Exhibit 99.1

NEWS

RELEASE

FOR IMMEDIATE RELEASE

Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

 

Record-setting full year sales of $508 million, up 48%; includes organic growth of 11%

 

2018 EPS of $1.49 per share; Non-GAAP EPS of $1.74, up 9%

 

2018 adjusted operating margin of 21.4%, adjusted EBITDA margin of 24.5%

 

Net debt lowered by $20 million during fourth quarter

 

Ended 2018 with net debt-to-EBITDA of 2.4x

 

Introducing 2019 revenue guidance of $590 million to $600 million, GAAP EPS of $2.10 to $2.20, non-GAAP cash EPS of $2.55 to $2.65, adjusted EBITDA margin of 24.5% to 25.5%

Sarasota, FL, February 25, 2019 — Helios Technologies (formerly known as Sun Hydraulics) (NasdaqSNHY) (“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 fourth quarter and full year ended December 29, 2018.  The results include Faster Group since its acquisition on April 5, 2018 and Custom Fluidpower (CFP) since its acquisition on August 1, 2018.  

Wolfgang Dangel, Helios Technologies’ President and Chief Executive Officer, commented, “As I reflect on the past two years, I note that they represented periods of tremendous growth and diversification for Helios, as we have been successfully executing our Vision 2025 strategic plan.  We finished 2018 with $508 million of revenue compared with $197 million in 2016, more than a 2.5 times increase.  Similarly, we generated $124.3 million of adjusted EBITDA in 2018, or 24.5% of sales, compared with $48 million in 2016, or 24.4% of sales.  

“Specifically, in the past year, revenue grew 48% and adjusted EBITDA grew 43%.  Our strong fourth quarter performance, with adjusted EBITDA margin expanding 290 basis points over the prior year, contributed to the solid full year results.  Additionally, we reduced our net debt by nearly $20 million in the fourth quarter, finishing the year at 2.4x net debt-to-EBITDA and marking significant progress toward our leverage goal.  Highlights of 2018 include:

 

During the first quarter, we completed a successful follow-on equity offering where we issued 4.4 million shares and raised approximately $240 million of capital, which was used to partially fund the subsequent Faster acquisition.  

 

During the second quarter, we amended our bank credit facility and closed on the acquisition of Faster. This addition strategically contributes to the diversification of our end markets, hydraulic product offerings, geographies, manufacturing footprint, and customer base.

 

Also during the second quarter, we began our Sarasota Cartridge Valve Technology (CVT) manufacturing consolidation project, to increase our capacity and further improve our production efficiency in accordance with our lean enterprise initiative.  The project is progressing as planned and we expect to complete it within the next month or so.

 

During the third quarter, we adopted Helios Technologies as our new business name, reflecting that we now have several operating companies under our umbrella, in alignment with our Vision 2025 strategy.

Helios Technologies | 1500 West University Parkway | Sarasota, FL 34243 | 941-362-1200


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 2 of 14

 

 

Also during the third quarter, we completed the acquisition of CFP, a relatively small, bolt-on hydraulic integrator that geographically provides us with a pivotal stepping stone from which we are further building our presence in the growing Southeast Asia region.

 

Additionally during the third quarter, we began production at our new state-of-the-art facility in South Korea, in accordance with our ‘in the region, for the region’ philosophy.

 

Throughout the year, we continued to make steady progress with synergy realization among Enovation Controls, Faster and CFP, together with our legacy Sun Hydraulics business.

 

We also realized productivity improvement in all of our businesses, which is ongoing.

 

Finally, we continued to realize the results of our organic growth initiatives, with particular focus on new products and new markets penetration.”

Looking forward to 2019, Mr. Dangel added, “We are pleased with the results from our investments to gain market share and achieve our acquisition revenue synergies.  We believe we can continue to grow at a rate that exceeds growth expected in the currently changing macroeconomic climate.  Also, we are aggressively investing in innovative manufacturing technologies and market-leading new products, which will keep our capital expenditures and research and development spending at strong levels.  We believe that these investments are critical to the execution of our Vision 2025 strategy, which is driving shareholder value.”

