Hillman Solutions Corp.HLMN
Hillman Solutions Corp. Leases Disclosure
Lessee
The Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both 1) the right to obtain substantially all of the economic benefits from the use of the asset and 2) the right to direct the use of the asset. The Company leases certain distribution center locations, vehicles, forklifts, computer equipment, and its corporate headquarters with expiration dates through 2042. Certain lease arrangements include escalating rent payments and options to extend the lease term. Expected lease terms include these options to extend or terminate the lease when it is reasonably certain the Company will exercise the option. The Company's leasing arrangements do not contain material residual value guarantees nor material restrictive covenants.
The components of operating and finance lease costs for the years ended December 27, 2025, December 28, 2024 and December 30, 2023 were as follows:
| Year Ended December 27, 2025 | Year Ended December 28, 2024 | Year Ended December 30, 2023 | ||||||||||||||||||
| Operating lease costs | $ | 22,129 | $ | 21,821 | $ | 21,451 | ||||||||||||||
| Short term lease costs | 3,810 | 3,164 | 5,534 | |||||||||||||||||
| Variable lease costs | 2,033 | 2,732 | 847 | |||||||||||||||||
| Finance lease costs: | ||||||||||||||||||||
| Amortization of right of use assets | 5,774 | 3,910 | 2,570 | |||||||||||||||||
| Interest on lease liabilities | 1,062 | 557 | 285 | |||||||||||||||||
Rent expense is recognized on a straight-line basis over the expected lease term. Rent expense totaled $27,972, $27,717 and $27,832 in the years ended December 27, 2025, December 28, 2024 and December 30, 2023, respectively. Rent expense includes operating lease cost as well as expense for non-lease components such as common area maintenance, real estate taxes, real estate insurance, variable costs related to our leased vehicles and also short-term rental expenses.
The implicit rate is not determinable in most of the Company’s leases, as such management uses the Company’s incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The weighted average remaining lease terms and discount rates for all of our operating leases as of December 27, 2025 and December 28, 2024 were as follows:
| December 27, 2025 | December 28, 2024 | |||||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | |||||||||||||||||||||||
| Weighted average remaining lease term | 4.84 | 4.00 | 5.41 | 3.06 | ||||||||||||||||||||||
| Weighted average discount rate | 6.18% | 5.82% | 6.70% | 5.91% | ||||||||||||||||||||||
Supplemental balance sheet information related to the Company's finance leases as of December 27, 2025 and December 28, 2024:
| December 27, 2025 | December 28, 2024 | |||||||||||||
| $ | 18,778 | $ | 9,415 | |||||||||||
| 5,599 | 3,720 | |||||||||||||
| 13,619 | 6,028 | |||||||||||||
| Total principal payable on finance leases | $ | 19,218 | $ | 9,748 | ||||||||||
Supplemental cash flow information related to our operating leases was as follows for the years ended December 27, 2025 and December 28, 2024:
| Year Ended December 27, 2025 | Year Ended December 28, 2024 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash outflow from operating leases | $ | 22,313 | $ | 21,934 | ||||||||||
| Operating cash outflow from finance leases | 1,031 | 555 | ||||||||||||
| Financing cash outflow from finance leases | 5,683 | 3,682 | ||||||||||||
As of December 27, 2025, 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 27, 2025:
| Operating Leases | Finance Leases | |||||||||||||
| Less than one year | $ | 22,137 | $ | 6,484 | ||||||||||
| 1 to 2 years | 21,012 | 5,243 | ||||||||||||
| 2 to 3 years | 18,496 | 4,219 | ||||||||||||
| 3 to 4 years | 13,755 | 3,505 | ||||||||||||
| 4 to 5 years | 8,712 | 1,901 | ||||||||||||
| After 5 years | 10,264 | 83 | ||||||||||||
| Total future minimum rental commitments | 94,376 | 21,435 | ||||||||||||
| Less - amounts representing interest | (12,970) | (2,217) | ||||||||||||
| Present value of lease liabilities | $ | 81,406 | $ | 19,218 | ||||||||||
In July 2025, the Company entered into two additional operating leases which have not yet commenced; one is for an expansion project at the existing Bakersfield, California location, the second lease is for a new property located in Forest Park, Ohio for the purpose of consolidating office, warehouse, and distribution in the Cincinnati area. Occupancy has not yet commenced for either lease. The estimated future minimum rental commitments are approximately $407 per annum for the Bakersfield, California location beginning in 2026. The estimated future minimum rental commitments for the Forest Park lease are approximately $4.5 million per year beginning in late summer 2027, depending on substantial completion, and increasing 3.25% per year thereafter for 15 years, which gives the lease an estimated ending term in 2042.
Lessor
The Company has certain arrangements for key duplication equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Mar 16, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.