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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 September 26, 2020

OR

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.)

 

 

 

1500 WEST UNIVERSITY PARKWAY

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 32,111,864 shares of common stock, par value $.001, outstanding as of October 23, 2020.


2


Helios Technologies, Inc.

INDEX

For the quarter ended

September 26, 2020

 

 

 

Page

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Consolidated Balance Sheets as of September 26, 2020 (unaudited) and December 28, 2019

 

4

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited)

 

5

 

 

 

 

 

Consolidated Statements of Operations for the Nine Months Ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited)

 

6

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited)

 

7

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Three Months Ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited)

 

8

 

 

 

 

 

Consolidated Statements of Shareholders’ Equity for the Nine Months Ended September 26, 2020 (unaudited) and September 28, 2019 (unaudited)

 

9

 

 

 

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 26, 2020 (unaudited) and September 28, 2019 (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

 

25

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

35

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

36

 

 

 

 

 

 

Item 1A.

Risk Factors

 

36

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

36

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

36

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

36

 

 

 

 

 

 

Item 5.

Other Information

 

36

 

 

 

 

 

 

Item 6.

Exhibits

 

37

 

 

3


PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS.

Helios Technologies, Inc.

Consolidated Balance Sheets

(in thousands, except per share data)

 

 

September 26, 2020

 

 

December 28, 2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

32,444

 

 

$

22,123

 

Restricted cash

 

 

38

 

 

 

39

 

Accounts receivable, net of allowance for doubtful accounts of $1,459 and $1,131

 

 

71,585

 

 

 

66,677

 

Inventories, net

 

 

77,641

 

 

 

85,195

 

Income taxes receivable

 

 

5,553

 

 

 

3,196

 

Other current assets

 

 

16,729

 

 

 

15,359

 

Total current assets

 

 

203,990

 

 

 

192,589

 

Property, plant and equipment, net

 

 

139,318

 

 

 

145,854

 

Deferred income taxes

 

 

6,843

 

 

 

5,803

 

Goodwill

 

 

354,744

 

 

 

377,569

 

Other intangible assets, net

 

 

289,667

 

 

 

294,651

 

Other assets

 

 

4,603

 

 

 

5,285

 

Total assets

 

$

999,165

 

 

$

1,021,751

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

31,347

 

 

$

29,730

 

Accrued compensation and benefits

 

 

18,473

 

 

 

16,898

 

Other accrued expenses and current liabilities

 

 

13,222

 

 

 

13,549

 

Current portion of contingent consideration

 

 

 

 

 

828

 

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

 

 

11,808

 

 

 

7,623

 

Dividends payable

 

 

2,890

 

 

 

2,884

 

Income taxes payable

 

 

8,676

 

 

 

4,941

 

Total current liabilities

 

 

86,416

 

 

 

76,453

 

Revolving lines of credit

 

 

168,398

 

 

 

208,708

 

Long-term non-revolving debt, net

 

 

80,149

 

 

 

84,062

 

Deferred income taxes

 

 

49,434

 

 

 

49,290

 

Other noncurrent liabilities

 

 

26,952

 

 

 

25,602

 

Total liabilities

 

 

411,349

 

 

 

444,115

 

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,

   32,096 and 32,047 shares issued and outstanding

 

 

32

 

 

 

32

 

Capital in excess of par value

 

 

369,510

 

 

 

365,310

 

Retained earnings

 

 

267,660

 

 

 

267,658

 

Accumulated other comprehensive loss

 

 

(49,386

)

 

 

(55,364

)

Total shareholders' equity

 

 

587,816

 

 

 

577,636

 

Total liabilities and shareholders' equity

 

$

999,165

 

 

$

1,021,751

 

 

The accompanying Condensed 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)

 

 

 

Three Months Ended

 

 

 

September 26, 2020

 

 

September 28, 2019

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

122,645

 

 

$

138,045

 

Cost of sales

 

 

75,702

 

 

 

85,926

 

Gross profit

 

 

46,943

 

 

 

52,119

 

Selling, engineering and administrative expenses

 

 

24,042

 

 

 

24,066

 

Restructuring charges

 

 

 

 

 

1,724

 

Amortization of intangible assets

 

 

4,558

 

 

 

4,478

 

Loss on disposal of intangible asset

 

 

 

 

 

2,713

 

Operating income

 

 

18,343

 

 

 

19,138

 

Interest expense, net

 

 

2,730

 

 

 

3,790

 

Foreign currency transaction (gain) loss, net

 

 

(727

)

 

 

30

 

Miscellaneous income, net

 

 

(9

)

 

 

(72

)

Change in fair value of contingent consideration

 

 

(13

)

 

 

(72

)

Income before income taxes

 

 

16,362

 

 

 

15,462

 

Income tax provision

 

 

3,380

 

 

 

2,671

 

Net income

 

$

12,982

 

 

$

12,791

 

Basic and diluted net income per common share

 

$

0.40

 

 

$

0.40

 

Basic and diluted weighted average shares outstanding

 

 

32,095

 

 

 

32,027

 

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.


