Helios Technologies First Quarter 2021 Revenue Grew 58% Reflecting Strong Market Leadership; Augmented Strategy Gaining Traction

Rhea-AI Summary

Helios Technologies reported strong Q1 2021 results, driven in part by the acquisition of Balboa Water Group. The Company exceeded performance expectations with robust demand across various markets, particularly in Electronics and Hydraulics. CEO Josef Matosevic emphasized record demand, capacity expansion, and market share gains. Despite facing challenges including rising material costs and supply chain constraints, Helios maintained margins through strategic pricing. The recent acquisition of Shenzhen Joyonway Electronics further enhances capacity and supports the Company’s focus on regional capabilities.

Positive

• Exceeded Q1 2021 financial expectations.
• Strong demand in Electronics and Hydraulics sectors.
• Record levels of performance due to effective execution of plans.
• Increased capacity and productivity to meet rising demand.
• Successful diversification strategy leading to new customer acquisition.
• Recent acquisition of Shenzhen Joyonway enhances regional capabilities.

Negative

• Facing headwinds from rising material costs.
• Supply chain constraints and increased freight expenses.

Helios Technologies, Inc. (Nasdaq: HLIO) (“Helios” or the “Company”), a global leader in highly engineered motion control and electronic controls technology for diverse end markets, today reported financial results for the first quarter ended April 3, 2021. Results include a full quarter of BWG Holdings I Corp. (known as “Balboa Water Group” or “Balboa acquisition”), which was acquired on November 6, 2020.

Josef Matosevic, the Company’s President and Chief Executive Officer, commented, “Our first quarter well exceeded our expectations. Our performance was a direct result of the plans we put into place in the second half of last year and the excellent execution by the Helios team against those plans. In addition, end markets that we had projected would be strong, were even stronger than expected. We had very robust demand across many markets, with record levels in our Electronics segment as well as for our quick release couplings in our Hydraulics segment. We believe our leading market position, best in class lead times, and top-tier technologies are driving market share gains. Importantly, we were able to expand capacity and increase productivity to capture that demand. We believe our diversification strategy is also delivering, as we continue to add new customers in new markets.

While there are headwinds from increasing material costs, supply chain constraints and higher freight expenses, we are holding our margins level for the year as we carefully manage pricing to strengthen our advantages in the market and gain share.”

He concluded, “We are executing well on our augmented value streams so we can meet demand, diversify our markets and drive operating improvements. Our recent flywheel acquisition of Shenzhen Joyonway Electronics & Technology Company in China demonstrates our intent to expand our capacity and build our ‘in the region for the region’ capabilities. We continue to build our engineering expertise and expand our technology and product offerings. Additionally, we have structured our business to leverage across the organization to enable growth and drive profitability.”

1		Adjusted EBITDA is a non-GAAP measure. See comments regarding forward-looking non-GAAP measures in the Forward-Looking Information statement of this release
2		On a pro-forma basis for Balboa Water Group

First Quarter 2021 Consolidated Results

($ in millions, except per share data)				Q1 2021			Q1 2020			Change					% Change
Net sales				$	204.8		$	129.5		$	75.3				58%
Gross profit				$	75.4		$	51.9		$	23.5				45%
Gross margin					36.8%			40.1%			(330)		bps
Operating income (loss)				$	34.6		$	(10.0)		$	44.6				NM
Operating margin					16.9%			-7.7%			2460		bps
Non-GAAP adjusted operating margin					22.8%			20.4%			240		bps
Net income (loss)				$	22.6		$	(17.2)		$	39.8				NM
Diluted EPS				$	0.70		$	(0.54)		$	1.24				NM
Non-GAAP cash net income				$	31.7		$	18.1		$	13.6				75%
Non-GAAP cash EPS				$	0.99		$	0.56		$	0.43				77%
Adjusted EBITDA				$	51.3		$	30.4		$	20.9				69%
Adjusted EBITDA margin					25.1%			23.5%			160		bps
NM = Not meaningful

