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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, 2019

 

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.)

 

 

 

1500 WEST UNIVERSITY PARKWAY

SARASOTA, Florida

 

34243

(Address of Principal Executive Offices)

 

(Zip Code)

 

941/362-1200

(Registrant’s Telephone Number, Including Area Code)

 

 

 

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, 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. (Check one):

 

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 32,026,807 shares of common stock, par value $.001, outstanding as of July 26, 2019.


Helios Technologies, Inc.

INDEX

For the quarter ended

June 29, 2019

 

 

 

 

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Consolidated Balance Sheets as of June 29, 2019 (unaudited) and December 29, 2018

 

3

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)

 

4

 

 

 

 

 

Consolidated Statements of Operations for the Six Months Ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)

 

5

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)

 

6

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)

 

7

 

 

 

 

 

Consolidated Statements of Cash Flows for the Six Months Ended June 29, 2019 (unaudited) and June 30, 2018 (unaudited)

 

8

 

 

 

 

 

Notes to the Consolidated, Unaudited Financial Statements

 

9

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

34

 

 

 

 

 

 

Item 1A.

Risk Factors

 

34

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

34

 

 

 

 

 

 

Item 4.

Mine Safety Disclosure

 

34

 

 

 

 

 

 

Item 5.

Other Information

 

34

 

 

 

 

 

 

Item 6.

Exhibits

 

35

 

 

2


PART I: FINANCIAL INFORMATION

Item 1.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

 

 

June 29, 2019

 

 

December 29, 2018

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,283

 

 

$

23,477

 

Restricted cash

 

 

38

 

 

 

38

 

Accounts receivable, net of allowance for doubtful accounts of $1,529 and $1,336

 

 

81,817

 

 

 

72,806

 

Inventories, net

 

 

97,176

 

 

 

85,989

 

Income taxes receivable

 

 

1,262

 

 

 

4,549

 

Other current assets

 

 

14,745

 

 

 

9,997

 

Total current assets

 

 

208,321

 

 

 

196,856

 

Property, plant and equipment, net

 

 

146,607

 

 

 

126,868

 

Deferred income taxes

 

 

7,870

 

 

 

9,463

 

Goodwill

 

 

382,221

 

 

 

383,131

 

Other intangible assets, net

 

 

310,092

 

 

 

320,548

 

Other assets

 

 

4,746

 

 

 

5,299

 

Total assets

 

$

1,059,857

 

 

$

1,042,165

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

41,867

 

 

$

40,879

 

Accrued compensation and benefits

 

 

15,396

 

 

 

13,260

 

Other accrued expenses and current liabilities

 

 

13,642

 

 

 

9,941

 

Current portion of contingent consideration

 

 

1,047

 

 

 

18,120

 

Current portion of long-term non-revolving debt, net

 

 

6,357

 

 

 

5,215

 

Dividends payable

 

 

2,882

 

 

 

2,878

 

Income taxes payable

 

 

1,852

 

 

 

2,697

 

Total current liabilities

 

 

83,043

 

 

 

92,990

 

Revolving line of credit

 

 

250,950

 

 

 

255,750

 

Long-term non-revolving debt, net

 

 

87,766

 

 

 

91,720

 

Contingent consideration, less current portion

 

 

893

 

 

 

840

 

Deferred income taxes

 

 

52,478

 

 

 

57,783

 

Other noncurrent liabilities

 

 

26,473

 

 

 

12,314

 

Total liabilities

 

 

501,603

 

 

 

511,397

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, par value $0.001, 2,000,000 shares authorized,

   no shares issued or outstanding

 

 

 

 

 

 

Common stock, par value $0.001, 100,000,000 and 50,000,000 shares authorized,

   32,017,300 and 31,964,775 shares issued and outstanding

 

 

32

 

 

 

32

 

Capital in excess of par value

 

 

362,104

 

 

 

357,933

 

Retained earnings

 

 

246,828

 

 

 

219,056

 

Accumulated other comprehensive loss

 

 

(50,710

)

 

 

(46,253

)

Total shareholders' equity

 

 

558,254

 

 

 

530,768

 

Total liabilities and shareholders' equity

 

$

1,059,857

 

 

$

1,042,165

 

 

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

3


Helios Technologies, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Three months ended

 

 

 

June 29, 2019

 

 

June 30, 2018

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

143,842

 

 

$

136,168

 

Cost of sales

 

 

87,615

 

 

 

85,764

 

Gross profit

 

 

56,227

 

 

 

50,404

 

Selling, engineering and administrative expenses

 

 

25,309

 

 

 

25,325

 

Amortization of intangible assets

 

 

4,545

 

 

 

8,076

 

Operating income

 

 

26,373

 

 

 

17,003

 

Interest expense, net

 

 

4,048

 

 

 

4,151

 

Foreign currency transaction loss, net

 

 

501

 

 

 

3,301

 

Miscellaneous (income) expense, net

 

 

(157

)

 

 

80

 

Change in fair value of contingent consideration

 

 

56

 

 

 

251

 

Income before income taxes

 

 

