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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-21835

 

HELIOS TECHNOLOGIES, INC.

(Exact Name of Registration as Specified in its Charter)

 

Florida

 

59-2754337

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

7456 16th St E

SARASOTA, Florida

 

34243

(Address of Principal Executive Offices)

 

(Zip Code)

 

(941)362-1200

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock $.001 Par Value

 

HLIO

 

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller Reporting Company

 

 


 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The registrant had 33,052,989 shares of common stock, par value $.001, outstanding as of October 27, 2023.

 


 

Helios Technologies, Inc.

INDEX

For the quarter ended

September 30, 2023

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022

 

3

 

 

 

 

 

Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2023 and October 1, 2022

 

4

 

 

 

 

 

Consolidated Statements of Operations (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022

 

5

 

 

 

 

 

Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2023 and October 1, 2022

 

6

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity (unaudited) for the Three Months Ended September 30, 2023 and October 1, 2022

 

7

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022

 

8

 

 

 

 

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022

 

9

 

 

 

 

 

Condensed Notes to the Consolidated, Unaudited Financial Statements

 

10

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

33

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

33

 

 

 

 

PART II. OTHER INFORMATION

 

34

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

34

 

 

 

 

 

 

Item 1A.

Risk Factors

 

34

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

 

34

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

34

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

34

 

 

 

 

 

 

Item 5.

Other Information

 

34

 

 

 

 

 

 

Item 6.

Exhibits

 

35

 

 

2


 

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in millions, except per share data)

 

 

September 30, 2023

 

 

December 31, 2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

35.2

 

 

$

43.7

 

Accounts receivable, net of allowance for credit losses of $2.0 and $1.5

 

 

131.2

 

 

 

125.1

 

Inventories, net

 

 

208.7

 

 

 

191.6

 

Income taxes receivable

 

 

10.1

 

 

 

10.2

 

Other current assets

 

 

25.0

 

 

 

17.9

 

Total current assets

 

 

410.2

 

 

 

388.5

 

Property, plant and equipment, net

 

 

220.3

 

 

 

175.7

 

Deferred income taxes

 

 

2.1

 

 

 

1.6

 

Goodwill

 

 

502.7

 

 

 

468.5

 

Other intangible assets, net

 

 

426.4

 

 

 

405.6

 

Other assets

 

 

28.9

 

 

 

23.8

 

Total assets

 

$

1,590.6

 

 

$

1,463.7

 

Liabilities and shareholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

65.0

 

 

$

73.7

 

Accrued compensation and benefits

 

 

19.2

 

 

 

21.1

 

Other accrued expenses and current liabilities

 

 

22.3

 

 

 

32.0

 

Current portion of long-term non-revolving debt, net

 

 

21.8

 

 

 

19.0

 

Dividends payable

 

 

2.9

 

 

 

2.9

 

Income taxes payable

 

 

5.1

 

 

 

3.6

 

Total current liabilities

 

 

136.3

 

 

 

152.3

 

Revolving lines of credit

 

 

217.9

 

 

 

261.3

 

Long-term non-revolving debt, net

 

 

304.2

 

 

 

164.2

 

Deferred income taxes

 

 

57.2

 

 

 

61.0

 

Other noncurrent liabilities

 

 

33.0

 

 

 

30.0

 

Total liabilities

 

 

748.6

 

 

 

668.8

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, par value $0.001, 2.0 shares authorized,
   
no shares issued or outstanding

 

 

 

 

 

 

Common stock, par value $0.001, 100.0 shares authorized,
   
33.0 and 32.6 shares issued and outstanding

 

 

 

 

 

 

Capital in excess of par value

 

 

431.6

 

 

 

404.3

 

Retained earnings

 

 

475.3

 

 

 

450.0

 

Accumulated other comprehensive loss

 

 

(64.9

)

 

 

(59.4

)

Total shareholders' equity

 

 

842.0

 

 

 

794.9

 

Total liabilities and shareholders' equity

 

$

1,590.6

 

 

$

1,463.7

 

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

3


 

Helios Technologies, Inc.

Consolidated Statements of Operations (unaudited)

(in millions, except per share data)

 

 

 

Three Months Ended

 

 

 

September 30, 2023

 

 

October 1, 2022

 

Net sales

 

$

201.4

 

 

$

207.2

 

Cost of sales

 

 

141.7

 

 

 

137.9

 

Gross profit

 

 

59.7

 

 

 

69.3

 

Selling, engineering and administrative expenses

 

 

37.7

 

 

 

31.7

 

Amortization of intangible assets

 

 

8.2

 

 

 

6.8

 

Operating income

 

 

13.8

 

 

 

30.7

 

Interest expense, net

 

 

8.7

 

 

 

4.1

 

Foreign currency transaction loss (gain), net

 

 

0.1

 

 

 

(0.2

)

Other non-operating expense, net

 

 

 

 

 

0.2

 

Income before income taxes

 

 

5.0

 

 

 

26.7

 

Income tax provision

 

 

1.5

 

 

 

6.3

 

Net income

 

$

3.5

 

 

$

20.4

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

0.11

 

 

$

0.63

 

Diluted

 

$

0.11

 

 

$

0.63

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

33.0

 

 

 

32.5

 

Diluted

 

 

33.1

 

 

 

32.6

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.09

 

 

$

0.09

 

 

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

 

4


 

Helios Technologies, Inc.

