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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 October 2, 2021

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. YesNo

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). YesNo

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 32,401,071 shares of common stock, par value $.001, outstanding as of October 29, 2021.

 


 

Helios Technologies, Inc.

INDEX

For the quarter ended

October 2, 2021

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Consolidated Balance Sheets as of October 2, 2021 (unaudited) and January 2, 2021

 

3

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

4

 

 

 

 

 

Consolidated Statements of Operations for the Nine Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

5

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

6

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Three Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

7

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Nine Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

8

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended October 2, 2021 (unaudited) and September 26, 2020 (unaudited)

 

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

 

34

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

34

 

 

 

 

PART II. OTHER INFORMATION

 

35

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

35

 

 

 

 

 

 

Item 1A.

Risk Factors

 

35

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

35

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

35

 

 

 

 

 

 

Item 5.

Other Information

 

35

 

 

 

 

 

 

Item 6.

Exhibits

 

36

 

 

2


 

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)

 

 

October 2, 2021

 

 

January 2, 2021

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

47,687

 

 

$

25,216

 

Restricted cash

 

 

41

 

 

 

41

 

Accounts receivable, net of allowance for credit losses of $1,333 and $1,493

 

 

136,812

 

 

 

97,623

 

Inventories, net

 

 

148,186

 

 

 

110,372

 

Income taxes receivable

 

 

3,892

 

 

 

1,103

 

Other current assets

 

 

20,130

 

 

 

19,664

 

Total current assets

 

 

356,748

 

 

 

254,019

 

Property, plant and equipment, net

 

 

165,778

 

 

 

163,177

 

Deferred income taxes

 

 

3,537

 

 

 

6,645

 

Goodwill

 

 

463,034

 

 

 

443,533

 

Other intangible assets, net

 

 

416,913

 

 

 

419,375

 

Other assets

 

 

11,982

 

 

 

10,230

 

Total assets

 

$

1,417,992

 

 

$

1,296,979

 

Liabilities and shareholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

73,927

 

 

$

59,477

 

Accrued compensation and benefits

 

 

26,370

 

 

 

22,985

 

Other accrued expenses and current liabilities

 

 

28,586

 

 

 

24,941

 

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

 

 

15,368

 

 

 

16,229

 

Dividends payable

 

 

2,916

 

 

 

2,891

 

Income taxes payable

 

 

10,733

 

 

 

1,489

 

Total current liabilities

 

 

157,900

 

 

 

128,012

 

Revolving line of credit

 

 

276,326

 

 

 

255,909

 

Long-term non-revolving debt, net

 

 

178,534

 

 

 

189,932

 

Deferred income taxes

 

 

78,026

 

 

 

78,864

 

Other noncurrent liabilities

 

 

38,760

 

 

 

36,472

 

Total liabilities

 

 

729,546

 

 

 

689,189

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, par value $0.001, 2,000 shares authorized,
   
no shares issued or outstanding

 

 

 

 

 

 

Common stock, par value $0.001, 100,000 shares authorized,
   
32,400 and 32,121 shares issued and outstanding

 

 

32

 

 

 

32

 

Capital in excess of par value

 

 

391,461

 

 

 

371,778

 

Retained earnings

 

 

342,643

 

 

 

270,320

 

Accumulated other comprehensive loss

 

 

(45,690

)

 

 

(34,340

)

Total shareholders' equity

 

 

688,446

 

 

 

607,790

 

Total liabilities and shareholders' equity

 

$

1,417,992

 

 

$

1,296,979

 

 

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

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

October 2, 2021

 

 

September 26, 2020

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

223,241

 

 

$

122,645

 

Cost of sales

 

 

142,299

 

 

 

75,702

 

Gross profit

 

 

80,942

 

 

 

46,943

 

Selling, engineering and administrative expenses

 

 

32,786

 

 

 

24,042

 

Amortization of intangible assets

 

 

7,407

 

 

 

4,558

 

Operating income

 

 

40,749

 

 

 

18,343

 

Interest expense, net

 

 

3,813

 

 

 

2,730

 

Foreign currency transaction loss (gain), net

 

 

304

 

 

 

(727

)

Other non-operating income, net

 

 

(616

)

 

 

(22

)

Income before income taxes

 

 

37,248

 

 

 

16,362

 

Income tax provision

 

 

9,488

 

 

 

3,380

 

Net income

 

$

27,760

 

 

$

12,982

 

Basic and diluted net income per common share

 

$

0.86

 

 

$

0.40

 

Basic and diluted weighted average shares outstanding

 

 

32,385

 

 

 

32,095

 

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

(in thousands, except per share data)

 

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

September 26, 2020

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

651,499

 

 

$

371,422

 

