- Sales of $136.2 million, up
52%
- Net income of $6.8 million; non-GAAP
net income of $13.7 million
- Adjusted EBITDA of $34.9 million,
25.6% of sales
- Raising 2018 revenue guidance to
$510 million to $525 million
- Includes Custom Fluidpower since
August 1, 2018 acquisition
Helios Technologies (formerly known as Sun Hydraulics)
(Nasdaq: SNHY) (“Helios” or the “Company”), a global
industrial technology leader that develops and manufactures
solutions for both the hydraulics and electronics markets, today
reported financial results for the second quarter and first half of
2018, ended June 30, 2018. The results include Faster Group since
its acquisition on April 5, 2018.
Wolfgang Dangel, Helios Technologies’ President and Chief
Executive Officer, commented, “We are pleased to report record
quarterly sales, driven by the inclusion of Faster Group as well as
strong organic growth. Faster sales grew 25% over the prior-year
second quarter on a pro forma basis and our integration activities
have already begun and are progressing well. Our organic businesses
grew 9%, with our legacy Hydraulics business growing 7% and our
Electronics segment growing 14%. In our legacy Hydraulics business,
we have seen record order levels and expect that shipments in the
second half of the year will be stronger than the first half.”
He added, “Demand is continuing at very strong levels globally,
especially in the Asia-Pacific region. As we are working diligently
to keep up with customer demand, we made good progress during the
quarter to alleviate the impact of the supply chain constraints
that began a couple of quarters ago. We were pleased that our
operational progress resulted in a 25.6% adjusted EBITDA margin in
the quarter. However, backlog did grow. We anticipate further
improvements in our operational results as we progress through the
second half of 2018, including a reduction of our backlog.
“Strategically, we recently completed a couple of actions
separately announced. First, the change to our new business name,
Helios Technologies, is an integral part of our Vision 2025. As we
have been growing our portfolio of complementary businesses, it is
important to have an identity separate from our operating brands.
Second, the acquisition of Custom Fluidpower on August 1 is an
important stepping stone to further our growth in the Asia-Pacific
region,” Mr. Dangel noted.
Second Quarter 2018 Consolidated Results
($ in millions, except per share data)
Q2
2018 Q2 2017 Change %
Change Net sales $ 136.2 $ 89.3 $ 46.9 52 % Gross profit
$ 50.4 $ 38.6 $ 11.8 31 % Gross margin 37.0 % 43.2 % Operating
income $ 17.0 $ 20.7 $ (3.7 )
(18
%)
Operating margin 12.5 % 23.2 % Non-GAAP adjusted operating margin
23.5 % 25.5 % Net income $ 6.8 $ 7.3 $ (0.5 )
(7
%)
Diluted EPS $ 0.22 $ 0.27 $ (0.05 )
(19
%)
Non-GAAP adjusted net income $ 13.7 $ 12.8 $ 0.9 7 % Non-GAAP
adjusted EPS $ 0.43 $ 0.47 $ (0.04 )
(9
%)
Sales in the 2018 second quarter grew by $46.9 million, or 52%
over the same period last year, with the Faster business
contributing $38.7 million, while organic business sales grew 9%.
The Faster sales reflect 25% growth over the 2017 second quarter on
a pro forma basis. Order demand remained strong in the organic
business but shipments were hampered by ongoing supply chain
constraints, which have shown improvement over the first quarter of
2018. Sales to the Americas, Europe/Middle East/Africa (“EMEA”) and
Asia Pacific (“APAC”) comprised 50%, 32% and 18% of consolidated
sales, respectively. Foreign currency translation favorably
impacted consolidated sales by approximately $0.4 million.
Gross profit and gross margin in the second quarter of 2018 were
unfavorably impacted by $3.1 million for amortization of inventory
valuation step-up resulting from the Faster acquisition.
Additionally, while the Faster acquisition and sales growth drove
increases in gross profit, gross margin was unfavorably impacted by
ongoing supply chain constraints and higher material costs which
have lessened as the Company progresses through 2018. These are
explained further below in the segment reviews.
