Slide 1: Third Quarter 2020 Earnings
Third Quarter 2020 Earnings November 2, 2020 Josef Matosevic Tricia Fulton Tania Almond President & CEO Chief Financial Officer VP, IR and Corp. Comm. www.heliostechnologies.com © 2020 Helios Technologies 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: Q3 2020 Business Summary
Q3 2020 Business Summary AGILE RESPONSE TO CHANGING MARKET CONDITIONS REFLECTED IN STRONG SEQUENTIAL TOP- LINE RESULTS OUTSTANDING GROSS MARGIN EXPANSION OF 50 BASIS POINTS TO 38.3% ON LOWER VOLUME CONTINUED TO DEMONSTRATE SIGNIFICANT CASH GENERATION CAPABILITIES: $36.7 MILLION CASH FROM OPERATIONS
Slide 4: Balboa Water: Provider of Complimentary Proprietary Controls Technology
Balboa Water: Provider of Complimentary Proprietary Controls Technology Adding Scale and Diversification Global leader in spa and bath electronic Complementary AC technology Strengthens Helios and creates controls for health and wellness industry accelerates ability to grow shareholder value 1 Globa
Slide 5: Q3 2020 Financial Results Highlights
($ in millions, except per share data) Q3 2020 Financial Results Highlights (11%) YoY 50 bps YoY $122.6 38.3% Sales 3% Gross Margin 80 bps QoQ QoQ 23.4% -20 bps YoY $0.53 (13%) YoY Adj. EBITDA Margin(1) Non-GAAP Cash EPS(2) 80 bps (4%) QoQ QoQ (1) See supplemental slide for Adjusted EBITDA reconcili
Slide 6: Q3 - Consolidated Results
($ in millions, except per share data) Q3 - Consolidated Results Sales Gross Margin $138.0 $126.0 $129.5 $119.3 $122.6 37.8% 37.7% 40.1% 37.5% 38.3% $28.0 $25.7 $23.4 $17.2 $24.4 $110.1 $102.6 $103.8 $102.1 $98.2 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Hydraul
Slide 7: Q3 - Hydraulics Segment
Q3 2020 Sales by Region Q3 - Hydraulics Segment Third Quarter Highlights Americas APAC 28% Sales Drivers 39% ➢ End market softness and reduced order taking reflects EMEA continued COVID-19 pandemic impact 33% ➢ $1.9 million of favorable changes in FX ($ in millions) Gross Margin Drivers Sales Gross
Slide 8: Q3 - Electronics Segment
Q3 2020 Sales by Region Q3 - Electronics Segment APAC EMEA 6% 6% Third Quarter Highlights Sales Drivers ➢ $7.2 million or 42% sequential growth Americas ➢ Year-over-year demand significantly impacted by 88% COVID-19 pandemic ($ in millions) ➢ Runoff impact from intentional customer shift Sales Gross
Slide 9: Cash Flow
($ in millions) Cash Flow Three Months Ended YTD Free Cash Flow(1) Free Cash Flow Conversion 191% $104.0 9/26/20 9/28/19 9/26/20 Net cash provided by 126% 36.7 25.5 77.0 operating activities $76.2 CapEx (1.9) (4.2) (7.2) 105% Free cash flow (FCF) $34.8 $21.3 $69.9 $49.1 Note: Components may not add
Slide 10: 3Q Capital Structure
($ in millions) 3Q Capital Structure Capitalization Financial flexibility 9/26/20 12/28/19 • Generated $37 million of cash in the quarter which was 44% more than the prior year Cash and cash equivalents $32.4 $22.1 Total debt 260.4 300.4 • Reduced total debt by $27 million and net debt by $23 millio
Slide 11: Amended Credit Facility
Amended Credit Facility New Available Debt Capacity Updated Terms ➢ Revolver remains the same = $400M ➢ 5-year tenor extends duration through 2025 ➢ Term loan increased, ↑ from $100M = $200M ➢ Increased leverage to 3.75x, with an additional ➢ Accordion expanded, ↑from $200M = $300M (1) 0.50x step-up
Slide 12: Strategic Direction
