- Net sales grew $3.3 million sequentially to $122.6 million
compared with trailing second quarter
- Electronics sales up 42% over trailing second quarter to
$24.4 million
- Gross margin expanded 50 basis points over prior-year period
to 38.3% on lower volume demonstrating improved operational
efficiencies
- Generated $36.7 million of cash from operations and reduced
net debt-to-Adjusted EBITDA to 2.0x
- Paid its 96th Sequential Cash Dividend on October 20,
2020
- Expecting revenue in the range of $485 to $495 million and
Adjusted EBITDA margin of approximately 22% for the full year
2020
- Signed definitive agreement to acquire Balboa Water Group
for $218.5 million which is expected to close before year
end
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 26, 2020.
Josef Matosevic, the Company’s President and Chief Executive
Officer, commented, “We delivered excellent quarterly results with
total revenue exceeding our expectations while expanding gross
margins, which resulted in better-than-expected consolidated
decremental adjusted operating margin of 29%*. Our businesses
demonstrated their ability to quickly adjust to rapidly changing
market conditions. Our disciplined execution, continued
productivity improvements, and ongoing cost containment are what
enabled gross margins to expand on lower volumes.”
He continued, “We generated $36.7 million of cash in the quarter
which was 44% more than the prior-year period. Our ability to
generate cash enabled us to reduce net debt by over $50 million
year-to-date and continue to be a consistent dividend payer over
the last twenty-four years. This cash generation provides us the
financial flexibility to make the acquisition we recently announced
and gives us strong confidence in our ability to de-lever the
balance sheet post acquisition back to our 2x net debt-to-adjusted
EBITDA target. We entered into a definitive agreement on October 9,
2020, to acquire Balboa Water Group for $218.5 million using cash
and debt. This is an ideal fit for our Electronics segment and
entirely aligns with our Vision 2025 strategy. Balboa has
differentiated, proprietary controls technology which we plan to
leverage and accelerate the Electronics segment’s ability to
innovate and penetrate new and existing end markets.”
*Consolidated decremental adjusted
operating margin is defined as the change in adjusted operating
income divided by the change in sales.
Third Quarter 2020 Consolidated Results
($ in millions, except per share data)
Q3 2020
Q3 2019
Change
% Change
Net sales
$
122.6
$
138.0
$
(15.4)
(11%)
Gross profit
$
46.9
$
52.1
$
(5.2)
(10%)
Gross margin
38.3%
37.8%
50
bps
Operating income
$
18.3
$
19.1
$
(0.8)
(4%)
Operating margin
14.9%
13.8%
110
bps
Non-GAAP adjusted operating margin
19.3%
20.4%
(110)
bps
Net income
$
13.0
$
12.8
$
0.2
2%
Diluted EPS
$
0.40
$
0.40
$
-
0%
Non-GAAP cash net income
$
17.0
$
19.5
$
(2.5)
(13%)
Non-GAAP cash EPS
$
0.53
$
0.61
$
(0.08)
(13%)
Adjusted EBITDA
$
28.7
$
32.6
$
(3.9)
(12%)
Adjusted EBITDA margin
23.4%
23.6%
(20)
bps
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 non-GAAP adjusted operating margin and GAAP
net income to non-GAAP cash net income, non-GAAP cash earnings per
share, adjusted EBITDA and Adjusted EBITDA margin. 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
- The majority of the change in sales reflects the impact on
demand of the macro industrial softness resulting from the COVID-19
pandemic
- Foreign currency translation impact on sales: $2.0 million
Profits and margins
- Gross profit and margin drivers: gross profit reflects lower
sales volume while gross margin expanded 50 basis points driven by
successful management of our fixed cost base and favorable product
mix
- Selling, engineering and administrative (“SEA”) expenses: as a
percentage of sales improved 200 basis points reflecting cost
