Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Stifel 2024 Cross Sector Insight Conference
45 slides from Helios Technologies's conference presentation, Jun 4, 2024
Slide 1: Execute. Elevate.
Execute. Elevate. HELIOS TECHNOLOGIES (NYSE: HLIO) STIFEL 2024 CROSS SECTOR INSIGHT CONFERENCE JOSEF MATOSEVIC, PRESIDENT & CEO | SEAN BAGAN, CFO | TANIA ALMOND, VP OF IR & CORP. COMM. June 4, 2024
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 INDUSRIAL TECHNOLOGY LEADER (1,2) 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 $836M $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: Think and Act Globally
THINK AND ACT GLOBALLY Streamlining the Customer Experience Lifecycle PREVIOUS STATE CURRENT/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 HYD
Slide 6: 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 7: Our Connected Future
OUR CONNECTED FUTURE Leveraging our position at the intersection of Hydraulics and Electronics to create industry leading sub-system sales TRANSFORMATION INTO AN INTEGRATED OPERATING COMPANY HELIOS TECHNOLOGIES 7
Slide 8: Hydraulics Overview
HYDRAULICS OVERVIEW
Slide 9: Video – Hydraulics Segment Overview
VIDEO – HYDRAULICS SEGMENT OVERVIEW Link to Hydraulics Segment Video: Here HELIOS TECHNOLOGIES 9
Slide 10: Hydraulics Segment Overview
HYDRAULICS SEGMENT OVERVIEW Screw-in hydraulic cartridge Quick-release hydraulic Distribution of hydraulic, valves, electro-hydraulics, couplings, casting solutions & pneumatic, filtration, manifolds, integrated multi-connection for mobile off- lubrication and electronic packages for the industrial
Slide 11: Hydraulics End Markets
HYDRAULICS END MARKETS REVENUE BY END MARKET (FY 2023)(1) 1% 21% 38% $566M 16% 68% of total sales 24% Other / Mobile Mobile Industrial Agricultural Agriculture Recreational Industrial Other / Recreational • Material Handling • Industrial Machinery • Tractors Front Lines • Marine Health & Wellness •
Slide 12: Q1 2024 – Hydraulics Segment
Q1 2024 – HYDRAULICS SEGMENT Sequential improvement; First positive YoY growth in APAC since 4Q22 ($ in millions) QoQ YoY Sales: $142.4 7% 4% Gross Profit: $44.5 8% 11% Operating 9% 22% $21.8 Income: Q1 SALES BY REGION Q1 SALES BY CHANNEL 29% 39% ~52% APAC ~48% $142 Americas $142 OEM Distributor 32%
Slide 13: Video – Hydraulics Centers of Excellence Spotlight
VIDEO – HYDRAULICS CENTERS OF EXCELLENCE SPOTLIGHT Link to Hydraulics Segment Video: Here HELIOS TECHNOLOGIES 13
Slide 14: Hydraulics Market Expansion Potential
HYDRAULICS MARKET EXPANSION POTENTIAL Current Material Handling Specialized Forestry Equipment Agriculture Renewable Energy Mining Vehicles Markets Packaging & Machine Tools & Marine/Offshore Construction Factory Automation Exploration Processing Presses Growth Markets Recreational Pharmaceutical He
Slide 15: Electronics Overview
ELECTRONICS OVERVIEW
Slide 16: Video – Electronics Segment Overview
VIDEO – ELECTRONICS SEGMENT OVERVIEW Link to Electronics Segment Video: Here HELIOS TECHNOLOGIES 16
Slide 17: Electronics Segment Overview
ELECTRONICS SEGMENT OVERVIEW Hydraulic Control Solutions Electronic Controls and Accessories for Rugged Electronic Spas, Swimspas & Monitoring & GPS Speed Control Walk-In Baths Control Solutions for Recreational Marine Our trusted global brands deliver technology solutions that ensure safety, reliab
Slide 18: Electronics End Markets
ELECTRONICS END MARKETS REVENUE BY END MARKET (FY 2023)(1) 12% 2% 36% $270M 18% 32% of total sales 32% Health & Other / Mobile Mobile Industrial Agriculture Wellness Recreational Industrial Other / Recreational • Material Handling • Industrial Machinery • Walk-in Baths • Marine Health & Wellness • C
Slide 19: Q1 2024 – Electronics Segment
Q1 2024 – ELECTRONICS SEGMENT Strong sequential and YoY performance driven by improving health & wellness market ($ in millions) QoQ YoY Sales: $69.6 17% 6% Gross Profit: $22.7 61% 8% Operating 610% 5% $7.1 Income: Q1 SALES BY REGION Q1 SALES BY CHANNEL 7% 84% ~75% APAC ~25% $70 Americas $70 OEM 9%
Slide 20: Video – Electronics Segment Integration Spotlight
VIDEO – ELECTRONICS SEGMENT INTEGRATION SPOTLIGHT Link to Electronics Segment Video: Here HELIOS TECHNOLOGIES 20
Slide 21: Electronics Existing and Growth Markets
ELECTRONICS EXISTING AND GROWTH MARKETS Off-Highway Material Handling Specialized Vehicles Stationary Equipment Equipment & Vehicles Current Markets Health & Wellness On-Road Vehicles Recreational Mining Growth Markets Commercial Food Construction Cold Plunge Pool Agriculture Service HELIOS TECHNOLO