Strategic Direction ✓ Near-term outlook ▪ COVID-19 pandemic impact on demand shifting expected trough timing from 3Q to 4Q ▪ Full year expectations for fiscal 2020; revenue range between $485 to $495 million and Adj. EBITDA margin of approximately 22%, excluding Balboa Water Group acquisition (as of
Slide 13: Supplemental Information
Supplemental Information www.heliostechnologies.com www.heliostechnologies.com © 2020 © 2020 Helios Technologies Helios Technologies 13
Slide 14: YTD - Consolidated Results
($ in millions, except per share data) YTD - Consolidated Results Sales Gross Margin $428.7 38.5% 38.6% $371.4 $88.5 $67.3 $340.3 $304.1 YTD 2019 YTD 2020 YTD 2019 YTD 2020 Hydraulics Electronics Adjusted EBITDA Margin(1) Non-GAAP Cash EPS(2) 23.8% $1.89 23.2% $1.64 YTD 2019 YTD 2020 YTD 2019 YTD 20
Slide 15: YTD - Segment Results
YTD - Segment Results ($ in millions) Hydraulics ($ in millions) Electronics Sales Gross Profit Operating Income Sales Gross Profit Operating Income $340.3 $304.1 $124.2 $88.5 $112.7 $65.8 $62.4 $67.3 $40.7 $30.8 $19.0 $10.4 36.5% 37.1% 19.3% 20.5% 46.0% 45.7% 21.5% 15.5% YTD 2019 YTD 2020 YTD 2019
Slide 16: Segment Data
Segment Data ($ in thousands) Three Months Ended N i ne Months Ended Septem ber 26, Septem ber 28, Septem ber 26, Septem ber 28, 2020 2019 2020 2019 Sales: Hydraulics $ 98,206 $ 110,089 $ 304,113 $ 340,262 Electronics 24,439 27,956 67,309 88,476 Consolidated $ 122,645 $ 138,045 $ 371,422 $ 428,738 G
Slide 17: Sales by Geographic Region & Segment
Sales by Geographic Region & Segment (Unaudited) 2020 Sales by Geographic Region and Segment 2019 Sales by Geographic Region and Segment ($ in millions) ($ in millions) % Change % Change % Change % Change % Change % Change % Change % Change Q1 Q2 Q3 YTD 2020 Q1 Q2 Q3 YTD 2019 y/y y/y y/y y/y y/y y/y
Slide 18: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation Three Months Ended N i ne Months Ended (Unaudited) Septem ber 26, Septem ber 28, Septem ber 26, Septem ber 28, ($ in thousands) 2020 2019 2020 2019 GAAP operating inc ome $ 1 8 ,3 4 3 $ 1 9 ,1 3 8 $ 2 5 ,0 1 2 $ 7 1 ,3 4 2 Acquisition-related amortization of
Slide 19: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) Three Months Ended N i ne Months Ended ($ in thousands) Septem ber 26, Septem ber 28, Septem ber 26, Septem ber 28, 2020 2019 2020 2019 Net inc ome $ 1 2 ,9 8 2 $ 1 2 ,7 9 1 $ 8 ,6 6 7 $ 4 6 ,4 6 0 Amortization of intangible assets 4,558 4,478 13,3
Slide 20: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) Twel ve Months ($ in thousands) Three Months Ended N i ne Months Ended Ended Septem ber 26, Septem ber 28, Septem ber 26, Septem ber 28, Septem ber 26, 2020 2019 2020 2019 2020 Net inc ome $ 1 2 ,9 8 2 $ 1 2 ,7 9 1 $ 8 ,6 6 7 $ 4 6 ,4 6 0 $ 2 2 ,4 7 6 Inter
Slide 21: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 Q3 2020 TTM Net cash provided by operating activities $ 49,382 $ 77,450 $ 90,480 $ 116,610 Contingent consideration payment in excess of acquisition date fair value - - 10,731 - Adjusted net cash provided by operating activiti
Slide 22: Net Debt-to-Adjusted EBITDA Reconciliation
Net Debt-to-Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) A s of Septem ber 26, 2020 Current portion of long-term non-revolving debt, net $ 11,808 Revolving lines of credit 168,398 Long-term non-revolving debt, net 80,149 Total debt 2 6 0 ,3 5 5 Less: Cash and cash equivalents 32,444 N
Slide 23: Third Quarter 2020 Earnings
Third Quarter 2020 Earnings November 2, 2020 www.heliostechnologies.com © 2020 Helios Technologies 23