Helios Technologies, Inc. · NYSE:HLIO
Helios Technologies — Q3 2024 Earnings Presentation
31 slides from Helios Technologies's earnings presentation, Nov 6, 2024
Slide 1: Third Quarter 2024 Earnings
Execute. Elevate. HELIOS TECHNOLOGIES (NYSE: HLIO) THIRD QUARTER 2024 EARNINGS SEAN BAGAN, INTERIM PRESIDENT, CEO & CFO | TANIA ALMOND, VP OF IR & CORPORATE COMMUNICATION November 6, 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: Q3 2024 Financial Profile: On Track, Further Improvements
Q1Q3 2024: 2024: Net Sales Cash From ONFURTHER TRACK OUTFINANCIAL $194.5 M -3% YoY Operations $34.8 M OFPROFILE THE GATEIMPROVEMENTS -12% QoQ +195% YoY +3% QoQ • CASH FROM OPERATIONS UP 195% OVER LAST YEAR • STRONG MARGIN IMPROVEMENTS ON LOWER SALES Diluted Adj. EBITDA Non-GAAP • REDUCED DEBT FOR FI
Slide 4: 2024 Hurricanes: Unified Team Overcoming Adversity
2024 HURRICANES: UNIFIED TEAM OVERCOMING ADVERSITY Safety of our people is always top priority; continue working through the recovery and financial impacts Team Injuries from the Hurricanes None Number of Lost Manufacturing Shifts 18 Estimated Revenue Impact ~$10M Estimated Recovery Expenses ~$3M HE
Slide 5: Q3 2024 – Net Sales
Q3 2024 – NET SALES Growth in Health & Wellness partially offset declines in other markets ($ in millions) QUARTERLY TRENDS: SALES BY SEGMENT YoY Direction Market* $201.4 Hydraulics Electronics $194.5 67% 33% Industrial Mobile $195 Agriculture Q3 23 Q3 24 Recreational Health & Wellness Other SALES B
Slide 6: Q3 2024 – Gross Profit and Margin
Q3 2024 – GROSS PROFIT AND MARGIN Absolute growth and margin expansion over the year ago period despite lower volumes ($ in millions) QUARTER • YoY: gross profit increased $0.8 million and gross $67.2 $70.6 margin expanded 150 bps despite lower volume due to $59.7 $55.3 $60.5 lower material costs, r
Slide 7: Q3 2024 – Operating / Adjusted Operating Margin
Q3 2024 – OPERATING / ADJUSTED OPERATING MARGIN Strong operating margin improvement as expected from efficiencies and cost adjustments QUARTER • YoY: GAAP operating income expanded 61% with 16.4% 16.6% 13.7% 14.5% margin expanded 450 bps driven by to lower material 12.6% 4.6% 5.2% 4.9% costs and low
Slide 8: Q3 2024 – Net Income & Adjusted EBITDA & Margin
Q3 2024 – NET INCOME & ADJUSTED EBITDA & MARGIN Strong profitability expansion in the quarter over the year ago period ($ in millions, except per share data) NET INCOME $13.6 $11.4 $9.2 $3.5 $3.3 • YoY: net income up 226% and diluted GAAP Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 EPS up $0.23 Diluted GAAP EPS $
Slide 9: Q3 2024 – Hydraulics Segment
Q3 2024 – HYDRAULICS SEGMENT Industrial and mobile markets grew while offset by weakness in agriculture market compared to year ago period ($ in millions) YoY QoQ Sales: $129.4 2% 11% Gross Profit: $40.9 0% 9% Operating $24.2 32% 1% Income: Q3 SALES BY REGION Q3 SALES BY CHANNEL 32% 40% ~50% APAC $1
Slide 10: Q3 2024 – Electronics Segment
Q3 2024 – ELECTRONICS SEGMENT Increased demand in APAC and EMEA helped to partially offset the decline in the Americas compared to year ago period ($ in millions) YoY QoQ Sales: $65.1 6% 12% Gross Profit: $19.6 5% 24% Operating 62% 34% $6.8 Income: Q3 SALES BY REGION Q3 SALES BY CHANNEL 12% 78% ~79%
