Slide 1: Investor Presentation
Investor Presentation May 2022 Josef Matosevic – President & CEO Tricia Fulton – Chief Financial Officer Tania Almond – VP, 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 $2.1B • Strong finan
Slide 4: Helios Business System
Helios Business System 1 Drive the cash flow engine 1 Champion a global operating mindset 2 Deliver new products 2 Leverage global resources and assets 3 Leverage existing products 3 Manufacture to support diverse end markets 4 Cultivate customer centricity 4 Accelerate innovation 5 Build in the reg
Slide 5: Existing End Markets and New Diversified Opportunities
Existing End Markets and New Diversified Opportunities Industrial Mobile Agriculture Recreational Health & Wellness End Markets Specialty Commercial Commercial Pharmaceutical Off Road Vehicle HVAC Food Service Manufacturing Vehicles New Applications Helios Technologies // Investor Presentation 5
Slide 6: Think and Act Global
Think and Act Global Streamlining the Customer Experience Lifecycle CURRENT STATE FUTURE STATE Customer Helios Team New strategy allows for fewer customer contact points Business Segment and internal efficiencies, resulting in satisfied customers, higher margins, and increased revenue HYDRAULICS Int
Slide 7: M&A Flywheel Acquisition Strategy At Work
M&A Flywheel Acquisition Strategy At Work Taimi Hydraulics Products Innovative hydraulics component designer and manufacturer Swivel Cartridges to complete multiline packages • Founded 2005 -- manufacturer of innovative hydraulic components • Ball-less design swivel products • Improves hydraulic rel
Slide 8: Q1 2022 – Consolidated Results
Q1 2022 – Consolidated Results Sales Gross Profit & Margin ($ millions) ($ millions) $223.4 $223.2 $240.5 $83.6 $217.7 $82.2 $80.9 $204.8 $75.4 $74.3 $90.4 $89.8 $103.4 $86.8 $85.7 $119.1 $133.0 $133.4 $130.9 $137.1 36.8% 36.8% 36.2% 34.2% 34.8% Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q1 21 Q2 21 Q3 21 Q4 21
Slide 9: Q1 2022 – Consolidated Results
Q1 2022 – Consolidated Results Adj. EBITDA Margin(1) Adjusted EBITDA Margin Drivers 25.1% 25.7% 25.1% • Top tier industry performance despite challenging macro 24.6% 24.5% environment highlighting business model leverage 22.7% Diluted Earnings Drivers • Strong operating leverage dropping to the bott
Slide 10: Q1 2022 – Hydraulics Segment
Q1 2022 – Hydraulics Segment Q1 Sales by Region First Quarter Highlights 30% Sales Drivers APAC 31% • Growth as end markets rebound, especially mobile and industrial equipment markets. Improved demand seen in $137 m Americas the Americas and EMEA. • Acquisitions added $6.4 million, with organic reve
Slide 11: Hydraulics Segment Overview
Segment Revenue as % of Total 2020 Total Revenue Hydraulics Segment Overview by Segment, $523 million (TTM 1Q22) 59% $905M $534M Hydraulics (Announced Intent to Acquire) Hydraulics Revenue 1Q 2021 (LTM) by Channel Electronics Revenue Screw-in hydraulic cartridge Quick-release hydraulic Distribution
Slide 12: Hydraulics End Markets Today
Hydraulics End Markets Today Revenue by End Market Defining End Markets (TTM 1Q22)(2) • Channels to market are decades strong • A material “off-balance sheet asset” • Conduit for growth and expansion $534M 3% Mobile Industrial Recreational Agricultural Current Total Addressable Market(1) $32-35B Glo
Slide 13: 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 14: Q1 2022 – Electronics Segment
Q1 2022 – Electronics Segment Q1 Sales by Region First Quarter Highlights 11% Sales Drivers EMEA 75% • Strong demand in health & wellness and recreational markets 14% drove growth in all regions despite approximately $11 million of Americas APAC $103 m delays due to supply chain shortages • FX and a
Slide 15: Electronics Segment Overview
Electronics Segment Overview 2020 Segment Total Revenue Revenue as % of Total by Segment, $523 million (TTM 1Q22) 41% $370M $905M Electronics Hydraulic Control Electronics Revenue 1Q 2021 (LTM) Electronicsby Channel Revenue Solutions Electronic Controls by Channel, $263 million and Accessories for (
Slide 16: Electronics End Markets Today
Electronics End Markets Today Revenue by End Market (FYE 2021)(2) 19% $370 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
