10-Q

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 September 30, 2023

☐ 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.


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 33,052,989 shares of common stock, par value $.001, outstanding as of October 27, 2023.

Helios Technologies, Inc.

INDEX

For the quarter ended

September 30, 2023


			Page

PART I. FINANCIAL INFORMATION			3

	Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022		3

	Consolidated Statements of Operations (unaudited) for the Three Months Ended September 30, 2023 and October 1, 2022		4

	Consolidated Statements of Operations (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022		5

	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, 2023 and October 1, 2022		6

	Consolidated Statements of Shareholders’ Equity (unaudited) for the Three Months Ended September 30, 2023 and October 1, 2022		7

	Consolidated Statements of Shareholders’ Equity (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022		8

	Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2023 and October 1, 2022		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	33

	Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION			34

	Item 1.	Legal Proceedings	34

	Item 1A.	Risk Factors	34

	Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	34

	Item 3.	Defaults Upon Senior Securities	34

	Item 4.	Mine Safety Disclosures	34

	Item 5.	Other Information	34

	Item 6.	Exhibits	35

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in millions, except per share data)


	September 30, 2023			December 31, 2022
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	35.2		$	43.7
Accounts receivable, net of allowance for credit losses of $2.0 and $1.5		131.2			125.1
Inventories, net		208.7			191.6
Income taxes receivable		10.1			10.2
Other current assets		25.0			17.9
Total current assets		410.2			388.5
Property, plant and equipment, net		220.3			175.7
Deferred income taxes		2.1			1.6
Goodwill		502.7			468.5
Other intangible assets, net		426.4			405.6
Other assets		28.9			23.8
Total assets	$	1,590.6		$	1,463.7
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	65.0		$	73.7
Accrued compensation and benefits		19.2			21.1
Other accrued expenses and current liabilities		22.3			32.0
Current portion of long-term non-revolving debt, net		21.8			19.0
Dividends payable		2.9			2.9
Income taxes payable		5.1			3.6
Total current liabilities		136.3			152.3
Revolving lines of credit		217.9			261.3
Long-term non-revolving debt, net		304.2			164.2
Deferred income taxes		57.2			61.0
Other noncurrent liabilities		33.0			30.0
Total liabilities		748.6			668.8
Commitments and contingencies		—			—
Shareholders' equity:
Preferred stock, par value $0.001, 2.0 shares authorized, no shares issued or outstanding		—			—
Common stock, par value $0.001, 100.0 shares authorized, 33.0 and 32.6 shares issued and outstanding		—			—
Capital in excess of par value		431.6			404.3
Retained earnings		475.3			450.0
Accumulated other comprehensive loss		(64.9	)		(59.4	)
Total shareholders' equity		842.0			794.9
Total liabilities and shareholders' equity	$	1,590.6		$	1,463.7

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 (unaudited)

(in millions, except per share data)


	Three Months Ended
	September 30, 2023		October 1, 2022
Net sales	$	201.4	$	207.2
Cost of sales		141.7		137.9
Gross profit		59.7		69.3
Selling, engineering and administrative expenses		37.7		31.7
Amortization of intangible assets		8.2		6.8
Operating income		13.8		30.7
Interest expense, net		8.7		4.1
Foreign currency transaction loss (gain), net		0.1		(0.2	)
Other non-operating expense, net		—		0.2
Income before income taxes		5.0		26.7
Income tax provision		1.5		6.3
Net income	$	3.5	$	20.4

Net income per share:
Basic	$	0.11	$	0.63
Diluted	$	0.11	$	0.63

Weighted average shares outstanding:
Basic		33.0		32.5
Diluted		33.1		32.6

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 (unaudited)

(in millions, except per share data)


	Nine Months Ended
	September 30, 2023		October 1, 2022
Net sales	$	642.2	$	689.4
Cost of sales		435.7		454.2
Gross profit		206.5		235.2
Selling, engineering and administrative expenses		113.8		98.1
Amortization of intangible assets		24.7		20.6
Operating income		68.0		116.6
Interest expense, net		22.6		11.7
Foreign currency transaction loss (gain), net		0.6		(1.3	)
Other non-operating expense, net		—		1.5
Income before income taxes		44.8		104.7
Income tax provision		10.7		23.8
Net income	$	34.1	$	80.9

Net income per share:
Basic	$	1.04	$	2.49
Diluted	$	1.04	$	2.48

Weighted average shares outstanding:
Basic		32.8		32.5
Diluted		33.0		32.6

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 (Loss) Income (unaudited)

(in millions)


	Three Months Ended						Nine Months Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Net income	$	3.5		$	20.4		$	34.1		$	80.9
Other comprehensive loss
Foreign currency translation adjustments, net of tax		(10.2	)		(20.2	)		(6.5	)		(47.1	)
Unrealized gain on interest rate swaps, net of tax		0.9			3.2			1.0			10.5
Total other comprehensive loss		(9.3	)		(16.9	)		(5.5	)		(36.5	)
Comprehensive (loss) income	$	(5.8	)	$	3.4		$	28.6		$	44.3

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 millions)


															Accumulated
									Capital in						other
	Preferred		Preferred		Common		Common		excess of			Retained			comprehensive
	shares		stock		shares		stock		par value			earnings			loss			Total

Balance at July 1, 2023		—	$	—		33.0	$	—	$	428.4		$	474.7		$	(55.6	)	$	847.5
Shares issued, ESPP										0.6									0.6
Stock-based compensation										2.7									2.7
Cancellation of shares for payment of employee tax withholding										(0.1	)								(0.1	)
Dividends declared													(2.9	)					(2.9	)
Net income													3.5						3.5
Other comprehensive loss																(9.3	)		(9.3	)
Balance at September 30, 2023		—	$	—		33.0	$	—	$	431.6		$	475.3		$	(64.9	)	$	842.0

Balance at July 2, 2022		—	$	—		32.5	$	—	$	397.6		$	417.9		$	(68.6	)	$	747.0
Shares issued, ESPP										0.5									0.5
Shares issued, acquisition										1.6									1.6
Stock-based compensation										1.8									1.8
Dividends declared													(2.9	)					(2.9	)
Net income													20.4						20.4
Other comprehensive loss																(16.9	)		(16.9	)
Balance at October 1, 2022		—	$	—		32.5	$	—	$	401.5		$	435.4		$	(85.5	)	$	751.4

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)

Nine Months Ended

(in millions)


															Accumulated
									Capital in						other
	Preferred		Preferred		Common		Common		excess of			Retained			comprehensive
	shares		stock		shares		stock		par value			earnings			loss			Total

Balance at December 31, 2022		—	$	—		32.6	$	—	$	404.3		$	450.0		$	(59.4	)	$	794.9
Shares issued, ESPP										1.6									1.6
Shares issued, acquisition						0.4				18.7									18.7
Stock-based compensation										9.2									9.2
Cancellation of shares for payment of employee tax withholding										(2.2	)								(2.2	)
Dividends declared													(8.8	)					(8.8	)
Net income													34.1						34.1
Other comprehensive loss																(5.5	)		(5.5	)
Balance at September 30, 2023		—	$	—		33.0	$	—	$	431.6		$	475.3		$	(64.9	)	$