Slide 11: Q3 2024 – Cash Flow
Q3 2024 – CASH FLOW Disciplined working capital management growing cash generation ($ in millions) Adjusted Free Cash Flow(1) Three Months Ended 9/28/24 9/30/23 Net Cash Provided by 204% $34.8 $11.8 244% Operating Activities 83% 126% $94.0 79% $91.7 Capital Expenditures (CapEx) (6.0) (5.9) $86.3 $76
Slide 12: Q3 2024 – Capital Structure
Q3 2024 – CAPITAL STRUCTURE Utilizing cash generated to reduce debt and fund organic growth initiatives ($ in millions) DEBT PROFILE CAPITAL ALLOCATION PRIORITIES 1. 2. 3. 4. Pay Down Organic Dividend Acquisitions Debt Investments $483 Total Debt $178 $372 revolver / Liquidity Additional Details oth
Slide 13: Updating Full Year 2024 Outlook
UPDATING FULL YEAR 2024 OUTLOOK Reflecting weaker end markets and hurricane impacts Total Net Sales $800M to $805M Adjusted EBITDA Margin(2) 19.0% 19.6% to Diluted Non-GAAP EPS (1, 2) $2.10 to $2.20 Note: See Supplemental Information for full 2024 outlook line-item details. (1) Reflects a Non-GAAP f
Slide 14: 2024 Segment Outlook
2024 SEGMENT OUTLOOK HYDRAULICS ELECTRONICS Regional Trends AMER EMEA APAC AMER EMEA APAC Positive Catalysts Health & Wellness Ramping Centers of Excellence Commercial Food Service Stable / Moderate Lift Recurring Software (starting in 2024) Flat / No Signs Yet of Bounce Mobile Starting / In a Down
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: Initial Thoughts on 2025
INITIAL THOUGHTS ON 2025 Positioning the business for profitable growth as end markets start to recover • Macro growth appears likely → IMF’s latest World Economic Outlook1 forecasts global GDP growth of 3.3% 1 for 2025. • The U.S. Federal Reserve’s September 20242 "dot plot" shows anticipated inter
Slide 17: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 18: Market Indicators Remain Weak; Manufacturing Soft
MARKET INDICATORS REMAIN WEAK; MANUFACTURING SOFT Purchasing Managers Index Trends NFPA reports total fluid power shipments declined 14.9% in August 2024 compared to the previous year Source: Institute for Supply Chain Management Source: Power&Motion https://www.powermotiontech.com/pneumatics/media-
Slide 19: Agriculture Market Has Been in Steep Decline
AGRICULTURE MARKET HAS BEEN IN STEEP DECLINE Ag Economy Barometer AEM United States Ag Tractor and Combine Report U.S. Unit Retail Sales Source: AEM Source: The AEM Ag Tractor and Combine Report is provided monthly and is derived from AEM member Purdue University Center for Commercial Agriculture, P
Slide 20: Building on a Strong Foundation of Step Level Growth
BUILDING ON A STRONG FOUNDATION OF STEP LEVEL GROWTH OUR SALES PERFORMANCE & CURRENT VIEW HIGHLIGHTS ($ millions) • Transitioning from a holding company to an integrated operating company $869 $885 (1) $836 $803 • Diversifying the business and markets while evolving into selling system solutions • L
Slide 21: Other Modeling Items
OTHER MODELING ITEMS ($ in millions, except per share data) 2024 OUTLOOK ASSUMPTIONS KEY METRICS • Electronics segment to outpace Hydraulics 2023 Actual 2024 Outlook segment driven by Balboa’s core business recovery and identified growth opportunities Total Net Sales $835.6 $800 - $805 Net Income $3