The factors that impacted gross profit and gross margin also
impacted operating income and operating margin, as well as $3.7
million of acquisition and financing-related expenses. Operating
income in the second quarter of 2018 reflects $8.0 million of
acquisition-related amortization of intangible assets, compared
with $2.0 million in the prior-year second quarter.
Non-GAAP adjusted operating margin was 23.5% in the 2018 quarter
compared with 25.5% a year ago. The decrease is primarily due to
the supply chain constraints and higher material costs noted above.
See the attached tables for additional important disclosures
regarding Helios’ use of non-GAAP adjusted operating income and
non-GAAP adjusted operating margin as well as a reconciliation of
net income to non-GAAP adjusted operating income.
Net interest expense was $4.2 million compared with $1.0 million
in the prior-year period, with the increase due to the debt to fund
the Faster acquisition.
In the second quarter, Helios incurred a $2.0 million net
foreign currency transaction loss associated with locking the
Faster Group purchase price in euros, unfavorably impacting results
in the second quarter of 2018. Additionally, the Company incurred
$1.3 million of net foreign currency transaction losses due to
significant currency fluctuation during the 2018 second
quarter.
The Company recorded a $0.3 million charge for accretion of the
contingent consideration associated with the Enovation Controls
acquisition, compared with an $8.2 million increase to the fair
value of the liability in last year’s quarter.
The Tax Cuts and Jobs Act was the primary factor resulting in a
lower effective tax rate in the 2018 second quarter, at 26.3%,
compared with 33.2% in the second quarter of 2017.
Net income was $6.8 million, or $0.22 per share in the second
quarter of 2018. Non-GAAP net income was $13.7 million, or $0.43
per share, compared with $12.8 million, or $0.47 per share, in the
prior-year second quarter. See the attached tables for additional
important disclosures regarding Helios’ use of non-GAAP net income
and non-GAAP EPS as well as a reconciliation of net income to
non-GAAP net income.
Second Quarter
Adjusted EBITDA ($ in millions)
Q2 2018 Q2 2017
Change % Change Adjusted EBITDA $ 34.9 $ 24.8
$ 10.1 41 % Adjusted EBITDA margin 25.6 % 27.8 %
Second quarter 2018 Adjusted EBITDA (earnings before net
interest expense, income taxes, depreciation and amortization, and
certain amortization and non-recurring charges) was $34.9 million,
or 25.6% of sales.
Helios believes that, when used in conjunction with measures
prepared in accordance with GAAP, Adjusted EBITDA and Adjusted
EBITDA margin (Adjusted EBITDA as a percentage of sales), which are
non-GAAP measures, help in the understanding of its operating
performance. See the attached tables for additional important
disclosures regarding Helios’ use of Adjusted EBITDA and Adjusted
EBITDA margin as well as a reconciliation of net income to Adjusted
EBITDA.
First Half 2018 Consolidated Results
($ in millions, except per share data)
2018 2017 Change %
Change Net sales $ 233.5 $ 170.7 $ 62.8 37 % Gross profit $
88.0 $ 71.4 $ 16.6 23 % Gross margin 37.7 % 41.8 % Operating income
$ 34.3 $ 36.5 $ (2.2 )
(6
%)
Operating margin 14.7 % 21.4 % Non-GAAP adjusted operating margin
22.5 % 25.1 % Net income $ 18.7 $ 17.5 $ 1.2 7 % Diluted EPS $ 0.61
$ 0.65 $ (0.04 )
(6
%)
Non-GAAP Adjusted net income $ 27.3 $ 24.3 $ 3.0
12
%
Non-GAAP adjusted EPS $ 0.89 $ 0.90 $ (0.01 )
(1
%)
Sales in the 2018 first half grew $62.8 million, or 37%, over
the prior year, with Faster contributing $38.7 million, while
organic business sales grew 14%. Foreign currency translation
favorably impacted consolidated sales by approximately $2.8
million.
Operating income in the first half of 2018 was impacted by
acquisition-related items, including $3.1 million for amortization
of inventory valuation, $4.9 million for acquisition and
financing-related expenses, $0.2 million for restructuring charges
and $10.0 million for acquisition-related amortization of
intangible assets. Operating income in the first half of 2017 was
similarly impacted by $1.8 million for amortization of inventory
valuation, $0.2 million for acquisition and financing-related
expenses and $4.3 million for acquisition-related amortization of
intangible assets.
