Executive Summary

Q4 2024 revenue rose 0.5% to $349.6M; GAAP diluted EPS was $(0.01) and Adjusted EPS was $0.10 (flat YoY). Adjusted EBITDA increased 3.5% to $56.3M .
FY 2024 delivered record Adjusted EBITDA of $241.8M despite a soft macro, with Net Debt/TTM Adjusted EBITDA improving to 2.8x and year-end liquidity of $233M .
2025 guidance: Net Sales $1.495–$1.575B, Adjusted EBITDA $255–$275M, and Free Cash Flow $90–$110M; assumptions include interest expense $45–$55M, capex ~$90M, and YE leverage ~2.2x .
Capital structure catalyst: Term loan repriced to SOFR + 200 bps in Jan-2025 (~$1.6M annualized interest savings before fees), following a margin step-down; $360M of debt swapped at 5.69% through Jan-2027 .

What Went Well and What Went Wrong

What Went Well
- Margin execution: FY adjusted gross margin expanded 390 bps to 48.1% on efficiencies, lower COGS, and favorable mix .
- RDS profitability held: Q4 RDS Adjusted EBITDA margin rose to 35.0% (from 30.0%), with MinuteKey 3.5 rollout ahead of plan and better variable G&A .
- Balance sheet: Net debt reduced to $674.0M; leverage improved to 2.8x; liquidity $233M . Quote: “We will continue our measured and prudent capital investments into our MinuteKey 3.5 fleet…confident we can drive strong results…” – CEO Jon Michael Adinolfi .
What Went Wrong
- Q4 adjusted gross margin down 50 bps YoY to 47.7% (adds back prior-year impairment), as expected; quarterly SG&A rate benefited YoY but remained elevated annually .
- Canada softness: Q4 Canada revenue down 3.6% YoY; industrial exposure pressured; management expects pressure to persist near term .
- Macro/volume headwinds persisted (2024 “market volumes” −5 pts) and modest price headwinds; HPS Q4 adj. EBITDA −3.7% YoY on price headwinds despite sales growth .

Financial Results

Sequential trend (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($M)	$379.4	$393.3	$349.6
GAAP Diluted EPS ($)	$0.06	$0.04	$(0.01)
Adjusted Diluted EPS ($)	$0.16	$0.16	$0.10
Adjusted EBITDA ($M)	$68.4	$72.6	$56.3
Adjusted Gross Margin %	48.7%	48.2%	47.7%

YoY (Q4 only)

Metric	Q4 2023	Q4 2024	YoY Change
Revenue ($M)	$347.8	$349.6	+0.5%
GAAP Diluted EPS ($)	$(0.05)	$(0.01)	Improvement
Adjusted Diluted EPS ($)	$0.10	$0.10	Flat
Adjusted EBITDA ($M)	$54.4	$56.3	+3.5%
Adjusted Gross Margin %	48.2%	47.7%	−50 bps

Consensus vs Actual (Q4 2024)

Metric	Consensus	Actual
Revenue ($M)	Unavailable – S&P Global data not accessible today	$349.6
EPS ($)	Unavailable – S&P Global data not accessible today	$(0.01) GAAP; $0.10 Adj

Segment breakdown – Q4 2024 vs Q4 2023

Segment	Net Sales Q4’23 ($000s)	Net Sales Q4’24 ($000s)	Δ	Adj. EBITDA Q4’23 ($000s)	Adj. EBITDA Q4’24 ($000s)	Δ	Adj. EBITDA Margin Q4’23	Q4’24
Hardware & Protective	256,421	260,530	+1.6%	35,777	34,444	−3.7%	14.0%	13.2%
Robotics & Digital (RDS)	58,410	57,231	−2.0%	17,498	20,050	+14.6%	30.0%	35.0%
Canada	32,977	31,801	−3.6%	1,095	1,775	+62.1%	3.3%	5.6%
Consolidated	347,808	349,562	+0.5%	54,370	56,269	+3.5%	15.6%	16.1%

KPIs and balance sheet

KPI	FY 2023	FY 2024
Net Cash from Operations ($M)	$238.0	$183.3
Capital Expenditures ($M)	$65.8	$85.2
Free Cash Flow ($M)	$172.3	$98.1
Gross Debt ($M)	$760.9	$718.6
Net Debt ($M)	$722.4	$674.0
Net Debt / TTM Adj. EBITDA (x)	3.3x	2.8x
Liquidity ($M)	N/A	$233 (Revolver $189 + Cash $45)

Guidance Changes

2025 guidance (introduced)

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY 2025	N/A	$1.495–$1.575B (mid: $1.535B)	New
Adjusted EBITDA	FY 2025	N/A	$255–$275M (mid: $265M)	New
Free Cash Flow	FY 2025	N/A	$90–$110M (mid: $100M)	New
Interest expense	FY 2025	N/A	$45–$55M	New
Cash interest	FY 2025	N/A	$40–$50M	New
Cash taxes	FY 2025	N/A	$15–$25M	New
Capex	FY 2025	N/A	~$90M	New
Restructuring/Other	FY 2025	N/A	~$10M	New
Working Capital	FY 2025	N/A	~$0M	New
Diluted Shares	FY 2025	N/A	~201M	New
YE Leverage	FY 2025	N/A	~2.2x	New

