Generates Strong Cash from Operations and
Executes Successfully on Cost Containment
- Net sales of $119.3 million; moderate 8% decline from prior
quarter during COVID-19 pandemic
- Planned and aggressive cost containment provided for solid
margins on lower volume
- Operating improvements led to gross margin of 37.5%
- Continued to make investments in organic growth
initiatives
- Generated $25.3 million of cash from operations and reduced
debt $7 million; successfully maintained net debt to adjusted
EBITDA ratio of 2.1x despite challenging environment
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
ended June 27, 2020.
Josef Matosevic, the Company’s President and Chief Executive
Officer, commented, “I am pleased with our management team’s
adaptability and leadership during these challenging times and am
excited about the opportunities for advancing our strong pipeline
of new product development. We performed very well in the quarter
with better than expected sales supported by shipment of past due
orders and a relatively resilient global agriculture industry. Due
to the agility of our businesses, we adjusted quickly to changing
market demands related to COVID-19 in both segments and
outperformed in the hydraulics segment, while the electronic
segment was able to achieve their plan despite tough market
conditions. Our solid profit margins on lower sales were the result
of disciplined execution and the cost containment measures rapidly
initiated in March and April to address the economic downturn from
the COVID-19 pandemic combined with continued efforts to improve
productivity. The efforts of both segments enabled us to achieve a
better than expected consolidated decremental adjusted operating
margin of 32%*.”
He continued, “We were encouraged to see demand pick up in June,
although given the trend of increasing COVID-19 cases in the U.S.,
we are carefully monitoring our end markets and customers. We
expect our third quarter will now be the trough for us this year
given lower levels of backlog at the end of June. We believe from
there we should see recovery with improving order levels.”
Mr. Matosevic concluded, “Our objectives through this pandemic
are to continue generating strong cash flow and, importantly, to
navigate into a strategic position for growth as markets recover.
We are developing the additional value streams to augment our
Vision 2025 strategy that will leverage the strengths and
capabilities of the Helios organization, including our
well-respected brands, our dedicated global employees and our
strong balance sheet. We believe the enhancements to the strategy
will also provide greater clarity on the efforts required to
accelerate organic growth through new end markets and new products
combined with programmatic portfolio expansion through future
acquisitions.”
*Consolidated decremental adjusted operating margin is defined
as the change in adjusted operating income divided by the change in
sales.
Second Quarter 2020 Consolidated Results
($ in millions, except per share data)
Q2 2020 Q2
2019 Change % Change Net sales
$
119.3
$
143.8
$
(24.5)
(17%)
Gross profit
$
44.7
$
56.2
$
(11.5)
(20%)
Gross margin
37.5%
39.1%
Operating income
$
16.7
$
26.4
$
(9.7)
(37%)
Operating margin
14.0%
18.4%
Non-GAAP adjusted operating margin
19.3%
21.5%
Net income
$
12.9
$
17.3
$
(4.4)
(25%)
Diluted EPS
$
0.40
$
0.54
$
(0.14)
(26%)
Non-GAAP cash net income
$
17.7
$
20.7
$
(3.0)
(14%)
Non-GAAP cash EPS
$
0.55
$
0.65
$
(0.10)
(15%)
Adjusted EBITDA
$
27.0
$
34.7
$
(7.7)
(22%)
Adjusted EBITDA margin
22.6%
24.1%
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 earnings per share, 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 non-GAAP adjusted operating margin, and adjusted EBITDA. Helios
believes that, when used in conjunction with measures prepared in
accordance with GAAP, the non-GAAP measures described above help
improve the understanding of its operating performance.
