- Generated $34.8 million in cash from operations, up 195%
over prior-year period, reflecting disciplined working capital
initiatives
- Reduced $19.3 million in total debt, the fifth consecutive
quarter of debt reduction; Improved net debt leverage ratio again
sequentially down to 2.8x from 3.0x ending 2Q24
- Delivered net sales of $194.5 million in the quarter, within
expected guidance range
- Expanded gross margin 150 bps with strong operating margin
improvement as expected from improved efficiencies and cost
adjustments, despite lower net sales
- Achieved diluted EPS of $0.34 in 3Q24 and diluted Non-GAAP
EPS of $0.59, up 209% and 34% respectively over prior-year
period
- Updating 2024 outlook to reflect weaker end market
conditions plus hurricane impacts; Remain focused on working
capital management, operational efficiencies, cost discipline, and
reducing debt
Helios Technologies, Inc. (NYSE: HLIO) (“Helios” or the
“Company”), a global leader in highly engineered motion control and
electronic controls technology, today reported financial results
for the third quarter ended September 28, 2024.
“The Helios team delivered solid results in line with our
outlook for the quarter while we provided exceptional products,
services and solutions to our customers, and drove operational
efficiencies with strong cash management. These efforts contributed
to the measurable margin expansion in the quarter. Our focus on
inventory management helped us reach an inventory level we have not
achieved since January 2023. This consistent reduction in
inventory, operational efficiencies, and strong cash generation
enabled us to reduce debt for the fifth consecutive quarter while
we continued to improve our net debt leverage ratio. I believe we
are a better, even more financially disciplined business than we
were a year ago and expect that to be more evident as market
conditions improve,” said Sean Bagan, Interim President, Chief
Executive Officer, and Chief Financial Officer of Helios.
“Facing three straight storms, including a direct hit to
Sarasota with Hurricane Milton, our team’s strength was tested.
Between the storms, we lost over 18 production shifts across our
multiple manufacturing facilities in Florida. It has been amazing
to watch our global teams come together and show extraordinary
support for one another. I saw resilience, dedication, and energy
in the Helios team that is driven by a connectedness and engagement
more powerful than I have ever witnessed before. Our speed of
recovery from these uncontrollable factors has been made possible
by the dedicated efforts of our employees, the support of our
customers, and the strength of our community. We made excellent
progress on many fronts even in the face of natural disasters,
increasing softness in market conditions, and higher hydraulic
distributor inventory levels. We believe the underlying
fundamentals of this business are solid which are reflected through
improved profitability metrics even with lower volumes. As the
markets strengthen, we will have a more efficient business that can
deliver strong earnings power. In the meantime, we must temper our
expectations to reflect the current market conditions and
operational disruptions. Consequently, we have updated our outlook
for the year accordingly,” Mr. Bagan concluded.
Third Quarter 2024 Consolidated Results
For the Three Months Ended ($ in millions, except per share
data)(Unaudited)
September 28,2024 September 30,2023
Change % Change Net sales
$
194.5
$
201.4
$
(6.9
)
(3
%)
Gross profit
$
60.5
$
59.7
$
0.8
1
%
Gross margin
31.1
%
29.6
%
150
bps
Operating income
$
22.2
$
13.8
$
8.4
61
%
Operating margin
11.4
%
6.9
%
450
bps
Non-GAAP adjusted operating margin*
16.6
%
13.7
%
290
bps
Net income
$
11.4
$
3.5
$
7.9
226
%
Diluted EPS
$
0.34
$
0.11
$
0.23
209
%
Non-GAAP net income*
$
19.7
$
14.4
$
5.3
37
%
Diluted Non-GAAP EPS*
$
0.59
$
0.44
$
0.15
34
%
Adjusted EBITDA*
$
40.6
$
35.6
$
5.0
14
%
Adjusted EBITDA margin*
20.9
%
17.7
%
320
bps
* Adjusted numbers are not measures determined in accordance
with generally accepted accounting principles in the United States,
commonly known as GAAP. Nevertheless, Helios believes that
providing these specific Non-GAAP figures are important for
investors and other readers of Helios financial statements, as they
are used as analytical indicators by Helios management to better
understand operating performance. These Non-GAAP financial measures
should be considered in addition to results prepared in accordance
with GAAP and should not be considered a substitute for GAAP.
Please carefully review the attached Non-GAAP reconciliations to
the most directly comparable GAAP measures and the related
additional information provided throughout. Because these metrics
are Non-GAAP measures and are thus susceptible to varying
calculations, these figures, as presented, may not be directly
comparable to other similarly titled measures used by other
companies.
Sales
- Changes in Market Mix: Compared with the prior-year period,
Electronics segment revenue declined 6% as the Health &
Wellness market growth did not fully offset weakness in
recreational, industrial, and mobile markets; Hydraulics sales were
down 2% primarily reflecting the weakness in the agriculture
market. Compared with the second quarter 2024, the Electronics
segment declined 12% and the Hydraulics segment revenue declined
11%.
- By Region: sales in Asia Pacific ("APAC”) grew 16% while there
was an 11% decline in the Americas and a 3% decline in Europe, the
Middle East and Africa (“EMEA”) compared with the year ago period.
Compared with the second quarter 2024, APAC declined 5% and
Americas declined 12%, and EMEA was down 17%.
- Other Impacts: foreign currency (FX) translation favorably
impacted sales by $0.6 million in the third quarter 2024.
Profits and margins
- Gross profit and margin impacts: gross profit increased $0.8
million compared with the year ago period and gross margin expanded
150 basis points as the impact of lower volume was offset by lower
material costs, reductions in variable overhead and favorable
foreign currency impacts of $0.2. Compared with the second quarter
2024, gross profit declined $10.1 million, or 14%.