See the attached tables for additional important disclosures regarding Helios’s use of non-GAAP adjusted operating income, non-GAAP adjusted operating margin, non-GAAP cash net income, non-GAAP cash earnings per share, adjusted EBITDA (earnings before net interest expense, income taxes, depreciation and amortization, and certain non-recurring charges) and adjusted EBITDA margin (adjusted EBITDA as a percentage of sales) as well as reconciliations of GAAP operating income to non-GAAP adjusted operating income and non-GAAP adjusted operating margin and GAAP net income to non-GAAP cash net income, non-GAAP cash earnings per share, adjusted EBITDA and Adjusted EBITDA margin. Helios believes that, when used in conjunction with measures prepared in accordance with GAAP, the non-GAAP measures described above help improve the understanding of its operating performance.

Sales

• Sales reflected strong demand across all markets, in particular agriculture, construction equipment, recreation, and health & wellness. Results include a full quarter contribution from the Balboa acquisition.
• Strength in demand across all regions.
• Foreign currency translation adjustment on sales: $5.8 million favorable.

Profits and margins

• Gross profit and margin drivers: Gross profit and margin were influenced by mix of products sold, the business model of the Balboa acquisition, which has lower gross margin but higher operating margin, as well as the increasing freight costs and constraints with the supply chain.
• Selling, engineering and administrative (“SEA”) expenses: as a percentage of sales, improved 490 basis points to 14.9%, reflecting both the business model of the Balboa acquisition and continued cost containment initiatives.
• Amortization of intangible assets: $10.2 million was up from $4.3 million in the prior year reflecting the acquisition.
• Goodwill impairment charge: $31.9 million in first quarter of 2020, resulting from weakened market outlook primarily due to the COVID-19 pandemic.

Non-operating items

• Net interest expense: $4.8 million in the quarter, up $1.8 million compared with the prior-year period due to higher debt balances.
• Effective tax rate: 23.2% compared with 22.3% in the prior-year period, which excludes non-taxable goodwill impairment charge.

Net income, earnings per share, non-GAAP cash earnings per share and adjusted EBITDA

• GAAP net income and earnings per share: $22.6 million and $0.70 per share.
• Non-GAAP cash earnings per share: $0.99 compared with $0.56 last year on strong demand, operational efficiencies and better-than-expected performance of the Balboa acquisition.
• Adjusted EBITDA margin: Improved 160 basis points to 25.1% compared with the prior-year period due higher volume and operational efficiencies.

Hydraulics Segment Review

(Refer to sales by geographic region and segment data in accompanying tables)

($ in millions, except per share data)
Hydraulics		Three Months Ended
		Q1 2021			Q1 2020			Change					% Change
Net Sales
Americas		$	34.3		$	37.3		$	(3.0)				(8%)
EMEA			43.3			33.5			9.8				29%
APAC			41.5			33.0			8.5				26%
Total Segment Sales		$	119.1		$	103.8		$	15.3				15%
Gross Profit		$	45.4		$	39.7		$	5.7				14%
Gross Margin			38.1%			38.2%			(10)		bps
SEA Expenses		$	17.3		$	18.2		$	(0.9)				(5%)
Operating Income		$	28.1		$	21.5		$	6.6				31%
Operating Margin			23.6%			20.7%			290		bps

First Quarter Hydraulics Segment Review

• Higher sales in the European, Middle East, Africa (“EMEA”) and Asia/Pacific (“APAC”) regions, were driven by demand from the construction and agricultural end markets. This more than offset softness in the Americas; foreign currency exchange rates had a $5.7 million favorable adjustment on sales.
• The change in gross margin was mostly the result of product mix and increases in freight to meet customer requirements in a timely manner.
• Operating margin improved 290 basis points reflecting strong cost containment efforts.

