- 6% sales growth in challenging environment, results in $144
million net sales
- Solid profitability at all levels
- EPS of $0.54 per share; Non-GAAP Cash EPS of $0.65
- Adjusted EBITDA margin of 24.1%, reflecting sequential 40
basis point improvement over first quarter
- Gross margin of 39.1%, reflecting sequential 60 basis point
improvement over first quarter
- Updating 2019 guidance due to currency headwinds and end
market softening
Helios Technologies, Inc. (Nasdaq: HLIO) (“Helios” or the
“Company”), a global industrial technology leader that develops and
manufactures solutions for both the hydraulics and electronics
markets, today reported financial results for the second quarter
and first half of 2019, ended June 29, 2019. The results include
Faster Group since its acquisition on April 5, 2018 and Custom
Fluidpower (CFP) since its acquisition on August 1, 2018.
Wolfgang Dangel, the Company’s President and Chief Executive
Officer, commented, “We are very pleased with the quality of
earnings produced in both segments of the business, even on the
lower than anticipated sales. While neither segment was able to
drive top line sequential growth, margins were up across the board
compared with the first quarter of 2019. Our Electronics segment
experienced softer sales than we expected, but we were successful
at managing our costs and output, driving improvement at both the
gross and operating margin levels while we continue to make
significant investments in R&D for new OEM projects scheduled
to start production in 2020 and 2021. Our Hydraulics segment also
realized organic margin expansion in the second quarter over the
first quarter. This improvement was driven by efficiencies
following completion of the CVT manufacturing consolidation project
which resulted in increased capacity as expected. However, our
Hydraulics sales for the second quarter, particularly for our CVT
products, were below our expectations. Aside from softening in
certain end markets, we had sufficient backlog and demand in total,
but the sales mix precluded us from maximizing the newly designed
capacity in our Sarasota facilities. This variation in product mix
impacted our production scheduling and output during the quarter.
Once our production mix is normalized, the CVT manufacturing
consolidation project is expected to drive 15% added capacity
within our Sarasota facilities by the end of this year, allowing us
to further leverage our fixed cost base.
“From an economic standpoint, clearly there is softening in many
markets globally,” continued Dangel. “We believe that some of the
lower demand is resulting from macroeconomic factors like the trade
war and general geopolitical uncertainty, while the remainder is
due to the economic cycle. On a sequential basis from the first
quarter of 2019 to the second quarter, several end markets such as
global mining and U.S. construction still demonstrated resilience.
However, several of our other end markets, including recreational
and material handling, have further softened. European agriculture
remains weak as does oil and gas in the Americas. Most recently, we
have started to see a decline in the construction equipment market
in APAC, specifically in South Korea. We are continuing to take
market share in other areas within APAC, which drove high single
digit sequential growth in that region.”
Mr. Dangel added, “Despite the further economic softening, we
continue to advance our strategic initiatives. History has shown
that these end markets recover quite quickly from cyclical
downturns and we plan to have the capacity available to service our
customers and win in the marketplace when our end markets recover.
We are pleased to report that we began shipping products from our
newly opened facility in China in June and will be increasing our
output as we progress through the year. This project, which was
completed ahead of schedule, strengthens our ‘in the region, for
the region’ initiative in support of demand in the growing China
market. Also, acquisition synergy realization continues, including
the production of CVT components at the Faster facilities in both
Europe and the U.S.”
Second Quarter 2019 Consolidated Results
($ in millions, except per share data)
Q2 2019 Q2
2018 Change % Change Net sales
$
143.8
$
136.2
$
7.6
6%
Gross profit
$
56.2
$
50.4
$
5.8
12%
Gross margin
39.1%
37.0%
Operating income
$
26.4
$
17.0
$
9.4
55%
Operating margin
18.4%
12.5%
Non-GAAP adjusted operating margin
21.5%
23.5%
Net income
$
17.3
$
6.8
$
10.5
154%
Diluted EPS
$
0.54
$
0.22
$
0.32
145%
Non-GAAP cash net income
$
20.7
$
19.8
$
0.9
5%
Non-GAAP cash EPS
$
0.65
$
0.63
$
0.02
3%
Adjusted EBITDA
$
34.7
$
34.9
$
(0.2)
(1%)
Adjusted EBITDA margin
24.1%
25.6%
See the attached tables for additional important disclosures
regarding Helios’s use of non-GAAP adjusted operating income,
non-GAAP adjusted operating margin, non-GAAP cash net income,
non-GAAP cash EPS, adjusted EBITDA (earnings before net interest
expense, income taxes, depreciation and amortization, and certain
non-recurring charges) and adjusted EBITDA margin (adjusted EBITDA
as a percentage of sales) as well as reconciliations of GAAP
operating income to non-GAAP adjusted operating income and GAAP net
income to non-GAAP cash net income and adjusted EBITDA. Helios
believes that, when used in conjunction with measures prepared in
accordance with GAAP, non-GAAP measures described above help in the
understanding of its operating performance.