Non-GAAP adjusted operating margin was 22.5% in the 2018 first
half compared with 25.1% in the prior-year period. The decrease is
primarily due to the supply chain constraints and higher material
costs noted above, as well as other operational costs noted in the
first quarter. See the attached tables for additional important
disclosures regarding Helios’ use of non-GAAP adjusted operating
income and non-GAAP adjusted operating margin as well as a
reconciliation of net income to non-GAAP adjusted operating
income.
Net interest expense was $4.6 million compared with $1.6 million
for the first half of 2017, with the increase primarily due to debt
to fund the Faster acquisition.
A foreign currency transaction loss, change in fair value of
contingent consideration and effective tax rate are consistent with
the fluctuations described above for the second quarter.
Net income was $18.7 million, or $0.61 per share. Non-GAAP net
income was $27.3 million, or $0.89 per share, compared with $24.3
million, or $0.90 per share, last year. See the attached tables for
additional important disclosures regarding Helios’ use of non-GAAP
net income and non-GAAP EPS as well as a reconciliation of net
income to non-GAAP net income.
First Half 2018
Adjusted EBITDA ($ in millions)
2018 2017
Change % Change Adjusted EBITDA $ 58.2 $ 47.7 $ 10.5
22 % Adjusted EBITDA margin 24.9 % 27.9 %
First half 2018 Adjusted EBITDA was $58.2 million, or 24.9% of
sales.
Helios believes that, when used in conjunction with measures
prepared in accordance with GAAP, Adjusted EBITDA and Adjusted
EBITDA margin, which are non-GAAP measures, help in the
understanding of its operating performance. See the attached tables
for additional important disclosures regarding Helios’ use of
Adjusted EBITDA and Adjusted EBITDA margin as well as a
reconciliation of net income to Adjusted EBITDA.
Hydraulics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales of $103.6 million grew 70.4% over the prior-year
second quarter. The $42.8 million increase included $38.7 million
from the Faster business and 7% of organic growth. Growth was
driven by increased demand in all geographies and end markets, and
was also positively impacted by global sales and marketing
initiatives. Orders outpaced revenue, however, supply chain
constraints impacted the segment’s ability to complete and ship
certain products. This is leading to a stronger back half of the
year. Including Faster, sales to the Americas, EMEA and APAC were
up 41%, 144% and 46%, respectively. Foreign currency translation
favorably impacted segment sales by $0.1 million, of which $0.9
million favorable effect was recognized by the Sun Hydraulics
business, offset by $0.8 million unfavorable effect recognized by
the Faster business.
Second quarter operating and gross margins were lower than last
year but showed sequential improvement over the first quarter of
2018. While significant customer demand continued, the segment
realized improvements in its supply chain activities and recognized
production efficiencies compared with previous quarters. Material
cost increases persisted, but are expected to be alleviated in the
third quarter of 2018 as Sun’s price increases take effect.
Higher SEA (selling, engineering and administrative) expenses
and R&D (research and development) expenses in the 2018 quarter
include $5.3 million for the Faster business, partially offset by
reduced costs and efficiencies realized by the historical Sun
business.
Second quarter operating income increased $9.0 million, or 55%,
to $25.4 million, representing 24.5% of sales.
For the first half, segment sales grew $51.3 million, of which
$38.7 million was contributed by Faster and 11% growth was realized
organically. Operating income for the first half of 2018 was $38.8
million, or 23.3% of sales.
Electronics Segment Review
(Refer to sales by geographic region and segment data in
accompanying tables)
Segment sales grew to $32.5 million for the second quarter, an
increase of 14% over the second quarter of last year. Growth was
driven by increased demand in power controls and recreational
vehicle end markets. Proactive sales initiatives and increased
demand for new products developed in the past year also contributed
to the 2018 growth. Foreign currency translation favorably impacted
segment sales by $0.3 million.
Similar to the Hydraulics segment, second quarter gross margin
was lower than last year but showed sequential improvement over the
first quarter of 2018. Improved productivity partially offset
ongoing higher material and freight costs, resulting in lower gross
margin compared with the prior year. SEA costs increased by $1.0
million due to planned investments in sales and marketing
initiatives, and research and development to support the segment’s
growth strategy, as well as increased accounting and administrative
infrastructure costs.