Electronics Segment Review

(Refer to sales by geographic region and segment data in accompanying tables)

($ in millions, except per share data)
Electronics		Three Months Ended
		Q1 2021			Q1 2020			Change					% Change
Net Sales
Americas		$	65.0		$	21.6		$	43.4				201%
EMEA			9.3			2.5			6.8				272%
APAC			11.4			1.6			9.8				613%
Total Segment Sales		$	85.7		$	25.7		$	60.0				234%
Gross Profit		$	30.0		$	12.2		$	17.8				146%
Gross Margin			35.0%			47.5%			(1250)		bps
SEA Expenses		$	11.7		$	7.4		$	4.3				58%
Operating Income		$	18.3		$	4.8		$	13.5				281%
Operating Margin			21.4%			18.7%			270		bps

First Quarter Electronics Segment Review

• Sales increased mostly as a result of the Balboa acquisition. This was the first full quarter of revenue contribution from Balboa. Strong demand from health & wellness and recreational markets as well as new product introductions drove significant sales increases despite headwinds from supply chain constraints to meet demand.
• Gross margin reflects the different business model of the Balboa acquisition, which has lower gross margins that are offset by a lower SEA expense structure.
• Operating margin of 21.4%, up 270 basis points compared with the prior-year period, demonstrates the business model of the Balboa acquisition, which has an inherently lower operating expense structure, and higher volume in the organic business. SEA expenses increased due to the incremental expenses from the acquisition.

Balance Sheet and Cash Flow Review

• Total debt was reduced by $10.2 million to $452.2 million during the first quarter of 2021 from $462.4 million at January 2, 2021, reflecting net repayment of $5.9 million in the quarter.
• Cash and cash equivalents at April 3, 2021 were $25.9 million, up $0.7 million from the end of 2020.
• Pro-forma net debt-to-adjusted EBITDA improved to 2.65x at the end of the first quarter 2021 compared with 3.0x (pro-forma for Balboa) at the end of 2020 demonstrating the Company’s ability to rapidly de-lever the balance sheet following an acquisition. At the end of the first quarter 2021, the Company had $150.1 million available on its revolving lines of credit.
• Net cash provided by operations remained flat at $15.1 million in the first quarter 2021 and in the prior-year period.
• Capital expenditures were $5.0 million, or approximately 2% of sales. The Company continues to expect to spend between $30 to $35 million in capital investments in 2021.
• Paid 98^th sequential quarterly cash dividend on April 20, 2021.

2021 Outlook

The following provides the Company’s expectations for 2021. This assumes constant currency, using quarter end rates, and that markets served continue to recover from the global pandemic.

		Previous 2021 Guidance		Updated 2021 Guidance		% Change at Mid-Point from Previous Guidance
Consolidated revenue		$675 - $705 million		$740 - $750 million		8%
Adjusted EBITDA		$155 - $170 million		$170 - $180 million		8%
Adjusted EBITDA margin		23% - 24%		23% - 24%		unchanged
Interest expense		$16 - $18 million		$16 - $18 million		unchanged
Effective tax rate		24% - 26%		24% - 26%		unchanged
Depreciation		$22 - $24 million		$22 - $24 million		unchanged
Amortization		$30 - $31 million		$30 - $31 million		unchanged
Capital expenditures		$30 - $35 million		$30 - $35 million		unchanged
Capital expenditures % total revenue		~5% of sales		~4% of sales		updated calculation
Non-GAAP Cash EPS		$2.75 - $3.10		$3.30 - $3.50		16%

Tricia Fulton, the Company’s Chief Financial Officer commented, “The increase in our guidance for 2021 is driven by the strong end market demand we had in the first quarter and expect to continue throughout 2021. We are able to leverage our fixed cost base and maintain our strong margins even given the headwinds on material costs and logistics and our decision to manage price to our competitive advantage.”

Webcast

The Company will host a conference call and webcast tomorrow, May 11, 2021 at 9:00 a.m. Eastern Time to review its financial and operating results and discuss its corporate strategies and outlook. A question-and-answer session will follow. The conference call can be accessed by calling (201) 689-8573. The audio webcast will be available at www.heliostechnologies.com.

A telephonic replay will be available from approximately 12:00 p.m. ET on the day of the call through Tuesday, May 18, 2021. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13718360. The webcast replay will be available in the investor relations section of the Company’s website at www.heliostechnologies.com, where a transcript will also be posted once available.