Fourth Quarter 2018 Consolidated Results

($ in millions, except per share data)

Q4 2018

 

 

Q4 2017

 

 

Change

 

 

% Change

 

Net sales

$

138.7

 

 

$

84.2

 

 

$

54.5

 

 

 

65

%

Gross profit

$

52.9

 

 

$

28.9

 

 

$

24.0

 

 

 

83

%

Gross margin

 

38.2

%

 

 

34.3

%

 

 

 

 

 

 

 

 

Operating income

$

22.1

 

 

$

7.6

 

 

$

14.5

 

 

 

190

%

Operating margin

 

15.9

%

 

 

9.0

%

 

 

 

 

 

 

 

 

Non-GAAP adjusted operating margin

 

19.7

%

 

 

17.9

%

 

 

 

 

 

 

 

 

Net income

$

16.4

 

 

$

2.8

 

 

$

13.6

 

 

 

493

%

Diluted EPS*

$

0.51

 

 

$

0.10

 

 

$

0.41

 

 

 

403

%

Non-GAAP adjusted net income

$

13.0

 

 

$

7.3

 

 

$

5.7

 

 

 

78

%

Non-GAAP adjusted EPS*

$

0.41

 

 

$

0.27

 

 

$

0.14

 

 

 

52

%

Adjusted EBITDA

$

32.4

 

 

$

17.2

 

 

$

15.2

 

 

 

88

%

Adjusted EBITDA margin

 

23.4

%

 

 

20.5

%

 

 

 

 

 

 

 

 

See the attached tables for additional important disclosures regarding Helios’s use of non-GAAP adjusted operating income, non-GAAP adjusted operating margin, non-GAAP adjusted net income, non-GAAP adjusted EPS, adjusted EBITDA (earnings before net interest expense, income taxes, depreciation and amortization, and certain non-recurring charges) and adjusted EBITDA margin (adjusted EBITDA as a percentage of sales) as well as reconciliations of GAAP operating income to non-GAAP adjusted operating income and GAAP net income to non-GAAP adjusted net income and adjusted EBITDA.

* The comparison is impacted by a 4.9 million increase in weighted average shares outstanding in the 2018 fourth quarter compared with the prior-year fourth quarter.

Sales

 

Acquisition growth – Faster contributed $36.0 million; CFP contributed $11.9 million

 

Organic growth – 8%

 

Foreign currency translation on organic sales – $0.4 million unfavorable

 

Foreign currency translation on acquired businesses’ sales – $2.6 million unfavorable (compared with exchange rates in effect at the respective acquisition dates)


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 3 of 14

 

Profits and margins

 

Gross profit and margin drivers – Organic sales growth, acquisitions, price increases and improved efficiency

 

Selling, engineering and administrative (SEA) expenses – Increased primarily due to Faster and CFP acquisitions, partially offset by cost reductions in the organic businesses; lower as a percent of sales  

 

Acquisition-related amortization of intangible assets – $6.0 million ($2.0 million in prior year)

 

Other operating profit and margin factors – Last year included $1 million for acquisition and financing-related expenses and $1.5 million of restructuring charges

Non-operating items

 

Net interest expense – Higher primarily for debt to fund the Faster and CFP acquisitions

 

Effective tax rate – 3.6%, low due to the U.S. Tax Cuts and Jobs Act as well as some discrete items
(49.9% in the fourth quarter of 2017)

EPS and adjusted EBITDA

 

Driven by growth and productivity improvements noted above  

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.  

Full Year 2018 Consolidated Results

($ in millions, except per share data)

2018

 

 

2017

 

 

Change

 

 

% Change

 

Net sales

$

508.0

 

 

$

342.8

 

 

$

165.2

 

 

 

48

%

Gross profit

$

192.7

 

 

$

136.5

 

 

$

56.2

 

 

 

41

%

Gross margin

 

37.9

%

 

 

39.8

%

 

 

 

 

 

 

 

 

Operating income

$

75.6

 

 

$

61.5

 

 

$

14.1

 

 

 

23

%

Operating margin

 

14.9

%

 

 

17.9

%

 

 

 

 

 

 

 

 

Non-GAAP adjusted operating margin

 

21.4

%

 

 

22.5

%

 

 

 

 

 

 

 

 

Net income

$

46.7

 

 

$

31.6

 

 

$

15.1

 

 

 

48

%

Diluted EPS*

$

1.49

 

 

$

1.17

 

 

$

0.32

 

 

 

28

%

Non-GAAP Adjusted net income

$

54.3

 

 

$

43.2

 

 

$

11.1

 

 

 

26

%

Non-GAAP adjusted EPS*

$

1.74

 

 

$

1.60

 

 

$

0.14

 

 

 

9

%

Adjusted EBITDA

$

124.3

 

 

$

87.2

 

 

$

37.1

 

 

 

43

%

Adjusted EBITDA margin

 

24.5

%

 

 

25.4

%

 

 

 

 

 

 

 

 

See the attached tables for additional important disclosures regarding Helios’s use of non-GAAP adjusted operating income, non-GAAP adjusted operating margin, non-GAAP adjusted net income, non-GAAP adjusted EPS, adjusted EBITDA and adjusted EBITDA margin as well as reconciliations of GAAP operating income to non-GAAP adjusted operating income and GAAP net income to non-GAAP adjusted net income and adjusted EBITDA.

