Hillman Solutions Corp
For the period ended Sep 28, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 28, 2024 · Filed Nov 5, 2024
HLMN$8.32-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-29; filed 2024-08-06.
0001822492-24-000140
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-28; filed 2024-11-05.
0001822492-24-000164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 155 previous paragraphs and 173 current paragraphs.
79 unchanged; 58 reworded; 31 added; 13 removed; 5 previous and 5 current paragraphs rearranged.
Tables are not compared: 13 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
Acquisition of Koch Industries, Inc.
Current report
Term Loan Repricing
Current report
Acquisition of Intex DIY, Inc.
Current report
On August 23, 2024, the Company completed the acquisition of Intex DIY, Inc. ("Intex"), a leading supplier of wiping cloths, consumable rags, and cleaning textiles for a total purchase price of $34.0 million. This acquisition expands Hillman’s offerings in the cleaning products category. Intex is based in Georgia and sells to customers located throughout North America and its financial results will reside in the Company's Hardware and Protective Solutions reportable segment.
Current report
True Value Bankruptcy
Current report
On October 14, 2024, True Value Company, LLC and certain of its affiliates (collectively, "True Value"), a hardware brand and wholesaler selling to 4,500 independently operated locations, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware. True Value accounted for $9.7 million and $29.4 million of our net sales for the thirteen and thirty-nine weeks ended September 28, 2024, equating to approximately 3% of our net sales in each period. Of our net sales to True Value, approximately 77% are sales made directly to independently owned True Value locations and approximately 23% are made to True Value's wholesale warehouse.
Current report
Additionally, True Value accounted for approximately $8.8 million of our accounts receivable, net of rebates and discounts, as of the October 14, 2024 Chapter 11 bankruptcy filing date. True Value accounted for approximately $7.9 million of our accounts receivable, net of rebates and discounts, as of September 28, 2024.
Current report
Concurrent with the announcement of the Chapter 11 bankruptcy filing, True Value also announced that it had entered into an agreement to sell substantially all of its business operations to another home improvement industry peer as a "stalking horse", or lead, bidder and would initiate a competitive bidding process under Section 363 of the bankruptcy code designed to achieve the highest or otherwise best value for True Value.
Current report
We are currently assessing the impacts of True Value's Chapter 11 reorganization and proposed sale on our future net sales to True Value and on the collectibility of our outstanding accounts receivable. We believe the Chapter 11 reorganization will negatively impact future net sales; however, such impact could be partially offset by the ability of the independently owned locations, which are not debtors subject to the Chapter 11 filing, to purchase our products through other hardware wholesalers that are also our customers. With respect to collectibility of our accounts receivable outstanding as of September 28, 2024, we recorded a charge of $7.8 million representing the net receivable balances less the amount we expect to recover as an administrative claim pursuant to Section 503(b)(9) of the bankruptcy code. The loss was recorded in selling, warehouse, general and administrative expenses. We recorded an additional $0.9 million in reserve in the fourth quarter for receivables generated in the fourth quarter through the bankruptcy date.
Current report
If True Value were unsuccessful with their Chapter 11 reorganization, and instead the business were liquidated, the potential adverse effects due to the loss of sales to the True Value warehouse, on our business, financial condition and results of operations would be more significant.
Current report
•Protective equipment net sales increased by $4.0 million primarily driven by $6.6 million in additional sales related to the Intex acquisition, partially offset by decreased volume.
Current report
•Warehouse expense decreased $0.5 million primarily due to lower sales volumes along with improved operational efficiencies.
Current report
•Selling expense increased $0.7 million primarily due to increased variable selling expenses due to the shift from full-service keys to self-service keys, which have a higher variable selling cost.
Current report
•G&A increased by $0.9 million primarily driven by increased compensation expense along with a $0.3 million write off of accounts receivable, net, due to True Value declaring bankruptcy. See Note 17 -
Current report
Subsequent Events of the Notes to Condensed Consolidated Financial Statements for additional information.
Current report
•Warehouse expense decreased by $0.4 million primarily due to the shift from full-service keys, which have a higher warehousing cost, to self-service keys.
