- Delivered net sales of $219.9 million up 4% over 1Q24 with
Hydraulics up 2% and Electronics up 7%
- Demonstrated sequential margin improvement over 1Q24 across
both gross (+40 bps) and operating (+220 bps) margins from improved
volume, operational initiatives, and cost management
- Achieved diluted EPS of $0.41 in 2Q24 and Diluted Non-GAAP
EPS of $0.64, up 21% over 1Q24
- Improved the cash conversion cycle through working capital
initiatives; Generated $33.8 million in cash from operations in
2Q24 up 30% over the year-ago level
- Reduced $18.6 million of total debt, the fourth straight
quarter of debt reduction, while making continued progress on
lowering our net debt leverage ratio
- Extended debt maturities to 2029, increased available
liquidity, and reduced spreads optimizing our capital structure to
provide financial flexibility to execute our strategic
priorities
- Moderating 2H24 outlook to reflect softening end market
conditions reducing second half visibility; Focused on controlling
the controllables: working capital, operational efficiencies, and
cost discipline
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 second quarter ended June 29,
2024. Results include 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.
“For the third consecutive quarter, the Helios team delivered
financial results that met or slightly beat our guidance. The
second quarter’s sequential top line growth, expanding margins, and
disciplined working capital management validate that the
adjustments we have made in the business are yielding positive
outcomes. We improved our cash conversion cycle and applied the
cash generated from operations to reduce debt for the fourth
consecutive quarter. Importantly, we are committed to our strategy
to become a leader in premium engineered hydraulic and electronic
system solutions which are mission critical for our customers’
applications. Our structure enables us to maximize our engineering
capabilities across the organization, leverage our strong supplier
relationships, and benefit from our market and geographic
diversification. We are well positioned as strategic global
partners for our customers as an integrated operating company with
our ‘in the region, for the region’ strategy,” said Sean Bagan,
Interim President, Chief Executive Officer, and Chief Financial
Officer of Helios.
“Our primary strategic focus is threefold: (i) exceed our
customer’s expectations by delivering exceptional products,
services and solutions, ensuring every interaction leaves them
delighted and loyal to our brands, (ii) foster a culture of
continuous learning empowering our employees to thrive and grow,
creating collaboration and innovation, and (iii) secure long-term
organizational success through achieving sustainable profitable
growth. We acknowledge the softening conditions in several of our
end markets and are moderating our full year 2024 outlook to
reflect such. Nonetheless, there is much within our control to
deliver increasing value and we remain well positioned to
accelerate our profitable sales growth especially as markets
strengthen,” Mr. Bagan concluded.
Second Quarter 2024 Consolidated Results
For the Three Months Ended ($ in millions, except per share
data)(Unaudited)
June 29,2024 July 1,2023
Change % Change Net sales
$
219.9
$
227.6
$
(7.7
)
(3
%)
Gross profit
$
70.6
$
75.8
$
(5.2
)
(7
%)
Gross margin
32.1
%
33.3
%
(120
)
bps Operating income
$
26.0
$
29.5
$
(3.5
)
(12
%)
Operating margin
11.8
%
13.0
%
(120
)
bps Non-GAAP adjusted operating margin*
16.4
%
18.5
%
(210
)
bps Net income
$
13.6
$
16.8
$
(3.2
)
(19
%)
Diluted EPS
$
0.41
$
0.51
$
(0.10
)
(20
%)
Non-GAAP net income*
$
21.5
$
26.8
$
(5.3
)
(20
%)
Diluted Non-GAAP EPS*
$
0.64
$
0.81
$
(0.17
)
(21
%)
Adjusted EBITDA*
$
44.2
$
50.1
$
(5.9
)
(12
%)
Adjusted EBITDA margin*
20.1
%
22.0
%
(190
)
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 1% as the Health &
Wellness market did not fully offset weakness in recreational,
mobile, and industrial markets; Hydraulics sales were down 4%
reflecting the weakness in agriculture, mobile, and industrial
market. Compared with the first quarter 2024, the Electronics
segment grew 7% and the Hydraulics segment revenue improved 2%.
Sales included $1.2 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 Asia Pacific ("APAC”) grew 12% while there
was an 11% decline in Europe, the Middle East and Africa (“EMEA”)
and 5% decline in the Americas compared with the year ago period.
Compared with the first quarter 2024, APAC increased 10% and
Americas increased 3%, while EMEA was relatively unchanged.
