What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-02-27 · 273 added, 230 removed, 1216 unchanged (29% of the section changed)

42 unchanged sentences

We have audited the accompanying consolidated balance sheets of Hillman Solutions Corp.

and subsidiaries (the "Company") as of December 31, 2022, the related consolidated statements of comprehensive loss, cash flows, and stockholders’ equity, for the period ended December 31, 2022, and the related notes and the financial statement schedule II - Valuation Accounts (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 30, 2023 and December 31, 2022, the related consolidated statements of comprehensive loss, cash flows, and stockholders’ equity, for each of the two years in the period ended December 30, 2023, and the related notes and the financial statement schedule II - Valuation Accounts (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 30, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

1 unchanged sentence

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to their respective carrying values.

The Company used both a discounted cash flow model and a multiple of earnings approach to estimate the fair values of the Hardware Solutions (“HS”) reporting unit and the Protective Solutions (“PS”) reporting unit.

The discounted cash flow model requires management to make significant estimates and assumptions including projected net sales and earnings growth rates and discount rates.

The Company used a discounted cash flow model to estimate the fair values of the Hardware Solutions (“HS”) reporting unit and the Protective Solutions (“PS”) reporting unit.

The discounted cash flow model requires management to make significant estimates and assumptions including projected net sales and earnings before interest, taxes, depreciation, and amortization (“EBITDA”) growth rates and discount rates.

Changes in these assumptions could have a significant impact on either the fair value of the reporting units, the amount of any goodwill impairment charge, or both.

The Company’s consolidated goodwill balance was $824 million as of December 31, 2022, of which $424 million and $129 million were allocated to the HS reporting unit and the PS reporting unit, respectively.

The Company’s consolidated goodwill balance was $825 million as of

36 | December 30, 2023 Form 10-K

estimated fair value of the HS and PS reporting units exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized.

December 30, 2023, of which $437 million and $129 million were allocated to the HS reporting unit and the PS reporting unit, respectively.

The estimated fair value of the HS and PS reporting units exceeded their carrying values as of the measurement date and, therefore, no impairment was recognized.

We identified the Company’s discounted cash flow model in the impairment evaluation of goodwill for the HS and the PS reporting units as a critical audit matter because of the significant judgments made by management to estimate the fair values of these reporting units.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of certain of management’s estimates and assumptions, particularly related to projected net sales and earnings growth rates and discount rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimates of projected net sales and earnings growth rates and discount rates used by management to estimate the fair values of the HS and PS reporting units included the following, among others:

• We evaluated management’s ability to accurately forecast projected net sales and earnings growth rates by comparing actual results to management’s historical forecasts.

• We performed a sensitivity analysis of the projected net sales and earnings growth rates and discount rates, which included their impact on cash flows.

• We evaluated the reasonableness of management’s projected net sales and earnings growth rates by comparing the forecasts to (1) historical net sales and earnings growth rates, (2) underlying analysis detailing business strategies and growth plans, (3) internal communications to management and the Board of Directors, and (4) forecasted information included in the Company press releases, as well as in analyst and industry reports for the Company and certain of its peer companies.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodologies utilized, along with valuation assumptions including the discount rates and long-term net sales growth rates selected by:

Our audit procedures related to the estimates of projected net sales and EBITDA growth rates and discount rates used by management to estimate the fair values of the HS and PS reporting units included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the Hardware Solutions and Protective Solutions reporting units, such as controls related to management’s forecasts of projected net sales and EBITDA growth rates and selection of the discount rates.

• We evaluated management’s ability to accurately forecast projected net sales and EBITDA growth rates by comparing actual results to management’s historical forecasts.

• We performed a sensitivity analysis of the projected net sales and EBITDA growth rates and discount rates, which included their impact on cash flows.

• We evaluated the reasonableness of management’s projected net sales and EBITDA growth rates by comparing the forecasts to (1) historical net sales and EBITDA growth rates, (2) underlying analysis detailing business strategies and growth plans, (3) internal communications to management and the Board of Directors, and (4) industry reports for the Company and certain of its peer companies.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation methodologies utilized, along with the discount rates and long-term net sales growth rates selected by:

• Developing a range of independent estimates for the discount rates and compared those to those rates selected by management.

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Hillman Solutions Corp.

and subsidiaries (the Company) as of December 25, 2021, the related consolidated statements of comprehensive loss, cash flows, and stockholders’ equity for each of the years in the two‑year period ended December 25, 2021, and the related notes and financial statement schedule II -- Valuation Accounts) (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 25, 2021, and the results of its operations and its cash flows for each of the years in the two‑year period ended December 25, 2021, in conformity with U.S.

We have audited the accompanying consolidated statements of comprehensive loss, cash flows, and stockholders’ equity of Hillman Solutions Corp.

and subsidiaries (the Company) for the year ended December 25, 2021 and the related notes and financial statement schedule II – Valuation Accounts (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 25, 2021, in conformity with U.S.

generally accepted accounting principles.

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These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2010 to 2022.

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Operating lease right of use assets 87,479 66,955

Deferred tax asset — 1,323

Other assets 14,754 23,586

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Management fees to related party — — 270

Other income, net ( 1,119 ) ( 2,778 ) ( 5,250 )

Other expense (income), net

12,843 ( 1,119 ) ( 2,778 )

Income from operations 60,928 39,893 10,314

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Investment income on trust common securities — — ( 233 )

Loss (income) on mark-to-market adjustment of interest rate swap — ( 1,685 ) 601

Income on mark-to-market adjustment of interest rate swap

— — ( 1,685 )

Refinancing costs — — 8,070

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Net loss from above $ ( 9,589 ) $ ( 16,436 ) $ ( 38,332 )

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation adjustments 4,801 ( 7,615 ) ( 283 )

Hedging activity ( 11,597 ) 13,745 2,517

Total other comprehensive income 6,130 2,234 2,652

Total other comprehensive (loss) income

( 6,796 ) 6,130 2,234

Comprehensive loss $ ( 16,385 ) $ ( 10,306 ) $ ( 36,098 )

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Depreciation and amortization 121,640 120,010 120,730

Loss (gain) on dispositions of property and equipment ( 26 ) 221 161

Impairment of long lived assets — — 210

(Gain) loss on dispositions of property and equipment

( 34 ) ( 26 ) 221

Impairment charges

Deferred income taxes ( 8,693 ) ( 873 ) ( 21,846 )

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Proceeds from exercise of stock options 2,167 2,609 2,670

Payments of contingent consideration ( 1,232 ) — —

Other financing activities 9 1,777 —

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Stock option activity, stock awards and employee stock purchase plan 523 — 17,925 — — 17,925

Recapitalization of Landcadia, net of issuance costs and fair value of assets and liabilities acquired 58,672 6 377,959 — — 377,965

Shares issued to PIPE, net of issuance costs 37,500 4 363,297 — — 363,301

Hedging activity — — — — 2,517 2,517

Warrant redemption 6,365 1 62,414 — — 62,415

Change in cumulative foreign currency translation adjustment — — — — ( 283 ) ( 283 )

3 unchanged sentences

Stock option activity, stock awards and employee stock purchase plan 553 — 16,190 — — 16,190

Recapitalization of Landcadia, net of issuance costs and fair value of assets and liabilities acquired 58,672 6 377,959 — — 377,965

Shares issued to PIPE, net of issuance costs 37,500 4 363,297 — — 363,301

Hedging activity — — — — 13,745 13,745

Warrant redemption 6,365 1 62,414 — — 62,415

Change in cumulative foreign currency translation adjustment — — — — ( 7,615 ) ( 7,615 )

Other — — 760 — — 760

Balance at December 31, 2022

4 unchanged sentences

Change in cumulative foreign currency translation adjustment — — — — 4,801 4,801

Other — — 760 — — 760

Balance at December 30, 2023 194,913 $ 20 $ 1,418,535 $ ( 236,206 ) $ ( 27,820 ) $ 1,154,529

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See Note 3 - Merger Agreement for more information.

In connection with the closing of the Business Combination on July 14, 2021, Landcadia changed its name from “Landcadia Holdings III, Inc." to “Hillman Solutions Corp.” and the Company’s common stock and warrants began trading on The Nasdaq Stock Market under the trading symbols “HLMN” and “HLMNW”, respectively.

