Slide 1: Investor Presentation
Investor Presentation August 2022 Josef Matosevic – President & CEO Tricia Fulton – Chief Financial Officer Tania Almond – VP, IR, Corp. Comm. & Risk Mgmt. 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 $923M $2.3B • Strong finan
Slide 4: Helios Business System
Helios Business System 1 Drive the cash flow engine 1 Champion a global operating mindset 2 Deliver new products 2 Leverage global resources and assets 3 Leverage existing products 3 Manufacture to support diverse end markets 4 Cultivate customer centricity 4 Accelerate innovation 5 Build in the reg
Slide 5: Existing End Markets and New Diversified Opportunities
Existing End Markets and New Diversified Opportunities Industrial Mobile Agriculture Recreational Health & Wellness End Markets Specialty Commercial Commercial Pharmaceutical Off Road Vehicle HVAC Food Service Manufacturing Vehicles New Applications Helios Technologies // Investor Presentation 5
Slide 6: Think and Act Global
Think and Act Global Streamlining the Customer Experience Lifecycle CURRENT STATE FUTURE STATE Customer Helios Team New strategy allows for fewer customer contact points Business Segment and internal efficiencies, resulting in satisfied customers, higher margins, and increased revenue HYDRAULICS Int
Slide 7: Manufacturing and Operating Strategy at Work
Manufacturing and Operating Strategy at Work Active Project Flows for Electronics Segment Objectives are Driven by the Helios Business System (HBS) and its Missions Leverage the global manufacturing footprint across businesses to: • Optimize overhead utilization • Engage global talent and resources
Slide 8: Q2 2022 – Consolidated Results
Q2 2022 – Consolidated Results Sales Gross Profit & Margin ($ millions) ($ millions) $223.4 $223.2 $240.5 $241.7 $217.7 $82.2 $80.9 $83.6 $82.3 $74.3 $103.4 $98.9 $90.4 $89.8 $86.8 $133.0 $133.4 $130.9 $137.1 $142.8 36.8% 36.2% 34.2% 34.8% 34.1% Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q2 21 Q3 21 Q4 21 Q1 22
Slide 9: Q2 2022 – Consolidated Results
Q2 2022 – Consolidated Results Adj. EBITDA Margin(1) Adjusted EBITDA Margin Drivers 25.7% 25.1% • Delivering top-tier industry performance in the face of inflationary 24.6% 24.5% 24.4% headwinds and supply chain constraints 22.7% Diluted Earnings Drivers • Tailwinds: operating efficiencies, leverage
Slide 10: Q2 2022 – Hydraulics Segment
Q2 2022 – Hydraulics Segment Q2 Sales by Region Second Quarter Highlights Sales Drivers 31% • Continued strength in industrial machinery, renewable APAC energy, power generation, oil & gas, material handling, 35% construction, forestry equipment, and specialty vehicles $143 m Americas • Sales growth
Slide 11: Hydraulics Segment Overview
Segment Revenue as % of Total 2020 Total Revenue Hydraulics Segment Overview by Segment, $523 million (TTM 2Q22) 59% $923M $544M 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 2Q22)(2) • Channels to market are decades strong 14% • A material “off-balance sheet asset” • Conduit for growth and expansion $544M Industrial Mobile Agricultural Other Current Total Addressable Market(1) $32-35B Global Hy
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: Q2 2022 – Electronics Segment
Q2 2022 – Electronics Segment Q2 Sales by Region Second Quarter Highlights 12% Sales Drivers EMEA 81% • Continued strength in industrial machinery, oil & gas, 7% construction, specialty vehicles, marine, and off-road vehicles Americas APAC $99 m • Sales growth 9% YoY (10% in constant currency(1)); O
Slide 15: Electronics Segment Overview
Electronics Segment Overview 2020 Segment Total Revenue Revenue as % of Total by Segment, $523 million (TTM 2Q22) 41% $379M $923M 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 2Q22)(2) $379 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: Accelerating Growth: Hitting $1B Milestone Two Years Early
