v3.26.3
Commitments and Contingencies
9 Months Ended
Sep. 26, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Insurance Coverage
The Company self-insures its general liability including product liability, automotive and workers' compensation losses up to $500 per occurrence. Catastrophic coverage has been purchased from third party insurers for occurrences up to $60,000. The two risk areas involving the most significant accounting estimates are workers' compensation and automotive liability. Actuarial valuations performed by the Company's outside risk insurance expert were used by the Company's management to form the basis for workers' compensation and automotive liability loss reserves. The actuary contemplated the Company's specific loss history, actual claims reported, and industry trends among statistical and other factors to estimate the range of reserves required. Risk insurance reserves are comprised of specific reserves for individual claims and additional amounts expected for development of these claims, as well as for incurred but not yet reported claims. The Company believes that the liability of approximately $4,125 recorded for such risks is adequate as of September 26, 2026.
As of September 26, 2026, the Company has provided certain vendors and insurers letters of credit aggregating to $5,350 related to our product purchases and insurance coverage for product liability, workers’ compensation, and general liability.
The Company self-insures group health claims up to an annual stop loss limit of $300 per participant. Historical group insurance loss experience forms the basis for the recognition of group health insurance reserves. Provisions for losses expected under these programs are recorded based on an analysis of historical insurance claim data and certain actuarial assumptions. The Company believes that the liability of approximately $4,964 recorded for such risks is adequate as of September 26, 2026.
Import Duties

The Company imports large quantities of fastener products which are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements and bilateral actions. 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. The U.S. 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 nail products sourced from Asian countries. The Company sourced products under review from vendors in China and Taiwan during the periods selected for review. The Company accrues for the duty expense once it is determined to be probable and the amount can be reasonably estimated.
Litigation

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On April 15, 2026, Hillman filed a lawsuit in the U.S. Court of International Trade against the United States of America seeking a full refund of all IEEPA tariffs that Hillman has paid to the United States. We elected to apply a gain contingency model in accordance with ASC 450-30, “Gain Contingencies” to account for potential recoveries of previously paid tariffs under which a gain will not be recognized until realized or realizable. Additionally, after the Supreme Court ruling in February, the U.S. administration almost immediately instituted new tariffs against most major trading partners under Section 122 of the Trade Act of 1974 at a rate of 10 percent for a period of up to 150 days. As the Section 122 tariffs expired, the administration announced new tariffs under Section 301 on imports from more than 80 countries, citing the U.S. prohibition on goods made with forced labor, with rates generally from 10 to 12.5 percent. Several 301 investigations remain open, which could produce further country-specific tariffs. We expect that the impact of these additional tariffs will partially offset any benefit of the IEEPA refunds that we will receive in the current year. Future adverse effects on our financial results could occur if tariff levels persist, continue to rise, or remain volatile. We continue to develop and implement mitigation strategies (such as price increases and sourcing changes, among others) and assess future implementation timelines, though there is no assurance that these efforts will be successful. Refunds associated with tariff costs that remain capitalized in inventory are reflected as a reduction to inventory on the accompanying Condensed Consolidated Balance Sheets and will benefit cost of sales as the related inventory is sold. Refunds associated with tariff costs previously recognized in earnings are reflected as a reduction to cost of sales (exclusive of depreciation and amortization) on the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).

We are involved in litigation arising in the normal course of business. In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.