In connection with the closing of the Business Combination on July 14, 2021, Landcadia changed its name from “Landcadia Holdings III, Inc." to “Hillman Solutions Corp.” and the Company’s common stock began trading on The Nasdaq Stock Market under the trading symbol “HLMN”.

The Company has a 52-53 week fiscal year ending on the last Saturday in December.

1 unchanged sentence

The additional week in a 53 week fiscal year is added to the fourth quarter, making such quarter consist of 14 weeks.

In the current year, 2022, the Company had its first 53 week fiscal year.

In 2023, the Company had a 52 week fiscal year, whereas in the prior year, 2022, the Company had its first 53 week fiscal year.

Nature of Operations:

1 unchanged sentence

(1) Hardware and Protective Solutions, (2) Robotics and Digital Solutions, and (3) Canada.

In the first quarter of 2023, the Company realigned its Canada segment to include the Canada portions of the Protective Solutions and MinuteKey businesses, which are now operating under the Canada segment leadership team.

Previously, the results of the Canada portion of the Protective Solutions business were reported in the Hardware and Protective Solutions segment and the Canada portion of the MinuteKey business was reported in the Robotics and Digital Solutions segment and were operating under those respective segment leadership teams.

See Note 21 - Segment Reporting and Geographic Information.

Hillman provides and, on a limited basis, produces products such as fasteners and related hardware items;

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The Company has not experienced any losses related to these balances.

Management believes it's credit risk is minimal.

Restricted Investments:

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Maintenance and repairs are charged to expense as incurred.

The Company capitalizes certain costs that are directly associated with the development of internally developed software, representing the historical cost of these assets.

The Company capitalizes certain costs that are directly associated with the development of internally developed software related to our key and engraving machines, representing the historical cost of these assets.

Once the software is completed and placed into service, such costs are amortized over the estimated useful lives.

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With the assistance of an independent third-party specialist, management assessed the value the of the reporting units based on a discounted cash flow model and multiple of earnings.

Assumptions critical to our fair value estimates under the discounted cash flow model include the discount rate and projected net sales and earnings growth rates.

Assumptions critical to our fair value estimates under the discounted cash flow model include the discount rate and projected net sales and EBITDA growth rates.

The results of the quantitative assessment in 2023, 2022, and 2021 indicated that the fair value of each reporting unit was in excess of its carrying value.

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(1) The "Other" change to goodwill relates to adjustments resulting from fluctuations in foreign currency exchange rates for the Canada and Mexico reporting units.

(2) The amount relates to the OZCO acquisition, see Note 6 - Acquisitions for additional information.

Intangible Assets:

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Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary.

No impairment charges were recorded in 2022 or 2021.

In the year ended December 26, 2020, the Company recorded an impairment charge of $ 210 related to the loss on the disposal of our FastKey self-service duplicating kiosks and related assets in our Robotics and Digital Solutions reportable segment.

The aforementioned impairment charge incurred was included within other income/expense on the Consolidated Statements of Comprehensive Loss.

During fiscal 2023, the Company performed an impairment assessment on certain intangible assets.

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 net realizable value of inventory.

As a result, the Company recognized an impairment charge of $19.6 million during the fourth quarter of 2023 to write down the carrying values of intangible assets to their fair value.

The Impairment charge was split between the following asset categories:

$15.6 million for customer relationships, $2.2 million for technology and patents, and $1.7 million for trademarks - other.

The impairment charge is included in other expense (income), net in the accompanying consolidated statements of comprehensive loss.

No other impairment charges were recorded in 2023, 2022, or 2021.

Approximately 95 % of the Company’s long-lived assets are held within the United States.

Income Taxes:

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Deferred income taxes are computed using the asset and liability method.

3 unchanged sentences

See Note 7 - Income Taxes for additional information.

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In accordance with guidance regarding the accounting for uncertainty in income taxes, the Company recognizes a tax position if, based solely on its technical merits, it is more likely than not to be sustained upon examination by the relevant taxing authority.

1 unchanged sentence

A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to be recognized in the Consolidated Financial Statements.

Interest and penalties related to income taxes are included in (benefit) provision for income taxes.

Interest and penalties related to income taxes are included in (benefit) expense for income taxes.

Contingent Consideration:

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The risk neutral method is applied, resulting in a value that captures the risk associated with the form of the payout structure and the projection risk.

The assumptions utilized in the calculation based on financial performance milestones include projected revenue and/or EBITDA amounts, volatility and discount rates.

The assumptions utilized in the calculation based on financial performance milestones include projected revenue, volatility and discount rates.

For potential payments related to product development milestones, we estimated the fair value based on the probability of achievement of such milestones.

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The plan provides for a matching contribution for eligible employees of 50 % of each dollar contributed by the employee up to 6 % of the employee's compensation.

In addition, the plan provides an annual contribution in amounts authorized by the Board of Directors, subject to the terms and conditions of the plan.

In addition, the plan allows for an optional annual contribution in amounts authorized by the Board of Directors, subject to the terms and conditions of the plan.

Hillman Canada sponsors a Deferred Profit Sharing Plan (“DPSP”) and a Group Registered Retirement Savings Plan (“RRSP”) for all qualified, full-time employees, with at least three months of continuous service.

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The following table disaggregates our revenue by product category.

Certain amounts in the prior year presentation between segments were reclassified to conform to the current year’s presentation.

Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue

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Our revenue by geography is allocated based on the location of our sales operations.

Our Hardware and Protective Solutions segment contains sales of Big Time personal protective equipment into Canada.

Our Robotics and Digital Solutions segment contains sales of MinuteKey Canada.

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.

2 unchanged sentences

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.

The Company’s performance obligations under its arrangements with customers are providing products, in-store merchandising services, and access to key duplicating and engraving equipment.

6 unchanged sentences

Therefore, these costs are expensed as incurred.

Freight and shipping costs and the cost of our in-store merchandising services teams are recognized in selling, general, and administrative expense when control over products is transferred to the customer.

The Company used the practical expedient regarding the existence of a significant financing component as payments are due in less than one year after delivery of the products.

Freight and shipping costs and the cost of our in-store merchandising services teams are recognized in selling, warehouse, general, and administrative expense when control over products is transferred to the customer.

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The Company used the practical expedient regarding the existence of a significant financing component as payments are due in less than one year after delivery of the products.

Shipping and Handling:

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Treasury interest rate whose term is consistent with the expected term of the share-based award.

The dividend yield on our common stock is assumed to be zero since we have not historically paid dividends on these awards and have no current plans to do so in the future.

Determining the fair value of stock options at the grant date requires judgment, including estimates for the expected life of the share-based award,

The dividend yield on our common stock is assumed to be zero since we have not historically paid

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stock price volatility, dividend yield, and interest rate.

dividends on these awards and have no current plans to do so in the future.

Determining the fair value of stock options at the grant date requires judgment, including estimates for the expected life of the share-based award, stock price volatility, dividend yield, and interest rate.

These assumptions may differ significantly between grant dates because of changes in the actual results of these inputs that occur over time.

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The valuation of the Company’s common stock was historically performed at the end of our fiscal year.

The share price for the year ended December 26, 2020 was $1,647.13.

Stock-based compensation expense is recognized using a fair value based recognition method.

14 unchanged sentences

For interest rate swaps, the notional amounts, rates, and maturities of our interest rate swaps are closely matched to the related terms of hedged debt obligations.

The critical terms of the interest rate swap are matched to the critical terms of the underlying hedged item to determine whether the derivatives used for hedging transactions are highly effective in offsetting changes in the cash flows of the underlying hedged item.

If it is determined that a derivative ceases to be a highly effective

The critical terms of the interest rate swap are matched to the critical terms of the underlying hedged

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hedge, the hedge accounting is discontinued and all subsequent derivative gains and losses are recognized in the Statement of Comprehensive Loss.

item to determine whether the derivatives used for hedging transactions are highly effective in offsetting changes in the cash flows of the underlying hedged item.

If it is determined that a derivative ceases to be a highly effective hedge, the hedge accounting is discontinued and all subsequent derivative gains and losses are recognized in the Statement of Comprehensive Loss.

Derivative instruments designated in hedging relationships that mitigate exposure to the variability in future cash flows of the variable-rate debt and foreign currency exchange rates are considered cash flow hedges.

28 unchanged sentences

Change in net assets as a result of recapitalization $ 741,323

The change in number of shares outstanding as a result of the reverse recapitalization is summarized as follows:

52 | December 30, 2023 Form 10-K

The change in number of shares outstanding as a result of the reverse recapitalization is summarized as follows:

Common shares issued to new Hillman shareholders (5)

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Facilitation of the Effects of Reference Rate Reform on Financial Reporting which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The new guidance provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2024.

