Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — R.W. Baird Global Industrial Conference 2021
27 slides from Helios Technologies's conference presentation, Nov 11, 2021
Slide 1: R.W. Baird Global Industrial Conference
R.W. Baird Global Industrial Conference November 11, 2021 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 $803M $3.6B • 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: Hydraulics Today
Hydraulics Today Revenue by End Market Defining End Markets (3Q21 LTM) • Channels to market are decades strong • A material “off-balance sheet asset” • Conduit for growth and expansion $489M 3% Mobile Industrial Recreational Agricultural Current Total Addressable Market(1) $32-35B Global Hydraulics
Slide 8: 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 9: Electronics Today
Electronics Today Revenue by End Market (3Q21 LTM) 19% $314 Million Current Addressable Market(1) Industrial & Mobile Recreational Global Electronics Health & Wellness Market $Trillions… Industrial & Mobile Recreational Health & Wellness $4B Helios’s Electronics • Off-Highway • Marine • Walk-in Bath
Slide 10: 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 11: 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 12: 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; Our markets grow on average 3% to 5% ≥$1B • Diversifying our markets, our products and our $850 (1) $803 applications ~10% • Leveraging a strong
Slide 13: Revenue Diversification Expected to Continue
Revenue Diversification Expected to Continue Segment Electronics expected to 39% $197m become a 2016 Revenue $803M much larger LTM Q3 2021 contributor by 61% Revenue 2023 98% Hydraulics Electronics Geographic 22% 26% $197m 48% Geographic 2016 Revenue $803M 48% Diversity Will 30% LTM Q3 2021 Continue
Slide 14: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin Growth Highlights • Leveraging shared global supply chains Capture ~180 bps from • Integrating manufacturing operations and systems 25.4% 2020A to 2023E 25.0% • Leveraging manufacturing centers in developed and low-cost
Slide 15: Solid Cash Position
Solid Cash Position Historic Annual Free Cash Flow Historic Annual Leverage(1) Highlights ($ millions) • Ability to convert FCF and increase it 204% over time 103% 126% $94.0 3.04x • Self-funding acquisition strategy over $89.0 time $76.2 2.38x ≤ 2.0x Target 105% 2.12x 2.0x • FCF dollars and convers
Slide 16: Capital Allocation Priorities
Capital Allocation Priorities Capital Allocation Priorities Last 5 Years Near-Term 1 ORGANIC GROWTH 4% 8% • Grow at ~2x market • New product development 10% • Integrate electronics and hydraulics know-how • Support product platform Expect a more balanced approach with our flywheel 2 DEBT REDUCTION a
Slide 17: 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 18: 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- ≥$1B in Sales GAAP Cash EPS Growth ~2x EBITDA Margin(1) by YE 2023 CAGR(2) ≥22% Market Rates by YE 2023 With Enhanced Margin Profile (1) Reflects a non-GAAP financial measure; see supplemental slide
Slide 19: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 20: Helios Technologies // Investor Presentation 20
Helios Technologies // Investor Presentation 20
Slide 21: Strong Financial Performance
Strong Financial Performance Revenue Gross Profit & Margin ($ millions) ($ millions) $803 $291 $555 $523 $314 $212 $508 $193 $196 $112 $116 $126 $443 $489 $382 $407 37.9% 38.3% 37.5% 36.3% 2018 2019 2020 Q3 21 LTM 2018 2019 2020 Q3 21 LTM EPS & Non-GAAP Cash EPS Adjusted EBITDA & Margin $3.86 ($ mil
Slide 22: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 22
Slide 23: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) 2016 2017 2018 2019 2020 Net income $ 23,304 $ 31,558 $ 46,730 $ 60,268 $ 14,218 Interest expense, net (790) 3,781 13,876 15,387 13,286 Income tax provision 11,597 15,986 9,665 15,039 9,829 Depreciation and amortization 11,318 19,190 39,714
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three Months Ended (Unaudited) J a nua ry 2, A pri l 3, J ul y 3, October 2, LTM Q3 ($ in thousands) 2021 2021 2021 2021 2021 Net inc ome $ 5 ,5 5 1 $ 2 2 ,5 8 7 $ 3 0 ,6 9 4 $ 2 7 ,7 6 0 $ 8 6 ,5 9 2 Interest expense, net 4,714 4,751 4,400 3,813 17,678 Income tax prov
Slide 25: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) LTM Q3 ($ in thousands) 2018 2019 2020 2021 Net income $ 46,730 $ 60,268 $ 14,218 $ 86,592 Amortization of intangible assets 23,262 18,065 22,114 34,222 Acquisition and financing-related expenses 5,685 11 7,264 9,989 Restructuring charges 170 1,724
Slide 26: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 Q3 2 1 LTM 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 ,5 1 4 Contingent consideration payment in excess of acquisition date fair value - - 10,731 - - Adjusted
Slide 27: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) LTM Q3 ($ in thousands) 2017 2018 2019 2020 2021 Current portion of long-term non-revolving debt, net $ - $ 5,215 $ 7,623 $ 16,229 $ 15,368 Revolving lines of credit 116,000 255,750 208,708 256,224 277,347 Long-term non-revolving debt, net - 91,
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