About Helios Technologies

Helios Technologies is a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including construction, material handling, agriculture, energy, recreational vehicles, marine, health and wellness. Helios sells its products to customers in over 85 countries around the world. Its strategy for growth is to be the leading provider in niche markets, with premier products and solutions through innovative product development and acquisition. The company has paid a cash dividend to its shareholders every quarter since becoming a public company in 1997. For more information please visit: www.heliostechnologies.com.

FORWARD-LOOKING INFORMATION

This news release contains “forward‐looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934. 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 beliefs, and assumptions made by Helios Technologies, Inc. (“Helios” or the “Company”), its directors or its officers about the Company and the industry in which it operates, and assumptions made by management, and include among other items, (i) the Company’s strategies regarding growth, including its intention to develop new products and make acquisitions; (ii) the effectiveness of Creating the Center of Engineering Excellence; (iii) the Company’s financing plans; (iv) trends affecting the Company’s financial condition or results of operations; (v) the Company’s ability to continue to control costs and to meet its liquidity and other financing needs; (vi) the declaration and payment of dividends; and (vii) 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. Similarly, statements that describe our future plans, objectives or goals also are forward-looking statements. These statements are not guaranteeing future performance and are subject to a number of risks and uncertainties. Our actual results may differ materially from what is expressed or forecasted in such forward-looking statements, and undue reliance should not be placed on such statements. All forward-looking statements are made as of the date hereof, and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that could cause the actual results to differ materially from what is expressed or forecasted in such forward‐looking statements include, but are not limited to, (i) conditions in the capital markets, including the interest rate environment and the availability of capital; (ii) our failure to realize the benefits expected from the Balboa acquisition, our failure to promptly and effectively integrate the Balboa acquisition and the ability of Helios to retain and hire key personnel, and maintain relationships with suppliers (iii) risks related to health epidemics, pandemics and similar outbreaks and similar outbreaks, including, without limitation, the current COVID-19 pandemic, which may affect our supply chain and material costs, which could have material adverse effects on our business, financial position, results of operations and/or cash flows; (iv) changes in the competitive marketplace that could affect the Company’s revenue and/or cost bases, such as increased competition, lack of qualified engineering, marketing, management or other personnel, and increased labor and raw materials costs; and (v) new product introductions, product sales mix and the geographic mix of sales nationally and internationally. 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 2, 2021.

This news release will discuss some historical non-GAAP financial measures, which the Company believes are useful in evaluating its performance. The determination of the amounts that are excluded from these non-GAAP measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income recognized in a given period. You should not consider the inclusion of this additional information in isolation or as a substitute for results prepared in accordance with GAAP.

This news release also presents forward-looking statements regarding non-GAAP Adjusted EBITDA margin. The Company is unable to present a quantitative reconciliation of these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict the necessary components of such GAAP measures without unreasonable effort or expense. In addition, the Company believes that such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company’s 2021 financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end and year-end adjustments. Any variation between the Company’s actual results and preliminary financial data set forth above may be material.

Financial Tables Follow:

HELIOS TECHNOLOGIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
			Three Months Ended
			April 3,				March 28,
			2021				2020				% Change
Net sales			$	204,844			$	129,483			58	%
Cost of sales				129,477				77,633			67	%
Gross profit				75,367				51,850			45	%
Gross margin				36.8	%			40.1	%
Selling, engineering and administrative expenses				30,561				25,664			19	%
Amortization of intangible assets				10,198				4,348			135	%
Goodwill impairment				-				31,871			NM
Operating income (loss)				34,608				(10,033	)		NM
Operating margin				16.9	%			-7.7	%
Interest expense, net				4,751				2,951			61	%
Foreign currency transaction loss, net				464				125			271	%
Other non-operating income, net				(1	)			(94	)		(99	)%
Income (loss) before income taxes				29,394				(13,015	)		NM
Income tax provision				6,807				4,208			62	%
Net income (loss)			$	22,587			$	(17,223	)		NM
Basic and diluted net income (loss) per common share			$	0.70			$	(0.54	)		NM
Basic and diluted weighted average shares outstanding				32,193				32,062
Dividends declared per share			$	0.09			$	0.09
NM = Not meaningful