Current report
•Warehouse expense increased by $0.4 million primarily due to costs associated with our distribution center relocation.
Current report
•G&A increased by $0.2 million primarily due to severance costs associated with restructuring and increased compensation and benefit expense.
Current report
In the thirteen weeks ended September 30, 2023, other income (expense) consisted primarily of a $1.6 million gain on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob.
Current report
Income from operations in our Hardware and Protective Solutions segment decreased $1.3 million due to the changes in net sales, cost of sales, and SG&A expenses described above.
Current report
•Net sales for the thirty-nine weeks ended September 28, 2024 were $1,123.0 million compared to net sales of $1,128.7 million in the thirty-nine weeks ended September 30, 2023, a decrease of approximately $5.6 million or 0.5%.
Current report
•Protective equipment net sales increased by $3.9 million primarily driven by $6.6 million in additional sales related to the Intex acquisition offset by $2.3 million in decreased volume.
Current report
Hardware and Protective Solutions' cost of sales as a percentage of net sales decreased primarily due to decreased product and inbound shipping costs.
Current report
•Selling expense increased by $1.5 million primarily due to increased compensation and benefit expense.
Current report
•Warehouse expense increased $0.6 million primarily due to inflation in labor and shipping costs along with costs associated with our distribution center relocation.
Current report
In the thirty-nine weeks ended September 28, 2024, other income (expense) consisted primarily of a $0.3 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note 15 - Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for additional information). In addition, we recorded exchange rate losses of $0.3 million in the thirty-nine weeks ended September 28, 2024. Offsetting the loss was income from certain rebates received.
Current report
(5)Bankruptcy related reserves includes amounts written off in connection with the True Value Chapter 11 bankruptcy filing on October 14, 2024 (see Note 17 - Subsequent Events of the Notes to Condensed Consolidated Financial Statements for additional information).
Current report
33 | September 28, 2024 Form 10-Q
Current report
34 | September 28, 2024 Form 10-Q
Current report
On August 23, 2024, the Company completed the acquisition of Intex DIY, Inc. ("Intex"), a leading supplier of wiping cloths, consumable rags, and cleaning textiles for a total purchase price of $34.0 million. See Note 4 - Acquisitions of the Notes to Condensed Consolidated Financial Statements for additional information.
Current report
35 | September 28, 2024 Form 10-Q
Removed paragraphs (13)
Previous report
Robotics and Digital Solutions cost of sales as a percentage of net sales increased primarily due to higher machine maintenance costs.
Previous report
•Selling expense increased by $4.3 million primarily due to increased compensation and benefit expense.
Previous report
•G&A increased by $0.8 million primarily due to costs associated with facility consolidation and increased variable compensation.
Previous report
In the thirteen weeks ended July 1, 2023, other income (expense) consisted primarily of a $2.5 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob. In addition, we recorded exchange rate gains of $0.3 million in the thirteen weeks ended July 1, 2023.
Previous report
•Net sales for the twenty-six weeks ended June 29, 2024 were comparable to the twenty-six weeks ended July 1, 2023.
Previous report
•Protective equipment net sales were comparable to prior year.
Previous report
•Selling expense increased by $7.3 million primarily due to increased compensation and benefit expense.
Previous report
Robotics and Digital Solutions SG&A decreased due to the following:
Previous report
•Selling expense decreased by $0.8 million primarily due to reduced variable selling expenses.
Previous report
•G&A increased by $0.8 million primarily driven by costs associated with facility consolidation and increased compensation and benefit expense.
Previous report
In the twenty-six weeks ended June 29, 2024, other income (expense) consisted primarily of a $0.8 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note
Previous report
In 2023, the Company's effective tax rate differed from the U.S. federal statutory tax rate primarily due to Global Intangible Low-Taxed Income ("GILTI") from the Canadian subsidiary. In addition, the effective tax rate differed from the U.S. federal statutory tax rate for 2023 due to state and foreign income taxes and certain non-deductible expenses.
