Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Investor Presentation (February 2023)
41 slides from Helios Technologies's investor presentation, February 2023
Slide 1: Investor Presentation
Investor Presentation February 2023 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 $885M $2.2B • Strong finan
Slide 4: Helios Business System
Helios Business System 1 Drive the cash flow engine 1 Champion a global operating mindset 2 Deliver new products 2 Leverage global resources and assets 3 Leverage existing products 3 Manufacture to support diverse end markets 4 Cultivate customer centricity 4 Accelerate innovation 5 Build in the reg
Slide 5: Existing End Markets and New Diversified Opportunities
Existing End Markets and New Diversified Opportunities Industrial Mobile Agriculture Recreational Health & Wellness End Markets Specialty Commercial Commercial Pharmaceutical Off Road Vehicle HVAC Food Service Manufacturing Vehicles New Applications Helios Technologies // Investor Presentation 5
Slide 6: Think and Act Global
Think and Act Global Streamlining the Customer Experience Lifecycle CURRENT STATE FUTURE STATE Customer Helios Team New strategy allows for fewer customer contact points Business Segment and internal efficiencies, resulting in satisfied customers, higher margins, and increased revenue HYDRAULICS Int
Slide 7: Latest M&A Flywheel Acquisition Strategy At Work
Latest M&A Flywheel Acquisition Strategy At Work Schultes Precision Manufacturing Capabilities & Facilities: highly trusted, high-precision specialist in CNC milling, lathe turning, prototyping, Swiss machining and engineering assembly. • Founded 1946 – headquartered in Buffalo Grove, Illinois • EXT
Slide 8: Latest M&A Flywheel Acquisition Strategy At Work
Latest M&A Flywheel Acquisition Strategy At Work Daman Products Company Product Examples recognized leader in complex manifold design and manufacturing for precision Integrated Manifold hydraulic manifolds and related fluid conveyance products Assemblies • Founded 1976 – headquartered in Mishawaka,
Slide 9: Q4 2022 – Consolidated Results
Q4 2022 – Consolidated Results Sales Gross Profit & Margin ($ millions) ($ millions) Includes ($7.1M) FX - $240.5 $241.7 $203.1M(1) Adjusted $83.6 $217.7 $207.2 for FX $82.3 $196.0 $74.3 $69.3 $103.4 $98.9 $63.2 $86.8 $76.0 $55.8 $130.9 $137.1 $142.8 $131.2 $140.2 34.2% 34.8% 34.1% 33.4% 32.2% Q4 21
Slide 10: Q4 2022 – Consolidated Results
Q4 2022 – Consolidated Results Adj. EBITDA Margin(1) Adjusted EBITDA Margin Drivers • Adjusted EBITDA margin: despite macro headwinds, and FX 24.6% 24.5% 24.4% impacts maintaining healthy level at 20% in Q4 and top-tier level 23.2% 23.2% 22.7% at 23.2% for FY22 during rapid inflationary environment
Slide 11: Q4 2022 – Hydraulics Segment
Q4 2022 – Hydraulics Segment Fourth Quarter Highlights Q4 Sales by Region Sales Drivers • Sales, on a constant currency(1) basis were up 12%; driven by end 28% market demand in mobile, industrial, and mining markets APAC 41% • Acquisitions added $8.2 million; Organic constant currency (1) revenue Am
Slide 12: Hydraulics Segment Overview
Segment Revenue as % of Total 2020 Total Revenue Hydraulics Segment Overview by Segment, $523 million (FY 2022) $885m 62% $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 13: Hydraulics End Markets Today
Hydraulics End Markets Today Revenue by End Market Defining End Markets (FY 2022)(2) • Channels to market are decades strong 13.9% • Conduit for growth and expansion $551m Industrial Mobile Agricultural Other Current Total Addressable Market(1) $32-35B Global Hydraulics Market Mobile Industrial Agri
Slide 14: 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 15: Q4 2022 – Electronics Segment
Q4 2022 – Electronics Segment Q4 Sales by Region Fourth Quarter Highlights Sales Drivers 9% • End market demand in recreational, industrial machinery, and EMEA specialty vehicles partially offset supply chain constraints and 86% 5% decline in health & wellness market Americas $56 m APAC • FX impact
Slide 16: Electronics Segment Overview
Electronics Segment Overview 2020 Segment Total Revenue Revenue as % of Total by Segment, $523 million (FY 2022) 38% $334m $885m Electronics Hydraulic Control Solutions Electronics Revenue 1Q 2021 (LTM) Electronicsby Channel Revenue Electronic Controls by Channel, $263 million (FY 2022) and Accessor
Slide 17: Electronics End Markets Today
Electronics End Markets Today Revenue by End Market (FY 2022)(2) $334 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 18: 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 19: 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 20: Revenue Diversification Expected to Continue
Revenue Diversification Expected to Continue Segment 2% Electronics expected to 38% $197m become a 2016 Revenue $885m much larger 2022 Revenue contributor by 98% 62% 2023 Hydraulics Electronics Geographic 22% 22% $197m 48% Geographic 2016 $885m Diversity Will Revenue 2022 Revenue 53% Continue 30% 25
Slide 21: 2023 Outlook
2023 Outlook Path to Hit 22% Three-Year Earnings* CAGR Implied 3 -Year Exiting CAGR at 2 0 2 3 2023 2 0 2 0 Ac tual 2 0 2 1 Ac tual 2 0 2 2 Ac tual 2 0 2 3 O utlook range mid-point Run-Rate Consolidated revenue $523 million $869 million $885 million $910 - $940 million 21% ~$1 billion Net income $14