- Other Impacts: foreign currency (FX) translation unfavorably
impacted sales by $0.9 million in the second quarter 2024.
Profits and margins
- Gross profit and margin impacts: gross profit declined $5.2
million compared with the year ago period primarily on lower
volume, higher labor costs, and unfavorable FX partially offset by
contributions from acquisitions. Gross margin contracted 120 basis
points impacted by lower fixed cost leverage on lower volume,
revenue mix, and higher labor costs partially offset by
improvements in pricing and material costs. Compared with the first
quarter 2024, gross profit increased $3.4 million, or 5%, and gross
margin expanded 40 basis points.
- Selling, engineering and administrative (“SEA”) expenses: SEA
declined $1.3 million, or 3% compared with the year ago period
reflecting cost containment actions.
- Amortization of intangible assets: $7.9 million down 5%
compared with the year ago period as some intangibles have fully
amortized since the comparable period.
Non-operating items
- Net interest expense: up $0.7 million compared with the prior
year period due to the June 2024 debt refinancing activities that
included the write-off of $0.5 million unamortized debt issuance
costs in connection to individual banks exiting the loan syndicate
and higher interest rates in the current period offset with a lower
outstanding debt balance.
- Effective tax rate: relatively unchanged at 23.0% compared with
22.9% in the year ago period.
Net income, diluted earnings per share
(“EPS”), Non-GAAP EPS, and adjusted EBITDA margin
- GAAP net income: down $3.2 million, or $0.10 per diluted share,
compared with the year ago period. Compared with first quarter
2024, up $4.4 million, or $0.13 per diluted share.
- Diluted Non-GAAP EPS: declined $0.17 compared with the year ago
period primarily the result of lower volume, compressed margins on
lost absorption, sales mix, and increased interest expense.
Compared with first quarter of 2024, increased $0.11, or 21%.
- Adjusted EBITDA margin: contracted 190 basis points compared
with the year ago period driven by the items discussed previously.
Compared with the first quarter of 2024, up by 190 basis
points.
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Hydraulics For the Three
Months Ended ($ in millions)(Unaudited)
June 29, 2024
July 1, 2023 Change % Change Net Sales
Americas
$
59.5
$
60.6
$
(1.1
)
(2
%)
EMEA
42.8
51.3
(8.5
)
(17
%)
APAC
43.4
40.5
2.9
7
%
Total Segment Sales
$
145.7
$
152.4
$
(6.7
)
(4
%)
Gross Profit
$
44.9
$
49.7
$
(4.8
)
(10
%)
Gross Margin
30.8
%
32.6
%
(180
)
bps SEA Expenses
$
21.0
$
22.7
$
(1.7
)
(7
%)
Operating Income
$
23.9
$
27.0
$
(3.1
)
(11
%)
Operating Margin
16.4
%
17.7
%
(130
)
bps
Second Quarter 2024 Hydraulics Segment
Review
- Sales: improving conditions in APAC helped to offset weakness
in EMEA and Americas, resulting in a 4% year over year contraction
in segment sales. Sales declined in the agriculture, mobile, and
industrial end markets compared with the year ago period. FX had an
unfavorable $0.8 million impact on sales. Compared with the first
quarter of 2024, sales improved 2% driven by higher demand in
APAC.
- Gross profit and margin drivers: lower gross profit and margin,
compared with the year ago period was primarily the result of fixed
cost absorption on lower volume and higher labor costs. Compared
with the first quarter of 2024, gross profit grew 1% while gross
margin declined 50 basis points primarily due to product mix.
- Operating income and operating margin: lower operating income
and margin, compared with the year ago period reflect impact of
lower gross profit offset somewhat by operating cost reductions.
Compared with the first quarter 2024, operating income increased
10% and margin was up 110 basis points.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Electronics For the Three
Months Ended ($ in millions)(Unaudited)
June 29, 2024
July 1, 2023 Change % Change Net Sales
Americas
$
57.8
$
63.2
$
(5.4
)
(9
%)
EMEA
9.0
7.0
2.0
29
%
APAC
7.4
5.0
2.4
48
%
Total Segment Sales
$
74.2
$
75.2
$
(1.0
)
(1
%)
Gross Profit
$
25.7
$
26.1
$
(0.4
)
(2
%)
Gross Margin
34.6
%
34.7
%
(10
)
bps SEA Expenses
$
15.4
$
14.1
$
1.3
9
%
Operating Income
$
10.3
$
12.0
$
(1.7
)
(14
%)
Operating Margin
13.9
%
16.0
%
(210
)
bps
Second Quarter 2024 Electronics Segment
Review
- Sales: increased demand in APAC and EMEA helped to offset the
decline in the Americas compared with the year ago period.
