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 June 29, 2024

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

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-40935

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 33,219,806 shares of common stock, par value $.001, outstanding as of July 26, 2024.

Helios Technologies, Inc.

INDEX

For the quarter ended

June 29, 2024


			Page

PART I. FINANCIAL INFORMATION			3

	Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of June 29, 2024 (unaudited) and December 30, 2023		3

	Consolidated Statements of Operations (unaudited) for the Three Months Ended June 29, 2024 and July 1, 2023		4

	Consolidated Statements of Operations (unaudited) for the Six Months Ended June 29, 2024 and July 1, 2023		5

	Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Months Ended June 29, 2024 and July 1, 2023		6

	Consolidated Statements of Shareholders’ Equity (unaudited) for the Three Months Ended June 29, 2024 and July 1, 2023		7

	Consolidated Statements of Shareholders’ Equity (unaudited) for the Six Months Ended June 29, 2024 and July 1, 2023		8

	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 29, 2024 and July 1, 2023		9

	Condensed Notes to the Consolidated, Unaudited Financial Statements		10

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

	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 millions, except per share data)


	June 29, 2024			December 30, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	45.0		$	32.4
Accounts receivable, net of allowance for doubtful accounts of $2.6 and $2.1		132.6			114.8
Inventories, net		206.3			215.1
Income taxes receivable		9.9			11.3
Other current assets		28.8			23.1
Total current assets		422.6			396.7
Property, plant and equipment, net		223.6			227.9
Deferred income taxes		4.6			1.7
Goodwill		506.1			514.0
Other intangible assets, net		405.0			426.4
Other assets		19.0			23.7
Total assets	$	1,580.9		$	1,590.4
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	67.4		$	70.3
Accrued compensation and benefits		24.2			19.4
Other accrued expenses and current liabilities		26.9			27.0
Current portion of long-term non-revolving debt, net		17.2			23.2
Dividends payable		3.0			3.0
Income taxes payable		6.0			2.0
Total current liabilities		144.7			144.9
Revolving lines of credit		190.4			199.8
Long-term non-revolving debt, net		291.7			298.3
Deferred income taxes		54.5			57.1
Other noncurrent liabilities		33.1			35.7
Total liabilities		714.4			735.8
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, 33.2 and 33.1 shares issued and outstanding		—			—
Capital in excess of par value		439.7			434.4
Retained earnings		492.4			475.6
Accumulated other comprehensive loss		(65.6	)		(55.4	)
Total shareholders' equity		866.5			854.6
Total liabilities and shareholders' equity	$	1,580.9		$	1,590.4

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

Helios Technologies, Inc.

Consolidated Statements of Operations (unaudited)

(in millions, except per share data)


	Three Months Ended
	June 29, 2024			July 1, 2023
	(unaudited)			(unaudited)
Net sales	$	219.9		$	227.6
Cost of sales		149.3			151.8
Gross profit		70.6			75.8
Selling, engineering and administrative expenses		36.7			38.0
Amortization of intangible assets		7.9			8.3
Operating income		26.0			29.5
Interest expense, net		8.5			7.8
Foreign currency transaction loss, net		0.2			0.1
Other non-operating income, net		(0.3	)		(0.2	)
Income before income taxes		17.6			21.8
Income tax provision		4.0			5.0
Net income	$	13.6		$	16.8

Net income per share:
Basic	$	0.41		$	0.51
Diluted	$	0.41		$	0.51

Weighted average shares outstanding:
Basic		33.2			32.8
Diluted		33.3			32.9

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)


	Six Months Ended
	June 29, 2024			July 1, 2023
	(unaudited)			(unaudited)
Net sales	$	431.9		$	440.8
Cost of sales		294.1			294.0
Gross profit		137.8			146.8
Selling, engineering and administrative expenses		75.7			76.1
Amortization of intangible assets		15.7			16.4
Operating income		46.4			54.3
Interest expense, net		16.7			14.0
Foreign currency transaction loss, net		0.5			0.5
Other non-operating income, net		(0.3	)		-
Income before income taxes		29.5			39.8
Income tax provision		6.8			9.2
Net income	$	22.7		$	30.6