*  The comparison is impacted by a 4.3 million increase in weighted average shares outstanding in 2018.

Sales

 

Acquisition growth – Faster contributed $106.5 million; CFP contributed $20.3 million

 

Organic growth – 11%  

 

Foreign currency translation on organic sales – $3.1 million favorable


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 4 of 14

 

 

Foreign currency translation on acquired businesses’ sales – $5.2 million unfavorable (compared with exchange rates in effect at the respective acquisition dates)

Profits and margins

 

Gross profit and margin drivers – Organic sales growth, acquisitions, and price increases, partially offset by $4.4 million for amortization of inventory valuation step-up ($1.8 million in 2017)

 

SEA expenses – Increased primarily due to Faster and CFP acquisitions, partially offset by cost reductions in the organic businesses; lower as a percent of sales  

 

Acquisition-related amortization of intangible assets – $23.0 million ($8.4 million in prior year)

 

Other operating profit and margin factors – $5.7 million for acquisition and financing-related expenses ($1.0 million in 2017).  Last year also included $1.5 million of restructuring charges.  

Non-operating items

 

Net interest expense – Higher primarily for debt to fund the Faster and CFP acquisitions

 

Foreign currency transaction loss and change in fair value of contingent consideration – $3.6 million and $1.5 million, respectively, varied significantly compared with 2017, as previously disclosed  

 

Effective tax rate – variation impacted by the factors described above for the fourth quarter

EPS and adjusted EBITDA

 

Driven by revenue growth, partially offset by freight, seasonality and the impact of CFP’s integrator business model

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.

Hydraulics Segment Review

(Refer to sales by geographic region and segment data in accompanying tables)

Segment sales of $111.5 million nearly doubled over the prior-year fourth quarter.  The $52.4 million increase included $36.0 million from the Faster business, $11.9 million from CFP and 8% of organic growth.  Growth was driven by demand in most geographies and end markets, price increases, and was also positively impacted by global sales and marketing initiatives.  Orders continued to outpace revenue.  Foreign currency translation for the Sun Hydraulics business had a $0.3 million unfavorable impact compared with the 2017 fourth quarter.

Fourth quarter 2018 gross margin of 35.6% was relatively in line with the prior year’s 35.9%.  The Faster business reported lower-than-average gross margin primarily due to unabsorbed costs during its holiday shutdown in December.  Additionally, due to the nature of a value-add distributor business, CFP carries a lower gross margin than the rest of the segment.  The 2017 fourth quarter gross margin was unfavorably impacted by one-time operational items and other cost pressures related to strong customer demand.  

Higher SEA expenses in the 2018 quarter included $7.1 million for the Faster and CFP businesses.  

As a result of the above, fourth quarter operating income nearly doubled to $22.3 million, representing 20.0% of sales, up from 19.2% last year.  


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 5 of 14

 

For 2018, segment sales grew $151.2 million, or 66%, to $381.8 million.  The growth included $106.5 million contributed by Faster and $20.3 million by CFP, and 11% growth was realized organically.  Operating income for the year was $83.9 million, or 22.0% of sales.

 

Electronics Segment Review

(Refer to sales by geographic region and segment data in accompanying tables)

Segment sales were $27.2 million for the 2018 fourth quarter, an 8% increase compared with the fourth quarter of last year.  The growth was driven by project timing and increased content with current customers.  Foreign currency translation minimally impacted segment sales in the quarter.  

Fourth quarter 2018 gross margin improved substantially to 45.7%, up from 30.5% last year.  Favorable productivity, project mix and improved cost position drove the growth.  

SEA costs decreased by $1.0 million in the quarter compared with last year, primarily due to restructuring costs included last year.  

Fourth quarter operating income significantly improved to $5.1 million, or 18.7%, compared with a $0.7 million loss in last year’s fourth quarter.

In 2018, segment sales grew 13% to $126.2 million.  Operating income for 2018 was $25.0 million, or 19.8% of sales, up from 16.0% in 2017.  The increase was driven by revenue growth as well as efficiencies realized from productivity improvements and project mix.

