What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 319 added, 478 removed, 1011 unchanged (44% of the section changed)

3 unchanged sentences

Report of Independent Registered Public Accounting Firm - Deloitte & Touche LLP

Report of Independent Registered Public Accounting Firm - KPMG LLP

Consolidated Financial Statements:

Consolidated Balance Sheets

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income ( Loss )

Consolidated Statements of Cash Flows

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We reviewed the results of management's assessment with the Audit Committee of Hillman Solutions Corp.

/s/ DOUGLAS J.

CAHILL /s/ ROBERT O.

Cahill Robert O.

/s/ JON MICHAEL ADINOLFI

/s/ ROBERT O.

Jon Michael Adinolfi

President and Chief Executive Officer Chief Financial Officer

6 unchanged sentences

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

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.

and subsidiaries (the "Company") as of December 28, 2024 and December 30, 2023, the related consolidated statements of comprehensive income (loss), cash flows, and stockholders’ equity, for each of the three years in the period ended December 28, 2024, 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 28, 2024 and December 30, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 28, 2024, 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 28, 2024, 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 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

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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 EBITDA 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 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:

Our audit procedures related to the estimates of projected net sales and EBITDA growth rates and the selection of 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:

• We performed a sensitivity analysis of the projected net sales and EBITDA growth rates and selected 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) 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 internal 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:

◦ Testing the source information underlying the determination of discount rates and long-term net sales growth rates, including the mathematical accuracy of the calculations.

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

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36 | December 28, 2024 Form 10-K

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors Hillman Solutions Corp.:

Opinion on the Consolidated Financial Statements

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.

Basis for Opinion

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 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 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 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 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.

Cincinnati, Ohio

March 16, 2022

38 | December 30, 2023 Form 10-K

HILLMAN SOLUTIONS CORP.

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Income and other taxes 10,377 6,469

Interest 343 697

Other accrued expenses 31,843 21,309

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Stockholders' equity:

Common stock, $ 0.0001 par, 500,000,000 shares authorized, 194,913,124 issued and outstanding at December 30, 2023 and 194,548,411 issued and outstanding at December 31, 2022

Common stock, 0.0001 par, 500,000,000 shares authorized, 196,705,710 and 194,913,124 issued and outstanding at December 28, 2024 and December 30, 2023, respectfully

Additional paid-in capital 1,442,958 1,418,535

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE Income (LOSS)

(dollars in thousands)

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Amortization 61,274 62,309 62,195

Management fees to related party — — 270

Other expense (income), net 361 12,843 ( 1,119 )

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

Income from operations 88,801 60,928 39,893

Gain on change in fair value of warrant liability — — ( 14,734 )

Interest expense, net 59,241 68,310 54,560

Interest expense on junior subordinated debentures — — 7,775

Investment income on trust common securities — — ( 233 )

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

— — ( 1,685 )

Refinancing costs 3,008 — —

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

Income tax expense (benefit) 2,207 1,769 ( 11,784 )

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

Basic and diluted loss per share $ ( 0.05 ) $ ( 0.08 ) $ ( 0.28 )

Weighted average basic and diluted shares outstanding 194,722 194,249 134,699

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

Other comprehensive (loss) income:

Income (loss) before income taxes 26,552 ( 7,382 ) ( 14,667 )

Income tax expense 9,297 2,207 1,769

Net income (loss) $ 17,255 $ ( 9,589 ) $ ( 16,436 )

Basic income (loss) per share $ 0.09 $ ( 0.05 ) $ ( 0.08 )

Weighted average basic shares outstanding 196,108 194,722 194,249

Diluted income (loss) per share $ 0.09 $ ( 0.05 ) $ ( 0.08 )

Weighted average diluted shares outstanding 198,915 194,722 194,249

Net income (loss) from above $ 17,255 $ ( 9,589 ) $ ( 16,436 )

Other comprehensive income (loss):

Foreign currency translation adjustments ( 16,471 ) 4,801 ( 7,615 )

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Total other comprehensive (loss) income ( 13,836 ) ( 6,796 ) 6,130

( 6,796 ) 6,130 2,234

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

Comprehensive income (loss) $ 3,419 $ ( 16,385 ) $ ( 10,306 )

The Notes to Consolidated Financial Statements are an integral part of these statements.

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Cash flows from operating activities:

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

Adjustments to reconcile net loss to net cash provided by (used for) operating activities:

Net income (loss) $ 17,255 $ ( 9,589 ) $ ( 16,436 )

Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:

Depreciation and amortization 130,040 121,640 120,010

(Gain) loss on dispositions of property and equipment 56 ( 34 ) ( 26 )

( 34 ) ( 26 ) 221

Impairment charges — 24,600 —

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Deferred financing and original issue discount amortization 5,065 5,323 3,582

Loss on debt restructuring, net of third party fees paid — — ( 8,372 )

Loss on debt restructuring 3,008 — —

Cash paid to third parties in connection with debt restructuring ( 1,554 ) — —

Stock-based compensation expense 13,463 12,004 13,524

Change in fair value of warrant liabilities — — ( 14,734 )

Customer bankruptcy reserve 8,640 — —

Change in fair value of contingent consideration 228 ( 4,936 ) ( 1,128 )

Other non-cash interest and change in value of interest rate swap — — ( 1,685 )

Changes in operating items:

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Accounts payable ( 7,784 ) 8,029 ( 53,760 )

Accrued salaries and wages 12,707 6,750 7,553

Other accrued liabilities 9,089 ( 7,889 ) ( 12,703 )

Net cash provided by (used for) by operating activities 238,035 119,011 ( 110,254 )

Net cash provided by operating activities 183,336 238,035 119,011

Cash flows from investing activities:

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Cash flows from financing activities:

Borrowings on senior term loans, net of discount — — 883,872

Repayments of senior term loans ( 106,383 ) ( 88,510 ) ( 10,638 )

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Repayments of revolving credit loans ( 115,000 ) ( 250,000 ) ( 265,000 )

Repayments of senior notes — — ( 330,000 )

Financing fees ( 33 ) — —

Proceeds from recapitalization of Landcadia, net of transaction costs — — 455,161

Proceeds from sale of common stock in PIPE, net of issuance costs — — 363,301

Repayment of junior subordinated debentures — — ( 108,707 )

Principal payments under finance lease obligations ( 3,682 ) ( 2,410 ) ( 1,470 )

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Other financing activities ( 567 ) 9 1,777

Net cash (used for) provided by financing activities ( 161,976 ) ( 28,722 ) 193,329

Net cash used for financing activities ( 39,268 ) ( 161,976 ) ( 28,722 )

Effect of exchange rate changes on cash 5,286 ( 735 ) ( 991 )

Net increase (decrease) in cash and cash equivalents 7,472 16,476 ( 6,915 )

Net increase in cash and cash equivalents 5,957 7,472 16,476

Cash and cash equivalents at beginning of period 38,553 31,081 14,605

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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

Net Loss — — — ( 9,589 ) — ( 9,589 )

Net income — — — 17,255 — 17,255

Stock option activity, stock awards and employee stock purchase plan 1,793 — 24,423 — — 24,423

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References to 2024, 2023, and 2022 are for fiscal years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

On July 14, 2021, privately held HMAN Group Holdings Inc.

("Old Hillman"), and Landcadia Holdings III, Inc.

(“Landcadia” and after the Business Combination described herein, “New Hillman”), a special purpose acquisition company ("SPAC") consummated the previously announced business combination (the “Closing”) pursuant to the terms of the Agreement and Plan of Merger, dated as of January 24, 2021 (as amended on March 12, 2021, the "Merger Agreement”) by and among Landcadia, Helios Sun Merger Sub, a wholly-owned subsidiary of Landcadia (“Merger Sub”), HMAN Group Holdings Inc., a Delaware corporation (“Hillman Holdco”) and CCMP Sellers’ Representative, LLC, a Delaware Limited Liability Company in its capacity as the Stockholder Representative thereunder (the “Stockholder Representative”).

Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Hillman Holdco with Hillman Holdco surviving the merger as a wholly owned subsidiary of New Hillman, which was renamed “Hillman Solutions Corp.” (the “Merger” and together with the other transactions contemplated by the Merger Agreement, the “Business Combination”).

Unless the context indicates otherwise, the discussion of the Company and its financial condition and results of operations is with respect to New Hillman following the closing date and Old Hillman prior to the closing date.

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 began trading on The Nasdaq Stock Market under the trading symbol “HLMN”.