containment initiatives which were partially offset by $0.1 million
of acquisition costs and $0.6 million of officer transition
costs
- Amortization of intangible assets: $4.6 million, comparable
with the prior-year period
Non-operating items
- Net interest expense: was $2.7 million in the quarter lower by
$1.1 million compared to the prior year period due to reduced debt
balances
- Effective tax rate: 20.7% compared with 17.3% in the prior year
period
Net income, earnings per share, non-GAAP
cash earnings per share and adjusted EBITDA
- GAAP net income and earnings per share: $13.0 million up 2%
over the prior year period, and $0.40 per share flat with last
year, respectively
- Non-GAAP cash earnings per share: $0.53 compared with $0.61
last year due primarily to lower sales
- Adjusted EBITDA margin: sequentially was up 80 bps to 23.4%
compared with the second quarter 2020 of 22.6%
Year-to-date 2020 Consolidated Results
($ in millions, except per share data)
2020
2019
Change
% Change
Net sales
$
371.4
$
428.7
$
(57.3)
(13%)
Gross profit
$
143.5
$
164.9
$
(21.4)
(13%)
Gross margin
38.6%
38.5%
10
bps
Operating income
$
25.0
$
71.3
$
(46.3)
(65%)
Operating margin
6.7%
16.6%
(990)
bps
Non-GAAP adjusted operating margin
19.7%
20.8%
(110)
bps
Net income
$
8.7
$
46.5
$
(37.8)
(81%)
Diluted EPS
$
0.27
$
1.45
$
(1.18)
(81%)
Non-GAAP cash net income
$
52.7
$
60.6
$
(7.9)
(13%)
Non-GAAP cash EPS
$
1.64
$
1.89
$
(0.25)
(13%)
Adjusted EBITDA
$
86.1
$
102.0
$
(15.9)
(16%)
Adjusted EBITDA margin
23.2%
23.8%
(60)
bps
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 non-GAAP adjusted operating margin and GAAP
net income to non-GAAP cash net income, non-GAAP cash earnings per
share, adjusted EBITDA and Adjusted EBITDA margin. 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
- The majority of the change in sales reflects the impact on
demand of the macro industrial softness resulting from the COVID-19
pandemic
- Foreign currency translation impact on sales: ($1.8)
million
Profits and margins
- Gross profit and margin drivers: gross margin improved 10 basis
points on lower volume from production efficiencies and favorable
product mix
- SEA expenses: improved $2.2 million primarily due to cost
management efforts, even after $2.4 million in officer transition
costs and $0.2 million in incremental acquisition and
financing-related expenses
- Amortization of intangible assets: $13.3 million compared with
$13.5 million in prior year
- Goodwill impairment charge: $31.9 million, related to Faster’s
change in market outlook resulting from the COVID-19 pandemic
Non-operating items
- Net interest expense: $3.7 million improvement to $8.6 million
from reduction of approximately $50 million in net debt
- Effective tax rate: 16.9%, excludes non-taxable goodwill
impairment charge, down from 20.5% in prior year, included certain
one-time benefits in the second quarter 2020 that reduced the
year-to-date effective tax rate
Earnings per share, non-GAAP cash earnings
per share and adjusted EBITDA
- GAAP Earnings per share: included a $31.9 million charge for
goodwill impairment, reflects impact of reduced sales volume,
partially offset by cost management efforts, lower interest and
one-time tax benefit
- Non-GAAP cash earnings per share: change is similar to the GAAP
earnings per share explanation above, adjusted for amortization,
goodwill impairment charge and other unusual items
- Adjusted EBITDA margin: 60 basis point change reflects lower
sales volume somewhat offset by effective cost management efforts
and production efficiencies
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions, except per share data)
Hydraulics
Q3 2020
Q3 2019
Change
% Change
Net Sales
Americas
$
27.7
$
43.3
$
(15.6)
(36%)
EMEA
$
32.1
$
31.9
$
0.2
1%
APAC
$
38.4
$
34.9
$
3.5
10%
Total Segment Sales
$
98.2
$
110.1
$
(11.9)
(11%)
Gross Profit
$
35.5
$
39.1
$
(3.6)
(9%)
Gross Margin
36.1%
35.5%
60
bps
