- End markets continue to rebound with agriculture, marine and
health/wellness leading the way
- New customer wins in the fourth quarter drive end market
diversification
- Adjusted EBITDA* margins consistent with prior year even
through pandemic
- Strong sales growth anticipated for 2021 Outlook; margins
expected to remain strong despite significant investments to propel
growth
- Debt repayment remains a priority supported by strong cash
flow
Helios Technologies, Inc. (Nasdaq: HLIO) (“Helios” or the
“Company”), a global leader in highly engineered motion control and
electronic controls technology for diverse end markets, today
reported financial results for the fourth quarter and full year
2020 ended January 2, 2021. Results include the acquisition of BWG
Holdings I Corp. (known as “Balboa Water Group” or “Balboa
acquisition”) on November 6, 2020.
Josef Matosevic, the Company’s President and Chief Executive
Officer, commented, “We ended the year on a strong note with all
businesses exceeding our expectations in revenue and profitability.
The Helios team worked extremely hard through a very challenging
macro environment in 2020 and drove excellent results and superior
shareholder return. We realized strong demand across a number of
our markets, especially in agriculture, marine and health and
wellness. The Balboa acquisition also exceeded our expectations in
their first two months as part of the Helios family.
Over the last couple quarters, we have talked about diversifying
our end markets. We are pleased to report that we have already won
our first diversified markets customer with product offerings in
the hydraulics segment and over time expanding into the electronics
segment. We continue to pursue additional opportunities to
diversify.”
He continued, “As we enter 2021, we are investing in expanding
capacity as well as manufacturing and productivity improvements.
Importantly, we are confident that we can keep driving growth and
delivering improved margins over time. Our cash generation remains
robust and we are focused on maintaining financial flexibility to
support our flywheel acquisition strategy. In fact, we continued to
de-lever our balance sheet. In the fourth quarter, we were able to
pay down debt and achieve net leverage of 3.0x1, significantly
better than anticipated at the time of the Balboa acquisition.”
*Adjusted EBITDA is a non-GAAP measure.
See comments regarding forward-looking non-GAAP measures in the
Forward-Looking Information statement of this release.
1 On a pro-forma basis for Balboa Water
Group
Fourth Quarter 2020 Consolidated Results
($ in millions, except per share data)
Q4 2020
Q4 2019
Change
% Change
Net sales
$
151.6
$
125.9
$
25.7
20%
Gross profit
$
52.7
$
47.4
$
5.3
11%
Gross margin
34.8%
37.7%
(290)
bps
Operating income
$
10.4
$
18.8
$
(8.4)
(45%)
Operating margin
6.9%
14.9%
(800)
bps
Non-GAAP adjusted operating margin
18.8%
18.5%
30
bps
Net income
$
5.6
$
13.8
$
(8.2)
(60%)
Diluted EPS
$
0.17
$
0.43
$
(0.26)
(60%)
Non-GAAP cash net income
$
19.2
$
17.2
$
2.0
12%
Non-GAAP cash EPS
$
0.60
$
0.54
$
0.06
11%
Adjusted EBITDA
$
35.1
$
29.2
$
5.9
20%
Adjusted EBITDA margin
23.2%
23.2%
-
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
- Sales reflected improving demand across all markets, in
particular agriculture and marine, and the Balboa acquisition,
which contributed $26.1 million in the fourth quarter.
- Foreign currency translation adjustment on sales: $3.8 million
favorable.
Profits and margins
- Gross profit and margin drivers: gross profit included $1.9
million of inventory step-up amortization related to the Balboa
acquisition, a (120) basis-point impact to margin. Gross profit and
margin were also influenced by mix of products sold, the business
model of the Balboa acquisition, which has lower gross margin but
higher operating margin, as well as the increasing freight costs
and constraints with the supply chain and labor affecting
productivity.
- Selling, engineering and administrative (“SEA”) expenses: as a
percentage of sales, increased 290 basis points, reflecting both
the business model of the Balboa acquisition and continued cost
containment initiatives which were offset by $7.1 million of
acquisition- and financing-related costs and $0.4 million of
integration costs and officer transition.
