Shareholder Letter

We enter 2023 well positioned to accelerate our momentum as we execute on our augmented strategy to transform into an integrated operating company. By remaining focused on our purpose and mission, staying incredibly close to our customers and partners, and continuing to invest in our people and technology, we will come out ahead of our competition. Josef Matosevic, President and Chief Executive Officer
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Dear Fellow Shareholders;

In 2022, the Helios Technologies team continued to build a strong foundation for sustainable success, by executing the strategies we have laid out over the last few years. This drove top-tier margins and solid earnings for our shareholders. We enter 2023 on a path to achieve our $1 billion revenue milestone with continued top tier margins on a run-rate basis1.

The world experienced several macro-economic challenges last year which led to the most difficult time the US equity markets have faced since the global financial crisis. However, looking at the broader, three-year perspective, the total return for the Russell 2000 Index was 9%, while Helios outperformed it by generating a three-year total return of 20%. Creating long-term shareholder value is a core philosophy for us. We will continue to build on our financial strength with strong free cash flow generation and a very flexible balance sheet which enables us to be opportunistic on flywheel acquisitions.

Executed Well on Our Strategy

As an organization, we remain focused on being an industry leader in innovation, thereby providing our customers the attention and dedication they have come to expect. Our Helios Business System continues to guide our strategies and tactics, enabling us to capitalize on our unique position as a pure play hydraulics and electronics provider. We made great strides this year on our transformation from a holding company to an integrated operating company. I am very proud of how relentless our global teams worked navigating non-stop challenges. It is a true testament to the amazing people we have in the Helios family and the core values we share.

2022 was an important year as we integrated and closed on flywheel acquisitions and advanced our technological capabilities.

In addition, we announced the plans for new Centers of Excellence to provide the best service for our customers by leveraging a world-class manufacturing and operating approach.

As our team executed our augmented strategy we protected our business, thought and acted globally, all while diversifying our markets and revenue base. Most importantly, we continue to build and develop the talent that makes up our global workforce.

Solid Execution Drove Top-Tier Margins and Solid Earnings in 2022

Our team's execution drove top-tier margins and solid earnings for the Company in 2022:

  • Sales of $885 million, up 2% from $869 million in 2021, and up 5% on a constant-currency basis2
  • GAAP net income of $98.4 million
  • GAAP EPS of $3.02
  • Non-GAAP cash EPS2 of $4.03
  • Adjusted EBITDA2 margins of 23.2%
  • Net debt/pro forma Adjusted EBITDA ratio of 1.9x3
  • Year-End total liquidity of $183 million and
  • 104th consecutive quarterly dividend, with 26 years of uninterrupted return of capital to shareholders while investing in growth.

With our financial flexibility we can continue investing in organic growth as well as advance our acquisition strategy.

We achieved solid financial results in a challenging economy

 
$885 Million
Full Year Sales
 
$98.4 Million
GAAP Net Income
 
$3.02
Diluted GAAP EPS
 
$4.03
Diluted Non-GAAP Cash EPS2

Accolades Received This Year

This past year we were recognized by several third-party organizations. Helios was named one of America's Best Mid-Size Companies by Forbes for 2022. Faster won the Systems and Components Trophy—Engineers Choice for its innovative Faster ABC electronic hydraulic hose coupling while Sun was named a 2022 Florida Manufacturing Employer of Choice. Enovation Controls for the third year in a row was named one of the Best Workplaces in Manufacturing and Production in 2022. We are extremely proud of these notable recognitions, and they are just a few highlights of the many great things our people and companies are accomplishing every single day. Having a highly engaged and productive workforce is critical to driving success for any organization. We believe these strengths will enable us to attract top talent, minimize risks, and ultimately, keep winning in the marketplace.

Leveraging Hydraulics and Electronics Leadership

In 2023, we expect to keep building upon the progress we've made. We will stay focused on what we can control and keep innovating, maintaining our top-tier lead times and our customer-centric, “in the region for the region” approach to manufacturing and operational excellence. As mentioned, we are opening two operational Centers of Excellence in North America for Hydraulics and recently opened a new Automated Warehouse in Italy at Faster. With these moves, we expect to drive greater operational efficiencies, better quality control, and enable technology enhancements that create advanced solutions for our customers.