SEA Expenses
$
16.6
$
21.2
$
(4.6)
(22%)
Operating Income
$
18.9
$
17.9
$
1.0
6%
Operating Margin
19.2%
16.3%
290
bps
Third Quarter Hydraulics Segment
Review
- Higher sales in the Europe, Middle East, Africa (“EMEA”) and
Asia/Pacific (“APAC”) regions were driven by demand from the
construction and agricultural end markets; foreign currency
exchange rates had a $1.9 million impact on sales
- Gross margin improved 60 basis points due to favorable change
in sales mix, the effectiveness of the factory consolidation of the
CVT facility in Florida and savings from cost containment efforts
such as over-time management, decreased usage of temporary labor
and inventory and supplies costs management
- Operating margin improved 290 basis points driven by some
one-time expenses in the year-ago period related to restructuring
and disposal of an intangible asset, as well as effective cost
management efforts and production efficiencies in the current
quarter
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions, except per share data)
Electronics
Q3 2020
Q3 2019
Change
% Change
Net Sales
Americas
$
21.4
$
24.1
$
(2.7)
(11%)
EMEA
$
1.5
$
2.1
$
(0.6)
(29%)
APAC
$
1.5
$
1.8
$
(0.3)
(17%)
Total Segment Sales
$
24.4
$
28.0
$
(3.6)
(13%)
Gross Profit
$
11.4
$
13.0
$
(1.6)
(12%)
Gross Margin
46.8%
46.4%
40
bps
SEA Expenses
$
6.7
$
7.0
$
(0.3)
(4%)
Operating Income
$
4.7
$
6.0
$
(1.3)
(22%)
Operating Margin
19.2%
21.4%
(220)
bps
Third Quarter Electronics Segment
Review
- Sales recovered in the third quarter compared with the trailing
second quarter although year-over-year still reflects demand
impacts from the pandemic as well as the intentional shift in
customer base which involved removing certain contractual
obligations enabling broader market penetration
- Third quarter 2020 gross margin improved 40 basis points due to
favorable sales mix and cost management efforts during the quarter.
Cost containment measures helped to offset the impact of
decremental leverage on lower volume resulting in operating income
of $4.7 million
Balance Sheet and Cash Flow Review
- Total debt improved to $260.4 million at September 26, 2020,
from $300.4 million at December 28, 2019
- Cash and cash equivalents at September 26, 2020 were $32.4
million, up $10.3 million from the end of 2019
- Net debt-to-adjusted EBITDA reached the Companies target 2.0x
at September 26, 2020. At the end of the quarter, the Company had
$231.3 million available on its revolving line of credit
- Net cash provided by operations was $77.0 million and $50.9
million year to date in 2020 and 2019, respectively. The Company
generated $36.7 million of cash from operations in the current
quarter up from $25.5 million in the prior-year period
- Capital expenditures were $7.2 million year to date. Capital
expenditure levels reflect the focus on cash preservation 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
Balboa Water Group Acquisition
On October 12, 2020, the Company announced it had signed a
definitive agreement on October 9, 2020 to acquire BWG Holdings I
Corp. (operating as Balboa Water Group) for $218.5 million from
investment funds affiliated with AEA Investors LP (the
“Acquisition”). Helios plans to fund the Acquisition through a
combination of cash and existing and new credit facilities. Helios
expects to close the transaction in the fourth quarter of 2020,
subject to customary closing conditions and regulatory
approvals.
2020 Outlook
As of November 2, 2020, the Company expects revenue to range
from $485 to $495 million for the full year 2020, which
incorporates expectations of typical seasonality in the fourth
quarter for the Electronics segment combined with recovering order
levels for the Hydraulics segment. The Company also expects
Adjusted EBITDA margin to be approximately 22% for the full year
2020. The outlook does not include any contribution from the
Acquisition.