Slide 22: Path for Long Term Growth Plans
Path for Long Term Growth Plans As Outlined at June 2021 Investor Day Our Performance & Current View ($ in millions) ≥$1B ~$1B (2) $925 $869 $885 (1) $745 ~10% Organic $555 $523 $555 $523 CAGR $508 $508 2021-2023 $343 $343 $201 $197 $201 $197 2015 2016 2017 2018 2019 2020 2021E 2023 Goal 2015 2016 2
Slide 23: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin(1) Growth Highlights • Leveraging shared global supply chains • Integrating manufacturing operations and systems 25.4% ~25.0% • Leveraging manufacturing centers in developed and low-cost locations 24.6% 24.5% 24.4% • Uti
Slide 24: Strong Cash Flow
Strong Cash Flow ($ in millions) Free Cash Flow(1) Three Months Ended Twelve Months Ended ($ millions) 12/31/22 1/1/22 12/31/22 1/1/22 204% 83% Net cash provided by $35.7 $31.1 $109.9 113.1 126% $94.0 79% operating activities $86.3 CapEx (10.0) (9.7) (31.9) (26.8) $76.2 $78.0 105% Free cash flow (1)
Slide 25: Capital Allocation Priorities
Capital Allocation Priorities Capital Allocation Priorities Last 5 Years(1) Near-Term 1 ORGANIC GROWTH 4% 10% • Grow at ~2x(2) market • New product development • Integrate electronics and hydraulics know-how 18% • Support product platform Expect a more balanced approach with our flywheel 2 DEBT REDU
Slide 26: Capital Structure
Capital Structure ($ in millions) Financial Flexibility Capitalization (2) • Achieved net debt/pro forma Adjusted EBITDA of 1.9x : 12/31/22 1/1/22 • Reflects acquisitions of Taimi and Daman Cash and cash equivalents $43.7 $28.5 • Below target leverage ratio of 2.0x providing flexibility Total debt 4
Slide 27: 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 28: M&A Scorecard – Profile of Each Deal When Acquired
M&A Scorecard – Profile of Each Deal When Acquired 2016 2018 2018 2020 2021 2021 2021 2022 2022 2023 Acquisition Type: Transformational Transformational Flywheel Transformational Flywheel Flywheel Flywheel Flywheel Flywheel Flywheel Meets Growth & 1 Profitability Goals 2 Enhances Technology 3 Divers
Slide 29: Path to Hit Accelerated Targets
Path to Hit Accelerated Targets Hitting $1B Milestone on a Run Rate (RR) Basis by YE23 ~$1B in RR (1) Organic Sales ~25% Adj. Non-GAAP Sales by Growth(2) ~2x EBITDA Margin(2) Cash EPS YE 2023 Market Rates by RR YE 2023 CAGR(2,3) ~22% With Enhanced Margin Profile (1) Run rate basis defined as annuali
Slide 30: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 31: Helios Technologies // Investor Presentation 31
Helios Technologies // Investor Presentation 31
Slide 32: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 32
Slide 33: Segment Data
Segment Data (Unaudited) ($ in millions) For the Three Months Ended For the Year Ended December 31, 2022 January 1, 2022 December 31, 2022 January 1, 2022 Sales: Hydraulics $ 140.2 $ 130.9 $ 551.3 $ 516.4 Electronics 55.8 86.8 334.1 352.7 Consolidated $ 196.0 $ 217.7 $ 885.4 $ 869.2 Gross profit and
Slide 34: Organic and Acquired Sales
Organic and Acquired Sales (Unaudited) ($ in millions) Three Months Ended Full Year Ended Three Months Ended Full Year Ended April 3, July 3, October 2, January 1, January 1, April 2, July 2, October 1, December 31, December 31, 2021 2021 2021 2022 2022 2022 2022 2022 2022 2022 Hydraulics Organic $
Slide 35: Sales by Geographic Region & Segment
Sales by Geographic Region & Segment (Unaudited) Helios Technologies // Investor Presentation 35
Slide 36: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted operating margin is adjusted operating income divided by sales. Adjusted operating income and adjusted operating margin are not measures determined in accordance with generally accepted accounti
Slide 37: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted net income per diluted share is adjusted net income divided by diluted weighted average common shares outstanding. Cash net income per share is cash net income divided by diluted weighted average
Slide 38: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in millions) (1) Acquisition and financing-related expenses include costs associated with our M&A activities. These activities include all phases of the M&A process from analyzing targets, to raising funding, to due diligence and transaction costs at clo
Slide 39: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted net cash provided by operating activities is net cash provided by operating activities less contingent consideration payment in excess of acquisition date fair value. Free cash flow is net cash provided by
Slide 40: Non-GAAP Sales Growth Reconciliation
Non-GAAP Sales Growth Reconciliation (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted net cash provided by operating activities is net cash provided by operating activities less contingent consideration payment in excess of acquisition date fair value. Free cash flow is net cash prov
Slide 41: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in millions) Non-GAAP Financial Measure: Net debt is total debt minus cash and cash equivalents. Net debt-to-Adjusted EBITDA is net debt divided by Adjusted EBITDA. Net debt and net debt-to-Adjusted EBITDA are not measures determined in accor
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