Sales
- Acquisition – CFP contributed $12.6 million
- Organic – $2.4 million decline, 2%, excluding the effect of
currency
- Foreign currency translation on organic sales – $2.6 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Production efficiencies and
cost management efforts, partially offset by lower margin CFP
business model; last year included $3.1 million acquisition
inventory step-up amortization
- Selling, engineering and administrative (SEA) expenses –
Increased primarily due to the CFP acquisition and investments to
support the growth and change in Helios business structure,
partially offset by cost reduction efforts; improved as a percent
of sales
- Amortization of intangible assets – $4.5 million ($8.1 million
in prior year due to short-lived acquisition intangibles)
- Other operating profit and margin factors – Last year included
$3.7 million for acquisition and financing related expenses
Non-operating items
- Foreign currency transaction loss – $0.5 million ($3.3 million
in prior year, including loss on foreign exchange forward contract
to secure funds for the Faster acquisition)
- Effective tax rate – 21.3%, down from 26.3% last year
EPS, non-GAAP cash EPS and adjusted
EBITDA
- GAAP EPS – Cost management efforts and improved productivity,
partially offset by investments to support growth; last year
included acquisition-related expenses
- Non-GAAP cash EPS – Comparable to last year and first quarter
2019, reflects cost management efforts and improved productivity,
offset by investments to support growth
- Adjusted EBITDA margin – Reflects improved productivity, offset
by investments to support growth and lower margin CFP business
model
First Half 2019 Consolidated Results
($ in millions, except per share data)
2019
2018
Change
% Change
Net sales
$
290.7
$
233.5
$
57.2
25%
Gross profit
$
112.7
$
88.0
$
24.7
28%
Gross margin
38.8%
37.7%
Operating income
$
52.2
$
34.3
$
17.9
52%
Operating margin
18.0%
14.7%
Non-GAAP adjusted operating margin
21.0%
22.5%
Net income
$
33.7
$
18.7
$
15.0
80%
Diluted EPS
$
1.05
$
0.61
$
0.44
72%
Non-GAAP cash net income
$
41.1
$
34.9
$
6.2
18%
Non-GAAP cash EPS
$
1.28
$
1.13
$
0.15
13%
Adjusted EBITDA
$
69.4
$
58.2
$
11.2
19%
Adjusted EBITDA margin
23.9%
24.9%
See the attached tables for additional important disclosures
regarding Helios’s use of non-GAAP adjusted operating income,
non-GAAP adjusted operating margin, non-GAAP cash net income,
non-GAAP cash EPS, adjusted EBITDA and adjusted EBITDA margin as
well as reconciliations of GAAP operating income to non-GAAP
adjusted operating income and GAAP net income to non-GAAP cash net
income and adjusted EBITDA. Helios believes that, when used in
conjunction with measures prepared in accordance with GAAP,
non-GAAP measures described above help in the understanding of its
operating performance.
Sales
- Acquisition – Faster and CFP contributed $61.6 million
- Organic – $0.5 million decline, excluding the effect of
currency
- Foreign currency translation on organic sales – $3.9 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Acquisitions, price
increases, production efficiencies and cost management efforts,
partially offset by lower margin CFP business model; last year
included $3.1 million acquisition inventory step-up
amortization
- SEA expenses – Increased primarily due to Faster and CFP
acquisitions as well as investments to support the growth and
change in Helios business structure, partially offset by cost
management efforts; improved as a percent of sales
- Amortization of intangible assets – $9.1 million ($10.1 million
in prior year)
- Other operating profit and margin factors – Last year included
$4.9 million for acquisition and financing related expenses
Non-operating items
- Net interest expense – Higher due to debt to fund the Faster
and CFP acquisitions
- Effective tax rate – 21.7%, down from 25.5% from last year
EPS, non-GAAP cash EPS and adjusted
EBITDA
- GAAP EPS – Improvement primarily driven by acquisition growth
and cost management efforts, partially offset by investments to
support growth; last year included acquisition-related
expenses
- Non-GAAP cash EPS – Improvement primarily driven by acquisition
growth and cost management efforts, partially offset by investments
to support growth
- Adjusted EBITDA margin – Impacted by investments to support
growth and lower margin CFP business model
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales of $113.7 million increased 10% over the
prior-year second quarter. The $10.1 million increase included
$12.6 million from the acquired CFP business and flat organic
sales, partially offset by $2.5 million of unfavorable changes in
foreign currency exchange rates. Demand continued to be strong in
the Americas region with organic sales increasing 4%. The Europe,
Middle East, Africa (EMEA) region declined 4% and Asia/Pacific
(APAC) region sales remained flat organically, both excluding the
$2.6 million effect of unfavorable foreign currency exchange rate
changes.
