- Strong third quarter free cash flow of 15% of sales
contributes to $27 million debt reduction
- EPS of $0.40; Non-GAAP Cash EPS of $0.61; resulting from
$138 million net sales
- Adjusted EBITDA of $23.6 million, 23.6% margin on
sales
- Updating 2019 guidance due to further 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 third quarter and
year-to-date period ended September 28, 2019.
Wolfgang Dangel, the Company’s President and Chief Executive
Officer, commented, “We are pleased with revenue and the quality of
earnings produced in both segments of our business during the third
quarter, as we continue to experience economic softening in our end
markets. We realized organic sales growth in our Hydraulics
segment, which benefited from a solid order backlog. However, our
Electronics segment sales were again impacted by challenging end
markets and the effects of customer contract changes we made
earlier this year. From a profitability perspective, we have
established a flexible cost base throughout our organization and
both segments effectively employed cost management initiatives,
allowing us to generate a resilient adjusted EBITDA margin relative
to our topline. In our Sun Hydraulics business, we incurred
one-time organizational restructuring charges related to our offer
of early retirement as well as a small reduction in force. These
actions allow us to achieve a more agile and competitive cost
structure going forward as well as align the talent of the
organization with our future growth strategies. The restructuring
initiative will provide fourth quarter savings of approximately
$0.6 million, resulting in a $3.0 million to $3.5 million reduction
in our total cost base for 2020.”
Mr. Dangel added, “In addition to our focus on costs, we
continue to concentrate on cash flows. We realized free cash flow
in excess of 15% during the quarter, bringing our year-to-date
adjusted free cash flow to our target 10% level. We reduced debt by
$27 million, bringing our net debt to adjusted EBITDA down to 2.3x,
as we work toward our goal of less than 2x.”
Third Quarter 2019 Consolidated Results
($ in millions, except per share data)
Q3 2019 Q3
2018 Change % Change Net sales
$
138.0
$
135.8
$
2.2
2%
Gross profit
$
52.1
$
51.7
$
0.4
1%
Gross margin
37.8
%
38.1
%
Operating income
$
19.1
$
19.2
$
(0.1
)
(1%)
Operating margin
13.8
%
14.1
%
Non-GAAP adjusted operating margin
20.4
%
21.3
%
Net income
$
12.8
$
11.6
$
1.2
10%
Diluted EPS
$
0.40
$
0.36
$
0.04
11%
Non-GAAP cash net income
$
19.5
$
19.8
$
(0.3
)
(2%)
Non-GAAP cash EPS
$
0.61
$
0.62
$
(0.01
)
(2%)
Adjusted EBITDA
$
32.6
$
33.6
$
(1.0
)
(3%)
Adjusted EBITDA margin
23.6
%
24.8
%
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 related – $3.9 million
- Organic growth – $0.8 million, 1%, excluding the effect of
currency
- Foreign currency translation on sales – $2.5 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Cost management efforts,
offset by a change in the margin profile of products sold; last
year included $2.1 million of acquisition inventory step-up
amortization
- Selling, engineering and administrative (SEA) expenses –
Decreased primarily due to cost reduction efforts and lower
performance-based compensation; improved as a percent of sales
- Unusual items – $1.7 million organizational restructuring
charges and $2.7 million loss on disposal of intangible asset
unfavorably impacted current year operating income
- Amortization of intangible assets – $4.5 million ($7.0 million
in prior year due to short-lived acquisition intangibles)
- Other operating profit and margin factors – Last year included
$0.7 million for acquisition and financing related expenses
Non-operating items
- Interest expense – $3.8 million ($4.6 million in prior year),
decrease due to lower debt and interest rates
- Effective tax rate – 17.3%, down from 18.6% last year
EPS, non-GAAP cash EPS and adjusted
EBITDA
- GAAP EPS – Cost management efforts, lower amortization and
lower interest, partially offset by restructuring charges and loss