Mr. Matosevic concluded, “The value of the diversity of our end
markets, which will be further enhanced with the addition of
Balboa, was demonstrated in our results this quarter. As we look
farther out, we believe the successful execution of our strategy to
grow through end market and geographic diversification, leading
market share in niche applications and expanding product offerings
will enable us to achieve our Vision 2025 goals. In fact, the
Helios team is excited about the opportunities in front of us as we
work to accelerate our achievements and create a stronger, scalable
and more dynamic business.”
Webcast
The Company will host a conference call and webcast today at
9:00 a.m. Eastern Time to review its financial and operating
results and discuss its corporate strategies and outlook. A
question-and-answer session will follow. The conference call can be
accessed by calling (201) 689-8573. The audio webcast will be
available at www.heliostechnologies.com.
A telephonic replay will be available from 12:00 p.m. ET on the
day of the call through Tuesday, November 9, 2020. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13711361. 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 timing of
completion of the Acquisition and the expected benefits and
synergies from the Acquisition; (iii) the Company’s financing
plans; (iv) trends affecting the Company’s financial condition or
results of operations; (v) the Company’s ability to continue to
control costs and to meet its liquidity and other financing needs;
(vi) the declaration and payment of dividends; and (vii) 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) the risk that the Acquisition will
not be consummated in a timely manner or at all, our failure to
realize the benefits expected from the Acquisition, our failure to
promptly and effectively integrate the Acquisition and the ability
of Helios to retain and hire key personnel, and maintain
relationships with suppliers; (iii) 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 (iv) 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.
This news release also presents forward-looking statements
regarding non-GAAP Adjusted EBITDA margin. The Company is unable to
present a quantitative reconciliation of these forward-looking
non-GAAP financial measures to their most directly comparable
forward-looking GAAP financial measures because such information is
not available, and management cannot reliably predict the necessary
components of such GAAP measures without unreasonable effort or
expense. In addition, the Company believes that such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors. The unavailable information
could have a significant impact on the Company’s full 2020
financial results. These non-GAAP financial measures are
preliminary estimates and are subject to risks and uncertainties,
including, among others, changes in connection with quarter-end and
year-end adjustments. Any variation between the Company’s actual
results and preliminary financial data set forth above may be
material.
Financial Tables Follow:
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
% Change
2020
2019
% Change
Net sales
$
122,645
$
138,045
(11)%
$
371,422
$
428,738
(13)%
Cost of sales
75,702
85,926
(12)%
227,910
263,884
(14)%
Gross profit
46,943
52,119
(10)%
143,512
164,854
(13)%
Gross margin
38.3%
37.8%
38.6%
38.5%
Selling, engineering and administrative expenses