HELIOS TECHNOLOGIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
			April 3,				January 2,
			2021				2021
Assets			(Unaudited)
Current assets:
Cash and cash equivalents			$	25,924			$	25,216
Restricted cash				41				41
Accounts receivable, net of allowance for credit losses
of $1,453 and $1,493				124,391				97,623
Inventories, net				119,763				110,372
Income taxes receivable				579				1,103
Other current assets				21,901				19,664
Total current assets				292,599				254,019
Property, plant and equipment, net				160,695				163,177
Deferred income taxes				6,152				6,645
Goodwill				434,059				443,533
Other intangible assets, net				407,309				419,375
Other assets				10,734				10,230
Total assets			$	1,311,548			$	1,296,979
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable			$	72,608			$	59,477
Accrued compensation and benefits				18,731				22,985
Other accrued expenses and current liabilities				24,315				24,941
Current portion of long-term non-revolving debt, net				15,841				16,229
Dividends payable				2,900				2,891
Income taxes payable				7,749				1,489
Total current liabilities				142,144				128,012
Revolving line of credit				249,797				255,909
Long-term non-revolving debt, net				186,126				189,932
Deferred income taxes				73,578				78,864
Other noncurrent liabilities				34,623				36,472
Total liabilities				686,268				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,
32,226 and 32,121 shares issued and outstanding				32				32
Capital in excess of par value				376,994				371,778
Retained earnings				290,007				270,320
Accumulated other comprehensive loss				(41,753	)			(34,340	)
Total shareholders’ equity				625,280				607,790
Total liabilities and shareholders’ equity			$	1,311,548			$	1,296,979

HELIOS TECHNOLOGIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
			Three Months Ended
			April 3,				March 28,
			2021				2020
Cash flows from operating activities:
Net income (loss)			$	22,587			$	(17,223	)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization				15,237				8,376
Goodwill Impairment				-				31,871
Stock-based compensation expense				2,107				1,533
Amortization of debt issuance costs				125				179
Benefit for deferred income taxes				(906	)			(1,186	)
Forward contract gains, net				(2,402	)			(440	)
Other, net				32				160
(Increase) decrease in operating assets:
Accounts receivable				(28,051	)			(6,838	)
Inventories				(10,809	)			(2,818	)
Income taxes receivable				565				1,415
Other current assets				(2,614	)			(2,740	)
Other assets				2,139				1,213
Increase (decrease) in operating liabilities:
Accounts payable				13,912				3,867
Accrued expenses and other liabilities				(2,147	)			(4,652	)
Income taxes payable				6,126				3,051
Other noncurrent liabilities				(819	)			(701	)
Net cash provided by operating activities				15,082				15,067
Cash flows from investing activities:
Acquisition of business, net of cash acquired				(1,000	)			-
Amounts paid for net assets acquired				(2,400	)			-
Capital expenditures				(5,036	)			(2,937	)
Proceeds from dispositions of equipment				35				3
Cash settlement of forward contracts				1,544				1,634
Software development costs				(623	)			-
Net cash used in investing activities				(7,480	)			(1,300	)
Cash flows from financing activities:
Borrowings on revolving credit facilities				6,602				2,000
Repayment of borrowings on revolving credit facilities				(8,500	)			(5,500	)
Repayment of borrowings on long-term non-revolving debt				(4,029	)			(2,100	)
Proceeds from stock issued				333				355
Dividends to shareholders				(2,891	)			(2,885	)
Other financing activities				(974	)			(815	)
Net cash used in financing activities				(9,459	)			(8,945	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash				2,565				310
Net increase in cash, cash equivalents and restricted cash				708				5,132
Cash, cash equivalents and restricted cash, beginning of period				25,257				22,162
Cash, cash equivalents and restricted cash, end of period			$	25,965			$	27,294