- Amortization of intangible assets: $8.8 million was up from
$4.5 million in the prior year reflecting the acquisition.
Non-operating items
- Net interest expense: $4.7 million in the quarter, up $1.5
million compared with the prior-year period due to increased debt
balances.
- Effective tax rate: 22.4% compared with 18.1% in the prior-year
period driven by favorable tax incentives in the prior-year period,
while the fourth quarter 2020 rate was affected by one-time
non-deductible costs incurred during the Balboa acquisition.
Net income, earnings per share, non-GAAP
cash earnings per share and adjusted EBITDA
- GAAP net income and earnings per share: $5.6 million $0.17 per
share.
- Non-GAAP cash earnings per share: $0.60 compared with $0.54
last year on better-than-expected performance of the Balboa
acquisition.
- Adjusted EBITDA margin: unchanged at 23.2% compared with the
prior-year period.
Full Year 2020 Consolidated Results
($ in millions, except per share data)
2020
2019
Change
% Change
Net sales
$
523.0
$554.7
$
(31.7)
(6%)
Gross profit
$
196.2
$212.3
$
(16.1)
(8%)
Gross margin
37.5%
38.3%
(80)
bps
Operating income
$
35.4
$90.1
$
(54.7)
(61%)
Operating margin
6.8%
16.2%
(940)
bps
Non-GAAP adjusted operating margin
19.5%
20.3%
(80)
bps
Net income
$
14.2
$60.3
$
(46.1)
(76%)
Diluted EPS
$
0.44
$1.88
$
(1.44)
(77%)
Non-GAAP cash net income
$
71.9
$77.7
$
(5.8)
(7%)
Non-GAAP cash EPS
$
2.24
$2.43
$
(0.19)
(8%)
Adjusted EBITDA
$
121.2
$131.1
$
(9.9)
(8%)
Adjusted EBITDA margin
23.2%
23.6%
(40)
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 reflected the effect on
demand from the COVID-19 pandemic, including government-mandated
operational closure in Italy and global shelter-at-home orders,
somewhat offset by the Balboa acquisition.
- Foreign currency translation adjustment on sales: $2.0 million
favorable.
Profits and margins
- Gross profit and margin drivers: gross margin was affected by
lower volume and a (40) bps impact from inventory step-up
amortization related to the Balboa acquisition.
- SEA expenses: $106.8 million, or 20.4% of sales and included
$7.3 million in acquisition- and finance-related costs, $2.6
million in officer transition costs and approximately $1.9 million
incremental SEA expenses from the Balboa acquisition.
- Amortization of intangible assets: $22.1 million compared with
$18.1 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: $2.1 million improvement to $13.3 million
from lower debt balances through most of the year.
- Effective tax rate: 17.6%, excludes non-taxable goodwill
impairment charge, and includes certain one-time benefits in the
second quarter 2020 that reduced the year-to-date effective tax
rate; Effective tax rate was 20.0% in 2019.
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 and $7.3 million in acquisition- and
financing-costs and also reflects the effect of reduced sales
volume, partially offset by cost management efforts, lower interest
expense and a one-time tax benefit.
- Non-GAAP cash earnings per share: change was similarly impacted
by lower sales volume.
- Adjusted EBITDA margin: only (40) basis point change despite
the influence of the pandemic on sales volume as a result of
effective cost management efforts, production efficiencies and
strong margin profile of acquisition.
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions, except per share data)
Hydraulics
Q4 2020
Q4 2019
Change
% Change
Net Sales
Americas
$
31.3
$
36.2
$
(4.9)
(14%)
EMEA
$
34.4
$
31.1
$
3.3
11%
APAC
$
37.4
$
35.2
$
2.2
6%
Total Segment Sales
$
103.1
$
102.5
$
0.6
1%
Gross Profit
$
37.6
$
37.2
$
0.4
1%
Gross Margin
36.5%
36.3%
20
bps
SEA Expenses
$
18.0
$
16.9
$
1.1
7%
Operating Income
$
19.6
$
20.3
$
(0.7)
(3%)
Operating Margin
19.0%
19.8%
(80)
bps
Fourth Quarter Hydraulics Segment
Review
- Higher sales were driven by increases in Europe, Middle East,
Africa (“EMEA”) and Asia/Pacific (“APAC”), regions which were
impacted primarily by demand from the construction and agricultural
end markets. This more than offset softness in the Americas;
foreign currency exchange rates had a $3.7 million favorable
adjustment on sales.