The Company is currently evaluating contract and the optional expedients provided by the new standard.

As of December 30, 2023, the Company does not have any receivables, hedging relationships, lease agreements, or debt agreements that reference LIBOR or another reference rate expected to be discontinued.

On June 30, 2023, we amended and restated our term loan and interest rate swap agreements.

As a result of those amendments, our floating rate debt no longer references a LIBOR based benchmark rate.

In January 2021, FASB issued ASU 2021-01, Reference Rate Reform to expand the scope of ASU 2020-04 by allowing an entity to apply the optional expedients, by stating that a change to the interest rate used for margining, discounting or contract price alignment for a derivative is not considered to be a change to the critical terms of the hedging relationship that requires designation.

The entity may apply the contract modification relief provided in ASU 2020-04 and continue to account for the derivative in the same manner that existed prior to the changes resulting from reference rate reform or the discounting transition.

The Company is currently evaluating contract and the optional expedients provided by the new standard.

On June 30, 2023, we amended and restated our term loan and interest rate swap agreements.

As a result of those amendments, our floating rate debt no longer references a LIBOR based benchmark rate.

On October 28, 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

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Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date.

53 | December 30, 2023 Form 10-K

This update is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to 1) the recognition of an acquired contract liability, and 2) payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendment is effective on December 15, 2022.

The Company has evaluated the impact provided by the new standard and does not expect it to have a material impact on its financial statements.

The Company has evaluated the impact provided by the new standard and the standard did not have a material impact on its financial statements.

On March 28, 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging which clarifies the guidance in ASC Topic 815, Derivatives and Hedging on fair value hedge accounting of interest rate risk

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for portfolios of financial assets.

Fair Value Hedging which clarifies the guidance in ASC Topic 815, Derivatives and Hedging on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The ASU amends the guidance in ASU 2017-12 which established the "last-of-layer" method for making the fair value hedge accounting for these portfolios more accessible.

3 unchanged sentences

The amendment is effective for fiscal years beginning after December 15, 2022.

The Company has evaluated the impact provided by the new standard and does not expect it to have a material impact on its financial statements.

The Company has evaluated the impact provided by the new standard and the standard did not have a material impact on its financial statements.

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) to enhance the transparency of supplier finance programs.

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The amendment on roll forward information is effective for fiscal years beginning after December 15, 2023, which should be applied prospectively.

Company has evaluated the impact provided by the new standard and the standard did not have a material impact on its financial statements.

On November 27, 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The purpose of the amendments is to enable investors to better understand an entity’s overall performance and assists in assessing potential future cash flows.

The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and should be applied retrospectively to all prior periods presented.

The Company is currently evaluating the impact provided by the new standard.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures.

The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

The amendments on Income Tax Disclosures are effective for fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented.

The Company is currently evaluating the impact provided by the new standard.

RELATED PARTY TRANSACTIONS

The Company has recorded aggregate management fee charges and expenses from CCMP and Oak Hill Funds of $ 270 and $ 577 for the years ended December 25, 2021 and December 26, 2020, respectively.

Hillman, Jefferies Financial Group Inc., certain other financial sponsors, certain CCMP affiliated investors and certain Oak Hill affliated investors entered into the Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), pursuant to which, among other things, the parties to the A&R Registration Rights Agreement agreed not to effect any sale or distribution of any equity securities of Hillman held by any of them during the lock-up period described therein and were granted certain registration rights with respect to their respective shares of Hillman common stock, in each case, on the terms and subject to the conditions therein.

Richard Zannino and Joe Scharfenberger, both partners at CCMP, were members of our Board at the time Hillman entered into the A&R Registration Rights Agreement.

Zannino and Mr.

Scharfenberger each resigned from the

54 | December 30, 2023 Form 10-K

Hillman Board in May 2023 following CCMP's complete exit of its investment in Hillman during the second quarter of 2023.

Another director, Teresa Gendron, was the CFO of Jefferies Financial Group Inc.

until March 2023.

Additionally, Oak Hill owned in excess of 5% of the Company’s outstanding securities at certain times in fiscal 2022.

The Company recorded aggregate management fee charges and expenses from CCMP and Oak Hill Funds of $ 270 for the year ended December 25, 2021.

Subsequent to the Merger, the Company is no longer being charged management fees, see Note 3 - Merger Agreement for additional details.

Two members of our Board of Directors, Rich Zannino and Joe Scharfenberger, are partners at CCMP.

Another director, Teresa Gendron, is the CFO of Jefferies.

Gregory Mann and Gabrielle Mann are employed by Hillman.

Hillman leases an industrial warehouse and office facility from companies under the control of the Manns.

Rental expense for the lease of this facility was $ 205 for the year ended December 31, 2022 and $ 351 for the years ended December 25, 2021 and December 26, 2020.

The building was sold to a third party in 2022 and is an arms length transaction from the date of sale forward.

At the Closing, Hillman, the Sponsors, CCMP Investors and the Oak Hill Investors entered into the A&R Registration Rights Agreement, pursuant to which, among other things, the parties to the A&R Registration Rights Agreement agreed not to effect any sale or distribution of any equity securities of Hillman held by any of them during the lock-up period described therein and were granted certain registration rights with respect to their respective shares of Hillman common stock, in each case, on the terms and subject to the conditions therein.

Rental expense for the lease of this facility was $ 205 and $ 351 for the years ended December 31, 2022 and December 25, 2021, respectively.

The building was sold to a third party in 2022 and is an arm's length transaction from the date of sale forward.

Sales to related parties, which are included in net sales, consist primarily of the sale of excess inventory to Ollie's Bargain Outlet Holdings, Inc.

John Swygert, President and Chief Executive Officer of Ollie's, is a member of our Board of Directors.

Sales to related parties were $ 687 for the year ended December 31, 2022.

There were no such sales made throughout 2021 and 2020.

Sales to related parties were $ 1,583 and $ 687 for the years ended December 30, 2023 and December 31, 2022, respectively.

There were no such sales made during 2021.

Oz Post International, LLC

3 unchanged sentences

The following table reconciles the fair value of the acquired assets and assumed liabilities to the total purchase price of OZCO.

52 | December 31, 2022 Form 10-K

Accounts receivable $ 1,341

11 unchanged sentences

Other Acquisitions

On February 19, 2020, the Company acquired the assets of Instafob LLC ("Instafob") for a cash payment of $ 800 and a total purchase price of $ 2,618 , which includes $ 1,818 in contingent and non-contingent considerations that remain payable to the seller.

The financial results of Instafob reside within the Company's Robotics and Digital Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

On March 7, 2022, the Company completed its acquisition of the Irvine, California-based Monkey Hook, LLC ("Monkey Hook") for a total purchase price of $ 2,800 , which includes $300 in hold-back that remains payable to the seller.

On March 7, 2022, the Company completed its acquisition of the Irvine, California-based Monkey Hook, LLC ("Monkey Hook") for a total purchase price of $ 2,800 , which includes $ 300 in hold-back that remained payable to the seller as of December 31, 2022.

During the first quarter of 2023, the hold-back of $300 was paid to satisfy the full purchase price.

Monkey Hook products are designed to hang artwork on drywall where no stud is present.

Monkey Hook sells its products throughout North America and its financial results reside in the Company's Hardware and Protective Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

Monkey Hook sells its products throughout North America and its financial results reside in the Company's

55 | December 30, 2023 Form 10-K

Hardware and Protective Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

On December 5, 2023, the Company completed its acquisition of Ajustlock, an innovative adjustable barrel bolt lock used on gates, doors or windows which self-adjusts vertically to eliminate door shift issues, for a total purchase price of $ 1,400 , which includes a $ 100 hold-back payable to the seller.

Ajustlock sells its products throughout North America and its financial results reside in the Company's Hardware and Protective Solutions reportable segment and have been determined to be immaterial for purposes of additional disclosure.

Loss before income taxes are comprised of the following components for the periods indicated:

5 unchanged sentences

Loss before income taxes $ ( 7,382 ) $ ( 14,667 ) $ ( 50,116 )

53 | December 31, 2022 Form 10-K

Below are the components of the Company's income tax expense (benefit) for the periods indicated:

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federal net operating loss (“NOL”) carryforwards totaling $ 35,938 as of December 30, 2023 that are available to offset future taxable income.