Balance Sheet and Cash Flow Review

Total debt was $352.7 million at December 29, 2018, down from $364.8 million at the end of the sequential third quarter.  Cash and cash equivalents at December 29, 2018 were $23.5 million, up from $15.9 million at September 29, 2018.  Accordingly, net debt was down $19.7 million in the fourth quarter of 2018.  The reduction reflected the strong operating cash flows in the fourth quarter.

Cash provided by operations was $77.5 million and $49.4 million in 2018 and 2017, respectively.  The increase was primarily due to higher cash from earnings, partially offset by increases in working capital.

Capital expenditures were $28.4 million and $22.2 million for 2018 and 2017, respectively.  The increase was primarily for machinery and equipment, costs for the completion of the Company’s new production facility in South Korea which opened in August of 2018, the addition of the Faster business, and costs associated with the Company’s CVT facility consolidation project in Sarasota.  Capital expenditures in 2019 are estimated to be
$30 million to $35 million, in support of the Company’s ongoing investments to drive its innovative leadership.


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 6 of 14

 

2019 Outlook and Guidance

The following summarizes the Company’s expectations for 2019, compared with actual 2018 results:

 

2018 Actual

 

2019 Guidance

Change

Consolidated revenue

$508 million

 

$590 - $600 million

16% - 18%

   Hydraulics segment revenue

$382 million

 

$464 - $469 million

21% - 23%

   Electronics segment revenue

$126 million

 

$126 - $131 million

0% - 4%

GAAP EPS

$1.49

 

$2.10 - $2.20

41% - 48%

Non-GAAP cash EPS

$2.30

 

$2.55 - $2.65

11% - 15%

Adjusted EBITDA margin

24.5%

 

24.5% - 25.5%

0 - 100 bps

 

Mr. Dangel stated, “Given our acquisitions and organic growth initiatives, we are benefiting from much more diversified end markets and a broader customer revenue base than we had a few years ago.  While it is not practical to expect the organic growth rates that we realized during the past two years to continue, and we are cautious about macroeconomic expectations, we are encouraged with our incoming order rates and realization of acquisition synergies that are driving our expectations for growth in 2019.  For 2019, we are currently expecting organic revenue growth of 2% to 4%.  In addition to organic growth, our first quarter of 2019 will include the acquisition growth resulting from the timing of last year’s Faster and CFP acquisitions.”

He concluded, “Additionally, we continue to focus on profitability improvements and cash flows from all of our businesses, including further realization of the benefits from investments that we’ve made over the past few years.  At the midpoint of our 2019 guidance, we are targeting a 50 basis point improvement in our adjusted EBITDA margin.  We believe that the results of these actions are moving us toward our Vision 2025 goals, including $1 billion in revenue with 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,
March 5, 2019.  To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13686203.  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.r.l.  The Hydraulics segment serves diverse markets including material handling, construction equipment, agriculture, specialized vehicles, energy and others through its Sun Hydraulics and Faster Group companies,


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 7 of 14

 

providing high-performance screw-in hydraulic cartridge valves and manifolds as well as quick-release hydraulic coupling solutions.  The Electronics segment 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 1. “Business” and Item 1A. “Risk Factors” in the Company’s Form 10-K for the year ended December 29, 2018. 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. 

For more information, contact:
Karen L. Howard / Deborah K. Pawlowski
Kei Advisors LLC
(716) 843-3942 / (716) 843-3908
khoward@keiadvisors.com / dpawlowski@keiadvisors.com

 

Financial Tables Follow.


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 8 of 14

 

HELIOS TECHNOLOGIES

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

 

 

Three Months Ended

 

 

For the Year Ended

 

 

December 29,

 

 

December 30

 

 

 

 

 

 

December 29,

 

 

December 30

 

 

 

 

 

 

2018

 

 

2017

 

 

% Change

 

 

2018

 

 

2017

 

 

% Change

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

138,723

 

 

$

84,150

 

 

 

65

%

 

$

508,045

 

 

$

342,839

 

 

 

48

%

Cost of sales

 

85,795

 

 

 

55,296

 

 

 

55

%

 

 

315,362

 

 

 

206,314

 

 

 

53

%

Gross profit

 

52,928

 

 

 

28,854

 

 

 

83

%

 

 

192,683

 

 

 

136,525

 

 

 

41

%

Gross margin

 

38.2

%

 

 

34.3

%

 

 

 

 

 

 

37.9

%

 

 

39.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, engineering and administrative expenses

 

24,789

 

 

 

18,182

 

 

 

36

%

 

 

93,867

 

 

 

