- Delivered revenue and earnings in line with recent guidance;
revenue of $193.4 million in 4Q23 and $835.6 million for
FY23
- Demonstrated disciplined cost control during 2H23 resulting
in 4Q23 SEA expenses at the lowest quarterly level in FY23 even
while absorbing incremental expenses from acquisitions in
1H23
- Generated strong cash from operations of $33.7 million in
4Q23, the highest quarter of the year demonstrating disciplined
working capital management and strong cash conversion
- Paid down $19.7 million of total debt in 4Q23, the second
sequential quarterly reduction; maximizing debt paydown remains a
capital allocation priority in 2024
- Expect return to growth in 2024 leveraging value from the
methodical investments made; combined with disciplined cost
management and operational efficiencies to elevate our
profitability levels
- Establishing 2024 revenue guidance of approximately $840 to
$860 million, or 1% to 3% annual growth over 2023; excluding
potential system sales opportunities
Helios Technologies, Inc. (NYSE: HLIO) (“Helios” or the
“Company”), a global leader in highly engineered motion control and
electronic controls technology for diverse end markets, today
reported financial results for the fourth quarter ended December
30, 2023. Results include our most recent flywheel acquisitions of
Schultes Precision Manufacturing, Inc. (or “Schultes”), which was
acquired on January 27, 2023, and i3 Product Development, Inc. (or
“i3”), which was acquired on May 26, 2023.
“A few years ago, our team made a conscious decision to
transform the Company by integrating and leveraging all the
acquired businesses. As I reflect on the past year, the challenges
we faced tested our resolve and demanded unwavering determination.
2023 was marked with several macroeconomic and geopolitical
challenges but was also a year of progress in many areas. We
elevated our executive staff, as well as deepened our talent pool
and filled product solution gaps with our acquisitions. This year
we proactively pulled investments ahead so operations can be a
strong enabler of sales. The global Helios team worked tirelessly
aligning our capacity and structure to do so. We made methodical
investments in the expansion of our global facilities, as it
reflects the growth opportunities we see before us. We applied our
innovation and engineering expertise to solve customers’ most
difficult system design and production problems. We expect the new
integrated system solutions we are creating will define our
future,” said Josef Matosevic, President and Chief Executive
Officer of Helios.
“Through it all, we emerged as a united team even stronger as we
maintain focus on our shared values and our strategic missions. Our
operational expertise, the talent of our team and the deeply rooted
relationships we have with our customers and partners give us
confidence in our ability to execute our plan of increasingly
profitable growth and to deliver attractive returns on our
investments over time. Our focus in 2024 turns to executing
on the realization of this true transformation elevating our
business into a global integrated operating company. I am extremely
encouraged by the progress we are making and excited for what lies
ahead,” Matosevic concluded.
Fourth Quarter 2023 Consolidated Results
For the Three Months
Ended
For the Year Ended
($ in millions, except per share
data)
(Unaudited)
December 30,
2023
December 31,
2022
Change
%
Change
December 30,
2023
December 31,
2022
Change
%
Change
Net sales
$
193.4
$
196.0
$
(2.6)
(1%)
$
835.6
$
885.4
$
(49.8)
(6%)
Gross profit
$
55.3
$
63.2
$
(7.9)
(13%)
$
261.7
$
298.5
$
(36.8)
(12%)
Gross margin
28.6%
32.2%
(360)
bps
31.3%
33.7%
(240)
bps
Operating income
$
11.9
$
20.7
$
(8.8)
(43%)
$
79.9
$
137.3
$
(57.4)
(42%)
Operating margin
6.2%
10.6%
(440)
bps
9.6%
15.5%
(590)
bps
Non-GAAP adjusted operating margin*
12.6%
16.7%
(410)
bps
15.6%
20.4%
(480)
bps
Net income
$
3.3
$
17.5
$
(14.2)
(81%)
$
37.5
$
98.4
$
(60.9)
(62%)
Diluted EPS
$
0.10
$
0.54
$
(0.44)
(81%)
$
1.14
$
3.02
$
(1.88)
(62%)
Non-GAAP net income*
$
12.4
$
25.4
$
(13.0)
(51%)
$
77.1
$
131.3
$
(54.2)
(41%)
Diluted Non-GAAP EPS*
$
0.38
$
0.78
$
(0.40)
(51%)
$
2.34
$
4.03
$
(1.69)
(42%)
Adjusted EBITDA*
$
32.3
$
39.2
$
(6.9)
(18%)
$
161.4
$
205.3
$
(43.9)
(21%)
Adjusted EBITDA margin*
16.7%
20.0%
(330)
bps
19.3%
23.2%
(390)
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: Electronics segment revenue improved 7%
primarily in Health & Wellness compared with the year ago
period helping to offset the 5% decline in Hydraulics which was
spread across several end markets we serve. Compared with third
quarter 2023, Hydraulics segment revenue remained relatively stable
with 1% improvement while the Electronics segment was down 14%
driven by macroeconomic shifts. Sales included $9.4 million in
revenue from acquisitions. (See the Organic and Acquired Revenue
table in this release that provides acquired revenue by segment by
quarter).