Sales
- $119.3 million, declined 16% excluding the effect of currency;
the majority of the decline was attributable to the effects of the
COVID-19 pandemic and the associated macro industrial softness
- Foreign currency translation on sales – $1.7 million
unfavorable
Profits and margins
- Gross profit and margin drivers – Gross profit was negatively
impacted by lower sales volume and unfavorable currency; gross
margin contracted 1.6 points as productivity improvements and
ongoing cost management efforts helped to offset the impact of
reduced leverage of fixed costs on a lower sales base and COVID-19
related production labor inefficiencies
- Selling, engineering and administrative (“SEA”) expenses –
Decreased 7% reflecting aggressive cost containment initiatives
which were partially offset by increased cost for safety equipment
and cleaning services, restructuring costs and $1.6 million of CEO
transition costs
- Amortization of intangible assets – $4.4 million, comparable
with the prior-year period
Non-operating items
- Net interest expense – $2.9 million ($4.0 million in prior
year), down on lower debt balances
- Effective tax rate – 4.7% (21.3% in prior year); excluding $2.6
million of one-time benefits, the effective tax rate for the period
was 22.7%
Net income, earnings per share, non-GAAP
cash earnings per share and adjusted EBITDA
- GAAP net income and earnings per share – Decline of $4.4
million and $0.14, respectively, were impacted by lower sales
volume and CEO transition costs, partially offset by cost
management efforts, lower interest and reduced effective tax
rate
- Non-GAAP cash earnings per share – $0.10 lower reflecting the
above, adjusted for amortization and other unusual items
- Adjusted EBITDA margin – Decline of 150 basis points on lower
sales volume, reflecting the lower global demand environment
related to COVID-19
First Half 2020 Consolidated Results
($ in millions, except per share data)
2020
2019
Change % Change Net sales
$
248.8
$
290.7
$
(41.9)
(14%)
Gross profit
$
96.6
$
112.7
$
(16.1)
(14%)
Gross margin
38.8%
38.8%
Operating income
$
6.7
$
52.2
$
(45.5)
(87%)
Operating margin
2.7%
18.0%
Non-GAAP adjusted operating margin
19.9%
21.0%
Net (loss) income
$
(4.3)
$
33.7
$
(38.0)
NM
Diluted EPS
$
(0.13)
$
1.05
$
(1.18)
NM
Non-GAAP cash net income
$
35.7
$
41.1
$
(5.4)
(13%)
Non-GAAP cash EPS
$
1.11
$
1.28
$
(0.17)
(13%)
Adjusted EBITDA
$
57.4
$
69.4
$
(12.0)
(17%)
Adjusted EBITDA margin
23.1%
23.9%
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 earnings per share, 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 non-GAAP adjusted operating margin,
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
- $38.2 million decline, or 13% excluding the effect of currency;
the majority of the decline was attributable to the effects of the
COVID-19 pandemic and the associated macro industrial softness
- Foreign currency translation on sales – $3.7 million
unfavorable
Profits and margins
- Gross profit and margin drivers – maintained gross margin at
38.8% despite significant decline in sales; production
efficiencies, cost management efforts and an $0.9 million
non-recurring benefit in Electronics offset lower sales volume
- SEA expenses – Decreased primarily due to cost management
efforts, which were partially offset by CEO transition costs and
increased cost for safety equipment and cleaning services
- Amortization of intangible assets – $8.8 million compared with
$9.1 million in prior year
- Goodwill impairment charge – $31.9 million, resulted from
weakened market outlook primarily due to the COVID-19 pandemic
Non-operating items
- Net interest expense – $5.8 million compared with $8.4 million
in prior year, declined with lower debt balances
- Effective tax rate – 15.0%, excludes non-taxable goodwill
impairment charge, down from 21.7% in prior year, included certain
one-time benefits in the second quarter that reduced the effective
tax rate for the period
Earnings per share, non-GAAP cash earnings
per share and adjusted EBITDA
- GAAP Earnings per share – Impacted by $31.9 million charge for
goodwill impairment, as well as lower sales volume, partially
offset by cost management efforts, lower interest and one-time tax
benefit
- Non-GAAP cash earnings per share – decrease of $0.17 reflects
the above, adjusted for amortization, goodwill impairment charge
and other unusual items
- Adjusted EBITDA margin – Decline of 80 basis points on lower
sales volume, reflecting effective cost management efforts and
production efficiencies
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales of $102.1 million declined 10% compared with the
prior-year second quarter, impacted by softer end market demand
attributable to the COVID-19 pandemic. The decrease also included
$1.6 million from unfavorable changes in foreign currency exchange
rates. Sales declined in the Americas region by 17%. The Europe,
Middle East, Africa (“EMEA”) region declined 13.6%, while
Asia/Pacific (“APAC”) region sales grew 5.6%, both excluding the
combined $1.6 million effect of unfavorable foreign currency
exchange rate changes.
Second quarter 2020 gross margin of 36.7% was down from the
prior year’s 37.3% due to reduced leverage of fixed costs on lower
sales volume and COVID-19 related production labor inefficiencies.