Acquisitions contributed $1.2 million in the second quarter. Higher
sales in health and wellness partially offset continued softness in
recreational, mobile, and industrial end markets compared with the
year ago period. Compared with the first quarter of 2024, sales
improved 7% driven by growth in health and wellness. FX had an
unfavorable $0.1 million impact of sales.
- Gross profit and margin drivers: slightly lower gross profit
and margin compared to the year ago period was primarily due to
lower volume and the mix in sales. Compared with the first quarter
of 2024, gross profit grew 13% and gross margin expanded 200 basis
points driven primarily by higher volumes and operational focus on
efficiencies and cost reductions.
- Operating income and operating margin: the decline in operating
income and contraction of operating margin, compared with the year
ago period, were driven primarily by negative revenue mix and
incremental costs associated with the 2023 acquisitions partially
offset by lower material costs. Compared with the first quarter of
2024, operating income grew $3.2 million or 45% and margin expanded
370 basis points driven primarily by leverage from higher sales
volume.
Balance Sheet and Cash Flow Review
- Refinanced debt at quarter end: total debt at quarter-end was
$502.7 million down 8.5% from $549.1 million at the end of the
second quarter 2023. On June 25, 2024, the Company amended and
restated its term loans and revolving credit facility expanding its
borrowing capacity while reducing borrowing spread rates and
eliminating certain spread adjustment costs. As a result of these
refinancings, the Company received $7.1 million in cash proceeds
from the termination of an interest rate swap agreement.
- Cash and cash equivalents: as of June 29, 2024 were $45.0
million, up 21% sequentially from the first quarter 2024
demonstrating the focus on cash management.
- Inventory: decreased by $7.6 million, or 4%, to $206.3 million
from the first quarter of 2024. The decrease was the result of more
disciplined financial management to accelerate cash conversion
rates.
- Pro-forma net debt-to-adjusted EBITDA: slight sequential
decline to 3.0x at quarter end compared with 3.1x at the end of the
first quarter. At the end of the second quarter 2024, the Company
had $308.3 million available on its revolving lines of credit.
- Net cash provided by operations: was $33.8 million in the
second quarter 2024 compared with $26.1 million in the year ago
period.
- Capital expenditures: were $8.1 million in the second quarter
2024, or 3.7% of sales. This is down from $10.5 million, or 4.6% of
sales, as the Company made capital investments in our Centers of
Excellence and implemented automation processes in the year ago
period.
- Dividends: Paid 110th sequential quarterly cash dividend of
$0.09 per share on July 19, 2024, a history of over 27 consecutive
years of dividends.
Moderating Second Half / Full Year 2024 Outlook:
Mr. Bagan continued, “Given the softening in demand documented
by various industry groups regarding weakness in the near term, the
order book trends we are seeing for the second half, a prolonged
period of negative U.S. PMI data, and the contracting annual fiscal
year revenue guidance published by our largest public company
customers, we are prudently bringing in our sales expectations for
the year. Despite this second half sales moderating, we still
expect to maintain our original adjusted EBITDA margin range. We
remain focused on protecting our margins through operational
efficiencies and disciplined cost management. Over the next few
years as we further penetrate some of our new customer and end
market wins, along with strengthening our system solution offerings
within the electro-hydraulics industry, we expect to create
significant value and drive positive shareholder returns.”