- By Region: Sales in the Americas were up by 4% while there was
a 10% decline in Europe, the Middle East and Africa (“EMEA”) and a
5% decline in Asia Pacific ("APAC”) compared to the year ago
period.
- Other Impacts: Favorable foreign currency (FX) translation was
$1.7 million. Supply chain constraints delayed an estimated $7.4
million in sales, which has leveled back to a more normalized
operating range.
Profits and margins
- Gross profit and margin impacts: Gross profit declined
primarily on lower volume, restructuring costs, higher wage and
benefit costs, partially offset by acquisitions and pricing. Gross
margin contraction was primarily due to under absorption of
overhead on lower volume and unfavorable mix.
- Selling, engineering and administrative (“SEA”) expenses: SEA
sequentially were down $2.5 million, or 7%, and up less than 1%
compared with the fourth quarter of 2022 despite absorbing higher
run-rate SEA from 1H23 acquisitions. The sequential decrease was
primarily related to cost control measures deployed during
2H23.
- Amortization of intangible assets: $8.2 million up 9% compared
with the prior year period reflecting the Company’s flywheel
acquisitions.
Non-operating items
- Net interest expense: down $0.1 million sequentially due to
total debt reduction of 4% compared to the third quarter of 2023;
and up $3.6 million in the quarter compared with the prior year
period, reflecting higher interest rates and increased average net
debt balance related to the debt financing of 1H23
acquisitions.
- Effective tax rate: 23.3% compared with (2.3%) in the fourth
quarter of 2022 and 23.8% for full year 2023 compared with 19.2% in
the year ago period reflecting the mix in income to various tax
jurisdictions with a state tax benefit in 2022.
Net income, diluted earnings per share
(“EPS”), Non-GAAP EPS, and adjusted EBITDA margin
- GAAP net income and diluted EPS: $3.3 million and $0.10 diluted
EPS.
- Diluted Non-GAAP EPS: $0.38 compared with $0.78 in the fourth
quarter of 2022 primarily the result of lower volume, compressed
margins on lost absorption, and increased interest expense (of
$0.08 per share), taxes, depreciation and amortization
expenses.
- Adjusted EBITDA margin: 16.7% contracted 330 basis points
compared with the year ago period driven by the items discussed
previously in this report.
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions)
(Unaudited)
Hydraulics
For the Three Months
Ended
December 30,
2023
December 31,
2022
Change
% Change
Net Sales
Americas
$
60.2
$
56.8
$
3.4
6
%
EMEA
38.1
43.3
(5.2
)
(12
%)
APAC
35.4
40.1
(4.7
)
(12
%)
Total Segment Sales
$
133.7
$
140.2
$
(6.5
)
(5
%)
Gross Profit
$
41.2
$
48.6
$
(7.4
)
(15
%)
Gross Margin
30.8
%
34.7
%
(390
)
bps
SEA Expenses
$
21.2
$
18.0
$
3.2
18
%
Operating Income
$
20.0
$
30.6
$
(10.6
)
(35
%)
Operating Margin
15.0
%
21.8
%
(680
)
bps
Fourth Quarter Hydraulics Segment
Review
- Sales: Grew 6% in the Americas which partially offset weakness
in EMEA and APAC, resulting in a 5% year-over-year contraction in
segment sales. Acquisitions contributed $7.1 million in the fourth
quarter. Sales declined broadly across several end markets compared
with the year ago period. Sales improved 1% sequentially compared
with the third quarter of 2023 driven by growing throughput levels
in our North American Centers of Excellence. FX had a favorable
$1.6 million impact on sales and supply chain constraints delayed
an estimated $4.2 million in sales.
