Hillman Solutions (HLMN) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $379.4 million, down 0.2% year-over-year, with YTD net sales flat at $729.7 million; net income rose to $12.5 million from $4.5 million in Q2 2023, and YTD net income was $11.0 million, reversing a prior year loss.

• Adjusted EBITDA for Q2 2024 was $68.4 million (18% margin), up from $58.0 million (15.3% margin) in Q2 2023; YTD Adjusted EBITDA was $120.7 million (16.5% margin), up from $98.2 million (13.5%).

• Adjusted gross margin improved to 48.7% in Q2 2024 (up from 43.0% in Q2 2023); YTD adjusted gross margin was 48.2% (up from 42.3%).

• CEO succession announced: Jon Michael Adinolfi to become CEO in January 2025, with Doug Cahill moving to Executive Chairman.

• Koch acquisition contributed $12.3 million in Q2 sales and $21.5 million in first-half sales, strengthening Hardware and Protective Solutions.

Financial highlights

• Free cash flow for Q2 2024 was $42.5 million, reversing a $6 million outflow in Q1; free cash flow for H1 2024 was $36.4 million, down from $78.0 million in H1 2023.

• Net debt at quarter-end was $705.3 million, with net debt/TTM Adjusted EBITDA at 2.9x, down from 4.0x a year ago.

• Gross debt at quarter-end was $759.4 million, down from $851.5 million a year ago; liquidity available was $305.3 million, including $251.2 million in revolver capacity and $54.0 million in cash.

• Net cash from operating activities was $76.5 million for H1 2024, compared to $115.0 million in the prior year period.

• Capital expenditures for the first half were $40.1 million, focused on kiosks and merchandising racks.

Outlook and guidance

• Full-year 2024 net sales guidance lowered to $1.44–$1.48 billion (midpoint $1.46 billion, down 1% from 2023).

• Adjusted EBITDA guidance raised to $240–$250 million (midpoint $245 million, up 12% from 2023).

• Free cash flow guidance maintained at $100–$120 million for 2024.

• Net debt/Adjusted EBITDA leverage ratio targeted at 2.7x by year-end.

• Long-term growth targets: organic sales growth of 6% per year, with high single to low double-digit Adjusted EBITDA growth before M&A.