- Gross margin improved 20 basis points due to higher sales, a
favorable change in sales mix, the effectiveness of the factory
consolidation of the CVT facility in Florida and savings from cost
containment efforts, including over-time management, decreased
usage of temporary labor and inventory and supplies expense
management.
- The change in operating margin was driven by increased
investment in R&D spend to drive future revenue growth and
corporate operating costs allocated to the segment.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
($ in millions, except per share data)
Electronics
Q4 2020
Q4 2019
Change
% Change
Net Sales
Americas
$
37.5
$
19.5
$
18.0
92%
EMEA
$
4.9
$
2.0
$
2.9
145%
APAC
$
6.1
$
1.9
$
4.2
221%
Total Segment Sales
$
48.5
$
23.4
$
25.1
107%
Gross Profit
$
17.0
$
10.2
$
6.8
67%
Gross Margin
35.0%
43.5%
(850)
bps
SEA Expenses
$
8.0
$
7.2
$
0.8
11%
Operating Income
$
9.0
$
3.0
$
6.0
200%
Operating Margin
18.5%
12.9%
560
bps
Fourth Quarter Electronics Segment
Review
- Sales increased as a result of the Balboa acquisition, which
added $26.1 million in revenue in the fourth quarter. While demand
from the marine market is increasing, sales are affected by supply
chain constraints and the continued impact in other markets from
the pandemic. Sales also reflect the intentional shift in customer
base which involved releasing certain contractual obligations
enabling broader market penetration.
- Gross margin reflects the different business model of the
Balboa acquisition, which has lower gross margins which is offset
by lower SEA expense structure.
- Operating margin of 18.5% demonstrates the business model of
the Balboa acquisition, which has an inherently lower operating
expense structure. SEA expenses increased due to the incremental
expenses from the Balboa acquisition.
Balance Sheet and Cash Flow Review
- Total debt increased to $462.4 million at January 2, 2021 from
$300.4 million at December 28, 2019 reflecting net debt repayment
of $48.3 million through the year and additional borrowings of $200
million for the acquisition.
- Cash and cash equivalents at January 2, 2021 were $25.2
million, up $3.1 million from the end of 2019.
- Pro-forma net debt-to-adjusted EBITDA was 3.0x at January 2,
2021 demonstrating the Company’s financial strategy to flex up
leverage to support its acquisition strategy and then use cash
generated from operations to pay down debt. At the end of the
fourth quarter 2020, the Company had $144.0 million available on
its revolving line of credit.
- Adjusted net cash provided by operations increased to $108.6
million in 2020 compared with $101.2 million in 2019. The Company
generated $31.5 million of cash from operations in the fourth
quarter compared with from $39.6 million in the prior-year
period.
- Capital expenditures were $14.6 million, or approximately 3% of
sales demonstrating the focus on cash preservation in light of the
influence of COVID-19 on economic conditions. The Company expects
to return to its more normalized capital investment level of
approximately 5% of sales going forward.
- Paid 97th sequential quarterly cash dividend on January 20,
2021.
2021 Outlook
The following provides the Company’s expectations for 2021. This
assumes constant currency rates and that markets served continue to
recover from the global pandemic.
2020 Actual
2021 Outlook
Consolidated revenue
$523 million
$675 - $705 million
Adjusted EBITDA margin
23.2%
23% - 24%
Interest expense
$13 million
$16 - $18 million
Effective tax rate*
17.6%
24% - 26%
Depreciation
$18 million
$22 - $24 million
Amortization
$22 million
$30 - $31 million
Capital expenditures
~3% of sales
~5% of sales
Non-GAAP Cash EPS
$2.24
$2.75 - $3.10
* Included certain one-time benefits in the second quarter 2020
that reduced the full year effective tax rate.