- Gross profit and margin drivers: Lower gross profit and margin
year-over-year were primarily the result of lower volume, the
different margin profile of acquired businesses, restructuring
costs, and higher wage and benefit costs. Restructuring costs
included in cost of sales included $1.5 million in the fourth
quarter of 2023.
- Operating income and operating margin: Reflect impact of lower
volume on gross profit year-over-year as well as costs related to
acquisitions and maintaining investment levels in new product
development. Notably, SEA expenses declined sequentially 7%
compared with third quarter 2023.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions)
(Unaudited)
Electronics
For the Three Months
Ended
December 30,
2023
December 31,
2022
Change
% Change
Net Sales
Americas
$
48.8
$
48.0
$
0.8
2
%
EMEA
5.8
5.3
0.5
9
%
APAC
5.1
2.5
2.6
104
%
Total Segment Sales
$
59.7
$
55.8
$
3.9
7
%
Gross Profit
$
14.1
$
14.6
$
(0.5
)
(3
%)
Gross Margin
23.6
%
26.2
%
(260
)
bps
SEA Expenses
$
13.1
$
13.9
$
(0.8
)
(6
%)
Operating Income
$
1.0
$
0.7
$
0.3
43
%
Operating Margin
1.7
%
1.3
%
40
bps
Fourth Quarter Electronics Segment
Review
- Sales: Improved by 7% over the prior year driven by increases
in all regions combined with a $2.3 million contribution from
acquisitions. Sales grew driven by a double-digit increase over the
year ago period in health and wellness, partially offset by
continued softness in the marine and industrial end markets. Sales
declined 14% sequentially as expected from the swift market shift
cited in the third quarter of 2023. Foreign currency exchange rates
did not materially impact sales and supply chain constraints
delayed an estimated $3.2 million in sales.
- Gross profit and margin drivers: Compared with the year ago
period, lower gross profit and margin reflects decreased sales
volume and mix, higher material costs, the different margin profile
of acquired businesses, and restructuring costs.
- Operating income and operating margin: Grew compared with the
year ago period in spite of lower gross profit as a result of
disciplined cost control lowering total SEA expenses down 6%
compared to the year ago period and down 9% sequentially.
Balance Sheet and Cash Flow Review
- Total debt: at quarter-end was $524.8 million, down from $544.5
million at the end of the third quarter as the Company’s capital
allocation priorities include debt reduction. A higher total debt
balance compared with the year ago period reflect the acquisitions
of Schultes and i3 that were partially financed with debt.
- Cash and cash equivalents: as of December 30, 2023 were $32.4
million, down 8% sequentially from the third quarter 2023 while
paying down $19.7 million of debt highlighting the focus on working
capital management.
- Inventory: increased $6.4 million to $215.1 million from the
third quarter of 2023. The increase was the result of the decline
in volume from the swift macro shifts cited in the third quarter of
2023 and the timing lag effect. Additionally, as a part of
integrating and consolidating operations through opening the North
American Hydraulics Centers of Excellence, there has been some
inventory build required to maintain timely workflows.
- Pro-forma net debt-to-adjusted EBITDA: slight sequential
increase to 3.01x at quarter end compared with 2.98x at the end of
the third quarter (pro-forma for Schultes and i3). At the end of
the fourth quarter 2023, the Company had $200.1 million available
on its revolving lines of credit.
- Net cash provided by operations: was $33.7 million in the
fourth quarter 2023 compared with $11.8 million in the third
quarter 2023 and $35.7 million in the year ago period, bringing the
twelve month cash flow from operations to $83.9 million compared
with $109.9 million for the comparable period in 2022.
- Capital expenditures: were $8.8 million in the fourth quarter
2023, or 4.6% of sales finalizing many of the capacity expansion
projects. This compares with $10.0 million, or 5.1% of sales, in
the year ago period. For the full year, capital expenditures were
$34.3 million, or 4.1% of sales. This compares with $31.9 million,
or 3.6% of sales in 2022.
- Dividends: Paid 108th sequential quarterly cash dividend on
January 19, 2024.