65,580

 

 

 

43

%

Restructuring charges

 

-

 

 

 

1,031

 

 

 

 

 

 

 

-

 

 

 

1,031

 

 

 

 

 

Amortization of intangible assets

 

6,088

 

 

 

2,037

 

 

 

199

%

 

 

23,262

 

 

 

8,423

 

 

 

176

%

Operating income

 

22,051

 

 

 

7,604

 

 

 

190

%

 

 

75,554

 

 

 

61,491

 

 

 

23

%

Operating margin

 

15.9

%

 

 

9.0

%

 

 

 

 

 

 

14.9

%

 

 

17.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

4,620

 

 

 

1,071

 

 

 

331

%

 

 

13,876

 

 

 

3,781

 

 

 

267

%

Foreign currency transaction (gain) loss, net

 

(212

)

 

 

12

 

 

NM

 

 

 

3,558

 

 

 

(52

)

 

NM

 

Miscellaneous expense, net

 

58

 

 

 

377

 

 

 

(85

)%

 

 

243

 

 

 

742

 

 

 

(67

%)

Change in fair value of contingent consideration

 

554

 

 

 

621

 

 

 

(11

)%

 

 

1,482

 

 

 

9,476

 

 

 

(84

%)

Income before income taxes

 

17,031

 

 

 

5,523

 

 

 

208

%

 

 

56,395

 

 

 

47,544

 

 

 

19

%

Income tax provision

 

607

 

 

 

2,755

 

 

 

(78

)%

 

 

9,665

 

 

 

15,986

 

 

 

(40

%)

Net income

$

16,424

 

 

$

2,768

 

 

 

493

%

 

$

46,730

 

 

$

31,558

 

 

 

48

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net income per common share

$

0.51

 

 

$

0.10

 

 

 

403

%

 

$

1.49

 

 

$

1.17

 

 

 

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding

 

31,965

 

 

 

27,074

 

 

 

 

 

 

 

31,309

 

 

 

27,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

$

0.09

 

 

$

0.09

 

 

 

 

 

 

$

0.36

 

 

$

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM = Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 9 of 14

 

HELIOS TECHNOLOGIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

December 29,

 

 

December 30,

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

23,477

 

 

$

63,882

 

Restricted cash

 

38

 

 

 

40

 

Accounts receivable, net of allowance for doubtful accounts

 

 

 

 

 

 

 

of $1,336 and $358

 

72,806

 

 

 

37,503

 

Inventories, net

 

85,989

 

 

 

41,545

 

Income taxes receivable

 

4,549

 

 

 

-

 

Other current assets

 

9,997

 

 

 

3,806

 

Total current assets

 

196,856

 

 

 

146,776

 

Property, plant and equipment, net

 

126,868

 

 

 

91,931

 

Deferred income taxes

 

9,463

 

 

 

4,654

 

Goodwill

 

383,131

 

 

 

108,869

 

Other intangibles, net

 

320,548

 

 

 

104,131

 

Other assets

 

5,299

 

 

 

3,405

 

Total assets

$

1,042,165

 

 

$

459,766

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

40,879

 

 

$

15,469

 

Accrued compensation and benefits

 

13,260

 

 

 

3,932

 

Other accrued expenses and current liabilities

 

9,941

 

 

 

5,045

 

Current portion of contingent consideration

 

18,120

 

 

 

17,102

 

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

 

5,215

 

 

 

-

 

Dividends payable

 

2,878

 

 

 

2,437

 

Income taxes payable

 

2,697

 

 

 

1,878

 

Total current liabilities

 

92,990

 

 

 

45,863

 

Revolving line of credit

 

255,750

 

 

 

116,000

 

Long-term non-revolving debt, net

 

91,720

 

 

 

-

 

Contingent consideration, less current portion

 

840

 

 

 

16,780

 

Deferred income taxes

 

57,783

 

 

 

2,068

 

Other noncurrent liabilities

 

12,314

 

 

 

6,382

 

Total liabilities

 

511,397

 

 

 

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,

 

 

 

 

 

 

 

31,964,775 and 27,077,145 shares outstanding

 

32

 

 

 

27

 

Capital in excess of par value

 

357,933

 

 

 

95,354

 

Retained earnings

 

219,056

 

 

 

183,770

 

Accumulated other comprehensive loss

 

(46,253

)

 

 

(6,478

)

Total shareholders’ equity

 

530,768

 

 

 

272,673

 

Total liabilities and shareholders’ equity

$

1,042,165

 

 

$

459,766

 

 


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 10 of 14

 