Last year was also another record year of product line and technological innovation. For example, within our Hydraulics segment, we unveiled our new energy saving ecoline™ program which includes ENERGEN™, the unique cartridge valve that converts hydraulic flow into electric energy as well as our Sun Common Cavity solutions. In our Electronics segment, we announced product innovations that include the OpenView™ product family and SpaTouch4™, both leveraging our new open-source software based Next Display Platform™. Product innovations like this will be key drivers of organic growth for our business for years to come. This collection of market leading product releases and integrated solutions further demonstrate the power of our strategy as we leverage our research and development across our businesses.

Building a Strong Foundation for Sustainable Success

As we started 2023, we closed another noteworthy Hydraulics flywheel acquisition with Schultes Precision Manufacturing which brings additional customers and capabilities. Combining our organic and acquired technologies truly differentiates Helios in the marketplace. We are well positioned to capitalize on the macro trend of the electrification of hydraulics as well as evolve into an integrated solutions provider over time. Through our innovation strategy, we are an industry leader making it incredibly tough for our competition to follow.

We enter 2023 well positioned to accelerate our momentum as we execute on our augmented strategy to transform into an integrated operating company. By remaining focused on our purpose and mission, staying incredibly close to our customers and partners, and continuing to invest in our people and technology, we will come out ahead of our competition.

We continue to focus on Environmental, Social and Governance (ESG) factors that our constituents value most. We encourage you to review our Proxy and the ESG section our of website, which provides further detail.

As always, I appreciate and thank all Helios stakeholders—employees, customers, partners, suppliers, and investors— as well as our Board of Directors. Together we are growing this great Company and expanding shareholder value while making a positive impact on our communities.

Respectfully,

Josef Matosevic, President and Chief Executive Officer
Helios Technologies, Inc.

1Run rate basis defined as annualizing the anticipated fourth quarter of 2023 to equate to ~$1 billion in revenues.

2Reflects a non-GAAP financial measure; reference Financial Highlights for reconciliations and other important information regarding Helios' use of non-GAAP financial measures.

3On a pro-forma basis for Taimi and Daman Products; reflects non-GAAP measure. Please reference Non-GAAP Reconciliation provided.

Close

2022 At A Glance

$885.4 M
Revenue
$180.7 M
Adjusted Operating Income*
$205.3 M
Adjusted EBITDA*
$3.02 / $4.03
Diluted EPS/Diluted Non-GAAP Cash EPS*
135%
10-Year Total Shareholder Return
90
Number of Countries Sold Into
2,900
Colleagues
~60%
Of Workforce Comprised Of Diverse, Minority Nationalities

*Reflects a non-GAAP financial measure; reference Financial Highlights for reconciliations and other important information regarding Helios’ use of non-GAAP financial measures.

Augmenting Strategy

In 2022, we continued to make significant progress with our augmented strategy to include evolving how we operate from a holding company to an integrated operating company. In this new structure we intend to better leverage sales, marketing, innovation, customer relationships and operational excellence across all of our businesses. Below is a summary of our augmented strategies that feed into our Helios Business System.

Our trusted global brands deliver technology solutions that ensure safety, reliability, connectivity and control.