Given the gross margin pressures and SEA investments, second
quarter operating income was relatively flat compared with the
prior-year second quarter, at $6.5 million, or 20.0% of sales.
For the first half, segment sales grew $11.4 million, or 20.4%.
Operating income for the first half of 2018 was $13.6 million, or
20.2% of sales.
Balance Sheet and Cash Flow Review
Total debt was $355.2 million at June 30, 2018, up from $116.0
million at December 30, 2017, with the increase primarily to fund
the Faster acquisition. Cash and cash equivalents at June 30, 2018
were $29.9 million, compared with $63.9 million at the end of
2017.
Cash provided by operations was $31.1 million and $21.7 million
for the first half of 2018 and 2017, respectively. The increase was
driven by strong second quarter cash flows, primarily due to higher
net income and improved working capital utilization, especially
inventory.
Capital expenditures were $10.6 million and $3.3 million for the
first half of 2018 and 2017, respectively. The increase was
primarily for machinery and equipment and costs for the ongoing
construction of the Company’s new production facility in South
Korea.
2018 Outlook and Guidance
Mr. Dangel stated, “Our organic businesses and the Faster Group
remain on track with the revenue expectations we previously
reported. However, the addition of Custom Fluidpower has resulted
in an increase to our revenue guidance as well as some of our other
metrics. Additionally, we are adjusting our consolidated operating
margin guidance modestly.”
The following summarizes the Company’s updated expectations for
2018, including Custom Fluidpower since its August 1 acquisition,
compared with previously provided guidance:
Previous 2018Guidance
Updated 2018 Guidance
Consolidated revenue $490 - $505 million
$510 - $525 million
Hydraulics segment revenue $368 - $378 million
$388 - $398
million Electronics segment revenue $122 - $127 million
$122
- $127 million Consolidated operating margin (1) 22.7% -
24.0%(1)
21.7% - 23.0%(1) Consolidated interest
expense $10.5 - $12.0 million
$13.5 - $14.5 million
Effective tax rate 24.5% - 26.5%
24.5% - 26.5% Capital
expenditures $20 - $25 million
$25 - $30 million
Depreciation $14.5 - $15.5 million
$16.5 - $17.5 million
Amortization $20 - $21 million
$22.5 - $23.5 million (1)
Operating margin is non-GAAP, before acquisition-related
amortization of intangibles and one-time costs
Mr. Dangel concluded, “Step by step, we are striving to become a
leading global designer and manufacturer of intelligent systems and
controls. We are diligently and carefully working toward the
attainment of our Vision 2025 goals, to achieve global technology
leadership in the industrial good section with critical mass
exceeding $1 billion in sales while maintaining our superior
profitability and financial strength.”
Webcast
The Company will host a conference call and webcast tomorrow
morning at 9:00 a.m. Eastern Time to review its financial and
operating results, and discuss its corporate strategies and
outlook. A question-and-answer session will follow.
The conference call can be accessed by calling (201) 689-8573.
The audio webcast can be monitored at www.heliostechnologies.com.
Participants will have the ability to ask questions on either the
teleconference call or the webcast.
A telephonic replay will be available from 12:00 p.m. ET on the
day of the call through Tuesday, August 14, 2018. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13681117. The webcast replay will be available in the investor
relations section of the Company’s website at
www.heliostechnologies.com, where a transcript will also be posted
once available.
About Helios Technologies
Helios Technologies is the business name for Sun Hydraulics
Corporation, a publicly-listed company on the Nasdaq Global Stock
Market (SNHY). Helios Technologies is a global industrial
technology leader that develops and manufactures hydraulic and
electronic control solutions for diverse markets. The Company does
business through its operating subsidiaries around the world,
including Sun Hydraulics, LLC, Enovation Controls, LLC and Faster
S.p.A. Through its Hydraulics segment, the Company serves diverse
markets including material handling, construction equipment,
agriculture, specialized vehicles, energy and others through its
Sun Hydraulics and Faster Group companies, providing
high-performance screw-in hydraulic cartridge valves and manifolds
as well as quick-release hydraulic coupling solutions. Through its
Electronics segment, the Company provides electronic control
solutions through Enovation Controls for recreational and
off-highway vehicles, as well as industrial stationary and mobile
power equipment. Helios Technologies and information about its
associated companies is available online at
www.heliostechnologies.com.