Mr. Matosevic concluded, “We are implementing augmented values
streams to drive growth and profitability at Helios. We expect our
recent addition of BJN Technologies and the establishment of our
Center of Engineering Excellence to enable quicker integration of
technology capabilities, leverage talent and know-how across the
organization and open opportunities to address new markets. We
believe that fully integrating these elements of our business also
creates a more cohesive operation that can deliver enhanced
performance and value for our customers.”
Webcast
The Company will host a conference call and webcast tomorrow,
March 2, at 9:00 a.m. Eastern Time to review its financial and
operating results and discuss its corporate strategies and outlook.
A question-and-answer session will follow. The conference call can
be accessed by calling (201) 689-8573. The audio webcast will be
available at www.heliostechnologies.com.
A telephonic replay will be available from approximately 12:00
p.m. ET on the day of the call through Tuesday, March 9, 2021. To
listen to the archived call, dial (412) 317-6671 and enter
conference ID number 13715001. The webcast replay will be available
in the investor relations section of the Company’s website at
www.heliostechnologies.com, where a transcript will also be posted
once available.
About Helios Technologies
Helios Technologies is a global leader in highly engineered
motion control and electronic controls technology for diverse end
markets, including construction, material handling, agriculture,
energy, recreational vehicles, marine, health and wellness. Helios
sells its products to customers in over 85 countries around the
world. Its strategy for growth is to be the leading provider in
niche markets, with premier products and solutions through
innovative product development and acquisition. The company has
paid a cash dividend to its shareholders every quarter since
becoming a public company in 1997. For more information please
visit: www.heliostechnologies.com.
FORWARD-LOOKING INFORMATION
This news release contains “forward‐looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward‐looking statements involve risks and uncertainties, and
actual results may differ materially from those expressed or
implied by such statements. They include statements regarding
current expectations, estimates, forecasts, projections, our
beliefs, and assumptions made by Helios Technologies, Inc.
(“Helios” or the “Company”), its directors or its officers about
the Company and the industry in which it operates, and assumptions
made by management, and include among other items, (i) the
Company’s strategies regarding growth, including its intention to
develop new products and make acquisitions; (ii) the effectiveness
of Creating the Center of Engineering Excellence; (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) risks related to health
epidemics, pandemics and similar outbreaks and similar outbreaks,
including, without limitation, the current COVID-19 pandemic, which
may have material adverse effects on our business, financial
position, results of operations and/or cash flows; (iv) 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 (v) 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 September 26, 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 2021 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)
Three Months Ended
For the Year Ended
January 2,
December 28,
January 2,
December 28,
2021
2019
% Change
2021
2019
% Change
(Unaudited)
(Unaudited)
Net sales
$
151,618
$
125,927
20%
$
523,040
$
554,665
(6)%
Cost of sales
98,902
78,500
26%
326,812
342,383
(5)%
Gross profit
52,716
47,427
11%
196,228
212,282
(8)%
Gross margin