The following provides the Company’s expectations for 2024 as of
August 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 Initial 2024 Outlook
Updated 2024 Outlook Total net sales
$835.6 million
$840 - $860 million
$825 - $840 million
Net income
$37.5 million
$50 - $63 million
$45 - $52 million
Adjusted EBITDA
$161.4 million
$163 - $180 million
$161 - $176 million
Adjusted EBITDA margin
19.3%
19.5% - 21.0%
19.5% - 21.0%
Interest expense
$31.2 million
$34 - $35 million
$33.5 - $34.5 million
Effective tax rate
24%
22% - 24%
21% - 23%
Depreciation
$30.2 million
$34 - $36 million
$31.5 - $32.5 million
Amortization
$33.6 million
$33 - $35 million
$32.5 - $33.5 million
Capital expenditures % net sales
4%
3% - 4%
3.5% - 4.0%
Diluted EPS
$1.14
$1.50 - $1.90
$1.35 - $1.55
Diluted Non-GAAP EPS
$2.34
$2.35 - $2.75
$2.25 - $2.45
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,
August 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 Tuesday, August 13, 2024. To
listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13746830. 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 related to
our international operations, including the potential impact of the
ongoing conflict in Ukraine and the Middle East; (ix) new product
introductions, product sales mix and the geographic mix of sales
nationally and internationally; and (x) 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 Six Months
Ended June 29, July 1, June 29, July
1
2024
2023
% Change
2024
2023
% Change Net sales
$
219.9
$
227.6
(3
)%
$
431.9
$
440.8
(2
)%
Cost of sales
149.3
151.8
(2
)%
294.1
294.0
0
%
Gross profit
70.6
75.8
(7
)%
137.8
146.8
(6
)%
Gross margin
32.1
%
33.3
%
31.9
%
33.3
%
Selling, engineering and administrative expenses
36.7
38.0
(3
)%
75.7
76.1
(1
)%
Amortization of intangible assets
7.9
8.3
(5
)%
15.7
16.4
(4
)%
Operating income
26.0
29.5
(12
)%
46.4
54.3
(15
)%
Operating margin
11.8
%
13.0
%
10.7
%
12.3
%
Interest expense, net
8.5
7.8
9
%
16.7
14.0
19
%
Foreign currency transaction loss, net
0.2
0.1
100
%
0.5
0.5
-
%
Other non-operating (income) expense, net
(0.3
)
(0.2
)
50
%
(0.3
)
-
Income before income taxes
17.6
21.8
(19
)%
29.5
39.8
(26
)%
Income tax provision
4.0
5.0
(20
)%
6.8
9.2
(26
)%
Net income
$
13.6
$
16.8
(19
)%
$
22.7
$
30.6
(26
)%
Net income per share: Basic
$
0.41
$
0.51
(20
)%
$
0.69
$
0.94
(27
)%
Diluted
$
0.41
$
0.51
(20
)%
$
0.68
$
0.93
(27
)%
Weighted average shares outstanding: Basic
33.2
32.8
33.2
32.7
Diluted
33.3
32.9
33.3
32.8
Dividends declared per share
$
0.09
$
0.09
$
0.18
$
0.18
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except per share
data)
June 29, 2024 December 30, 2023 (Unaudited)
Assets Current assets: Cash and cash equivalents
$
45.0
$
32.4
Accounts receivable, net of allowance for credit losses of $2.6 and
$2.1
132.6
114.8
Inventories, net
206.3
215.1
Income taxes receivable
9.9
11.3
Other current assets
28.8
23.1
Total current assets
422.6
396.7
Property, plant and equipment, net
223.6
227.9
Deferred income taxes
4.6
1.7
Goodwill
506.1
514.0
Other intangible assets, net
405.0
426.4
Other assets
19.0
23.7
Total assets
$
1,580.9
$
1,590.4
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
67.4
$
70.3
Accrued compensation and benefits
24.2
19.4
Other accrued expenses and current liabilities
26.9
27.0
Current portion of long-term non-revolving debt, net
17.2
23.2
Dividends payable
3.0
3.0
Income taxes payable
6.0
2.0
