Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Investor Presentation (November 2022)
36 slides from Helios Technologies's investor presentation, November 2022
Slide 1: Investor Presentation
Investor Presentation November 2022 Josef Matosevic – President & CEO Tricia Fulton – EVP & Chief Financial Officer Tania Almond – VP, Investor Relations & Corp. Comm. Helios Technologies // Investor Presentation 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation and oral statements made by management in connection herewith that are not historical facts are “forward‐looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward‐looking statements involve risks and uncertainties, a
Slide 3: Growing, Global Industrial Technology Leader
Growing, Global Industrial Technology Leader (1) Helios Technologies (NYSE: HLIO) Financial & Market Data Global leader in highly engineered motion control and electronic controls technology for diverse end markets • Outsized growth driven by diversification and innovation $907M $1.7B • Strong finan
Slide 4: Helios Business System
Helios Business System 1 Drive the cash flow engine 1 Champion a global operating mindset 2 Deliver new products 2 Leverage global resources and assets 3 Leverage existing products 3 Manufacture to support diverse end markets 4 Cultivate customer centricity 4 Accelerate innovation 5 Build in the reg
Slide 5: Existing End Markets and New Diversified Opportunities
Existing End Markets and New Diversified Opportunities Industrial Mobile Agriculture Recreational Health & Wellness End Markets Specialty Commercial Commercial Pharmaceutical Off Road Vehicle HVAC Food Service Manufacturing Vehicles New Applications Helios Technologies // Investor Presentation 5
Slide 6: Think and Act Global
Think and Act Global Streamlining the Customer Experience Lifecycle CURRENT STATE FUTURE STATE Customer Helios Team New strategy allows for fewer customer contact points Business Segment and internal efficiencies, resulting in satisfied customers, higher margins, and increased revenue HYDRAULICS Int
Slide 7: Latest M&A Flywheel Acquisition Strategy At Work
Latest M&A Flywheel Acquisition Strategy At Work Daman Products Company Product Examples recognized leader in complex manifold design and manufacturing for precision Integrated Manifold hydraulic manifolds and related fluid conveyance products Assemblies • Founded 1976 – headquartered in Mishawaka,
Slide 8: Q3 2022 – Consolidated Results
Q3 2022 – Consolidated Results Sales Gross Profit & Margin ($ millions) ($ millions) Includes ($8.2M) FX $223.2 $240.5 $241.7 and estimated ($5.3M) $83.6 $217.7 $207.2 Hurricane Ian $80.9 $82.3 $74.3 $71.6 (1) Adjusted impacts, $220.7M(1) $69.3 $103.4 $98.9 Adjusted for both for Hurricane Ian $89.8
Slide 9: Q3 2022 – Consolidated Results
Q3 2022 – Consolidated Results Adj. EBITDA Margin(1) Adjusted EBITDA Margin Drivers 25.1% • Continue to deliver top-tier margins in the face of significant 24.6% 24.5% 24.4% 23.6%(2) Adjusted for macro headwinds, a hurricane, and supply chain constraints 22.7% 23.2% Hurricane Ian Diluted Earnings Dr
Slide 10: Q3 2022 – Hydraulics Segment
Q3 2022 – Hydraulics Segment Third Quarter Highlights Q3 Sales by Region Sales Drivers • Sales, on a constant currency(1) basis and excluding impact of 31% hurricane(2), were up 8%; end market demand in industrial and mobile APAC 38% markets helped to offset headwinds $131 m Americas • Acquisitions
Slide 11: Hydraulics Segment Overview
Segment Revenue as % of Total 2020 Total Revenue Hydraulics Segment Overview by Segment, $523 million (TTM 3Q22) 60% $907m $542m Hydraulics Hydraulics Revenue 1Q 2021 (LTM) by Channel Electronics Revenue Screw-in hydraulic cartridge Quick-release hydraulic Distribution of hydraulic, by Channel, $263
