HLMN

Hillman is a genuine, if unglamorous, turnaround. After three straight years of GAAP losses (FY2021 -$38.3M through FY2023 -$9.6M), the company has now strung together two profitable years — net income of $17.3M in FY2024 and $40.3M in FY2025 (+133.6%), with operating income up 28.3% to $114M and diluted EPS doubling to $0.20. Revenue grew 5.4% to $1.55B, the best top-line print in the five-year history. Crucially, the MD&A shows Adjusted EBITDA climbing to $275.3M from $241.8M, driven almost entirely by the Hardware and Protective Solutions segment ($196.3M vs $155.7M), and interest expense falling to $56.5M from $59.2M as the 2025 Repricing Amendment chips away at borrowing costs. This is a deleveraging story working as designed: long-term debt down 3.4% to $668M, liabilities/equity at a manageable 0.92x.

The problem is what you pay and what cushions you have. At $8.33 the stock trades at 41.6x trailing GAAP EPS — optically rich — though that softens to roughly 8x EV/EBITDA (≈$2.3B enterprise value on $275M EBITDA) and 1.1x sales, which is fair rather than cheap for a capital-intensive distributor. The quality flags are real: net margin is just 2.6%, ROE only 3.3%, retained earnings remain deeply negative at -$179M, and the GAAP earnings lean heavily on a $141M D&A add-back from acquisition intangibles. More concerning, operating cash flow fell 42.6% to $105M and cash & equivalents dropped 38.7% to $27.3M — a thin buffer against $668M of term debt. Free cash flow after $70M capex is roughly $35M, a ~2% yield, most of which is needed to service and reduce debt rather than reward shareholders (buybacks were a token $12.4M).