  • Protect the Business
  • Think and Act Globally
  • Diversify Markets and Revenue
  • Develop Talent
  • Ensure that the cash flywheel continues to spin
  • Drive intra- and inter-company initiatives that open global markets and leverage resources
  • Swarm commercial opportunities to diversify global and end-market revenue
  • Ensure team members are in the right seats and fill key skill gaps for future growth
  1. Drive the cash flow engine
  2. Deliver new products
  3. Leverage existing products
  4. Cultivate customer centricity
  1. Champion a global operating mindset
  2. Leverage global resources and assets
  3. Manufacture to support diverse end markets
  4. Accelerate innovation
  5. Build in the region, for the region
  1. Diversify end markets
  2. Grow wallet share
  3. Lead with technology
  4. Address white spaces
  5. Monetize synergies
  1. Develop and engage global talent
  2. Embrace diversity and shared values
  3. Instill a customer-centric culture
  4. Promote a learning organization

Advancing Technologies

January
  1. Appointed New General Counsel Marc Greenberg
February
  1. Received Systems & Components Award sponsored by DLG (a Helios operating company)
    See Press Release
  2. Named to Forbes List of America's Best Mid-Size Companies
    See Press Release
  3. Innovation Strategy Led to Record Product Line Expansion of Cartridge Valve Technologies
    See Press Release
March
  1. Nominated Diana Sacchi to Board of Directors
    See Press Release
April
  1. Advanced Sustainability Efforts, new ESG website introduced
    See Press Release
May
  1. Awarded Electronics Project with Storyteller Overland
    See Press Release
June
  1. Set Goal of Achieving Net Zero GHG Emissions By 2050
    See Press Release
July
  1. Closed Acquisition of Taimi
    See Press Release
  2. Released Efficient, Energy Saving ecoline™ Program
    See Press Release
August
  1. Named to Tampa Bay Business Journal Five Fastest Growing Public Companies
    Read Article
  2. Expanded Hydraulics Product Line with Universal Cartridge Valve Solution
    See Press Release
September
  1. Introduced the Next Display Platform™
    See Press Release
  2. Released ENERGEN™ Solution–Unique Cartridge Valve Technology Converts Hydraulic Flow into Electric Energy
    See Press Release
  3. Closed Acquisition of Daman Products
    See Press Release
  4. Named One of the Best Workplaces in Manufacturing & Production™ in 2022 by Great Place to Work® (a Helios operating company)
    See Press Release
October
  1. Leveraged Next Display Platform™ and Announced OpenView™ S50 and S70
    See Press Release
  2. Named a 2022 Florida Manufacturing Employer of Choice (a Helios operating company)
    See Press Release
November
  1. Leveraged Next Display Platform™ and Announced SpaTouch4™
    See Press Release
December
  1. Appointed Lee Wichlacz to Newly Created Position as President of Electronics Segment
    See Press Release

Accelerating Growth

We service various end markets by designing and manufacturing hydraulic cartridge valves and manifolds, hydraulic quick release couplings and customized electronic controls systems and displays. Agriculture, mobile, industrial, and health and wellness are a few end markets that utilize our technology. With our high-quality products and customized technology solutions, we are growing to be a leading provider for niche markets.

$885M2022 REVENUE
38%
62%
Electronics
Hydraulics

Hydraulics

18%
Industrial
42%
Mobile
25%
Agriculture
14%
Other/
Recreational
<1%
Health & Wellness

Electronics

15%
Industrial
8%
Mobile
1%
Agriculture
26%
Other/
Recreational
50%
Health & Wellness

Consolidated Overview

Americas
53%
Of Revenue
EMEA
25%
Of Revenue
APAC
22%
Of Revenue
Headquarters
Hydraulics

Center of Excellence
Electronics

In 2022 we made good progress advancing our Manufacturing and Operating Strategy across our global footprint.

We are leveraging our operations footprint to shape value streams that enable commercial strategies. This year we identified many projects across both segments. For example, a project can represent a product line move that enables global growth, increases profitability, and mitigates global supply chain risk. This is a continuous improvement process, which is already part of our DNA here at Helios. We are now doing this as an integrated operating company versus at the business unit level. As we grow into a larger, more global company and fold in more acquisitions, there will always be something that we can further improve upon.

Additionally, we announced our plans to create two new Regional Operational Centers of Excellence (“CoE”) for the Hydraulics segment. Facility expansion is currently underway in Mishawaka, Indiana, the future Hydraulic Manifold Solutions CoE, to accept the manifold machining and integrated package assembly operations from Sun Hydraulics, the integrated package business from Faster Inc, and to allow for Daman's core organic growth. The quick release coupling (QRC) manufacturing will then transfer from Maumee, OH to the cartridge valve technology location in Sarasota, FL to complete the Hydraulic Valve and Coupling Solutions CoE.