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

"Hillman Solutions Corp.," "HMan Group Holdings Inc.," and "The Hillman Companies, Inc." are holding companies with no other operations, cash flows, material assets or liabilities other than the equity interests in "The Hillman Group, Inc.," which is the borrower under our credit facility.

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

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

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.

In 2024 and 2023, the Company had a 52 week fiscal year, whereas in 2022, the Company had its first 53 week fiscal year.

Nature of Operations:

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(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;

2 unchanged sentences

personal protective equipment such as gloves and eye-wear;

rope and chain;

builder's hardware;

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The Canada segment also produces fasteners, stampings, fittings, and processes threaded parts for automotive suppliers, industrial Original Equipment Manufacturers (“OEMs”), and industrial distributors.

43 | December 30, 2023 Form 10-K

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The allowance for doubtful accounts was $ 2,827 and $ 2,770 as of December 28, 2024 and December 30, 2023, respectively.

41 | December 28, 2024 Form 10-K

In the years ended December 28, 2024 and December 30, 2023, the Company entered into agreements to sell, on an ongoing basis and without recourse, certain trade accounts receivable.

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When assets are sold or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and the resulting gain or loss is reflected in income from operations.

44 | December 30, 2023 Form 10-K

Property and equipment, net, consists of the following at December 28, 2024 and December 30, 2023:

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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 EBITDA growth rates.

Assumptions critical to our fair value estimates

42 | December 28, 2024 Form 10-K

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 2024, 2023, and 2022 indicated that the fair value of each reporting unit was in excess of its carrying value.

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Other intangibles, net, as of December 28, 2024 and December 30, 2023 consist of the following:

45 | December 30, 2023 Form 10-K

(Years) December 28, 2024 December 30, 2023

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Long-Lived Assets:

43 | December 28, 2024 Form 10-K

Long-lived assets, such as property and equipment and definite-lived intangible assets, are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.

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$ 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.

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

No other impairment charges were recorded in 2024, 2023, or 2022.

1 unchanged sentence

Income Taxes:

46 | December 30, 2023 Form 10-K

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

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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) expense for income taxes.

Interest and penalties related to income taxes are included in income tax expense for income taxes.

Contingent Consideration:

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These reserves are classified as other current and other long-term liabilities within the balance sheets.

44 | December 28, 2024 Form 10-K

The Company self-insures our group health claims up to an annual stop loss limit of $ 300 per participant.

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Retirement benefit costs were $ 4,832 , $ 4,315 , and $ 4,055 in the years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively .

47 | December 30, 2023 Form 10-K

Revenue Recognition:

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

45 | December 28, 2024 Form 10-K

Hardware and Protective Solutions Robotics and Digital Solutions Canada Total Revenue

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Consolidated $ 1,068,734 $ 245,633 $ 171,961 $ 1,486,328

48 | December 30, 2023 Form 10-K

The following table disaggregates our revenue by geographic location:

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

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.

46 | December 28, 2024 Form 10-K

Hardware and Protective Solutions revenues consist primarily of the delivery of fasteners, anchors, specialty fastening products, rope and chain, and personal protective equipment such as gloves and eye-wear as well as in-store merchandising services for the related product category.

Robotics and Digital Solutions revenues consist primarily of sales of keys and identification tags through self-service key duplication and engraving kiosks.

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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.

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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.

49 | December 30, 2023 Form 10-K

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:

The costs incurred to ship product to customers, including freight and handling expenses, are included in selling, warehouse, general, and administrative (“SG&A”) expenses on the Company's Consolidated Statements of Comprehensive Loss.

Shipping and handling costs were $ 53,438 , $ 53,288 , and $ 59,911 in the years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

Research and Development:

consisting primarily of internal wages and benefits in connection with improvements to the fastening products along with the key duplicating and engraving machines.

The Company expenses research and development costs, which are included in selling, warehouse, general, and administrative (“SG&A”) expenses on the Company's Consolidated Statements of Comprehensive Income (Loss) consisting primarily of internal wages and benefits in connection with improvements to the fastening products along with the key duplicating and engraving machines.

The Company's research and development costs were $ 1,333 , $ 2,562 , and $ 2,349 in the years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

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2021 Equity Incentive Plan

Effective July 14, 2021, in connection with the Merger, the Company established the 2021 Equity Incentive Plan.

Effective July 14, 2021, the Company established the 2021 Equity Incentive Plan.

Under the 2021 Equity Incentive Plan, the Company may grant options, stock appreciation rights, restricted stock, and other stock-based awards.

47 | December 28, 2024 Form 10-K

Hillman reflects the options granted in accordance with Accounting Standards Codification 718, Compensation - Stock Compensation ("ASC 718").

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2014 Equity Incentive Plan

Prior to the Merger, the Company had a stock-based employee compensation plan pursuant to which the Company granted options, stock appreciation rights, restricted stock, and other stock-based awards.

Prior to 2021, the Company had a stock-based employee compensation plan pursuant to which the Company granted options, stock appreciation rights, restricted stock, and other stock-based awards.

Hillman reflects the options granted in its stand-alone Consolidated Financial Statements in accordance with Accounting Standards Codification 718, Compensation — Stock Compensation (“ASC 718”).

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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

50 | December 30, 2023 Form 10-K

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

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, 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.

The Company applied assumptions in the determination of the fair value of the common stock underlying the stock-based awards granted.

With the assistance of an independent third-party specialist, management assessed the value of the Company’s common stock based on a combination of the income approach and guideline public company method.

Factors that were considered in connection with estimating these grant date fair values are as follows:

• The Company’s financial results and future financial projections;

• The market value of equity interests in substantially similar businesses, which equity interests can be valued through non-discretionary, objective means;

• The lack of marketability of the Company’s common stock;

• The likelihood of achieving a liquidity event, such as an initial public offering or business combination, given prevailing market conditions;

• Industry outlook;

• General economic outlook, including economic growth, inflation and unemployment, interest rate environment and global economic trends

Determination of the fair value of our common stock also involved the application of multiple valuation methodologies and approaches, with varying weighting applied to each methodology as of the grant date.

Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding the Company’s expected future revenue, expenses, and future cash flows;

discount rates;

market multiples;

the selection of comparable companies;

and the probability of possible future events.

Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact the valuations and may have a material impact on the valuation of our common stock.

Prior to the Merger, the Company revalued the common stock annually, unless changes in facts or circumstances indicate the need for a mid-year revaluation.

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

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

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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

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

48 | December 28, 2024 Form 10-K

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.

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.

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If the derivative is designated as a cash flow hedge and the hedging relationship qualifies for hedge accounting, the effective portion of the change in the fair value of the derivative is recorded in other comprehensive income or loss.

The change in fair value for instruments not qualifying for hedge accounting are recognized in the Statement of Comprehensive Loss in the period of the change.

The change in fair value for instruments not qualifying for hedge accounting are recognized in the Statement of Comprehensive Income (Loss) in the period of the change.

See Note 13 - Derivatives and Hedging for additional information.

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Actual results may differ from these estimates.

MERGER AGREEMENT

On July 14, 2021, the Merger between HMAN and Landcadia was consummated.

Pursuant to the Merger Agreement, at the closing date of the Merger, the outstanding shares of Old Hillman common stock were converted into 91,220,901 shares of New Hillman common stock as calculated pursuant to the Merger Agreement.

The Merger was accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP.

Under this method of accounting, Landcadia is treated as the “acquired” company for financial reporting purposes.

This determination was based primarily on Old Hillman having the ability to appoint a majority of the initial Board of the combined entity, Old Hillman's senior management comprising the majority of the senior management of the combined company, and the ongoing operations of Old Hillman comprising the ongoing operations of the combined company.

Accordingly, for accounting purposes, the Merger was treated as the equivalent of New Hillman issuing shares for the net assets of Landcadia, accompanied by a recapitalization.

The net assets of Landcadia were stated at carrying value.

The historical statements of the combined entity prior to the Merger are presented as those of Old Hillman with the exception of the shares and par value of equity recast to reflect the exchange ratio on the Closing Date, adjusted on a retroactive basis.

A summary of the impact of the reverse recapitalization on the cash, cash equivalents and restricted cash, change in net assets and the change in common shares is included in the tables below.

Landcadia cash and cash equivalents (1)

PIPE investment proceeds (2)

Less cash paid to underwriters and other transaction costs, net of tax (3)

Net change in cash and cash equivalents as a result of recapitalization $ 818,462

Prepaid expenses and other current assets (1)

Accounts payable and other accrued expenses (1)

Warrant liabilities (1)(4)

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

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)

Shares issued to SPAC sponsors and public shareholders (6)

Common shares issued to PIPE investors (2)

Common shares outstanding immediately after the business combination 187,392,901

These assets and liabilities represent the reported balances as of the Closing Date immediately prior to the Business Combination.

