Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Baird 2020 Global Industrial Conference
31 slides from Helios Technologies's conference presentation, Nov 12, 2020
Slide 1: Baird 2020 Global Industrial Conference
Baird 2020 Global Industrial Conference November 12, 2020 Josef Matosevic Tricia Fulton President & CEO Chief Financial Officer Nasdaq: HLIO 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: Growing, Global Industrial Technology Leader
Growing, Global Industrial Technology Leader Founded: 1970 Helios Technologies (NASDAQ: HLIO) IPO: 1997 TTM Revenue: $497M Adj. EBITDA Margin: 23.2% Market Cap: ~$1.4B Cash Dividend Yield: 0.8% Cash Dividend Paid for 96 Consecutive Quarters TTM Q3 2020 Revenue by Segment Helios Technologies is a glo
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
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
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
Slide 7: Executing Vision 2025
Executing Vision 2025 Q3 2020 TTM Revenue by Geography Appointed New CEO Brings deep commercial, Established Vision Acquired Faster Acquired Custom Fluidpower APAC operational and M&A 30% Americas 2025 Strategy $531m purchase price $26m purchase price experience 43% EMEA 27% 2015 2016 2018 2019 2020
Slide 8: Diversified End Markets
Diversified End Markets INDUSTRIAL AGRICULTURE Renewable Energy Factory Automation Combines Tractors $497M TTM Q3 2020 Revenue Packaging & Power Generation Seeders Balers Processing MOBILE RECREATIONAL Recreational Material Handling Construction Cartridge Valve Technology Marine Motorcycles Quick Re
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 Q3 2020 TTM Complex, dense Integrated packages Revenue $407 million Gross Profit $150 million Gros
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 Q3 2020 TTM Displays Receiver Machine Controllers Revenue $91 million Keypad Full-Color Gross Profit $41 million Au
Slide 11: Achieving Our Vision 2025
Achieving Our Vision 2025 www.heliostechnologies.com © 2020 Helios Technologies 11
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
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 14% CAGR ~$220 19% ADJUSTED OPERATING ~$700 MARGIN(1) $497 21% $91 CAGR $407 $201 $117 2015
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
Slide 15: 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 16: M&A Scorecard
M&A Scorecard 2016 2018 2018 2020 High growth; good Outpaced market New end-market and regional Growth/Profitability Solid growth; good margins margins growth; strong margins entry; Improving margins Synergy Targets (within 4 yrs) ~$5M in EBITDA ~$7.5M in EBITDA ~$2M in EBITDA N.G., upside opportuni
Slide 17: Solid Financial Performance
Solid Financial Performance ($ in millions, except per share data) Revenue Gross Profit & Margin $555 $508 $497 $212 $112 $193 $191 $343 $126 $91 $443 $137 $382 $407 $112 $231 39.8% 37.9% 38.3% 38.4% 2017 2018 2019 Q3 2020 TTM 2017 2018 2019 Q3 2020 TTM Hydraulics Electronics EPS & Non-GAAP Cash EPS
Slide 18: Strong Liquidity Position
Strong Liquidity Position ($ in millions) Capital Structure Ending Q3 2020 Capital Allocation Priorities $400 Total RCF $32 $266 1 Organic Growth $232 Undrawn 2 Debt Reduction $168 Drawn $93 Balance 3 Acquisitive Growth Term Loans Revolving Credit Cash Liquidity (2) Facilities • Net Debt / Adj. EBIT
Slide 19: 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 = $300M (1) 0.50x step-up
Slide 20: Cash Flow
Cash Flow ($ in millions) 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 21: 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 $495 million and Adj. EBITDA margin of approximately 22%, excluding Balboa Water Group acquisition (as of
Slide 22: Commitment to Shareholder Value Creation
Commitment to Shareholder Value Creation 1 NICHE TECHNOLOGY - A global niche technology leader in Hydraulics and Electronics with highly engineered and comprehensive in-house value add capabilities 2 SUPERIOR FINANCIAL PERFORMANCE - Proven track record of growing 2x faster than market at superior pr
Slide 23: Defined Vision, Designed Transformation
Defined Vision Designed Transformation www.heliostechnologies.com © 2020 Helios Technologies 23
Slide 24: Supplemental Information
Supplemental Information www.heliostechnologies.com © 2020 Helios Technologies 24
Slide 25: Segment Data
Segment Data www.heliostechnologies.com © 2020 Helios Technologies 25
Slide 26: Sales by Geographic Region & Segment
Sales by Geographic Region & Segment www.heliostechnologies.com © 2020 Helios Technologies 26
Slide 27: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) ($ in thousands) Twel ve Months Ended Septem ber 26, 2020 G AAP opera ti ng i ncom e $ 43,784 Acquisition-related amortization of intangible assets 17,844 Acquisition and financing-related expenses 176 Restructuring charges 361 CEO and officer tra
Slide 28: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Twel ve Months Ended (Unaudited) Septem ber 26, Decem ber 28, Decem ber 29, Decem ber 30, ($ in thousands) 2020 2019 2018 2017 N et i ncom e $ 22,476 $ 60,268 $ 46,730 $ 31,558 Interest expense, net 11,736 15,387 13,876 3,781 Income tax provision 11,276 15,039 9,665 15
Slide 29: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation Twel ve Months Ended (Unaudited) ($ in thousands) Septem ber 26, Decem ber 28, Decem ber 29, Decem ber 30, 2020 2019 2018 2017 N et i ncom e $ 22,476 $ 60,268 $ 46,730 $ 31,558 Acquisition-related amortization of inventory step-up - - 4,441 1,774 Acquisition a
Slide 30: Net Debt-to-Adjusted EBITDA Reconciliation
Net Debt-to-Adjusted EBITDA Reconciliation A s of (Unaudited) Septem ber 26, ($ in thousands) 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 Tota l debt 260,355 Less: Cash and cash equivalents 32,444 N et
Slide 31: Baird 2020 Global Industrial Conference
Baird 2020 Global Industrial Conference November 12, 2020 Nasdaq: HLIO www.heliostechnologies.com © 2020 Helios Technologies 31
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