Second quarter 2019 gross margin of 37.3% was down from the
prior year’s 38.0%. Organic gross margin improved but was offset by
the impact of CFP’s value-add integrator business model which
reduced gross margin by approximately 150 basis points in the
quarter.
Higher SEA expenses in the 2019 second quarter included $2.3
million for the CFP business as well as investments to support the
growth and change in structure of Helios.
As a result of the above, second quarter operating income
decreased to $24.1 million, representing 21.2% of sales, compared
with 24.5% last year.
For the first half, segment sales grew $64.0 million, or 39%, to
$230.2 million, compared with the 2018 first half. The growth
included $61.6 million of acquisition revenue contributed by Faster
and CFP, and 4% organic growth excluding the $3.6 million impact of
unfavorable changes in foreign currency exchange rates. Operating
income for the first half was $47.9 million, or 20.8% of sales.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales were $30.1 million for the 2019 second quarter, a
7% decrease compared with the second quarter of last year. The
decline was primarily due to softer demand in recreational and oil
and gas end markets as well as a release of contractual obligations
to allow the Company to offer all products to a broader and more
diversified customer base. Foreign currency translation had a $0.1
million unfavorable impact on segment sales in the quarter.
Second quarter 2019 gross margin expanded to 45.8%, from 43.4%
last year. Net price increases and cost management efforts which
resulted in production efficiencies drove the improvement.
SEA costs decreased by $0.3 million in the quarter compared with
last year.
Operating income was $6.5 million in the second quarters of both
2019 and 2018, with the 2019 operating margin improving to 21.6%
from 20.0% last year.
For the first half, segment sales were down 10% to $60.5
million, compared with the 2018 first half. Foreign currency had a
$0.4 million unfavorable impact. Despite the sales decline,
operating income was $13.0 million, with the 2019 first half
operating margin improving to 21.5% from 20.2% last year.
Balance Sheet and Cash Flow Review
Total debt was $345.1 million at June 29, 2019, down from $352.7
million at the end of 2018. Cash and cash equivalents at June 29,
2019 were $13.3 million after using available cash to reduce debt
at the end of the quarter, compared with $23.5 million at December
29, 2018. During the second quarter of 2019, the Company paid $17.8
million as the third and final payment due on the Enovation
Controls contingent consideration liability. As a result, the net
debt to EBITDA ratio increased to 2.4x at June 29, 2019 compared
with 2.3x at March 30, 2019.
Cash provided by operations was $25.4 million and $31.1 million
in the first six months of 2019 and 2018, respectively. The
decrease was impacted by $10.7 million of the contingent
consideration payment and a net increase in working capital,
partially offset by improved cash from earnings.
Capital expenditures were $15.4 million and $10.6 million in the
first halves of 2019 and 2018, respectively. The increase was
primarily for manufacturing technology enhancements, equipment to
complete the Company’s CVT manufacturing consolidation project in
Sarasota, machinery and leasehold improvements for the Company’s
new China facility, equipment to support CVT’s new engineering
center of excellence and the addition of the Faster business.
Capital expenditures in 2019 are estimated to be $30 million to $35
million, in support of the Company’s ongoing investments to drive
its innovative leadership.