Slide 12: Hydraulics End Markets Today
Hydraulics End Markets Today Revenue by End Market Defining End Markets (TTM 3Q22)(2) • Channels to market are decades strong 14% • Conduit for growth and expansion $542m Industrial Mobile Agricultural Other Current Total Addressable Market(1) $32-35B Global Hydraulics Market Mobile Industrial Agric
Slide 13: Hydraulics Market Expansion Potential
Hydraulics Market Expansion Potential Specialized Material Handling Forestry Equipment Agriculture Renewable Energy Mining Current Vehicles Markets Packaging & Machine Tools & Marine/Offshore Construction Factory Automation Exploration Processing Presses Growth Markets Recreational Pharmaceutical He
Slide 14: Q3 2022 – Electronics Segment
Q3 2022 – Electronics Segment Q3 Sales by Region Third Quarter Highlights Sales Drivers 10% • End market demand in recreational, industrial machinery, and EMEA 86% construction partially offset supply chain constraints and decline Americas in health & wellness market 4% $76 m • Acquisitions added $0
Slide 15: Electronics Segment Overview
Electronics Segment Overview 2020 Segment Total Revenue Revenue as % of Total by Segment, $523 million (TTM 3Q22) 40% $365m $907m Electronics Hydraulic Control Electronics Revenue 1Q 2021 (LTM) Electronicsby Channel Revenue Solutions Electronic Controls by Channel, $263 million and Accessories for (
Slide 16: Electronics End Markets Today
Electronics End Markets Today Revenue by End Market (TTM 3Q22)(2) $365 Million Current Addressable Market(1) Industrial, Mobile & Agriculture Recreational Health & Wellness Global Electronics Market $Trillions… Industrial & Mobile Recreational Health & Wellness $4B Helios’s Electronics • Off-Highway
Slide 17: Electronics Market Expansion Potential
Electronics Market Expansion Potential Material Handling Specialized Vehicles Stationary Equipment Agriculture Current Markets Health & Wellness Construction Recreational Mining Growth Markets On-Road Commercial Food Bus & Commercial Commercial Recreation Service Transportation Lawn Equipment HVAC H
Slide 18: Value Proposition of Augmented Strategy
Value Proposition of Augmented Strategy System Sales Strategy How We Win ✓ Increase wallet/market share ✓ Develop deeper, more strategic relationships ✓ Create “Sticky Solutions” ✓ Grow diversified markets ✓ Drive operational efficiencies through R&D cross pollination Helios Technologies // Investor
Slide 19: Remain On-Path for Long Term Growth Plans
Remain On-Path for Long Term Growth Plans As Outlined at June 2021 Investor Day Our Performance & Current View ($ millions) ≥$1B ≥$1B $898 (2) $869 (1) $745 ~10% $555 Organic $508 $523 $555 $523 $508 CAGR 2021-2023 $343 $343 $201 $197 $201 $197 2015 2016 2017 2018 2019 2020 2021E 2023 Goal 2015 2016
Slide 20: Revenue Diversification Expected to Continue
Revenue Diversification Expected to Continue Segment Electronics expected to $197m 2016 Revenue $869m 41% become a much larger 2021 Revenue contributor by 59% 2023 96% Hydraulics Electronics Geographic 22% 26% $197m 48% Geographic 2016 Revenue $869m 49% Diversity Will 30% 2021 Revenue Continue 25% A
Slide 21: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin(1) Growth Highlights • Leveraging shared global supply chains • Integrating manufacturing operations and systems 25.4% ~25.0% • Leveraging manufacturing centers in developed and low-cost locations 24.6% 24.5% 24.4% • Uti
Slide 22: Strong Cash Flow
Strong Cash Flow Free Cash Flow(1) Three Months Ended ($ millions) 10/1/22 10/2/21 204% 83% Net cash provided by $30.0 $32.5 126% $94.0 71% operating activities $86.4 CapEx (8.5) (6.7) $76.2 $73.8 105% (1) Free cash flow (FCF) $21.5 $25.7 86% $49.1 Note: Components may not add to totals due to round
Slide 23: Capital Allocation Priorities