HELIOS TECHNOLOGIES SEGMENT DATA (In thousands) (Unaudited)
			Three Months Ended
			April 3,				March 28,
			2021				2020
Sales:
Hydraulics			$	119,106			$	103,818
Electronics				85,738				25,665
Consolidated			$	204,844			$	129,483
Gross profit and margin:
Hydraulics			$	45,409			$	39,674
				38.1	%			38.2	%
Electronics				29,958				12,176
				35.0	%			47.5	%
Consolidated			$	75,367			$	51,850
				36.8	%			40.1	%
Operating income (loss) and margin:
Hydraulics			$	28,073			$	21,482
				23.6	%			20.7	%
Electronics				18,280				4,778
				21.4	%			18.7	%
Corporate and other				(11,745	)			(36,293	)
Consolidated			$	34,608			$	(10,033	)
				16.9	%			(7.7	%)

HELIOS TECHNOLOGIES ADDITIONAL INFORMATION (Unaudited)
2021 Sales by Geographic Region and Segment
($ in millions)
		Q1			% Change y/y
Americas:
Hydraulics		$	34.3		(8%)
Electronics			65.0		201%
Consol. Americas			99.3		69%
% of total			48%
EMEA:
Hydraulics		$	43.3		29%
Electronics			9.3		272%
Consol. EMEA			52.6		46%
% of total			26%
APAC:
Hydraulics		$	41.5		26%
Electronics			11.4		613%
Consol. APAC			52.9		53%
% of total			26%
Total		$	204.8		58%
2020 Sales by Geographic Region and Segment
($ in millions)
		Q1			% Change y/y		Q2			% Change y/y		Q3			% Change y/y		Q4			% Change y/y		YTD 2020			% Change y/y
Americas:
Hydraulics		$	37.3		(10%)		$	34.2		(17%)		$	27.7		(36%)		$	31.3		(14%)		$	130.5		(20%)
Electronics			21.6		(17%)			13.4		(50%)			21.4		(11%)			37.5		92%			93.9		(2%)
Consol. Americas			58.9		(13%)			47.6		(30%)			49.1		(27%)			68.8		24%			224.4		(13%)
% of total			45%					40%					40%					45%					43%
EMEA:
Hydraulics			33.5		(20%)			31.2		(15%)			32.1		1%			34.4		11%			131.2		(7%)
Electronics			2.5		0%			1.9		6%			1.5		(29%)			4.9		145%			10.8		29%
Consol. EMEA			36.0		(19%)			33.1		(14%)			33.6		(1%)			39.3		19%			142.0		(5%)
% of total			28%					28%					27%					26%					27%
APAC:
Hydraulics		$	33.0		(0%)		$	36.7		3%		$	38.4		10%		$	37.4		6%		$	145.5		5%
Electronics			1.6		(11%)			1.9		12%			1.5		(17%)			6.1		221%			11.1		54%
Consol. APAC			34.6		(1%)			38.6		3%			39.9		9%			43.5		17%			156.6		7%
% of total			27%					32%					33%					29%					30%
Total		$	129.5		(12%)		$	119.3		(17%)		$	122.6		(11%)		$	151.6		20%		$	523.0		(6%)

HELIOS TECHNOLOGIES Non-GAAP Adjusted Operating Income RECONCILIATION (In thousands) (Unaudited)
			Three Months Ended
			April 3,				March 28,
			2021				2020
GAAP operating income (loss)			$	34,608			$	(10,033	)
Acquisition-related amortization of intangible assets				10,198				4,348
Acquisition and financing-related expenses				922				74
Restructuring charges				418				-
CEO and officer transition costs				-				165
Goodwill impairment				-				31,871
Acquisition integration costs				594				-
Non-GAAP adjusted operating income			$	46,740			$	26,425
GAAP operating margin				16.9	%			-7.7	%
Non-GAAP adjusted operating margin				22.8	%			20.4	%