Of the $79,396 of federal carryforwards, $41,470 was generated before January 1, 2018 and expire from 2032 to 2036.

The remaining $37,926 can be carried forward indefinitely but is subject to an 80% taxable income limitation.

A portion of the U.S.

The remaining NOL can be carried forward indefinitely but is subject to an 80% taxable income limitation.

$4,921 of the remaining U.S.

federal NOLs were acquired with the MinuteKey purchase in 2018.

The MinuteKey NOLs are subject to limitation under IRC §382 from current and prior ownership changes.

In addition, the Company's Canadian subsidiary maintains an NOL carryforward of $ 2,507 .

These carryforwards expire from 2039 to 2040.

Management anticipates utilizing all U.S.

federal and foreign NOLs prior to their expiration.

federal NOLs prior to their expiration.

The Company has state NOL carryforwards with an aggregate tax benefit of $ 2,411 which expire from 2023 to 2042.

The Company maintains a valuation allowance of $ 51 for the state NOLs expected to expire prior to utilization.

The Company has $ 1,035 of general business tax credit carryforwards which expire from 2026 to 2041.

11 unchanged sentences

Accrued bonus / deferred compensation 9,628 6,458

Deferred social security (CARES Act) — 899

Interest limitation 26,247 37,709

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Derivative security value 1,599 5,519

All other items — 505

Deferred tax liabilities $ 233,402 $ 245,284

3 unchanged sentences

The amount of net deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward periods are reduced.

The Company maintains a valuation allowance of $ 51 on U.S.

state NOLs due to the Company's inability to utilize the losses prior to expiration.

The Company considers the earnings of certain non-U.S.

subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings.

The Company has not recorded a deferred tax liability related to the U.S.

federal and state income taxes and foreign withholding taxes of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States.

It is not practicable to estimate the amount of additional tax that would be payable on the undistributed earnings that are considered permanently reinvested.

Should management decide to repatriate the foreign earnings, the Company would need to adjust the income tax provision in the period the earnings will no longer be indefinitely invested outside the United States.

The Company historically considered the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested based on access to sufficient liquidity within the United States, as well as plans for use and investment outside of the United States.

As such, the Company did not provide for income taxes on undistributed earnings and other outside basis differences of its Canadian and Mexican subsidiaries.

In 2023, the Company reevaluated its assertion and determined it no longer intends to indefinitely reinvest its non-U.S.

undistributed earnings.

In 2023, the Company repatriated funds from its Canadian subsidiary and recorded an associated withholding tax expense of $ 1,484 .

The Company has determined that the remaining undistributed earnings as of the reporting date can be repatriated without incurring further withholding taxes, U.S.

state taxes, and certain tax impacts relating to foreign currency exchange effects.

Any tax implications of future year remittances are expected to result from future year earnings.

57 | December 30, 2023 Form 10-K

3 unchanged sentences

Statutory federal income tax rate 21.0 % 21.0 % 21.0 %

taxes and the impact of non-U.S.

losses for which a current tax benefit is not available ( 7.1 ) % ( 1.3 ) % 0.6 %

taxes ( 12.5 ) % ( 7.1 ) % ( 1.3 ) %

State and local income taxes, net of U.S.

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Adjustment for change in tax law — % 5.4 % — %

Permanent differences:

Acquisition and related transaction costs ( 3.8 ) % ( 2.7 ) % ( 2.2 ) %

Decrease in fair value of warrant liability — % — % 6.2 %

Meals & Entertainment ( 2.7 ) % ( 0.1 ) % ( 0.2 ) %

Withholding taxes ( 20.1 ) % — % — %

Impact of foreign currency 3.3 % — % — %

Global Intangible Low-Taxed Income ("GILTI") — % ( 24.4 ) % ( 0.5 ) %

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and numerous consolidated and separate income tax returns in various states and foreign jurisdictions.

The Company is not under any significant audits for the period ended December 31, 2022.

The Company is under audit in Canada.

The audit is in the beginning phase.

There are no other significant audits for the period ended December 30, 2023.

In general, our income tax returns for the years from 2008 through the current year remain open to examination by federal and state taxing authorities.

In addition, our tax years of 2015 through current year remain open and subject to examination by local tax authorities in certain foreign jurisdictions in which we have operations.

In addition, our tax years of 2015 through current year remain open and subject to examination by tax authorities in certain foreign jurisdictions in which we have operations.

Each whole warrant entitles the holder thereof to purchase one share of common stock at an exercise price of $ 11.50 per share and a redemption price of $.10 a share.

As of the date of the merger, as discussed in Note 3 - Merger Agreement, there were 24,666,628 warrants outstanding consisting of 16,666,628 public warrants, which were included in the units issued in Landcadia's initial public offering ("Public Warrants"), and 8,000,000 private placement warrants, which were included in the units issued in the concurrent private placement at the time of Landcadia's initial public offering ("Private Placement Warrants" and, collectively with the Public Warrants, the "Warrants").

The Public and Private Placement Warrants were accounted for as liabilities and are presented as

58 | December 30, 2023 Form 10-K

warrant liabilities on the Consolidated Balance Sheets.

The Public and Private Placement Warrants were accounted for as liabilities and are presented as warrant liabilities on the Consolidated Balance Sheets.

The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within loss on change in fair value of warrant liabilities in the Consolidated Statements of Comprehensive Loss.

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Public and private warrant exercise activity and underlying Common Stock issued or surrendered for the year ended December 25, 2021 is:

59 | December 30, 2023 Form 10-K

Public Warrants Private Warrants Total

4 unchanged sentences

Ending balance as of December 25, 2021 — — —

57 | December 31, 2022 Form 10-K

LONG-TERM DEBT

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Total long term debt, net $ 731,708 $ 884,636

(1) The Company entered into an agreement to finance warehouse fixtures and equipment.

The agreement has an interest rate of 3.94% and will be repaid through August 31, 2027.

2023 Conversion of Debt from LIBOR Interest Rate to SOFR Interest Rate

The Company's debt instruments are subject to interest rate adjustments that were initially based on the London Interbank Offered Rate ("LIBOR").

However, due to the discontinuation of LIBOR as a benchmark rate and the industry's transition to the Secured Overnight Financing Rate (SOFR), the Company has undertaken the necessary steps to convert its debt from LIBOR interest rate to SOFR interest rate.

On June 30, 2023, the Company amended the term loan credit agreement to change the benchmark rate from LIBOR to SOFR.

The interest rate for the term loan is, at the discretion of the Company, (i) term SOFR plus a margin varying from 2.50 % to 2.75 % per annum based on leverage, plus a credit spread adjustment varying between 0.11% to 0.43%, depending on the SOFR tenor selected;

or (ii) an alternate base rate plus a margin varying from 1.50 % to 1.75 % per annum based on leverage.

Revolving Loans and Term Loans

As of December 31, 2022, the ABL Revolver had an outstanding amount of $ 72,000 and outstanding letters of credit of $ 35,890 .

As of December 30, 2023, the ABL Revolver did not have an outstanding balance, and had outstanding letters of credit of $ 40,890 .

The Company has $ 246,838 of available borrowings under the revolving credit facility as a source of liquidity as of December 30, 2023 based on the customary asset-backed loan borrowing base and availability provisions.

In August 2023, the Company made a $80.0 million prepayment against the outstanding term loan balance without payment of a premium or penalty.

On July 29, 2022, the Company amended the asset-based revolving credit agreement (the “ABL Revolver") with Barclays Bank PLC, as administrative agent, and the lenders and other parties thereto (the “ABL Credit Agreement”), increasing the aggregate commitments thereunder to $375.0 million and extended the maturity.

2 unchanged sentences

The stated maturity date of the revolving credit commitments under the ABL Credit Agreement is July 29, 2027.

The loans and other amounts outstanding under the ABL Credit Agreement and related documents are guaranteed by Hillman Solutions Corp., a wholly‑owned subsidiary of the Company, and, subject to certain exceptions, the Borrower’s wholly-owned domestic subsidiaries and are secured by substantially all of the Borrower’s and the guarantors’ assets plus, solely in the case of the Canadian Borrower, its and its wholly-owned Canadian subsidiary’s assets, which is guaranteed by the Canadian portion under the ABL Credit Agreement.