FORWARD-LOOKING INFORMATION
This news release contains “forward‐looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward‐looking statements involve risks and uncertainties, and
actual results may differ materially from those expressed or
implied by such statements. They include statements regarding the
intent, belief or current expectations, estimates, vision or
projections of Sun Hydraulics Corporation (“Helios” or the
“Company”), its directors or its officers about the Company and the
industry in which it operates, and assumptions made by management,
and include among other items, (i) the Company’s strategies
regarding growth, including its intention to develop new products
and make acquisitions; (ii) the Company’s financing plans; (iii)
the Company’s expectations regarding our sales, expenses, gross
margins and other results of operations; (iv) trends affecting the
Company’s financial condition or results of operations; (v) the
Company’s ability to continue to control costs and to meet its
liquidity and other financing needs; (vi) the declaration and
payment of dividends; (vii) the Company’s ability to respond to
changes in customer demand domestically and internationally,
including as a result of standardization; and (viii) potential
challenges relating to changes in and compliance with governmental
laws and regulations affecting our U.S. and international business.
Although the Company believes that its expectations are based on
reasonable assumptions, it can give no assurance that the
anticipated results will occur. Important factors that could cause
the actual results to differ materially from those in the
forward‐looking statements include, among other items, (i) the
economic cyclicality of the capital goods industry in general and
the hydraulics industry in particular, which directly affect
customer orders, lead times and sales volume; (ii) fluctuations in
global business conditions, including the impact of economic
recessions in the U.S. and other parts of the world, (iii)
conditions in the capital markets, including the interest rate
environment and the availability of capital; (iv) changes in the
competitive marketplace that could affect the Company’s revenue
and/or costs, such as increased competition, lack of qualified
engineering, marketing, management or other personnel, and
increased labor and raw materials costs; (v) risks related to the
integration of the businesses of the Company, Enovation Controls
and Faster Group; (vi) changes in technology or customer
requirements, such as standardization of the cavity into which
screw‐in cartridge valves must fit, which could render the
Company’s products or technologies noncompetitive or obsolete;
(vii) new product introductions, product sales mix and the
geographic mix of sales nationally and internationally; and (viii)
changes relating to the Company’s international sales, including
changes in regulatory requirements or tariffs, compliance with
anti-corruption laws and trade laws, including export and import
compliance, trade or currency restrictions, fluctuations in
exchange rates, and tax and collection issues. Further information
relating to factors that could cause actual results to differ from
those anticipated is included but not limited to information under
the heading Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in the Company’s
Form 10‐Q for the quarter ended June 30, 2018, and Item 1.
“Business” and Item 1A. “Risk Factors” in the Company’s Form 10-K
for the year ended December 30, 2017. The Company disclaims any
intention or obligation to update or revise forward‐looking
statements, whether as a result of new information, future events
or otherwise.
This news release will discuss some non-GAAP financial measures,
which the Company believes are useful in evaluating our
performance. You should not consider the inclusion of this
additional information in isolation or as a substitute for results
prepared in accordance with GAAP. The Company has provided
reconciliations of comparable GAAP to non-GAAP measures in tables
found in the end of this news release.
Financial Tables Follow.
