Hillman Solutions Corp.

Previous wording

Net sales during 2024 decreased by 0.3% when compared to 2023. Driving our results for the year were the net sales contributions from the two acquisitions Hillman closed on this year (Koch in January 2024 and Intex DIY in August 2024). These were more than offset by a decline in net sales due to soft home improvement spending and price reductions during the year. Hardware and Protective Solutions, which is our largest segment, making up 74.3% of our net sales, led the way with an increase of 1.8% which was mainly driven by the aforementioned acquisitions. Offsetting this was a decrease in our Robotics and Digital Solutions segment and our Canadian business.

Current wording

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.

Previous wording

Products across our business are primarily used by DIYers and small contractors for repair, maintenance, and remodel projects. Because repair and maintenance projects are 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. were at a 30-year low during 2024, totaling $4.06 million. This was a headwind for our top line results during the year.

Current wording

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.

Previous wording

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 our two largest customers, Home Depot and Lowe's. This is the first time in Hillman's history that we have been recognized by our two largest customers as vendor of the year in the same year.

Current wording

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.

Previous wording

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, interest rates, and the growing concerns of a potential recession, 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.

Current wording

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.

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 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 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 by 2.8% in 2024, increased by 2.9% in 2023, and increased by 8.3% in 2022. The U.S. dollar increased in value relative to the Taiwan dollar by approximately 7.1% in 2024, decreased 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 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 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.

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 9.0% in 2024, decreased 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 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.

Previous wording

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 on February 1, 2025 by the Trump Administration and any retaliatory tariffs issued in response thereto, could also increase prices on affected products.

Current wording

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.

Previous wording

•Net income improved to $17.3 million, or $0.09 per diluted share, compared to a net loss of $9.6 million, or $(0.05) per diluted share for the year ended December 30, 2023.

Current wording

•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.

Previous wording

•Adjusted EBITDA(1) totaled $241.8 million versus $219.4 million in the year ended December 30, 2023.

Current wording

•Adjusted EBITDA(1) totaled $275.3 million versus $241.8 million in the year ended December 28, 2024.

Previous wording

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 in-store merchandising services for the related product category.

Current wording

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.

Previous wording

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 and key accessories.

Current wording

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.

Previous wording

Net sales decreased $3.9 million in total during 2024. The decrease in net sales was primarily driven by the factors described below:

Current wording

Net sales increased $79.6 million in total during 2025. The increase in net sales was primarily driven by the factors described below:

Previous wording

•Hardware sales increased $3.7 million primarily driven by $39.9 million of net sales added by the acquisition of Koch, offset by $27.3 million in reduced volume driven by market softness and $8.9 million in price reductions.

Current wording

•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.

Previous wording

•Protective equipment sales increased by $16.1 million primarily driven by $21.1 million of net sales added by the acquisition of Intex, offset by $3.8 million in price reductions and $1.0 million in reduced volume driven by market softness.

Current wording

•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.

Previous wording

Canada net sales decreased $8.6 million primarily due to a $6.7 million decrease related to price reductions as well as a $2.1 million unfavorable impact of the exchange rate from Canadian dollars to U.S. dollars.

Current wording

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.

Previous wording

Our Robotics and Digital Solutions cost of sales as a percentage of net sales decreased primarily due to a shift in product mix from full-service to self-service keys.

Current wording

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.

Previous wording

•Selling expense increased $10.7 million primarily due to increased compensation and benefit expense.

Current wording

•Selling expense increased by $9.6 million primarily due to increased compensation and benefit expense.

Previous wording

•General and administrative (“G&A”) increased by $20.4 million. We recorded a write off of $8.6 million of accounts receivable, net, in 2024 due to the True Value bankruptcy. The remaining increase was primarily driven by increased incentive compensation and investment into information technology and security.

Current wording

•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.

Previous wording

•Warehouse decreased by $1.3 million primarily due to the shift from full-service keys, which have a higher warehousing cost, to self-service keys.

Current wording

•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.

Previous wording

•Warehouse expense increased $0.8 million due to inflation in labor and shipping costs.

Current wording

•Warehouse expense increased by $1.4 million due to inflation in labor and shipping costs.

Previous wording

Canada SG&A increased in 2024 due to the following:

Current wording

Canada SG&A decreased in 2025 due to the following:

Previous wording

Depreciation expense increased $9.4 million due to increased capital spend on merchandising racks and facility relocations completed in the prior year.