HELIOS TECHNOLOGIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

For the Year Ended

 

 

December 29, 2018

 

 

December 30, 2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

46,730

 

 

$

31,558

 

Adjustments to reconcile net income to

 

 

 

 

 

 

 

net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

39,714

 

 

 

19,190

 

Loss on disposal of assets

 

56

 

 

 

1,539

 

Stock-based compensation expense

 

4,271

 

 

 

4,042

 

Amortization of debt issuance costs

 

729

 

 

 

334

 

Benefit for deferred income taxes

 

(1,455

)

 

 

(6,791

)

Amortization of acquisition-related inventory step-up

 

4,441

 

 

 

1,774

 

Change in fair value of contingent consideration

 

1,482

 

 

 

9,476

 

Non-cash restructuring and related charges

 

-

 

 

 

390

 

Forward contract losses, net

 

3,496

 

 

 

-

 

Other, net

 

(86

)

 

 

318

 

(Increase) decrease in operating assets, net of acquisitions:

 

 

 

 

 

 

 

Accounts receivable

 

(5,976

)

 

 

(11,063

)

Inventories

 

(11,703

)

 

 

(13,063

)

Income taxes receivable

 

(4,054

)

 

 

512

 

Other current assets

 

565

 

 

 

254

 

Other assets

 

(1,299

)

 

 

(820

)

Increase (decrease) in operating liabilities, net of acquisitions:

 

 

 

 

 

 

 

Accounts payable

 

5,894

 

 

 

5,780

 

Accrued expenses and other liabilities

 

(1,400

)

 

 

1,497

 

Income taxes payable

 

(5,031

)

 

 

3,404

 

Other noncurrent liabilities

 

1,076

 

 

 

1,051

 

Net cash provided by operating activities

 

77,450

 

 

 

49,382

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

(534,662

)

 

 

(500

)

Capital expenditures

 

(28,380

)

 

 

(22,205

)

Proceeds from dispositions of equipment

 

62

 

 

 

47

 

Proceeds from sale of short-term investments

 

-

 

 

 

6,684

 

Cash settlement of forward contracts

 

(2,535

)

 

 

-

 

Net cash used in investing activities

 

(565,515

)

 

 

(15,974

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Borrowings on revolving credit facility

 

282,500

 

 

 

-

 

Repayment of borrowings on revolving credit facility

 

(142,750

)

 

 

(24,000

)

Borrowings on long-term non-revolving debt

 

101,447

 

 

 

-

 

Repayment of borrowings on long-term non-revolving debt

 

(3,825

)

 

 

-

 

Borrowings under factoring arrangement

 

3,184

 

 

 

-

 

Repayments of borrowings under factoring arrangement

 

(3,120

)

 

 

-

 

Payments on capital lease obligations

 

(961

)

 

 

-

 

Proceeds from stock issued

 

241,338

 

 

 

1,156

 

Dividends to shareholders

 

(11,003

)

 

 

(10,260

)

Debt issuance costs

 

(1,763

)

 

 

-

 

Payment of employee tax withholding

 

(365

)

 

 

-

 

Payment of contingent consideration liability

 

(17,342

)

 

 

(16,985

)

Net cash provided by (used in) financing activities

 

447,340

 

 

 

(50,089

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

318

 

 

 

6,345

 

Net decrease in cash, cash equivalents and restricted cash

 

(40,407

)

 

 

(10,336

)

Cash, cash equivalents and restricted cash, beginning of period

 

63,922

 

 

 

74,258

 

Cash, cash equivalents and restricted cash, end of period

$

23,515

 

 

$

63,922

 

 


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 11 of 14

 

HELIOS TECHNOLOGIES

SEGMENT DATA

(in thousands)

 

 

Three Months Ended

 

 

For the Year Ended

 

 

December 29,

 

 

December 30

 

 

December 29,

 

 

December 30

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

$

111,548

 

 

$

59,084

 

 

$

381,845

 

 

$

230,662

 

Electronics

 

27,175

 

 

 

25,066

 

 

 

126,200

 

 

 

112,177

 

Consolidated

$

138,723

 

 

$

84,150

 

 

$

508,045

 

 

$

342,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit and margin (Unaudited):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

$

39,738

 

 

$

21,220

 

 

$

141,674

 

 

$

91,709

 

 

 

35.6

%

 

 

35.9

%

 

 

37.1

%

 

 

39.8

%

Electronics

 

12,414

 

 

 

7,634

 

 

 

55,450

 

 

 

46,590

 

 

 