24,042
24,066
(0)%
73,306
75,531
(3)%
Restructuring Charges
-
1,724
NM
-
1,724
NM
Amortization of intangible assets
4,558
4,478
2%
13,323
13,544
(2)%
Goodwill impairment
-
-
NM
31,871
-
NM
Loss on disposal of intangible asset
-
2,713
NM
-
2,713
NM
Operating income
18,343
19,138
(4)%
25,012
71,342
(65)%
Operating margin
14.9%
13.8%
6.7%
16.6%
Interest expense, net
2,730
3,790
(28)%
8,572
12,223
(30)%
Foreign currency transaction (gain) loss, net
(727)
30
NM
(319)
92
NM
Miscellaneous income, net
(9)
(72)
(88)%
(85)
(122)
(30)%
Change in fair value of contingent consideration
(13)
(72)
(82)%
(47)
703
NM
Income before income taxes
16,362
15,462
6%
16,891
58,446
(71)%
Income tax provision
3,380
2,671
27%
8,224
11,986
(31)%
Net income
$
12,982
$
12,791
1%
$
8,667
$
46,460
(81)%
Basic and diluted net income per common share
$
0.40
$
0.40
-%
$
0.27
$
1.45
(81)%
Basic and diluted weighted average shares outstanding
32,095
32,027
32,079
32,006
Dividends declared per share
$
0.09
$
0.09
$
0.27
$
0.27
NM = Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
September 26,
December 28,
2020
2019
(Unaudited)
Assets Current assets: Cash and cash
equivalents
$
32,444
$
22,123
Restricted cash
38
39
Accounts receivable, net of allowance for doubtful accounts
of $1,459 and $1,131
71,585
66,677
Inventories, net
77,641
85,195
Income taxes receivable
5,553
3,196
Other current assets
16,729
15,359
Total current assets
203,990
192,589
Property, plant and equipment, net
139,318
145,854
Deferred income taxes
6,843
5,803
Goodwill
354,744
377,569
Other intangible assets, net
289,667
294,651
Other assets
4,603
5,285
Total assets
$
999,165
$
1,021,751
Liabilities and shareholders’ equity Current
liabilities: Accounts payable
$
31,347
$
29,730
Accrued compensation and benefits
18,473
16,898
Other accrued expenses and current liabilities
13,222
13,549
Current portion of contingent consideration
-
828
Current portion of long-term non-revolving debt, net
11,808
7,623
Dividends payable
2,890
2,884
Income taxes payable
8,676
4,941
Total current liabilities
86,416
76,453
Revolving lines of credit
168,398
208,708
Long-term non-revolving debt, net
80,149
84,062
Deferred income taxes
49,434
49,290
Other noncurrent liabilities
26,952
25,602
Total liabilities
411,349
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,
32,096 and 32,047 shares issued and outstanding
32
32
Capital in excess of par value
369,510
365,310
Retained earnings
267,660
267,658
Accumulated other comprehensive loss
(49,386
)
(55,364
)
Total shareholders’ equity
587,816
577,636
Total liabilities and shareholders’ equity
$
999,165
$
1,021,751
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 26,
September 28,
2020
2019
Cash flows from operating activities: Net income
$
8,667
$
46,460
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
25,805
26,006
(Gain) loss on disposal of assets
(32
)
2,793
Goodwill impairment
31,871
-
Stock-based compensation expense
3,830
4,058
Amortization of debt issuance costs
537
545
Benefit for deferred income taxes
(2,937
)
(1,381
)
Change in fair value of contingent consideration
(47
)
630
Forward contract losses (gains), net
2,513
(3,973
)
Net investment hedge loss
164
-
Other, net
1,202
1,304
(Increase) decrease in operating assets: Accounts receivable
(4,685
)
(6,533
)
Inventories
7,776
(6,674
)
Income taxes receivable
(2,874
)
(1,598
)
Other current assets
(1,382
)
(3,448
)
Other assets