Consolidated Statements of Operations (unaudited)

(in millions, except per share data)

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

October 1, 2022

 

Net sales

 

$

642.2

 

 

$

689.4

 

Cost of sales

 

 

435.7

 

 

 

454.2

 

Gross profit

 

 

206.5

 

 

 

235.2

 

Selling, engineering and administrative expenses

 

 

113.8

 

 

 

98.1

 

Amortization of intangible assets

 

 

24.7

 

 

 

20.6

 

Operating income

 

 

68.0

 

 

 

116.6

 

Interest expense, net

 

 

22.6

 

 

 

11.7

 

Foreign currency transaction loss (gain), net

 

 

0.6

 

 

 

(1.3

)

Other non-operating expense, net

 

 

 

 

 

1.5

 

Income before income taxes

 

 

44.8

 

 

 

104.7

 

Income tax provision

 

 

10.7

 

 

 

23.8

 

Net income

 

$

34.1

 

 

$

80.9

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

1.04

 

 

$

2.49

 

Diluted

 

$

1.04

 

 

$

2.48

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

32.8

 

 

 

32.5

 

Diluted

 

 

33.0

 

 

 

32.6

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.27

 

 

$

0.27

 

 

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

5


 

Helios Technologies, Inc.

Consolidated Statements of Comprehensive (Loss) Income (unaudited)

(in millions)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

October 1, 2022

 

 

September 30, 2023

 

 

October 1, 2022

 

Net income

 

$

3.5

 

 

$

20.4

 

 

$

34.1

 

 

$

80.9

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

 

(10.2

)

 

 

(20.2

)

 

 

(6.5

)

 

 

(47.1

)

Unrealized gain on interest rate swaps, net of tax

 

 

0.9

 

 

 

3.2

 

 

 

1.0

 

 

 

10.5

 

Total other comprehensive loss

 

 

(9.3

)

 

 

(16.9

)

 

 

(5.5

)

 

 

(36.5

)

Comprehensive (loss) income

 

$

(5.8

)

 

$

3.4

 

 

$

28.6

 

 

$

44.3

 

 

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

 

6


 

Helios Technologies, Inc.

Consolidated Statements of Shareholders’ Equity (unaudited)

Three Months Ended

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

other

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

Common

 

 

Common

 

 

excess of

 

 

Retained

 

 

comprehensive

 

 

 

 

 

 

shares

 

 

stock

 

 

shares

 

 

stock

 

 

par value

 

 

earnings

 

 

loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 1, 2023

 

 

 

 

$

 

 

 

33.0

 

 

$

 

 

$

428.4

 

 

$

474.7

 

 

$

(55.6

)

 

$

847.5

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.6

 

 

 

 

 

 

 

 

 

0.6

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.7

 

 

 

 

 

 

 

 

 

2.7

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

(0.1

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.9

)

 

 

 

 

 

(2.9

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.5

 

 

 

 

 

 

3.5

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9.3

)

 

 

(9.3

)

Balance at September 30, 2023

 

 

 

 

$

 

 

 

33.0

 

 

$

 

 

$

431.6

 

 

$

475.3

 

 

$

(64.9

)

 

$

842.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 2, 2022

 

 

 

 

$

 

 

 

32.5

 

 

$

 

 

$

397.6

 

 

$

417.9

 

 

$

(68.6

)

 

$

747.0

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5

 

 

 

 

 

 

 

 

 

0.5

 

Shares issued, acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.6

 

 

 

 

 

 

 

 

 

1.6

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.8

 

 

 

 

 

 

 

 

 

1.8

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.9

)

 

 

 

 

 

(2.9

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20.4

 

 

 

 

 

 

20.4

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16.9

)

 

 

(16.9

)

Balance at October 1, 2022

 

 

 

 

$

 

 

 

32.5

 

 

$

 

 

$

401.5

 

 

$

435.4

 

 

$

(85.5

)

 

$

751.4

 

 

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

 

7


 

Helios Technologies, Inc.

Consolidated Statements of Shareholders’ Equity (unaudited)

Nine Months Ended

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

other

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

Common

 

 

Common

 

 

excess of

 

 

Retained

 

 

comprehensive

 

 

 

 

 

 

shares

 

 

stock

 

 

shares

 

 

stock

 

 

par value

 

 

earnings

 

 

loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

 

 

$

 

 

 

32.6

 

 

$

 

 

$

404.3

 

 

$

450.0

 

 

$

(59.4

)

 

$

794.9

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.6

 

 

 

 

 

 

 

 

 

1.6

 

Shares issued, acquisition

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

18.7

 

 

 

 

 

 

 

 

 

18.7

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9.2

 

 

 

 

 

 

 

 

 

9.2

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.2

)

 

 

 

 

 

 

 

 

(2.2

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8.8

)

 

 

 

 

 

(8.8

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34.1

 

 

 

 

 

 

34.1

 

Other comprehensive loss