Current wording

Depreciation expense increased $11.1 million due to increased capital spend on merchandising racks along with key duplication kiosks.

Previous wording

In the year ended December 28, 2024, other expense (income), net consisted primarily of an exchange rate loss of $0.9 million along with a $0.2 million loss 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). Offsetting the loss was income from certain rebates received. In the year ended December 30, 2023, other expense (income), net consisted primarily of a $19.6 million impairment charge related to the write down of intangible assets, (see Note 2 - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for additional information) and a $4.9 million gain on the revaluation of the contingent consideration associated with the acquisition of Resharp and Instafob.

Current wording

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.

Previous wording

Income from operations in our Hardware and Protective Solutions segment increased $48.4 million due to the changes in net sales, cost of sales, SG&A expense, and other expense (income), net described above. Depreciation expense increased by $6.5 million due to increased capital spend on merchandising racks and facility relocations completed in the prior year.

Current wording

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.

Previous wording

Income from operations in our Robotics and Digital Solutions segment decreased by $19.1 million primarily due to the changes in net sales, cost of sales, and SG&A expenses described above, including the $5.0 million settlement agreement and a decrease of $5.2 million in other expense driven by the changes in revaluation of the contingent consideration. Offsetting the decrease was a $2.8 million increase in depreciation expense associated with increased capital spend on key machines.

Current wording

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.

Previous wording

Canada's income from operations decreased by $1.5 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 $0.7 million in 2024 compared to a gain of $0.1 million in 2023.

Current wording

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.

Previous wording

Interest expense, net, decreased $9.1 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 2024 (see Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information).

Current wording

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).

Previous wording

For the years ended December 28, 2024 and December 30, 2023 the effective income tax rate was 35.0% and (29.9)%, respectively. The Company recorded an income tax provision for the year ended December 28, 2024 of $9.3 million, and an income tax provision for the year ended December 30, 2023 of $2.2 million.

Current wording

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.

Previous wording

In 2024, 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 withholding taxes for distributions from our Canadian business.

Current wording

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.

Previous wording

In 2023, the Company's effective tax rate differed from the U.S. federal statutory tax rate primarily due to withholding taxes on distributions from our Canadian subsidiary. In addition, the effective tax rate differed due to state and foreign income taxes and certain non-deductible expenses.

Current wording

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.

Previous wording

(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 includes 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.

Current wording

(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.

Previous wording

(2)Litigation expense include a settlement and legal fees paid in association with a dispute with a kiosk development partner, 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).

Current wording

(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).

Previous wording

(3)Transaction and integration expense includes professional fees and other costs related to the Koch Industries, Inc. and Intex DIY, Inc acquisitions and the CCMP secondary offerings in 2023.

Current wording

(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.

Previous wording

(4)In the first quarter of 2024, we entered into a Repricing Amendment (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).

Current wording

(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).

Previous wording

Operating cash flows 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 the current year we saw increases in accrued incentive compensation which favorably impacted our cash flow from operating activities.

Current wording

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.

Previous wording

Cash of $85.2 million, $65.8 million, and $69.6 million, was used in the years ending December 28, 2024, December 30, 2023 and December 31, 2022, respectively, to invest in new key duplicating kiosks and machines and merchandising racks.

Current wording

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.

Previous wording

The Company used $106.4 million of cash for principal payments on the senior term loan, including a $100.0 million prepayment made on October 3, 2024 against the outstanding term loan balance without payment of a premium or penalty. As of December 28, 2024, we have outstanding borrowings of $645.5 million on the term loan. See Note 7 - Long-Term Debt of the Notes to Consolidated Financial Statements for additional information.

Current wording

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.

Previous wording

Our revolver draws, net of repayments, used cash of $62.0 million in the year ended December 28, 2024 as part of the Company's initiative to pay down the term loan along with the acquisitions of Koch and Intex referenced above. During the year ended December 30, 2023, our revolver repayments, net of draws, used cash of $72.0 million as part of the Company's initiative to pay down the term loan.

Current wording

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.

Previous wording

In the years ended December 28, 2024, December 30, 2023, and December 31, 2022, the Company received $9.7 million, $2.2 million, and $2.6 million, respectively, from the exercise of stock options.

Current wording

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.

Previous wording

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 28, 2024, the ABL Revolver had an outstanding balance of $62.0 million and had outstanding letters of credit of $41.6 million, leaving $188.7 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. We expect to spend $90 million for capital expenditures in 2025. Our future investments 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.

Current wording

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 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.