The recapitalization of the assets and liabilities from Landcadia's balance sheet was a non-cash financing activity.

In connection with the Business Combination, Landcadia entered into subscription agreements with certain investors (the “PIPE Investors”), pursuant to which it issued 37,500,000 shares of common stock at $ 10.00 per share (the “PIPE Shares”) for an aggregate purchase price of $ 375,000 (the “PIPE Financing”), which closed simultaneously with the consummation of the Business Combination.

In connection with the Business Combination, the Company incurred $ 36,140 of transaction costs, net of tax, consisting of underwriting, legal and other professional fees which were recorded as accumulated deficit as a reduction of proceeds.

The warrants acquired in the Merger include (a) redeemable warrants issued by Landcadia and sold as part of the units in the Landcadia IPO (whether they were purchased in the Landcadia IPO or thereafter in the open market), which were exercisable for an aggregate of 16,666,628 shares of common stock at a purchase price of $ 11.50 per share (the “Public Warrants”) and (b) warrants issued by Landcadia to the Sponsors in a private placement simultaneously with the closing of the Landcadia IPO, which were exercisable for an aggregate of 8,000,000 shares of common stock at a purchase price of $ 11.50 per share (the “Private Placement Warrants”).

The Company issued 91,220,901 common shares in exchange for 553,439 Old Hillman common shares resulting in an exchange ratio of 164.83 .

This exchange ratio was applied to Old Hillman's common shares which further impacted common stock held at par value and additional paid in capital as well as the calculation of weighted average shares outstanding and loss per common share.

The Company issued 50,000,000 shares to the public shareholders and 8,672,000 shares to the SPAC sponsor shareholders at the Closing Date .

RECENT ACCOUNTING PRONOUNCEMENTS

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

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 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.

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.

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):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination.

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 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 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.

ASU 2022-01 renames that method the "portfolio layer'' method.

Under current guidance, the last-of-layer method enables an entity to apply fair value hedging to a stated amount of a closed portfolio of prepayable financial assets without having to consider prepayment risk or credit risk when measuring those assets.

ASU 2022-01 expands the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and non-prepayable financial assets.

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

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.

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

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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.

The Company has adopted the new standard in this Form 10-K, see Note 18 - Segment Reporting and Geographic Information for more information.

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

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

49 | December 28, 2024 Form 10-K

On November 4, 2024, the FASB issued ASU 2023-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses.

This ASU mandates that public business entities provide detailed disclosures in the notes to their financial statements, breaking down certain expense categories presented on the income statement into specified natural expense components.

This enhanced disclosure aims to provide investors with more detailed information about the types of expenses included in commonly presented expense captions, such as cost of sales, selling, general, and administrative expenses (SG&A), and research and development.

The amendments introduced by ASU 2024-03 are effective for public business entities for fiscal years beginning after December 15, 2026.

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

RELATED PARTY TRANSACTIONS

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.

Hillman, Jefferies Financial Group Inc., certain other financial sponsors, certain CCMP affiliated investors and certain Oak Hill affiliated 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.

Scharfenberger each resigned from the 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.

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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.

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 and $ 351 for the years ended December 31, 2022 and December 25, 2021, respectively.

Hillman leased 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.

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 $ 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

On April 16, 2021, the Company completed the acquisition of Oz Post International, LLC ("OZCO"), a leading manufacturer of superior quality hardware that offers structural fasteners and connectors used for decks, fences and other outdoor structures, for a total purchase price of $ 39,834 .

The Company entered into an amendment ("OZCO Amendment") to the term loan credit agreement dated May 31, 2018 (the "2018 Term Loan"), which provided $ 35,000 of incremental term loan funds to be used to finance the acquisition.

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

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

John Swygert, Executive Chairman of Ollie's since 2025, and before that President and Chief Executive Officer of Ollie's, is a member of our Board of Directors.

Sales to related parties were $ 622 , $ 1,583 , and $ 687 for the years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

Monkey Hook, LLC

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.

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 due one year after closing.

During the fourth quarter of 2024, the remaining hold-back of $54, which reflects the balance owed to Ajustlock after deducting certain amounts owed by Ajustlock to the Company, was paid to satisfy the full purchase price.

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.

Koch Industries, Inc.

50 | December 28, 2024 Form 10-K

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 $ 23,783 .

In the second quarter of 2024, the Company had a final net working capital adjustment of $173, which reduced goodwill and the purchase price of the acquisition from an estimated $23,956 at closing in the first quarter of 2024 to $ 23,783 .

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

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

Inventory $ 20,194

Other current assets 275

Property and equipment 586

Goodwill 3,048

Customer relationships 4,000

Trade names 300

Total assets acquired $ 28,403

Liabilities assumed ( 4,620 )

Total purchase price $ 23,783

Net sales and operating income from Koch included in the Company's Condensed Consolidated Statement of Comprehensive Income (Loss) for the year ended December 28, 2024 were as follows:

Year Ended December 28, 2024

Net sales $ 39,888

Operating income 3,279

Pro forma financial information has not been presented for Koch as the financial results of Koch were insignificant to the financial results of the Company on a standalone basis.

Intex DIY, Inc.

On August 23, 2024, the Company completed the acquisition of Intex DIY, Inc.

("Intex"), a leading supplier of wiping cloths, consumable rags, and cleaning textiles for a total purchase price of $ 34,064 .

This acquisition expands Hillman’s offerings in the cleaning products category.

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

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

Accounts receivable $ 11,981

5 unchanged sentences

Trade names 104

Technology 4,000

Total assets acquired $ 40,775

1 unchanged sentence

Total purchase price $ 34,064

Pro forma financial information has not been presented for OZCO as their associated financial results are insignificant to the financial results of the Company.

Other Acquisitions

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

Net sales and operating income from Intex included in the Company's Condensed Consolidated Statement of Comprehensive Income (Loss) for the year ended December 28, 2024 were as follows:

51 | December 28, 2024 Form 10-K

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:

Year Ended December 28, 2024

Net sales $ 21,075

Operating income 2,037

Pro forma financial information has not been presented for Intex as the financial results of Intex were insignificant to the financial results of the Company on a standalone basis.

Income (loss) before income taxes are comprised of the following components for the periods indicated:

Year Ended December 28, 2024 Year Ended

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Non-United States based operations 8,486 10,520 18,150

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

Income (loss) before income taxes $ 26,552 $ ( 7,382 ) $ ( 14,667 )

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 $ 3,861 as of December 28, 2024 that are available to offset future taxable income.

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

$4,921 of the remaining U.S.

All 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.

Management anticipates utilizing all U.S.

federal NOLs prior to their expiration.

Management anticipates utilizing all remaining U.S.

federal NOLs evenly through 2032 in accordance with the IRC §382 limitation.

The Company has state NOL carryforwards with an aggregate tax benefit of $ 1,666 which expire from 2025 to 2043.

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

A valuation allowance of $ 210 has been maintained for a portion of these tax credits.

The Company has $ 82 of foreign tax credit carryforwards which expire from 2023 to 2026.

A full valuation allowance has been established for these credits given insufficient foreign source income projections.

The table below reflects the significant components of the Company's net deferred tax assets and liabilities at December 28, 2024 and December 30, 2023:

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Lease liabilities 24,735 25,690

Deferred revenue - shipping terms 319 354

Transaction costs 1,474 1,536

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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 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.

Historically, the Company 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.

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

undistributed earnings.

In 2024, the Company recorded withholding tax expense of $559.

A portion of the withholding tax expense is attributable to undistributed earnings from our Canadian subsidiary.

We've recorded a liability for the undistributed amount of $435 as of the end of the 2024 fiscal year.

At the end of the fiscal 2023 period, the Company did not record a liability for undistributed earnings as all amounts were distributed by the end of the period.

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.

53 | December 28, 2024 Form 10-K

6 unchanged sentences

federal income tax benefit 3.9 % 0.2 % 2.9 %

Change in valuation allowance — % — % 0.9 %

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

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

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

Meals & entertainment 0.9 % ( 2.7 ) % ( 0.1 ) %

7 unchanged sentences

The Company's reserve for unrecognized tax benefits remains unchanged for the year ended December 28, 2024.

A balance of $ 1,101 of unrecognized tax benefit is shown in the financial statements at December 30, 2023 as a reduction of the deferred tax asset for the Company's NOL carryforward.