Establishing Full Year 2024 Outlook:
Sean Bagan, Chief Financial Officer, commented, “We have clear
financial priorities in 2024 to (i) Execute on our profitable sales
growth plan by realizing operating leverage inherent in our
business, while fully instilling investment and cost discipline;
(ii) Shorten our cash conversion cycle through sustainable working
capital improvement initiatives; and (iii) Reduce debt utilizing
the free cash flow conversion proceeds. We know execution is
critical in delivering on our commitments this year as we strive
for more predictable results in 2024. We expect this renewed
financial focus will in turn elevate Helios to be the scalable,
integrated operating Company into which we are evolving.”
The following provides the Company’s expectations for 2024 as of
February 26, 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
2024 Outlook
Consolidated revenue
$835.6 million
$840 - $860 million
Net income
$37.5 million
$50 - $63 million
Adjusted EBITDA
$161.4 million
$163 - $180 million
Adjusted EBITDA margin
19.3%
19.5% - 21.0%
Interest expense
$31.2 million
$34 - $35 million
Effective tax rate
24%
22% - 24%
Depreciation
$30.2 million
$34 - $36 million
Amortization
$33.6 million
$33 - $35 million
Capital expenditures % total
revenue
4% of sales
3% - 4% of sales
Diluted EPS
$1.14
$1.50 - $1.90
Diluted Non-GAAP EPS
$2.34
$2.35 - $2.75
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. For 2023, adjusted EBITDA excludes $17.2 million of costs
for restructuring activities and acquisition related costs
including integration. For 2023, diluted Non-GAAP EPS excludes
$1.20 per diluted share of costs primarily for amortization,
restructuring activities, acquisition related costs including
integration and the related tax impact on these items.
Webcast
The Company will host a conference call and webcast tomorrow,
February 27, 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 Tuesday, March 5, 2024. To
listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13743457. 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) the Company’s
financing plans; (iv) trends affecting the Company’s financial
condition or results of operations; (v) the Company’s ability to
continue to control costs and to meet its liquidity and other
financing needs; (vi) the Company’s ability to declare and pay
dividends; and (vii) 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) 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; (ii)
supply chain disruption and the potential inability to procure
goods; (iii) conditions in the capital markets, including the
interest rate environment and the availability of capital on terms
acceptable to us, or at all; (iv) 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; (v) 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; (vi) 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; (vii) risks related to our
international operations, including the potential impact of the
ongoing conflict in Ukraine and the Middle East; and (viii) new
product introductions, product sales mix and the geographic mix of
sales nationally and internationally; (ix) 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 31,
2022 filed with the Securities and Exchange Commission (SEC) on
February 28, 2023 as well as our upcoming 10-K to be filed with the
SEC.
This news release will discuss some historical Non-GAAP