45.7

%

 

 

30.5

%

 

 

43.9

%

 

 

41.5

%

Corporate and other

 

776

 

 

 

-

 

 

 

(4,441

)

 

 

(1,774

)

Consolidated

$

52,928

 

 

$

28,854

 

 

$

192,683

 

 

$

136,525

 

 

 

38.2

%

 

 

34.3

%

 

 

37.9

%

 

 

39.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income and margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

$

22,291

 

 

$

11,316

 

 

$

83,858

 

 

$

54,934

 

 

 

20.0

%

 

 

19.2

%

 

 

22.0

%

 

 

23.8

%

Electronics

 

5,086

 

 

 

(673

)

 

 

25,046

 

 

 

17,943

 

 

 

18.7

%

 

 

(2.7

%)

 

 

19.8

%

 

 

16.0

%

Corporate and other

 

(5,326

)

 

 

(3,039

)

 

 

(33,350

)

 

 

(11,386

)

Consolidated

$

22,051

 

 

$

7,604

 

 

$

75,554

 

 

$

61,491

 

 

 

15.9

%

 

 

9.0

%

 

 

14.9

%

 

 

17.9

%

 


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 12 of 14

 

HELIOS TECHNOLOGIES

ADDITIONAL INFORMATION

(Unaudited)

 

2018 Sales by Geographic Region and Segment

(in millions)

 

Q1

 

%

of Total

 

Q2

 

%

of Total

 

Q3

 

%

of Total

 

Q4

 

%

of Total

 

2018

 

%

of Total

 

Americas:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

$

26.4

 

 

 

 

$

39.7

 

 

 

 

$

38.4

 

 

 

 

$

44.2

 

 

 

 

$

148.7

 

 

 

 

Electronics

 

30.1

 

 

 

 

 

27.9

 

 

 

 

 

27.4

 

 

 

 

 

23.5

 

 

 

 

 

108.9

 

 

 

 

Consol. Americas

 

56.5

 

58%

 

 

67.6

 

50%

 

 

65.8

 

48%

 

 

67.7

 

49%

 

 

257.6

 

51%

 

EMEA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

 

19.6

 

 

 

 

 

40.5

 

 

 

 

 

34.6

 

 

 

 

 

34.9

 

 

 

 

 

129.6

 

 

 

 

Electronics

 

2.7

 

 

 

 

 

2.7

 

 

 

 

 

2.7

 

 

 

 

 

2.0

 

 

 

 

 

10.1

 

 

 

 

Consol. EMEA

 

22.3

 

23%

 

 

43.2

 

32%

 

 

37.3

 

28%

 

 

36.9

 

27%

 

 

139.7

 

27%

 

APAC:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hydraulics

 

16.6

 

 

 

 

 

23.4

 

 

 

 

 

31.1

 

 

 

 

 

32.4

 

 

 

 

 

103.5

 

 

 

 

Electronics

 

1.9

 

 

 

 

 

2.0

 

 

 

 

 

1.6

 

 

 

 

 

1.7

 

 

 

 

 

7.2

 

 

 

 

Consol. APAC

 

18.5

 

19%

 

 

25.4

 

18%

 

 

32.7

 

24%

 

 

34.1

 

24%

 

 

110.7

 

22%

 

Total

$

97.3

 

 

 

 

$

136.2

 

 

 

 

$

135.8

 

 

 

 

$

138.7

 

 

 

 

$

508.0

 

 

 

 

 

 

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 Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 13 of 14

 

HELIOS TECHNOLOGIES

Non-GAAP Adjusted Operating Income RECONCILIATION

(in thousands)

(Unaudited)

 

Three Months Ended

 

 

For the Year Ended

 

 

December 29,

 

 

December 30

 

 

December 29,

 

 

December 30

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

GAAP operating income

$

22,051

 

 

$

7,604

 

 

$

75,554

 

 

$

61,491

 

Acquisition-related amortization of intangible assets

 

6,028

 

 

 

2,037

 

 

 

23,021

 

 

 

8,423

 

Acquisition-related amortization of inventory step-up

 

(776

)

 

 

-

 

 

 

4,441

 

 

 

1,774

 

Acquisition and financing-related expenses

 

90

 

 

 

1,019

 

 

 

5,685

 

 

 

1,019

 

Restructuring charges

 

-

 

 

 

1,462

 

 

 

170

 

 

 

1,462

 

One-time operational items

 

-

 

 

 

2,907

 

 

 

-

 

 

 

2,907

 

Non-GAAP adjusted operating income

$

27,393

 