The loans and other amounts outstanding under the ABL Credit Agreement and related documents are guaranteed by Hillman Solutions

60 | December 30, 2023 Form 10-K

Corp., and, subject to certain exceptions, the Borrower’s wholly-owned domestic subsidiaries and are secured by substantially all of the Borrower’s and the guarantors’ assets plus, solely in the case of the Canadian Borrower, its and its wholly-owned Canadian subsidiary’s assets, which is guaranteed by the Canadian portion under the ABL Credit Agreement.

On April 16, 2021, the Company acquired Oz Post International, LLC ("OZCO").

6 unchanged sentences

Refer to Note 10 - Leases.

58 | December 31, 2022 Form 10-K

2021 Refinancing

7 unchanged sentences

The delayed draw term loan facility under the Term Credit Agreement may be used to finance permitted acquisitions and similar investments and to replenish cash and repay revolving credit loans previously used for permitted acquisitions.

As of July 2023, the delayed draw term loan facility expired and is no longer accumulating interest expense.

In connection with the Term Credit Agreement, the Company recorded $ 23,432 in deferred financing fees and $ 6,380 in discounts which are recorded as long term debt on the Consolidated Balance Sheet.

2 unchanged sentences

The Company amended its interest rate swaps in connection with the refinancing, see Note 15 - Derivatives and Hedging for additional details.

61 | December 30, 2023 Form 10-K

Loss (gain) on extinguishment of debt

13 unchanged sentences

Guaranteed Preferred Beneficial Interest in the Company's Junior Subordinated Debentures

59 | December 31, 2022 Form 10-K

In September 1997, The Hillman Group Capital Trust ("Trust"), a Grantor trust, completed a $ 105,443 underwritten public offering of 4,217,724 Trust Preferred Securities (“TOPrS”).

2 unchanged sentences

The Trust distributed monthly cash payments it received from the Company as interest on the debentures to preferred security holders at an annual rate of 11.6 % on the liquidation amount of $ 25.00 per preferred security.

Pursuant to the Indenture that governed the TOPrS, the Trust was able to defer distribution payments to holders of the TOPrS for a period that could not exceed 60 months (the “Deferral Period”).

During a Deferral Period, the Company was required to accrue the full amount of all interest payable, and such deferred interest payable became immediately payable by the Company at the end of the Deferral Period.

During fiscal year 2020, the Company elected to defer interest payments to the bondholders during April 2020 through July 2020.

The additional interest incurred as a result of the deferral was immaterial.

Interest paid to the bondholders at the end of the Deferral Period was paid in full.

There were no interest deferrals during fiscal 2021 or 2020.

In connection with the public offering of TOPrS, the Trust issued $ 3,261 of trust common securities to the Company.

7 unchanged sentences

Certain lease arrangements include escalating rent payments and options to extend the lease term.

Expected lease terms include these options to extend or terminate the lease when it is reasonably certain the Company will exercise the option.

Expected lease terms include these options to extend or

62 | December 30, 2023 Form 10-K

terminate the lease when it is reasonably certain the Company will exercise the option.

The Company's leasing arrangements do not contain material residual value guarantees nor material restrictive covenants.

The components of operating and finance lease cost for the year ended December 31, 2022 and December 25, 2021 were as follows:

The components of operating and finance lease costs for the years ended December 30, 2023, December 31, 2022 and December 25, 2021 were as follows:

Year Ended December 30, 2023 Year Ended

December 25, 2021

Operating lease cost $ 19,670 $ 20,860

December 31, 2022 Year Ended December 25, 2021

Operating lease costs

$ 21,451 $ 19,670 $ 20,860

Short term lease costs 5,534 6,960 4,827

Variable lease costs 847 2,028 1,496

Finance lease cost:

Finance lease costs:

Amortization of right of use assets 2,570 1,563 914

3 unchanged sentences

Rent expense includes operating lease cost as well as expense for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.

The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental borrowing rate based on the information available at the commencement date in determining the

60 | December 31, 2022 Form 10-K

present value of future payments.

The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of December 31, 2022 and December 25, 2021:

The weighted average remaining lease terms and discount rates for all of our operating leases as of December 30, 2023 and December 31, 2022 were as follows:

December 30, 2023 December 31, 2022

15 unchanged sentences

Financing cash outflow from finance leases 2,410 1,470

63 | December 30, 2023 Form 10-K

As of December 30, 2023, our future minimum rental commitments are immaterial for lease agreements beginning after the current reporting period.

10 unchanged sentences

Present value of lease liabilities $ 94,401 $ 7,312

In the first quarter of 2023 the Company began an additional operating lease for a new property located in Shannon, Georgia for the purposes of office, warehouse, and distribution.

The estimated future minimum rental commitments are approximately $26,721.

In addition, on February 1, 2023, the Company began a new operating lease for a distribution center located in Belton, Missouri.

The estimated future minimum rental commitments are approximately $13,636.

61 | December 31, 2022 Form 10-K

The Company has certain arrangements for key duplication equipment under which we are the lessor.

2 unchanged sentences

DEFERRED COMPENSATION PLAN

The Company maintains a deferred compensation plan for key employees (the “Nonqualified Deferred Compensation Plan” or “NQDC”) which allows the participants to defer up to 25 % of salary and commissions and up to 100 % of bonuses to be paid during the year and invest these deferred amounts into certain Company directed mutual fund investments, subject to the election of the participants.

The Company is permitted to make a 25 % matching contribution on deferred amounts up to $ 10 , subject to a five year vesting schedule.

The Company maintains a deferred compensation plan for key employees (the “Nonqualified Deferred Compensation Plan” or “NQDC”).

The NQDC was frozen at the end of fiscal 2021 such that the NQDC does not allow new contributions.

The NQDC previously allowed eligible employees to defer up to 25% of salary and commissions and up to 100% of bonuses.

Prior to 2021, the Company contributed a matching contribution of 25% on the first $10 of employee deferrals, subject to a five-year vesting schedule.

As of December 30, 2023 and December 31, 2022, the Company's Consolidated Balance Sheets included $ 818 and $ 1,155 , respectively, in restricted investments representing the assets held in mutual funds to fund deferred compensation liabilities owed to the Company's current and former employees.

12 unchanged sentences

Amounts reclassified from other comprehensive income¹ 385

Net current period other comprehensive loss 2,652

Net current period other comprehensive income

Balance at December 25, 2021 ( 27,154 )

3 unchanged sentences

Balance at December 31, 2022 ( 21,024 )

Other comprehensive loss before reclassifications 10,524

Other comprehensive income before reclassifications

Amounts reclassified from other comprehensive income 3

Net current period other comprehensive income 6,130

Net current period other comprehensive loss

Balance at December 30, 2023 $ ( 27,820 )

In the year December 26, 2020, there were no amounts reclassified into other comprehensive income.

During the year ended December 25, 2021, the Company obtained and amended its interest rate swap agreements to hedge against effective cash flows (i.e.

In the year December 25, 2021, the Company obtained and amended its interest rate swap agreements to hedge against effective cash flows (i.e.

interest payments) on floating-rate debt associated with the Company's new Term Credit Agreement.

3 unchanged sentences

See Note 15 - Derivatives and Hedging for additional information on the interest rate swaps.

For the year ended December 31, 2022, the Company deferred a gain of $ 22,771 , reclassified a gain of $ 4,394 and tax of $ 4,631 into other comprehensive loss due to hedging activities.

During the year ended December 31, 2022, the Company deferred a gain of 22,711 , reclassified a gain of $ 4,394 and a net of tax of 4,631 into other comprehensive loss due to hedging activities.

The amounts reclassified out of other comprehensive loss were recorded as interest expense.

See Note 15 - Derivatives and Hedging for additional information on the interest rate swaps.

For the year ended December 30, 2023, the Company deferred a gain of $ 125 , reclassified a gain of $ 15,608 including tax expense of $ 3,886 into other comprehensive loss due to hedging activities.

The amounts reclassified out of other comprehensive loss were recorded as interest expense.

See Note 15 - Derivatives and Hedging for additional information on the interest rate swaps.

STOCK-BASED COMPENSATION

34 unchanged sentences

9,250 $ 8.22 5.27 years

In fiscal year ended December 31, 2022, 182 options were exercised.

In fiscal year ended December 25, 2021, 435 options were exercised.

In fiscal year ended December 26, 2020, 7,333 options were exercised.

In fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, 77 , 182 , and 435 options were exercised, respectfully.