Total current liabilities
144.7
144.9
Revolving lines of credit
190.4
199.8
Long-term non-revolving debt, net
291.7
298.3
Deferred income taxes
54.5
57.1
Other noncurrent liabilities
33.1
35.7
Total liabilities
714.4
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
439.7
434.4
Retained earnings
492.4
475.6
Accumulated other comprehensive loss
(65.6
)
(55.4
)
Total shareholders’ equity
866.5
854.6
Total liabilities and shareholders’ equity
$
1,580.9
$
1,590.4
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
For the Six Months Ended June 29, 2024 July
1, 2023 Cash flows from operating activities: Net income
$
22.7
$
30.6
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
31.7
31.3
Stock-based compensation expense
6.7
6.5
Amortization of debt issuance costs
0.7
0.3
Benefit for deferred income taxes
(1.3
)
(2.1
)
Forward contract losses, net
-
0.4
Other, net
0.8
0.4
(Increase) decrease in, net of acquisitions: Accounts receivable
(19.5
)
(8.5
)
Inventories
6.3
(9.6
)
Income taxes receivable
1.2
3.3
Other current assets
(6.0
)
(4.9
)
Other assets
3.9
3.1
Increase (decrease) in, net of acquisitions: Accounts payable
(1.9
)
(3.5
)
Accrued expenses and other liabilities
5.2
(5.6
)
Income taxes payable
4.0
2.7
Other noncurrent liabilities
(2.9
)
(3.3
)
Contingent consideration payments in excess acquisition date fair
value
-
(2.7
)
Net cash provided by operating activities
51.6
38.4
Cash flows from investing activities: Business acquisitions,
net of cash acquired
-
(114.8
)
Capital expenditures
(13.6
)
(19.6
)
Proceeds from dispositions of property, plant and equipment
-
0.2
Cash settlement of forward contracts
-
0.4
Software development costs
(1.8
)
(2.0
)
Net cash used in investing activities
(15.4
)
(135.8
)
Cash flows from financing activities: Borrowings on
revolving credit facilities
37.1
142.7
Repayment of borrowings on revolving credit facilities
(43.6
)
(188.6
)
Borrowings on long-term non-revolving debt
126.8
160.0
Repayment of borrowings on long-term non-revolving debt
(138.5
)
(12.3
)
Proceeds from stock issued
1.0
1.0
Dividends to shareholders
(6.0
)
(5.9
)
Payment of employee tax withholding on equity award vestings
(2.4
)
(2.1
)
Payment of contingent consideration liability
-
(3.4
)
Other financing activities
(4.1
)
(1.3
)
Proceeds received upon termination of Cash Flow hedge instruments
7.1
-
Net cash (used in) provided by financing activities
(22.6
)
90.1
Effect of exchange rate changes on cash and cash equivalents
(1.0
)
1.1
Net increase (decrease) in cash and cash equivalents
12.6
(6.2
)
Cash and cash equivalents, beginning of period
32.4
43.7
Cash and cash equivalents, end of period
$
45.0
$
37.5
HELIOS TECHNOLOGIES
SEGMENT DATA
(In millions)
(Unaudited)
For the Three Months Ended For the Six Months
Ended June 29,2024 July 1,2023 June
29,2024 July 1,2023 Net Sales: Hydraulics
$
145.7
$
152.4
$
288.1
$
300.1
Electronics
74.2
75.2
143.8
140.7
Consolidated
$
219.9
$
227.6
$
431.9
$
440.8
Gross profit and margin: Hydraulics
$
44.9
$
49.7
$
89.5
$
99.6
30.8
%
32.6
%
31.1
%
33.2
%
Electronics
25.7
26.1
48.3
47.2
34.6
%
34.7
%
33.6
%
33.5
%
Consolidated
$
70.6
$
75.8
$
137.8
$
146.8
32.1
%
33.3
%
31.9
%
33.3
%
Operating income (loss) and margin: Hydraulics
$
23.9
$
27.0
$
45.7
$
55.0
16.4
%
17.7
%
15.9
%
18.3
%
Electronics
10.3
12.0
17.4
19.5
13.9
%
16.0
%
12.1
%
13.9
%
Corporate and other
(8.2
)
(9.5
)
(16.7
)
(20.2
)
Consolidated
$
26.0
$
29.5
$
46.4
$