A balance of $ 1,101 of unrecognized tax benefit is shown in the financial statements at December 28, 2024 as a non-current liability.

As of December 30, 2023, the unrecognized tax benefit was shown in the financial statements as a reduction of the deferred tax asset for the Company's NOL carryforward.

During 2024, the Company utilized its available unlimited NOLs and began paying Federal cash taxes to the U.S.

As a result, the Company reclassified the unrecognized tax benefit to a non-current liability in the financial statements.

The Company recognizes accrued interest and penalties of $99 and $0 related to unrecognized tax benefits as income tax expense for the 2024 and 2023 periods, respectively.

The following is a summary of the changes for the periods indicated below:

10 unchanged sentences

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

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.

There are no significant audits for the period ended December 28, 2024.

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 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

54 | December 28, 2024 Form 10-K

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.

As of the date of the Merger, the fair market value of the warranty liabilities were recorded as $ 77,190 on the Consolidated Balance Sheets.

The Public Warrants were considered part of level 1 of the fair value hierarchy, as those securities are traded on an active public market.

At the Closing Date, the Company valued the Private Warrants using Level 3 of the fair value hierarchy.

The Private Warrants were valued using a Modified Black Scholes Model, which is considered to be a Level 3 fair value measurement.

The primary unobservable input utilized in determining the fair value of the Private Warrants are the share price of the Company's common stock, the risk free rate, and the expected volatility of the Company’s common stock.

The Public Warrants may only be exercised for a whole number of shares.

No fractional warrants were issued upon separation of the units issued in the initial public offering into their component parts of Public Warrants and shares of common stock.

The Public Warrants became exercisable on the later of 30 days after the completion of the Business Combination or 12 months from the closing of the Public Offering.

On November 22, 2021, the Company announced that it would redeem all of its outstanding warrants (the “Public Warrants”) to purchase shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”), that were issued under the Amended and Restated Warrant Agreement (the “Warrant Agreement”), dated November 13, 2020, by and between the Company and Continental Stock Transfer & Trust Company (“CST”), as warrant agent (the “Warrant Agent”) as part of the units sold in the Company’s initial public offering (the “IPO”) and that remain outstanding at 5:00 p.m.

New York City time on December 22, 2021 (the “Redemption Date”) for a redemption price of $ 0.10 per Public Warrant.

In addition, the Company would redeem all of its outstanding warrants to purchase Common Stock that were issued under the Warrant Agreement in a private placement simultaneously with the IPO (the “Private Warrants” and, together with the Public Warrants, the “Warrants”) on the same terms as the outstanding Public Warrants.

Under the terms of the Warrant Agreement, the Company was entitled to redeem all of the outstanding Public Warrants at a redemption price of $0.10 per Public Warrant if (i) the last sales price (the “Reference Value”) of the Common Stock equals or exceeds $10.00 per share on any twenty trading days within any thirty-day trading period ending on the third trading day prior to the date on which a notice of redemption is given and (ii) if the Reference Value is less than $18.00 per share, the Private Warrants must also concurrently be called for redemption on the same terms as the outstanding Public Warrants.

At the direction of the Company, the Warrant Agent delivered a notice of redemption to each of the registered holders of the outstanding Warrants.

As the Reference Value was less than $18.00 per share, payment upon exercise of the Warrants was made either (i) in cash, at an exercise price of $ 11.50 per share of Common Stock or (ii) on a “cashless basis” in which the exercising holder received a number of shares of Common Stock determined in accordance with the terms of the Warrant Agreement and based on the Redemption Date and the volume weighted average price (the “Fair Market Value”) of the Common Stock during the 10 trading days immediately following the date on which the notice of redemption was sent to holders of Warrants.

The Company provided holders the Fair Market Value no later than one business day after such 10-trading day period ends.

In no event did the number of shares of Common Stock issued in connection with an exercise on a cashless basis exceed 0.361 shares of Common Stock per Warrant.

If any holder of Warrants would, after taking into account all of such holder’s Warrants exercised at one time, have been entitled to receive a fractional interest in a share of Common Stock, the number of shares the holder was entitled to receive was rounded down to the nearest whole number of shares.

Any Warrants that remained unexercised at 5:00 p.m.

New York City time on the Redemption Date was then void and no longer exercisable, and the holders of those Warrants were entitled to receive only the redemption price of $0.10 per warrant.

As of December 25, 2021, the Company exercised and redeemed all of its warrants generating cash proceeds of $ 8 and cash paid of $ 47 and issuing 6,365 shares of Common Stock.

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

Beginning balance as of July, 14 2021 16,666,628 8,000,000 24,666,628

Shares issued for cash exercises ( 666 ) — ( 666 )

Shares issued for cashless exercises ( 16,199,169 ) ( 8,000,000 ) ( 24,199,169 )

Shares redeemed by the Company ( 466,793 ) — ( 466,793 )

Ending balance as of December 25, 2021 — — —

LONG-TERM DEBT

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Total long term debt, net $ 691,726 $ 731,708

Revolving Loans and Term Loans

As of December 28, 2024, the ABL Revolver had an outstanding balance of $62.0 million, and had outstanding letters of credit of $ 41.6 million.

The Company has $ 188.7 million of available borrowings under the revolving credit facility as a source of liquidity as of December 28, 2024 based on the customary asset-backed loan borrowing base and availability provisions.

In October 2024 and August 2023, the Company made a $100.0 million and $80.0 million prepayment against the outstanding term loan balance without payment of a premium or penalty, respectfully.

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.

Portions of the ABL Agreement are separately available for borrowing by the Company's United States subsidiary and Canadian subsidiary for $325.0 million and $50.0 million, respectively.

The interest rate for the ABL Revolver is, at the discretion of the Company, adjusted SOFR (or a Canadian banker’s acceptance rate in the case of Canadian Dollar loans) plus a margin varying from 1.25% to 1.75% per annum based on availability or an alternate base rate (or a Canadian prime rate or alternate base rate in the case of Canadian Dollar loans), plus a margin varying from 0.25% to 0.75% per annum based on availability, plus a 0.10% credit spread adjustment.

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., 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.

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

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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 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.

Portions of the ABL Agreement are separately available for borrowing by the Company's United States subsidiary and Canadian subsidiary for $325.0 million and $50.0 million, respectively.

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

2024 Conversion of Debt from CDOR Interest Rate to CORRA Interest Rate

Though the Company currently does not have any Canadian obligations outstanding on the ABL Revolver, the Company entered into Amendment No.

5 to the ABL Revolver on June 27, 2024 to transition its benchmark interest rate for Canadian borrowings from the Canadian Dollar Offered Rate ("CDOR") to the Term Canadian Overnight

55 | December 28, 2024 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").

See Note 6 - Acquisitions for additional information regarding the OZCO acquisition.

Repo Rate Average ("CORRA").

The amendment and transition was due to the discontinuation of CDOR on June 30, 2024.

The foregoing descriptions of Amendment No.

5 to the ABL Revolver do not purport to be complete and is qualified in its entirety by the terms and conditions of Amendment No.

5 to the ABL Revolver and the Amended and Restated ABL Credit Agreement.

2024 Repricing

On March 26, 2024, the Company entered into a Repricing Amendment (2024 Repricing Amendment) on its existing Senior Term Loan due July 14, 2028.

The 2024 Repricing Amendment (i) reduces the interest rate per annum applicable to the Term Loan outstanding from SOFR plus a margin varying from 2.5 % to 2.75 % plus a Credit Spread Adjustment ("CSA") varying between 0.11 % to 0.43 % to SOFR plus a margin varying from 2.25 % to 2.50 %, without the CSA and (ii) implements a 1% prepayment premium for the existing Term Loan to apply to Repricing Transactions that occur within six months after the effective date of the 2024 Repricing Amendment.

In connection with the closing of the 2024 Repricing Amendment, the Company expensed $ 3,008 consisting of $ 1,554 of existing fees written off and $1,454 in new fees expensed.

The Company capitalized an additional $ 33 primarily for the payment of upfront lender fees (original issue discount).

The aggregate minimum principal maturities of the long-term debt obligations for each of the five years following December 28, 2024 are as follows:

Thereafter 715,685

Total $ 708,807

1 unchanged sentence

Refer to Note 8 - Leases.

2021 Refinancing

In connection with the Closing as described in Note 1 - Basis of Presentation, the Company entered into a new credit agreement (the “Term Credit Agreement”), which provided for a new funded term loan facility of $ 835.0 million and a delayed draw term loan facility of $ 200.0 million (of which $ 16.0 million was drawn).

