Helios Technologies, Inc. · NYSE:HLIO

Helios Technologies — Morgan Stanley 8th Annual Laguna Conference 2020

29 slides from Helios Technologies's conference presentation, Sep 17, 2020

  1. Slide 1: Morgan Stanley 8th Annual Laguna Conference

    Morgan Stanley 8th Annual Laguna Conference September 17, 2020 Josef Matosevic Tricia Fulton President & CEO Chief Financial Officer Nasdaq: HLIO www.heliostechnologies.com © 2020 Helios Technologies 1

  2. 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

  3. Slide 3: Growing, Global Industrial Technology Leader

    Growing, Global Industrial Technology Leader Founded: 1970 Helios Technologies (NASDAQ: HLIO) IPO: 1997 TTM Revenue: $513M Adj. EBITDA Margin: 23.2% Market Cap: ~$1.3B Cash Dividend Yield: 0.9% Cash Dividend Paid for 95 Consecutive Quarters TTM Q2 2020 Revenue by Segment $513 million Helios Technolo

  4. Slide 4: Vision 2025

    VISION 2025 Achieve global technology leadership in the industrial goods sector by 2025 with critical mass exceeding $1 BILLION in sales while maintaining superior profitability and financial strength. www.heliostechnologies.com © 2020 Helios Technologies 4

  5. Slide 5: Three Megatrends Impacting Our Markets

    Three Megatrends Impacting Our Markets Sophistication of Safe Globalization Machinery & Equipment Computing Power GLOBAL NEEDS WILL DRIVE THESE TRENDS Population Urbanization & Productivity & Electrification & Automation Energy Saving Growth Environment Efficiencies Digitalization LEVERAGE GLOBAL EX

  6. Slide 6: Strategic Roadmap

    Strategic Roadmap Business Goals: $1BREVENUE │ >20% ADJUSTED OPERATING MARGIN FLOOR │ $70 >24% ADJUSTED EBITDA MARGIN FLOOR 2x SALES GROWTH RATE EXCEEDING MARKET 6% CAPEX AS % OF SALES 6% ENGINEERING LABOR AS % OF SALES Leadership Strategies: Differentiation Customer Centricity Operational Efficienc

  7. Slide 7: Executing Vision 2025

    Executing Vision 2025 Q2 2020 TTM Revenue by Geography Established Vision 2025 Acquired Faster Acquired Custom Fluidpower APAC 28% Americas Strategy $531m purchase price $26m purchase price 45% EMEA 27% 2015 2016 2018 2019 2020 Q2 2020 TTM Revenue by Channel to Market Acquired Enovation Controls Cha

  8. Slide 8: Diversified End Markets

    Diversified End Markets INDUSTRIAL AGRICULTURE Renewable Energy Factory Automation Combines Tractors $513M TTM Q2 2020 Revenue Packaging & Power Generation Seeders Balers Processing MOBILE RECREATIONAL Recreational Material Handling Construction Cartridge Valve Technology Marine Motorcycles Quick Re

  9. Slide 9: Leadership in Niche Markets: Hydraulics

    Leadership in Niche Markets: Hydraulics Leading market position in global Leading market position in global Focused on expanding cartridge valve market quick release couplings market addressable market Q2 2020 TTM Complex, dense Integrated packages Revenue $419 million Gross Profit $154 million Gros

  10. Slide 10: Leadership in Niche Markets: Electronics

    Leadership in Niche Markets: Electronics Leading market position in Growing market share in Increasing recreational vehicle market construction market addressable market Full-Color GPS Q2 2020 TTM Displays Receiver Machine Controllers Revenue $94 million Keypad Full-Color Gross Profit $43 million Au

  11. Slide 11: Achieving Our Vision 2025

    Achieving Our Vision 2025 www.heliostechnologies.com © 2020 Helios Technologies 11

  12. Slide 12: Vision 2025: Pathway to Superior Profitability

    Vision 2025: Pathway to Superior Profitability Organic Expansion $1 BILLION REVENUE Targeted Acquisitions >20% ADJ. OPERATING MARGIN Operational Excellence >24% ADJ. EBITDA Superior Liquidity MARGIN www.heliostechnologies.com © 2020 Helios Technologies 12

  13. Slide 13: Vision 2025: Pathway to Superior Growth

    Vision 2025: Pathway to Superior Growth REVENUE AND ADJUSTED OPERATING MARGIN (IN MILLIONS) Assumption: Includes COVID -19 pandemic impact in 2020 Hydraulics Electronics Future Acquisitions Total $1,000 ~$80 13% CAGR ~$220 20% ADJUSTED OPERATING ~$700 MARGIN(1) $513 23% $94 CAGR $419 $201 $117 2015

  14. Slide 14: Differentiated & Disciplined Acquisition Strategy

    Differentiated & Disciplined Acquisition Strategy Goals Targets Integration Model • Niche Technology leader • Strong management • Successful on standalone basis • Broaden technology offerings and capabilities • Culture supporting innovation • Retain employees • Increase solutions-based offerings • S

  15. Slide 15: M&A Scorecard

    M&A Scorecard 2016 2018 2018 Outpaced market growth; New end-market and regional Growth/Profitability High growth; good margins strong margins entry; Improving margins Synergy Targets (within 4 yrs) ~$5M in EBITDA ~$7.5M in EBITDA ~$2M in EBITDA Electronic Controls & Technology Fit Quick Release Cou