- Selling, engineering and administrative (“SEA”) expenses: SEA
declined $7.3 million, or 19% compared with the year ago period
reflecting lower payroll and benefit costs and a cost adjustment
from lower stock based compensation expense from officer
transition.
- Amortization of intangible assets: $7.9 million down 4%
compared with the year ago period as some intangibles have become
fully amortized since the comparable period.
Non-operating items
- Net interest expense: up $0.3 million compared with the year
ago period. The year ago period interest expense benefited $1.8
million from a recognized gain on an interest rate swap
agreement.
- Effective tax rate: of 14.2% compared with 30.5% in the year
ago period. The year-to-date provision was 20.3% and 23.8% of
pretax income for 2024 and 2023, respectively. These effective
rates fluctuate relative to the levels of income and different tax
rates in effect among the countries in which we sell our products.
The change in the comparable prior-year quarter and year-to-date is
primarily due to an overall increase in discrete tax benefits
driven by the officer transition in July 2024.
Net income, diluted earnings per share
(“EPS”), Non-GAAP EPS, and adjusted EBITDA margin
- GAAP net income: grew $7.9 million, or $0.23 per diluted share,
compared with the year ago period. Compared with second quarter
2024, net income declined $2.2 million, or $0.07 per diluted
share.
- Diluted Non-GAAP EPS: increased $0.15, or over 34% compared
with the year ago period primarily the result of strong cost
discipline, operational efficiencies, lower payroll and benefits
costs, lower stock based compensation costs, and cost take out
measures. Compared with second quarter of 2024, diluted non-GAAP
EPS declined $0.05, or 8%.
- Adjusted EBITDA margin: expanded 320 basis points compared with
the year ago period reflecting the improvements discussed
earlier.
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Hydraulics For the Three
Months Ended ($ in millions)(Unaudited)
September
28,2024 September 30,2023 Change % Change
Net Sales Americas
$
52.1
$
55.7
$
(3.6
)
(6
%)
EMEA
36.7
38.8
(2.1
)
(5
%)
APAC
40.6
37.5
3.1
8
%
Total Segment Sales
$
129.4
$
132.0
$
(2.6
)
(2
%)
Gross Profit
$
40.9
$
41.1
$
(0.2
)
(0
%)
Gross Margin
31.6
%
31.1
%
50
bps SEA Expenses
$
16.7
$
22.7
$
(6.0
)
(26
%)
Operating Income
$
24.2
$
18.4
$
5.8
32
%
Operating Margin
18.7
%
13.9
%
480
bps
Third Quarter 2024 Hydraulics Segment
Review
- Sales: higher sales in APAC partially offset the declines in
EMEA and Americas, resulting in a 2% year over year decline in
segment sales. The decline in sales in the third quarter was
primarily driven by softness in the agriculture end market, while
industrial and mobile end markets were up compared to the prior
year period. FX had a favorable $0.6 million impact on sales.
Compared with the second quarter of 2024, sales declined 11% driven
on general weakness across all end markets.
- Gross profit and margin drivers: modestly lower gross profit
was on lower sales while gross margin expanded 50 bps primarily
from reduced overhead expenses compared with the year ago period.
Compared with the second quarter of 2024, gross profit declined 9%
while gross margin expanded 80 bps primarily due to lower material
costs.
- Operating income and operating margin: higher operating income
of $24.2 million grew 32% and operating margin expanded 480 bps,
compared with the year ago period due to the gross margin
improvement and lower SEA expenses from lower payroll and benefit
costs and the cost adjustment as previously described. Compared
with the second quarter 2024, operating income increased 1% and
margin expanded 230 basis points.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Electronics For the Three
Months Ended ($ in millions)(Unaudited)
September
28,2024 September 30,2023 Change % Change
Net Sales Americas
$
50.9
$
59.4
$
(8.5
)
(14
%)
EMEA
6.5
5.7
0.8
14
%
APAC
7.7
4.3
3.4
79
%
Total Segment Sales
$
65.1
$
69.4
$
(4.3
)
(6
%)
Gross Profit
$
19.6
$
18.6
$
1.0
5
%
Gross Margin
30.1
%
26.8
%
330
bps SEA Expenses
$
12.8
$
14.4
$
(1.6
)
(11
%)
Operating Income
$
6.8
$
4.2
$
2.6
62
%
Operating Margin
10.4
%
6.1
%
430
bps
Third Quarter 2024 Electronics Segment
Review
- Sales: increased demand in APAC and EMEA helped to partially
offset the decline in the Americas resulting in a 6% year over year
decline in segment sales. Higher sales in health and wellness
partially offset continued softness in recreational, industrial,
and mobile end markets compared with the year ago period. Compared
with the second quarter of 2024, sales were down 12% primarily due
to normal patterns in health and wellness and continued weakness
across other end markets.
- Gross profit and margin drivers: gross profit increased 5% as
lower volume was offset by a decrease in material costs. Margin
expansion of 330 bps compared with the year ago period as lower
material costs partially offset the impact of a higher mix of
revenue in products with a lower margin profile and slightly lower
leverage of fixed costs. Compared with the second quarter of 2024,
gross profit declined $6.1 million and gross margin contracted 450
bps primarily due to lower volumes and lower leverage of fixed
costs.
- Operating income and operating margin: the growth in operating
income of 62% and expansion of operating margin of 430 bps,
compared with the year ago period due to the improvement in gross
margin and lower SEA expenses from lower payroll and benefit costs
and the cost adjustment as previously described. Compared with the
second quarter of 2024, operating income declined $3.5 million or
34% and margin contracted 350 bps driven primarily by leverage from
lower sales volume.