2,613
1,259
Increase (decrease) in operating liabilities: Accounts
payable
1,387
(5,046
)
Accrued expenses and other liabilities
955
6,249
Income taxes payable
3,548
3,363
Other noncurrent liabilities
(1,884
)
(2,386
)
Contingent consideration payment in excess of acquisition date fair
value
-
(10,731
)
Net cash provided by operating activities
77,027
50,897
Cash flows from investing activities: Capital
expenditures
(7,155
)
(19,584
)
Proceeds from dispositions of equipment
103
124
Cash settlement of forward contracts
(1,742
)
2,256
Software development costs
(227
)
-
Net cash used in investing activities
(9,021
)
(17,204
)
Cash flows from financing activities: Borrowings on
revolving credit facilities
11,000
107,814
Repayment of borrowings on revolving credit facilities
(55,609
)
(135,750
)
Borrowings on long-term non-revolving debt
5,812
-
Repayment of borrowings on long-term non-revolving debt
(5,905
)
(4,188
)
Proceeds from stock issued
1,027
1,252
Dividends to shareholders
(8,660
)
(8,641
)
Payment of contingent consideration liability
(830
)
(7,064
)
Other financing activities
(1,107
)
(1,370
)
Net cash used in financing activities
(54,272
)
(47,947
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(3,414
)
4,482
Net increase (decrease) in cash, cash equivalents and restricted
cash
10,320
(9,772
)
Cash, cash equivalents and restricted cash, beginning of period
22,162
23,515
Cash, cash equivalents and restricted cash, end of period
$
32,482
$
13,743
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
2020
2019
Sales: Hydraulics
$
98,206
$
110,089
$
304,113
$
340,262
Electronics
24,439
27,956
67,309
88,476
Consolidated
$
122,645
$
138,045
$
371,422
$
428,738
Gross profit and margin: Hydraulics
$
35,547
$
39,112
$
112,695
$
124,153
36.2%
35.5%
37.1%
36.5%
Electronics
11,396
13,007
30,817
40,701
46.8%
46.4%
45.7%
46.0%
Consolidated
$
46,943
$
52,119
$
143,512
$
164,854
38.3%
37.8%
38.6%
38.5%
Operating income and margin: Hydraulics
$
18,942
$
17,867
$
62,413
$
65,752
19.2%
16.3%
20.5%
19.3%
Electronics
4,683
5,977
10,400
18,977
19.2%
21.4%
15.5%
21.5%
Corporate and other
(5,282)
(4,706)
(47,801)
(13,387)
Consolidated
$
18,343
$
19,138
$
25,012
$
71,342
14.9%
13.8%
6.7%
16.6%
HELIOS TECHNOLOGIES
ADDITIONAL INFORMATION
(Unaudited)
2020 Sales by Geographic Region and Segment ($ in millions)
Q1
% Change
y/y
Q2
% Change
y/y
Q3
% Change
y/y
YTD 2020
% Change
y/y
Americas:
Hydraulics
$
37.3
(10%)
$
34.2
(17%)
$
27.7
(36%)
$
99.4
(21%)
Electronics
21.6
(17%)
13.4
(50%)
21.4
(11%)
56.4
(26%)
Consol. Americas
58.9
(13%)
47.6
(30%)
49.1
(27%)
155.8
(23%)
% of total
45%
40%
40%
42%
EMEA:
Hydraulics
33.5
(20%)
31.2
(15%)
32.1
1%
96.7
(12%)
Electronics
2.5
0%
1.9
6%
1.5
(29%)
5.9
(8%)
Consol. EMEA
36.0
(19%)
33.1
(14%)
33.6
(1%)
102.6
(12%)
% of total
28%
28%
27%
28%
APAC:
Hydraulics
$
33.0
(0%)
$
36.7
3%
$
38.4
10%
$
108.0
4%
Electronics
1.6
(11%)
1.9
12%
1.5
(17%)
5.0
(6%)
Consol. APAC
34.6
(1%)
38.6
3%
39.9
9%
113.0
4%
% of total
27%
32%
33%
30%
Total
$
129.5
(12%)
$
119.3
(17%)
$
122.6
(11%)
$
371.4
(13%)
2019 Sales by Geographic
Region and Segment
($ in millions)
Q1
% Change
y/y
Q2
% Change
y/y
Q3
% Change
y/y
YTD 2019
% Change
y/y
Americas:
Hydraulics
$
41.6
58%
$
41.2
4%
$
43.3
13%
$
126.1
21%
Electronics
26.1
(13%)
26.6
(5%)
24.0
(12%)
76.7
(10%)
Consol. Americas
67.7
20%
67.8
0%
67.3
2%
202.8
7%
% of total
46%
47%
49%
47%
EMEA:
Hydraulics
41.8
113%
36.8
(9%)