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
data)
(Unaudited)
Three Months Ended
Six Months Ended June 30, July 1,
June 30, July 1, 2018 2017 %
Change 2018 2017 % Change Net sales
$ 136,168 $ 89,335 52%
$
233,486 $ 170,688 37% Cost of sales
85,764 50,752 69% 145,465
99,311 46%
Gross profit 50,404 38,583
31% 88,021 71,377 23% Gross margin 37.0
% 43.2 % 37.7 % 41.8 % Selling, engineering and
administrative expenses 25,325 15,843 60% 43,640 30,544 43%
Amortization of intangible assets 8,076 2,039
296% 10,124 4,348 133%
Operating income 17,003
20,701 (18)% 34,257
36,485 (6%) Operating margin 12.5 %
23.2 % 14.7 % 21.4 % Interest expense, net 4,151 964 331%
4,634 1,589 NM Foreign currency transaction loss (gain), net 3,301
7 NM 3,812 (40 ) NM Miscellaneous expense, net 80 635 NM 44 702 NM
Change in fair value of contingent consideration 251
8,191 NM 653 8,191 NM
Income before income taxes 9,220 10,904
(15)% 25,114 26,043 (4%) Income tax
provision 2,424 3,620 (33)%
6,407 8,548 (25%)
Net income $
6,796 $ 7,284 (7)%
$ 18,707 $ 17,495
7% Basic and diluted net income per common share $
0.22 $ 0.27 (19%) $ 0.61 $ 0.65 (6%)
Basic and diluted weighted average shares outstanding 31,597
27,046 30,718 26,996 Dividends declared per share $ 0.09
$ 0.09 $ 0.18 $ 0.20 NM = Not
meaningful
HELIOS TECHNOLOGIES
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and
per share data)
June 30, December 30,
2018 2017
(Unaudited)
Assets Current assets: Cash and cash equivalents $ 29,942 $
63,882 Restricted cash 40 40 Accounts receivable, net of allowance
for doubtful accounts of $631 and $358 74,344 37,503 Inventories,
net 77,289 41,545 Income taxes receivable 592 - Other current
assets 8,882 3,806 Total current assets
191,089 146,776 Property, plant and equipment, net 114,428 91,931
Deferred income taxes 7,940 4,654 Goodwill 345,997 108,869 Other
intangibles, net 328,921 104,131 Other assets 3,977
3,405
Total assets $ 992,352
$ 459,766 Liabilities and
shareholders’ equity Current liabilities: Accounts payable $
39,136 $ 15,469 Accrued expenses 21,856 8,977 Current portion of
contingent consideration 34,535 17,102 Current portion of long-term
debt, net 3,505 - Dividends payable 2,845 2,437 Income taxes
payable 3,064 1,878 Other current liabilities 2,320
- Total current liabilities 107,261 45,863 Revolving
line of credit 256,750 116,000 Long-term debt, net 94,972 -
Contingent consideration, less current portion - 16,780 Deferred
income taxes 20,817 2,068 Other noncurrent liabilities 9,157
6,382
Total liabilities
488,957 187,093 Commitments and
contingencies - -
Shareholders’ equity: Preferred stock,
2,000,000 shares authorized, par value $0.001, no shares
outstanding - - Common stock, 50,000,000 shares authorized, par
value $0.001, 31,604,459 and 27,077,145 shares outstanding 32 27
Capital in excess of par value 337,772 95,354 Retained earnings
196,787 183,770 Accumulated other comprehensive loss (31,196
) (6,478 )
Total shareholders’ equity
503,395 272,673 Total
liabilities and shareholders’ equity $ 992,352
$ 459,766
HELIOS TECHNOLOGIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
July 1, 2018 2017 Cash flows from operating
activities: Net income $ 18,707 $ 17,495 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 17,076 9,855 Loss on disposal of
assets 8 692 Stock-based compensation expense 2,061 2,038
Amortization of debt issuance costs 371 202 Benefit for deferred
income taxes - (3,229 ) Amortization of acquisition-related
inventory step-up 3,125 1,774 Change in fair value of contingent
consideration 653 8,191 Forward contract losses, net 3,493 - Other,