on disposal of intangible asset; last year included
acquisition-related expenses
- Non-GAAP cash EPS – Comparable to last year, reflects above
adjusted for amortization, unusual items and acquisition-related
costs
- Adjusted EBITDA margin – Reflects unfavorable product mix,
partially offset by cost management efforts
Year-to-date 2019 Consolidated Results
($ in millions, except per share data)
2019
2018
Change
% Change
Net sales
$
428.7
$
369.3
$
59.4
16%
Gross profit
$
164.9
$
139.8
$
25.1
18%
Gross margin
38.5
%
37.9
%
Operating income
$
71.3
$
53.5
$
17.8
33%
Operating margin
16.6
%
14.5
%
Non-GAAP adjusted operating margin
20.8
%
22.1
%
Net income
$
46.5
$
30.3
$
16.2
53%
Diluted EPS
$
1.45
$
0.97
$
0.48
49%
Non-GAAP cash net income
$
60.6
$
54.7
$
5.9
11%
Non-GAAP cash EPS
$
1.89
$
1.76
$
0.13
8%
Adjusted EBITDA
$
102.0
$
91.9
$
10.1
11%
Adjusted EBITDA margin
23.8
%
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 related – $65.5 million
- Organic growth – $0.3 million, excluding the effect of
currency
- Foreign currency translation on organic sales – $6.4 million
unfavorable
Profits and margins
- Gross profit and margin drivers –Acquisitions, price increases
and cost management efforts, partially offset by lower margin CFP
business model; last year included $5.2 million of 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
- Unusual items – $1.7 million organizational restructuring
charges and $2.7 million loss on disposal of intangible asset
unfavorably impacted current year operating income
- Amortization of intangible assets – $13.5 million ($17.2
million in prior year)
- Other operating profit and margin factors – Last year included
$5.6 million for acquisition and financing related expenses
Non-operating items
- Net interest expense – Higher due to debt to fund the Faster
and CFP acquisitions
- Foreign currency transaction loss – $3.8 million in prior year,
including loss on foreign exchange forward contract to secure funds
for Faster acquisition
- Effective tax rate – 20.5%, down from 23.0% 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, and an unfavorable product mix; 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 $110.1 million increased 6% over the prior-year
third quarter. The $6.0 million increase included $3.9 million from
the acquired CFP business and $4.4 million from organic sales,
partially offset by $2.3 million from unfavorable changes in
foreign currency exchange rates. Shipments continued to be strong
in the Americas region with organic sales increasing 13%. The
Europe, Middle East, Africa (EMEA) region declined 4% and
Asia/Pacific (APAC) region sales grew 3% organically, both
excluding the $2.3 million effect of unfavorable foreign currency
exchange rate changes.
Third quarter 2019 gross margin of 35.5% was down from the prior
year’s 37.6% as unfavorable product mix and foreign currency
exchange rates offset improvements from price increases, net of
material cost increases.
SEA expenses in the 2019 third quarter included $0.8 million for
the CFP business, partially offset by cost management efforts and
lower performance-based compensation.
In the third quarter of 2019, the Company incurred one-time
costs of $1.7 million for early retirement and severance charges
related to organizational restructuring and a $2.7 million loss on
the disposal of an intangible asset from the termination of a
technology licensing agreement.
Primarily due to the $4.4 million for restructuring charges and
intangible asset disposal described above, third quarter operating
income decreased $4.8 million to $17.9 million, representing 16.3%
of sales, compared with 21.8% last year.
Year to date, segment sales grew $70.0 million, or 26%, to
$340.3 million, compared with the 2018 period. The growth included
$65.5 million of acquisition revenue contributed by Faster and CFP,
and 4% organic growth excluding the $5.9 million impact of
unfavorable changes in foreign currency exchange rates. Operating
income for the year-to-date period was $65.8 million, or 19.3% of
sales.