We believe that our two new Centers of Excellence, combined with the strength of innovation in our quick release coupling and hydraulic valve operations in Italy, create the platforms that accelerate our drive to being a global leader of electro/hydraulic solutions. We engineer motion control solutions for applications in our targeted markets that require high degrees of precision, reliability, and durability. The integration and consolidation serve to strengthen our 'in the region, for the region' strategy, promote enhanced R&D collaboration, and enable expanded capacity to support our future growth. Josef Matosevic, President and Chief Executive Officer

Financial Highlights

NET SALES ($ in millions)
'18
$508.0
'19
$554.7
'20
$523.0
'21
$869.2
'22
$885.4
Adjusted Cash From Operations* ($ in millions)
'18
$77.5
'19
$101.2
'20
$108.6
'21
$113.2
'22
$109.9
Diluted Non-Gaap Cash EPS*  
'18
$2.30
'19
$2.43
'20
$2.24
'21
$4.25
'22
$4.03
Adjusted EBITDA Margin* (As a percent of sales)
'18
24.5%
'19
23.6%
'20
23.2%
'21
24.6%
'22
23.2%
View Financial Tables
Statement of
Operations Other Financial
Data Balance Sheet
Data MD&A Results
of Operations Non-GAAP Adjusted
Operating Income
Reconciliation Adjusted EBITDA
Reconciliation Non-GAAP Cash
Net Income
Reconciliation Non-GAAP
Adjusted Cash
from Operations Non-GAAP
Sales Growth
Reconciliation Net Debt-to-Adjusted
EBITDA
Reconciliation
Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Statement of Operations (in millions except per share data)
Net sales $885.4 $869.2 $523.0 $554.7 $508.0
Gross profit 298.5 312.8 196.2 212.3 192.7
Operating income 137.3 149.3 35.4 90.1 75.6
Adjusted operating income* 180.7 192.0 101.7 112.6 108.9
Net income 98.4 104.6 14.2 60.3 46.7
Non-GAAP cash net income* 131.3 138.1 71.9 77.7 72.1
Net income per share
    Basic $  3.03 $  3.24 $  0.44 $  1.88 $  1.49
    Diluted $  3.02 $  3.22 $  0.44 $  1.88 $  1.49
Diluted Non-GAAP cash EPS $  4.03 $  4.25 $  2.24 $  2.43 $  2.30
Dividends per share $  0.36 $  0.36 $  0.36 $  0.36 $  0.36

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Other Financial Data (in millions except per share data)
Depreciation and amortization $51.6 $54.4 $39.7 $35.2 $39.7
Capital expenditures 31.9 26.8 14.6 25.0 28.4
Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Balance Sheet Data (in millions except per share data)
Cash and cash equivalents $    43.7 $    28.5 $    25.2 $    22.1 $    23.5
Working capital 236.2 182.1 126.0 116.1 103.9
Total assets 1,463.7 1,415.3 1,297.0 1,021.8 1,042.2
Total debt 446.1 445.0 462.4 300.4 352.7
Shareholders' equity 794.9 709.0 607.8 577.6 530.8
Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
MD&A Results of Operations (in millions except per share data)
Gross margin 33.7% 36.0% 37.5% 38.3% 37.9%
Adjusted operating margin* 20.4% 22.1% 19.5% 20.3% 21.4%
Adjusted EBITDA margin* 23.2% 24.6% 23.2% 23.6% 24.5%
Adjusted net income margin* 14.8% 15.9% 13.7% 14.0% 14.2%
Adjusted cash from operations as a percent of sales* 12.4% 13.0% 20.8% 18.2% 15.2%