financial measures, which 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 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. 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)
For the Three Months Ended
(unaudited)
For the Year Ended
December 30,
December 31
December 30,
December 31
2023
2022
% Change
2023
2022
% Change
Net sales
$
193.4
$
196.0
(1
)%
$
835.6
$
885.4
(6
)%
Cost of sales
138.1
132.8
4
%
573.9
586.9
(2
)%
Gross profit
55.3
63.2
(13
)%
261.7
298.5
(12
)%
Gross margin
28.6
%
32.2
%
31.3
%
33.7
%
Selling, engineering and administrative expenses
35.2
35.0
1
%
148.9
133.1
12
%
Amortization of intangible assets
8.2
7.5
9
%
32.9
28.1
17
%
Operating income
11.9
20.7
(43
)%
79.9
137.3
(42
)%
Operating margin
6.2
%
10.6
%
9.6
%
15.5
%
Interest expense, net
8.6
5.0
72
%
31.2
16.7
87
%
Foreign currency transaction loss (gain), net
-
0.4
(100
)%
0.6
(0.9
)
(167
)%
Other non-operating income, net
(1.0
)
(1.8
)
(44
)%
(1.1
)
(0.3
)
267
%
Income before income taxes
4.3
17.1
(75
)%
49.2
121.8
(60
)%
Income tax provision
1.0
(0.4
)
(350
)%
11.7
23.4
(50
)%
Net income
$
3.3
$
17.5
(81
)%
$
37.5
$
98.4
(62
)%
Net income per share: Basic
$
0.10
$
0.54
(81
)%
$
1.14
$
3.03
(62
)%
Diluted
$
0.10
$
0.54
(81
)%
$
1.14
$
3.02
(62
)%
Weighted average shares outstanding: Basic
33.1
32.6
32.9
32.5
Diluted
33.1
32.6
33.0
32.6
Dividends declared per share
$
0.09
$
0.09
$
0.36
$
0.36
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except per share
data)
December 30, 2023
December 31, 2022
Assets Current assets: Cash and cash equivalents
$
32.4
$
43.7
Accounts receivable, net of allowance for credit losses of $2.1 and
$1.5
114.8
125.1
Inventories, net
215.1
191.6
Income taxes receivable
11.3
10.2
Other current assets
23.1
17.9
Total current assets
396.7
388.5
Property, plant and equipment, net
227.9
175.7
Deferred income taxes
1.7
1.6
Goodwill
514.0
468.5
Other intangible assets, net
426.4
405.6
Other assets
23.7
23.8
Total assets
$
1,590.4
$
1,463.7
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
70.3
$
73.7
Accrued compensation and benefits
19.4
21.1
Other accrued expenses and current liabilities
27.0
32.0
Current portion of long-term non-revolving debt, net
23.2
19.0
Dividends payable
3.0
2.9
Income taxes payable
2.0
3.6
Total current liabilities
144.9
152.3
Revolving lines of credit
199.8
261.3
Long-term non-revolving debt, net
298.3
164.2
Deferred income taxes
57.1
61.0
Other noncurrent liabilities
35.7
30.0
Total liabilities
735.8
668.8
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, 33.1 and
32.6 shares issued and outstanding
-
-
Capital in excess of par value
434.4
404.3
Retained earnings
475.6
450.0
Accumulated other comprehensive loss
(55.4
)
(59.4
)
Total shareholders’ equity
854.6
794.9
Total liabilities and shareholders’ equity
$
1,590.4
$
1,463.7
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
For the Year Ended
December 30, 2023
December 31, 2022
Cash flows from operating activities: Net income
$
37.5
$
98.4
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
63.8
51.6
Stock-based compensation expense
11.6
8.6
Amortization of debt issuance costs
0.6
0.5
Benefit for deferred income taxes
(7.9
)
(4.5
)
Forward contract losses (gains), net
0.3
(4.0
)
(Increase) decrease in, net of acquisitions: Accounts receivable
16.3
9.1
Inventories
(17.9
)
(27.0
)
Income taxes receivable
0.3
(5.0
)
Other current assets
(5.5
)
1.6
Other assets
(3.8
)
8.0
Increase (decrease) in, net of acquisitions: Accounts payable
(5.2
)
(11.5
)
Accrued expenses and other liabilities
(5.8
)
(6.2
)