FY 2024 – updated guidance vs actual

Metric	Updated FY 2024 Guidance (11/5/24)	Actual FY 2024	Outcome
Net Sales	$1.455–$1.485B	$1.4726B	Within range
Adjusted EBITDA	~ $250M	$241.8M	Below guide
Free Cash Flow	$100–$115M	$98.1M	Slightly below

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
RDS/MinuteKey 3.5	900+ machines by Q3; 1,200 by YE; RDS to return to growth in 2025; new service contracts; Redbox tech hires	MinuteKey 3.5 in all stores at top two partners by 2026; 2025 capex peak then −$20M in 2026; RDS FCF potential ~$50M annualized after rollout	Improving
Macro/Volumes	Market volumes −5 pts in 2024; price −1 pt; new wins +2 pts; M&A +4 pts	Q4 seasonally pressured; Q1 tracking as expected; expecting modest price actions H2’25	Stabilizing
Supply chain & Freight	90%+ containers on annual contracts; monitoring 2025 renewals	2025 contract increases expected but limited P&L impact due to timing; preferred carrier access	Manageable
Tariffs	Prepared to pass-through; diversified sourcing (1/3 NA, 1/3 Taiwan/ROW, 1/3 China)	Dollar-for-dollar pricing if imposed; potential share gains as retailers seek alternatives	Neutral to slight positive
Canada	Down 6–10% YoY in prior quarters; maintaining profitability ~10% EBITDA	Q4 sales −3.6% YoY; profitability improved; continued macro pressure	Mixed
Technology/AI/Cloud	Emphasis on data/category management and RDS feature set	Accelerating cloud migration and leveraging AI to improve efficiency/service	Building

Management Commentary

“Adjusted gross margins improved 390 basis points to 48.1% for 2024 compared to 44.2% during 2023… sustained operating efficiencies, lower cost of goods sold, and a shift in selling a higher margin mix of products.” – Executive Chairman Doug Cahill .
“We have challenged ourselves to profitably grow this business to $2 billion in net sales over the next 3 to 5 years… organic 5%–6% plus 2–3 acquisitions per year.” – CEO Jon Michael Adinolfi .
“We expect full-year 2025 adjusted EBITDA to total between $255 million and $275 million… adjusted gross margins to come in above 47%.” – CFO Robert (Rocky) Kraft .

Q&A Highlights

RDS growth and capital discipline: Expect RDS positive growth as early as Q1’25 (low to mid-single digits) driven by 3.5 rollout; will avoid deployments without adequate ROIC; some attrition outside top three partners anticipated but offset by initiatives .
Pricing trajectory: Expect ~−1 pt price in 1H’25 due to roll-forward givebacks; plan for strategic pricing in 2H’25 unrelated to tariffs to offset persistent cost inflation (freight, labor, rents) .
Tariffs: Will price dollar-for-dollar if imposed; diversified sourcing and potential to win categories as retailers de-risk direct import exposure .
Container rates: 2025 contract renewals to increase, but limited 2025 P&L impact given lag and shipping cadence .
Canada: Markets remain pressured; new wins help offset; focus on maintaining profitability until macro turns .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at the time of this analysis due to data access limits; as a result, we cannot assess beats/misses versus consensus today. The company described Q4 Adjusted EBITDA as in line with expectations .

Key Takeaways for Investors

Margin durability: Structural gross margin improvements (FY 48.1%) and continued adjusted EBITDA resilience despite volume softness support 2025 margin targets (>47% gross margin; ~10% EBITDA growth at guide midpoint) .
RDS inflection on horizon: MinuteKey 3.5 rollout, expanded capabilities (auto fobs, transponders, endless aisle), and disciplined capital deployment position RDS to shift from margin leader to cash contributor post-2025 rollout completion .
Balanced growth algorithm: 2025 outlook leans on new wins (~2.5 pts) and M&A contribution, with muted price and modest volume headwinds assumed—execution on pipeline (PowerPro screws, Koch/Intex cross-sell) is key .
Deleveraging and rate tailwind: Repricing to SOFR+200 bps plus ongoing FCF should drive lower interest burden and improved leverage (~2.2x YE’25 target) even while funding growth capex .
Tariff optionality: Hillman’s multi-country sourcing and in-store service model may enable share gains if tariffs tighten retailer supply chains; management plans dollar-for-dollar pricing to protect margins .
Canada watch: Continued macro pressure but profitability improving; upside as cycle turns .
Near-term trading setup: Without consensus datapoints, focus on 2025 execution milestones (RDS rollout pace, H2 pricing actions, M&A cadence) and any signs of stabilization in home improvement traffic that could lift volumes and mix .

Sources: Q4/FY 2024 8-K and press release ; Q4 2024 earnings call transcript ; Q3 2024 press release/call ; Q2 2024 press release/call ; Term loan repricing PR .

Hillman Solutions Corp. (HLMN)·Q4 2024 Earnings Summary