Strengthening Cash Flow, Balance Sheet and Financial
Flexibility
- Net cash provided by operations: Generated $34.8 million in the
third quarter 2024, up 195% compared with $11.8 million in the year
ago period.
- Continued debt reduction: total debt at quarter-end was $483.4
million down 11% from $544.5 million at September 30, 2023 and down
4% sequentially.
- Cash and cash equivalents: as of September 28, 2024, were $46.7
million, up 4% sequentially from the second quarter 2024 and up 33%
compared with the year ago period.
- Inventory: continued to decline to $199.2 million, down $7.1
million or 3%, from the second quarter of 2024 and down 7%, or
$15.9 million, from the end of 2023. The continued decline in
inventory levels reflects disciplined financial management with the
intent to accelerate cash conversion rates.
- Net debt-to-adjusted EBITDA leverage ratio: improved to 2.8x at
quarter end compared with 3.0x at the end of the second quarter
2024. At the end of the third quarter 2024, the Company had $325.3
million available on its revolving lines of credit.
- Capital expenditures: were $6.0 million in the third quarter
2024, or 3.0% of sales and relatively flat with the year ago
period.
- Dividends: Paid 111th consecutive quarterly cash dividend of
$0.09 per share on October 21, 2024, a history of over 27
consecutive years of dividends.
Updating Full Year 2024 Outlook:
Mr. Bagan continued, “While our third quarter results were
within our expected range, the impact of growing distributor
inventory levels and weakening end markets combined with 18 lost
manufacturing shifts from three hurricanes, we are judiciously
updating our outlook for the remainder of the year. Despite lower
full year sales volumes compared with last year, the midpoint of
our range implies a steady adjusted EBITDA margin. We remain
focused on protecting our margins through operational efficiencies
and disciplined cost control. We have made good progress in working
capital management and debt repayment year to date and expect to
have continued opportunities for improvement there. Over the last
few years, we have diversified our customer base as well as end
markets which should benefit us, especially as markets
recover.”
The following provides the Company’s expectations for 2024 as of
November 5, 2024. This assumes constant currency, using quarter end
rates, and that markets served are not further impacted by the
macroeconomic or the geopolitical environment.
2023 Actual Previous 2024 Outlook Updated 2024
Outlook Total net sales
$835.6 million
$825 - $840 million
$800 - $805 million
Net income
$37.5 million
$45 - $52 million
$40 - $42 million
Adjusted EBITDA
$161.4 million
$161 - $176 million
$152 - $158 million
Adjusted EBITDA margin
19.3%
19.5% - 21.0%
19.0% - 19.6%
Interest expense
$31.2 million
$33.5 - $34.5 million
$33.5 - $34.0 million
Effective tax rate
24%
21% - 23%
20% - 21%
Depreciation
$30.2 million
$31.5 - $32.5 million
$31.5 - $32.0 million
Amortization
$33.6 million
$32.5 - $33.5 million
$33.0 - $33.5 million
Capital expenditures % net sales
4%
3.5% - 4.0%
3.5% - 3.7%
Diluted EPS
$1.14
$1.35 - $1.55
$1.15 - $1.25
Diluted Non-GAAP EPS
$2.34
$2.25 - $2.45
$2.10 - $2.20
Forward-looking adjusted EBITDA, adjusted EBITDA margin and
diluted Non-GAAP EPS represent Non-GAAP financial measures. The
Company has presented the comparable GAAP figures in the table
above. See comments on reconciliation of forward-looking non-GAAP
financial measures in the Forward-Looking Information included in
this release describing the safe harbor provided within the meaning
of Section 21E of the Securities Exchange Act of 1934.
Webcast
The Company will host a conference call and webcast tomorrow,
Wednesday, November 6, 2024, at 9:00 a.m. Eastern Time to review
its financial and operating results and discuss its corporate
strategies and outlook. A question-and-answer session will follow.
The conference call can be accessed by calling (201) 689-8573. The
audio webcast will be available at www.heliostechnologies.com.
A telephonic replay will be available from approximately 1:00
p.m. ET on the day of the call through Friday, November 20, 2024.
To listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13748511. The webcast replay will be available
in the investor relations section of the Company’s website at
www.heliostechnologies.com, where a transcript will also be posted
once available.
About Helios Technologies
Helios Technologies is a global leader in highly engineered
motion control and electronic controls technology for diverse end
markets, including construction, material handling, agriculture,
energy, recreational vehicles, marine and health and wellness.
Helios sells its products to customers in over 90 countries around
the world. Its strategy for growth is to be the leading provider in
niche markets, with premier products and solutions through
innovative product development and acquisition. The Company has
paid a cash dividend to its shareholders every quarter since
becoming a public company in 1997. For more information please
visit: www.heliostechnologies.com and follow us on LinkedIn.
FORWARD-LOOKING INFORMATION
This news release contains “forward‐looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward‐looking statements involve risks and uncertainties, and
actual results may differ materially from those expressed or
implied by such statements. They include statements regarding
current expectations, estimates, forecasts, projections, our
beliefs, and assumptions made by Helios Technologies, Inc.