2019 Outlook and Guidance
The Company is updating its guidance for 2019:
Previous 2019Guidance Updated 2019Guidance Change
vs 2018Actual Consolidated revenue $580 - $590 million $565 -
$575 million 11% - 13% Hydraulics segment revenue $464 - $469
million $453 - $458 million 18% - 20% Electronics segment revenue
$116 - $121 million $112 - $117 million (7)% - (11)% GAAP EPS $2.10
- $2.20 $1.95 - $2.05 31% - 38% Non-GAAP cash EPS $2.55 - $2.65
$2.40 - $2.50 4% - 9% Adjusted EBITDA margin 24.0% - 24.5% 23.5% -
24.0% (50) - (100) bps
Mr. Dangel noted, “We are updating our guidance for 2019 in
light of the changes in foreign currency exchange rates as well as
softening end market conditions, exacerbated by the potential
impact of recently announced tariffs. A high percentage of the
change in our revenue guidance is attributable to the unfavorable
impact of currency changes. The remainder is due to the impact of
further softening in the recreational and oil and gas markets on
our Electronics segment as well as the impact of general market
softening on our Hydraulics segment, partially offset by the
revenue anticipated from our strong backlog.
“The reduction in our revenue expectations will only have a
modest impact on our adjusted EBITDA margin expectations and we
still expect to grow our bottom line. We are adapting and adjusting
our business processes to respond to the current environment, while
continuing to capture the synergies from our acquisitions and
execute our long-term strategic initiatives. Our focus remains on
making investments to further globalize our business, advancing our
state-of-the-art manufacturing technologies, and introducing
innovative market-leading products and solutions that result in
market share gains. We reiterate the goals we established for
Vision 2025,” Mr. Dangel concluded.
Webcast
The Company will host a conference call and webcast tomorrow
morning 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 can be monitored at www.heliostechnologies.com.
Participants will have the ability to ask questions on either the
teleconference call or the webcast.
A telephonic replay will be available from 12:00 p.m. ET on the
day of the call through Tuesday, August 13, 2019. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13692266. 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 industrial technology leader
that develops and manufactures hydraulic and electronic control
solutions for diverse markets. The Company does business through
its operating subsidiaries around the world, including Sun
Hydraulics, Enovation Controls, and Faster Group. The Company
operates in two business segments, Hydraulics and Electronics.
There are three key technologies within our Hydraulics segment:
cartridge valve technology (“CVT”), quick-release hydraulic
coupling solutions (“QRC”) and hydraulic system design (“Systems”).
Within CVT, our products provide functions important to a hydraulic
system: to control rates and direction of fluid flow and to
regulate and control pressures. QRC products allow users to connect
and disconnect quickly from any hydraulic circuit without leakage
and ensure high-performance under high temperature and pressure
using one or multiple couplers. Systems provide engineered
solutions for machine users, manufacturers or designers to fulfill
complete system design requirements including electro-hydraulic,
remote control, electronic control and programmable logic
controller systems, as well as automation of existing equipment. In
our Electronics segment, we are a leader in display and control
integration solutions offering rugged and reliable instruments,
coupled with expertise in J1939 engine protocol, to produce an
industry-leading array of easy-to-read displays and gauges for
controller area network (“CAN”) transmitted engine data and faults.
We refer to this technology as Electronic Controls (“EC”). Helios
Technologies and information about its associated companies is
available online at www.heliostechnologies.com.
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 the
intent, belief or current expectations, estimates, vision or
projections of 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 Company’s financing plans; (iii)
the Company’s expectations regarding our sales, expenses, gross
margins and other results of operations; (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 declaration and
payment of dividends; (vii) the Company’s ability to respond to
changes in customer demand domestically and internationally,
including as a result of standardization; and (viii) potential
challenges relating to changes in and compliance with governmental
laws and regulations affecting our U.S. and international business.
Although the Company believes that its expectations are based on
reasonable assumptions, it can give no assurance that the
anticipated results will occur. Important factors that could cause
the actual results to differ materially from those in the
forward‐looking statements include, among other items, (i) the
economic cyclicality of the capital goods industry in general and
the hydraulics and electronics industries in particular, which
directly affect customer orders, lead times and sales volume; (ii)
fluctuations in global business conditions, including the impact of
economic recessions in the U.S. and other parts of the world, (iii)
conditions in the capital markets, including the interest rate
environment and the availability of capital; (iv) changes in the
competitive marketplace that could affect the Company’s revenue
and/or costs, such as increased competition, lack of qualified
engineering, marketing, management or other personnel, and
increased labor and raw materials costs; (v) risks related to the
integration of the businesses of the Company, Enovation Controls
and Faster Group; (vi) changes in technology or customer
requirements, such as standardization of the cavity into which
screw‐in cartridge valves must fit, which could render the
Company’s products or technologies noncompetitive or obsolete;
(vii) new product introductions, product sales mix and the
geographic mix of sales nationally and internationally; and (viii)
changes relating to the Company’s international sales, including
changes in regulatory requirements or tariffs, compliance with
anti-corruption laws and trade laws, including export and import
compliance, trade or currency restrictions, fluctuations in
exchange rates, and tax and collection issues. Further information
relating to 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 29, 2018. The
Company disclaims any intention or obligation to update or revise
forward‐looking statements, whether as a result of new information,
future events or otherwise.