Slide 22: Electronics New Product Introductions
ELECTRONICS NEW PRODUCT INTRODUCTIONS A Year of New Product Breakthroughs S70 U120 PB565 PB562/3 S50 U150 ST4 ST Mini J400 SELECT SERIES PVP70 ULTIMATE SERIES SPA DISPLAYS PRO SERIES SPA II Controls CLIM8ZONE II Ozone Generator Chiller Pack Smart Heater Jacuzzi 880 SPA HEAT / COOL PACK OPENPV SOFTWA
Slide 23: Financial Overview
FINANCIAL OVERVIEW
Slide 24: Q1 2024 – Net Sales
Q1 2024 – NET SALES Strong sequential improvement across all regions; YoY electronics offset hydraulics for relatively unchanged sales ($ in millions) QUARTER TRENDS (QoQ): SALES BY SEGMENT YoY Direction Market* Hydraulics Electronics $213.2 $212.0 Industrial 67% 33% Mobile $212 Agriculture Recreati
Slide 25: Q1 2024 – Gross Profit and Margin
Q1 2024 – GROSS PROFIT AND MARGIN Improved sequential volume drives margin expansion in first quarter ($ in millions) QUARTER • QoQ: gross profit up 22% while gross margin $71.0 $75.8 $67.2 expanded 310 bps driven by higher sales volume. $59.7 $55.3 • YoY: decline in gross profit driven by lower vol
Slide 26: Q1 2024 – Operating / Adjusted Operating Margin
Q1 2024 – OPERATING / ADJUSTED OPERATING MARGIN Cost control key to delivering margin improvement QUARTER • QoQ: GAAP operating income expanded 71% while 17.2% 18.5% 13.7% 14.5% GAAP operating margin expanded 340 bps driven by 5.5% 12.6% 5.6% 4.9% increasing volume 6.8% 6.4% 11.6% 13.0% 6.9% 6.2% 9.
Slide 27: Q1 2024 – Net Income & Adjusted EBITDA Margin
Q1 2024 – NET INCOME & ADJUSTED EBITDA MARGIN The incremental margin impacts inherent in the Helios business model will drop to the bottom line as volume comes back ($ in millions, except per share data) Net Income $16.8 $13.9 $9.2 • QoQ: net income up 179% or $0.18 per $3.5 $3.3 diluted share. Q1 2
Slide 28: Q1 2024 – Cash Flow
Q1 2024 – CASH FLOW Disciplined working capital management and strong cash conversion ($ in millions) Free Cash Flow(1) Three Months Ended 3/30/24 4/1/23 Net Cash Provided by 204% $17.8 $12.3 Operating Activities 83% 126% $94.0 79% Capital Expenditures (CapEx) (5.5) (9.1) $86.3 $76.2 $78.0 187% 139%
Slide 29: Q1 2024 – Capital Structure
Q1 2024 – CAPITAL STRUCTURE Utilizing cash generated to reduce debt and fund organic growth initiatives ($ in millions) DEBT PROFILE CAPITAL ALLOCATION PRIORITIES 1. 2. 3. 4. Pay Down Organic $521 Debt Investments Dividend Acquisitions Total Debt $205 revolver / other $234 Additional Details Liquidi
Slide 30: 2024 Segment Outlook
2024 SEGMENT OUTLOOK HYDRAULICS ELECTRONICS Health & Wellness, Americas, addition of Positive Catalysts Ramping CoE, new markets Commercial Food Service, recurring software sales starting in 2024 Stable / Moderate Lift Mobile, APAC, Americas APAC Flat / No Signs Yet of Bounce Industrial Construction
Slide 31: 2024 Financial Priorities
2024 FINANCIAL PRIORITIES Focused on execution to deliver the year and set the stage for accelerating future growth 1 2 3 4 5 Drive Operating Shorten Cash Leverage Strong Return to Growth Reduce Debt Leverage Conversion Cycle Foundation With higher volumes Utilizing free cash flow Through improved E
Slide 32: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 33: Building on a Strong Foundation of Step Level Growth
BUILDING ON A STRONG FOUNDATION OF STEP LEVEL GROWTH OUR PERFORMANCE & CURRENT VIEW HIGHLIGHTS ($ millions) • Transitioning from a holding company to an integrated operating company $869 $885 (1) $836 $850 • Diversifying the business and markets while evolving into selling system solutions • Leverag
Slide 34: 2024 Outlook
2024 OUTLOOK 2 0 2 3 Ac tual 2 0 2 4 O utlook Total net sales $835.6 million $840 - $860 million Net income $37.5 million $50 - $63 million Adjusted EBITDA $161.4 million $163 - $180 million Adjusted EBITDA margin 19.3% 19.5% - 21.0% Interest expense $31.2 million $34 - $35 million Effective tax rat
Slide 35: Non-GAAP Reconciliation Tables
NON-GAAP RECONCILIATION TABLES
Slide 36: Segment Data
SEGMENT DATA (Unaudited) ($ in millions) For the Three Months Ended March 30, 2024 April 1, 2023 Net Sales: Hydraulics $ 142.4 $ 147.7 Electronics 69.6 65.5 Consolidated $ 212.0 $ 213.2 Gross profit and margin: Hydraulics $ 44.5 $ 50.0 31.3% 33.9% Electronics 22.7 21.0 32.6% 32.1% Consolidated $ 67.