Capital Allocation Priorities Capital Allocation Priorities Last 5 Years(1) Near-Term 1 ORGANIC GROWTH 4% 10% • Grow at ~2x(2) market • New product development • Integrate electronics and hydraulics know-how 16% • Support product platform Expect a more balanced approach with our flywheel 2 DEBT REDU
Slide 24: Capital Structure
Capital Structure Financial Flexibility Capitalization (2) • Achieved net debt/pro forma Adjusted EBITDA of 1.90x : 10/1/22 10/2/21 • Reflects acquisitions of Taimi and Daman Cash and cash equivalents $36.8 $47.7 • Below target leverage ratio of 2.0x providing flexibility Total debt 457.5 471.2 (1)
Slide 25: Proven M&A Framework Driving What Comes Next…
Proven M&A Framework Driving What Comes Next… Goals Targets Integration Model • Meets Growth and Profitability Goals • Strong management • Successful on standalone basis • Enhances Technology • Culture supporting innovation • Retain employees • Diversifies End Markets • Superior profitability • Keep
Slide 26: Line of Sight to Meet Accelerated Plans
Line of Sight to Meet Accelerated Plans Hitting $1B Milestone in Sales Two Years Early Organic Sales ~25% Adj. Organic Non- ≥$1B in Sales GAAP Cash EPS Growth(1) ~2x EBITDA Margin(2) by YE 2023 CAGR(3) ≥22% Market Rates by YE 2023 With Enhanced Margin Profile (1) Calculated on a constant currency ba
Slide 27: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 28: Helios Technologies // Investor Presentation 28
Helios Technologies // Investor Presentation 28
Slide 29: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 29
Slide 30: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) ($ in thousands) Three Months Ended Nine Months Ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 GAAP operating income $ 30,743 $ 40,749 $ 116,605 $ 117,421 Acquisition-related amortization of intangible assets 6,774 7,407 20,
Slide 31: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in thousands) Three Months Ended Nine Months Ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 Net income $ 20,378 $ 27,760 $ 80,892 $ 81,042 Amortization of intangible assets 6,925 7,487 20,956 25,431 (1 ) Acquisition and fi
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) Twelve Months ($ in thousands) Three Months Ended Nine Months Ended Ended October 1, 2022 October 2, 2021 October 1, 2022 October 2, 2021 October 1, 2022 Net income $ 20,378 $ 27,760 $ 80,892 $ 81,042 $ 104,447 Interest expense, net 4,098 3,813 11,719 12,96
Slide 33: Hurricane Ian Reconciliation
Hurricane Ian Reconciliation Three Months Ended October 1, 2022 (Unaudited) ($ in millions) Estimated Impact Hurricane As Reported of Hurricane Ian Adjusted Net Sales $ 207.2 $ 5.3 $ 212.5 Gross Profit $ 69.3 $ 2.3 $ 71.6 Gross Margin 33.4% 33.7% Operating income $ 30.7 $ 2.1 $ 32.8 Operating Margin
Slide 34: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Q3 2 0 2 2 TTM Net c ash provided by operating ac tivities $ 4 9 ,3 8 2 $ 7 7 ,4 5 0 $ 9 0 ,4 8 0 $ 1 0 8 ,5 5 6 $ 1 1 3 ,2 0 2 $ 1 0 5 ,4 1 0 Contingent consideration payment in excess of acquisition date fair value
Slide 35: Non-GAAP Sales Growth Reconciliation
Non-GAAP Sales Growth Reconciliation (Unaudited) Three Months Ended Nine Months Ended ($ in millions) Hydraulics Electronics Consolidated Hydraulics Electronics Consolidated Q3 2022 Net Sales $ 131.2 $ 76.0 $ 207.2 $ 411.1 $ 278.3 $ 689.4 (1 ) 7.9 0.3 8.2 19.4 1.1 20.5 Impact of foreign currency tra
Slide 36: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) As of October 1, 2022 Current portion of long-term non-revolving debt, net $ 18,897 Revolving lines of credit 269,286 Long-term non-revolving debt, net 169,332 Total debt 457,515 Less: Cash and cash equivalents 36,813 Net debt $
Helios Technologies — Investor Presentation (November 2022) on 6ix