On November 8, 2023, Hillman Solutions Corp (HLMN, Financial), a prominent provider of hardware products and merchandising solutions, disclosed its financial outcomes for the thirteen and thirty-nine weeks ending September 30, 2023. The company experienced a 5.4% increase in net sales for the third quarter, amounting to $398.9 million, compared to $378.5 million in the prior year's quarter. However, for the thirty-nine weeks, net sales saw a slight decrease of 0.6% compared to the same period last year.
Hillman's net income for the quarter was $5.1 million, or $0.03 per diluted share, a notable improvement from a net loss of $9.5 million, or $0.05 per diluted share, in the prior year quarter. The year-to-date net income stood at $0.5 million, or $0.00 per diluted share, compared to a net loss of $2.5 million, or $0.01 per diluted share, in the previous year. Adjusted diluted EPS for the quarter was $0.11 per diluted share, a decrease from $0.14 per diluted share in the prior year quarter.
Adjusted EBITDA for the quarter increased to $66.8 million from $59.0 million in the prior year quarter, while the year-to-date adjusted EBITDA remained relatively flat at $165.0 million. The company reported robust free cash flow of $119.3 million year-to-date, a significant increase from $16.8 million in the prior year period.
Gross debt was reduced to $811.1 million, down from $918.8 million at the end of 2022, and net debt stood at $771.8 million, a decrease from $887.7 million at the end of the previous year. Liquidity available was approximately $291.2 million, including available borrowing under the revolving credit facility and cash equivalents.
Doug Cahill, Chairman, President, and Chief Executive Officer of Hillman, stated, "During the quarter our team successfully navigated the challenging macroeconomic environment to produce mid-single-digit top line growth and double-digit Adjusted EBITDA growth. Margins improved to historical norms, driven by strength in our Hardware and Protective Solutions segment, lower priced inventory being sold, and the resilience of Hillman’s competitive moat."
"We expect gross margins to expand sequentially into the fourth quarter as we derive the benefits of new business wins, our prior pricing actions, and prudent cost controls," Cahill added, expressing confidence in the company's ability to produce free cash flow at healthy levels and enter 2024 on solid footing.
Hillman has updated its full-year 2023 guidance, now expecting net sales to be between $1.455 to $1.485 billion, adjusted EBITDA to be between $215 to $220 million, and free cash flow to be between $135 to $155 million.
The company's balance sheet reflects a healthy liquidity position, and the cash flow statement indicates strong operating cash generation. Hillman's management remains focused on reducing debt and improving the net debt to adjusted EBITDA ratio, which has continued its downward trend for the fifth consecutive quarter.
Hillman's resilience in the face of economic challenges and its ability to generate substantial free cash flow are likely to appeal to value investors looking for stable companies with strong financial health. The company's focus on necessary repair and maintenance projects provides a degree of insulation from reduced foot traffic at customer locations, suggesting a robust business model capable of weathering economic cycles.
For more detailed financial information and reconciliations of non-GAAP financial measures, please refer to the end of the press release.
Investors and interested parties can access a replay of the webcast presentation discussing the results on Hillman's Investor Relations website.
For further insights and analysis on Hillman Solutions Corp's financial performance, stay tuned to GuruFocus.com.
Explore the complete 8-K earnings release (here) from Hillman Solutions Corp for further details.
