Helios Technologies(US:HLIO)2023-02-28 21:50Financial Performance - Consolidated net sales for 2022 increased by $16.2 million, or 1.9%, compared to the prior year, with acquisition growth contributing $24.9 million while organic sales declined by $8.7 million, or 1.0%[205]. - The Hydraulics segment reported net sales of $551.3 million for 2022, a growth of $34.9 million, or 6.8%, with acquisition-related sales accounting for $22.4 million of the increase[212]. - Hydraulics segment net sales for 2022 were $551.3 million, a 6.7% increase from $516.4 million in 2021, driven by a 19.0% increase in the Americas[215]. - Electronics segment net sales decreased by $18.6 million, or 5.3%, to $334.1 million, with organic sales impacted by supply chain constraints and foreign currency exchange rates[218]. Profitability and Costs - Gross profit for 2022 declined by $14.3 million, or 4.6%, driven by lower volume and higher material costs, with gross margin decreasing by 2.3 percentage points to 33.7%[207]. - Operating income as a percentage of sales decreased by 1.7 percentage points to 15.5% in 2022, impacted by gross margin changes and increased M&A-related professional fees[209]. - The Electronics segment experienced a gross profit decline of $17.0 million, or 14.2%, primarily due to lower sales volume and increased material costs[221]. - Gross profit for the Hydraulics segment improved by $2.1 million, or 1.1%, despite a $7.1 million unfavorable impact from foreign currency changes[216]. Restructuring and Strategic Initiatives - The company incurred $5.2 million in restructuring costs in 2022, aimed at improving the global cost structure and aligning employee talent with strategic operational goals[208]. - The company completed several strategic acquisitions, including Schultes Precision Manufacturing in January 2023, enhancing its manufacturing capabilities and expanding into new end markets[196]. Cash Flow and Investments - Cash provided by operating activities totaled $109.9 million in 2022, a decrease of $3.2 million, or 2.8%, compared to the prior year[236]. - Cash on hand increased by $15.2 million to $43.7 million at the end of 2022, supported by a cash management strategy focused on operational funding and debt reduction[236]. - Cash used in investing activities totaled $90.8 million in 2022, slightly up from $90.3 million in 2021, with capital expenditures increasing by 19.0% to $31.9 million[238]. - Capital expenditures for 2023 are forecasted to be approximately 3%-5% of sales, focusing on capacity expansion and technology improvements[238]. Market Trends and External Factors - The health and wellness market experienced a sharp decline in sales during 2022, following a pandemic-driven increase in 2020 and 2021[200]. - Foreign currency exchange rates negatively impacted sales by $27.6 million, or 3.2%, while pricing changes had a favorable impact of $40.2 million, or 4.6%[206]. - A 10% decrease in average exchange rates in 2022 would have resulted in a decrease in annual sales of $32.6 million and net income of $8.1 million[266]. Liabilities and Financing - Borrowings on credit facilities totaled $183.6 million for term loans and $262.9 million for revolving credit facilities as of December 31, 2022[241]. - Dividends paid totaled $11.7 million in 2022, consistent with the previous year, at a rate of $0.09 per share[242]. - Contingent consideration liabilities related to acquisitions amounted to $6.7 million as of December 31, 2022, payable through the last quarter of 2024[245]. - Interest rates on credit facilities ranged from 3.9% to 6.4% as of December 31, 2022, with estimated future interest payments totaling $71.6 million[244]. - The company does not engage in off-balance sheet financing arrangements, including variable interest entities[259].