34.8%
37.7%
37.5%
38.3%
Selling,
engineering and administrative expenses
33,525
24,134
39%
106,831
99,665
7%
Restructuring charges
-
-
NM
-
1,724
NM
Amortization of intangible assets
8,791
4,521
94%
22,114
18,065
22%
Loss on disposal of intangible asset
-
-
NM
-
2,713
NM
Goodwill impairment
-
-
NM
31,871
-
NM
Operating income
10,400
18,772
(45)%
35,412
90,115
(61)%
Operating margin
6.9%
14.9%
6.8%
16.2%
Interest
expense, net
4,714
3,164
49%
13,286
15,387
(14)%
Foreign currency transaction (gain) loss, net
(1,237)
(938)
32%
(1,555)
(846)
84%
Other non-operating (income) expense, net
(233)
(315)
(26)%
(366)
267
(237)%
Income before income taxes
7,156
16,861
(58)%
24,047
75,307
(68)%
Income tax provision
1,605
3,052
(47)%
9,829
15,039
(35)%
Net income
$
5,551
$
13,809
(60)%
$
14,218
$
60,268
(76)%
Basic and diluted
net income per common share
$
0.17
$
0.43
(60)%
$
0.44
$
1.88
(77)%
Basic and diluted
weighted average shares outstanding
32,113
32,044
32,088
32,015
Dividends
declared per share
$
0.09
$
0.09
$
0.36
$
0.36
NM =
Not meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
January 2,
December 28,
2021
2019
Assets Current assets: Cash and cash
equivalents
$
25,216
$
22,123
Restricted cash
41
39
Accounts receivable, net of allowance for doubtful accounts
of $1,493 and $1,131
97,623
66,677
Inventories, net
110,372
85,195
Income taxes receivable
1,103
3,196
Other current assets
19,664
15,359
Total current assets
254,019
192,589
Property, plant and equipment, net
163,177
145,854
Deferred income taxes
6,645
5,803
Goodwill
443,533
377,569
Other intangible assets, net
419,375
294,651
Other assets
10,230
5,285
Total assets
$
1,296,979
$
1,021,751
Liabilities and shareholders’ equity Current
liabilities: Accounts payable
$
59,477
$
29,730
Accrued compensation and benefits
22,985
16,898
Other accrued expenses and current liabilities
24,941
14,377
Current portion of long-term non-revolving debt, net
16,229
7,623
Dividends payable
2,891
2,884
Income taxes payable
1,489
4,941
Total current liabilities
128,012
76,453
Revolving lines of credit
255,909
208,708
Long-term non-revolving debt, net
189,932
84,062
Deferred income taxes
78,864
49,290
Other noncurrent liabilities
36,472
25,602
Total liabilities
689,189
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,
32,121 and 32,047 shares issued and outstanding
32
32
Capital in excess of par value
371,778
365,310
Retained earnings
270,320
267,658
Accumulated other comprehensive loss
(34,340)
(55,364)
Total shareholders’ equity
607,790
577,636
Total liabilities and shareholders’ equity
$
1,296,979
$
1,021,751
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
For the Year Ended
January 2,
December 28,
2021
2019
Cash flows from operating activities: Net income
$
14,218
$
60,268
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
39,695
35,215
Goodwill impairment
31,871
-
Stock-based compensation expense
5,781
5,207
Amortization of debt issuance costs
1,107
717
Benefit for deferred income taxes
(3,631)
(551)
Amortization of acquisition-related inventory step-up
1,874
-
Forward contract losses (gains), net
5,458
(2,863)
Other, net
1,006
4,614
(Increase) decrease in operating assets, net of acquisition:
Accounts receivable
727
5,657
Inventories
570
(1,450)
Income taxes receivable
1,731
(2,459)
Other current assets
(1,856)
(4,043)
Other assets
4,030
1,772
Increase (decrease) in operating liabilities, net of acquisition:
Accounts payable
10,569
(10,750)
Accrued expenses and other liabilities
3,806
5,700
Income taxes payable
(5,127)
6,234
Other noncurrent liabilities
(3,273)
(2,057)
Contingent consideration payment in excess of acquisition date fair
value
-
(10,731)
Net cash provided by operating activities
108,556
90,480