5


Helios Technologies, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

Nine Months Ended

 

 

 

September 26, 2020

 

 

September 28, 2019

 

 

 

(unaudited)

 

 

(unaudited)

 

Net sales

 

$

371,422

 

 

$

428,738

 

Cost of sales

 

 

227,910

 

 

 

263,884

 

Gross profit

 

 

143,512

 

 

 

164,854

 

Selling, engineering and administrative expenses

 

 

73,306

 

 

 

75,531

 

Restructuring charges

 

 

 

 

 

1,724

 

Amortization of intangible assets

 

 

13,323

 

 

 

13,544

 

Goodwill impairment

 

 

31,871

 

 

 

 

Loss on disposal of intangible asset

 

 

 

 

 

2,713

 

Operating income

 

 

25,012

 

 

 

71,342

 

Interest expense, net

 

 

8,572

 

 

 

12,223

 

Foreign currency transaction (gain) loss, net

 

 

(319

)

 

 

92

 

Miscellaneous income, net

 

 

(85

)

 

 

(122

)

Change in fair value of contingent consideration

 

 

(47

)

 

 

703

 

Income before income taxes

 

 

16,891

 

 

 

58,446

 

Income tax provision

 

 

8,224

 

 

 

11,986

 

Net income

 

$

8,667

 

 

$

46,460

 

Basic and diluted net income per common share

 

$

0.27

 

 

$

1.45

 

Basic and diluted weighted average shares outstanding

 

 

32,079

 

 

 

32,006

 

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.

 

 


6


Helios Technologies, Inc.

Consolidated Statements of Comprehensive Income

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 26, 2020

 

 

September 28, 2019

 

 

September 26, 2020

 

 

September 28, 2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net income

 

$

12,982

 

 

$

12,791

 

 

$

8,667

 

 

$

46,460

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax

 

 

8,575

 

 

 

(10,984

)

 

 

7,237

 

 

 

(12,317

)

Unrealized gain (loss) on interest rate swap, net of tax

 

 

716

 

 

 

(388

)

 

 

(1,259

)

 

 

(3,512

)

Total other comprehensive income (loss)

 

 

9,291

 

 

 

(11,372

)

 

 

5,978

 

 

 

(15,829

)

Comprehensive income

 

$

22,273

 

 

$

1,419

 

 

$

14,645

 

 

$

30,631

 

 

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

 

7


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 June 27, 2020

 

 

 

 

$

 

 

 

32,081

 

 

$

32

 

 

$

367,841

 

 

$

257,568

 

 

$

(58,677

)

 

$

566,764

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

304

 

 

 

 

 

 

 

 

 

 

 

304

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,383

 

 

 

 

 

 

 

 

 

 

 

1,383

 

Cancellation of shares for payment of employee tax withholding

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(18

)

 

 

 

 

 

 

 

 

 

 

(18

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,890

)

 

 

 

 

 

 

(2,890

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,982

 

 

 

 

 

 

 

12,982

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,291

 

 

 

9,291

 

Balance at September 26, 2020

 

 

 

 

$

 

 

 

32,096

 

 

$

32

 

 

$

369,510

 

 

$

267,660

 

 

$

(49,386

)

 

$

587,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 29, 2019

 

 

 

 

$

 

 

 

32,017

 

 

$

32

 

 

$

362,104

 

 

$

246,828

 

 

$

(50,710

)

 

$

558,254

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, ESPP

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

408

 

 

 

 

 

 

 

 

 

 

 

408

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,277

 

 

 

 

 

 

 

 

 

 

 

1,277

 

Cancellation of shares for payment of withholding tax

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(27

)

 

 

 

 

 

 

 

 

 

 

(27

)

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,884

)

 

 

 

 

 

 

(2,884

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,791

 

 

 

 

 

 

 

12,791

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,372

)

 

 

(11,372

)

Balance at September 28, 2019

 

 

 

 

$

 

 

 

32,033

 

 

$

32

 

 

$

363,762

 

 

$

256,735

 

 

$

(62,082

)

 

$

558,447

 

 

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

 

 


8


Helios Technologies, Inc.

Consolidated Statements of Shareholders’ Equity (unaudited)

Nine 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 December 28, 2019

 

 

 

 

$

 

 

 

32,047

 

 

$

32

 

 

$

365,310

 

 

$

267,658

 

 

$

(55,364

)

 

$

577,636

 

Shares issued, restricted stock

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued, other compensation

 

 

 

 

 

 

 

 

 

 

12