This news release will discuss some non-GAAP financial measures,
which the Company believes are useful in evaluating our
performance. You should not consider the inclusion of this
additional information in isolation or as a substitute for results
prepared in accordance with GAAP.
Financial Tables Follow.
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share data)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
% Change
2019
2018
% Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales
$
143,842
$
136,168
6 %
$
290,693
$
233,486
25 %
Cost of sales
87,615
85,764
2 %
177,958
145,465
22 %
Gross profit
56,227
50,404
12 %
112,735
88,021
28 %
Gross margin
39.1%
37.0%
38.8%
37.7%
Selling, engineering and administrative expenses
25,309
25,325
(0)%
51,465
43,640
18 %
Amortization of intangible assets
4,545
8,076
(44)%
9,066
10,124
(10)%
Operating income
26,373
17,003
55 %
52,204
34,257
52 %
Operating margin
18.4%
12.5%
18.0%
14.7%
Interest expense, net
4,048
4,151
(2)%
8,433
4,634
82 %
Foreign currency transaction loss, net
501
3,301
(85)%
62
3,812
(98)%
Miscellaneous (income) expense, net
(157)
80
(296)%
(50)
44
(214)%
Change in fair value of contingent consideration
56
251
(78)%
775
653
19 %
Income before income taxes
21,925
9,220
138 %
42,984
25,114
71 %
Income tax provision
4,660
2,424
92 %
9,315
6,407
45 %
Net income
$
17,265
$
6,796
154 %
$
33,669
$
18,707
80 %
Basic and diluted net income per common share
$
0.54
$
0.22
145 %
$
1.05
$
0.61
72 %
Basic and diluted weighted average shares outstanding
32,012
31,597
31,995
30,718
Dividends declared per share
$
0.09
$
0.09
$
0.18
$
0.18
NM = Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
data)
June 29,
December 29,
2019
2018
(Unaudited)
Assets Current assets: Cash and cash equivalents
$
13,283
$
23,477
Restricted cash
38
38
Accounts receivable, net of allowance for doubtful accounts of
$1,529 and $1,336
81,817
72,806
Inventories, net
97,176
85,989
Income taxes receivable
1,262
4,549
Other current assets
14,745
9,997
Total current assets
208,321
196,856
Property, plant and equipment, net
146,607
126,868
Deferred income taxes
7,870
9,463
Goodwill
382,221
383,131
Other intangibles, net
310,092
320,548
Other assets
4,746
5,299
Total assets
$
1,059,857
$
1,042,165
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
41,867
$
40,879
Accrued compensation and benefits
15,396
13,260
Other accrued expenses and current liabilities
13,642
9,941
Current portion of contingent consideration
1,047
18,120
Current portion of long-term non-revolving debt, net
6,357
5,215
Dividends payable
2,882
2,878
Income taxes payable
1,852
2,697
Total current liabilities
83,043
92,990
Revolving line of credit
250,950
255,750
Long-term non-revolving debt, net
87,766
91,720
Contingent consideration, less current portion
893
840
Deferred income taxes
52,478
57,783
Other noncurrent liabilities
26,473
12,314
Total liabilities
501,603
511,397
Commitments and contingencies
-
-
Shareholders’ equity: Preferred stock, 2,000,000 shares
authorized, par value $0.001, no shares outstanding
-
-
Common stock, 100,000,000 shares authorized, par value $0.001,
32,017,300 and 31,964,775 shares outstanding
32
32
Capital in excess of par value
362,104
357,933
Retained earnings
246,828
219,056
Accumulated other comprehensive loss
(50,710
)
(46,253
)
Total shareholders’ equity
558,254
530,768
Total liabilities and shareholders’
equity
$
1,059,857
$
1,042,165
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
Six Months Ended
June 29,
June 30,
2019
2018
(Unaudited)
(Unaudited)
Cash flows from operating activities: Net income
$
33,669
$
18,707
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
17,195
17,076
Loss on disposal of assets
79
8
Stock-based compensation expense