Cost of sales

 

 

413,036

 

 

 

227,910

 

Gross profit

 

 

238,463

 

 

 

143,512

 

Selling, engineering and administrative expenses

 

 

95,757

 

 

 

73,306

 

Amortization of intangible assets

 

 

25,285

 

 

 

13,323

 

Goodwill impairment

 

 

 

 

 

31,871

 

Operating income

 

 

117,421

 

 

 

25,012

 

Interest expense, net

 

 

12,965

 

 

 

8,572

 

Foreign currency transaction loss (gain), net

 

 

1,271

 

 

 

(319

)

Other non-operating income, net

 

 

(727

)

 

 

(132

)

Income before income taxes

 

 

103,912

 

 

 

16,891

 

Income tax provision

 

 

22,870

 

 

 

8,224

 

Net income

 

$

81,042

 

 

$

8,667

 

Basic and diluted net income per common share

 

$

2.51

 

 

$

0.27

 

Basic and diluted weighted average shares outstanding

 

 

32,272

 

 

 

32,079

 

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 Income

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 2, 2021

 

 

September 26, 2020

 

 

October 2, 2021

 

 

September 26, 2020

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

27,760

 

 

$

12,982

 

 

$

81,042

 

 

$

8,667

 

Other comprehensive (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

 

(7,528

)

 

 

8,575

 

 

 

(14,215

)

 

 

7,237

 

Unrealized gain (loss) on interest rate swap, net of tax

 

 

623

 

 

 

716

 

 

 

2,865

 

 

 

(1,259

)

Total other comprehensive (loss) income

 

 

(6,905

)

 

 

9,291

 

 

 

(11,350

)

 

 

5,978

 

Comprehensive income

 

$

20,855

 

 

$

22,273

 

 

$

69,692

 

 

$

14,645

 

 

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 thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

other

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

Common

 

 

Common

 

 

excess of

 

 

Retained

 

 

comprehensive

 

 

 

 

 

 

shares

 

 

stock

 

 

shares

 

 

stock

 

 

par value

 

 

earnings

 

 

loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at July 3, 2021

 

 

 

 

$

 

 

 

32,249

 

 

$

32

 

 

$

379,299

 

 

$

317,799

 

 

$

(38,785

)

 

$

658,345

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

522

 

 

 

 

 

 

 

 

 

522

 

Shares issued, acquisition

 

 

 

 

 

 

 

 

134

 

 

 

 

 

 

10,390

 

 

 

 

 

 

 

 

 

10,390

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,050

 

 

 

 

 

 

 

 

 

2,050

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(235

)

 

 

 

 

 

 

 

 

(235

)

Shares repurchased

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(583

)

 

 

 

 

 

 

 

 

(583

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,916

)

 

 

 

 

 

(2,916

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,760

 

 

 

 

 

 

27,760

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,905

)

 

 

(6,905

)

Balance at October 2, 2021

 

 

 

 

$

 

 

 

32,400

 

 

$

32

 

 

$

391,461

 

 

$

342,643

 

 

$

(45,690

)

 

$

688,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 27, 2020

 

 

 

 

$

 

 

 

32,081

 

 

$

32

 

 

$

367,841

 

 

$

257,568

 

 

$

(58,677

)

 

$

566,764

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

304

 

 

 

 

 

 

 

 

 

304

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,383

 

 

 

 

 

 

 

 

 

1,383

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(18

)

 

 

 

 

 

 

 

 

(18

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,890

)

 

 

 

 

 

(2,890

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,982

 

 

 

 

 

 

12,982

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,291

 

 

 

9,291

 

Balance at September 26, 2020

 

 

 

 

$

 

 

 

32,096

 

 

$

32

 

 

$

369,510

 

 

$

267,660

 

 

$

(49,386

)

 

$

587,816

 

 

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 thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

other

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

Common

 

 

Common

 

 

excess of

 

 

Retained

 

 

comprehensive

 

 

 

 

 

 

shares

 

 

stock

 

 

shares

 

 

stock

 

 

par value

 

 

earnings

 

 

loss

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 2, 2021

 

 

 

 

$

 

 

 

32,120

 

 

$

32

 

 

$

371,778

 

 

$

270,320

 

 

$

(34,340

)

 

$

607,790

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

43

 

 

 

 

 

 

36

 

 

 

 

 

 

 

 

 

36

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

32

 

 

 

 

 

 

1,318

 

 

 

 

 

 

 

 

 

1,318

 

Shares issued, acquisition

 

 

 

 

 

 

 

 

197

 

 

 

 

 

 

14,014

 

 

 

 

 

 

 

 

 

14,014

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,233

 

 

 

 

 

 

 

 

 

6,233

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

(1,335

)