Stock option compensation expense of $ 3,504 , $ 8,144 , and $ 13,634 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the years ended December 30, 2023, December 31, 2022, and December 25, 2021, respectively.

1 unchanged sentence

The expense will be recognized as a charge to earnings over a weighted average period of approximately 0.50 years.

The weighted-average grant-date fair value of share options granted during the years 2021 and 2020 was $ 3.23 , and $ 2.55 , respectively.

The weighted-average grant-date fair value of share options granted during the year 2021 was $ 3.23 .

The total intrinsic value of share options exercised during the years ended 2023, 2022, and 2021 was $ 162 , $ 893 , and $ 1,594 , respectively.

3 unchanged sentences

The associated expense is recognized over the service period.

There were no restricted stock award activity under the 2014 Equity Incentive Plan for the year ended December 30, 2023.

Restricted stock compensation expense of $ 346 and $ 624 was recognized in the

66 | December 30, 2023 Form 10-K

A summary of the restricted stock activity under the 2014 Equity Incentive Plan for the year ended December 31, 2022 is presented below (share amounts in thousands):

Number of Shares Weighted Avg.

Grant Date Fair Value

(in whole dollars)

Unvested at December 25, 2021

Vested ( 89 )

Forfeited or expired —

Unvested at December 31, 2022

Restricted stock compensation expense of $ 346 , $ 624 , and $ 1,165 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the fiscal years ended December 31, 2022, December 25, 2021, and December 26, 2020, respectively.

accompanying Consolidated Statements of Comprehensive Loss for the fiscal years ended December 31, 2022, and December 25, 2021, respectively.

Restricted Stock Units

The Restricted Stock Units ("RSUs") granted to employees for service generally vest after three years, subject to continued employment.

The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date.

A summary of the restricted stock unit activity under the 2014 Equity Incentive Plan for the year ended December 30, 2023 is presented below (share amounts in thousands):

5 unchanged sentences

Outstanding at December 30, 2023

Restricted stock compensation expense of $ 357 and $ 661 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the fiscal year ended December 31, 2022 and December 25, 2021, respectively.

Restricted stock compensation expense of $ 582 , $ 357 and $ 661 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

As of December 30, 2023, there was $ 55 of unrecognized compensation expense for unvested common options.

8 unchanged sentences

Expected terms 6.25 years

65 | December 31, 2022 Form 10-K

Stock Options

2 unchanged sentences

A summary of the stock option activity under the 2021 Equity Inventive Plan for the year ended December 30, 2023 is presented below (share amounts in thousands):

67 | December 30, 2023 Form 10-K

Number of Shares Weighted Avg.

3 unchanged sentences

Outstanding at December 31, 2022

751 $ 9.98 9.08 years

Forfeited or expired ( 30 )

2 unchanged sentences

Exercisable at December 30, 2023

In fiscal year ended December 31, 2022 and December 25, 2021 no options were exercised.

Stock option compensation expense of $ 543 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022.

In December 25, 2021 and December 26, 2020 there was not any stock compensation expense.

180 $ 9.98 8.09 years

In fiscal years ended December 30, 2023 and December 31, 2022, no options were exercised.

Stock option compensation expense of $ 1,124 and $ 543 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the years ended December 30, 2023 and December 31, 2022.

In December 25, 2021 there was not any stock compensation expense.

As of December 30, 2023, there was $ 3,237 of unrecognized compensation expense for unvested common options.

13 unchanged sentences

Outstanding at December 30, 2023

Restricted stock compensation expense of $ 3,810 and $ 336 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the fiscal year ended December 31, 2022 and December 25, 2021, respectively.

As of December 31, 2022, there was $ 7,416 of unrecognized compensation expense for unvested common options.

Restricted stock compensation expense of $ 6,440 , $ 3,810 and $ 336 was recognized in the accompanying Consolidated Statements of Comprehensive Loss for the fiscal years ended December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

As of December 30, 2023, there was $ 12,937 of unrecognized compensation expense for unvested common stock options.

The expense will be recognized as a charge to earnings over a weighted average period of approximately 1.18 years.

3 unchanged sentences

The option period commences on the first payroll date in January, April, July, and October of each year and ends approximately three months later on the last business day in March, June, September or December.

No employee may be granted an option under the Plan if, immediately after the option is granted, the employee would own stock possessing five

66 | December 31, 2022 Form 10-K

percent or more of the total combined voting power or value of all classes of stock of the Company.

No employee may be granted an option under the Plan if, immediately after the option is granted, the employee would own stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company.

The first option period began on January 1, 2022 and the first purchase was made in April of 2022.

Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period.

As of the December 31, 2022, there was approximately $ 314 of compensation expense related to the ESPP.

For the years ended December 30, 2023 and December 31, 2022, there was approximately $ 355 and $ 314 of compensation expense related to the ESPP.

68 | December 30, 2023 Form 10-K

EARNINGS PER SHARE

31 unchanged sentences

The Company measures those instruments at fair value and recognizes changes in the fair value of derivatives in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures.

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The Company does not enter into derivative transactions for speculative purposes and, therefore, holds no derivative instruments for trading purposes.

Interest Rate Swap Agreements

On January 8, 2018, the Company entered into a new forward Interest Rate Swap Agreement ("2018 Swap 1") with three year terms for $ 90,000 notional amount.

The forward start date of the 2018 Swap was September 30, 2018 and the termination date is June 30, 2021.

The 2018 Swap 1 has a fixed interest rate of 2.3 % plus the applicable interest rate margin of 4.0 % for an effective rate of 6.3 %.

The 2018 Swap 1 was terminated on June 30, 2021.

In accordance with ASC 815, the 2018 Swap 1 was not designated as a cash flow hedge and therefore changes in fair value were recorded in other (income) expense on the Company's Statements of Comprehensive Loss.

On November 8, 2018, the Company entered into another new forward Interest Rate Swap Agreement ("2018 Swap 2") for $ 60,000 notional amount.

The forward start date of the 2018 Swap 2 was November 30, 2018 and the termination date is November 30, 2022.

The 2018 Swap 2 has a pay fixed interest rate of 3.1 % plus the applicable interest rate margin of 4.0 % for an effective rate of 7.1 %.

The 2018 Swap 2 was effectively terminated on July 16, 2021 in connection with the Merger as described in Note 3 - Merger Agreement.

In accordance with ASC 815, the 2018 Swap 2 was not designated as a cash flow hedge and therefore changes in fair value were recorded in (gain) loss on mark-to-market adjustments on the Company's Statement of Comprehensive Loss.

69 | December 30, 2023 Form 10-K

On July 9, 2021, the Company entered into an interest swap agreement ("2021 Swap 1") for a notional amount of $ 144,000 .

The forward start date of the 2021 Swap 1 was July 30, 2021 and the termination date is July 31, 2024.

The 2021 Swap 1 has a determined pay fixed interest rate of 0.75 %.

In accordance with ASC 815, the Company determined the 2021 Swap 1 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive income into interest expense in the same period during which the hedged transactions affect earnings.

Originally, the 2021 Swap 1 has a determined pay fixed interest rate of 0.75 %.

As of June 30, 2023 the Company modified the terms of the swaps to replace the LIBOR-based reference rates with SOFR-based reference rates, in accordance with the respective swap agreements and market conventions.

This modification resulted in a determined pay fixed interest rate of 0.74%.

In accordance with ASC 815, the Company determined the 2021 Swap 1 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive (loss) income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive (loss) income into interest expense in the same period during which the hedged transactions affect earnings.

On July 9, 2021, the Company entered into an interest swap agreement ("2021 Swap 2") for a notional amount of $ 216,000 .

The forward start date of the 2021 Swap 2 was July 30, 2021 and the termination date is July 31, 2024.

Originally, the 2021 Swap 2 has a determined pay fixed interest rate of 0.76 %.

This modification resulted in a determined pay fixed interest rate of 0.74%.

In accordance with ASC 815, the Company determined the 2021 Swap 2 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive (loss) income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive (loss) income into interest expense in the same period during which the hedged transactions affect earnings.

On December 19, 2023, the Company entered into an interest swap agreement ("2024 Swap 1") for a notional amount of $ 144,000 .

The forward start date of the 2024 Swap 1 is July 21, 2024 and the termination date is January 31, 2027.

The 2024 Swap 1 has a determined pay fixed interest rate of 3.8 %.

In accordance with ASC 815, the Company determined the 2021 Swap 2 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive income into interest expense in the same period during which the hedged transactions affect earnings.