net 196 227 (Increase) decrease in operating assets, net of
acquisition: Accounts receivable (13,666 ) (14,191 ) Inventories
(4,754 ) (10,120 ) Income taxes receivable (46 ) 512 Other current
assets (501 ) (303 ) Other assets 270 98 Increase (decrease) in
operating liabilities, net of acquisition: Accounts payable 5,908
5,796 Accrued expenses and other liabilities 1,660 1,145 Income
taxes payable (3,405 ) 1,207 Other noncurrent liabilities
(39 ) 295
Net cash provided by operating
activities 31,117 21,684
Cash flows from investing activities: Capital
expenditures (10,581 ) (3,305 ) Proceeds from dispositions of
equipment 3 18 Proceeds from sale of short-term investments - 2,938
Acquisition of business, net of cash acquired (527,144 ) - Cash
settlements of forward contracts (2,535 ) -
Net cash used in investing activities (540,257
) (349 ) Cash flows from financing
activities: Borrowings on revolving line of credit 258,000 -
Repayment of borrowings on revolving line of credit (117,250 )
(16,000 ) Borrowings on long-term debt 100,932 - Repayment of
borrowings on long-term debt (1,250 ) - Borrowings under factoring
arrangement 1,044 - Payments on capital lease obligations (330 ) -
Proceeds from stock issued 240,602 465 Dividends to shareholders
(5,281 ) (5,390 ) Debt issuance costs (1,763 ) - Payment of
employee tax withholding (240 ) -
Net cash
provided by (used in) financing activities
474,464 (20,925 ) Effect of
exchange rate changes on cash and cash equivalents 736
4,042 Net (decrease) increase in cash and cash
equivalents (33,940 ) 4,452 Cash and cash equivalents, beginning of
period 63,882 74,221 Cash and cash
equivalents, end of period $ 29,942 $ 78,673
HELIOS TECHNOLOGIES
SEGMENT DATA
(In thousands)
(Unaudited)
Three Months Ended Six
Months Ended June 30, July 1, June
30, July 1, 2018 2017 2018
2017 Sales: Hydraulics $ 103,634 $ 60,818 $ 166,243 $
114,940 Electronics 32,534 28,517
67,243 55,748 Consolidated $ 136,168
$ 89,335 $ 233,486 $ 170,688
Gross profit and margin: Hydraulics $ 39,422 $ 25,576 $ 62,870 $
47,599 38.0 % 42.1 % 37.8 % 41.4 % Electronics 14,107 13,007 28,276
25,552 43.4 % 45.6 % 42.1 % 45.8 % Corporate and other
(3,125 ) - (3,125 ) (1,774 )
Consolidated $ 50,404 $ 38,583 $ 88,021 $
71,377 37.0 % 43.2 % 37.7 % 41.8 % Operating income
and margin: Hydraulics $ 25,401 $ 16,359 $ 38,844 $ 30,131 24.5 %
27.0 % 23.3 % 26.2 % Electronics 6,532 6,419 13,639 12,655 20.0 %
22.5 % 20.2 % 22.8 % Corporate and other (14,930 )
(2,077 ) (18,226 ) (6,301 ) Consolidated $ 17,003
$ 20,701 $ 34,257 $ 36,485 12.5 % 23.2
% 14.7 % 21.4 %
HELIOS TECHNOLOGIES
ADDITIONAL
INFORMATION
(Unaudited)
2018 Sales by
Geographic Region and Segment ($ in millions)
Q1 %
of Total
Q2 %
of Total
2018 %
of Total
Americas: Hydraulics $ 26.4 $ 39.7 $ 66.1 Electronics
30.1 27.9 58.0 Consol. Americas 56.5 58 % 67.6
50 % 124.1 53 % EMEA: Hydraulics 19.6 40.5 60.1 Electronics
2.7 2.7 5.4 Consol. EMEA 22.3 23 % 43.2 32 % 65.5 28
% APAC: Hydraulics 16.6 23.4 40.0 Electronics 1.9 2.0
3.9 Consol. APAC 18.5 19 % 25.4 18 %
43.9 19 % Total $ 97.3 $ 136.2
$ 233.5
2017 Sales by
Geographic Region and Segment ($ in millions)
Q1
%
of Total
Q2 %
of Total
Q3 %
of Total
Q4 %
of Total
2017 %
of Total
Americas: Hydraulics $ 24.7 $ 28.2 $ 25.3 $ 25.6 $ 103.8
Electronics 22.6 24.5 26.8 21.1
95.0 Consol. Americas 47.3 58 % 52.7 59 % 52.1 59 % 46.7 56 % 198.8
58 % EMEA: Hydraulics 17.1 16.6 16.1 16.4 66.2 Electronics
3.0 2.6 2.9 2.4 10.9 Consol. EMEA 20.1
25 % 19.2 22 % 19.0 22 % 18.8 22 % 77.1 22 % APAC: Hydraulics 12.3
16.0 15.2 17.1 60.6 Electronics 1.7 1.4 1.7
1.5 6.3 Consol. APAC 14.0 17 % 17.4 19
% 16.9 19 % 18.6 22 % 66.9 20 % Total $ 81.4