Adjusted EBITDA RECONCILIATION (In thousands) (Unaudited)
			Three Months Ended									Twelve Months Ended
			April 3,				March 28,					April 3,
			2021				2020					2021
Net income (loss)			$	22,587			$	(17,223	)			$	54,028
Interest expense, net				4,751				2,951					15,086
Income tax provision				6,807				4,208					12,428
Depreciation and amortization				15,237				8,376					46,556
EBITDA				49,382				(1,688	)				128,098
Acquisition and financing-related expenses				922				74					8,111
Restructuring charges				418				-					780
CEO and officer transition costs				-				165					2,427
Goodwill impairment				-				31,871					-
Inventory step-up amortization				-				-					1,874
Acquisition integration costs				594				-					851
Change in fair value of contingent consideration				-				-					(47	)
Adjusted EBITDA			$	51,316			$	30,422				$	142,094
Adjusted EBITDA margin				25.1	%			23.5	%				23.7	%
Balboa Water Group pre-acquisition adjusted EBITDA													18,514
TTM Pro forma adjusted EBITDA												$	160,608

HELIOS TECHNOLOGIES Non-GAAP Cash Net Income RECONCILIATION (In thousands) (Unaudited)
			Three Months Ended
			April 3,				March 28,
			2021				2020
Net income (loss)			$	22,587			$	(17,223	)
Amortization of intangible assets				10,231				4,348
Acquisition and financing-related expenses				922				74
Restructuring charges				418				-
CEO and officer transition costs				-				165
Goodwill impairment				-				31,871
Acquisition integration costs				594				-
Tax effect of above				(3,041	)			(1,147	)
Non-GAAP cash net income			$	31,711			$	18,088
Non-GAAP cash net income per diluted share			$	0.99			$	0.56

Net Debt-to-Adjusted EBITDA RECONCILIATION (In thousands) (Unaudited)
			As of
			April 3,
			2021
Current portion of long-term non-revolving debt, net			$ 15,841
Revolving lines of credit			250,212
Long-term non-revolving debt, net			186,126
Total debt			452,179
Less: Cash and cash equivalents			25,924
Net debt			$ 426,255
TTM Pro forma adjusted EBITDA*			$ 160,608
Ratio of net debt to TTM pro forma adjusted EBITDA			2.65
*On a pro-forma basis for Balboa Water Group

Non-GAAP Financial Measures and Non-GAAP Forward-looking Financial Measures:
Adjusted operating income, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted EBITDA, cash net income and cash net income per diluted share 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, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted EBITDA, cash net income and cash net income per diluted share are important for investors and other readers of Helios’s financial statements, as they are used as analytical indicators by Helios’s management to better understand operating performance. Because adjusted operating income, adjusted operating margin, adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted EBITDA, cash net income and cash net income per diluted share are non-GAAP measures and are thus susceptible to varying calculations, adjusted operating income, adjusted operating margin, EBITDA, adjusted EBITDA, adjusted EBITDA margin, net debt-to-adjusted EBITDA, cash net income and cash net income per diluted share, as presented, may not be directly comparable with other similarly titled measures used by other companies.

The Company does not provide a reconciliation of forward-looking non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin and cash net income and cash net income per diluted share disclosed above in our 2021 Outlook, to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-GAAP basis without preparing a GAAP analysis.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005805/en/

FAQ

What were Helios Technologies' Q1 2021 financial results?

Helios exceeded expectations in Q1 2021 with strong performance across multiple markets, particularly in Electronics and Hydraulics.

How did the acquisition of Balboa Water Group impact Helios Technologies?

The acquisition contributed significantly to the strong Q1 results, providing new capabilities and market reach.

What challenges did Helios Technologies face in Q1 2021?

Helios faced challenges including rising material costs, supply chain constraints, and increased freight expenses.

What is the significance of the acquisition of Shenzhen Joyonway for Helios Technologies?

The acquisition of Shenzhen Joyonway strengthens Helios' capacity and supports its strategy of building regional capabilities.

What strategies is Helios Technologies implementing to maintain margins?

Helios is managing pricing strategically to hold margins level amidst rising costs and supply chain issues.