Previous report
31 | June 29, 2024 Form 10-Q
Reworded paragraphs (58)
Previous wording
All forward-looking statements are made in good faith by the Company and are intended to qualify for the safe harbor from liability established by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. You should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," “target”, “goal”, "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable economic conditions that may affect operations, financial condition and cash flows including spending on home renovation or construction projects, inflation, recessions, instability in the financial markets or credit markets; (2) increased supply chain costs, including raw materials, sourcing, transportation and energy; (3) the highly competitive nature of the markets that we serve; (4) the ability to continue to innovate with new products and services; (5) direct and indirect costs associated with the May 2023 ransomware attack, and our receipt of expected insurance receivables associated with that cyber security incident; (6) seasonality; (7) large customer concentration; (8) the ability to recruit and retain qualified employees; (9) the outcome of any legal proceedings that may be instituted against the Company; (10) adverse changes in currency exchange rates; or (11) regulatory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and readers should also refer to those risks that are included in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K filed on February 22, 2024. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements.
Current wording
All forward-looking statements are made in good faith by the Company and are intended to qualify for the safe harbor from liability established by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. You should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," “target”, “goal”, "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to future performance. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside the Company's control and are difficult to predict. Factors that may cause such differences include, but are not limited to: (1) unfavorable economic conditions that may affect our and our customers’, suppliers’ and other business partners’ operations, financial condition and cash flows including spending on home renovation or construction projects, inflation, recessions, instability in the financial markets or credit markets; (2) increased supply chain costs, including raw materials, sourcing, transportation and energy; (3) the highly competitive nature of the markets that we serve; (4) the ability to continue to innovate with new products and services; (5) direct and indirect costs associated with the May 2023 ransomware attack, and our receipt of expected insurance receivables associated with that cyber security incident; (6) seasonality; (7) large customer concentration; (8) the ability to recruit and retain qualified employees; (9) the outcome of any legal proceedings that may be instituted against the Company; (10) adverse changes in currency exchange rates; or (11) regulatory changes and potential legislation that could adversely impact financial results. The foregoing list of factors is not exclusive, and readers should also refer to those risks that are included in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the Annual Report on Form 10-K filed on February 22, 2024. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward looking statements.
Previous wording
Hillman Solutions Corp. and its wholly-owned subsidiaries (collectively, “Hillman” or “Company”) are one of the largest providers of hardware-related products and related merchandising services to retail markets in North America. Our principal business is operated through our wholly-owned subsidiary, Hillman Solutions Corp. and its wholly-owned subsidiaries (collectively, “Hillman Group”), which had net sales of $379.4 million in the thirteen weeks ended June 29, 2024 and $729.7 million in the twenty-six weeks ended June 29, 2024. Hillman sells its products to hardware stores, home improvement centers, mass merchants, pet supply stores, and other retail outlets principally in the United States, Canada, and Mexico. Product lines include thousands of small hardware parts such as fasteners and related items; threaded rod and metal shapes; keys and accessories; builder's
Current wording
Hillman Solutions Corp. and its wholly-owned subsidiaries (collectively, “Hillman” or “Company”) are one of the largest providers of hardware-related products and related merchandising services to retail markets in North America. Our principal business is operated through our wholly-owned subsidiary, Hillman Solutions Corp. and its wholly-owned subsidiaries (collectively, “Hillman Group”), which had net sales of $393.3 million in the thirteen weeks ended September 28, 2024 and $1,123.0 million in the thirty-nine weeks ended September 28, 2024. Hillman sells its products to hardware stores, home improvement centers, mass merchants, pet supply stores, and other retail outlets principally in the United States, Canada, and Mexico. Product lines include thousands of small hardware parts such as fasteners and related items; threaded rod and metal shapes; keys and accessories; builder's hardware; personal protective equipment, such as gloves and eyewear; and identification items, such as tags and letters, numbers, and signs. We support product sales with services that include design and installation
Previous wording
hardware; personal protective equipment, such as gloves and eyewear; and identification items, such as tags and letters, numbers, and signs. We support product sales with services that include design and installation of merchandising systems, maintenance of appropriate in-store inventory levels, and break-fix for our robotics kiosks.
