hlio-10q_20210703.htm

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 July 3, 2021

☐ 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 NASDAQ Global Select Market

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 32,390,154 shares of common stock, par value $.001, outstanding as of July 30, 2021.

Helios Technologies, Inc.

INDEX

For the quarter ended

July 3, 2021

			Page

PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements

	Consolidated Balance Sheets as of July 3, 2021 (unaudited) and January 2, 2021		4

	Consolidated Statements of Operations for the Three Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		5

	Consolidated Statements of Operations for the Six Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		6

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		7

	Consolidated Statements of Shareholders’ Equity for the Three Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		8

	Consolidated Statements of Shareholders’ Equity for the Six Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		9

	Consolidated Statements of Cash Flows for the Six Months Ended July 3, 2021 (unaudited) and June 27, 2020 (unaudited)		10

	Condensed Notes to the Consolidated, Unaudited Financial Statements		11

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

	Item 4.	Controls and Procedures	32

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	33

	Item 1A.	Risk Factors	33

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

	Item 3.	Defaults Upon Senior Securities	33

	Item 4.	Mine Safety Disclosures	33

	Item 5.	Other Information	33

	Item 6.	Exhibits	34

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)

	July 3, 2021			January 2, 2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,371		$	25,216
Restricted cash		41			41
Accounts receivable, net of allowance for credit losses of $1,319 and $1,493		134,018			97,623
Inventories, net		132,318			110,372
Income taxes receivable		1,916			1,103
Other current assets		21,761			19,664
Total current assets		324,425			254,019
Property, plant and equipment, net		163,201			163,177
Deferred income taxes		3,551			6,645
Goodwill		436,233			443,533
Other intangible assets, net		401,483			419,375
Other assets		11,499			10,230
Total assets	$	1,340,392		$	1,296,979
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	74,553		$	59,477
Accrued compensation and benefits		23,706			22,985
Other accrued expenses and current liabilities		27,299			24,941
Current portion of long-term non-revolving debt, net		15,662			16,229
Dividends payable		2,902			2,891
Income taxes payable		6,868			1,489
Total current liabilities		150,990			128,012
Revolving line of credit		238,777			255,909
Long-term non-revolving debt, net		182,272			189,932
Deferred income taxes		76,417			78,864
Other noncurrent liabilities		33,591			36,472
Total liabilities		682,047			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, 32,249 and 32,121 shares issued and outstanding		32			32
Capital in excess of par value		379,299			371,778
Retained earnings		317,799			270,320
Accumulated other comprehensive loss		(38,785	)		(34,340	)
Total shareholders' equity		658,345			607,790
Total liabilities and shareholders' equity	$	1,340,392		$	1,296,979

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
	July 3, 2021			June 27, 2020
	(unaudited)			(unaudited)
Net sales	$	223,413		$	119,294
Cost of sales		141,261			74,575
Gross profit		82,152			44,719
Selling, engineering and administrative expenses		32,410			23,600
Amortization of intangible assets		7,680			4,417
Operating income		42,062			16,702
Interest expense, net		4,400			2,891
Foreign currency transaction loss, net		503			283
Other non-operating income, net		(110	)		(16	)
Income before income taxes		37,269			13,544
Income tax provision		6,575			636
Net income	$	30,694		$	12,908
Basic and diluted net income per common share	$	0.95		$	0.40
Basic and diluted weighted average shares outstanding		32,237			32,081
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)

	Six Months Ended
	July 3, 2021			June 27, 2020
	(unaudited)			(unaudited)
Net sales	$	428,258		$	248,777
Cost of sales		270,738			152,208
Gross profit		157,520			96,569
Selling, engineering and administrative expenses		62,971			49,264
Amortization of intangible assets		17,878			8,765
Goodwill impairment		—			31,871
Operating income		76,671			6,669
Interest expense, net		9,151			5,842
Foreign currency transaction loss, net		967			408
Other non-operating income, net		(111	)		(110	)
Income before income taxes		66,664			529
Income tax provision		13,382			4,844
Net income (loss)	$	53,282		$	(4,315	)
Basic and diluted net income (loss) per common share	$	1.65		$	(0.13	)
Basic and diluted weighted average shares outstanding		32,215			32,071
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 Income

(in thousands)

	Three Months Ended				Six Months Ended
	July 3, 2021		June 27, 2020		July 3, 2021			June 27, 2020
	(unaudited)		(unaudited)		(unaudited)			(unaudited)
Net income (loss)	$	30,694	$	12,908	$	53,282		$	(4,315	)
Other comprehensive income (loss)
Foreign currency translation adjustments, net of tax		2,431		3,562		(6,687	)		(1,338	)
Unrealized gain (loss) on interest rate swap, net of tax		537		227		2,242			(1,975	)
Total other comprehensive income (loss)		2,968		3,789		(4,445	)		(3,313	)
Comprehensive income (loss)	$	33,662	$	16,697	$	48,837		$	(7,628	)

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 April 3, 2021		—	$	—		32,226		$	32	$	376,994		$	290,007		$	(41,753	)	$	625,280
Shares issued, restricted stock						1					18									18
Shares issued, other compensation						7														—
Shares issued, ESPP						15					463									463
Stock-based compensation											2,076									2,076
Cancellation of shares for payment of employee tax withholding											(252	)								(252	)
Dividends declared														(2,902	)					(2,902	)
Net income														30,694						30,694
Other comprehensive income																	2,968			2,968
Balance at July 3, 2021		—	$	—		32,249		$	32	$	379,299		$	317,799		$	(38,785	)	$	658,345

Balance at March 28, 2020		—	$	—		32,075		$	32	$	366,521		$	247,548		$	(62,466	)	$	551,635
Shares issued, restricted stock						(6	)													—
Shares issued, ESPP						11					368									368
Shares issued, discretionary contribution						1					45									45
Stock-based compensation											914									914
Cancellation of shares for payment of employee tax withholding											(7	)								(7	)
Dividends declared														(2,888	)					(2,888	)
Net income														12,908						12,908
Other comprehensive income																	3,789			3,789
Balance at June 27, 2020		—	$	—		32,081		$	32	$	367,841		$	257,568		$	(58,677	)	$	566,764

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 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						31				18							18
Shares issued, other compensation						14											—
Shares issued, ESPP						25				796							796
Shares issued, acquisition