$ 89.3 $ 88.0
$ 84.1 $ 342.8
HELIOS TECHNOLOGIES
Non-GAAP Adjusted Operating Income
RECONCILIATION
(In thousands)
(Unaudited)
Three Months Ended
Year Ended June 30, July 1, June
30, July 1, 2018 2017 2018
2017 GAAP operating income $ 17,003
$ 20,701 $ 34,257 $
36,485 Acquisition-related amortization of intangible assets
8,015 2,039 10,004 4,348 Acquisition-related amortization of
inventory step-up 3,125 - 3,125 1,774 Acquisition and
financing-related expenses 3,731 - 4,927 200 Restructuring charges
59 - 170 -
Non-GAAP adjusted operating income $ 31,933
$ 22,740 $ 52,483
$ 42,807 GAAP operating margin 12.5 % 23.2 %
14.7 % 21.4 % Non-GAAP Adjusted operating margin 23.5 % 25.5 % 22.5
% 25.1 %
Non-GAAP Net Income
RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended Six
Months Ended June 30, July 1, June
30, July 1, 2018 2017 2018
2017 Net income $ 6,796 $
7,284 $ 18,707 $ 17,495
Acquisition-related amortization of inventory step-up 3,125 - 3,125
1,774 Acquisition and financing-related expenses 3,731 - 4,927 200
Restructuring charges 59 - 170 - Foreign currency forward contract
loss 2,030 - 2,535 - Change in fair value of contingent
consideration 251 8,191 653 8,191 Tax effect of above (2,299
) (2,703 ) (2,853 ) (3,354 )
Adjusted net
income $ 13,693 $ 12,772
$ 27,264 $ 24,306
Adjusted net income per diluted share $ 0.43
$ 0.47 $ 0.89
$ 0.90
Adjusted EBITDA RECONCILIATION
(in thousands)
(Unaudited)
Three Months Ended Six
Months Ended June 30, July 1, June
30, July 1, 2018 2017 2018
2017 Net income $ 6,796 $
7,284 $ 18,707 $ 17,495 Interest
expense (income), net 4,151 964 4,634 1,589 Income tax provision
2,424 3,620 6,407 8,548 Depreciation and amortization 12,347
4,764 17,076 9,855
EBITDA 25,718 16,632 46,824
37,487 Acquisition-related amortization of inventory step-up
3,125 - 3,125 1,774 Acquisition and financing-related expenses
3,731 - 4,927 200 Restructuring charges 59 - 170 - Foreign currency
forward contract loss 2,030 - 2,535 - Change in fair value of
contingent consideration 251 8,191
653 8,191
Adjusted EBITDA
$ 34,914 $ 24,823
$ 58,234 $ 47,652
Adjusted EBITDA margin 25.6 % 27.8 % 24.9 % 27.9 %
Non-GAAP Financial Measures:
Adjusted operating income, adjusted operating margin, adjusted
EBITDA, adjusted EBITDA margin, adjusted net income and adjusted
net income per diluted share are not measures determined in
accordance with generally accepted accounting principles in the
United States, commonly known as GAAP. Nevertheless, Helios
believes that providing non-GAAP information such as adjusted
operating income, adjusted operating margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted net income and adjusted net income
per diluted share are important for investors and other readers of
Helios’ financial statements, as they are used as analytical
indicators by Helios’ management to better understand operating
performance. Because adjusted operating income, adjusted operating
margin, adjusted EBITDA, adjusted EBITDA margin, adjusted net
income and adjusted net income per diluted share are non-GAAP
measures and are thus susceptible to varying calculations, adjusted
operating income, adjusted operating margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted net income and adjusted net income
per diluted share, as presented, may not be directly comparable to
other similarly titled measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180806005608/en/
Kei Advisors LLCKaren L. Howard,
716-843-3942khoward@keiadvisors.comorDeborah K. Pawlowski,
716-843-3908dpawlowski@keiadvisors.com
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