(“Helios” or the “Company”), its directors or its officers about
the Company and the industry in which it operates, and assumptions
made by management, and include among other items, (i) the
Company’s strategies regarding growth, including its intention to
develop new products and make acquisitions; (ii) the effectiveness
of creating the Centers of Excellence; (iii) trends affecting the
Company’s financial condition or results of operations; (iv) the
Company’s ability to continue to control costs and to meet its
liquidity and other financing needs; (v) the Company’s ability to
declare and pay dividends; and (vi) the Company’s ability to
respond to changes in customer demand domestically and
internationally, including as a result of the cyclical nature of
our business and the standardization. In addition, we may make
other written or oral statements, which constitute forward-looking
statements, from time to time. Words such as “may,” “expects,”
“projects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” variations of such words, and similar expressions are
intended to identify such forward-looking statements. Similarly,
statements that describe our future plans, objectives or goals also
are forward-looking statements. These statements are not
guaranteeing future performance and are subject to a number of
risks and uncertainties. Our actual results may differ materially
from what is expressed or forecasted in such forward-looking
statements, and undue reliance should not be placed on such
statements. All forward-looking statements are made as of the date
hereof, and we undertake no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Factors that could cause the actual results to differ materially
from what is expressed or forecasted in such forward‐looking
statements include, but are not limited to, (i) risks related to
the Company’s previous investigation of its former CEO and the
related management transition that is in process (ii) the Company’s
ability to respond to global economic trends and changes in
customer demand domestically and internationally, including as a
result of standardization and the cyclical nature of our business,
which can adversely affect the demand for capital goods; (iii)
supply chain disruption and the potential inability to procure
goods; (iv) conditions in the capital markets, including the
interest rate environment and the availability of capital on terms
acceptable to us, or at all; (v) global and regional economic and
political conditions, including inflation (or hyperinflation)
exchange rates, changes in the cost or availability of energy,
transportation, the availability of other necessary supplies and
services and recession; (vi) changes in the competitive marketplace
that could affect the Company’s revenue and/or cost bases, such as
increased competition, lack of qualified engineering, marketing,
management or other personnel, and increased labor and raw
materials costs; (vii) risks related to health epidemics, pandemics
and similar outbreaks, which may among other things, adversely
affect our supply chain, material costs, and work force and may
have material adverse effects on our business, financial position,
results of operations and/or cash flows; (viii) risks from acute
events like hurricanes, floods, tornadoes, and wildfires, as well
as chronic risks from longer-term weather patterns like drought,
sea level rise, and higher temperatures; (ix) risks related to our
international operations, including the potential impact of the
ongoing conflict in Ukraine and the Middle East; (x) new product
introductions, product sales mix and the geographic mix of sales
nationally and internationally; and (xi) stakeholders, including
regulators, views regarding our environmental, social and
governance goals and initiatives, and the impact of factors outside
of our control on such goals and initiatives. Further information
relating to additional factors that could cause actual results to
differ from those anticipated is included but not limited to
information under the heading Item 1. “Business” and Item 1A. “Risk
Factors” in the Company’s Form 10-K for the year ended December 30,
2023 filed with the Securities and Exchange Commission (SEC) on
February 27, 2024 as well as any subsequent filings with the
SEC.
Helios has presented non-GAAP measures including adjusted
operating income, adjusted operating margin, EBITDA, EBITDA margin,
adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted
EBITDA, adjusted net income, and adjusted net income per diluted
share and sales in constant currency. Helios believes that
providing these specific Non-GAAP figures are important for
investors and other readers of Helios financial statements, as they
are used as analytical indicators by Helios management to better
understand operating performance. The determination of the amounts
that are excluded from these Non-GAAP measures is a matter of
management judgment and depends upon, among other factors, the
nature of the underlying expense or income recognized in a given
period. You should not consider the inclusion of this additional
information in isolation or as a substitute for results prepared in
accordance with GAAP. Please carefully review the Non-GAAP
reconciliations to the most directly comparable GAAP measures and
the related additional information provided throughout. Because
these metrics are Non-GAAP measures and are thus susceptible to
varying calculations, these figures, as presented, may not be
directly comparable to other similarly titled measures used by
other companies.
This news release also presents forward-looking statements
regarding Non-GAAP measures, including adjusted EBITDA, adjusted
EBITDA margin and adjusted net income per diluted share. The
Company is unable to present a quantitative reconciliation of these
forward-looking Non-GAAP financial measures to their most directly
comparable forward-looking GAAP financial measures because such
information is not available, and management cannot reliably
predict the necessary components of such GAAP measures without
unreasonable effort or expense. In addition, the Company believes
that such reconciliations would imply a degree of precision that
would be confusing or misleading to investors. The unavailable
information could have a significant impact on the Company’s 2024
financial results. These Non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others, changes in connection with quarter-end and
year-end adjustments. Any variation between the Company’s actual
results and preliminary financial data set forth above may be
material.
