Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Investor Presentation (March 2022)
28 slides from Helios Technologies's investor presentation, March 2022
Slide 1: Investor Presentation
Investor Presentation March 2022 Josef Matosevic – President & CEO Tricia Fulton – Chief Financial Officer Tania Almond – VP of 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 $869M $2.4B • 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 Segment Overview
Segment Revenue as % of Total 2020 Total Revenue Hydraulics Segment Overview by Segment, $523 million (FY 2021) 59% $869M $516M Hydraulics Hydraulics Revenue 1Q 2021 (LTM) by Channel Electronics Revenue Screw-in hydraulic cartridge Quick-release hydraulic Distribution of hydraulic, by Channel, $263
Slide 8: Hydraulics End Markets Today
Hydraulics End Markets Today Revenue by End Market Defining End Markets (FY 2021) • Channels to market are decades strong • A material “off-balance sheet asset” • Conduit for growth and expansion $516M 3% Mobile Industrial Recreational Agricultural Current Total Addressable Market(1) $32-$35B Global
Slide 9: 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 10: Electronics Segment Overview
Electronics Segment Overview 2020 Total Revenue Segment Revenue by Segment, as % of Total $523 million (FY 2021) 41% $353M $869M Electronics Hydraulic Control Electronics Revenue 1Q 2021 (LTM) Electronicsby Channel Revenue Solutions Electronic Controls by Channel, $263 million (FY 2021) and Accessor
Slide 11: Electronics End Markets Today
Electronics End Markets Today Revenue by End Market (FY 2021) 19% $353 Million Current Addressable Market(1) Industrial & Mobile Recreational Health & Wellness Global Electronics Market $Trillions… Industrial & Mobile Recreational Health & Wellness $4B Helios’s Electronics • Off-Highway • Marine • W
Slide 12: 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 13: 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 14: 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 ≥$1B average 3% to 5% $940 • Diversifying our markets, our products and our $869 applications ~8% YoY • Leveraging a strong p
Slide 15: Revenue Diversification Expected to Continue
Revenue Diversification Expected to Continue Segment Electronics expected to $197m 2016 Revenue $869M 41% become a larger 2021 Revenue contributor over 59% time 98% Hydraulics Electronics Geographic 22% 25% $197m 48% Geographic 2016 Revenue $869M 49% Diversity Will 30% 2021 Revenue Continue 26% Amer
Slide 16: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin Growth Highlights • Leveraging shared global supply chains • Integrating manufacturing operations and systems 25.4% ~25.0% • Leveraging manufacturing centers in developed and low-cost locations 24.6% 24.5% 24.4% • Utiliz
Slide 17: Solid Cash Position
Solid Cash Position Historic Annual Free Cash Flow(1) Historic Annual Leverage(2) Highlights ($ millions) • Ability to convert FCF and increase it 204% over time 83% 126% $94.0 3.04x • Self-funding acquisition strategy over $86.4 time $76.2 2.38x ≤ 2.0x Target 105% 2.12x • FCF dollars and conversion
Slide 18: Capital Allocation Priorities
Capital Allocation Priorities Capital Allocation Priorities Last 5 Years Near-Term 1 ORGANIC GROWTH 4% 10% • Grow at ~2x market • New product development • Integrate electronics and hydraulics know-how 16% • Support product platform Expect a more balanced approach with our flywheel 2 DEBT REDUCTION
Slide 19: 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 20: 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- ≥$1B in Sales GAAP Cash EPS Growth ~2x EBITDA Margin(1) by YE 2023 CAGR(2) ≥22% Market Rates by YE 2023 With Enhanced Margin Profile (1) Reflects a non-GAAP financial measure; see supplemental slide
Slide 21: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 22: Helios Technologies // Investor Presentation 22
Helios Technologies // Investor Presentation 22
Slide 23: Strong Financial Performance
Strong Financial Performance Revenue Gross Profit & Margin ($ millions) ($ millions) $869 $313 $555 $353 $212 $508 $523 $193 $196 $112 $116 $126 $443 $516 $382 $407 37.9% 38.3% 37.5% 36.0% 2018 2019 2020 2021 2018 2019 2020 2021 EPS & Diluted Non-GAAP Cash EPS Adjusted EBITDA & Margin ($ millions) $
Slide 24: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 24
Slide 25: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Net inc ome $ 3 1 ,5 5 8 $ 4 6 ,7 3 0 $ 6 0 ,2 6 8 $ 1 4 ,2 1 8 $ 1 0 4 ,5 9 6 Interest expense, net 3,781 13,876 15,387 13,286 16,871 Income tax provision 15,986 9,665 15,039 9,829 26,583 Depreciation and amortizat
Slide 26: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in thousands) 2018 2019 2020 2021 Net income $ 46,730 $ 60,268 $ 14,218 $ 104,596 Amortization of intangible assets 23,262 18,065 22,114 33,042 Acquisition and financing-related expenses 5,685 11 7,264 5,741 Restructuring charges 170 1,724 361 4
Slide 27: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Net cash provided by operating activities $ 49,382 $ 77,450 $ 90,480 $ 108,556 $ 113,202 Contingent consideration payment in excess of acquisition date fair value - - 10,731 - - Adjusted net cash provided by operatin
Slide 28: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Current portion of long-term non-revolving debt, net $ - $ 5,215 $ 7,623 $ 16,229 $ 18,125 Revolving lines of credit 116,000 255,750 208,708 256,224 243,023 Long-term non-revolving debt, net - 91,720 84,
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