Electronics Segment Review (Refer to sales by geographic
region and segment data in accompanying tables)
Segment sales were $28.0 million for the 2019 third quarter, a
12% decrease compared with the third quarter of last year. The
decline was primarily due to softer demand in recreational and oil
and gas end markets as well as the impact of releasing contractual
obligations to allow the Company to offer all products to a broader
and more diversified customer base. Foreign currency translation
had a $0.2 million unfavorable impact on segment sales in the
quarter.
Third quarter 2019 gross margin was 46.4%, relatively consistent
with 46.5% last year. Cost management efforts which resulted in
production efficiencies drove the performance.
SEA costs decreased by $1.5 million in the quarter compared with
last year due to the cost management efforts and lower
performance-based compensation.
Operating income was $6.0 million in the third quarter of 2019,
compared with $6.3 million in 2018, with the 2019 operating margin
improving to 21.4% from 19.9% last year.
Year to date, segment sales were down 11% to $88.5 million,
compared with the 2018 period. Foreign currency had a $0.5 million
unfavorable impact. Despite the sales decline, operating income was
$19.0 million, with the 2019 year-to-date operating margin
improving to 21.5% from 20.2% last year.
Balance Sheet and Cash Flow Review
Total debt was $318.3 million at September 28, 2019, down from
$345.1 million at June 29, 2019 and $352.7 million at the end of
2018. Cash and cash equivalents at September 28, 2019 were $13.7
million after using available cash to reduce debt, compared with
$13.3 million at June 29, 2019 and $23.5 million at December 29,
2018. The net debt to adjusted EBITDA ratio improved to 2.3x at
September 28, 2019.
Cash provided by operations was $50.9 million and $44.2 million
in the first three quarters of 2019 and 2018, respectively.
Year-to-date operating cash flow reached $61.6 million after
considering the second quarter contingent consideration payment.
The improvement was mainly due to improved cash from earnings and
working capital management.
Capital expenditures were $19.6 million and $18.7 million in the
first three quarters of 2019 and 2018, respectively. Capital
expenditures in 2019 are estimated to be $25 million to $28
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 2019
Updated 2019
Guidance
Guidance
Change
Consolidated revenue
$565 - $575 million
$550 - $555 million
~(3)%
Hydraulics segment revenue
$453 - $458 million
$439 - $442 million
~(3)%
Electronics segment revenue
$112 - $117 million
$111 - $113 million
~(2)%
GAAP EPS
$1.95 - $2.05
$1.70 - $1.75
$(0.25) - $(0.30)
Non-GAAP cash EPS
$2.40 - $2.50
$2.24 - $2.29
$(0.16) - $(0.21)
Adjusted EBITDA margin
23.5% - 24.0%
22.4% - 22.8%
~(115) bps
Mr. Dangel noted, “We are updating our 2019 guidance given the
further softening of most of our end markets globally. While we
have backlog in our Hydraulics segment that will support fourth
quarter sales, this will be offset by softening demand in specific
end markets as well as mix issues that create reserve capacity
continuing from past quarters. We will realize the results of our
cost management efforts including the restructuring, but the lower
revenue will reduce margins and net income. We will continue to
monitor the economic climate and its impact on our business,
further adjusting costs as needed. And, given our market
positioning, we will be ready to react when our end markets do
recover. As economic cycles are a normal part of business, we
remain committed to the goals we established for Vision 2025.”
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, November 12, 2019. To listen to
the archived call, dial (412) 317-6671 and enter conference ID
number 13694908. 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 the Hydraulics segment:
cartridge valve technology (“CVT”), quick-release hydraulic
coupling solutions (“QRC”) and hydraulic system design (“Systems”).
Within CVT, 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.
The Company’s Electronics segment is an international leader in
complete, fully-tailored display and control solutions for engines,
engine-driven equipment and specialty vehicles. Its broad range of
display, controls and instrumentation are complemented by its
extensive application expertise and unparalleled depth of software,
embedded programming, hardware and sustaining engineering teams.
