Slide 1: Fourth Quarter 2023 Earnings
FOURTH QUARTER 2023 EARNINGS FEBRUARY 27, 2024 J O S E F M AT O S E V I C , P R E S I D E N T & C E O | S E A N B A G A N , C F O | T A N I A A L M O N D , V P O F I R & C O R P. C O M M .
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,
Slide 3: Q4 2023 Business Summary
Q4 2023 BUSINESS SUMMARY NAVIGATING HEADWINDS YoY revenue for Hydraulics (5%) and Electronics +7%; QoQ revenue for Hydraulics +1% and Electronics (14%) reflecting SUSTAINED MARKET CONDITIONS driven by macroeconomic factors influencing customer behavior across multiple end markets HELIOS TEAM continu
Slide 4: Strategic Investments Made Over the Last Several Years
STRATEGIC INVESTMENTS MADE OVER THE LAST SEVERAL YEARS 1 2 3 4 5 Product Innovation Acquisitions Capacity Regional Structure Systems / Software Helios continues to be a Helios is enhancing its Helios is bringing Helios is maximizing Helios is leveraging leading innovator technology, expanding ~200,0
Slide 5: Strategic Investments in Capacity to Meet Future Demand
STRATEGIC INVESTMENTS IN CAPACITY TO MEET FUTURE DEMAND COMPLETE: New capacity COMPLETE: Automated IN PROCESS: New in India @ Faster Warehouse in Italy @ Faster capacity in Italy @ Faster Additional New capacity Newly opened Automated Warehouse Current Added ~22,000 sq. ft. to Added 22,600 sq. ft. o
Slide 6: Strategic Investments in Capacity to Meet Future Demand
STRATEGIC INVESTMENTS IN CAPACITY TO MEET FUTURE DEMAND COMPLETE: New Hydraulic COMPLETE: New Hydraulic COMPLETE: New capacity Valve and Coupling Solutions Manifold Solutions Center of expansion in Tijuana, Center of Excellence in Excellence in Indiana @ Mexico @ Balboa Sarasota @ Sun Daman New Buil
Slide 7: Q4 2023 Financial Results Highlights
Q4 2023 FINANCIAL RESULTS HIGHLIGHTS ($ in millions) Sales • YoY sales up 7% in Electronics and down 5% in Hydraulics which was spread across several end markets served -1% YoY • QoQ sales up 1% increase in Hydraulics and down 14% in $193.4 Electronics driven by swift macroeconomic shifts cited in 3
Slide 8: Q4 2023 Financial Results Highlights
Q4 2023 FINANCIAL RESULTS HIGHLIGHTS Operating Expenses YoY • SEA dollars declined QoQ by $2.5 million, or down 7%, primarily 6.2% -440 bps driven by cost control measures deployed during 2H23 despite absorbing higher run-rate SEA from 1H23 acquisitions; YoY increased slightly compared to the prior-
Slide 9: Q4 2023 Financial Results Highlights
Q4 2023 FINANCIAL RESULTS HIGHLIGHTS ($ in millions, except per share data) YoY YoY $3.3 -81% 16.7% -330 bps Net Income Adj. EBITDA Margin (1) QoQ QoQ -6% -100 bps YoY YoY $0.10 -81% $0.38 (1) -51% Diluted GAAP EPS QoQ Diluted Non-GAAP EPS -9% QoQ -14% 16% (1) Reflects a non-GAAP financial measure;
Slide 10: Q4 2023 Consolidated Results
Q4 2023 CONSOLIDATED RESULTS Sales Gross Profit & Margin ($ millions) ($ millions) $227.6 $213.2 $201.4 $75.8 $196.0 $193.4 $71.0 $63.2 $59.7 $65.5 $75.2 $55.3 $55.8 $69.4 $59.7 $140.2 $147.7 $152.4 $133.7 $132.0 32.2% 33.3% 33.3% 29.6% 28.6% Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q4 22 Q1 23 Q2 23 Q3 23 Q4
Slide 11: Q4 2023 Consolidated Results
Q4 2023 CONSOLIDATED RESULTS Adjusted EBITDA Margin Drivers (1) Adj. EBITDA Margin • Adjusted EBITDA margin down QoQ 100 basis points at 16.7% in Q4 reflecting items discussed while investing for future growth 23.2% 22.0% Diluted Earnings Drivers 20.3% 20.0% • Tailwinds: cost control, manufacturing
Slide 12: Q4 2023 – Hydraulics Segment
Q4 2023 – HYDRAULICS SEGMENT Fourth Quarter Highlights Q4 Sales by Region Sales Drivers • Sales down 5% YoY driven by sales declines in EMEA and APAC partially 26% offset by growth in the Americas; sales declined broadly across several APAC 45% end markets Americas • Sales up 1% QoQ driven by growin
Slide 13: Q4 2023 – Electronics Segment
Q4 2023 – ELECTRONICS SEGMENT Fourth Quarter Highlights Q4 Sales by Region Sales Drivers • Sales up 7% YoY driven by sales increases in all regions with 9% the largest contribution from APAC. YoY end market increases APAC 81% driven by health and wellness 10% $60 m Americas • Sales down 14% QoQ as e
Slide 14: Cash Flow
CASH FLOW ($ in millions) Three Months Twelve Months Free Cash Flow(1) Ended Ended ($ millions) 12/30/23 12/31/22 12/30/23 12/31/22 204% 83% Adjusted net cash provided by $33.7 $35.7 $86.6 $109.9 126% $94.0 79% operating activities $86.3 $76.2 $78.0 Capital Expenditures (8.8) (10.0) (34.3) (31.9) 10
Slide 15: Capital Structure