Income taxes payable
(1.6
)
(2.3
)
Other noncurrent liabilities
3.9
(7.4
)
Contingent consideration payments in excess acquisition date fair
value
(2.7
)
-
Net cash provided by operating activities
83.9
109.9
Cash flows from investing activities: Business acquisitions,
net of cash acquired
(114.2
)
(67.3
)
Capital expenditures
(34.3
)
(31.9
)
Proceeds from dispositions of property, plant and equipment
0.3
7.2
Cash settlement of forward contracts
0.4
4.3
Software development costs
(6.1
)
(3.1
)
Net cash used in investing activities
(153.9
)
(90.8
)
Cash flows from financing activities: Borrowings on
revolving credit facilities
189.2
118.7
Repayment of borrowings on revolving credit facilities
(252.0
)
(92.7
)
Borrowings on long-term non-revolving debt
160.0
-
Repayment of borrowings on long-term non-revolving debt
(21.5
)
(18.0
)
Proceeds from stock issued
2.0
2.1
Dividends to shareholders
(11.8
)
(11.7
)
Payment of employee tax withholding on equity award vestings
(2.2
)
(2.6
)
Payment of contingent consideration liability
(3.4
)
(1.0
)
Other financing activities
(2.4
)
(1.7
)
Net cash provided by (used in) financing activities
57.9
(6.9
)
Effect of exchange rate changes on cash and cash equivalents
0.8
3.0
Net (decrease) increase in cash and cash equivalents
(11.3
)
15.2
Cash and cash equivalents, beginning of period
43.7
28.5
Cash and cash equivalents, end of period
$
32.4
$
43.7
HELIOS TECHNOLOGIES
SEGMENT DATA
(In millions)
(Unaudited)
For the Three Months
Ended
For the Year Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Net Sales: Hydraulics
$
133.7
$
140.2
$
565.8
$
551.3
Electronics
59.7
55.8
269.8
334.1
Consolidated
$
193.4
$
196.0
$
835.6
$
885.4
Gross profit and margin: Hydraulics
$
41.2
$
48.6
$
181.8
$
195.5
30.8
%
34.7
%
32.1
%
35.5
%
Electronics
14.1
14.6
79.9
103.0
23.6
%
26.2
%
29.6
%
30.8
%
Consolidated
$
55.3
$
63.2
$
261.7
$
298.5
28.6
%
32.2
%
31.3
%
33.7
%
Operating income (loss) and margin: Hydraulics
$
20.0
$
30.6
$
93.3
$
122.7
15.0
%
21.8
%
16.5
%
22.3
%
Electronics
1.0
0.7
24.7
52.5
1.7
%
1.3
%
9.2
%
15.7
%
Corporate and other
(9.1
)
(10.6
)
(38.1
)
(37.9
)
Consolidated
$
11.9
$
20.7
$
79.9
$
137.3
6.2
%
10.6
%
9.6
%
15.5
%
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 Year Ended
April 2,
July 2,
October 1,
December 31,
December 31,
April 1,
July 1,
September 30,
December 30,
December 30,
2022
2022
2022
2022
2022
2023
2023
2023
2023
2023
Hydraulics
Organic
$
130.7
$
137.1
$
129.1
$
132.0
$
528.9
$
134.0
$
137.2
$
121.0
$
126.6
$
518.8
Acquisition
6.4
5.7
2.1
8.2
22.4
13.7
15.2
11.0
7.1
47.0
Total
$
137.1
$
142.8
$
131.2
$
140.2
$
551.3
$
147.7
$
152.4
$
132.0
$
133.7
$
565.8
Electronics
Organic
$
102.7
$
97.9
$
75.2
$
55.8
$
331.6
$
65.5
$
74.0
$
67.1
$
57.4
$
264.0
Acquisition
0.8
1.0
0.7
-
2.5
-
1.2
2.3
2.3
5.8
Total
$
103.4
$
98.9
$
75.9
$
55.8
$
334.1
$
65.5
$
75.2
$
69.4
$
59.7
$
269.8
Consolidated
Organic
$
233.4
$
235.0
$
204.3
$
187.8
$
860.5
$
199.5
$
211.2
$
188.1
$
184.0
$
782.8
Acquisition
7.2
6.6
2.9
8.2
24.9
13.7
16.4
13.3
9.4
52.8
Total
$
240.5
$
241.7
$
207.2
$
196.0
$
885.4
$
213.2
$
227.6
$
201.4
$
193.4
$
835.6
___________________________________
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.
HELIOS TECHNOLOGIES
Net Sales by Geographic Region
and Segment
(In millions)
(Unaudited)
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%)
2022
Q1
% Change
y/y
Q2
% Change
y/y
Q3
% Change
y/y
Q4
% Change
y/y
2022
% Change
y/y
Americas: Hydraulics
$
43.1
26%
$
49.9
20%
$
49.7