 

$

15,029

 

 

$

108,871

 

 

$

77,076

 

GAAP operating margin

 

15.9

%

 

 

9.0

%

 

 

14.9

%

 

 

17.9

%

Non-GAAP Adjusted operating margin

 

19.7

%

 

 

17.9

%

 

 

21.4

%

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP and Cash Net Income RECONCILIATION

(in thousands)

(Unaudited)

 

Three Months Ended

 

 

 

For the Year Ended

 

 

December 29,

 

 

December 30

 

 

 

December 29,

 

 

December 30

 

 

2018

 

 

2017

 

 

 

2018

 

 

2017

 

Net income

$

16,424

 

 

$

2,768

 

 

 

$

46,730

 

 

$

31,558

 

Acquisition-related amortization of inventory step-up

 

(776

)

 

 

-

 

 

 

 

4,441

 

 

 

1,774

 

Acquisition and financing-related expenses

 

90

 

 

 

1,019

 

 

 

 

5,685

 

 

 

1,019

 

Restructuring charges

 

-

 

 

 

1,462

 

 

 

 

170

 

 

 

1,462

 

Foreign currency forward contract loss

 

-

 

 

 

-

 

 

 

 

2,535

 

 

 

-

 

One-time operational items

 

-

 

 

 

2,907

 

 

 

 

-

 

 

 

2,907

 

Change in fair value of contingent consideration

 

554

 

 

 

621

 

 

 

 

1,482

 

 

 

9,476

 

Tax effect of above

 

22

 

 

 

(1,983

)

 

 

 

(3,394

)

 

 

(5,491

)

Impact of tax reform

 

(1,400

)

 

 

463

 

 

 

 

(1,400

)

 

 

463

 

Other one-time tax related items

 

(1,920

)

 

 

-

 

 

 

 

(1,920

)

 

 

-

 

Non-GAAP adjusted net income

$

12,994

 

 

$

7,257

 

 

 

$

54,329

 

 

$

43,168

 

Acquisition-related amortization of intangible assets

 

6,028

 

 

 

2,037

 

 

 

 

23,021

 

 

 

8,423

 

Tax effect of above

 

(1,025

)

 

 

(672

)

 

 

 

(5,456

)

 

 

(2,780

)

Non-GAAP cash net income

$

17,997

 

 

$

8,622

 

 

 

$

71,894

 

 

$

48,811

 

Non-GAAP adjusted net income per diluted share

$

0.41

 

 

$

0.27

 

 

 

$

1.74

 

 

$

1.60

 

Non-GAAP cash net income per diluted share

$

0.56

 

 

$

0.32

 

 

 

$

2.30

 

 

$

1.81

 

 


Helios Technologies Reports Fourth Quarter and Full Year 2018 Results

February 25, 2019

Page 14 of 14

 

Adjusted EBITDA RECONCILIATION

(in thousands)

(Unaudited)

 

Three Months Ended

 

 

For the Year Ended

 

 

December 29,

 

 

December 30

 

 

December 29,

 

 

December 30

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

$

16,424

 

 

$

2,768

 

 

$

46,730

 

 

$

31,558

 

Interest expense, net

 

4,620

 

 

 

1,071

 

 

 

13,876

 

 

 

3,781

 

Income tax provision

 

607

 

 

 

2,755

 

 

 

9,665

 

 

 

15,986

 

Depreciation and amortization

 

10,913

 

 

 

4,633

 

 

 

39,714

 

 

 

19,190

 

EBITDA

 

32,564

 

 

 

11,227

 

 

 

109,985

 

 

 

70,515

 

Acquisition-related amortization of inventory step-up

 

(776

)

 

 

-

 

 

 

4,441

 

 

 

1,774

 

Acquisition and financing-related expenses

 

90

 

 

 

1,019

 

 

 

5,685

 

 

 

1,019

 

Restructuring charges

 

-

 

 

 

1,462

 

 

 

170

 

 

 

1,462

 

Foreign currency forward contract loss

 

-

 

 

 

-

 

 

 

2,535

 

 

 

-

 

One-time operational items

 

-

 

 

 

2,907

 

 

 

-

 

 

 

2,907

 

Change in fair value of contingent consideration

 

554

 

 

 

621

 

 

 

1,482

 

 

 

9,476

 

Adjusted EBITDA

$

32,432

 

 

$

17,236

 

 

$

124,298

 

 

$

87,153

 

Adjusted EBITDA margin

 

23.4

%

 

 

20.5

%

 

 

24.5

%

 

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.