Slide 1: Third Quarter 2023 Earnings
THIRD QUARTER 2023 EARNINGS NOVEMBER 2, 2023 J O S E F M AT O S E V I C , P R E S I D E N T & C E O | S E A N B A G A N , C F O | TA N I A A L M O N D , V P O F I R & C O R P. C O M M .
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,
Slide 3: Q3 2023 Business Summary
Q3 2023 BUSINESS SUMMARY NAVIGATING HEADWINDS YoY Hydraulics revenue +1% and Electronics segment (9%); QoQ Hydraulics revenue (13%) and Electronics (8%) reflecting SWIFT CHANGE IN DEMAND driven by macroeconomic conditions influencing customer behavior across multiple end markets PROTECTING THE BUSIN
Slide 4: Strategic Investments Made Over the Last Several Years
STRATEGIC INVESTMENTS MADE OVER THE LAST SEVERAL YEARS 1 2 3 4 5 Product Innovation Acquisitions Capacity Regional Structure Systems / Software Helios continues to be a Helios is enhancing its Helios is bringing Helios is maximizing Helios is leveraging leading innovator technology, expanding ~200,0
Slide 5: Strategic Investments in Capacity to Meet Future Demand
STRATEGIC INVESTMENTS IN CAPACITY TO MEET FUTURE DEMAND Opened: New capacity in Opened: Automated In Process: New capacity India @ Faster Warehouse in Italy @ Faster in Italy @ Faster Additional New capacity Newly opened Automated Warehouse Current Adds ~22,000 sq. ft. to double Adds 22,600 sq. feet
Slide 6: Strategic Investments in Capacity to Meet Future Demand
STRATEGIC INVESTMENTS IN CAPACITY TO MEET FUTURE DEMAND Complete: New Hydraulic Nearing Completion: New In Progress: New capacity Valve and Coupling Solutions Hydraulic Manifold Solutions expansion in Tijuana, Center of Excellence in Center of Excellence in Mexico @ Balboa Sarasota @ Sun Indiana @ D
Slide 7: Q3 2023 Financial Results Highlights
Q3 2023 FINANCIAL RESULTS HIGHLIGHTS ($ in millions, except per share data) Sales • YoY sales were impacted by reduced demand for products in our YoY mobile, marine, industrial, and health and wellness markets -3% • QoQ swift declines in demand across mobile, agriculture, marine, $201.4 industrial,
Slide 8: Q3 2023 Financial Results Highlights
Q3 2023 FINANCIAL RESULTS HIGHLIGHTS ($ in millions, except per share data) Operating Expenses • SEA dollars declined slightly QoQ; YoY increased 19% YoY 6.9% -790 bps compared to the prior-year period, driven by acquisitions, integration, and higher wage and benefit costs, new hires for investments
Slide 9: Q3 2023 Financial Results Highlights
Q3 2023 FINANCIAL RESULTS HIGHLIGHTS ($ in millions, except per share data) YoY YoY $3.5 -83% 17.7% -550 bps Net Income Adj. EBITDA Margin (1) QoQ QoQ -79% -430 bps YoY YoY $0.11 -83% $0.44 (1) -51% Diluted GAAP EPS QoQ Diluted Non-GAAP Cash EPS -78% QoQ -46% 16% (1) Reflects a non-GAAP financial me
Slide 10: Q3 2023 Consolidated Results
Q3 2023 CONSOLIDATED RESULTS Sales Gross Profit & Margin ($ millions) ($ millions) $227.6 $207.2 $213.2 $201.4 $75.8 $196.0 $69.3 $71.0 $63.2 $59.7 $65.5 $75.2 $76.0 $55.8 $69.4 $140.2 $147.7 $152.4 $131.2 $132.0 33.4% 32.2% 33.3% 33.3% 29.6% Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q3 22 Q4 22 Q1 23 Q2 23 Q3
Slide 11: Q3 2023 Consolidated Results
Q3 2023 CONSOLIDATED RESULTS Adjusted EBITDA Margin Drivers (1) Adj. EBITDA Margin • Adjusted EBITDA margin down QoQ 430 basis points at 17.7% 23.2% 23.2% in Q3 reflecting items discussed while investing for future growth 22.0% Diluted Earnings Drivers 20.0% 20.3% • Tailwinds: manufacturing and oper
Slide 12: Q3 2023 – Hydraulics Segment
Q3 2023 – HYDRAULICS SEGMENT Third Quarter Highlights Q3 Sales by Region Sales Drivers • Sales up 1% YoY driven by sales to the Americas and some pricing; 29% sales declined to the mobile, industrial and agricultural end markets APAC 42% • Sales down 13% QoQ driven by swift changes in the mobile, Am
Slide 13: Q3 2023 – Electronics Segment
Q3 2023 – ELECTRONICS SEGMENT Third Quarter Highlights Q3 Sales by Region Sales Drivers • Sales down 9% YoY driven by sales declines in the Americas 6% and EMEA partially offset by growth in APAC. YoY end market declines driven by health and wellness, marine, and industrial APAC 86% machinery market
Slide 14: Cash Flow
CASH FLOW ($ in millions) Free Cash Flow(1) Three Months Ended ($ millions) 9/30/23 10/1/22 204% 83% Adjusted net cash provided by operating activities $11.8 $30.0 126% $94.0 79% $86.3 $76.2 $78.0 CapEx (5.9) (8.5) 105% 103% (1) Free cash flow (FCF) $5.9 $21.5 $53.1 $49.1 86% $27.2 Cash generation a