Financial Tables Follow:
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
data)
(Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 28,
September 30,
September 28,
September 30,
2024
2023
% Change
2024
2023
% Change
Net sales
$
194.5
$
201.4
(3
)%
$
626.4
$
642.2
(2
)%
Cost of sales
134.0
141.7
(5
)%
428.1
435.7
(2
)%
Gross profit
60.5
59.7
1
%
198.3
206.5
(4
)%
Gross margin
31.1
%
29.6
%
31.7
%
32.2
%
Selling, engineering and administrative expenses
30.4
37.7
(19
)%
106.2
113.8
(7
)%
Amortization of intangible assets
7.9
8.2
(4
)%
23.6
24.7
(4
)%
Operating income
22.2
13.8
61
%
68.5
68.0
1
%
Operating margin
11.4
%
6.9
%
10.9
%
10.6
%
Interest expense, net
9.0
8.7
3
%
25.7
22.6
14
%
Foreign currency transaction loss, net
0.1
0.1
-
%
0.5
0.6
(17
)%
Other non-operating (income) expense, net
(0.2
)
-
-
%
(0.6
)
-
-
%
Income before income taxes
13.3
5.0
166
%
42.9
44.8
(4
)%
Income tax provision
1.9
1.5
27
%
8.7
10.7
(19
)%
Net income
$
11.4
$
3.5
226
%
$
34.2
$
34.1
0
%
Net income per share: Basic
$
0.34
$
0.11
209
%
$
1.03
$
1.04
(1
)%
Diluted
$
0.34
$
0.11
209
%
$
1.03
$
1.04
(1
)%
Weighted average shares outstanding: Basic
33.2
33.0
33.2
32.8
Diluted
33.2
33.1
33.2
33.0
Dividends declared per share
$
0.09
$
0.09
$
0.27
$
0.27
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except per share
data)
September 28, 2024 December 30, 2023
(Unaudited)
Assets Current assets: Cash and cash equivalents
$
46.7
$
32.4
Accounts receivable, net of allowance for credit losses of $2.5 and
$2.1
120.8
114.8
Inventories, net
199.2
215.1
Income taxes receivable
10.9
11.3
Other current assets
28.3
23.1
Total current assets
405.9
396.7
Property, plant and equipment, net
223.7
227.9
Deferred income taxes
1.8
1.7
Goodwill
517.0
514.0
Other intangible assets, net
404.5
426.4
Other assets
18.8
23.7
Total assets
$
1,571.7
$
1,590.4
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
56.9
$
70.3
Accrued compensation and benefits
23.4
19.4
Other accrued expenses and current liabilities
28.5
27.0
Current portion of long-term non-revolving debt, net
17.6
23.2
Dividends payable
3.0
3.0
Income taxes payable
4.6
2.0
Total current liabilities
134.0
144.9
Revolving lines of credit
174.5
199.8
Long-term non-revolving debt, net
287.9
298.3
Deferred income taxes
56.7
57.1
Other noncurrent liabilities
33.1
35.7
Total liabilities
686.2
735.8
Commitments and contingencies Shareholders’ equity: Preferred
stock, par value $0.001, 2.0 shares authorized, no shares issued or
outstanding
-
-
Common stock, par value $0.001, 100.0 shares authorized, 33.2 and
33.1 shares issued and outstanding
-
-
Capital in excess of par value
436.0
434.4
Retained earnings
500.8
475.6
Accumulated other comprehensive loss
(51.3
)
(55.4
)
Total shareholders’ equity
885.5
854.6
Total liabilities and shareholders’ equity
$
1,571.7
$
1,590.4
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
For the Nine Months Ended September 28, 2024
September 30, 2023 Cash flows from operating
activities: Net income
$
34.2
$
34.1
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
47.8
47.7
Stock-based compensation expense
2.5
9.2
Amortization of debt issuance costs
0.9
0.5
Benefit for deferred income taxes
(2.1
)
(3.1
)
Forward contract losses, net
-
0.1
Other, net
1.1
0.5
(Increase) decrease in, net of acquisitions: Accounts receivable
(5.5
)
(1.5
)
Inventories
16.2
(14.4
)
Income taxes receivable
0.7
0.3
Other current assets
(5.0
)
(7.5
)
Other assets
4.8
5.8
Increase (decrease) in, net of acquisitions: Accounts payable
(13.4
)
(9.1
)
Accrued expenses and other liabilities
5.3
(6.9
)
Income taxes payable
2.3
1.8
Other noncurrent liabilities
(3.4
)
(4.6
)
Contingent consideration payments in excess acquisition date fair
value
-
(2.7
)
Net cash provided by operating activities
86.4
50.2
Cash flows from investing activities: Business acquisitions,
net of cash acquired
-
(114.8
)
Capital expenditures
(19.6
)
(25.5
)
Proceeds from dispositions of property, plant and equipment
0.1
0.3
Cash settlement of forward contracts
-
0.6
Software development costs
(2.6
)
(5.1
)
Net cash used in investing activities
(22.1
)
(144.5
)
Cash flows from financing activities: Borrowings on
revolving credit facilities
38.1
175.7
Repayment of borrowings on revolving credit facilities
(64.7
)
(219.0