CAPITAL STRUCTURE Capital Deployment Priorities 1 2 3 Organic Investment Dividend Acquisitions ($ in millions) Financial Flexibility Capitalization • Generated $33.7 million of cash from operations in Q4 12/30/23 12/31/22 (2) • Net debt/pro forma Adjusted EBITDA of 3.01x with a focus on debt Cash an
Slide 16: Establishing Full Year 2024 Outlook
ESTABLISHING FULL YEAR 2024 OUTLOOK Total Company Sales Segment Sales 2024 Outlook Assumptions $ in Millions $ in Millions • Sales guidance excludes any potential new large system sales opportunities • Expecting mid- to high-single digit top line growth sequentially in Q1 Hydraulics • Electronics se
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 ($ in millions) • Transitioning from a holding company to an integrated operating company $869 $885 (1) $836 $850 • Diversifying the business and markets while evolving into selling system solutions • Leve
Slide 18: Maintaining Healthy Margins While Investing for Growth
MAINTAINING HEALTHY MARGINS WHILE INVESTING FOR GROWTH Historic / Projected Capex & Adj. EBITDA Margin(1) Highlights ($ in millions) • Integrating manufacturing operations and leveraging regional 25.4% 24.4% 24.5% 24.6% Centers of Excellence to position for long term growth 23.6% 23.2% 23.2% • Lever
Slide 19: 2024 Financial Priorities
2024 FINANCIAL PRIORITIES RETURN TO GROWTH executing on profitable sales growth plan DRIVE OPERATING LEVERAGE with higher volumes and disciplined investment and cost management SHORTEN CASH CONVERSION CYCLE through improved working capital management REDUCE DEBT utilizing free cash flow conversion p
Slide 20: Supplemental Information
SUPPLEMENTAL INFORMATION
Slide 21: Segment Data
SEGMENT DATA (Unaudited) ($ in millions) HELIOS TECHNOLOGIES INVESTOR PRESENTATION 21
Slide 22: Organic and Acquired Net Sales
ORGANIC AND ACQUIRED NET SALES (Unaudited) ($ in millions) For the Three Months Ended For the Year Ended For the Three Months Ended For the Year Ended April 2, July 2, October 1, December 31, December 31, April 1, July 1, September 30, December 30, December 30, 2022 2022 2022 2022 2022 2023 2023 202
Slide 23: Net Sales by Geographic Region & Segment
NET SALES BY GEOGRAPHIC REGION & SEGMENT (Unaudited) ($ in millions) 2023 2022 % Change % Change % Change % Change Full % Change % Change % Change % Change % Change Full % Change Q1 y/y Q2 y/y Q3 y/y Q4 y/y Year y/y Q1 y/y Q2 y/y Q3 y/y Q4 y/y Year y/y Americas: Americas: Hydraulics $ 57.9 34% $ 60.
Slide 24: Non-GAAP Adjusted Operating Income & Margin Reconciliation
NON-GAAP ADJUSTED OPERATING INCOME & NON-GAAP ADJUSTED OPERATING MARGIN RECONCILIATION (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted operating margin is adjusted operating income divided by net sales. Adjusted operating income and adjusted operating margin are not measures determi
Slide 25: Non-GAAP Adjusted Net Income & Per Diluted Share Reconciliation
NON-GAAP ADJUSTED NET INCOME & NON-GAAP ADJUSTED NET INCOME PER DILUTED SHARE RECONCILIATION (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted net income per diluted share is adjusted net income divided by diluted weighted average common shares outstanding. Adjusted net income and adj
Slide 26: Non-GAAP Adjusted EBITDA & Margin Reconciliation
NON-GAAP ADJUSTED EBITDA & NON-GAAP ADJUSTED EBITDA MARGIN RECONCILIATION (Unaudited) ($ in millions) (A) Acquisition and financing-related expenses include costs associated with our M&A activities. We believe these costs are not representative of the Company's operational performance and it is ther
Slide 27: Non-GAAP Adjusted Free Cash Flow Reconciliation
NON-GAAP ADJUSTED FREE CASH FLOW RECONCILIATION (Unaudited) ($ in millions) Non-GAAP Financial Measure: Adjusted net cash provided by operating activities is net cash provided by operating activities less contingent consideration payment in excess of acquisition date fair value. Free cash flow is ne
Slide 28: Non-GAAP Net Sales Growth Reconciliation
NON-GAAP NET SALES GROWTH RECONCILIATION (Unaudited) ($ in millions) Non-GAAP Financial Measure: Net sales in constant currency is net sales adjusted for the impact of foreign currency translation. The impact from foreign currency translation is calculated by translating current period activity at a
Slide 29: Net Debt to Non-GAAP Adjusted EBITDA Reconciliation
NET DEBT TO NON-GAAP ADJUSTED EBITDA RECONCILIATION (Unaudited) ($ in millions) Non-GAAP Financial Measure: Net debt is total debt minus cash and cash equivalents. Net debt-to-adjusted EBITDA is net debt divided by adjusted EBITDA. Net debt and net debt-to-adjusted EBITDA are not measures determined
Slide 30: @)nsues
@)nsues AUGMENTING S°aATEG- ADVANCING 1 2SHNOLOGIES ACCELERATING uiiu wit