The Company also entered into an amendment to their existing Asset-Based Revolving Credit Agreement (the “ABL Amendment”) extending the maturity and conformed certain provisions to the Term Credit Agreement.

The proceeds of the funded term loans under the Term Credit Agreement and revolving credit loans under the ABL Credit Agreement were used, together with other available cash, to (1) refinance in full all outstanding term loans and to terminate all outstanding commitments under the credit agreement, dated as of May 31, 2018 ("2018 Term Loan" including the OZCO Amendment), (2) refinance outstanding revolving credit loans, and (3) redeem in full the senior notes due July 15, 2022 (the “ 6.375 % Senior Notes”).

Additionally, the Company fully redeemed the 11.6 % Junior Subordinated Debentures.

The interest rate on the Term Credit Agreement is, at the discretion of the Company, either the adjusted London Interbank Offered Rate ("LIBOR") rate plus a margin varying from 2.50% and 2.75% per annum or an alternate base rate plus a margin varying from 1.50% to 1.75% per annum.

The Term Credit Agreement is payable in installments equal to 0.25 % of the original principal amount and delayed draw with a balloon payment due on the maturity date of July 14, 2028.

The term loans and other amounts outstanding under the Term Credit Agreement are guaranteed by the Company's wholly-owned domestic subsidiaries and are secured by substantially all of the Borrower’s and the Guarantors' assets.

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.

In connection with the ABL Amendment, the Company recorded $ 3,035 in deferred financing fees which are recorded as other non-current assets on the Consolidated Balance Sheet.

Additionally, the Company recorded a loss (gain) on extinguishment of debt for each debt instrument included in the refinancing as detailed below.

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

Term Credit Agreement $ 20,243

ABL Revolver 288

6.375% Senior Notes, due 2022 1,083

11.6% Junior Subordinated Debentures ( 13,603 )

Interest rate swaps 59

Total $ 8,070

The interest rate on the 2018 Term Loan was, at the discretion of the Company, either the adjusted LIBOR rate plus 4.00% per annum for LIBOR loans or an alternate base rate plus 3.00 % per annum.

The 2018 Term Loan was payable in fixed installments of approximately $ 2,652 per quarter, with a balloon payment scheduled on the loan's maturity date of May 31, 2025.

6.375% Senior Notes, due 2022

On June 30, 2014, Hillman Group issued $ 330.0 million aggregate principal amount of its senior notes due July 15, 2022 (the “6.375% Senior Notes”), which are guaranteed by Hillman Solutions Corp.

and its domestic subsidiaries other than the Hillman Group Capital Trust.

Hillman Group pays interest on the 6.375 % Senior Notes semi-annually on January 15 and July 15 of each fiscal year.

The 6.375% senior notes were fully redeemed in 2021 in connection with the refinancing discussed above.

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

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”).

The Trust invested the proceeds from the sale of the preferred securities in an equal principal amount of 11.6 % Junior Subordinated Debentures of Hillman due September 30, 2027.

The Company paid interest to the Trust on the Junior Subordinated Debentures underlying the TOPrS at the rate of 11.6% per annum on their face amount of $ 105,443 , or $ 12,231 per annum in the aggregate.

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.

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

The Trust invested the proceeds from the sale of the trust common securities in an equal principal amount of 11.6 % Junior Subordinated Debentures of Hillman due September 30, 2027.

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

The Trust Preferred Securities were fully redeemed in 2021 in connection with the refinancing discussed above.

The Company determines if a contract is or contains a lease at inception or modification of a contract.

3 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

62 | December 30, 2023 Form 10-K

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

Expected lease terms include these options to extend or 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.

56 | December 28, 2024 Form 10-K

The components of operating and finance lease costs for the years ended December 28, 2024, December 30, 2023 and December 31, 2022 were as follows:

30 unchanged sentences

Financing cash outflow from finance leases 3,682 2,410

63 | December 30, 2023 Form 10-K

As of December 28, 2024, our future minimum rental commitments are immaterial for lease agreements beginning after the current reporting period.

Maturities of our lease liabilities for all operating and finance leases are as follows as of December 28, 2024:

57 | December 28, 2024 Form 10-K

Operating Leases Finance Leases

34 unchanged sentences

Amounts reclassified from other comprehensive income² ( 15,608 )

Net current period other comprehensive income 6,130

Net current period other comprehensive loss ( 6,796 )

Balance at December 30, 2023 ( 27,820 )

3 unchanged sentences

Balance at December 28, 2024 $ ( 41,656 )

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.

In accordance with ASC 815, derivatives designated and that qualify as cash flow hedges of interest rate risk record the associated gain or loss within other comprehensive income.

For the year ended December 25, 2021, the Company deferred a gain of $ 2,982 , reclassified a loss of $ 385 and a net of tax of $ 850 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.

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.

4 unchanged sentences

See Note 13 - Derivatives and Hedging for additional information on the interest rate swaps.

For the year ended December 28, 2024 the Company deferred a loss of $ 8,162 , reclassified a loss of $ 11,680 including tax benefit of $ 883 into other comprehensive loss due to hedging activities.

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

See Note 13 - Derivatives and Hedging for additional information on the interest rate swaps.

STOCK-BASED COMPENSATION

1 unchanged sentence

2014 Equity Incentive Plan

Following the Merger and in connection with the business combination described in Note 3 - Merger Agreement, Landcadia Holdings III, Inc.

(“Landcadia”) became the direct parent company of HMAN and was renamed Hillman Solutions Corp.

(“New Hillman”).

Shares of Class A common stock of New Hillman (“New Hillman Shares”) are publicly traded on The Nasdaq Capital Market.

Consequently, the outstanding stock options issued under the 2014 Equity Incentive Plan (the “Prior Plan”) prior to the Merger were converted and modified to purchase New Hillman Shares.

At the Closing, each outstanding option to acquire common stock of Hillman Holdco (a “Hillman Holdco Option”), whether vested or unvested, was assumed by New Hillman and converted into an option to purchase common stock of New Hillman (“New Hillman Option”) with substantially the same terms and conditions (including expiration date and exercise provisions) as applicable to the Hillman Holdco Option immediately prior to the Closing, except both the number of shares and the exercise price were modified using the conversion ratio at Closing.

Each New Hillman Option is generally subject to the same vesting conditions as the Hillman Holdco Option from which it was converted, except that the performance-based vesting conditions of any Hillman Holdco Option granted prior to 2021 were adjusted such that the performance-based portion of the associated New Hillman Option will vest upon certain pre-established stock price hurdles.

For all time based options and performance options granted during 2021 the change in fair value was immaterial and as such no additional compensation cost was recognized.

For the performance options granted prior, the modification of the vesting criteria resulted in $11,482 of additional compensation expense, $ 8,228 of which was recognized in 2021 and $ 3,254 was recognized in the year ended December 31, 2022.

65 | December 30, 2023 Form 10-K

At the Closing, (i) each share of unvested restricted Hillman Holdco common stock was cancelled and converted into the right to receive a number of shares of New Hillman restricted stock equal to the Closing Stock Per Restricted Share Amount (as defined in the Merger Agreement) with substantially the same terms and conditions as were applicable to the related share of Hillman Holdco restricted stock immediately prior to the Closing (including with respect to vesting and termination-related provisions), and (ii) each Hillman Holdco restricted stock unit was assumed by New Hillman and converted into a New Hillman restricted stock unit award with substantially the same terms and conditions as were applicable to such Hillman Holdco restricted stock unit immediately prior to the Closing (including with respect to vesting and termination-related provisions).

Upon closing, the 2014 Equity Incentive Plan may grant options, stock appreciation rights, restricted stock, and other stock-based awards for up to an aggregate of 14,523,510 shares of its common stock.

The Company's former parent, HMAN Group Holdings Inc., established the 2014 Equity Incentive Plan (the “Prior Plan”) in 2014.

The Company merged with a special purpose acquisition corporation on July 14, 2021 and began trading on The Nasdaq Capital Market.

At that time, share awards under the Prior Plan were converted and modified to reflect share awards of the Company's common stock.

The modification of the vesting criteria of certain performance options resulted in $ 3,254 of additional compensation expense recognized in the year ended December 31, 2022.

The Company is no longer granting new awards under the 2014 Equity Incentive Plan.

Awards previously granted under the 2014 Equity Incentive Plan include options, restricted stock, and other stock-based awards for up to an aggregate of 14,523,510 shares of its common stock.