Additionally, during the quarter there was a favorable change in
sales mix and savings from cost containment efforts such as
over-time management, decreased usage of temporary labor and
inventory and supplies costs management.
SEA expenses in the 2020 second quarter decreased $2.8 million
compared with the prior-year period, benefiting from cost
management efforts.
Operating income in the 2020 second quarter was $22.0 million.
Operating margin expanded 30 basis points to 21.5%, compared with
21.2% last year.
For the first half, segment sales totaled $205.9 million;
excluding the $3.6 million impact of unfavorable changes in foreign
currency exchange rates, segment sales decreased 9.0%. Gross profit
declined $7.9 million, or 9.3%, from the prior year period, while
gross margin expanded 60 basis points to 37.5%. The increase was
primarily driven by effective cost management efforts and
production efficiencies. Operating income for the first half was
$43.5 million, or 21.1% of sales.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales were $17.2 million for the 2020 second quarter,
compared with $30.1 million in the prior year quarter. The decline
was primarily due to decreased demand caused by the COVID-19
pandemic including lost revenue from OEM shutdowns, a soft oil and
gas end market and our intentional shift in customer base which
involved changes in certain contractual obligations. Foreign
currency translation had a minimal impact on segment sales in the
quarter.
Second quarter 2020 gross margin was 42.1%, down from 45.8% last
year. The contraction was attributable to decreased leverage of
fixed costs resulting from lower volume partially offset by cost
management efforts.
SEA costs in the quarter decreased by $1.0 million as a result
of cost saving and restructuring efforts.
Operating income was $0.9 million in the second quarter of 2020,
compared with $6.5 million in 2019. 2020 operating margin
contracted to 5.5%, from 21.6% last year.
For the first half, segment sales were down 29% to $42.9
million, compared with the 2019 first half. Foreign currency had a
$0.1 million unfavorable impact. Despite the significant sales
decline, the 2020 first half gross margin declined just 50 basis
points to 45.3% from 45.8% last year. Operating income for the
period was $5.7 million, or 13.3% of sales.
Balance Sheet and Cash Flow Review
Total debt was $287.4 million at June 27, 2020, down from $300.4
million at December 28, 2019. Cash and cash equivalents at June 27,
2020 were $37.0 million, up from $22.1 million at December 28, 2019
as the Company focuses on preserving cash. Net debt decreased by
$16.7 million from the end of the trailing first quarter and net
debt-to-adjusted EBITDA remained unchanged at 2.1x at June 27,
2020, compared the end of the first quarter 2020 and yearend 2019.
The Company has $37.0 million in cash and $205.3 million available
on its revolving line of credit, which also allows for an accordion
of up to an additional $200 million, subject to certain pro forma
compliance requirements.
Cash provided by operations was $40.3 million and $25.4 million
in the first six months of 2020 and 2019, respectively. The Company
generated $25.3 million of cash from operations in the quarter up
from $16.3 million in the prior-year period.
Capital expenditures were $5.2 million and $15.4 million for the
first halves of 2020 and 2019, respectively, with the decrease in
2020 due to a conscious reduction in light of the impact of
COVID-19 on economic conditions. Given the current environment,
capital expenditures in 2020 are focused on higher priority and
critical projects.
2020 Guidance
Given the uncertainty in outlook due to the impact of the
COVID-19 pandemic on the economy and end markets, the Company will
not be providing financial guidance metrics.
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 11, 2020. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13705886. 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 operates in two business
segments, Hydraulics and Electronics. The Hydraulics segment
markets and sells products globally under the brands of Sun
Hydraulics in relation to cartridge valve technology, Custom
Fluidpower with regard to hydraulic system design and Faster in
connection with quick release coupling solutions. Global
Electronics brands include Enovation Controls and Murphy for
fully-tailored solutions with a broad range of rugged and reliable
instruments such as displays, controls and instrumentation
products. 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
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 Company’s
financing plans; (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 declaration and payment of dividends; and
(vi) the Company’s ability to respond to changes in customer demand
domestically and internationally, including as a result of
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) conditions in the
capital markets, including the interest rate environment and the
availability of capital; (ii) 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; and (iii) new product
introductions, product sales mix and the geographic mix of sales
nationally and internationally. 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 28, 2019 and Part
II, Item IA, “Risk Factors” in the Company’s Form 10-Q for the
quarter ended March 28, 2020 and other filings with the Securities
and Exchange Commission..
