Slide 1: First Quarter 2023 Earnings
FIRST QUARTER 2023 EARNINGS MAY 9, 2023 J O S E F M AT O S E V I C , P R E S I D E N T & C E O | T R I C I A F U LT O N , E V P & C F O | TA N I A A L M O N D , V P O F I R & C O R P. C O M M .
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,
Slide 3: Q1 2023 Business Summary
Q1 2023 Business Summary GREW REVENUE SEQUENTIALLY: Total +9%, Electronics segment +17% (of which Health and Wellness up 36%), Hydraulics segment +5% over 4Q22; GREW REVENUE ANNUALLY: Hydraulics +8% (+10% in constant currency), Electronics -37% while +11% (ex. Health and Wellness) over 1Q22 PROTECTI
Slide 4: Strategic Investments for Future Growth
Strategic Investments for Future Growth Opened: New capacity in Opened: Automated In Progress: New Manifold Starting: New capacity India @ Faster Warehouse in Italy @ Faster Center of Excellence in expansion in Tijuana, Indiana @ Daman Mexico @ Balboa Adds 21,969 sq. ft. to double Adds 22,600 sq. fe
Slide 5: Latest M&A Flywheel Acquisition Announced
Latest M&A Flywheel Acquisition Announced i3 Product Development i3 has served more than 450 clients and completed over 4,000 projects in its 28-year history. Creates products that holistically combine emotion, user-centered design, engineered precision, quality craftsmanship, smart technology and d
Slide 6: Q1 2023 Financial Results Highlights
Q1 2023 Financial Results Highlights ($ in millions, except per share data) Sales $213.2 -11% YoY • Sales in several end markets grew during the first quarter of 2023 including mobile equipment, industrial, construction and agriculture, Sales offset by the ongoing though improving contraction of the
Slide 7: Q1 2023 Financial Results Highlights
Q1 2023 Financial Results Highlights ($ in millions, except per share data) Operating Expenses YoY • SEA dollars increased 13% to $38.1 million compared to the 11.6% -620 bps prior-year period, reflecting integration of acquisitions and higher operating expenses, including investing in key strategic
Slide 8: Q1 2023 Financial Results Highlights
Q1 2023 Financial Results Highlights ($ in millions, except per share data) YoY $13.9 -54% 20.3% (1) -420 bps YoY Net Income QoQ Adj. EBITDA Margin -21% 30 bps QoQ -55% YoY -39% YoY $0.42 $0.72 QoQ Diluted GAAP EPS -22% QoQ Diluted Non-GAAP Cash EPS(1) -8% 16% (1) Reflects a non-GAAP financial measu
Slide 9: Q1 2023 – Consolidated Results
Q1 2023 – Consolidated Results Sales Gross Profit & Margin ($ millions) ($ millions) Includes ($3.5M) FX - $240.5 $241.7 $216.7M(1) Adjusted $83.6 $82.3 $207.2 $213.2 $196.0 for FX $69.3 $71.0 $63.2 $103.4 $98.9 $65.5 $76.0 $55.8 $137.1 $142.8 $131.2 $140.2 $147.7 34.8% 34.1% 33.4% 32.2% 33.3% Q1 22
Slide 10: Q1 2023 Consolidated Results Adjusted EBITDA Margin Drivers
Q1 2023 Consolidated ResultsAdjusted EBITDA Margin Drivers Adj. EBITDA Margin(1) • Adjusted EBITDA margin up sequentially 30 basis points maintaining healthy level at 20.3% in Q1 despite macro headwinds, supply chain delays, FX impacts, while investing for 24.6% 24.5% 24.4% 23.2% 23.2% future growth
Slide 11: Q1 2023 – Hydraulics Segment
Q1 2023 – Hydraulics Segment First Quarter Highlights Q1 Sales by Region Sales Drivers • Sales up sequentially over 4Q22 5%; Sales up YoY 8%, on a 27% constant currency(1) basis up 10%; driven by sales to the Americas APAC 39% and some pricing Americas • Acquisitions added $13.7 million $148 m 34% •
Slide 12: Q1 2023 – Electronics Segment
Q1 2023 – Electronics Segment Q1 Sales by Region First Quarter Highlights Sales Drivers 10% • Sales up sequentially over 4Q22 17% (of which Health and EMEA 84% Wellness up 36%). Sales down YoY 37% while up 11% (excluding Health and Wellness.) End market demand was 6% $66 m Americas driven by mobile
Slide 13: Strong Cash Flow
Strong Cash Flow ($ in millions) Free Cash Flow(1) Three Months Ended ($ millions) 4/1/23 4/2/22 204% 83% Net cash provided by operating activities $12.3 $14.7 126% $94.0 79% 88% $86.3 $76.2 $78.0 CapEx (9.1) (5.6) $72.1 105% (1) Free cash flow (FCF) $3.2 $9.1 $49.1 86% $27.2 Consistent cash generat
Slide 14: Capital Structure