The following table summarizes the key assumptions used in the valuation model for valuing the Company's stock compensation awards under the 2014 Equity Incentive Plan:

3 unchanged sentences

Expected terms 6.25 years

59 | December 28, 2024 Form 10-K

Stock Options

14 unchanged sentences

8,562 $ 8.42 4.72 years

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.

In fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, 1,284 , 77 , and 182 options were exercised, respectively.

Stock option compensation expense of $ 1,546 , $ 3,504 , and $ 8,144 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.

As of December 28, 2024, there was $ 73 of unrecognized compensation expense for unvested common options.

The expense will be recognized as a charge to earnings over a weighted average period of approximately 0.08 years.

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 2024, 2023, and 2022 was $ 3,409 , $ 162 , and $ 893 , 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

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

There were no restricted stock award activity under the 2014 Equity Incentive Plan for the years ended December 28, 2024 and December 30, 2023.

Restricted stock compensation expense of $ 346 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal year ended December 31, 2022.

Restricted Stock Units

5 unchanged sentences

Outstanding at December 30, 2023

Vested ( 199 )

Forfeited or expired —

Outstanding at December 28, 2024

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.

The expense will be recognized as a charge to earnings over a weighted average period of approximately 0.13 years.

60 | December 28, 2024 Form 10-K

Restricted stock unit compensation expense of $ 55 , $ 582 and $ 357 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

2021 Equity Incentive Plan

Effective July 14, 2021, the Company established the 2021 Equity Incentive Plan.

Under the 2021 Equity Incentive Plan (the “Plan”), the maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan as of the Effective Date is (i) 7,150,814 shares, plus (ii) the number of shares of Stock underlying awards under the 2014 Equity Incentive Plan that on or after the Effective Date expire or become unexercisable, or are forfeited, cancelled or otherwise terminated, in each case, without delivery of shares or cash therefore, and would have become available again for grant under the Prior Plan in accordance with its terms (not to exceed 14,523,510 shares of Stock in the aggregate) (the “Share Pool”).

On June 7, 2024, the 2021 Equity Incentive Plan was amended to increase the share reserve by 2,000,000 shares of common stock (the 2021 Equity Incentive Plan as amended is referred to as the “2021 Plan”).

Under the 2021 Plan, the maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan as of the Effective Date is (i) 9,150,814 shares, plus (ii) the number of shares of Stock underlying awards under the 2014 Equity Incentive Plan that on or after the Effective Date expire or become unexercisable, or are forfeited, cancelled or otherwise terminated, in each case, without delivery of shares or cash therefore, and would have become available again for grant under the Prior Plan in accordance with its terms (not to exceed 16,523,510 shares of Stock in the aggregate) (the “Share Pool”).

The following table summarizes the key assumptions used in the valuation model for valuing the Company's stock compensation awards under the 2021 Equity Incentive Plan:

7 unchanged sentences

A summary of the stock option activity under the 2021 Equity Inventive Plan for the year ended December 28, 2024 is presented below (share amounts in thousands):

67 | December 30, 2023 Form 10-K

Number of Shares Weighted Avg.

4 unchanged sentences

1,387 $ 9.39 8.62 years

Exercised ( 48 )

Forfeited or expired ( 8 )

3 unchanged sentences

479 $ 9.59 7.45 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.

In the fiscal year ended December 28, 2024 48 options were exercised and in December 30, 2023 no options were exercised.

Stock option compensation expense of $ 1,701 , $ 1,124 and $543 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

As of December 28, 2024, there was $ 3,898 of unrecognized compensation expense for unvested common options.

The expense will be recognized as a charge to earnings over a weighted average period of approximately 1.28 years.

The weighted-average grant-date fair value of share options granted during the years 2023 was $ 3.73 .

The weighted-average grant-date fair value of share options granted during the year ended 2024 was $ 4.55 .

The total intrinsic value of share options exercised during the year ended 2024 was $ 46 .

Restricted Stock Units

1 unchanged sentence

The RSUs granted to non-employee directors generally vest in full on the first anniversary of the grant date or the date of the annual meeting following the grant date, whichever is earlier.

61 | December 28, 2024 Form 10-K

A summary of the restricted stock unit activity under the 2021 Equity Incentive Plan for the year ended December 28, 2024 is presented below (share amounts in thousands):

3 unchanged sentences

Outstanding at December 30, 2023

2,437 9.11 years

Granted 1,313

2 unchanged sentences

Outstanding at December 28, 2024

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.

3,529 9.30 years

Restricted stock unit compensation expense of $ 9,785 , $ 6,440 and $ 3,810 was recognized in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

As of December 28, 2024, there was $ 14,528 of unrecognized compensation expense for unvested common stock options.

7 unchanged sentences

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

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

For the years ended December 28, 2024, December 30, 2023, and December 31, 2022, there was approximately $ 376 , $ 355 , and $ 314 of compensation expense related to the ESPP, respectively.

EARNINGS PER SHARE

2 unchanged sentences

The following is a reconciliation of the basic and diluted Earnings Per Share ("EPS") computations for both the numerator and denominator (in thousands, except per share data):

62 | December 28, 2024 Form 10-K

Year Ended December 28, 2024

1 unchanged sentence

(Denominator) Per Share

Net loss $ ( 9,589 ) 194,722 $ ( 0.05 )

Net income $ 17,255 196,108 $ 0.09

Dilutive effect of stock options and awards — 2,807 —

Dilutive effect of warrants — — —

Net loss per diluted common share $ ( 9,589 ) 194,722 $ ( 0.05 )

Net income per diluted common share $ 17,255 198,915 $ 0.09

Year Ended December 30, 2023

2 unchanged sentences

Net loss $ ( 9,589 ) 194,722 $ ( 0.05 )

Dilutive effect of stock options and awards — — —

Dilutive effect of warrants — — —

5 unchanged sentences

Dilutive effect of stock options and awards — — —

Dilutive effect of warrants — — —

Net loss per diluted common share $ ( 16,436 ) 194,249 $ ( 0.08 )

Stock options and awards outstanding totaling 2,863 , 5,874 and 5,896 were excluded from the computation for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively, as they would have had an antidilutive effect under the treasury stock method.

Warrants of 10,540 were excluded from the computation for the year ended December 25, 2021 as they would have had an antidilutive effect under the treasury stock method.

DERIVATIVES AND HEDGING

6 unchanged sentences

Interest Rate Swap Agreements

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

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

1 unchanged sentence

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.

In accordance with ASC 815, the Company determined the 2021 Swap 1 constituted an effective cash flow hedge and therefore changes in fair value were recorded within other comprehensive income (loss) within the Company's Statement of Comprehensive Income (Loss) and the deferred gains or losses were reclassified out of other comprehensive income (loss) 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.

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

63 | December 28, 2024 Form 10-K

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

1 unchanged sentence

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.

In accordance with ASC 815, the Company determined the 2021 Swap 2 constituted an effective cash flow hedge and therefore changes in fair value were recorded within other comprehensive income (loss) within the Company's Statement of Comprehensive Income (Loss) and the deferred gains or losses were reclassified out of other comprehensive income (loss) 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 .

1 unchanged sentence

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

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.

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 income (loss) within the Company's Statement of Comprehensive Income (Loss) and the deferred gains or losses are reclassified out of other comprehensive income (loss) 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 .

1 unchanged sentence

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

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.

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 income (loss) within the Company's Statement of Comprehensive Income (Loss) and the deferred gains or losses are reclassified out of other comprehensive income (loss) into interest expense in the same period during which the hedged transactions affect earnings.

As of December 28, 2024, 2021 Swap 1 and 2021 Swap 2 expired, and as such, have no remaining value.

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

12 unchanged sentences

— 5,336 Other accrued expenses — —

Other current assets 207 — Other non-current liabilities

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

Other current/ non-current assets 787 207 Other non-current liabilities

2024 Swap 2 Other current/ non-current assets 1,961 436 Other non-current liabilities — ( 1,660 )

Total hedging instruments $ 2,748 $ 9,539 $ — $ ( 3,273 )

1 unchanged sentence

Additional information with respect to the fair value of derivative instruments is included in Note 14 - Fair Value Measurements.

70 | December 30, 2023 Form 10-K

Foreign Currency Forward Contracts

During fiscal 2022 and 2021 the Company entered into multiple foreign currency forward contracts.

During fiscal 2024 and 2022 the Company entered into foreign currency forward contracts.

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.

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 total notional amount of contracts outstanding was C$ 4,087 and C$ 2,692 as of December 28, 2024 and December 31, 2022, respectively.