On July 16, 2021, the Company modified its original 2018 Swap 2 derivative instrument ("2021 Swap 3") for a notional amount of $ 60,000 .

The forward start date of the 2021 Swap 3 was July 30, 2021 and the termination date is November 30, 2022.

In accordance with ASC 815, the Company determined the 2024 Swap 1 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive (loss) income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive (loss) income into interest expense in the same period during which the hedged transactions affect earnings.

On December 19, 2023, the Company entered into an interest swap agreement ("2024 Swap 2") for a notional amount of $ 216,000 .

The forward start date of the 2024 Swap 2 was July 21, 2024 and the termination date is January 31, 2027.

The 2024 Swap 2 has a determined pay fixed interest rate of 3.62 %.

In accordance with ASC 815, the Company determined the 2021 Swap 3 constituted an effective cash flow hedge and therefore changes in fair value are recorded within accumulated other comprehensive loss within the Company's Consolidated Balance Sheets and the deferred gains or losses are reclassified out of other comprehensive income into interest expense in the same period during which the hedged transactions affect earnings.

Due to an other-than-insignificant financing element from the modification, the swap entered into during 2021 is considered a hybrid instrument, with a financing component treated as a debt instrument with an embedded at-market derivative.

Within the Company’s consolidated balance sheets, the financing components are carried at amortized cost and the embedded at-market derivatives are carried at fair value.

68 | December 31, 2022 Form 10-K

In accordance with ASC 815, the Company determined the 2024 Swap 2 constituted an effective cash flow hedge and therefore changes in fair value are recorded within other comprehensive (loss) income within the Company's Statement of Comprehensive Loss and the deferred gains or losses are reclassified out of other comprehensive (loss) income into interest expense in the same period during which the hedged transactions affect earnings.

The following table summarizes the Company's derivatives financial instruments:

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Derivatives designated as hedging instruments:

2021 Swap 1 Other non-current assets $ 8,705 $ 1,513 Other accrued expenses $ — $ ( 170 )

2021 Swap 2 Other non-current assets 13,044 2,250 Other accrued expenses — ( 270 )

2021 Swap 3 Other current assets — 59 Other accrued expenses/other non-current liabilities — ( 1,880 )

2021 Swap 1 Other current/ non-current assets

$ 3,560 $ 8,705 Other accrued expenses $ — $ —

2021 Swap 2 Other current/ non-current assets

5,336 13,044 Other accrued expenses — —

Other current assets 207 — Other non-current liabilities

2024 Swap 2 Other current assets 436 — Other non-current liabilities ( 1,660 ) —

Total hedging instruments $ 9,539 $ 21,749 $ ( 3,273 ) $ —

1 unchanged sentence

Additional information with respect to the fair value of derivative instruments is included in Note 16 - Fair Value Measurements.

70 | December 30, 2023 Form 10-K

Foreign Currency Forward Contracts

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The purpose of the Company's foreign currency forward contracts is to manage the Company's exposure to fluctuations in the exchange rate of the Canadian dollar.

The total notional amount of contracts outstanding was C$ 2,692 million and C$ 4,464 as of December 31, 2022 and December 25, 2021, respectively.

The total fair value of the foreign currency forward contracts was $ 12 as of December 31, 2022 and $ 14 as of December 25, 2021, respectively, and was reported on the accompanying Consolidated Balance Sheets in other current liabilities.

An increase in other income of $95 and decrease of $ 331 was recorded in the Consolidated Statements of Comprehensive Loss for the change in fair value during years ended December 31, 2022 and December 25, 2021, respectively.

As of December 30, 2023, the Company did not have any foreign currency forward contracts.

The total notional amount of contracts outstanding was C$ 2,692 as of December 31, 2022.

The total fair value of the foreign currency forward contracts was $ 12 as of December 31, 2022, and was reported on the accompanying Consolidated Balance Sheets in other current liabilities.

An increase in other income of $ 95 and $ 331 was recorded in the Consolidated Statements of Comprehensive Loss for the change in fair value during year ended December 31, 2022 and December 25, 2021, respectfully.

The Company's foreign currency forward contracts did not qualify for hedge accounting treatment because they did not meet the provisions specified in ASC 815.

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Unobservable inputs reflecting the reporting entity's own assumptions.

69 | December 31, 2022 Form 10-K

The accounting guidance establishes a hierarchy which requires an entity to maximize the use of quoted market prices and minimize the use of unobservable inputs.

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Interest rate swaps — 6,266 — 6,266

Foreign exchange forward contracts — 12 — 12

Contingent consideration payable — — 4,895 4,895

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Interest rate swaps — 21,749 — 21,749

Foreign exchange forward contracts — 14 — 14

Contingent consideration payable — — 11,063 11,063

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Trading securities represent assets held in a Rabbi Trust to fund deferred compensation liabilities and are included as restricted investments on the accompanying Consolidated Balance Sheets.

71 | December 30, 2023 Form 10-K

The Company utilizes interest rate swap contracts to manage our targeted mix of fixed and floating rate debt, and these contracts are valued using observable benchmark rates at commonly quoted intervals for the full term of the swap contracts.

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As of December 30, 2023 and December 31, 2022, the foreign exchange forward contracts were included in other current liabilities on the accompanying Consolidated Balance Sheets.

As of December 30, 2023 and December 31, 2022, the Company's foreign exchange forward contracts were immaterial for disclosure.

The contingent consideration represents future potential earn-out payments related to the Resharp acquisition in fiscal 2019 in which the maximum payout for the contingent consideration is $25.0 million plus 1.8% of net knife-sharpening revenues for five years after the $25.0 million is fully paid and the Instafob acquisition in the first quarter of 2020 where payment is based on 5% of the net sales from 2020 through 2022 plus 1% of net sales from 2023 through 2029.

Refer to Note 6 - Acquisitions for additional details.

The estimated fair value of the contingent earn-out was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting earn-out payments.

The estimated fair value of the contingent earn-outs was determined using a Monte Carlo analysis examining the frequency and mean value of the resulting earn-out payments.

The resulting value captures the risk associated with the form of the payout structure.

The risk neutral method is applied, resulting in a value that captures the risk associated with the form of the payout structure and the projection risk.

The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability's estimated value.

As of December 31, 2022, the total contingent consideration for Resharp was recorded as $ 271 within other accrued expenses and $ 9,729 within other non-current liabilities on the accompanying Consolidated Balance Sheets.

As of December 31, 2022, the total contingent consideration for Instafob was recorded as $ 922 within other accrued expenses and $ 141 within other non-current liabilities on the accompanying Consolidated Balance Sheets.

As of December 25, 2021, the total contingent consideration was recorded as $ 477 within other accrued expenses and $ 11,870 within other non-current liabilities on the accompanying Consolidated Balance Sheets.

The Company recorded a $ 890 decrease in the Resharp contingent consideration liability as of December 31, 2022 compared to December 25, 2021.

The Company recorded a $ 238 decrease in the Instafob contingent consideration liability as of December 31, 2022 compared to December 25, 2021.

The total decrease of $ 1,128 in value was determined by using a simulation model of the Monte Carlo analysis that included updated projections applicable to the liability as of December 31, 2022 compared to the prior valuation period and was recorded within other income in the Consolidated Statements of Comprehensive Loss.

70 | December 31, 2022 Form 10-K

The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the estimated value of the liability.

The current and non-current portions of these obligations are reported separately on the Consolidated Balance Sheets as other accrued expense and other non-current liabilities, respectively.

Subsequent changes in the fair value of the contingent consideration liabilities, as determined by using a simulation model of the Monte Carlo analysis that includes updated projections applicable to the liability, are recorded within other expense (income), net in the Consolidated Statements of Comprehensive Loss.

The table below provides a summary of the changes in fair value of the Company’s contingent considerations (Level 3) for Resharp and Instafob as of December 30, 2023.

Other accrued expense

Other non-current liabilities

Other accrued expense Other non-current liabilities Total

Fair value as of December 31, 2022

$ 271 $ 9,729 $ 922 $ 141 $ 11,063

Fair value of cash consideration paid

( 219 ) — ( 1,013 ) — ( 1,232 )

Change in fair value of contingent consideration 148 ( 5,129 ) 107 ( 62 ) ( 4,936 )

Fair value as of December 30, 2023

$ 200 $ 4,600 $ 16 $ 79 $ 4,895

Cash, restricted investments, accounts receivable, short-term borrowings and accounts payable are reflected in the Consolidated Financial Statements at book value, which approximates fair value, due to the short-term nature of these instruments.