Current wording
of merchandising systems, maintenance of appropriate in-store inventory levels, and break-fix for our robotics kiosks.
Previous wording
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, particularly those located in China and Taiwan, because we purchase a majority of our products for resale from multiple vendors located in these countries. 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 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 Increased in value relative to the CNY by approximately 2.4% in the twenty-six weeks ended June 29, 2024, increased by 2.9% in 2023, and increased by 8.3% during 2022. The U.S. dollar Increased in value relative to the Taiwan dollar by approximately 6.0% in the twenty-six weeks ended June 29, 2024, declined by 0.4% in 2023, and increased by 10.8% in 2022.
Current wording
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, particularly those located in China and Taiwan, because we purchase a majority of our products for resale from multiple vendors located in these countries. 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 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 declined in value relative to the CNY by approximately 1.3% in the thirty-nine weeks ended September 28, 2024, increased by 2.9% in 2023, and increased by 8.3% during 2022. The U.S. dollar increased in value relative to the Taiwan dollar by approximately 3.0% in the thirty-nine weeks ended September 28, 2024, declined by 0.4% in 2023, and increased by 10.8% in 2022.
Previous wording
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 increased in value relative to the Canadian dollar by approximately 3.5% in the twenty-six weeks ended June 29, 2024, declined by 2.4% in 2023, and increased by 5.7% in 2022.
Current wording
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 increased in value relative to the Canadian dollar by approximately 2.1% in the thirty-nine weeks ended September 28, 2024, declined by 2.4% in 2023, and increased by 5.7% in 2022.
Previous wording
•Net sales for the thirteen weeks ended June 29, 2024 were $379.4 million compared to net sales of $380.0 million for the thirteen weeks ended July 1, 2023, a decrease of approximately $0.6 million or 0.2%.
Current wording
•Net sales for the thirteen weeks ended September 28, 2024 were $393.3 million compared to net sales of $398.9 million for the thirteen weeks ended September 30, 2023, a decrease of approximately $5.6 million or 1.4%.
Previous wording
•Net income for the thirteen weeks ended June 29, 2024 was $12.5 million, or $0.06 per diluted share, compared to net income of $4.5 million, or $0.02 per diluted share for the thirteen weeks ended July 1, 2023.
Current wording
•Net income for the thirteen weeks ended September 28, 2024 was $7.4 million, or $0.04 per diluted share, compared to net income of $5.1 million, or $0.03 per diluted share for the thirteen weeks ended September 30, 2023.
Previous wording
•Adjusted EBITDA(1) totaled $68.4 million versus $58.0 million in the thirteen weeks ended June 29, 2024 and in the thirteen weeks ended July 1, 2023, respectively.
Current wording
•Adjusted EBITDA(1) totaled $72.6 million versus $66.8 million in the thirteen weeks ended September 28, 2024 and in the thirteen weeks ended September 30, 2023, respectively.
Previous wording
The decrease in total net sales during the second quarter of 2024 was driven primarily driven by the factors described below:
Current wording
The decrease in total net sales during the third quarter of 2024 was driven primarily driven by the factors described below:
Previous wording
Hardware and Protective Solutions net sales increased by $9.3 million in the thirteen weeks ended June 29, 2024 due to the following:
Current wording
Hardware and Protective Solutions' net sales increased by $0.3 million in the thirteen weeks ended September 28, 2024 due to the following:
Previous wording
•Hardware net sales increased by $15.4 million primarily driven by $21.5 million in additional sales related to the Koch acquisition, offset by decreased volume.
Current wording
•Hardware net sales decreased by $3.7 million primarily due to decreased volume driven by market softness, partially offset by $10.3 million in additional sales related to the Koch acquisition.
Previous wording
Robotics and Digital Solutions net sales in the thirteen weeks ended June 29, 2024 decreased by $5.0 million primarily driven by decreased volume of key and engraving sales.
Current wording
Robotics and Digital Solutions net sales in the thirteen weeks ended September 28, 2024 decreased by $3.3 million primarily driven by decreased volume of key and engraving sales.