Accelerating Growth: Hitting $1B Milestone Two Years Early Historic and Projected Revenue Growth Highlights ($ millions) • Outpacing market growth by ~2x(1); Our markets grow on average 3% to 5% ≥$1B $923 • Diversifying our markets, our products and our $869 applications • Leveraging a strong pipeli
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 $869M 49% Diversity Will 30% 2021 Revenue Continue 25% A
Slide 21: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin Growth Highlights • Leveraging shared global supply chains • Integrating manufacturing operations and systems 25.4% ~25.0% • Leveraging manufacturing centers in developed and low-cost locations 24.6% 24.5% 24.5% 24.4% •
Slide 22: Strong Cash Flow
Strong Cash Flow Free Cash Flow(1) Three Months Ended ($ millions) 7/2/22 7/3/21 204% 83% Net cash provided by 70% $29.5 $34.5 126% operating activities $86.4 $94.0 CapEx (7.9) (5.3) 105% $76.2 $77.9 (1) Free cash flow (FCF) $21.6 $29.1 86% Note: Components may not add to totals due to rounding $49.
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 • Cash and cash equivalents up $8.3 million, or 25%, from the end 7/2/22 7/3/21 of Q1 2022 Cash and cash equivalents $41.3 $34.3 • Generated $29.5 million of operating cash flow in Q2, up 101% Total debt 419.1 437.1 sequentially over Q1 2022 (2)
Slide 25: Proven M&A Framework
Proven M&A Framework 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 customer relationships •
Slide 26: Accelerated Plans: Hitting $1B Milestone in Sales Two Years Early
Accelerated Plans Hitting $1B Milestone in Sales Two Years Early Organic Sales ~25% Adj. Organic Non- ≥$1B in Sales GAAP Cash EPS Growth ~2x EBITDA Margin(1) by YE 2023 CAGR(2) ≥22% Market Rates by YE 2023 With Enhanced Margin Profile (1) Reflects a non-GAAP financial measure; see supplemental slide
Slide 27: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 28: Helios Technologies // Investor Presentation 28
Helios Technologies // Investor Presentation 28
Slide 29: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 29
Slide 30: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) ($ in thousands) Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 GAAP operating income $ 42,977 $ 42,062 $ 85,863 $ 76,671 Acquisition-related amortization of intangible assets 6,799 7,680 13,780 17,878 Acqu
Slide 31: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in thousands) Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Net income $ 30,036 $ 30,694 $ 60,514 $ 53,282 Amortization of intangible assets 6,926 7,713 14,031 17,944 Acquisition and financing-related ex
Slide 32: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) Twelve Months Three Months Ended Six Months Ended Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 July 2, 2022 Net income $ 30,036 $ 30,694 $ 60,514 $ 53,282 $ 111,829 Interest expense, net 3,813 4,400 7,621 9,151 15,342 Income ta
Slide 33: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Q2 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 7 ,8 7 3 Contingent consideration payment in excess of acquisition date fair value
Slide 34: Non-GAAP Sales Growth Reconciliation
Non-GAAP Sales Growth Reconciliation (Unaudited) Three Months Ended ($ in millions) Hydra ul i cs El ectroni cs Cons ol i da te Q 2 2 0 2 2 Net Sales $ 1 4 2 .8 $ 9 8 .9 $ 2 4 1 .7 Impact of foreign currency translation (1) 7.0 0.5 7.5 Net Sales in c onstant c urrenc y 1 4 9 .8 9 9 .4 2 4 9 .2 Less:
Slide 35: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) As of July 2, 2022 Current portion of long-term non-revolving debt, net $ 19,157 Revolving lines of credit 226,092 Long-term non-revolving debt, net 173,807 Total debt 419,056 Less: Cash and cash equivalents 41,315 Net debt $ 37