54.3
11.8
%
13.0
%
10.7
%
12.3
%
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 Six Months Ended
April 1, July 1, September 30, December
30, December 30, March 30, June 29,
June 29,
2023
2023
2023
2023
2023
2024
2024
2024
Hydraulics Organic
$
134.0
$
137.2
$
121.0
$
126.6
$
518.8
$
140.5
$
145.7
$
286.2
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
$
288.1
Electronics Organic
$
65.5
$
74.0
$
67.1
$
57.4
$
264.0
$
67.6
$
73.0
$
140.7
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
$
143.8
Consolidated Organic
$
199.5
$
211.2
$
188.1
$
184.0
$
782.8
$
208.1
$
218.7
$
426.8
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
$
431.9
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)
Q1 % Change y/y Q2 % Change y/y
YTD 2024 % Change y/y Americas: Hydraulics
$
55.8
(4
%)
$
59.5
(2
%)
$
115.3
(3
%)
Electronics
58.1
5
%
$
57.8
(9
%)
115.9
(2
%)
Consol. Americas
113.9
1
%
117.3
(5
%)
231.2
(2
%)
% of total
54
%
53
%
54
%
EMEA: Hydraulics
$
45.5
(8
%)
$
42.8
(17
%)
$
88.3
(12
%)
Electronics
6.5
(3
%)
9.0
29
%
15.5
13
%
Consol. EMEA
52.0
(7
%)
51.8
(11
%)
103.8
(9
%)
% of total
25
%
24
%
24
%
APAC: Hydraulics
$
41.1
2
%
$
43.4
7
%
$
84.5
4
%
Electronics
5.0
35
%
7.4
48
%
12.4
43
%
Consol. APAC
46.1
5
%
50.8
12
%
96.9
8
%
% of total
22
%
23
%
22
%
Total
$
212.0
(1
%)
$
219.9
(3
%)
$
431.9
(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 Six Months
Ended Twelve Months Ended June 29, 2024
Margin July 1, 2023 Margin June 29,
2024 Margin July 1, 2023 Margin June
29, 2024 Margin GAAP operating income
$
26.0
11.8
%
$
29.5
13.0
%
$
46.4
10.7
%
$
54.3
12.3
%
$
72.0
8.7
%
Acquisition-related amortization of intangible assets
7.9
3.6
%
8.3
3.6
%
15.7
3.6
%
16.4
3.7
%
32.2
3.9
%
Acquisition and financing-related expenses
(A)
0.1
0.0
%
1.1
0.5
%
0.6
0.1
%
2.8
0.6
%
1.8
0.2
%
Restructuring charges
(B)
1.7
0.8
%
3.1
1.4
%
3.2
0.7
%
4.3
1.0
%
10.9
1.3
%
Officer transition costs
0.3
0.1
%
-
0.0
%
0.5
0.1
%
0.8
0.2
%
1.0
0.1
%
Acquisition integration costs
(C)
-
0.0
%
0.1
0.0
%
0.3
0.1
%
0.2
0.0
%
0.4
0.0
%
Other
-
0.0
%
-
0.0
%
-
0.0
%
(0.1
)
0.0
%
0.3
0.0
%
Non-GAAP adjusted operating income
$
36.0
16.4
%
$
42.1
18.5
%
$
66.7
15.4
%
$
78.7
17.9
%
$
118.6
14.3
%
GAAP operating margin
11.8
%
13.0
%
10.7
%
12.3
%
8.7
%
Non-GAAP adjusted operating margin
16.4
%
18.5
%
15.4
%
17.9
%
14.3
%
Net sales
$
219.9
$
227.6
$
431.9
$
440.8
$
826.7
Non-GAAP Adjusted EBITDA &
Non-GAAP Adjusted EBITDA Margin RECONCILIATION
(In millions)
(Unaudited)
For the Three Months Ended For the Six Months
Ended Twelve Months Ended June 29, 2024
Margin July 1, 2023 Margin June 29,
2024 Margin July 1, 2023 Margin June
29, 2024 Margin Net income
$
13.6
6.2
%
$
16.8
7.4
%
$
22.7
5.3
%
$
30.6
6.9
%
$
29.6
3.6
%
Interest expense, net
8.5
3.9
%
7.8
3.4
%
16.7
3.9
%
14.0
3.2
%
34.0
4.1
%
Income tax provision
4.0
1.8
%
5.0
2.2
%
6.8
1.6
%
9.2
2.1
%
9.3
1.1
%
Depreciation and amortization
16.0
7.3
%
16.1
7.1
%
31.7
7.3
%
31.3
7.1
%
64.2
7.8
%
EBITDA
42.1
19.1
%
45.7
20.1
%
77.9
18.0
%
85.1
19.3
%
137.1
16.6
%
Acquisition and financing-related expenses
(A)
0.1
0.0
%
1.1
0.5
%
0.6
0.1
%
2.8
0.6
%
1.8
0.2
%
Restructuring charges
(B)
1.7
0.8
%
3.1
1.4
%
3.2
0.7
%
4.3
1.0
%
10.9
1.3
%
Officer transition costs
0.3
0.1
%
-
0.0
%
0.5
0.1
%
0.8
0.2
%
1.0
0.1
%
Acquisition integration costs
(C)
-
0.0
%
0.1
0.0
%
0.3
0.1
%
0.2
0.0
%
0.4
0.0
%
Change in fair value of contingent consideration
-
0.0
%
0.6