31.9
(8%)
110.5
17%
Electronics
2.5
(7%)
1.8
(33%)
2.1
(22%)
6.4
(21%)
Consol. EMEA
44.3
99%
38.6
(11%)
34.0
(9%)
116.9
14%
% of total
30%
27%
25%
27%
APAC:
Hydraulics
33.1
99%
35.7
53%
34.9
12%
103.7
46%
Electronics
1.8
(5%)
1.7
(15%)
1.8
13%
5.3
(4%)
Consol. APAC
34.9
89%
37.4
47%
36.7
12%
109.0
42%
% of total
24%
26%
26%
26%
Total
$
146.9
51%
$
143.8
6%
$
138.0
2%
$
428.7
16%
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
2020
2019
GAAP operating income
$
18,343
$
19,138
$
25,012
$
71,342
Acquisition-related amortization of intangible assets
4,558
4,458
13,323
13,403
Acquisition and financing-related expenses
101
-
176
11
Restructuring charges
64
1,724
361
1,724
CEO and officer transition costs
622
-
2,431
-
Loss on disposal of intangible asset
-
2,713
-
2,713
Goodwill impairment
-
-
31,871
-
Other
-
127
-
127
Non-GAAP adjusted operating income
$
23,688
$
28,160
$
73,174
$
89,320
GAAP operating margin
14.9%
13.8%
6.7%
16.6%
Non-GAAP Adjusted operating margin
19.3%
20.4%
19.7%
20.8%
Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
Twelve Months Ended
September 26,
September 28,
September 26,
September 28,
September 26,
2020
2019
2020
2019
2020
Net income
$
12,982
$
12,791
$
8,667
$
46,460
$
22,476
Interest expense, net
2,730
3,790
8,572
12,223
11,736
Income tax provision
3,380
2,671
8,224
11,986
11,276
Depreciation and amortization
8,784
8,811
25,805
26,006
35,014
EBITDA
27,876
28,063
51,268
96,675
80,502
Acquisition and financing-related expenses
101
-
176
11
175
Restructuring charges
64
1,724
361
1,724
362
CEO and officer transition costs
622
-
2,431
-
2,431
Goodwill impairment
-
-
31,871
-
31,871
Loss on disposal of intangible asset
-
2,713
-
2,713
-
Other
-
127
-
127
-
Change in fair value of contingent consideration
(13)
(72)
(47)
703
(98)
Adjusted EBITDA
$
28,650
$
32,555
$
86,060
$
101,953
$
115,243
Adjusted EBITDA margin
23.4%
23.6%
23.2%
23.8%
23.2%
HELIOS TECHNOLOGIES
Non-GAAP Cash Net Income
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
Nine Months Ended
September 26,
September 28,
September 26,
September 28,
2020
2019
2020
2019
Net income
$
12,982
$
12,791
$
8,667
$
46,460
Amortization of intangible assets
4,558
4,478
13,323
13,544
Acquisition and financing-related expenses
101
-
176
11
Restructuring charges
64
1,724
361
1,724
CEO and officer transition costs
622
-
2,431
-
Goodwill impairment
-
-
31,871
-
Change in fair value of contingent consideration
(13)
(72)
(47)
703
Loss on disposal of intangible asset
-
2,713
-
2,713
Other
-
127
-
127
Tax effect of above
(1,333)
(2,243)
(4,061)
(4,706)
Non-GAAP cash net income
$
16,981
$
19,518
$
52,721
$
60,576
Non-GAAP cash net income per diluted share
$
0.53
$
0.61
$
1.64
$
1.89
Net Debt-to-Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
As of
September 26,
2020
Current portion of long-term non-revolving debt, net
$
11,808
Revolving lines of credit
168,398
Long-term non-revolving debt, net
80,149
Total debt
260,355
Less: Cash and cash equivalents
32,444
Net debt
$
227,911
Adjusted EBITDA, TTM ended September 26, 2020
$
115,243
Ratio of net debt to TTM adjusted EBITDA
2.0
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/20201102005235/en/
Tania Almond Vice President, Investor Relations & Corporate
Communications (941) 362-1333 tania.almond@HLIO.com
Deborah Pawlowski Kei Advisors LLC (716) 843-3908
dpawlowski@keiadvisors.com
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