)
Borrowings on long-term non-revolving debt
126.8
160.0
Repayment of borrowings on long-term non-revolving debt
(142.2
)
(16.3
)
Proceeds from stock issued
1.6
1.6
Dividends to shareholders
(8.9
)
(8.8
)
Payment of employee tax withholding on equity award vestings
(2.5
)
(2.2
)
Payment of contingent consideration liability
-
(3.4
)
Other financing activities
(4.7
)
(1.9
)
Proceeds received upon termination of Cash Flow hedge instruments
7.1
-
Net cash (used in) provided by financing activities
(49.4
)
85.7
Effect of exchange rate changes on cash and cash equivalents
(0.6
)
0.1
Net increase (decrease) in cash and cash equivalents
14.3
(8.5
)
Cash and cash equivalents, beginning of period
32.4
43.7
Cash and cash equivalents, end of period
$
46.7
$
35.2
HELIOS TECHNOLOGIES
SEGMENT DATA
(In millions)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended September 28,2024 September 30,2023
September 28,2024 September 30,2023 Net Sales:
Hydraulics
$
129.4
$
132.0
$
417.5
$
432.1
Electronics
65.1
69.4
208.9
210.1
Consolidated
$
194.5
$
201.4
$
626.4
$
642.2
Gross profit and margin: Hydraulics
$
40.9
$
41.1
$
130.3
$
140.7
31.6
%
31.1
%
31.2
%
32.6
%
Electronics
19.6
18.6
68.0
65.8
30.1
%
26.8
%
32.6
%
31.3
%
Consolidated
$
60.5
$
59.7
$
198.3
$
206.5
31.1
%
29.6
%
31.7
%
32.2
%
Operating income (loss) and margin: Hydraulics
$
24.2
$
18.4
$
69.9
$
73.3
18.7
%
13.9
%
16.7
%
17.0
%
Electronics
6.8
4.2
24.2
23.8
10.4
%
6.1
%
11.6
%
11.3
%
Corporate and other
(8.8
)
(8.8
)
(25.6
)
(29.1
)
Consolidated
$
22.2
$
13.8
$
68.5
$
68.0
11.4
%
6.9
%
10.9
%
10.6
%
ORGANIC AND ACQUIRED NET SALES
1
(In millions)
(Unaudited)
For the Three Months Ended For the Year Ended
For the Three Months Ended For the Nine Months Ended
April 1,
July 1,
September 30,
December 30,
December 30,
March 30,
June 29,
September 28,
September 28,
2023
2023
2023
2023
2023
2024
2024
2024
2024
Hydraulics Organic
$
134.0
$
137.2
$
121.0
$
126.6
$
518.8
$
140.5
$
145.7
$
129.4
$
415.6
Acquisition
13.7
15.2
11.0
7.1
47.0
1.9
-
-
1.9
Total
$
147.7
$
152.4
$
132.0
$
133.7
$
565.8
$
142.4
$
145.7
$
129.4
$
417.5
Electronics Organic
$
65.5
$
74.0
$
67.1
$
57.4
$
264.0
$
67.6
$
73.0
$
65.1
$
205.8
Acquisition
-
1.2
2.3
2.3
5.8
2.0
1.2
-
3.1
Total
$
65.5
$
75.2
$
69.4
$
59.7
$
269.8
$
69.6
$
74.2
$
65.1
$
208.9
Consolidated Organic
$
199.5
$
211.2
$
188.1
$
184.0
$
782.8
$
208.1
$
218.7
$
194.5
$
621.3
Acquisition
13.7
16.4
13.3
9.4
52.8
3.9
1.2
-
5.0
Total
$
213.2
$
227.6
$
201.4
$
193.4
$
835.6
$
212.0
$
219.9
$
194.5
$
626.4
HELIOS TECHNOLOGIES
Net Sales by Geographic Region
and Segment
(In millions)
(Unaudited)
2024
Q1 % Change y/y Q2 % Change y/y
Q3 % Change y/y YTD 2024 % Change y/y
Americas: Hydraulics
$
55.8
(4%)
$
59.5
(2%)
$
52.1
(6%)
$
167.4
(4%)
Electronics
58.1
5%
$
57.8
(9%)
$
50.9
(14%)
$
166.8
(6%)
Consol. Americas
113.9
1%
117.3
(5%)
103.0
(11%)
334.2
(5%)
% of total
54
%
53
%
53
%
53
%
EMEA:
Hydraulics
$
45.5
(8%)
$
42.8
(17%)
$
36.7
(5%)
$
125.0
(10%)
Electronics
6.5
(3%)
9.0
29%
6.5
14%
22.0
13%
Consol. EMEA
52.0
(7%)
51.8
(11%)
43.2
(3%)
147.0
(7%)
% of total
25
%
24
%
22
%
23
%
APAC:
Hydraulics
$
41.1
2%
$
43.4
7%
$
40.6
8%
$
125.1
6%
Electronics
5.0
35%
7.4
48%
7.7
79%
$
20.1
55%
Consol. APAC
46.1
5%
50.8
12%
48.3
16%
145.2
11%
% of total
22
%
23
%
25
%
23
%
Total
$
212.0
(1%)
$
219.9
(3%)
$
194.5
(3%)
$
626.4
(2%)
2023
Q1 % Change y/y Q2 % Change y/y
Q3 % Change y/y Q4 % Change y/y
2023
% Change y/y Americas: Hydraulics
$
57.9
34%
$
60.6
21%
$
55.7
12%
$
60.2
6%
$
234.4
17%
Electronics
55.1
(29%)
63.2
(21%)
59.4
(9%)
48.8
2%
$
226.5
(16%)
Consol. Americas
113.0
(6%)
123.8
(5%)
115.1
0%
109.0
4%
460.9
(2%)
% of total
53
%
54
%
57
%
56
%
55
%
EMEA:
Hydraulics
$
49.4
(7%)
$
51.3
5%
$
38.8
(6%)
$
38.1
(12%)
$
177.6
(5%)
Electronics
6.7
(43%)
7.0
(43%)
5.7
(26%)
5.8
9%
$
25.2
(32%)
Consol. EMEA
56.1
(13%)
58.3
(5%)
44.5
(9%)
43.9
(10%)
202.8
(9%)
% of total
26
%
26
%
22
%
23
%
24
%
APAC:
Hydraulics
$
40.4
(2%)
$
40.5
(8%)
$
37.5
(7%)
$
35.4
(12%)
$
153.8
(7%)
Electronics
3.7
(73%)
5.0
(22%)
4.3
30%
5.1
104%
$
18.1
(31%)
Consol. APAC
44.1
(20%)
45.5
(10%)
41.8
(4%)
40.5
(5%)
171.9
(10%)
% of total
21
%
20
%
21
%
21
%
21
%
Total
$
213.2
(11%)
$
227.6
(6%)
$
201.4
(3%)
$
193.4
(1%)
$
835.6
(6%)
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income & Non-GAAP Adjusted Operating Margin