10%
$
56.8
22%
$
199.5
19%
Electronics
77.7
20%
80.2
25%
65.0
1%
48.0
(26%)
270.9
5%
Consol. Americas
120.8
22%
130.1
23%
114.7
5%
104.8
(6%)
470.4
11%
% of total
50%
54%
55%
53%
53%
EMEA: Hydraulics
$
52.9
22%
$
49.0
5%
$
41.3
(8%)
$
43.3
(4%)
$
186.5
4%
Electronics
11.8
27%
12.3
12%
7.7
(31%)
5.3
(50%)
37.1
(12%)
Consol. EMEA
64.7
23%
61.3
6%
49.0
(12%)
48.6
(13%)
223.6
1%
% of total
27%
25%
24%
25%
25%
APAC: Hydraulics
$
41.1
(1%)
$
43.9
(2%)
$
40.2
(7%)
$
40.1
3%
$
165.3
(2%)
Electronics
13.9
22%
6.4
(58%)
3.3
(77%)
2.5
(79%)
26.1
(51%)
Consol. APAC
55.0
4%
50.3
(16%)
43.5
(25%)
42.6
(16%)
191.4
(14%)
% of total
23%
21%
21%
22%
22%
Total
$
240.5
17%
$
241.7
8%
$
207.2
(7%)
$
196.0
(10%)
$
885.4
2%
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income & Non-GAAP Adjusted Operating Margin
RECONCILIATION
(In millions)
(Unaudited)
For the Three Months
Ended
For the Year Ended
December 30,
2023
Margin
December 31,
2022
Margin
December 30,
2023
Margin
December 31,
2022
Margin
GAAP operating income
$
11.9
6.2%
$
20.7
10.6%
$
79.9
9.6%
$
137.3
15.5%
Acquisition-related amortization of intangible assets
8.2
4.2%
7.5
3.8%
32.9
3.9%
28.1
3.2%
Acquisition and financing-related expenses
(A)
0.7
0.4%
1.9
1.0%
4.0
0.5%
5.9
0.7%
Restructuring charges
(B)
3.0
1.6%
1.4
0.7%
12.1
1.4%
5.2
0.6%
Officer transition costs
0.3
0.2%
-
0.0%
1.2
0.1%
0.3
0.0%
Acquisition integration costs
(C)
0.1
0.1%
1.3
0.7%
0.3
0.0%
3.7
0.4%
Other
0.2
0.1%
-
0.0%
0.3
0.0%
0.2
0.0%
Non-GAAP adjusted operating income
$
24.4
12.6%
$
32.8
16.7%
$
130.7
15.6%
$
180.7
20.4%
GAAP operating margin
6.2%
10.6%
9.6%
15.5%
Non-GAAP adjusted operating margin
12.6%
16.7%
15.6%
20.4%
Net sales
$
193.4
$
196.0
$
835.6
$
885.4
Non-GAAP Adjusted EBITDA &
Non-GAAP Adjusted EBITDA Margin RECONCILIATION
(In millions)
(Unaudited)
For the Three Months
Ended
For the Year Ended
December 30,
2023
Margin
December 31,
2022
Margin
December 30,
2023
Margin
December 31,
2022
Margin
Net income
$
3.3
1.7
%
$
17.5
8.9
%
$
37.5
4.5
%
$
98.4
11.1
%
Interest expense, net
8.6
4.4
%
5.0
2.6
%
31.2
3.7
%
16.7
1.9
%
Income tax provision
1.0
0.5
%
(0.4
)
-0.2
%
11.7
1.4
%
23.4
2.6
%
Depreciation and amortization
16.1
8.3
%
14.2
7.2
%
63.8
7.6
%
51.6
5.8
%
EBITDA
29.0
15.0
%
36.3
18.5
%
144.2
17.3
%
190.1
21.5
%
Acquisition and financing-related expenses
(A)
0.7
0.4
%
1.9
1.0
%
4.0
0.5
%
5.9
0.7
%
Restructuring charges
(B)
3.0
1.6
%
(0.3
)
-0.2
%
12.1
1.4
%
3.5
0.4
%
Officer transition costs
0.3
0.2
%
-
0.0
%
1.2
0.1
%
0.3
0.0
%
Acquisition integration costs
(C)
0.1
0.1
%
1.3
0.7
%
0.3
0.0
%
3.7
0.4
%
Change in fair value of contingent consideration
(0.9
)
-0.5
%
0.1
0.1
%
(0.1
)
0.0
%
1.7
0.2
%
Other
0.1
0.1
%
(0.1
)
-0.1
%
(0.3
)
0.0
%
0.1
0.0
%
Adjusted EBITDA
$
32.3
16.7
%
$
39.2
20.0
%
$
161.4
19.3
%
$
205.3
23.2
%
Pre-acquisition adjusted EBITDA, 2023 Schultes and i3, 2022 Taimi
and Daman
2.2
5.0
TTM Pro forma adjusted EBITDA
$
163.6
$
210.3
GAAP net income margin
1.7
%
8.9
%
4.5
%
11.1
%
EBITDA margin
15.0
%
18.5
%
17.3
%
21.5
%
Adjusted EBITDA margin
16.7
%
20.0
%
19.3
%
23.2
%
Net sales
$
193.4
$
196.0
$
835.6
$
885.4
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 Year Ended
December 30,
2023
Per Diluted
Share*
December 31,
2022
Per Diluted
Share
December 30,
2023
Per Diluted
Share*
December 31,
2022
Per Diluted
Share
GAAP net income
$
3.3
$
0.10
$
17.5
$
0.54
$
37.5
$
1.14
$
98.4
$
3.02
Amortization of intangible assets
(D)
8.4
0.25
7.7
0.24
33.6
1.02
28.7
0.88