The total fair value of the foreign currency forward contracts was $ 4,325 and $ 12 as of December 28, 2024 and December 31, 2022, respectively and was reported on the accompanying Consolidated Balance Sheets in other current liabilities .

An increase in other income of $ 269 and $ 95 was recorded in the Consolidated Statements of Comprehensive Income (Loss) for the change in fair value during year ended December 28, 2024 and December 31, 2022, respectfully.

64 | December 28, 2024 Form 10-K

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.

Accordingly, the gain or loss on these derivatives was recognized in other (income) expense in the Consolidated Statements of Comprehensive Loss.

Accordingly, the gain or loss on these derivatives was recognized in other (income) expense in the Consolidated Statements of Comprehensive Income (Loss).

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

15 unchanged sentences

Interest rate swaps — 2,748 — 2,748

Foreign exchange forward contracts — 4,325 — 4,325

Contingent consideration payable — — 4,863 4,863

6 unchanged sentences

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.

3 unchanged sentences

As of December 28, 2024 and December 30, 2023, 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.

65 | December 28, 2024 Form 10-K

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.

4 unchanged sentences

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 28, 2024.

5 unchanged sentences

Fair value of cash consideration paid ( 249 ) — ( 11 ) — ( 260 )

( 219 ) — ( 1,013 ) — ( 1,232 )

Change in fair value of contingent consideration 275 ( 26 ) 18 ( 39 ) 228

5 unchanged sentences

Additional information with respect to the derivative instruments is included in Note 13 - Derivatives and Hedging.

RESTRUCTURING

Canadian Restructuring Plan

During fiscal 2018, the Company initiated plans to restructure the operations of the Canada segment.

The restructuring seeks to streamline operations in the greater Toronto area by consolidating facilities, exiting certain lines of business, and rationalizing Stock Keeping Units (“SKUs”).

The intended result of the Canada restructuring will be a more streamlined and scalable operation focused on delivering optimal service and a broad offering of products across the Company's core categories.

Plans were finalized during the fourth quarter of 2018.

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

Facility consolidation (1)

Inventory valuation adjustments $ —

Labor expense —

Consulting and legal fees 26

Other expense 5

Rent and related charges —

Severance 466

(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.

The labor, consulting, and legal expenses were included in selling, general and administrative expense ("SG&A") on the Consolidated Statement of Comprehensive Loss.

The inventory valuation adjustments were included in cost of sales on the Consolidated Statement of Comprehensive Loss.

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

Severance and related expense

Balance as of December 25, 2021 $ 339

Restructuring charges —

Cash paid ( 182 )

Balance as of December 31, 2022 $ 157

Restructuring charges —

Cash paid ( 157 )

Balance as of December 30, 2023 $ —

During the year ended December 30, 2023, the Company paid approximately $ 157 in severance related to the Canada Restructuring Plan.

United States Restructuring Plan

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.

This restructuring includes management realignment, integration of sales and operating functions, and strategic review of the Company's product offerings.

This plan was finalized during the fourth quarter of fiscal year 2019.

The Company incurred additional charges in fiscal 2021 related to the consolidation of two of our distribution centers.

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

Year Ended December 25, 2021

Management realignment & integration

Severance $ 111

Facility closures

Inventory valuation adjustments —

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

Balance as of December 26, 2020 $ 825

Restructuring charges 111

Cash paid (936)

Balance as of December 25, 2021 $ —

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

1 unchanged sentence

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 Company promptly initiated an investigation, engaged the services of cybersecurity 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.

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

In the fourth quarter of 2024, the Company received proceeds from our insurance claim that exceeded the amount recorded as a receivable by $617.

These proceeds represented the cost associated with lost revenue and incremental expenses incurred.

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.

66 | December 28, 2024 Form 10-K

Insurance Coverage

6 unchanged sentences

The Company believes that the liability of approximately $ 2,060 recorded for such risk insurance reserves is adequate as of December 28, 2024.

As of December 30, 2023, the Company has provided certain vendors and insurers letters of credit aggregating $ 40,890 related to our product purchases and insurance coverage of product liability, workers' compensation, and general liability.

As of December 28, 2024, the Company has provided certain vendors and insurers letters of credit aggregating $ 41.6 million related to our product purchases and insurance coverage of product liability, workers' compensation, and general liability.

The Company self-insures our group health claims up to an annual stop loss limit of $ 300 per participant.

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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

for certain nails products sourced from Asian countries.

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.

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

11 unchanged sentences

The terms of the settlement agreement include an $18.5 million payment from Hillman to Hy-Ko (in lieu of the $16.0 million jury verdict) and protection from any potential future patent infringement claims between the parties relating to key duplication or key identification through 2032.

KeyMe Litigation

On June 3, 2019, The Hillman Group, Inc.

("Hillman Group") filed a complaint for patent infringement against KeyMe, LLC ("KeyMe"), a provider of self-service key duplication kiosks, in the United States District Court for the Eastern District of Texas (Marshall Division) (the "Texas Court").

On August 16, 2019, KeyMe filed a complaint for patent infringement against Hillman Group in the United States District Court for the District of Delaware.

On March 2, 2020, Hillman Group filed a second complaint for patent infringement against KeyMe in the same Texas Court.

On October 23, 2020, the Texas Court granted KeyMe’s motion to consolidate the two Texas cases and granted Hillman Group’s motion to add another patent.

On April 12, 2021, a jury in the Texas case returned a verdict that KeyMe did not infringe any of the asserted patents and several of the asserted claims were invalid.

Final judgment was entered on April 13, 2021.

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.

The Kiosk Development Partner Dispute

67 | December 28, 2024 Form 10-K

On December 16, 2024, the Company entered into a settlement agreement with a kiosk development partner (the “Kiosk Partner”), pursuant to which the Company paid the Kiosk Partner a $5 million settlement payment on December 30, 2024 to resolve all claims and disputes alleged by the Kiosk Partner.

The Kiosk Partner’s claims alleged that, among other things, the Company failed to pay certain per key royalty fees to the Kiosk Partner allegedly owed under a joint development agreement dating back over 10 years ago.

Though the Company believes it had strong defenses to the claims made by the Kiosk Partner, the Company opted to settle the matter before litigation was filed in order to avoid the cost and uncertainty of protracted litigation.

STATEMENT OF CASH FLOWS

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Cash paid during the period for:

Interest on junior subordinated debentures $ — $ — $ 7,542

Interest 42,435 55,872 55,829

Income taxes, net of refunds 9,622 5,356 2,993

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.

As of December 28, 2024 and December 30, 2023, capital expenditures recorded in accounts payable totaled $ 1,627 and $ 1,186 , respectively.

CONCENTRATION OF CREDIT RISKS

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The Company places its cash and cash equivalents with high credit quality financial institutions.

Concentrations of credit risk with respect to sales and trade receivables are limited due to the large number of customers, with the exception of the two below customers, comprising the Company's customer base and their dispersion across geographic areas.

The Company performs periodic credit evaluations of its customers' financial condition and generally does not require collateral.

For the year ended December 30, 2023, the largest two customers accounted for 43.4 % of total revenues and 34.1 % of the year-end accounts receivable balance.

For the year ended December 28, 2024, the largest two customers, Lowe's and Home Depot, accounted for 40.9 % of total revenues and 32.6 % of the year-end accounts receivable balance.

For the year ended December 30, 2023, the largest two customers accounted for 43.4 % of total revenues and 34.1 % of the year end accounts receivable balance.

No other customer accounted for more than 10% of the Company's accounts receivables in 2023, 2022, nor 2021.

In each of the years ended December 30, 2023, December 31, 2022, and December 25, 2021, the Company derived over 10% of its total revenues from two separate customers which operated in each of the operating segments.

Certain customers operate using a purchasing cooperative(s) business model.

In this model, independently owned hardware stores make purchases directly from the Company and are invoiced through a billing arrangement with a cooperative.

Under this arrangement, the Company would invoice and receive payment from the cooperative for the product shipped directly to the store, and the cooperative would be responsible for invoicing and collecting from the independently owned hardware store.

Due to the nature of the cooperative billing arrangement, the risk of collection of the receivables generated by sales to these independently owned hardware stores is concentrated with the cooperative.

The Company does not believe a sales concentration exists in these scenarios, as the independently owned hardware stores can continue to make purchases from the Company via a direct bill arrangement or via another purchasing cooperative.

As of December 28, 2024 approximately 15% of the Company's accounts receivable was derived through the Ace Hardware purchasing cooperative.

Except as described in the paragraphs above, no other customer accounted for more than 10% of the Company's accounts receivables in 2024 or 2023.