  16. Slide 16: Solid Financial Performance

    Solid Financial Performance ($ in millions, except per share data) Revenue Gross Profit & Margin $555 $508 $513 $212 $193 $196 $112 $126 $94 $343 $137 $443 $419 $382 $112 $231 39.8% 37.9% 38.3% 38.2% 2017 2018 2019 Q2 2020 TTM 2017 2018 2019 Q2 2020 TTM Hydraulics Electronics EPS & Non-GAAP Cash EPS

  17. Slide 17: Strong Liquidity Position

    Strong Liquidity Position ($ in millions) Capital Structure Capital Allocation Priorities $400 Total RCF $37 $244 1 Organic Growth $206 Undrawn 2 Debt Reduction $194 Drawn $94 Balance 3 Acquisitive Growth Term Loans Revolving Credit Cash Liquidity (2) Facilities • Net Debt / Adj. EBITDA(1): 2.1x - G

  18. Slide 18: Significant Free Cash Flow Generation

    Significant Free Cash Flow Generation Free Cash Flow(1) ($ in millions) $90.6 Q2 2020 2017 2018 2019 $65.5 TTM $49.0 Net cash provided by $27.2 $49.4 $77.4 $90.5 $105.4 operating activities CapEx (22.2) (28.4) (25.0) (14.8) 2017 2018 2019 Q2 2020 Free cash flow (FCF) $27.2 $49.0 $65.5 $90.6 TTM Free

  19. Slide 19: 2020 Helios Outlook

    2020 Helios Outlook(1) Cautious near-term outlook given uncertainty of the COVID-19 pandemic ▪ Expect Q3 to be trough Continued focus on cash generation expected to build offensive position for growth Advancing and Enhancing Vision 2025 Strategy ▪ Leverage already existing strengths and capabilities

  20. Slide 20: Commitment to Shareholder Value Creation

    Commitment to Shareholder Value Creation 1 NICHE TECHNOLOGY - A global niche technology leader in Hydraulics and Electronics with highly engineered and comprehensive in-house value add capabilities 2 SUPERIOR FINANCIAL PERFORMANCE - Proven track record of growing 2x faster than market at superior pr

  21. Slide 21: Defined Vision, Designed Transformation

    Defined Vision Designed Transformation www.heliostechnologies.com © 2020 Helios Technologies 21

  22. Slide 22: Supplemental Information

    Supplemental Information www.heliostechnologies.com © 2020 Helios Technologies 22

  23. Slide 23: Segment Data

    Segment Data ($ in thousands) Three Months Ended Si x Months Ended J une 27, J une 29, J une 27, J une 29, 2020 2019 2020 2019 Sales: Hydraulics $ 102,089 $ 113,710 $ 205,907 $ 230,173 Electronics 17,205 30,132 42,870 60,520 Consolidated $ 119,294 $ 143,842 $ 248,777 $ 290,693 Gross profit and margi

  24. Slide 24: Sales by Geographic Region & Segment

    Sales by Geographic Region & Segment (Unaudited) 2 0 2 0 Sales by Geographic Region and Segment 2 0 1 9 Sales by Geographic Region and Segment ($ in millions) ($ in millions) % % % % % % % % Q1 of Total Q2 of Total 2020 of Total Q1 of Total Q2 of Total Q3 of Total Q4 of Total 2019 of Total Americas:

  25. Slide 25: Adjusted Operating Income Reconciliation

    Adjusted Operating Income Reconciliation (Unaudited) Twel ve Months Ended ($ in thousands) June 27, 2020 G A A P opera ti ng i ncom e $ 44,579 Acquisition-related amortization of intangible assets 17,744 Acquisition and financing-related expenses 74 Restructuring charges 2,022 Loss on disposal of in

  26. Slide 26: Adjusted EBITDA Reconciliation

    Adjusted EBITDA Reconciliation (Unaudited) Twel ve Months Ended ($ in thousands) J une 27, Decem ber 28, Decem ber 29, Decem ber 30, 2020 2019 2018 2017 N et i ncom e ( l os s ) $ 22,285 $ 60,268 $ 46,730 $ 31,558 Interest expense, net 12,796 15,387 13,876 3,781 Income tax provision 10,567 15,039 9,

  27. Slide 27: Non-GAAP Cash Net Income Reconciliation

    Non-GAAP Cash Net Income Reconciliation (Unaudited) Twel ve Months Ended ($ in thousands) J une 27, Decem ber 28, Decem ber 29, Decem ber 30, 2020 2019 2018 2017 N et i ncom e ( l os s ) $ 22,285 $ 60,268 $ 46,730 $ 31,558 Acquisition-related amortization of inventory step-up - - 4,441 1,774 Acquisi

  28. Slide 28: Net Debt-to-Adjusted EBITDA Reconciliation

    Net Debt-to-Adjusted EBITDA Reconciliation (Unaudited) A s of ($ in thousands) June 27, 2020 Current portion of long-term non-revolving debt, net $ 10,216 Revolving lines of credit 193,948 Long-term non-revolving debt, net 83,267 Tota l debt 287,431 Less: Cash and cash equivalents 36,965 N et debt $

  29. Slide 29: Morgan Stanley 8th Annual Laguna Conference

    Morgan Stanley 8th Annual Laguna Conference September 17, 2020 Nasdaq: HLIO www.heliostechnologies.com © 2020 Helios Technologies 29

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