RECONCILIATION
(In millions)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended Twelve Months Ended September 28, 2024
Margin September 30, 2023 Margin September
28, 2024 Margin September 30, 2023 Margin
September 28, 2024 Margin GAAP operating
income
$
22.2
11.4
%
$
13.8
6.9
%
$
68.5
10.9
%
$
68.0
10.6
%
$
80.4
9.8
%
Acquisition-related amortization of intangible assets
7.9
4.1
%
8.2
4.1
%
23.6
3.8
%
24.7
3.8
%
31.9
3.9
%
Acquisition and financing-related expenses
(A)
0.1
0.1
%
0.5
0.2
%
0.7
0.1
%
3.3
0.5
%
1.4
0.2
%
Restructuring charges
(B)
1.2
0.6
%
4.8
2.4
%
4.4
0.7
%
9.0
1.4
%
7.3
0.9
%
Officer transition costs
0.8
0.4
%
0.1
0.0
%
1.3
0.2
%
1.0
0.2
%
1.7
0.2
%
Acquisition integration costs
(C)
-
0.0
%
-
0.0
%
0.3
0.0
%
0.2
0.0
%
0.4
0.0
%
Other
-
0.0
%
0.1
0.0
%
0.2
0.0
%
-
0.0
%
0.2
0.0
%
Non-GAAP adjusted operating income
$
32.2
16.6
%
$
27.5
13.7
%
$
99.0
15.8
%
$
106.2
16.5
%
$
123.3
15.0
%
GAAP operating margin
11.4
%
6.9
%
10.9
%
10.6
%
9.8
%
Non-GAAP adjusted operating margin
16.6
%
13.7
%
15.8
%
16.5
%
15.0
%
Net sales
$
194.5
$
201.4
$
626.4
$
642.2
$
819.8
Non-GAAP Adjusted EBITDA &
Non-GAAP Adjusted EBITDA Margin RECONCILIATION
(In millions)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended Twelve Months Ended September 28, 2024
Margin September 30, 2023 Margin September
28, 2024 Margin September 30, 2023 Margin
September 28, 2024 Margin Net income
$
11.4
5.9
%
$
3.5
1.7
%
$
34.2
5.5
%
$
34.1
5.3
%
$
37.5
4.6
%
Interest expense, net
9.0
4.6
%
8.7
4.3
%
25.7
4.1
%
22.6
3.5
%
34.3
4.2
%
Income tax provision
1.9
1.0
%
1.5
0.7
%
8.7
1.4
%
10.7
1.7
%
9.7
1.2
%
Depreciation and amortization
16.1
8.3
%
16.4
8.1
%
47.8
7.6
%
47.7
7.4
%
63.9
7.8
%
EBITDA
38.4
19.7
%
30.1
14.9
%
116.4
18.6
%
115.1
17.9
%
145.4
17.7
%
Acquisition and financing-related expenses
(A)
0.1
0.1
%
0.5
0.2
%
0.7
0.1
%
3.3
0.5
%
1.4
0.2
%
Restructuring charges
(B)
1.2
0.6
%
4.8
2.4
%
4.4
0.7
%
9.0
1.4
%
7.3
0.9
%
Officer transition costs
0.8
0.4
%
0.1
0.0
%
1.3
0.2
%
1.0
0.2
%
1.7
0.2
%
Acquisition integration costs
(C)
-
0.0
%
-
0.0
%
0.3
0.0
%
0.2
0.0
%
0.4
0.0
%
Change in fair value of contingent consideration
-
0.0
%
-
0.0
%
-
0.0
%
0.8
0.1
%
(0.9
)
-0.1
%
Other
0.1
0.1
%
0.1
0.0
%
0.2
0.0
%
(0.4
)
-0.1
%
0.4
0.0
%
Adjusted EBITDA
$
40.6
20.9
%
$
35.6
17.7
%
$
123.3
19.7
%
$
129.0
20.1
%
$
155.7
19.0
%
-
-
TTM adjusted EBITDA
$
123.3
$
129.0
$
155.7
GAAP net income margin
5.9
%
1.7
%
5.5
%
5.3
%
4.6
%
EBITDA margin
19.7
%
14.9
%
18.6
%
17.9
%
17.7
%
Adjusted EBITDA margin
20.9
%
17.7
%
19.7
%
20.1
%
19.0
%
Net sales
$
194.5
$
201.4
$
626.4
$
642.2
$
819.8
*General note: items may not foot or recalculate due to rounding
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Net Income
& Non-GAAP Adjusted Net Income Per Diluted Share
RECONCILIATION
(In millions)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended September 28, 2024 Per Diluted Share
September 30, 2023 Per Diluted Share September 28,
2024 Per Diluted Share* September 30, 2023 Per
Diluted Share GAAP net income
$
11.4
$
0.34
$
3.5
$
0.11
$
34.2
$
1.03
$
34.1
$
1.03
Amortization of intangible assets
(D)
8.4
0.25
8.4
0.25
24.7
0.74
25.2
0.76
Acquisition and financing-related expenses
(A)
0.1
-
0.5
0.02
0.7
0.02
3.3
0.10
Restructuring charges
(B)
1.2
0.04
4.8
0.15
4.4
0.13
9.0
0.27
Officer transition costs
0.8
0.02
0.1
-
1.3
0.04
1.0
0.03
Acquisition integration costs
(C)
-
-
-
-
0.3
0.01
0.2
0.01
Change in fair value of contingent consideration
-
-
-
-
-
-
0.8
0.02
Other
0.1
-
0.1
-
0.2
0.01
(0.4
)
(0.01
)
Tax effect of above
(2.3
)
(0.07
)
(3.0
)
(0.09
)
(7.0
)
(0.21
)
(8.6
)
(0.26
)
Non-GAAP Adjusted net income
$
19.7
$
0.59
$
14.4
$
0.44
$
58.8
$
1.77
$
64.6
$
1.96
GAAP net income per diluted share
$
0.34
$
0.11
$
1.03
$
1.03
Non-GAAP Adjusted net income per diluted share
$
0.59
$
0.44
$
1.77
$
1.96
(A) Acquisition and financing-related expenses include costs
associated with our M&A activities. We believe these costs are
not representative of the Company's operational performance and it
is therefore more meaningful to analyze results with the costs
excluded. For the three months and nine months ended September 28,
2024, the charges include $0.1 and $0.7 of other miscellaneous
M&A costs, respectively.
