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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 1, 2022

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 32,556,476 shares of common stock, par value $.001, outstanding as of October 28, 2022.

 


 

Helios Technologies, Inc.

INDEX

For the quarter ended

October 1, 2022

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

Financial Statements

 

3

 

 

 

 

 

Consolidated Balance Sheets as of October 1, 2022 (unaudited) and January 1, 2022

 

3

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended October 1, 2022 (unaudited) and October 2, 2021 (unaudited)

 

4

 

 

 

 

 

Consolidated Statements of Operations for the Nine Months Ended October 1, 2022 (unaudited) and October 2, 2021 (unaudited)

 

5

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended October 1, 2022 (unaudited) and October 2, 2021 (unaudited)

 

6

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Three Months Ended October 1, 2022 (unaudited) and October 2, 2021 (unaudited)

 

7

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Nine Months Ended October 1, 2022 (unaudited) and October 2, 2021 (unaudited)

 

8

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 2022 (unaudited) and October 2, 2021 (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 1, 2022

 

 

January 1, 2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

36,813

 

 

$

28,540

 

Restricted cash

 

 

33

 

 

 

41

 

Accounts receivable, net of allowance for credit losses of $1,122 and $1,212

 

 

131,649

 

 

 

134,561

 

Inventories, net

 

 

179,718

 

 

 

165,629

 

Income taxes receivable

 

 

6,517

 

 

 

2,762

 

Other current assets

 

 

19,543

 

 

 

20,101

 

Total current assets

 

 

374,273

 

 

 

351,634

 

Property, plant and equipment, net

 

 

171,323

 

 

 

174,210

 

Deferred income taxes

 

 

6,008

 

 

 

2,934

 

Goodwill

 

 

447,140

 

 

 

459,936

 

Other intangible assets, net

 

 

396,528

 

 

 

412,759

 

Other assets

 

 

24,295

 

 

 

13,873

 

Total assets

 

$

1,419,567

 

 

$

1,415,346

 

Liabilities and shareholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

64,921

 

 

$

85,301

 

Accrued compensation and benefits

 

 

19,004

 

 

 

28,595

 

Other accrued expenses and current liabilities

 

 

30,890

 

 

 

28,254

 

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

 

 

18,897

 

 

 

18,125

 

Dividends payable

 

 

2,930

 

 

 

2,917

 

Income taxes payable

 

 

7,489

 

 

 

6,328

 

Total current liabilities

 

 

144,131

 

 

 

169,520

 

Revolving line of credit

 

 

267,693

 

 

 

242,312

 

Long-term non-revolving debt, net

 

 

169,332

 

 

 

183,897

 

Deferred income taxes

 

 

57,042

 

 

 

71,836

 

Other noncurrent liabilities

 

 

29,932

 

 

 

38,818

 

Total liabilities

 

 

668,130

 

 

 

706,383

 

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,
   
32,544 and 32,407 shares issued and outstanding

 

 

33

 

 

 

32

 

Capital in excess of par value

 

 

401,549

 

 

 

394,641

 

Retained earnings

 

 

435,392

 

 

 

363,279

 

Accumulated other comprehensive loss

 

 

(85,537

)

 

 

(48,989

)

Total shareholders' equity

 

 

751,437

 

 

 

708,963

 

Total liabilities and shareholders' equity

 

$

1,419,567

 

 

$

1,415,346

 

 

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 1, 2022

 

 

October 2, 2021

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

207,205

 

 

$

223,241

 

Cost of sales

 

 

137,939

 

 

 

142,299

 

Gross profit

 

 

69,266

 

 

 

80,942

 

Selling, engineering and administrative expenses

 

 

31,749

 

 

 

32,786

 

Amortization of intangible assets

 

 

6,774

 

 

 

7,407

 

Operating income

 

 

30,743

 

 

 

40,749

 

Interest expense, net

 

 

4,098

 

 

 

3,813

 

Foreign currency transaction (gain) loss, net

 

 

(199

)

 

 

304

 

Other non-operating expense (income), net

 

 

177

 

 

 

(616

)

Income before income taxes

 

 

26,667

 

 

 

37,248

 

Income tax provision

 

 

6,289

 

 

 

9,488

 

Net income

 

$

20,378

 

 

$

27,760

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

0.63

 

 

$

0.86

 

Diluted

 

$

0.63

 

 

$

0.85

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

32,541

 

 

 

32,385

 

Diluted

 

 

32,585

 

 

 

32,539

 

 

 

 

 

 

 

 

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 1, 2022

 

 

October 2, 2021

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

689,420

 

 

$

651,499

 

Cost of sales

 

 

454,202

 

 

 

413,036

 

Gross profit

 

 

235,218

 

 

 

238,463

 

Selling, engineering and administrative expenses

 

 

98,059

 

 

 

95,757

 

Amortization of intangible assets

 

 

20,554

 

 

 

25,285

 

Operating income

 

 

116,605

 

 

 

117,421

 

Interest expense, net

 

 

11,719

 

 

 

12,965

 

Foreign currency transaction (gain) loss, net

 

 

(1,296

)

 

 

1,271

 

Other non-operating expense (income), net

 

 

1,508

 

 

 

(727

)

Income before income taxes

 

 

104,674

 

 

 

103,912

 

Income tax provision

 

 

23,782

 

 

 

22,870

 

Net income

 

$

80,892

 

 

$

81,042

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

Basic

 

$

2.49

 

 

$

2.51

 

Diluted

 

$

2.48

 

 

$

2.50

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

 

 

32,493

 

 

 

32,272

 

Diluted

 

 

32,597

 

 

 

32,437

 

 

 

 

 

 

 

 

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 1, 2022

 

 

October 2, 2021

 

 

October 1, 2022

 

 

October 2, 2021

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

20,378

 

 

$

27,760

 

 

$

80,892

 

 

$

81,042

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

 

(20,181

)

 

 

(7,528

)

 

 

(47,053

)

 

 

(14,215

)

Unrealized gain on interest rate swap, net of tax

 

 

3,240

 

 

 

623

 

 

 

10,505

 

 

 

2,865

 

Total other comprehensive loss

 

 

(16,941

)

 

 

(6,905

)

 

 

(36,548

)

 

 

(11,350

)

Comprehensive income

 

$

3,437

 

 

$

20,855

 

 

$

44,344

 

 

$

69,692

 

 

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 2, 2022

 

 

 

 

$

 

 

 

32,504

 

 

$

33

 

 

$

397,643

 

 

$

417,944

 

 

$

(68,596

)

 

$

747,024

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

511

 

 

 

 

 

 

 

 

 

511

 

Shares issued, acquisition

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

1,573

 

 

 

 

 

 

 

 

 

1,573

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,840

 

 

 

 

 

 

 

 

 

1,840

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

 

 

 

(18

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,930

)

 

 

 

 

 

(2,930

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,378

 

 

 

 

 

 

20,378

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,941

)

 

 

(16,941

)

Balance at October 1, 2022

 

 

 

 

$

 

 

 

32,544

 

 

$

33

 

 

$

401,549

 

 

$

435,392

 

 

$

(85,537

)

 

$

751,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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</