Capital Structure ($ in millions) Financial Flexibility Capitalization • Cash and cash equivalents up $3.3 million from prior year 4/1/23 4/2/22 • Generated $12.3 million of operating cash flow in Q1 Cash and cash equivalents $36.3 $33.0 (2) • Achieved net debt/pro forma Adjusted EBITDA of 2.5x : To
Slide 15: Reiterating 2023 Outlook
Reiterating 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% ~$1 billion Ne
Slide 16: Path for Long Term Growth Plans
Path for Long Term Growth Plans As Outlined at June 2021 Investor Day Our Performance & Current View ($ in millions) ≥$1B ~$1B (2) $925 $869 $885 (1) $745 ~10% $555 Organic $508 $523 $555 $523 $508 CAGR 2021-2023 $343 $343 $201 $197 $201 $197 2015 2016 2017 2018 2019 2020 2021E 2023 Goal 2015 2016 2
Slide 17: Path to Hit Accelerated Targets
Path to Hit Accelerated Targets Hitting $1B Milestone on a Run Rate (RR) Basis by YE23 ~$1B in RR (1) Organic Sales ~25% Adj. Non-GAAP Sales by Growth(2) ~2x EBITDA Margin(2) Cash EPS YE 2023 Market Rates by RR YE 2023 CAGR(2,3) ~22% With Enhanced Margin Profile (1) Run rate basis defined as annuali
Slide 18: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 19: Segment Data
Segment Data (Unaudited) ($ in millions) For the Three Months Ended April 1, 2023 April 2, 2022 Sales: Hydraulics $ 147.7 $ 137.1 Electronics 65.5 103.4 Consolidated $ 213.2 $ 240.5 Gross profit and margin: Hydraulics $ 50.0 $ 50.8 33.9% 37.1% Electronics 21.0 32.8 32.1% 31.7% Consolidated $ 71.0 $
Slide 20: Organic and Acquired Sales
Organic and Acquired Sales (Unaudited) ($ in millions) Three Months Ended Full Year Ended Three Months Ended April 2, July 2, October 1, December 31, December 31, April 1, 2022 2022 2022 2022 2022 2023 Hydraulics Organic $ 130.7 $ 137.1 $ 129.1 $ 132.0 $ 528.9 $ 134.0 Acquisition 6.4 5.7 2.1 8.2 22.
Slide 21: Sales by Geographic Region & Segment
Sales by Geographic Region & Segment (Unaudited) 2022 Sales by Geographic Region and Segment 2023 Sales by Geographic Region and Segment ($ in millions) ($ in millions) % Change % Change % Change % Change % Change % Change Q1 y/y Q2 y/y Q3 y/y Q4 y/y 2022 y/y Q1 y/y Americas: Americas: Hydraulics $
Slide 22: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) ($ in millions) Three Months Ended April 1, 2023 April 2, 2022 GAAP operating income $ 24.8 $ 42.9 Acquisition-related amortization of intangible assets 8.1 7.0 Acquisition and financing-related expenses (A) 1.7 0.9 Restructuring charges (B) 1.2 0
Slide 23: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in millions) Three Months Ended April 1, 2023 April 2, 2022 Net income $ 13.9 $ 30.5 (D) Amortization of intangible assets 8.3 7.1 Acquisition and financing-related expenses (A) 1.7 0.9 (B) Restructuring charges 1.2 0.2 Officer transition costs
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in millions) Three Months Ended Twelve Months Ended April 1, 2023 April 2, 2022 April 1, 2023 Net income $ 13.9 $ 30.5 $ 81.8 Interest expense, net 6.2 3.8 19.1 Income tax provision 4.1 8.8 18.7 Depreciation and amortization 15.2 12.6 54.2 EBITDA 39.4 55
Slide 25: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in millions) Full Year TTM 2017 2018 2019 2020 2021 2022 Q1 2 0 2 3 Net c ash provided by operating ac tivities $ 4 9 .4 $ 7 7 .5 $ 9 0 .5 $ 1 0 8 .6 $ 1 1 3 .1 1 0 9 .9 1 0 7 .5 Contingent consideration payment in excess of acquisition date fair value -
Slide 26: Non-GAAP Sales Growth Reconciliation
Non-GAAP Sales Growth Reconciliation (Unaudited) ($ in millions) Three Months Ended Hydraulics Electronics Consolidated Q1 2023 Net Sales $ 147.7 $ 65.5 $ 213.2 (E) 3.3 0.2 3.5 Impact of foreign currency translation Net Sales in constant currency 151.0 65.7 216.7 Less: Acquisition related sales (13.
Slide 27: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in millions) As of April 1, 2023 Current portion of long-term non-revolving debt, net 20.2 Revolving lines of credit 346.7 Long-term non-revolving debt, net 158.9 Total debt 525.8 Less: Cash and cash equivalents 36.3 Net debt 489.5 (F) TTM Pr
Slide 28: @)nsues
@)nsues AUGMENTING S°aATEG- ADVANCING 1 2SHNOLOGIES ACCELERATING uiiu wit