meet our short-term liquidity needs, and we expect to maintain access to the capital markets, although there can be no assurance of our ability to do so. However, disruption and volatility in the global capital markets, could impact our capital resources and liquidity in the future.
Related Party Transactions:
The information required by this Item is set forth in the section entitled Related Party Transactions in the 2026 Proxy Statement and is hereby incorporated by reference into this Form 10-K.
Critical Accounting Policies and Estimates:
Our accounting policies are more fully described in Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements. As disclosed in that note, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Future events cannot be predicted with certainty and, therefore, actual results could differ from those estimates. The following section describes our critical accounting policies.
Inventory Realization:
Inventories consisting predominantly of finished goods are valued at the lower of cost or net realizable value, cost being determined principally on the standard cost method, which approximates the first-in-first-out "FIFO" method. The historical usage rate is the primary factor used in assessing the net realizable value of excess and obsolete inventory. A reduction in the carrying value of an inventory item from cost to net realizable value is recorded for inventory with excess on-hand quantities as determined based on historic and projected sales, product category, and stage in the product life cycle. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate our excess and obsolete inventory reserve. However, if our estimates regarding excess and obsolete inventory are inaccurate, we may be exposed to losses or gains that could be material. A 5% difference in actual excess and obsolete inventory reserved for at December 27, 2025 would have affected net earnings by approximately $1.6 million in fiscal 2025.
Goodwill:
We have adopted ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test and instead requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If, after assessing the totality of events or circumstances, we determine that the fair value of a reporting unit is less than the carrying value, then we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.
Our annual impairment assessment is performed for the reporting units as of October 1. In 2025, 2024, and 2023, with the assistance of an independent third-party specialist, management assessed the value of our reporting units based on a based on a discounted cash flow model and a guideline public company method. Assumptions critical to our fair value estimates under the discounted cash flow model include the projected net sales and EBITDA growth rates and the discount rates. The results of the quantitative assessments in 2025, 2024, and 2023 indicated that the fair value of each reporting unit was in excess of its carrying value.
Significant assumptions used in the determination of the estimated fair values of the reporting units are the projected net sales and EBITDA growth rates and the discount rate. The projected net sales and EBITDA growth rates are dependent on overall market growth rates, the competitive environment, inflation and our ability to pass price increase along to our customers, relative currency exchange rates, and business activities that impact market
31| December 27, 2025 Form 10-K
share. As a result, the growth rate could be adversely impacted by a sustained deceleration in category growth, devaluation of the U.S. Dollar against other currencies, an increased competitive environment, or an economic recession. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. Our discount rate may be impacted in the future by adverse changes in the macroeconomic environment and volatility in the equity and debt markets.
While management can and has implemented strategies to address these events, changes in operating plans or adverse changes in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges. As of December 27, 2025, the carrying value of our largest reporting unit, Hardware Solutions, goodwill was $450.9 million.
Recent Accounting Pronouncements:
Recently issued accounting standards are described in Note 3 - Recent Accounting Pronouncements of the Notes to Consolidated Financial Statements.
Hillman Solutions Corporation published this content on February 17, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 17, 2026 at 12:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]