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Non-GAAP Adjusted Operating Income Reconciliation (in millions except per share data)
GAAP operating income $137.3 $149.3 $  35.4 $  90.1 $  75.6
Acquisition-related amortization of inventory step-up — — — — 4.4
Acquisition and financing-related expenses1 5.9 5.7 7.2 — 5.7
Restructuring charges2 5.2 0.5 0.4 1.7 0.2
CEO and officer transition costs 0.3 0.3 2.6 — —
Loss on disposal of intangible asset — — — 2.7 —
Acquisition-related amortization of tangible assets 28.1 32.8 22.1 17.9 23.0
Goodwill impairment — — 31.9 — —
Other 0.2 (0.1) — 0.2 —
Inventory step-up amortization — 0.6 1.9 — —
Acquisition integration costs3 3.7 2.9 0.2 — —
Non-GAAP adjusted operating income* $180.7 $192.0 $101.7 $112.6 $108.9
Adjusted operating margin* 20.4% 22.1% 19.5% 20.3% 21.4%

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

1Acquisition and financing-related expenses include costs associated with our M&A activities. These activities include all phases of the M&A process from analyzing targets, to raising funding, to due diligence and transaction costs at closing. We utilize internal resources for a significant amount of time spent on our acquisition activities and have chosen not to staff a full M&A department or use significant outside services. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.3 million, professional fees of $2.0 million, travel costs of $0.7 million and other M&A related costs of $0.9 million.

2Restructuring activities include costs associated with our actions to improve operating efficiencies and rationalize our cost structure. The 2022 costs relate to an operational restructuring that combined the manufacturing operations at two of our locations into one location as well as organizational restructures among several locations, which aligned employee talent with the strategic operational goals of the company. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.2 million, severance-related costs of $2.3 million and manufacturing relocation and other costs of $0.7 million. Additionally in 2022, we realized a gain on the sale of property, plant and equipment related to our restructuring activities totaling $1.8 million.

3Acquisition integration activities include costs associated with integrating our acquired businesses, which can occur up to 18 months after acquisition date. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.5 million, professional fees of $0.8 million and travel and other costs of $0.4 million.

Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Adjusted EBITDA Reconciliation (in millions except per share data)
Net income $  98.4 $  104.6 $  14.2 $  60.3 $  46.7
Interest expense, net 16.7 16.9 13.3 15.4 13.9
Income tax provision 23.4 26.6 9.8 15.0 9.7
Depreciation and amortization 51.6 54.4 39.7 35.2 39.7
Acquisition-related amortization of inventory step-up — — — — 4.4
Acquisition and financing-related expenses1 5.9 5.7 7.2 — 5.7
Restructuring charges2 3.5 0.5 0.4 1.7 0.2
CEO and officer transition costs 0.3 0.3 2.6 — —
Loss on disposal of intangible asset — — — 2.7 —
Goodwill impairment — — 31.9 — —
Inventory step-up amortization — 0.6 1.9 — —
Acquisition integration costs3 3.7 2.9 0.2 — —
Foreign currency forward contract loss — — — — 2.5
Change in fair value of contingent consideration 1.7 1.1 — 0.7 1.5
Other 0.1 0.6 — 0.1 —
Adjusted EBITDA* $205.3 $214.1 $121.2 $131.1 $124.3
Adjusted EBITDA margin* 23.2% 24.6% 23.2% 23.6% 24.5%

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

1Acquisition and financing-related expenses include costs associated with our M&A activities. These activities include all phases of the M&A process from analyzing targets, to raising funding, to due diligence and transaction costs at closing. We utilize internal resources for a significant amount of time spent on our acquisition activities and have chosen not to staff a full M&A department or use significant outside services. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.3 million, professional fees of $2.0 million, travel costs of $0.7 million and other M&A related costs of $0.9 million.

2Restructuring activities include costs associated with our actions to improve operating efficiencies and rationalize our cost structure. The 2022 costs relate to an operational restructuring that combined the manufacturing operations at two of our locations into one location as well as organizational restructures among several locations, which aligned employee talent with the strategic operational goals of the company. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.2 million, severance-related costs of $2.3 million and manufacturing relocation and other costs of $0.7 million. Additionally in 2022, we realized a gain on the sale of property, plant and equipment related to our restructuring activities totaling $1.8 million.