The segment’s expertise allows it to deliver maximum results for
its customers and their applications with the state-of-the-art
solutions that are extremely rugged and reliable while being east
to use and integrate. This technology is referred to 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 Nine Months Ended
September 28, September 29, September 28,
September 29,
2019
2018
% Change
2019
2018
% Change
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales
$
138,045
$
135,837
2
%
$
428,738
$
369,322
16
%
Cost of sales
85,926
84,102
2
%
263,884
229,567
15
%
Gross profit
52,119
51,735
1
%
164,854
139,755
18
%
Gross margin
37.8
%
38.1
%
38.5
%
37.9
%
Selling, engineering and administrative expenses
24,066
25,440
(5
)%
75,531
69,078
9
%
Restructuring charges
1,724
-
NM
1,724
-
NM
Amortization of intangible assets
4,478
7,049
(36
)%
13,544
17,174
(21
)%
Loss on disposal of intangible asset
2,713
-
NM
2,713
-
NM
Operating income
19,138
19,246
(1
)%
71,342
53,503
33
%
Operating margin
13.8
%
14.1
%
16.6
%
14.5
%
Interest expense, net
3,790
4,622
(18
)%
12,223
9,256
32
%
Foreign currency transaction loss (gain), net
30
(42
)
(171
)%
92
3,770
(98
)%
Miscellaneous (income) expense, net
(72
)
141
(151
)%
(122
)
185
(166
)%
Change in fair value of contingent consideration
(72
)
275
(126
)%
703
928
(24
)%
Income before income taxes
15,462
14,250
9
%
58,446
39,364
48
%
Income tax provision
2,671
2,651
1
%
11,986
9,058
32
%
Net income
$
12,791
$
11,599
10
%
$
46,460
$
30,306
53
%
Basic and diluted net income per common share
$
0.40
$
0.36
11
%
$
1.45
$
0.97
49
%
Basic and diluted weighted average shares outstanding
32,027
31,843
32,006
31,093
Dividends declared per share
$
0.09
$
0.09
$
0.27
$
0.27
NM = Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE SHEETS
(In
thousands, except share data)
September 28, December 29,
2019
2018
(Unaudited)
Assets Current assets: Cash and cash equivalents
$
13,706
$
23,477
Restricted cash
37
38
Accounts receivable, net of allowance for doubtful accounts of
$1,427 and $1,336
77,315
72,806
Inventories, net
89,338
85,989
Income taxes receivable
590
4,549
Other current assets
15,397
9,997
Total current assets
196,383
196,856
Property, plant and equipment, net
144,230
126,868
Deferred income taxes
8,697
9,463
Goodwill
371,803
383,131
Other intangibles, net
294,682
320,548
Other assets
5,155
5,299
Total assets
$
1,020,950
$
1,042,165
Liabilities and shareholders’ equity Current liabilities:
Accounts payable
$
34,845
$
40,879
Accrued compensation and benefits
16,365
13,260
Other accrued expenses and current liabilities
14,209
9,941
Current portion of contingent consideration
923
18,120
Current portion of long-term non-revolving debt, net
6,946
5,215
Dividends payable
2,884
2,878
Income taxes payable
218
2,697
Total current liabilities
76,390
92,990
Revolving line of credit
225,489
255,750
Long-term non-revolving debt, net
85,913
91,720
Contingent consideration, less current portion
872
840
Deferred income taxes
48,057
57,783
Other noncurrent liabilities
25,782
12,314
Total liabilities
462,503
511,397
Commitments and contingencies
-
-
Shareholders’ equity: Preferred stock, par value $0.001,
2,000,000 shares authorized, no shares issued or outstanding
-
-
Common stock, par value $0.001, 100,000,000 and 50,000,000 shares
authorized, 32,032,882 and 31,964,775 shares issued and outstanding
32
32