(B) Restructuring activities include activities within our
Hydraulics segment related to the creation of our two new Regional
Operational Centers of Excellence ("CoE") which are nearing
completion with work expected to be completed in 2024. We also
continue to add capabilities and activities to our recently
expanded Tijuana, Mexico facility to support our Electronics
segment. Initial efforts have focused on circuit board assembly and
wire harness production. We have also recently initiated some
restructuring activities to better optimize our European regional
operations. We are transitioning some manufacturing of manifolds
and integrated package assembly to our Roncolo, Italy location.
These activities include in part the transferring of equipment and
operations between facilities. We believe these costs are not
representative of the Company's operational performance and it is
therefore more meaningful to analyze results with the costs
excluded. For the three months and nine months ended September 28,
2024, the charges include non-recurring labor costs of $0.8 and
$2.3 million and manufacturing relocation and other costs of $0.5
and $2.1 million, respectively.
(C) Acquisition integration activities include costs associated
with integrating our recently acquired businesses, which can occur
up to 18 months after acquisition date. We believe these costs are
not representative of the Company's operational performance and it
is therefore more meaningful to analyze results with the costs
excluded. For the three months ended and nine months ended
September 28, 2024, the costs totaled $0.0 and $0.3 million,
respectively.
(D) Amortization of intangible assets presented here includes
$0.5 and $1.1 million for capitalized software development costs
included within cost of sales in the income statement for the three
and nine months ended September 28, 2024, respectively.
*General note: items may not foot or recalculate due to
rounding
HELIOS TECHNOLOGIES
Non-GAAP Net Sales Growth
RECONCILIATION
(In millions)
(Unaudited)
For the Three Months Ended For the Nine Months
Ended Hydraulics Electronics Consolidated
Hydraulics Electronics Consolidated Q3 2024
Net Sales
$
129.4
$
65.1
$
194.5
$
417.5
$
208.9
$
626.4
Impact of foreign currency translation
(E)
(0.6
)
-
(0.6
)
0.5
0.1
0.6
Net Sales in constant currency
128.8
65.1
193.9
418.0
209.0
627.0
Less: Acquisition related sales
-
-
-
(1.9
)
(3.1
)
(5.0
)
Organic sales in constant currency
$
128.8
$
65.1
$
193.9
$
416.1
$
205.9
$
622.0
Q3 2023 Net Sales
$
132.0
$
69.4
$
201.4
$
432.1
$
210.1
$
642.2
Net sales growth
-2
%
-6
%
-3
%
-3
%
-1
%
-2
%
Net sales growth in constant currency
-2
%
-6
%
-4
%
-3
%
-1
%
-2
%
Organic net sales growth in constant currency
-2
%
-6
%
-4
%
-4
%
-2
%
-3
%
(E) The impact from foreign currency translation is
calculated by translating current period activity at average prior
period exchange rates.
Net Debt-to-Adjusted EBITDA
RECONCILIATION
(In millions)
(Unaudited)
As of September 28, 2024 Current portion of
long-term non-revolving debt, net
17.6
Revolving lines of credit
177.9
Long-term non-revolving debt, net
287.9
Total debt
483.4
Less: Cash and cash equivalents
46.7
Net debt
436.7
TTM adjusted EBITDA
155.7
Ratio of net debt to TTM adjusted EBITDA
2.8
Non-GAAP Financial Measures and Non-GAAP Forward-looking
Financial Measures:
Adjusted operating income, adjusted operating margin, EBITDA,
EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, net
debt-to-adjusted EBITDA, adjusted net income, adjusted net income
per diluted share and sales in constant currency are not measures
determined in accordance with generally accepted accounting
principles in the United States, commonly known as GAAP.
Nevertheless, Helios believes that providing these specific
Non-GAAP figures are important for investors and other readers of
Helios financial statements, as they are used as analytical
indicators by Helios management to better understand operating
performance. These Non-GAAP financial measures should be considered
in addition to results prepared in accordance with GAAP and should
not be considered a substitute for GAAP. Please carefully review
the attached Non-GAAP reconciliations to the most directly
comparable GAAP measures and the related additional information
provided throughout. Because these metrics are Non-GAAP measures
and are thus susceptible to varying calculations, these figures, as
presented, may not be directly comparable to other similarly titled
measures used by other companies. The Company does not provide a
reconciliation of forward-looking Non-GAAP financial measures, such
as adjusted EBITDA, adjusted EBITDA margin, adjusted net income and
adjusted net income per diluted share disclosed above in our 2024
Outlook, to their comparable GAAP financial measures because it
could not do so without unreasonable effort due to the
unavailability of the information needed to calculate reconciling
items and due to the variability, complexity and limited visibility
of the adjusting items that would be excluded from the Non-GAAP
financial measures in future periods.
__________________________________
1 Net Sales is considered to be
acquisition related until the acquisition has been included in the
Company’s financial results for one full year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105791339/en/
For more information, contact: Tania Almond Vice
President, Investor Relations and Corporate Communication (941)
362-1333 tania.almond@HLIO.com
Deborah Pawlowski Alliance Advisors IR (716) 843-3908
dpawlowski@allianceadvisors.com
Helios Technologies (NYSE:HLIO)
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Helios Technologies (NYSE:HLIO)
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