S&P upgrades Hillman Solutions

S&P said it raised its issuer credit ratings for Hillman Solutions Corp. to BB from BB- and the Hillman Group Inc. to BB from BB-. The agency also upgraded the issue-level rating on the senior secured term loan due 2028 to BB+ from BB. The recovery rating on this debt is 2, indicating our expectation of substantial (70%-90%; rounded estimate: 85%) recovery in default.

“Hillman's profitability improved in 2023 largely due to lower inbound shipping costs from Asia, which have returned to near pre-pandemic levels. Lower-cost inventory began flowing through the company's income statement in the second half of 2023. The company's improved profitability and debt repayments resulted in meaningful deleveraging, despite softer demand. We estimate Hillman's S&P Global Ratings-adjusted leverage declined to about 3.5x in fiscal 2023, compared with 4.2x for fiscal 2022,” S&P said in a press release.

The agency also noted Hillman generated $170 million in free operating cash flow in fiscal 2023 versus about $50 million the year before.

The outlook is stable.

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