Capital in excess of par value
363,762
357,933
Retained earnings
256,735
219,056
Accumulated other comprehensive loss
(62,082
)
(46,253
)
Total shareholders’ equity
558,447
530,768
Total liabilities and shareholders’ equity
$
1,020,950
$
1,042,165
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
Nine Months Ended September 28, September 29,
2019
2018
(Unaudited) (Unaudited)
Cash flows from operating
activities: Net income
$
46,460
$
30,306
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
26,006
28,801
Loss on disposal of assets
2,793
53
Stock-based compensation expense
4,058
3,364
Amortization of debt issuance costs
545
550
Benefit for deferred income taxes
(1,381
)
(393
)
Amortization of acquisition related inventory step up
-
5,217
Change in fair value of contingent consideration
630
928
Forward contract (gains) losses, net
(3,973
)
3,573
Other, net
1,304
386
(Increase) decrease in operating assets: Accounts receivable
(6,533
)
(10,595
)
Inventories
(6,674
)
(13,754
)
Income taxes receivable
(1,598
)
(1,723
)
Other current assets
(3,448
)
(1,329
)
Other assets
1,259
121
Increase (decrease) in operating liabilities: Accounts payable
(5,046
)
1,413
Accrued expenses and other liabilities
6,249
2,210
Income taxes payable
3,363
(4,762
)
Other noncurrent liabilities
(2,386
)
(144
)
Contingent consideration payments in excess of acquisition date
fair value
(10,731
)
-
Net cash provided by operating activities
50,897
44,222
Cash flows from investing activities: Capital expenditures
(19,584
)
(18,702
)
Proceeds from dispositions of equipment
124
20
Acquisition of business, net of cash acquired
-
(534,662
)
Cash settlement of forward contract
2,256
(2,535
)
Net cash used in investing activities
(17,204
)
(555,879
)
Cash flows from financing activities: Borrowings on
revolving credit facility
107,814
285,000
Repayment of borrowings on revolving credit facility
(135,750
)
(134,000
)
Borrowings on long-term non-revolving debt
-
101,035
Repayment of borrowings on long-term non-revolving debt
(4,188
)
(2,527
)
Borrowings under factoring arrangements
-
2,891
Repayment of borrowings under factoring arrangements
-
(2,040
)
Proceeds from stock issued
1,252
240,959
Dividends to shareholders
(8,641
)
(8,126
)
Debt issuance costs
-
(1,763
)
Payment of contingent consideration liability
(7,064
)
(17,342
)
Other financing activities
(1,370
)
(878
)
Net cash (used in) provided by financing activities
(47,947
)
463,209
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
4,482
440
Net decrease in cash, cash equivalents and restricted cash
(9,772
)
(48,008
)
Cash, cash equivalents and restricted cash, beginning of period
23,515
63,922
Cash, cash equivalents and restricted cash, end of period
$
13,743
$
15,914
HELIOS TECHNOLOGIES
SEGMENT
DATA
(In
thousands)
Three Months Ended Nine Months Ended
September 28, September 29, September 28,
September 29,
2019
2018
2019
2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Sales: Hydraulics
$
110,089
$
104,055
$
340,262
$
270,297
Electronics
27,956
31,782
88,476
99,025
Consolidated
$
138,045
$
135,837
$
428,738
$
369,322
Gross profit and margin: Hydraulics
$
39,112
$
39,066
$
124,153
$
101,936
35.5
%
37.6
%
36.5
%
37.7
%
Electronics
13,007
14,761
40,701
43,036
46.4
%
46.5
%
46.0
%
43.4
%
Corporate and other
-
(2,092
)
-
(5,217
)
Consolidated
$
52,119
$
51,735
$
164,854
$
139,755
37.8
%
38.1
%
38.5
%
37.9
%