This news release will discuss some historical non-GAAP
financial measures, which the Company believes are useful in
evaluating its 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.
Financial Tables Follow.
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
2020
2019
% Change
2020
2019
% Change Net sales
$
119,294
$
143,842
(17)%
$
248,777
$
290,693
(14)%
Cost of sales
74,575
87,615
(15)%
152,208
177,958
(14)%
Gross profit
44,719
56,227
(20)%
96,569
112,735
(14)%
Gross margin
37.5%
39.1%
38.8%
38.8%
Selling, engineering and administrative expenses
23,600
25,309
(7)%
49,264
51,465
(4)%
Amortization of intangible assets
4,417
4,545
(3)%
8,765
9,066
(3)%
Goodwill impairment
-
-
NM
31,871
-
NM
Operating income
16,702
26,373
(37)%
6,669
52,204
(87)%
Operating margin
14.0%
18.4%
2.7%
18.0%
Interest expense, net
2,891
4,048
(29)%
5,842
8,433
(31)%
Foreign currency transaction loss, net
283
501
(44)%
408
62
NM
Miscellaneous expense (income), net
18
(157)
NM
(76)
(50)
52 %
Change in fair value of contingent consideration
(34)
56
NM
(34)
775
NM
Income before income taxes
13,544
21,925
(38)%
529
42,984
(99)%
Income tax provision
636
4,660
(86)%
4,844
9,315
(48)%
Net income (loss)
$
12,908
$
17,265
(25)%
$
(4,315)
$
33,669
NM
Basic and diluted net income (loss) per common share
$
0.40
$
0.54
(26)%
$
(0.13)
$
1.05
NM
Basic and diluted weighted average shares outstanding
32,081
32,012
32,071
31,995
Dividends declared per share
$
0.09
$
0.09
$
0.18
$
0.18
NM = Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands)
June 27,
December 28,
2020
2019
(Unaudited)
Assets Current assets: Cash
and cash equivalents
$
36,965
$
22,123
Restricted cash
37
39
Accounts receivable, net of allowance for doubtful accounts
of $1,101 and $1,131
73,018
66,677
Inventories, net
84,950
85,195
Income taxes receivable
2,852
3,196
Other current assets
17,296
15,359
Total current assets
215,118
192,589
Property, plant and equipment, net
140,605
145,854
Deferred income taxes
8,837
5,803
Goodwill
346,071
377,569
Other intangible assets, net
286,522
294,651
Other assets
4,627
5,285
Total assets
$
1,001,780
$
1,021,751
Liabilities and shareholders’ equity Current
liabilities: Accounts payable
$
29,424
$
29,730
Accrued compensation and benefits
16,457
16,898
Other accrued expenses and current liabilities
12,159
13,549
Current portion of contingent consideration
797
828
Current portion of long-term non-revolving debt, net
10,216
7,623
Dividends payable
2,888
2,884
Income taxes payable
9,972
4,941
Total current liabilities
81,913
76,453
Revolving lines of credit
193,948
208,708
Long-term non-revolving debt, net
83,267
84,062
Deferred income taxes
48,084
49,290
Other noncurrent liabilities
27,804
25,602
Total liabilities
435,016
444,115
Commitments and contingencies
-
-
Shareholders’ equity: Preferred stock, par value
$0.001, 2,000 shares authorized, no shares issued or
outstanding
-
-
Common stock, par value $0.001, 100,000 shares authorized,
32,081 and 32,047 shares issued and outstanding
32
32
Capital in excess of par value
367,841
365,310
Retained earnings
257,568
267,658
Accumulated other comprehensive loss
(58,677
)
(55,364
)
Total shareholders’ equity
566,764
577,636
Total liabilities and shareholders’ equity
$
1,001,780
$
1,021,751
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 27,
June 29,
2020
2019
Cash flows from operating activities: Net (loss)
income
$
(4,315
)
$
33,669
Adjustments to reconcile net (loss) income to net cash
provided by operating activities: Depreciation and
amortization
17,021
17,195
(Gain) Loss on disposal of assets
(15
)
79