21,925

 

 

 

9,220

 

Income tax provision

 

 

4,660

 

 

 

2,424

 

Net income

 

$

17,265

 

 

$

6,796

 

Basic and diluted net income per common share

 

$

0.54

 

 

$

0.22

 

Basic and diluted weighted average shares outstanding

 

 

32,012

 

 

 

31,597

 

Dividends declared per share

 

$

0.09

 

 

$

0.09

 

 

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

4


Helios Technologies, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Six months ended

 

 

 

June 29, 2019

 

 

June 30, 2018

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

290,693

 

 

$

233,486

 

Cost of sales

 

 

177,958

 

 

 

145,465

 

Gross profit

 

 

112,735

 

 

 

88,021

 

Selling, engineering and administrative expenses

 

 

51,465

 

 

 

43,640

 

Amortization of intangible assets

 

 

9,066

 

 

 

10,124

 

Operating income

 

 

52,204

 

 

 

34,257

 

Interest expense, net

 

 

8,433

 

 

 

4,634

 

Foreign currency transaction loss, net

 

 

62

 

 

 

3,812

 

Miscellaneous (income) expense, net

 

 

(50

)

 

 

44

 

Change in fair value of contingent consideration

 

 

775

 

 

 

653

 

Income before income taxes

 

 

42,984

 

 

 

25,114

 

Income tax provision

 

 

9,315

 

 

 

6,407

 

Net income

 

$

33,669

 

 

$

18,707

 

Basic and diluted net income per common share

 

$

1.05

 

 

$

0.61

 

Basic and diluted weighted average shares outstanding

 

 

31,995

 

 

 

30,718

 

Dividends declared per share

 

$

0.18

 

 

$

0.18

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 


5


Helios Technologies, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

 

 

 

Three months ended

 

 

Six months ended

 

 

 

June 29, 2019

 

 

June 30, 2018

 

 

June 29, 2019

 

 

June 30, 2018

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

17,265

 

 

$

6,796

 

 

$

33,669

 

 

$

18,707

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

 

3,498

 

 

 

(27,214

)

 

 

(1,333

)

 

 

(24,718

)

Unrealized loss on interest rate swap, net of tax

 

 

(2,042

)

 

 

 

 

 

(3,124

)

 

 

 

Total other comprehensive income (loss)

 

 

1,456

 

 

 

(27,214

)

 

 

(4,457

)

 

 

(24,718

)

Comprehensive income (loss)

 

$

18,721

 

 

$

(20,418

)

 

$

29,212

 

 

$

(6,011

)

 

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

 

6


Helios Technologies, Inc.

Consolidated Statements of Shareholders’ Equity (unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

 

other

 

 

 

 

 

 

 

Preferred

 

 

Preferred

 

 

Common

 

 

Common

 

 

excess of

 

 

Retained

 

 

comprehensive

 

 

 

 

 

 

 

shares

 

 

stock

 

 

shares

 

 

stock

 

 

par value

 

 

earnings

 

 

income (loss)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 30, 2019

 

 

 

 

$

 

 

 

31,996

 

 

$

32

 

 

$

360,195

 

 

$

232,445

 

 

$

(52,166

)

 

$

540,506

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

 

436

 

 

 

 

 

 

 

 

 

 

 

436

 

Shares issued, ESOP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

60

 

 

 

 

 

 

 

 

 

 

 

60

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,413

 

 

 

 

 

 

 

 

 

 

 

1,413

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,882

)

 

 

 

 

 

 

(2,882

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,265

 

 

 

 

 

 

 

17,265

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,456

 

 

 

1,456

 

Balance, June 29, 2019

 

 

 

 

$

 

 

 

32,017

 

 

$

32

 

 

$

362,104

 

 

$

246,828

 

 

$

(50,710

)

 

$

558,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

 

 

 

 

$

 

 

 

31,588

 

 

$

32

 

 

$

336,189

 

 

$

192,838

 

 

$

(3,983

)

 

$

525,076

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

438

 

 

 

 

 

 

 

 

 

 

 

438

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,145

 

 

 

 

 

 

 

 

 

 

 

1,145

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,847

)

 

 

 

 

 

 

(2,847

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,796

 

 

 

 

 

 

 

6,796

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27,213

)

 

 

(27,213

)

Balance, June 30, 2018

 

 

 

 

$

 

 

 

31,604

 

 

$

32

 

 

$

337,772

 

 

$

196,787

 

 

$

(31,196

)

 

$

503,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 29, 2018

 

 

 

 

$

 

 

 

31,965

 

 

$

32

 

 

$

357,933

 

 

$

219,056

 

 

$

(46,253

)

 

$

530,768

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

844

 

 

 

 

 

 

 

 

 

 

 

844

 

Shares issued, ESOP

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

1,152

 

 

 

 

 

 

 

 

 

 

 

1,152

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,781

 

 

 

 

 

 

 

 

 

 

 

2,781

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

(606

)

 

 

 

 

 

 

 

 

 

 

(606

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,763

)

 

 

 

 

 

 

(5,763

)

Net income