Helios Technologies Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of Income before Income Tax, Domestic and Foreign

For financial reporting purposes, income before income taxes includes the following components:


	For the year ended
	December 31, 2022		January 1, 2022		January 2, 2021
United States	$	71.3	$	87.1	$	30.6
Foreign		50.5		44.1		(6.6	)
Total	$	121.8	$	131.2	$	24.0

Schedule of Components of Income Tax Provision (Benefit)

The components of the income tax provision (benefit) are as follows:


	For the year ended
	December 31, 2022			January 1, 2022			January 2, 2021
Current tax expense (benefit):
United States	$	12.3		$	10.7		$	3.3
State and local		0.4			3.1			1.2
Foreign		15.9			17.3			7.3
Total current		28.6			31.1			11.8
Deferred tax expense (benefit):
United States		(0.4	)		(1.1	)		3.2
State and local		(2.6	)		0.2			(0.3	)
Foreign		(2.2	)		(3.6	)		(4.9	)
Total deferred		(5.2	)		(4.5	)		(2.0	)
Total income tax provision	$	23.4		$	26.6		$	9.8

Schedule of Effective Income Tax Rate Reconciliation

The reconciliation between the effective income tax rate and the U.S. federal statutory rate is as follows:


	For the year ended
	December 31, 2022			January 1, 2022			January 2, 2021
U.S. federal taxes at statutory rate	$	25.6		$	27.5		$	5.1
Increase (decrease)
Foreign withholding tax		—			0.1			0.3
Capitalized transaction costs		0.3			—			0.4
Foreign income taxed at different rate		1.7			3.6			1.4
FDII deduction		(2.8	)		(3.2	)		(1.3	)
Changes in estimates related to prior years including foreign		0.2			(0.2	)		(2.5	)
Goodwill impairment		—			—			6.7
State and local taxes, net		(1.0	)		2.7			0.6
Current year tax credits		(0.9	)		(0.5	)		(0.7	)
Foreign deferred other true up		(1.0	)		(1.6	)		—
Change in reserve		0.2			(1.9	)		(0.5	)
Excess officer compensation		1.4			—			—
Other		(0.3	)		0.1			0.3
Income tax provision	$	23.4		$	26.6		$	9.8

The effective tax rate for the year ended December 31, 2022 was lower than the rate for 2021 primarily due to a decrease in the foreign income taxed at different rates and state and local tax benefits, when compared to the year ended January 1, 2022. For the year ended December 31, 2022, the state and local taxes include a benefit for provision to return related to prior years. As a result of recent acquisitions, the Company’s state effective tax rate has decreased. The rate for all years benefited from tax deductions for foreign derived intangible income (FDII deduction).

Schedule of Deferred Tax Assets and Liabilities

Deferred income tax assets and liabilities are provided to reflect the future tax consequences of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2022 and January 1, 2022, are presented below:


	December 31, 2022			January 1, 2022
Deferred tax assets:
Foreign tax benefit of U.S. reserves	$	1.9		$	1.8
Net operating losses		6.2			5.2
Inventory		3.2			3.0
Intangible assets and goodwill		0.7			0.7
Accrued expenses and other		5.3			6.6
Other comprehensive income		5.6			3.4
Total deferred tax assets		22.9			20.7
Less: Valuation allowance		(1.7	)		(0.4	)
Net deferred tax assets		21.2			20.3
Deferred tax liabilities:
Depreciation		(8.6	)		(9.6	)
Intangible assets and goodwill		(71.7	)		(79.3	)
Other deferred tax liabilities		(0.3	)		(0.3	)
Total deferred tax liabilities		(80.6	)		(89.2	)
Net deferred tax liabilities	$	(59.4	)	$	(68.9	)

Schedule of Unrecognized Tax Benefits Roll Forward

The following is a roll-forward of the Company’s unrecognized tax benefits:


Unrecognized tax benefits - December 28, 2019	$	8.1
Increases from positions taken during prior periods		0.7
Increases from positions taken during current period		0.5
Current year acquisitions		3.2
Settled positions		(0.9	)
Unrecognized tax benefits - January 2, 2021	$	11.4
Decreases from positions taken during prior periods		(0.2	)
Increases from positions taken during current period		0.6
Lapse of statute of limitations		(2.8	)
Unrecognized tax benefits - January 1, 2022	$	9.0
Increases from positions taken during prior periods		0.9
Increases from positions taken during current period		0.2
Settled positions		(0.2	)
Lapse of statute of limitations		(2.0	)
Unrecognized tax benefits - December 31, 2022	$	7.9