Goodwill impairment
31,871
-
Stock-based compensation expense
2,447
2,781
Amortization of debt issuance costs
358
358
Benefit for deferred income taxes
(2,370
)
(1,095
)
Change in fair value of contingent consideration
(34
)
775
Forward contract gains, net
(41
)
(409
)
Net investment hedge loss
164
-
Other, net
510
940
(Increase) decrease in operating assets: Accounts receivable
(7,040
)
(9,586
)
Inventories
(724
)
(12,276
)
Income taxes receivable
327
(488
)
Other current assets
(1,736
)
(3,312
)
Other assets
1,855
781
Increase (decrease) in operating liabilities: Accounts
payable
(18
)
1,178
Accrued expenses and other liabilities
(1,424
)
4,176
Income taxes payable
4,885
3,078
Other noncurrent liabilities
(1,390
)
(1,668
)
Contingent consideration payment in excess of acquisition date fair
value
-
(10,731
)
Net cash provided by operating activities
40,331
25,445
Cash flows from investing activities: Capital
expenditures
(5,215
)
(15,413
)
Proceeds from dispositions of equipment
67
597
Cash settlement of forward contracts
(357
)
-
Net cash used in investing activities
(5,505
)
(14,816
)
Cash flows from financing activities: Borrowings on
revolving credit facilities
11,000
85,639
Repayment of borrowings on revolving credit facilities
(26,359
)
(91,000
)
Borrowings on long-term non-revolving debt
5,714
-
Repayment of borrowings on long-term non-revolving debt
(4,001
)
(2,910
)
Proceeds from stock issued
723
843
Dividends to shareholders
(5,772
)
(5,759
)
Payment of contingent consideration liability
-
(7,064
)
Other financing activities
(960
)
(1,141
)
Net cash used in financing activities
(19,655
)
(21,392
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(331
)
569
Net increase (decrease) in cash, cash equivalents and restricted
cash
14,840
(10,194
)
Cash, cash equivalents and restricted cash, beginning of period
22,162
23,515
Cash, cash equivalents and restricted cash, end of period
$
37,002
$
13,321
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
(Unaudited)
Three Months Ended Six Months
Ended June 27, June 29, June 27,
June 29,
2020
2019
2020
2019
Sales: Hydraulics
$102,089
$
113,710
$
205,907
$
230,173
Electronics
17,205
30,132
42,870
60,520
Consolidated
$119,294
$
143,842
$
248,777
$
290,693
Gross profit and margin: Hydraulics
$37,473
$
42,407
$
77,147
$
85,040
36.7%
37.3%
37.5%
36.9%
Electronics
7,246
13,820
19,422
27,695
42.1%
45.8%
45.3%
45.8%
Consolidated
$44,719
$
56,227
$
96,569
$
112,735
37.5%
39.1%
38.8%
38.8%
Operating income and margin: Hydraulics
$21,989
$
24,123
$
43,471
$
47,885
21.5%
21.2%
21.1%
20.8%
Electronics
939
6,488
5,717
13,000
5.5%
21.6%
13.3%
21.5%
Corporate and other
(6,226)
(4,238)
(42,519)
(8,681)
Consolidated
$16,702
$
26,373
$
6,669
$
52,204
14.0%
18.4%
2.7%
18.0%
HELIOS TECHNOLOGIES
ADDITIONAL INFORMATION
(Unaudited)
2020 Sales by Geographic Region and Segment ($ in
millions)
Q1 %of Total Q2 %of
Total
2020
%of Total Americas: Hydraulics
$
37.3
$
34.2
$
71.6
Electronics
21.6
13.4
35.0
Consol. Americas
58.9
45%
47.6
40%
106.6
43.0%
EMEA: Hydraulics
33.5
31.2
64.7
Electronics
2.5
1.9
4.4
Consol. EMEA
36.0
28%
33.1
28%
69.1
28.0%
APAC: Hydraulics
33.0
36.7
69.6
Electronics
1.6
1.9
3.5
Consol. APAC
34.6
27%
38.6
32%
73.1
29.0%
Total
$
129.5
$
119.3
$
248.8
2019 Sales by Geographic Region and Segment ($ in millions)
Q1 %of Total Q2 %of Total
Q3 %of Total Q4 %of Total
2019
%of Total Americas: Hydraulics
$
41.6
$
41.2
$
43.3
$
36.2
$
162.3
Electronics
26.1
26.6
24.0
19.5
96.3
Consol. Americas
67.7
46%
67.8
47%
67.3
49%
55.7
44%
258.6
47.0%
EMEA: Hydraulics
41.8
36.8
31.9
31.1
141.6
Electronics