Acquisition and financing-related expenses
(A)
0.7
0.02
1.9
0.06
4.0
0.12
5.9
0.18
Restructuring charges
(B)
3.0
0.09
(0.3
)
(0.01
)
12.1
0.37
3.5
0.11
Officer transition costs
0.3
0.01
-
-
1.2
0.04
0.3
0.01
Acquisition integration costs
(C)
0.1
-
1.3
0.04
0.3
0.01
3.7
0.11
Change in fair value of contingent consideration
(0.9
)
(0.03
)
0.1
-
(0.1
)
-
1.7
0.05
Other
0.1
-
(0.1
)
-
(0.3
)
(0.01
)
0.1
-
Tax effect of above
(2.6
)
(0.08
)
(2.7
)
(0.08
)
(11.2
)
(0.34
)
(11.0
)
(0.34
)
Non-GAAP Adjusted net income
$
12.4
$
0.38
$
25.4
$
0.78
$
77.1
$
2.34
$
131.3
$
4.03
GAAP net income per diluted share
$
0.10
$
0.54
$
1.14
$
3.02
Non-GAAP Adjusted net income per diluted share*
$
0.38
$
0.78
$
2.34
$
4.03
*may not foot or recalculate due to rounding
(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
twelve months ended December 30, 2023, the charges include
recurring labor costs of $0.1 million and $0.7 million,
professional fees of $0.4 million and $2.2 million and other
M&A related costs of $0.2 million and $1.1 million,
respectively.
(B) Restructuring activities include costs
associated with the creation of our two new Regional Operational
Centers of Excellence. 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 twelve months ended December 30,
2023, the charges include non-recurring labor costs of $2.1 million
and $7.8 million, travel costs of $0.2 million and $0.9 million and
manufacturing relocation and other costs of $0.7 million and $3.4
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 and
twelve months ended December 30, 2023, the costs totaled $0.1
million and $0.3 million, respectively.
(D) Amortization of intangible assets
presented here includes $0.2 million and $0.7 million of
amortization for capitalized software development costs included
within cost of sales in the income statement for the three months
and twelve months ended December 30, 2023, respectively.
HELIOS TECHNOLOGIES
Non-GAAP Net Sales Growth
RECONCILIATION
(In millions)
(Unaudited)
For the Three Months
Ended
For the Year Ended
Hydraulics
Electronics
Consolidated
Hydraulics
Electronics
Consolidated
Q4 / Full Year 2023 Net Sales
$
133.7
$
59.7
$
193.4
$
565.8
$
269.8
$
835.6
Impact of foreign currency translation
(E)
(1.6
)
(0.1
)
(1.7
)
(0.3
)
0.2
(0.1
)
Net Sales in constant currency
132.1
59.6
191.7
565.5
270.0
835.5
Less: Acquisition related sales
(7.1
)
(2.3
)
(9.4
)
(47.0
)
(5.8
)
(52.8
)
Organic sales in constant currency
$
125.0
$
57.3
$
182.3
$
518.5
$
264.2
$
782.7
Q4 / Full Year 2022 Net Sales
$
140.2
$
55.8
$
196.0
$
551.3
$
334.1
$
885.4
Net sales growth
-5
%
7
%
-1
%
3
%
-19
%
-6
%
Net sales growth in constant currency
-6
%
7
%
-2
%
3
%
-19
%
-6
%
Organic net sales growth in constant currency
-11
%
3
%
-7
%
-6
%
-21
%
-12
%
(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
December 30, 2023
Current portion of long-term non-revolving debt, net
23.2
Revolving lines of credit
203.3
Long-term non-revolving debt, net
298.3
Total debt
524.8
Less: Cash and cash equivalents
32.4
Net debt
492.4
TTM Pro forma adjusted EBITDA
(F)
163.6
Ratio of net debt to TTM pro forma adjusted EBITDA
3.01
(F) On a pro-forma basis for Schultes and i3.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240226514639/en/
For more information: Tania Almond Vice President,
Investor Relations and Corporate Communication (941) 362-1333
tania.almond@HLIO.com
Deborah Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
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