Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Q1 2024 Earnings Presentation
28 slides from Helios Technologies's earnings presentation, May 9, 2024
Slide 1: Execute. Elevate. First Quarter 2024 Earnings
Execute. Elevate. HELIOS TECHNOLOGIES (NYSE: HLIO) FIRST QUARTER 2024 EARNINGS JOSEF MATOSEVIC, PRESIDENT & CEO | SEAN BAGAN, CFO | TANIA ALMOND, VP OF IR & CORP. COMM. May 9, 2024
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: Q1 2024: Strong Start Out of the Gate
Q1Q1 2024: 2024: Net Sales Adj. Free ONSTRONG TRACK START OUT TO THE $212.0 M +10% QoQ Cash Flow1 $12.3 M OFYEAR OUT OF THE GATE THE GATE -1% YoY -51% QoQ +284% YoY • 10% SEQUENTIAL TOP LINE GROWTH OVER 4Q23 • SOLID SEQUENTIAL MARGIN IMPROVEMENT OVER 4Q23 Diluted Adj. EBITDA Non-GAAP • IMPROVED CASH
Slide 4: Our Connected Future
OUR CONNECTED FUTURE Leveraging our position at the intersection of Hydraulics and Electronics to create industry leading sub-system sales TRANSFORMATION INTO AN INTEGRATED OPERATING COMPANY HELIOS TECHNOLOGIES 4
Slide 5: Q1 2024 – Net Sales
Q1 2024 – NET SALES Strong sequential improvement across all regions; YoY electronics offset hydraulics for relatively unchanged sales ($ in millions) QUARTER TRENDS (QoQ): SALES BY SEGMENT YoY Direction Market* Hydraulics Electronics $213.2 $212.0 Industrial 67% 33% Mobile $212 Agriculture Recreati
Slide 6: Q1 2024 – Gross Profit and Margin
Q1 2024 – GROSS PROFIT AND MARGIN Improved sequential volume drives margin expansion in first quarter ($ in millions) QUARTER • QoQ: gross profit up 22% while gross margin $71.0 $75.8 $67.2 expanded 310 bps driven by higher sales volume. $59.7 $55.3 • YoY: decline in gross profit driven by lower vol
Slide 7: Q1 2024 – Operating / Adjusted Operating Margin
Q1 2024 – OPERATING / ADJUSTED OPERATING MARGIN Cost control key to delivering margin improvement QUARTER • QoQ: GAAP operating income expanded 71% while 17.2% 18.5% 13.7% 14.5% GAAP operating margin expanded 340 bps driven by 5.5% 12.6% 5.6% 4.9% increasing volume 6.8% 6.4% 11.6% 13.0% 6.9% 6.2% 9.
Slide 8: Q1 2024 – Net Income & Adjusted EBITDA Margin
Q1 2024 – NET INCOME & ADJUSTED EBITDA MARGIN The incremental margin impacts inherent in the Helios business model will drop to the bottom line as volume comes back ($ in millions, except per share data) Net Income $16.8 $13.9 $9.2 • QoQ: net income up 179% or $0.18 per $3.5 $3.3 diluted share. Q1 2
Slide 9: Q1 2024 – Hydraulics Segment
Q1 2024 – HYDRAULICS SEGMENT Sequential improvement; First positive YoY growth in APAC since 4Q22 ($ in millions) QoQ YoY Sales: $142.4 7% 4% Gross Profit: $44.5 8% 11% Operating 9% 22% $21.8 Income: Q1 SALES BY REGION Q1 SALES BY CHANNEL 29% 39% ~52% APAC ~48% $142 Americas $142 OEM Distributor 32%
Slide 10: Q1 2024 – Electronics Segment
Q1 2024 – ELECTRONICS SEGMENT Strong sequential and YoY performance driven by improving health & wellness market ($ in millions) QoQ YoY Sales: $69.6 17% 6% Gross Profit: $22.7 61% 8% Operating 610% 5% $7.1 Income: Q1 SALES BY REGION Q1 SALES BY CHANNEL 7% 84% ~75% APAC ~25% $70 Americas $70 OEM 9%
Slide 11: Q1 2024 – Cash Flow
Q1 2024 – CASH FLOW Disciplined working capital management and strong cash conversion ($ in millions) Free Cash Flow(1) Three Months Ended 3/30/24 4/1/23 Net Cash Provided by 204% $17.8 $12.3 Operating Activities 83% 126% $94.0 79% Capital Expenditures (CapEx) (5.5) (9.1) $86.3 $76.2 $78.0 187% 139%
Slide 12: Q1 2024 – Capital Structure
Q1 2024 – CAPITAL STRUCTURE Utilizing cash generated to reduce debt and fund organic growth initiatives ($ in millions) DEBT PROFILE CAPITAL ALLOCATION PRIORITIES 1. 2. 3. 4. Pay Down Organic $521 Debt Investments Dividend Acquisitions Total Debt $205 revolver / other $234 Additional Details Liquidi
Slide 13: Affirming Full Year 2024 Outlook
AFFIRMING FULL YEAR 2024 OUTLOOK $840M $860M Total Net Sales to Adjusted EBITDA Margin(2) 19.5% 21.0% to $2.35 $2.75 Diluted Non-GAAP EPS (1, 2) to Note: See Supplemental Information for full 2024 outlook line-item details. (1) Reflects a Non-GAAP financial measure; see supplemental slide for reconc
Slide 14: 2024 Segment Outlook
2024 SEGMENT OUTLOOK HYDRAULICS ELECTRONICS Health & Wellness, Americas, addition of Positive Catalysts Ramping CoE, new markets Commercial Food Service, recurring software sales starting in 2024 Stable / Moderate Lift Mobile, APAC, Americas APAC Flat / No Signs Yet of Bounce Industrial Construction
Slide 15: 2024 Financial Priorities
2024 FINANCIAL PRIORITIES Focused on execution to deliver the year and set the stage for accelerating future growth 1 2 3 4 5 Drive Operating Shorten Cash Leverage Strong Return to Growth Reduce Debt Leverage Conversion Cycle Foundation With higher volumes Utilizing free cash flow Through improved E
Slide 16: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 17: Building on a Strong Foundation of Step Level Growth
BUILDING ON A STRONG FOUNDATION OF STEP LEVEL GROWTH OUR PERFORMANCE & CURRENT VIEW HIGHLIGHTS ($ millions) • Transitioning from a holding company to an integrated operating company $869 $885 (1) $836 $850 • Diversifying the business and markets while evolving into selling system solutions • Leverag
Slide 18: Other Modeling Items
OTHER MODELING ITEMS ($ in millions, except per share data) 2024 OUTLOOK ASSUMPTIONS OTHER KEY METRICS • Sales guidance excludes any potential new large system sales opportunities 2023 Actual 2024 Outlook • Electronics segment growth rate to outpace Hydraulics Net Income $37.5 $50 - $63 segment driv
Slide 19: Segment Data
SEGMENT DATA (Unaudited) ($ in millions) For the Three Months Ended March 30, 2024 April 1, 2023 Net Sales: Hydraulics $ 142.4 $ 147.7 Electronics 69.6 65.5 Consolidated $ 212.0 $ 213.2 Gross profit and margin: Hydraulics $ 44.5 $ 50.0 31.3% 33.9% Electronics 22.7 21.0 32.6% 32.1% Consolidated $ 67.