Cash flows from investing activities: Acquisition of
business, net of cash acquired
(217,029)
-
Capital expenditures
(14,580)
(25,025)
Proceeds from dispositions of equipment
100
196
Cash settlement of forward contracts
(3,524)
2,478
Software development costs
(865)
-
Net cash used in investing activities
(235,898)
(22,351)
Cash flows from financing activities: Borrowings on
revolving credit facilities
117,565
129,951
Repayment of borrowings on revolving credit facilities
(79,609)
(176,750)
Borrowings on long-term non-revolving debt
119,727
-
Repayment of borrowings on long-term non-revolving debt
(5,958)
(5,465)
Proceeds from stock issued
1,344
1,650
Dividends to shareholders
(11,550)
(11,525)
Debt issuance costs
(1,714)
-
Payment of contingent consideration liability
(830)
(8,016)
Other financing activities
(1,234)
(1,588)
Net cash used in financing activities
137,741
(71,743)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(7,304)
2,261
Net increase (decrease) in cash, cash equivalents and restricted
cash
3,095
(1,353)
Cash, cash equivalents and restricted cash, beginning of period
22,162
23,515
Cash, cash equivalents and restricted cash, end of period
$
25,257
$
22,162
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
(Unaudited)
Three Months Ended
For the Year Ended
January 2,
December 28,
January 2,
December 28,
2021
2019
2021
2019
Sales: Hydraulics
$
103,079
$
102,550
$
407,192
$
442,812
Electronics
48,539
23,377
115,848
111,853
Consolidated
$
151,618
$
125,927
$
523,040
$
554,665
Gross profit and margin: Hydraulics
$
37,617
$
37,248
$
150,312
$
161,401
36.5%
36.3%
36.9%
36.4%
Electronics
16,973
10,179
47,790
50,881
35.0%
43.5%
41.3%
45.5%
Corporate and other
(1,874)
-
(1,874)
-
Consolidated
$
52,716
$
47,427
$
196,228
$
212,282
34.8%
37.7%
37.5%
38.3%
Operating income and margin: Hydraulics
$
19,584
$
20,275
$
81,996
$
86,027
19.0%
19.8%
20.1%
19.4%
Electronics
8,963
3,016
19,363
21,994
18.5%
12.9%
16.7%
19.7%
Corporate and other
(18,147)
(4,519)
(65,947)
(17,906)
Consolidated
$
10,400
$
18,772
$
35,412
$
90,115
6.9%
14.9%
6.8%
16.2%
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
Q4
% Change y/y
YTD 2020
% Change y/y
Americas:
Hydraulics
$
37.3
(10%)
$
34.2
(17%)
$
27.7
(36%)
$
31.3
(14%)
$
130.5
(20%)
Electronics
21.6
(17%)
13.4
(50%)
21.4
(11%)
37.5
92%
93.9
(2%)
Consol. Americas
58.9
(13%)
47.6
(30%)
49.1
(27%)
68.8
24%
224.4
(13%)
% of total
45%
40%
40%
45%
43%
EMEA:
Hydraulics
33.5
(20%)
31.2
(15%)
32.1
1%
34.4
11%
131.2
(7%)
Electronics
2.5
0%
1.9
6%
1.5
(29%)
4.9
145%
10.8
29%
Consol. EMEA
36.0
(19%)
33.1
(14%)
33.6
(1%)
39.3
19%
142.0
(5%)
% of total
28%
28%
27%
26%
27%
APAC:
Hydraulics
$
33.0
(0%)
$
36.7
3%
$
38.4
10%
$
37.4
6%
$
145.5
5%
Electronics
1.6
(11%)
1.9
12%
1.5
(17%)
6.1
221%
11.1
54%
Consol. APAC
34.6
(1%)
38.6
3%
39.9
9%
43.5
17%
156.6
7%
% of total
27%
32%
33%
29%
30%
Total
$
129.5
(12%)
$
119.3
(17%)
$
122.6
(11%)
$
151.6
20%
$
523.0
(6%)
2019 Sales by Geographic
Region and Segment
($ in millions)
Q1
% Change y/y
Q2
% Change y/y
Q3
% Change y/y
Q4
% Change y/y
YTD 2019
% Change y/y
Americas:
Hydraulics
$
41.6
58%
$
41.2
4%
$
43.3
13%
$
36.2
(18%)
$
162.3
9%
Electronics
26.1
(13%)
26.6
(5%)
24.0
(12%)
19.5
(17%)
96.3
(12%)
Consol. Americas
67.7
20%
67.8
0%
67.3
2%
55.7
(18%)
258.6
0%
% of total
46%
47%
49%
44%
47%
EMEA:
Hydraulics
41.8
113%
36.8
(9%)
31.9
(8%)
31.1
(11%)
141.6
9%
Electronics
2.5
(7%)
1.8
(33%)
2.1
(22%)
2.0
0%
8.4
(17%)
Consol. EMEA
44.3
99%
38.6
(11%)
34.0
(9%)
33.1
(10%)
150.0
7%
% of total
30%
27%
25%
26%
27%
APAC:
Hydraulics
33.1
99%
35.7
53%
34.9
12%
35.2
9%
138.9
34%
Electronics
1.8
(5%)
1.7
(15%)
1.8
13%
1.9
12%
7.2
0%
Consol. APAC
34.9
89%
37.4
47%
36.7
12%
37.1
9%
146.1
32%
% of total