Slide 37: Organic and Acquired Net Sales
ORGANIC AND ACQUIRED NET SALES (Unaudited) ($ in millions) For the Year For the Three For the Three Months Ended Ended Months Ended April 1, July 1, September 30, December 30, December 30, March 30, 2023 2023 2023 2023 2023 2024 Hydraulics Organic $ 134.0 $ 137.2 $ 121.0 $ 126.6 $ 518.8 $ 140.5 Acqu
Slide 38: Net Sales by Geographic Region & Segment
NET SALES BY GEOGRAPHIC REGION & SEGMENT (Unaudited) ($ in millions) 2023 2024 % Change % Change % Change % Change % Change % Change Q1 y/y Q2 y/y Q3 y/y Q4 y/y 2023 y/y Q1 y/y Americas: Americas: Hydraulics $ 57.9 34% $ 60.6 21% $ 55.7 12% $ 60.2 6% $ 234.4 17% Hydraulics $ 55.8 (4%) Electronics 55
Slide 39: Non-GAAP Adjusted Operating Income & Margin Reconciliation
NON-GAAP ADJUSTED OPERATING INCOME & NON-GAAP ADJUSTED OPERATING MARGIN RECONCILIATION (Unaudited) ($ in millions) Twelve Months For the Three Months Ended Ended March 30, April 1, March 30, 2024 Margin 2023 Margin 2024 Margin GAAP operating income $ 20.3 9.6% $ 24.8 11.6% $ 75.5 9.0% Acquisition-re
Slide 40: Non-GAAP Adj. Net Income & Per Diluted Share Reconciliation
NON-GAAP ADJ. NET INCOME & NON-GAAP ADJ. NET INCOME PER DILUTED SHARE RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended March 30, Per Diluted April 1, Per Diluted 2024 Share 2023 Share GAAP net income $ 9.2 $ 0.28 $ 13.9 $ 0.42 Amortization of intangible assets (D) 8.1 0.24 8.3 0
Slide 41: Non-GAAP Adjusted EBITDA & Margin Reconciliation
NON-GAAP ADJUSTED EBITDA & NON-GAAP ADJUSTED EBITDA MARGIN RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended Twelve Months Ended Marc h 3 0 , April 1 , Marc h 3 0 , 2024 Margin 2023 Margin 2024 Margin Net inc ome $ 9 .2 4 .3 % $ 1 3 .9 6 .5 % $ 3 2 .8 3 .9 % Interest expense, net
Slide 42: Non-GAAP Adjusted Free Cash Flow Reconciliation
NON-GAAP ADJUSTED FREE CASH FLOW RECONCILIATION (Unaudited) ($ in millions) For the Year Ended TTM Dec ember 3 0 , Dec ember 2 9 , Dec ember 2 8 , January 2 , January 1 , Dec ember 3 1 , Dec ember 3 0 , Marc h 3 0 , 2017 2018 2019 2021 2022 2022 2023 2024 Net c ash provided by operating ac tivities
Slide 43: Non-GAAP Net Sales Growth Reconciliation
NON-GAAP NET SALES GROWTH RECONCILIATION (Unaudited) ($ in millions) F or the Three Months Ended Hydra ul i cs El ectroni cs Cons ol i da ted Q 1 2 0 2 4 Net Sales $ 1 4 2 .4 $ 6 9 .6 $ 2 1 2 .0 Impact of foreign currency translation ( E) 0.2 0.1 0.3 Net Sales in c onstant c urrenc y 1 4 2 .6 6 9 .7
Slide 44: Net Debt to Non-GAAP Adjusted EBITDA Reconciliation
NET DEBT TO NON-GAAP ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) A s of Ma rch 30, 2024 Current portion of long-term non-revolving debt, net 23.2 Revolving lines of credit 205.4 Long-term non-revolving debt, net 292.7 Total debt 5 2 1 .3 Less: Cash and cash equivalents 37.3 Net debt 4
Slide 45: heliostechnologies.com (NYSE: HLIO)
7456 16th Street East Sarasota, FL 34243 941.362.1200 heliostechnologies.com (NYSE: HLIO)
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