10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging growth company

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

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-21835

HELIOS TECHNOLOGIES, INC.

(Exact Name of Registration as Specified in its Charter)


Florida		59-2754337
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

7456 16th St E SARASOTA, Florida		34243
(Address of Principal Executive Offices)		(Zip Code)

(941)362-1200

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock $.001 Par Value

HLIO

The New York Stock Exchange

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

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

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

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

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.

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.

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.

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.

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</