Previous wording
Canada net sales decreased by $4.8 million primarily due to price decreases of $2.9 million, volume decreases of $1.2 million, and an unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars.
Current wording
Canada net sales decreased by $2.6 million primarily due to price decreases of $1.6 million and an unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars.
Previous wording
•General and administrative (“G&A”) increased $4.8 million. The increase was primarily driven by an increase in compensation and benefit expense and an increased investment into information technology.
Current wording
•General and administrative (“G&A”) increased $11.8 million. The increase was primarily due to a write off of $7.5 million of accounts receivable, net, due to True Value declaring bankruptcy. See Note 17 - Subsequent Events of the Notes to Condensed Consolidated Financial Statements for additional information. The remaining increase was driven by an increase in compensation and benefit expense and an increased investment into information technology.
Previous wording
•Protective equipment net sales increased by $3.3 million primarily due to an increase in volume driven by new business wins and timing of promotional sales.
Current wording
•Selling expense increased by $3.3 million primarily due to increased compensation and benefit expense.
Previous wording
Depreciation expense increased $2.5 million due to capital spend on key duplicating kiosks and merchandising racks.
Current wording
Depreciation expense increased $3.5 million due to capital spend on key duplicating kiosks and merchandising racks.
Previous wording
Amortization expense in the thirteen weeks ended June 29, 2024 decreased by $0.3 million primarily due to the write down of the carrying values of intangible assets to their fair value as a result of exiting a specific product line that occurred in the fourth quarter of 2023.
Current wording
Amortization expense in the thirteen weeks ended September 28, 2024 decreased by $0.2 million primarily due to lower intangible asset balances following the write down of the carrying values of intangible assets to their fair value as a result of exiting a specific product line that occurred in the fourth quarter of 2023.
Previous wording
In the thirteen weeks ended June 29, 2024, other income (expense) consisted primarily of a $0.4 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note 15 - Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for additional information).
Current wording
In the thirteen weeks ended September 28, 2024, other income (expense) consisted primarily of a $0.5 million gain on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob (see Note 15 - Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for additional information). In addition, we recorded income related to certain rebates received of $0.3 million along with exchange rate gains of $0.1 million in the thirteen weeks ended September 28, 2024.
Previous wording
Income from operations in our Robotics and Digital Solutions segment decreased $3.1 million. The $3.1 million decrease is primarily due to the changes in net sales, cost of sales, and SG&A expenses described above, in addition to an increase in depreciation expense of $1.0 million due to capital spend on engraving and key duplication kiosks and machines and a decrease of $1.9 million in other expense driven by the changes in revaluation of the contingent consideration described above.
Current wording
Income from operations in our Robotics and Digital Solutions segment decreased $5.4 million. The $5.4 million decrease is primarily due to the changes in net sales, cost of sales, and SG&A expenses described above, in addition to an increase in depreciation expense of $1.8 million due to capital spend on engraving and key duplication kiosks and machines and a decrease of $1.1 million in other income driven by the changes in revaluation of the contingent consideration described above.
Previous wording
Canada's income from operations decreased by $1.8 million primarily due to the changes in net sales, cost of sales and SG&A expenses described above. In the thirteen weeks ended June 29, 2024, Canada recorded exchange rate losses of $0.2 million and in the thirteen weeks ended July 1, 2023, Canada recorded exchange rate gains of $0.2 million.
Current wording
Canada's income from operations decreased by $1.1 million primarily due to the changes in net sales, cost of sales and SG&A expenses described above. In the thirteen weeks ended September 28, 2024, Canada recorded exchange rate gains of $0.2 million and in the thirteen weeks ended September 30, 2023, Canada recorded exchange rate gains of $0.1 million.
Previous wording
Interest expense, net, decreased $4.1 million in the thirteen weeks ended June 29, 2024 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 2024 (see Note 9 - Long-term Debt of the Notes to Condensed Consolidated Financial Statements for additional information).