Slide 20: Organic and Acquired Net Sales
ORGANIC AND ACQUIRED NET SALES (Unaudited) ($ in millions) For the Year For the Three For the Three Months Ended Ended Months Ended April 1, July 1, September 30, December 30, December 30, March 30, 2023 2023 2023 2023 2023 2024 Hydraulics Organic $ 134.0 $ 137.2 $ 121.0 $ 126.6 $ 518.8 $ 140.5 Acqu
Slide 21: Net Sales by Geographic Region & Segment
NET SALES BY GEOGRAPHIC REGION & SEGMENT (Unaudited) ($ in millions) 2023 2024 % Change % Change % Change % Change % Change % Change Q1 y/y Q2 y/y Q3 y/y Q4 y/y 2023 y/y Q1 y/y Americas: Americas: Hydraulics $ 57.9 34% $ 60.6 21% $ 55.7 12% $ 60.2 6% $ 234.4 17% Hydraulics $ 55.8 (4%) Electronics 55
Slide 22: Non-GAAP Adjusted Operating Income & Margin Reconciliation
NON-GAAP ADJUSTED OPERATING INCOME & NON-GAAP ADJUSTED OPERATING MARGIN RECONCILIATION (Unaudited) ($ in millions) Twelve Months For the Three Months Ended Ended March 30, April 1, March 30, 2024 Margin 2023 Margin 2024 Margin GAAP operating income $ 20.3 9.6% $ 24.8 11.6% $ 75.5 9.0% Acquisition-re
Slide 23: Non-GAAP Adj. Net Income & EPS Reconciliation
NON-GAAP ADJ. NET INCOME & NON-GAAP ADJ. NET INCOME PER DILUTED SHARE RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended March 30, Per Diluted April 1, Per Diluted 2024 Share 2023 Share GAAP net income $ 9.2 $ 0.28 $ 13.9 $ 0.42 Amortization of intangible assets (D) 8.1 0.24 8.3 0
Slide 24: Non-GAAP Adjusted EBITDA & Margin Reconciliation
NON-GAAP ADJUSTED EBITDA & NON-GAAP ADJUSTED EBITDA MARGIN RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended Twelve Months Ended Marc h 3 0 , April 1 , Marc h 3 0 , 2024 Margin 2023 Margin 2024 Margin Net inc ome $ 9 .2 4 .3 % $ 1 3 .9 6 .5 % $ 3 2 .8 3 .9 % Interest expense, net
Slide 25: Non-GAAP Adjusted Free Cash Flow Reconciliation
NON-GAAP ADJUSTED FREE CASH FLOW RECONCILIATION (Unaudited) ($ in millions) For the Year Ended TTM Dec ember 3 0 , Dec ember 2 9 , Dec ember 2 8 , January 2 , January 1 , Dec ember 3 1 , Dec ember 3 0 , Marc h 3 0 , 2017 2018 2019 2021 2022 2022 2023 2024 Net c ash provided by operating ac tivities
Slide 26: Non-GAAP Net Sales Growth Reconciliation
NON-GAAP NET SALES GROWTH RECONCILIATION (Unaudited) ($ in millions) F or the Three Months Ended Hydra ul i cs El ectroni cs Cons ol i da ted Q 1 2 0 2 4 Net Sales $ 1 4 2 .4 $ 6 9 .6 $ 2 1 2 .0 Impact of foreign currency translation ( E) 0.2 0.1 0.3 Net Sales in c onstant c urrenc y 1 4 2 .6 6 9 .7
Slide 27: Net Debt to Non-GAAP Adjusted EBITDA Reconciliation
NET DEBT TO NON-GAAP ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) A s of Ma rch 30, 2024 Current portion of long-term non-revolving debt, net 23.2 Revolving lines of credit 205.4 Long-term non-revolving debt, net 292.7 Total debt 5 2 1 .3 Less: Cash and cash equivalents 37.3 Net debt 4
Slide 28: heliostechnologies.com (NYSE: HLIO)
7456 16th Street East Sarasota, FL 34243 941.362.1200 heliostechnologies.com (NYSE: HLIO)