Slide 22: Segment Data
SEGMENT DATA (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended September 28, September 30, September 28, September 30, 2024 2023 2024 2023 Net Sales: Hydraulics $ 129.4 $ 132.0 $ 417.5 $ 432.1 Electronics 65.1 69.4 208.9 210.1 Consolidated $ 194.5 $ 201.4 $ 626.4 $ 642
Slide 23: Organic and Acquired Net Sales
ORGANIC AND ACQUIRED NET SALES (Unaudited) ($ in millions) For the Year For the Nine For the Three Months Ended Ended For the Three Months Ended Months Ended April 1, July 1, September 30, December 30, December 30, March 30, June 29, September 28, September 28, 2023 2023 2023 2023 2023 2024 2024 202
Slide 24: Net Sales by Geographic Region & Segment
NET SALES BY GEOGRAPHIC REGION & SEGMENT (Unaudited) ($ in millions) 2023 2024 % Change % Change % Change % Change % Change % Change % Change % Change Q1 y/y Q2 y/y Q3 y/y Q4 y/y 2023 % Change y/y Q1 y/y Q2 y/y Q3 y/y YTD 2024 y/y Americas: Americas: Hydraulics $ 57.9 34% $ 60.6 21% $ 55.7 12% $ 60.
Slide 25: Non-GAAP Adjusted Operating Income & Margin Reconciliation
NON-GAAP ADJUSTED OPERATING INCOME & NON-GAAP ADJUSTED OPERATING MARGIN RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended Twelve Months Ended September September September September September 28, 2024 Margin 30, 2023 Margin 28, 2024 Margin 30, 2023 Margi
Slide 26: Non-GAAP Adj. Net Income & Per Diluted Share Reconciliation
NON-GAAP ADJ. NET INCOME & NON-GAAP ADJ. NET INCOME PER DILUTED SHARE RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended September Per Diluted September Per Diluted September 28, Per Diluted September 30, Per Diluted 28, 2024 Share 30, 2023 Share 2024 Sha
Slide 27: Non-GAAP Adjusted EBITDA & Margin Reconciliation
NON-GAAP ADJUSTED EBITDA & NON-GAAP ADJUSTED EBITDA MARGIN RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended Twelve Months Ended September September September September September 28, 2024 Margin 30, 2023 Margin 28, 2024 Margin 30, 2023 Margin 28, 2024 Ma
Slide 28: Non-GAAP Adjusted Free Cash Flow Reconciliation
NON-GAAP ADJUSTED FREE CASH FLOW RECONCILIATION (Unaudited) ($ in millions) For the Year Ended TTM December 30, December 29, December 28, January 2, January 1, December 31, December 30, September 28, 2017 2018 2019 2021 2022 2022 2023 2024 Net cash provided by operating activities $ 49.4 $ 77.5 $ 90
Slide 29: Non-GAAP Net Sales Growth Reconciliation
NON-GAAP NET SALES GROWTH RECONCILIATION (Unaudited) ($ in millions) For the Three Months Ended For the Nine Months Ended Hydraulics Electronics Consolidated Hydraulics Electronics Consolidated Q3 2024 Net Sales $ 129.4 $ 65.1 $ 194.5 $ 417.5 $ 208.9 $ 626.4 (E) (0.6) - (0.6) 0.5 0.1 0.6 Impact of f
Slide 30: Net Debt to Non-GAAP Adjusted EBITDA Reconciliation
NET DEBT TO NON-GAAP ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) As of September 28, 2024 Current portion of long-term non-revolving debt, net 17.6 Revolving lines of credit 177.9 Long-term non-revolving debt, net 287.9 Total debt 483.4 Less: Cash and cash equivalents 46.7 Net debt 43
Slide 31: heliostechnologies.com (NYSE: HLIO)
7456 16th Street East Sarasota, FL 34243 941.362.1200 heliostechnologies.com (NYSE: HLIO)