2,781
2,061
Amortization of debt issuance costs
358
371
Benefit for deferred income taxes
(1,095
)
-
Amortization of acquisition related inventory step-up
-
3,125
Change in fair value of contingent consideration
775
653
Forward contract (gains) losses, net
(409
)
3,493
Other, net
940
196
(Increase) decrease in operating assets: Accounts receivable
(9,586
)
(13,666
)
Inventories
(12,276
)
(4,754
)
Income taxes receivable
(488
)
(46
)
Other current assets
(3,312
)
(501
)
Other assets
781
270
Increase (decrease) in operating liabilities: Accounts payable
1,178
5,908
Accrued expenses and other liabilities
4,176
1,660
Income taxes payable
3,078
(3,405
)
Other noncurrent liabilities
(1,668
)
(39
)
Contingent consideration payment in excess of acquisition date fair
value
(10,731
)
-
Net cash provided by operating activities
25,445
31,117
Cash flows from investing activities: Capital expenditures
(15,413
)
(10,581
)
Proceeds from dispositions of equipment
597
3
Acquisition of business, net of cash acquired
-
(527,144
)
Cash settlement of forward contract
-
(2,535
)
Net cash used in investing activities
(14,816
)
(540,257
)
Cash flows from financing activities: Borrowings on
revolving credit facility
85,639
258,000
Repayment of borrowings on revolving credit facility
(91,000
)
(117,250
)
Borrowings on long-term non-revolving debt
-
100,932
Repayment of borrowings on long-term non-revolving debt
(2,910
)
(1,250
)
Borrowings unders factoring arrangements
-
1,044
Proceeds from stock issued
843
240,602
Dividends to shareholders
(5,759
)
(5,281
)
Debt issuance costs
-
(1,763
)
Payment of contingent consideration liability
(7,064
)
-
Other financing activities
(1,141
)
(570
)
Net cash (used in) provided by financing activities
(21,392
)
474,464
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
569
736
Net decrease in cash, cash equivalents and restricted cash
(10,194
)
(33,940
)
Cash, cash equivalents and restricted cash, beginning of period
23,515
63,922
Cash, cash equivalents and restricted cash, end of period
$
13,321
$
29,982
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Sales: Hydraulics
$
113,710
$
103,634
$
230,173
$
166,243
Electronics
30,132
32,534
60,520
67,243
Consolidated
$
143,842
$
136,168
$
290,693
$
233,486
Gross profit and margin: Hydraulics
$
42,407
$
39,422
$
85,040
$
62,870
37.3%
38.0%
36.9%
37.8%
Electronics
13,820
14,107
27,695
28,276
45.8%
43.4%
45.8%
42.1%
Corporate and other
-
(3,125)
-
(3,125)
Consolidated
$
56,227
$
50,404
$
112,735
$
88,021
39.1%
37.0%
38.8%
37.7%
Operating income and margin: Hydraulics
$
24,123
$
25,401
$
47,885
$
38,844
21.2%
24.5%
20.8%
23.3%
Electronics
6,488
6,532
13,000
13,639
21.6%
20.0%
21.5%
20.2%
Corporate and other
(4,238)
(14,930)
(8,681)
(18,226)
Consolidated
$
26,373
$
17,003
$
52,204
$
34,257
18.4%
12.5%
18.0%
14.7%
HELIOS TECHNOLOGIES
ADDITIONAL INFORMATION
(Unaudited)
2019 Sales by Geographic Region and Segment ($ in
millions)
Q1
% of Total
Q2
% of Total
2019
% of Total
Americas: Hydraulics
$
41.6
$
41.2
$
82.9
Electronics
26.1
26.6
52.7
Consol. Americas
67.7
46%
67.8
47%
135.6
47%
EMEA: Hydraulics
41.8
36.8
78.5
Electronics
2.5
1.8
4.3
Consol. EMEA
44.3
30%
38.6
27%
82.8
28%
APAC: Hydraulics
33.1
35.7
68.8
Electronics
1.8
1.7
3.5
Consol. APAC
34.9
24%
37.4
26%
72.3
25%
Total
$
146.9
$
143.8
$
290.7
2018 Sales by Geographic Region and Segment ($ in millions)
Q1 %of Total Q2 %of Total Q3
%of Total Q4 %of Total
2018
%of Total Americas: Hydraulics
$
26.4
$
39.7
$
38.4
$
44.2
$
148.7
Electronics
30.1
27.9
27.4
23.5
108.9
Consol. Americas
56.5
58%
67.6
50%
65.8
48%
67.7
49%
257.6
51%
EMEA: Hydraulics
19.6
40.5
34.6
34.9
129.6
Electronics
2.7
2.7
2.7
2.0
10.1
Consol. EMEA
22.3
23%
43.2
32%
37.3
28%
36.9
27%
139.7
27%