Current wording
Interest expense, net, decreased $1.6 million in the thirteen weeks ended September 28, 2024, 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 2024 (see Note 9 - Long-term Debt of the Notes to Condensed Consolidated Financial Statements for additional information).
Previous wording
For the thirteen weeks ended June 29, 2024 and thirteen weeks ended July 1, 2023, the effective income tax rate was 29.0% and (67.0)%, respectively. The Company recorded an income tax provision for the thirteen weeks ended June 29, 2024 of $5.1 million based on a pre-tax income of $17.6 million, and an income tax benefit for the thirteen weeks ended July 1, 2023 of $1.8 million based on a pre-tax income of $2.7 million.
Current wording
For the thirteen weeks ended September 28, 2024 and thirteen weeks ended September 30, 2023, the effective income tax rate was 37.0% and 71.9%, respectively. The Company recorded an income tax provision for the thirteen weeks ended September 28, 2024 of $4.4 million based on a pre-tax income of $11.8 million, and an income tax provision for the thirteen weeks ended September 30, 2023 of $13.0 million based on a pre-tax income of $18.0 million.
Previous wording
Twenty-six weeks ended June 29, 2024 vs the Twenty-six Weeks Ended
Current wording
Thirty-nine weeks ended September 28, 2024 vs the Thirty-nine Weeks Ended
Previous wording
•Net income for the twenty-six weeks ended June 29, 2024 was $11.0 million, or $0.06 per diluted share, compared to a net loss of $4.6 million, or $(0.02) per diluted share for the twenty-six weeks ended July 1, 2023.
Current wording
•Net income for the thirty-nine weeks ended September 28, 2024 was $18.5 million, or $0.09 per diluted share, compared to $0.5 million, or $0.00 per diluted share for the thirty-nine weeks ended September 30, 2023.
Previous wording
•Adjusted EBITDA(1) totaled $120.7 million versus $98.2 million in the twenty-six weeks ended June 29, 2024 and in the twenty-six weeks ended July 1, 2023, respectively.
Current wording
•Adjusted EBITDA(1) totaled $193.2 million versus $165.0 million in the thirty-nine weeks ended September 28, 2024 and in the thirty-nine weeks ended September 30, 2023, respectively.
Previous wording
The following analysis of results of operations includes a brief discussion of the factors that affected our operating results and a comparative analysis of the twenty-six weeks ended June 29, 2024 and the twenty-six weeks ended July 1, 2023.
Current wording
The following analysis of results of operations includes a brief discussion of the factors that affected our operating results and a comparative analysis of the thirty-nine weeks ended September 28, 2024 and the thirty-nine weeks ended September 30, 2023.
Previous wording
(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.
Current wording
(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 to Adjusted EBITDA.
Previous wording
The increase in total net sales during the twenty-six weeks ended June 29, 2024 was driven primarily driven by the factors described below:
Current wording
The decrease in total net sales during the thirty-nine weeks ended September 28, 2024 was primarily driven by the factors described below:
Previous wording
Hardware and Protective Solutions net sales increased by $15.4 million in the twenty-six weeks ended June 29, 2024 due to the following:
Current wording
Hardware and Protective Solutions' net sales increased by $15.6 million in the thirty-nine weeks ended September 28, 2024 due to the following:
Previous wording
•Hardware net sales increased by $6.0 million primarily driven by $12.3 million in additional sales related to the Koch acquisition, offset by a decrease in volume.
Current wording
•Hardware net sales increased by $11.7 million primarily driven by $31.7 million in additional sales related to the Koch acquisition offset by $13.0 million and $6.7 million in decreased volume and price, respectfully.
Previous wording
Robotics and Digital Solutions net sales in the twenty-six weeks ended June 29, 2024 decreased by $10.6 million primarily driven by decreased volume of key and engraving sales.
Current wording
Robotics and Digital Solutions net sales in the thirty-nine weeks ended September 28, 2024 decreased by $13.9 million primarily driven by decreased volume of key and engraving sales.
Previous wording
Canada net sales decreased by $5.0 million primarily due to volume decreases of $2.1 million, price decreases of $2.0 million, and an unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars.