In the year ended December 28, 2024 the Company derived over 10% of its total revenues from two separate customers which operated in each of the operating segments, whereas in years ended December 30, 2023, and December 31, 2022, the Company derived over 10% of its total revenues from two separate customers which operated in each of the operating segments.

The following table presents revenue from each customer as a percentage of total revenue for each of the years ended:

68 | December 28, 2024 Form 10-K

Year Ended December 28, 2024 Year Ended December 30, 2023 Year Ended December 31, 2022

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The Company's segment reporting structure uses the Company's management reporting structure as the foundation for how the Company manages its business.

The Company's reportable segments are strategic business units that offer different products and services, and in the case of our Canada segment in a different geography.

They are managed separately due to different products and marketing strategies.

The Company periodically evaluates its segment reporting structure in accordance with ASC 350-20-55 and has concluded that it has three reportable segments as of December 28, 2024.

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The Hardware and Protective Solutions segment distributes fasteners and related hardware items, threaded rod, personal protective equipment, and letters, numbers, and signs to hardware stores, home centers, mass merchants, and other retail outlets primarily in the United States and Mexico.

The Robotics and Digital Solutions segment consists of key duplication and engraving kiosks that can be operated directly by the consumer.

The Robotics and Digital Solutions segment consists of key duplication and engraving kiosks that can be operated directly by the consumer, primarily in the United States.

The kiosks operate in retail and other high-traffic locations offering customized licensed and unlicensed products targeted to consumers in the respective locations.

1 unchanged sentence

The Robotics and Digital Solutions segment also includes Resharp, our robotic knife sharpening business, and Instafob, which specializes in RFID ("Radio Frequency Identification") key duplication technology.

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 distributes fasteners and related hardware items, threaded rod, keys, key duplicating systems, engraving kiosks, 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.

For a reconciliation of our segment sales by product category and geographic area, please see Note 2 - Summary of Significant Accounting Policies.

For details on our major customers please see Note 17 - Concentration of Credit Risks .

The Company has transitioned from using segment operating income in prior years as a measure of performance and now utilizes segment adjusted EBITDA.

The Company measures the performance of its segments using segment adjusted earnings before interest, taxes, depreciation and amortization (“segment adjusted EBITDA”).

The Company’s President and Chief Executive Officer, who is the Chief Operating Decision Maker (“CODM”), uses segment adjusted EBITDA predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances, expressed as both actual amounts and as a percentage of sales, on a monthly, quarter to date, and year to date basis when making decisions about allocating resources to the segments.

The CODM also uses segment adjusted EBITDA in competitive analysis by benchmarking the Company’s competitors.

The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation.

The CODM reviews balance sheet accounts on a consolidated basis and does not regularly review balance sheet accounts by segment as part of their performance assessment and decision-making process.

The CODM primarily focuses on net sales growth, cost efficiencies, market expansion and product development rather than financial position.

The accounting policies of the Company’s segments are the same as those described in Note 1 - Basis of Presentation.

69 | December 28, 2024 Form 10-K

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 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 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

Segment adjusted EBITDA is not defined under GAAP and may not be comparable to similarly titled measures used by other companies and should not be considered a substitute for net earnings or other results reported in accordance with GAAP.

The tables below present net sales, significant segment expenses, and segment adjusted EBITDA for the reportable segments for the years ended December 28, 2024, December 30, 2023, and December 31, 2022.

See Note 2 - Summary of Significant Accounting Policies for a reconciliation of total reportable segments' revenues to consolidated revenues.

Hardware and Protective Solutions Year Ended December 28, 2024

December 30, 2023 Year Ended December 31, 2022

Hardware and Protective Solutions $ 1,074,619 $ 1,068,734 $ 1,017,594

Net Sales $ 1,094,377 $ 1,074,619 $ 1,068,734

Significant segment expenses

Adjusted cost of sales (exclusive of depreciation and amortization) (1)

612,175 654,904 669,500

Adjusted selling expense (2)

112,646 102,194 101,995

Adjusted Warehouse expense (3)

141,839 141,205 139,613

Adjusted General and administrative expense (4)

76,970 54,941 49,219

Other segment items (5)

( 813 ) ( 1,788 ) ( 231 )

Segment Adjusted EBITDA $ 151,560 $ 123,163 $ 108,638

Adjusted cost of sales (exclusive of depreciation and amortization) excludes an inventory revaluation charge made in the fourth quarter of 2023.

Adjusted selling expense excludes expense related to corporate restructuring activities.

Adjusted warehouse excludes restructuring expense associated with our distribution center relocations and corporate restructuring activities.

Adjusted general and administrative expense excludes stock-based compensation, acquisition and integration costs, expense associated with corporate restructuring and amounts related to the Cybersecurity Incident.

Other excludes an impairment charge related to the write down of intangible assets, primarily related to review of certain product offerings in 2023.

Robotics and Digital Solutions

Canada 156,458 171,961 161,879

Total revenues $ 1,476,477 $ 1,486,328 $ 1,425,967

Segment Income from Operations

Year Ended December 28, 2024

December 30, 2023 Year Ended December 31, 2022

Net sales $ 230,317 $ 245,400 $ 245,633

Significant segment expenses

Cost of sales (exclusive of depreciation and amortization) 65,747 71,566 73,944

Adjusted selling expense (1)

62,348 61,977 60,714

Adjusted Warehouse expense (2)

11,159 12,475 14,354

Adjusted General and administrative expense (3)

16,434 18,371 16,447

Other segment items (4)

Segment Adjusted EBITDA $ 74,413 $ 80,886 $ 80,174

Adjusted selling expense excludes related to corporate restructuring activities.

Adjusted warehouse expense excludes restructuring expense associated with our distribution center relocations and corporate restructuring activities.

Adjusted general and administrative expense excludes stock compensation expense, acquisition and integration expense, consulting expense and legal charges related to settlements, see Note 15 - Commitments and Contingencies.

Other excludes the gain or loss on the revaluation of our contingent consideration liability, see Note 14 - Fair Value Measurements.

70 | December 28, 2024 Form 10-K

Year Ended December 28, 2024

December 30, 2023 Year Ended December 31, 2022

Net sales $ 147,901 $ 156,458 $ 171,961

Significant segment expenses

Cost of sales (exclusive of depreciation and amortization) 86,769 97,495 103,107

Adjusted selling expense (1)

14,476 13,721 13,764

Adjusted Warehouse expense (2)

22,398 23,036 25,517

Adjusted General and administrative expense (3)

7,748 7,062 7,897

Other segment items 730 ( 167 ) 239

Segment Adjusted EBITDA $ 15,780 $ 15,311 $ 21,437

Adjusted selling expense excludes restructuring expense.

Adjusted warehouse expense excludes restructuring expense associated with our distribution center relocations and corporate restructuring activities.

Adjusted general and administrative expense excludes stock based compensation and expense associated with corporate restructuring activities.

The following table reconciles segment adjusted EBITDA by segment to the Company’s consolidated income (loss) before income taxes.

Year Ended December 28, 2024

December 30, 2023 Year Ended December 31, 2022

Hardware and Protective Solutions $ 151,560 $ 123,163 $ 108,638

1 unchanged sentence

Canada 15,780 15,311 21,437

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

Total adjusted EBITDA 241,753 219,360 210,249

Interest expense 59,241 68,310 54,560

Depreciation 68,766 59,331 57,815

Amortization 61,274 62,309 62,195

Stock compensation expense 13,463 12,004 13,524

Restructuring and other costs 2,978 3,031 2,617

Litigation expense 5,000 339 32,856

Transaction and integration expense 1,243 1,754 2,477

Change in fair value of contingent consideration 228 ( 4,936 ) ( 1,128 )

Impairment charges — 24,600 —

Refinancing costs 3,008 — —

Total adjusting items 215,201 226,742 224,916

Income (loss) before income taxes $ 26,552 $ ( 7,382 ) $ ( 14,667 )

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.

On January 14, 2025, the Company entered into a Repricing Amendment (2025 Repricing Amendment) on its existing Senior Term Loan due July 14, 2028.

The 2025 Repricing Amendment (i) reduces the interest rate per annum applicable to the Term Loan outstanding from SOFR plus a margin varying from 2.25% to 2.50% to SOFR plus a margin of 2.00%, as well as a 1.00% margin for ABR Loans and (ii) implements a 1% prepayment premium for the existing Term Loan to apply to Repricing Transactions that occur within six months after the effective date of the 2025 Repricing Amendment.

71 | December 28, 2024 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