The carrying amount of the long-term debt under the revolving credit facility approximates the fair value at December 30, 2023 and December 31, 2022, as the interest rate is variable and approximates current market rates.

The Company also believes the carrying amount of the long-term debt under the senior term loan approximates the fair value at December 31, 2022 and December 25, 2021 because, while subject to a minimum LIBOR or SOFR floor rate, the interest rate approximates current market rates of debt with similar terms and comparable credit risk.

The Company also believes the carrying amount of the long-term debt under the senior term loan approximates the fair value at December 30, 2023 and December 31, 2022 because, while subject to a minimum SOFR floor rate, the interest rate approximates current market rates of debt with similar terms and comparable credit risk.

Additional information with respect to the derivative instruments is included in Note 15 - Derivatives and Hedging.

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Plans were finalized during the fourth quarter of 2018.

The Company completed restructuring related activities in our Canada segment in 2021.

72 | December 30, 2023 Form 10-K

Company completed restructuring related activities in our Canada segment in 2021.

Charges incurred in part of the Canada Restructuring Plan included:

December 25, 2021 Year Ended

December 25, 2021

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Severance 466

Total $ 497 $ 4,830

(1) Facility consolidation includes inventory valuation adjustments associated with SKU rationalization, labor expense related to organizing inventory and equipment in preparation for the facility consolidation, consulting and legal fees related to the project, and other expenses.

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United States Restructuring Plan

71 | December 31, 2022 Form 10-K

During fiscal 2019, the Company implemented a plan to restructure the management and operations within the United States to achieve synergies and cost savings associated with the recent acquisitions described in Note 6 - Acquisitions.

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Charges incurred in part of the United States Restructuring Plan included:

December 25, 2021 Year Ended December 26, 2020

Year Ended December 25, 2021

Management realignment & integration

1 unchanged sentence

Facility closures

Severance — 903

Inventory valuation adjustments —

Other 319 1,422

Total $ 430 $ 4,779

The following represents a roll forward of the restructuring reserves for the year ended December 30, 2023:

73 | December 30, 2023 Form 10-K

Severance and related expense

3 unchanged sentences

Balance as of December 25, 2021 $ —

During the year ended December 31, 2022, the Company did not have severance or related expense related to the United States Restructuring Plan.

During the years ended December 30, 2023 and December 31, 2022, the Company did not have severance or related expense related to the United States Restructuring Plan.

COMMITMENTS AND CONTINGENCIES

Cybersecurity Incident

In late May 2023, the Company experienced a ransomware attack relating to certain systems on its network (the “Cybersecurity Incident”).

The Company promptly initiated an investigation, engaged the services of cyber-security experts and outside advisors and worked with appropriate law enforcement authorities to contain, assess and remediate the Cybersecurity Incident.

The Cybersecurity Incident affected certain information technology systems.

As part of the containment effort, affected systems were suspended and the Company elected to temporarily suspend additional systems in an abundance of caution.

The Company reactivated and restored its operational systems over the course of the week following the Cybersecurity Incident.

The Cybersecurity Incident related costs net of an expected insurance receivable totaled $1.0 million.

System remediation efforts regarding the Cybersecurity Incident have concluded as of December 30, 2023.

The Company expects to incur ongoing costs related to costs for ongoing efforts to enhance data security in response to ongoing developments in the cybersecurity landscape.

Insurance Coverage

The Company self-insures our general liability including products liability, automotive liability, and workers' compensation losses up to $ 500 per occurrence.

Catastrophic coverage has been purchased from third party insurers for occurrences in excess of $ 250 up to $ 60,000 .

Catastrophic coverage has been purchased from third party insurers for occurrences up to $ 60,000 .

The two risk areas involving the most significant accounting estimates are workers' compensation and automotive liability.

8 unchanged sentences

The Company believes that the liability of approximately $ 2,851 recorded for such group health insurance reserves is adequate as of December 30, 2023.

Import Duties

The Company imports large quantities of fastener products which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions.

The Company could be

The Company could be subject to the assessment of additional duties and interest if it or its suppliers fail to comply with customs regulations or similar laws.

Department of Commerce (the "Department”) has received requests from petitioners to conduct administrative reviews of compliance with anti-dumping duty and countervailing duty laws

74 | December 30, 2023 Form 10-K

subject to the assessment of additional duties and interest if it or its suppliers fail to comply with customs regulations or similar laws.

Department of Commerce (the "Department”) has received requests from petitioners to conduct administrative reviews of compliance with anti-dumping duty and countervailing duty laws for certain nails products sourced from Asian countries.

for certain nails products sourced from Asian countries.

The Company sourced products under review from vendors in China and Taiwan during the periods selected for review.

The Company accrues for the duty expense once it is determined to be probable and the amount can be reasonably estimated.

As of December 30, 2023, the Company is involved in litigation arising in the normal course of business.

In management’s opinion, any such litigation is not expected to have a material adverse effect on the consolidated financial condition, results of operations, or cash flows .

Hy-Ko Litigation

2 unchanged sentences

2:21-cv-0197.

Hy-Ko's complaint alleged that Hillman's KeyKrafter and PKOR key duplication machines infringed certain patents, and sought damages and injunctive relief against Hillman Group.

Hy-Ko's complaint alleged that Hillman's KeyKrafter and PKOR key duplication machines infringed certain patents, and sought damages and injunctive relief against the Hillman Group.

On October 7, 2022, following a jury trial commencing October 3, 2022, the jury rendered a verdict finding that Hillman infringed two Hy-Ko patents, but also found that there was no willfulness in the infringement.

11 unchanged sentences

On June 14, 2021, Hillman Group and KeyMe entered into a Settlement Agreement which globally resolved all pending legal disputes, including the Texas and Delaware district court actions discussed above.

In addition to the matters described above, we are involved in litigation arising in the normal course of business.

In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

STATEMENT OF CASH FLOWS

7 unchanged sentences

Income taxes, net of refunds 5,356 2,993 2,500

As of December 30, 2023, capital expenditures recorded in accounts payable totaled $ 1,186 .

75 | December 30, 2023 Form 10-K

The Company fully repaid the junior subordinated debentures in connection with the Merger in 2021.

See Note 9 - Long-Term Debt for additional details.

73 | December 31, 2022 Form 10-K

CONCENTRATION OF CREDIT RISKS

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The Canada segment distributes fasteners and related hardware items, threaded rod, keys, key duplicating systems, accessories, personal protective equipment, and identification items, such as tags and letters, numbers, and signs to hardware stores, home centers, mass merchants, industrial distributors, automotive aftermarket distributors, and other retail outlets and industrial Original Equipment Manufacturers (“OEMs”) in Canada.

The Canada segment also produces fasteners, stampings, fittings, and processes threaded parts for automotive suppliers and industrial OEMs.

The Company uses profit or loss from operations to evaluate the performance of its segments, and does not include segment assets or non-operating income/expense items for management reporting purposes.

Profit or loss

76 | December 30, 2023 Form 10-K

from operations is defined as income from operations before interest and tax expenses.

Canada segment also produces fasteners, stampings, fittings, and processes threaded parts for automotive suppliers and industrial OEMs.

Profit or loss from operations is defined as income from operations before interest and tax expenses.

Segment revenue excludes sales between segments, which is consistent with the segment revenue information provided to the Company's Chief Operating Decision Maker ("CODM").

The table below presents revenues and income (loss) from operations for the reportable segments for the years ended December 31, 2022, December 25, 2021, and December 26, 2020.

The table below presents revenues and income from operations for the reportable segments for the years ended December 30, 2023, December 31, 2022, and December 25, 2021.

Certain amounts in the prior year presentation between segments were reclassified to conform to the current year’s presentation.

Year Ended December 30, 2023

9 unchanged sentences

Total segment income from operations $ 60,928 $ 39,893 $ 10,314

SUBSEQUENT EVENTS

Koch Industries, Inc.

On January 11, 2024, the Company completed the acquisition of Koch Industries, Inc ("Koch"), a premier provider and merchandiser of rope and twine, chain and wire rope, and related hardware products for a total purchase price of $23,956.

Koch has business operations throughout North America and its financial results will reside in the Company's Hardware and Protective Solutions reportable segment.

77 | December 30, 2023 Form 10-K

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data