3Acquisition integration activities include costs associated with integrating our acquired businesses, which can occur up to 18 months after acquisition date. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.5 million, professional fees of $0.8 million and travel and other costs of $0.4 million.

Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Non-GAAP Cash Net Income Reconciliation (in millions except per share data)
Net income $ 98.4 $104.6 $ 14.2 $ 60.3 $ 46.7
Acquisition-related amortization of inventory step-up — — — — 4.4
Acquisition and financing-related expenses1 5.9 5.7 7.2 — 5.7
Restructuring charges2 3.5 0.5 0.4 1.7 0.2
CEO and officer transition costs 0.3 0.3 2.6 — —
Loss on disposal of intangible asset — — — 2.7 —
Goodwill impairment — — 31.9 — —
Inventory step-up amortization — 0.6 1.9 — —
Acquisition integration costs3 3.7 2.9 0.3 — —
Foreign currency forward contract loss — — — — 2.5
Change in fair value of contingent consideration 1.7 1.1 — 0.7 1.5
Amortization of intangible assets 28.7 33.0 22.1 18.1 23.3
Other 0.1 0.6 — 0.1 —
Impact of tax reform — — — — (1.4)
Other one-time tax related items — — — — (1.9)
Tax effect of above (11.0) (11.2) (8.6) (5.8) (8.9)
Non-GAAP cash net income* $131.3 $138.1 $ 72.0 $ 77.8 $ 72.1
Non-GAAP cash net income per diluted share* $  4.03 $  4.25 $ 2.24 $ 2.43 $ 2.30
Non-GAAP cash net income margin* 14.8% 15.9% 13.7% 14.0% 14.2%

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

1Acquisition and financing-related expenses include costs associated with our M&A activities. These activities include all phases of the M&A process from analyzing targets, to raising funding, to due diligence and transaction costs at closing. We utilize internal resources for a significant amount of time spent on our acquisition activities and have chosen not to staff a full M&A department or use significant outside services. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.3 million, professional fees of $2.0 million, travel costs of $0.7 million and other M&A related costs of $0.9 million.

2Restructuring activities include costs associated with our actions to improve operating efficiencies and rationalize our cost structure. The 2022 costs relate to an operational restructuring that combined the manufacturing operations at two of our locations into one location as well as organizational restructures among several locations, which aligned employee talent with the strategic operational goals of the company. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.2 million, severance-related costs of $2.3 million and manufacturing relocation and other costs of $0.7 million. Additionally in 2022, we realized a gain on the sale of property, plant and equipment related to our restructuring activities totaling $1.8 million.

3Acquisition integration activities include costs associated with integrating our acquired businesses, which can occur up to 18 months after acquisition date. We believe these costs are not representative of the Company’s operational performance and it is therefore more meaningful to analyze results with the costs excluded. For the year ended Dec 31, 2022, the charges include recurring labor costs of $2.5 million, professional fees of $0.8 million and travel and other costs of $0.4 million.

Year Ended
  Dec 31, 2022 Jan 1, 2022 Jan 2, 2021 Dec 28, 2019 Dec 29, 2018
Non-GAAP Adjusted Cash from Operations (in millions except per share data)
Net cash provided by operating activities $109.9 $113.1 $108.6 $ 90.5 $77.5
Contingent consideration payment in excess of acquisition date fair value — — — 10.7 —
Adjusted net cash provided by operating activities* $109.9 $113.1 $108.6 $101.2 $77.5
Non-GAAP adjusted cash from operations as a percent of sales* 12.4% 13.0% 20.8% 18.2% 15.2%

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Non-GAAP Sales Growth Reconciliation
For the Years Ended
2022 Net Sales $885.4
Impact of foreign currency translation1 27.6
2022 Net Sales in constant currency* 913.0
2021 Net Sales $869.2
2022 Net sales growth 2%
2022 Net sales growth in constant currency* 5%

1The impact from foreign currency translation is calculated by translating current period activity at average prior period exchange rates.