24%
26%
26%
29%
26%
Total
$
146.9
51%
$
143.8
6%
$
138.0
2%
$
125.9
(9%)
$
554.7
9%
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating
Income RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
For the Year Ended
January 2,
December 28,
January 2,
December 28,
2021
2019
2021
2019
GAAP operating income
$
10,400
$
18,772
$
35,412
$
90,115
Acquisition-related amortization of intangible assets
8,791
4,521
22,114
17,924
Acquisition and financing-related expenses
7,088
-
7,264
11
Restructuring charges
-
-
361
1,724
CEO and officer transition costs
161
-
2,592
-
Loss on disposal of intangible asset
-
-
-
2,713
Goodwill impairment
-
-
31,871
-
Other
-
-
-
127
Inventory step-up amortization
1,874
-
1,874
-
M&A integration costs
257
-
257
-
Non-GAAP adjusted operating income
$
28,571
$
23,293
$
101,745
$
112,614
GAAP operating margin
6.9%
14.9%
6.8%
16.2%
Non-GAAP Adjusted operating margin
18.8%
18.5%
19.5%
20.3%
Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
For the Year Ended
January 2,
December 28,
January 2,
December 28,
2021
2019
2021
2019
Net income
$
5,551
$
13,809
$
14,218
$
60,268
Interest expense, net
4,714
3,164
13,286
15,387
Income tax provision
1,605
3,052
9,829
15,039
Depreciation and amortization
13,890
9,209
39,695
35,215
EBITDA
25,760
29,234
77,028
125,909
Acquisition and financing-related expenses
7,088
-
7,264
11
Restructuring charges
-
-
361
1,724
CEO and officer transition costs
161
-
2,592
-
Goodwill impairment
-
-
31,871
-
Loss on disposal of intangible asset
-
-
-
2,713
Other
-
-
-
127
Inventory step-up amortization
1,874
-
1,874
-
M&A integration costs
257
-
257
-
Change in fair value of contingent consideration
-
(51)
(47)
652
Adjusted EBITDA
$
35,140
$
29,183
$
121,200
$
131,136
Adjusted EBITDA margin
23.2%
23.2%
23.2%
23.6%
Balboa Water Group pre-acquisition adjusted EBITDA
22,589
TTM Pro forma adjusted EBITDA
$
143,789
HELIOS TECHNOLOGIES
Non-GAAP Cash Net Income
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
For the Year Ended
January 2,
December 28,
January 2,
December 28,
2021
2019
2021
2019
Net income
$
5,551
$
13,809
$
14,218
$
60,268
Amortization of intangible assets
8,791
4,521
22,114
18,065
Acquisition and financing-related expenses
7,088
-
7,264
11
Restructuring charges
-
-
361
1,724
CEO and officer transition costs
161
-
2,592
-
Goodwill impairment
-
-
31,871
-
Change in fair value of contingent consideration
-
(51)
(47)
652
Loss on disposal of intangible asset
-
-
-
2,713
Other
-
-
-
127
Inventory step-up amortization
1,874
-
1,874
-
M&A integration costs
257
-
257
-
Tax effect of above
(4,543)
(1,118)
(8,604)
(5,823)
Non-GAAP cash net income
$
19,179
$
17,161
$
71,900
$
77,737
Non-GAAP cash net income per diluted share
$
0.60
$
0.54
$
2.24
$
2.43
Net Debt-to-Adjusted EBITDA
RECONCILIATION
(In thousands)
(Unaudited)
As of
January 2,
2021
Current portion of long-term non-revolving debt, net
$
16,229
Revolving lines of credit
256,224
Long-term non-revolving debt, net
189,932
Total debt
462,385
Less: Cash and cash equivalents
25,216
Net debt
$
437,169
Pro forma adjusted EBITDA*
$
143,789
Ratio of net debt to TTM adjusted EBITDA
3.0
Note: On a pro-forma basis for Balboa
Water Group
Non-GAAP Financial Measures and Non-GAAP Forward-looking
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 with
other similarly titled measures used by other companies.
The Company does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting and analyzing future periods, the Company
does so primarily on a non-GAAP basis without preparing a GAAP
analysis.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210301005960/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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