2.5
1.8
2.1
2.0
8.4
Consol. EMEA
44.3
30%
38.6
27%
34.0
25%
33.1
26%
150.0
27.0%
APAC: Hydraulics
33.1
35.7
34.9
35.2
138.9
Electronics
1.8
1.7
1.8
1.9
7.2
Consol. APAC
34.9
24%
37.4
26%
36.7
26%
37.1
30%
146.1
26.0%
Total
$
146.9
$
143.8
$
138.0
$
125.9
$
554.7
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 27, June 29, June 27, June
29,
2020
2019
2020
2019
GAAP operating income
$
16,702
$
26,373
$
6,669
$
52,204
Acquisition-related amortization of intangible assets
4,417
4,484
8,765
8,945
Acquisition and financing-related expenses
-
-
74
11
Restructuring charges
298
-
298
-
CEO transition costs
1,644
-
1,809
-
Goodwill impairment
-
-
31,871
-
Non-GAAP adjusted operating income
$
23,061
$
30,857
$
49,486
$
61,160
GAAP operating margin
14.0%
18.4%
2.7%
18.0%
Non-GAAP Adjusted operating margin
19.3%
21.5%
19.9%
21.0%
Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended Six Months
Ended Twelve Months Ended June 27, June
29, June 27, June 29, June 27,
2020
2019
2020
2019
2020
Net income (loss)
$
12,908
$
17,265
$
(4,315)
$
33,669
$
22,285
Interest expense, net
2,891
4,048
5,842
8,433
12,796
Income tax provision
636
4,660
4,844
9,315
10,567
Depreciation and amortization
8,645
8,624
17,021
17,195
35,041
EBITDA
25,080
34,597
23,392
68,612
80,689
Acquisition and financing-related expenses
-
-
74
11
74
Restructuring charges
298
-
298
-
2,022
CEO transition costs
1,644
-
1,809
-
1,809
Goodwill impairment
-
-
31,871
-
31,871
Loss on disposal of intangible asset
-
-
-
-
2,713
Other
-
-
-
-
127
Change in fair value of contingent consideration
(34)
56
(34)
775
(157)
Adjusted EBITDA
$
26,988
$
34,653
$
57,410
$
69,398
$
119,148
Adjusted EBITDA margin
22.6%
24.1%
23.1%
23.9%
23.2%
HELIOS TECHNOLOGIES
Non-GAAP Cash Net Income
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended Six Months
Ended June 27, June 29, June 27,
June 29,
2020
2019
2020
2019
Net income (loss)
$
12,908
$
17,265
$
(4,315)
$
33,669
Amortization of intangible assets
4,417
4,545
8,765
9,066
Acquisition and financing-related expenses
-
-
74
11
Restructuring charges
298
-
298
-
CEO transition costs
1,644
-
1,809
-
Goodwill impairment
-
-
31,871
-
Change in fair value of contingent consideration
(34)
56
(34)
775
Tax effect of above
(1,581)
(1,150)
(2,728)
(2,463)
Non-GAAP cash net income
$
17,652
$
20,716
$
35,740
$
41,058
Non-GAAP cash net income per diluted share
$
0.55
$
0.65
$
1.11
$
1.28
Net Debt-to-Adjusted EBITDA
Reconciliation
(In thousands)
(Unaudited)
As of June 27,
2020
Current portion of long-term non-revolving debt, net
$
10,216
Revolving lines of credit
193,948
Long-term non-revolving debt, net
83,267
Total debt
287,431
Less: Cash and cash equivalents
36,965
Net debt
$
250,466
Adjusted EBITDA, TTM ended June 27, 2020
$
119,148
Ratio of net debt to TTM Adjusted EBITDA
2.1
Non-GAAP Financial Measures:
Adjusted operating income, adjusted operating margin, EBITDA,
adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted
EBITDA, 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,
EBITDA, adjusted EBITDA, adjusted EBITDA margin, net
debt-to-adjusted EBITDA, 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, net
debt-to-adjusted EBITDA, 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, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net
debt-to-adjusted EBITDA, 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/20200803005648/en/
Deborah K. Pawlowski / Christopher M. Gordon Kei Advisors LLC
(716) 843-3908/ (716) 843-3874 dpawlowski@keiadvisors.com / cgordon@keiadvisors.com
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