Slide 15: Capital Structure
CAPITAL STRUCTURE Capital Deployment Priorities 1 2 3 Organic Investment Dividend Acquisitions ($ in millions) Capitalization Financial Flexibility 9/30/23 10/1/22 • Cash and cash equivalents relatively flat from prior year Cash and cash equivalents $35.2 $36.8 • Generated $14.5 million of Adjusted
Slide 16: Updating Full Year 2023 Outlook
UPDATING FULL YEAR 2023 OUTLOOK Total Company Sales Segment Sales Q4 Outlook Assumptions $ in Millions $ in Millions • Distributor & OEM channel inventory levels remain elevated Lowered to Hydraulics • Order push-outs received from OEM customers across many end markets • All North America & Asia cap
Slide 17: Building on a Strong Foundation of Step Level Growth
BUILDING ON A STRONG FOUNDATION OF STEP LEVEL GROWTH Our Performance & Current View Highlights • Transitioning from a holding company to an integrated operating company $869 $885 $828 (1) • Growing the top line while diversifying the business and markets • Leveraging regional manufacturing Centers o
Slide 18: Maintaining Healthy Margins While Investing for Growth
MAINTAINING HEALTHY MARGINS WHILE INVESTING FOR GROWTH Historic / Projected Capex & Adj. EBITDA Margin(1) Highlights • Integrating manufacturing operations and opening regional ~$ 37 * Centers of Excellence to position for long term growth $ 32 • Leveraging shared global supply chains and low-cost $
Slide 19: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 20: Segment Data
SEGMENT DATA (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Sales: Hydraulics $ 132.0 $ 131.2 $ 432.1 $ 411.1 Electronics 69.4 76.0 210.1 278.3 Consolidated $ 201.4 $ 207.2 $ 642.2 $ 689.4 Gross p
Slide 21: Organic and Acquired Sales
ORGANIC AND ACQUIRED SALES (Unaudited) ($ in millions) Three Months Ended Full Year Ended Three Months Ended Nine Months Ended April 2, July 2, October 1, December 31, December 31, April 1, July 1, September 30, September 30, 2022 2022 2022 2022 2022 2023 2023 2023 2023 Hydraulics Organic $ 130.7 $
Slide 22: Sales by Geographic Region & Segment
SALES BY GEOGRAPHIC REGION & SEGMENT (Unaudited) HELIOS TECHNOLOGIES INVESTOR PRESENTATION 22
Slide 23: Adjusted Operating Income Reconciliation
ADJUSTED OPERATING INCOME RECONCILIATION (Unaudited) ($ in millions) Three Months Ended Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 GAAP operating income $ 13.8 $ 30.7 $ 68.0 $ 116.6 Acquisition-related amortization of intangible assets 8.2 6.8 24.7 20.6 A
Slide 24: Non-GAAP Cash Net Income Reconciliation
NON-GAAP CASH NET INCOME RECONCILIATION (Unaudited) ($ in millions) Three Months Ended Nine Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 Net income $ 3.5 $ 20.4 $ 34.1 $ 80.9 (D) Amortization of intangible assets 8.4 6.9 25.2 21.0 Acquisition and financing-relat
Slide 25: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) Three Months Ended Nine Months Ended Twelve Months Ended September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022 September 30, 2023 Net income $ 3.5 $ 20.4 $ 34.1 $ 80.9 $ 51.7 Interest expense, net 8.7 4.1 22.6 11.7 27.7 Incom
Slide 26: Free Cash Flow Reconciliation
FREE CASH FLOW RECONCILIATION (Unaudited) ($ in millions) Full Year TTM Three Months Ended 2017 2018 2019 2020 2021 2022 Q3 2 0 2 3 September 3 0 , 2 0 2 3 O c tober 1 , 2 0 2 2 Net c ash provided by operating ac tivities $ 4 9 .4 $ 7 7 .5 $ 9 0 .5 $ 1 0 8 .6 $ 1 1 3 .1 1 0 9 .9 8 5 .9 1 1 .8 3 0 .0
Slide 27: Non-GAAP Sales Growth Reconciliation
NON-GAAP SALES GROWTH RECONCILIATION (Unaudited) ($ in millions) Three Months Ended Nine Months Ended Hydraulics Electronics Consolidated Hydraulics Electronics Consolidated Q3 2023 Net Sales $ 132.0 $ 69.4 $ 201.4 $ 432.1 $ 210.1 $ 642.2 (E) (2.2) - (2.2) 1.3 0.3 1.6 Impact of foreign currency tran
Slide 28: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) As of September 30, 2023 Current portion of long-term non-revolving debt, net 21.8 Revolving lines of credit 218.5 Long-term non-revolving debt, net 304.2 Total debt 544.5 Less: Cash and cash equivalents 35.2 Net debt 509.3 (F) T
Slide 29: G@yxsues
G@yxsues AUGMENTING S1uAvEu* ADVANCING 1 2SHNOLOGIES ACCELERATING uiiu wit