0.3
%
-
0.0
%
0.7
0.2
%
(0.9
)
-0.1
%
Other
-
0.0
%
(0.5
)
-0.2
%
0.2
0.0
%
(0.5
)
-0.1
%
0.4
0.0
%
Adjusted EBITDA
$
44.2
20.1
%
$
50.1
22.0
%
$
82.7
19.1
%
$
93.4
21.2
%
$
150.7
18.2
%
GAAP net income margin
6.2
%
7.4
%
5.3
%
6.9
%
3.6
%
EBITDA margin
19.1
%
20.1
%
18.0
%
19.3
%
16.6
%
Adjusted EBITDA margin
20.1
%
22.0
%
19.1
%
21.2
%
18.2
%
Net sales
$
219.9
$
227.6
$
431.9
$
440.8
$
826.8
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 Six Months
Ended June 29, 2024 Per Diluted Share July 1,
2023 Per Diluted Share June 29, 2024 Per
Diluted Share* July 1, 2023 Per Diluted Share
GAAP net income
$
13.6
$
0.41
$
16.8
$
0.51
$
22.7
$
0.68
$
30.6
$
0.93
Amortization of intangible assets
(D)
8.2
0.25
8.4
0.26
16.3
0.49
16.8
0.51
Acquisition and financing-related expenses
(A)
0.1
-
1.1
0.03
0.6
0.02
2.8
0.09
Restructuring charges
(B)
1.7
0.05
3.1
0.09
3.2
0.10
4.3
0.13
Officer transition costs
0.3
0.01
-
-
0.5
0.01
0.8
0.02
Acquisition integration costs
(C)
-
-
0.1
-
0.3
0.01
0.2
0.01
Change in fair value of contingent consideration
-
-
0.6
0.02
-
-
0.7
0.02
Other
-
-
(0.5
)
(0.02
)
0.2
0.01
(0.5
)
(0.02
)
Tax effect of above
(2.4
)
(0.07
)
(2.8
)
(0.09
)
(4.7
)
(0.14
)
(5.5
)
(0.17
)
Non-GAAP Adjusted net income
$
21.5
$
0.64
$
26.8
$
0.81
$
39.1
$
1.17
$
50.2
$
1.53
GAAP net income per diluted share
$
0.41
$
0.51
$
0.68
$
0.93
Non-GAAP Adjusted net income per diluted share
$
0.64
$
0.81
$
1.17
$
1.53
(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
six months ended June 29, 2024, the charges include $0.1 and $0.6
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
six months ended June 29, 2024, the charges include non-recurring
labor costs of $0.7 and $1.6 million and manufacturing relocation
and other costs of $1.0 and $1.6 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 six months ended June 29, 2024, the costs totaled $0.0 and $0.3
million, respectively.
(D) Amortization of intangible assets
presented here includes $0.3 and $0.6 million for capitalized
software development costs included within cost of sales in the
income statement for the three and six months ended June 29, 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 Six Months
Ended Hydraulics Electronics Consolidated
Hydraulics Electronics Consolidated Q2 2024
Net Sales
$
145.7
$
74.2
$
219.9
$
288.1
$
143.8
$
431.9
Impact of foreign currency translation
(E)
0.8
0.1
0.9
1.1
0.2
1.3
Net Sales in constant currency
146.5
74.3
220.8
289.2
144.0
433.2
Less: Acquisition related sales
-
(1.2
)
(1.2
)
(1.9
)
(3.1
)
(5.0
)
Organic sales in constant currency
$
146.5
$
73.1
$
219.6
$
287.3
$
140.9
$
428.2
Q2 2023 Net Sales
$
152.4
$
75.2
$
227.6
$
300.1
$
140.7
$
440.8
Net sales growth
-4
%
-1
%
-3
%
-4
%
2
%
-2
%
Net sales growth in constant currency
-4
%
-1
%
-3
%
-4
%
2
%
-2
%
Organic net sales growth in constant currency
-4
%
-3
%
-4
%
-4
%
0
%
-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 June 29, 2024 Current portion of
long-term non-revolving debt, net
17.2
Revolving lines of credit
193.8
Long-term non-revolving debt, net
291.7
Total debt
502.7
Less: Cash and cash equivalents
45.0
Net debt
457.7
TTM adjusted EBITDA
150.7
Ratio of net debt to TTM adjusted EBITDA
3.0
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240805956094/en/
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
Helios Technologies (NYSE:HLIO)
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