Net income per share:
Basic	$	0.69		$	0.94
Diluted	$	0.68		$	0.93

Weighted average shares outstanding:
Basic		33.2			32.7
Diluted		33.3			32.8

Dividends declared per share	$	0.18		$	0.18

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					Six Months Ended
	June 29, 2024			July 1, 2023		June 29, 2024			July 1, 2023
Net income	$	13.6		$	16.8	$	22.7		$	30.6
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax		(2.3	)		0.6		(10.6	)		3.7
Unrealized gain (loss) on interest rate swaps, net of tax		(0.8	)		2.5		0.4			0.1
Total other comprehensive (loss) income		(3.1	)		3.1		(10.2	)		3.8
Comprehensive income	$	10.5		$	19.9	$	12.5		$	34.4

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)

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 March 30, 2024		—	$	—		33.2	$	—	$	437.3		$	481.8		$	(62.5	)	$	856.6
Shares issued, ESPP										0.5									0.5
Stock-based compensation										2.5									2.5
Cancellation of shares for payment of employee tax withholding										(0.6	)								(0.6	)
Dividends declared													(3.0	)					(3.0	)
Net income													13.6						13.6
Other comprehensive loss																(3.1	)		(3.1	)
Balance at June 29, 2024		—	$	—		33.2	$	—	$	439.7		$	492.4		$	(65.6	)	$	866.5

Balance at April 1, 2023		—	$	—		32.6	$	—	$	406.4		$	460.9		$	(58.7	)	$	808.6
Shares issued, ESPP										0.5									0.5
Shares issued, acquisition						0.4				18.7									18.7
Stock-based compensation										3.1									3.1
Cancellation of shares for payment of employee tax withholding										(0.3	)								(0.3	)
Dividends declared													(3.0	)					(3.0	)
Net income													16.8						16.8
Other comprehensive income																3.1			3.1
Balance at July 1, 2023		—	$	—		33.0	$	—	$	428.4		$	474.7		$	(55.6	)	$	847.5

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)

Six 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 30, 2023		—	$	—		33.1	$	—	$	434.4		$	475.6		$	(55.4	)	$	854.6
Shares issued, restricted stock						0.1													—
Shares issued, ESPP										1.0									1.0
Stock-based compensation										6.7									6.7
Cancellation of shares for payment of employee tax withholding										(2.4	)								(2.4	)
Dividends declared													(5.9	)					(5.9	)
Net income													22.7						22.7
Other comprehensive loss																(10.2	)		(10.2	)
Balance at June 29, 2024		—	$	—		33.2	$	—	$	439.7		$	492.4		$	(65.6	)	$	866.5

Balance at December 31, 2022		—	$	—		32.6	$	—	$	404.3		$	450.0		$	(59.4	)	$	794.9
Shares issued, ESPP										1.0									1.0
Shares issued, acquisition						0.4				18.7									18.7
Stock-based compensation										6.5									6.5
Cancellation of shares for payment of employee tax withholding										(2.1	)								(2.1	)
Dividends declared													(5.9	)					(5.9	)
Net income													30.6						30.6
Other comprehensive income																3.8			3.8
Balance at July 1, 2023		—	$	—		33.0	$	—	$	428.4		$	474.7		$	(55.6	)	$	847.5

The accompanying Condensed Notes to the Consolidated, Unaudited Financial Statements are an integral part of these financial statements.

Helios Technologies, Inc.

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended

(in millions)


	Six Months Ended
	June 29, 2024			July 1, 2023
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income	$	22.7		$	30.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		31.7			31.3
Stock-based compensation expense		6.7			6.5
Amortization of debt issuance costs		0.7			0.3
Benefit for deferred income taxes		(1.3	)		(2.1	)
Forward contract losses, net		—			0.4
Other, net		0.8			0.4
(Increase) decrease in, net of acquisitions:
Accounts receivable		(19.5	)		(8.5	)
Inventories		6.3			(9.6	)
Income taxes receivable		1.2			3.3
Other current assets		(6.0	)		(4.9	)
Other assets		3.9			3.1
Increase (decrease) in, net of acquisitions:
Accounts payable		(1.9	)		(3.5	)
Accrued expenses and other liabilities		5.2			(5.6	)
Income taxes payable		4.0			2.7
Other noncurrent liabilities		(2.9	)		(3.3	)
Contingent consideration payments in excess of acquisition date fair value		—			(2.7	)
Net cash provided by operating activities