Slide 17: 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 18: 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 19: 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 average 3% to 5% ≥$1B • Diversifying our markets, our products and our $905 $869 applications • Leveraging a strong pipeline
Slide 20: Revenue Diversification Expected to Continue
Revenue Diversification Expected to Continue Segment Electronics expected to $197m 2016 Revenue $869M 41% become a much larger 2021 Revenue contributor by 59% 2023 98% Hydraulics Electronics Geographic 22% 26% $197m 48% Geographic 2016 Revenue $869M 49% Diversity Will 30% 2021 Revenue Continue 25% A
Slide 21: Strong Margins with a Pathway to Grow
Strong Margins with a Pathway to Grow Historic and Projected Adj. EBITDA Margin Growth Highlights • Leveraging shared global supply chains • Integrating manufacturing operations and systems 25.4% ~25.0% • Leveraging manufacturing centers in developed and low-cost locations 24.6% 24.5% 24.5% 24.4% •
Slide 22: Strong Cash Flow
Strong Cash Flow Free Cash Flow(1) Three Months Ended ($ millions) 4/2/22 4/3/21 204% 83% Net cash provided by 76% $14.7 $15.1 126% $94.0 operating activities $86.4 $85.4 CapEx (5.6) (5.0) $76.2 105% (1) Free cash flow (FCF) $9.1 $10.1 86% $49.1 Note: Components may not add to totals due to rounding
Slide 23: Capital Allocation Priorities
Capital Allocation Priorities Capital Allocation Priorities Last 5 Years(1) 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 REDUCTI
Slide 24: Capital Structure
Capital Structure Financial Flexibility Capitalization • Cash and cash equivalents up $4.5 million from the end of 2021 4/2/22 4/3/21 • Generated $14.7 million of operating cash flow in Q1 Cash and cash equivalents $33.0 $25.9 (2) • Achieved net debt/pro forma Adjusted EBITDA of 1.79x : Total debt 4
Slide 25: 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 26: 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- ≥$1B in Sales GAAP Cash EPS Growth ~2x EBITDA Margin(1) by YE 2023 CAGR(2) ≥22% Market Rates by YE 2023 With Enhanced Margin Profile (1) Reflects a non-GAAP financial measure; see supplemental slide
Slide 27: Driving Growth and Delivering Profitability
Driving Growth and Delivering Profitability 1 2 3 4 5 Strategy Growth Operational Financial Targets Recap Opportunities Efficiencies Position Expanding existing Meeting revenue goals markets, adding Streamlining sales, Growing free cash flow Pivoting to an operating 2 years early, adjacent markets,
Slide 28: Helios Technologies // Investor Presentation 28
Helios Technologies // Investor Presentation 28
Slide 29: Non-GAAP Reconciliation Tables
Non-GAAP Reconciliation Tables Helios Technologies // Investor Presentation 29
Slide 30: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation (Unaudited) Three Months Ended ($ in thousands) Apri l 2, 2022 Apri l 3, 2021 GAAP operating inc ome $ 4 2 ,8 8 7 $ 3 4 ,6 0 8 Acquisition-related amortization of intangible assets 6,980 10,198 Acquisition and financing-related expenses 859 922 Restructuring
Slide 31: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) Twel ve Months Three Months Ended Ended A pri l 2, 2022 A pri l 3, 2021 A pri l 2, 2022 Net inc ome $ 3 0 ,4 7 8 $ 2 2 ,5 8 7 $ 1 1 2 ,4 8 7 Interest expense, net 3,809 4,751 15,929 Income tax provision 8,774 6,807 28,550 Depreciation and a
Slide 32: Non-GAAP Cash Net Income Reconciliation
Non-GAAP Cash Net Income Reconciliation (Unaudited) ($ in thousands) Three Months Ended Apri l 2, 2022 Apri l 3, 2021 Net inc ome $ 3 0 ,4 7 8 $ 2 2 ,5 8 7 Amortization of intangible assets 7,105 10,231 Acquisition and financing-related expenses 859 922 Restructuring charges 268 418 Officer transiti
Slide 33: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation (Unaudited) ($ in thousands) (Unaudited) ($ in thousands) 2017 2018 2019 2020 2021 Q1 2022 TTM Net c ash provided by operating ac tivities $ 49,382 $ 77,450 $ 90,480 $ 108,556 $ 113,202 $ 112,808 Contingent consideration payment in excess of acquisition date fair value
Slide 34: Net Debt to Adjusted EBITDA Reconciliation
Net Debt to Adjusted EBITDA Reconciliation (Unaudited) ($ in thousands) A s of A pri l 2, 2022 Current portion of long-term non-revolving debt, net $ 18,141 Revolving lines of credit 240,086 Long-term non-revolving debt, net 179,864 Total debt 4 3 8 ,0 9 1 Less: Cash and cash equivalents 33,019 Net