APAC: Hydraulics
16.6
23.4
31.1
32.4
103.5
Electronics
1.9
2.0
1.6
1.7
7.2
Consol. APAC
18.5
19%
25.4
18%
32.7
24%
34.1
24%
110.7
22%
Total
$
97.3
$
136.2
$
135.8
$
138.7
$
508.0
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
GAAP operating income
$
26,373
$
17,003
$
52,204
$
34,257
Acquisition-related amortization of intangible assets
4,484
8,015
8,945
10,004
Acquisition-related amortization of inventory step-up
-
3,125
-
3,125
Acquisition and financing-related expenses
-
3,731
11
4,927
Restructuring charges
-
59
-
170
Non-GAAP adjusted operating income
$
30,857
$
31,933
$
61,160
$
52,483
GAAP operating margin
18.4%
12.5%
18.0%
14.7%
Non-GAAP Adjusted operating margin
21.5%
23.5%
21.0%
22.5%
Non-GAAP Cash Net Income
RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net income
$
17,265
$
6,796
$
33,669
$
18,707
Acquisition-related amortization of inventory step-up
-
3,125
-
3,125
Acquisition and financing-related expenses
-
3,731
11
4,927
Restructuring charges
-
59
-
170
Foreign currency forward contract loss
-
2,030
-
2,535
Change in fair value of contingent consideration
56
251
775
653
Amortization of intangible assets
4,545
8,076
9,066
10,124
Tax effect of above
(1,150)
(4,318)
(2,463)
(5,384)
Non-GAAP cash net income
$
20,716
$
19,750
$
41,058
$
34,857
Non-GAAP cash net income per diluted share
$
0.65
$
0.63
$
1.28
$
1.13
Adjusted EBITDA
RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 29,
June 30,
June 29,
June 30,
2019
2018
2019
2018
Net income
$
17,265
$
6,796
$
33,669
$
18,707
Interest expense, net
4,048
4,151
8,433
4,634
Income tax provision
4,660
2,424
9,315
6,407
Depreciation and amortization
8,624
12,347
17,195
17,076
EBITDA
34,597
25,718
68,612
46,824
Acquisition-related amortization of inventory step-up
3,125
3,125
Acquisition and financing-related expenses
-
3,731
11
4,927
Restructuring charges
-
59
-
170
Foreign currency forward contract loss
-
2,030
-
2,535
Change in fair value of contingent consideration
56
251
775
653
Adjusted EBITDA
$
34,653
$
34,914
$
69,398
$
58,234
Adjusted EBITDA margin
24.1%
25.6%
23.9%
24.9%
Non-GAAP Financial Measures:
Adjusted operating income, adjusted operating margin, adjusted
EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net
income per diluted share, cash net income and cash net income per
diluted share are not measures determined in accordance with
generally accepted accounting principles in the United States,
commonly known as GAAP. Nevertheless, Helios believes that
providing non-GAAP information such as adjusted operating income,
adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin,
adjusted net income, adjusted net income per diluted share, cash
net income and cash net income per diluted share are important for
investors and other readers of Helios’s financial statements, as
they are used as analytical indicators by Helios’s management to
better understand operating performance. Because adjusted operating
income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA
margin, adjusted net income, adjusted net income per diluted share,
cash net income and cash net income per diluted share are non-GAAP
measures and are thus susceptible to varying calculations, adjusted
operating income, adjusted operating margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted net income, adjusted net income
per diluted share, cash net income and cash net income per diluted
share, as presented, may not be directly comparable to other
similarly titled measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190805005563/en/
Karen L. Howard / Deborah K. Pawlowski Kei Advisors LLC (716)
843-3942 / (716) 843-3908 khoward@keiadvisors.com /
dpawlowski@keiadvisors.com
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