Current wording
Canada net sales decreased by $7.4 million primarily due to price decreases of $4.5 million, volume decreases of $1.5 million, and an unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars.
Previous wording
Canada cost of sales as a percentage of net sales decreased primarily due to decreased shipping and product costs.
Current wording
Canada cost of sales as a percentage of net sales decreased primarily due to decreased inbound shipping and product costs.
Previous wording
•General and administrative (“G&A”) increased $7.5 million. The increase was primarily driven by an increase in stock-based compensation expense, compensation and benefit expense, and an increased investment into information technology.
Current wording
•General and administrative (“G&A”) increased $19.2 million. The increase was due to a write off of $7.5 million of accounts receivable, net, due to True Value declaring bankruptcy. See Note 17 - Subsequent Events of the Notes to Condensed Consolidated Financial Statements for additional information. The remaining increase was driven by an increase in stock-based compensation expense, compensation and benefit expense, and an increased investment into information technology.
Previous wording
•Warehouse expense increased $1.3 million due to inflation in labor and shipping costs.
Current wording
•Warehouse expense increased $0.8 million due to inflation in labor and shipping costs.
Previous wording
Robotics and Digital Solutions SG&A was comparable to the prior year quarter with no significant changes in SG&A.
Current wording
Robotics and Digital Solutions SG&A was comparable to prior year.
Previous wording
•Selling expense increased by $1.0 million primarily due to increased compensation and benefit expense.
Current wording
•G&A increased by $1.0 million primarily driven by severance costs associated with restructuring and increased compensation and benefit expense.
Previous wording
Depreciation expense increased $2.1 million due to capital spend on merchandising racks.
Current wording
Depreciation expense increased $5.6 million due to capital spend on merchandising racks.
Previous wording
Amortization expense in the twenty-six weeks ended June 29, 2024 decreased by $0.6 million primarily due to the write down of the carrying values of intangible assets to their fair value as a result of exiting a specific product line that occurred in the fourth quarter of 2023.
Current wording
Amortization expense in the thirty-nine weeks ended September 28, 2024 decreased by $0.9 million primarily due to lower intangible asset balances following the write down of the carrying values of intangible assets to their fair value as a result of exiting a specific product line that occurred in the fourth quarter of 2023.
Previous wording
In the twenty-six weeks ended July 1, 2023, other income (expense) consisted primarily of a $4.2 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob. We also received $0.6 million in benefits from the state and local governments associated with our new facilities in the twenty-six weeks ended July 1, 2023. In addition, we recorded exchange rate gains of $0.4 million in the twenty-six weeks ended July 1, 2023.
Current wording
In the thirty-nine weeks ended September 30, 2023, other income (expense) consisted primarily of a $2.6 million loss on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob. We also received $0.6 million in benefits from the state and local governments associated with our new facilities in the thirty-nine weeks ended September 30, 2023. In addition, we recorded exchange rate gains of $0.4 million in the thirty-nine weeks ended September 30, 2023.
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Current report — wording carried from elsewhere
Robotics and Digital Solutions' cost of sales as a percentage of net sales decreased due to lower product and shipping costs as well as a shift in product mix from full-service to self-service keys.
Current report — wording carried from elsewhere
Robotics and Digital Solutions' SG&A increased due to the following:
Current report — wording carried from elsewhere
In 2023, the effective tax rate differed from the U.S. federal statutory tax rate due to state and foreign income taxes and certain non-deductible expenses.
Current report — wording carried from elsewhere
•Selling expense increased by $10.6 million primarily due to increased compensation and benefit expense.
Current report — wording carried from elsewhere
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
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Hardware and Protective Solutions cost of sales as a percentage of net sales decreased primarily due to decreased product and shipping costs.
Previous report — wording carried elsewhere
15 - Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements for additional information).
Previous report — wording carried elsewhere
Income from operations in our Hardware and Protective Solutions segment increased $28.8 million due to the changes in net sales, cost of sales, and SG&A expenses described above.
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
net basis, the activity on the revolver had no impact to our cash flows used for financing activities in the twenty-six weeks ended June 29, 2024.