Operating income and margin: Hydraulics
$
17,867
$
22,723
$
65,752
$
61,567
16.3
%
21.8
%
19.3
%
22.8
%
Electronics
5,977
6,321
18,977
19,960
21.4
%
19.8
%
21.5
%
20.2
%
Corporate and other
(4,706
)
(9,798
)
(13,387
)
(28,024
)
Consolidated
$
19,138
$
19,246
$
71,342
$
53,503
13.8
%
14.1
%
16.6
%
14.5
%
HELIOS TECHNOLOGIES
ADDITIONAL INFORMATION
(Unaudited)
2019 Sales by Geographic Region and Segment ($ in
millions)
Q1
%of Total
Q2
%of Total
Q3
%of Total
2019
%of Total Americas: Hydraulics
$
41.6
$
41.2
$
43.3
$
126.1
Electronics
26.1
26.6
24.0
76.7
Consol. Americas
67.7
46
%
67.8
47
%
67.3
49
%
202.8
47
%
EMEA: Hydraulics
41.8
36.8
31.9
110.5
Electronics
2.5
1.8
2.1
6.4
Consol. EMEA
44.3
30
%
38.6
27
%
34.0
25
%
116.9
27
%
APAC: Hydraulics
33.1
35.7
34.9
103.7
Electronics
1.8
1.7
1.8
5.3
Consol. APAC
34.9
24
%
37.4
26
%
36.7
26
%
109.0
26
%
Total
$
146.9
$
143.8
$
138.0
$
428.7
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 Nine Months Ended
September 28, September 29, September 28,
September 29,
2019
2018
2019
2018
GAAP operating income
$
19,138
$
19,246
$
71,342
$
53,503
Acquisition-related amortization of intangible assets
4,458
6,989
13,403
16,993
Acquisition-related amortization of inventory step-up
-
2,092
5,217
Acquisition and financing-related expenses
-
668
11
5,595
Restructuring charges
1,724
-
1,724
170
Loss on disposal of intangible asset
2,713
-
2,713
-
Other
127
-
127
-
Non-GAAP adjusted operating income
$
28,160
$
28,995
$
89,320
$
81,478
GAAP operating margin
13.8
%
14.1
%
16.6
%
14.5
%
Non-GAAP Adjusted operating margin
20.4
%
21.3
%
20.8
%
22.1
%
Non-GAAP Cash Net Income
RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 28, September 29, September 28,
September 29,
2019
2018
2019
2018
Net income
$
12,791
$
11,599
$
46,460
$
30,306
Acquisition-related amortization of inventory step-up
-
2,092
-
5,217
Acquisition and financing-related expenses
-
668
11
5,595
Restructuring charges
1,724
-
1,724
170
Loss on disposal of intangible asset
2,713
-
2,713
-
Foreign currency forward contract loss
-
-
-
2,535
Change in fair value of contingent consideration
(72
)
275
703
928
Amortization of intangible assets
4,478
7,049
13,544
17,174
Other
127
-
127
-
Tax effect of above
(2,243
)
(1,876
)
(4,706
)
(7,241
)
Non-GAAP cash net income
$
19,518
$
19,807
$
60,576
$
54,684
Non-GAAP cash net income per diluted share
$
0.61
$
0.62
$
1.89
$
1.76
Adjusted EBITDA
RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 28, September 29, September 28,
September 29,
2019
2018
2019
2018
Net income
$
12,791
$
11,599
$
46,460
$
30,306
Interest expense, net
3,790
4,622
12,223
9,256
Income tax provision
2,671
2,651
11,986
9,058
Depreciation and amortization
8,811
11,725
26,006
28,801
EBITDA
28,063
30,597
96,675
77,421
Acquisition-related amortization of inventory step-up
-
2,092
-
5,217
Acquisition and financing-related expenses
-
668
11
5,595
Restructuring charges
1,724
-
1,724
170
Foreign currency forward contract loss
-
-
-
2,535
Change in fair value of contingent consideration
(72
)
275
703
928
Loss on disposal of intangible asset
2,713
-
2,713
-
Other
127
-
127
-
Adjusted EBITDA
$
32,555
$
33,632
$
101,953
$
91,866
Adjusted EBITDA margin
23.6
%
24.8
%
23.8
%
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/20191104005901/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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