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Net Debt-to-Adjusted EBITDA Reconciliation
As of December 31, 2022
Current portion of long-term non-revolving debt, net 19.0
Revolving lines of credit 262.9
Long-term non-revolving debt, net 164.2
Total debt 446.1
Less: Cash and cash equivalents 43.7
Net debt 402.4
TTM Pro forma adjusted EBITDA2 210.3
Ratio of net debt to TTM pro forma adjusted EBITDA*,2 1.91

2On a pro-forma basis for Taimi and Daman.

*Adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are not measures determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, Helios believes that providing non-GAAP information such as adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are important for investors and other readers of Helios financial statements, as they are used as analytical indicators by Helios management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, cash net income, cash net income per diluted share, cash net income margin, adjusted net cash provided by operating activities and adjusted cash from operations as a percent of sales, as presented, may not be directly comparable to other similarly titled measures used by other companies.

Corporate Information

Directors

Philippe Lemaitre Chairman of the Board
Helios Technologies
Chairman, President, CEO, retired
Woodhead Industries, Inc.

Douglas Britt President, Chief Executive Officer
Boyd Corporation

Laura Dempsey Brown Senior VP, Communications
and Investor Relations, retired
W.W. Grainger, Inc.

Cariappa (Cary) Chenanda Vice President
Cummins, Inc.

Josef Matosevic President and Chief Executive Officer
Helios Technologies

Diana Sacchi Chief Human Resources Officer
Grameen America

Alexander Schuetz, PhD Chief Executive Officer
Knauf Engineering GmbH

Corporate Officers

Josef Matosevic President and Chief Executive Officer

Tricia Fulton Executive Vice President and
Chief Financial Officer

Matteo Arduini President of QRC
(Quick-Release Couplings)

Lee Wichlacz President, Electronics

Marc Greenberg, Esq. General Counsel and Secretary

Annual Meeting

Thursday, June 1, 2023
9:00 AM EDT
The Liberty Hotel
Boston, MA

Independent Auditors

Grant Thornton, LLP
Tampa, FL

Transfer Agent

Computershare
Canton, MA

Corporate Headquarters

Helios Technologies
7456 16th Street East
Sarasota, FL 34243
941.362.1200
www.heliostechnologies.com

Common Stock Information

New York Stock Exchange
Symbol: HLIO

Investor Relations

Tania Almond Vice President of Investor Relations and Corporate Communication
Investor@HeliosTechnologies.com

A copy of the Company's Form 10-K, filed with the Securities and Exchange Commission, will be furnished free of charge on written request to:

Helios Technologies
Investor Relations
7456 16th Street East
Sarasota, FL 34243

Downloads

2023 Proxy Statement
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2022 Annual Report
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2022 Annual Report On Form 10-K
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FORWARD-LOOKING INFORMATION

This annual report contains "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied by such statements. They include statements regarding current expectations, estimates, forecasts, projections, our benefits, and assumptions made by Helios Technologies, Inc. ("Helios" or the "Company"), its director or its officers about the Company and the industry in which it operates, and... assumptions made bymanagement, and include among other items, (i) the Company's strategies regarding growth, including its intention to develop new products and make acquisitions; (ii) the Company's financing plans; (iii) trends affecting the Company's financial condition or results of operations; (iv) the Company's ability to continue to control costs and to meet its liquidity and other financing needs; (v) the declaration and payment of dividends; and (vi) the Company's ability to respond to changes in customer demand domestically and internationally, including as a result of standardization. In addition, we may make other written or oral statements, which constitute forward-looking statements, from time to time. Words such as "may," "expects," "projects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward-looking statements.

Further information relating to factors that could cause actual results to differ from those anticipated is included but not limited to information under the heading Item 1. "Business" and Item 1A. "Risk Factors" in the Company's Form 10-K for the year ended January 1, 2022 and the Company's Form 10-K for the year ended December 31, 2022.

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