Helios Technologies 2020 Annual Report

A little over five years ago, we set out a 10-year vision to achieve global technology leadership in the industrial goods sector by reaching critical mass of $1 billion in sales through a combination of organic growth and acquisitions while maintaining superior profitability and financial strength. In support of these goals, we created four value

Augmenting Our Strategy

A little over five years ago, we set out a 10-year vision to achieve global technology leadership in the industrial goods sector by reaching critical mass of $1 billion in sales through a combination of organic growth and acquisitions while maintaining superior profitability and financial strength. In support of these goals, we created four value streams and completed the acquisitions of BWG Holdings I Corp. (“Balboa”) in the fourth quarter of 2020 and BJN Technologies, Inc. in the first quarter of 2021. These value streams are interlaced with our flywheel acquisition strategy as well as our Helios shared corporate values, and we believe they will deliver growth, diversification and market-leading financial performance as we develop into a more sophisticated, globally oriented, customer-centric and learning organization.

The four value streams we have introduced to the organization are as follows:
  • Protect the business and ensure the cash flywheel continues to spin. We plan to drive the cash flow engine through new product launches while we leverage existing products. We will cultivate customer-centricity and invest in expanding capacity as well as productivity improvements. Importantly, we will continue to execute on our newly developed global manufacturing and operating strategy that will drive improved margin.
  • Champion a global operating mindset to better leverage our assets, accelerate innovation and diversify our end markets.
  • Create great opportunities for growth, while reducing risk and cyclicality by diversifying our markets and sources of revenue, adding technology capacity and creating differentiation.
  • Develop our talent through a culture of customer-centricity, continuous improvement, embracing diversity, engaging the team, focusing on shared deeply rooted values and promoting a learning organization.

    • Advancing Technologies

    We acquired Balboa in November of 2020. We believe it is a perfect fit for our Electronics segment and positions us well for growth, aligning completely with our augmented strategy. Balboa is an innovative market leader in electronic controls, with proprietary and patented technology and AC (alternating current) power capabilities within the health and wellness industry. Balboa strengthens Helios with leading control solutions and a full suite of integrated products. Their proprietary technology accelerates our ability to innovate and expands and diversifies our addressable end markets. This acquisition is just the first step in a multi-year journey to build out our Electronics segment into a best-in-class industrial electronics provider.

    With the recent BJN Technologies acquisition, we were able to bring in the talent and expertise we needed to open our Helios Center of Engineering Excellence (HCEE), which will augment and coordinate Helios’s technology advancements and new product development. As we utilize HCEE to leverage the combined power of Enovation and Balboa, we expect to expand into new end markets with global OEMs that will increase the Electronics segment’s geographic exposure as we win new business. We believe the HCEE will enable us to drive our operational plans to leverage joint product development opportunities across the Electronics segment initially, and ultimately across all of Helios.

    Accelerating Growth

    Organic growth is a critical element to our achieving—and potentially exceeding—our objectives. By innovating new products, expanding geographic reach, and finding new markets, we expect to continue to grow organically at a pace greater than the markets we serve. We accomplished quite a bit during 2020. Key highlights include:

    Hydraulics Segment
    • Received the John Deere Supplier Innovation Award for 2020 for our multiconnection couplings with integrated valve systems. This is a tremendous honor for Helios to receive around our vision and progress in smart hydraulics. Our subsidiaries, Faster S.r.l. and Sun Hydraulics LLC, worked together to combine the advantages and features of MultiFaster and Sun electrohydraulic cartridge valves into an integrated manifold, reducing complexity and increasing reliability of the hydraulic circuit. This type of engineering collaboration is exactly the vision Helios has for the cross-pollination of R&D between our subsidiaries.
    • Expanded “in the region for the region” manufacturing capacity with localized sourcing in Asia, and grew Asia Pacific region sales by 5%.
    • Opened a state-of-the-art global research and development facility, the Robert E. Koski Center of Engineering Innovation, which will serve as the foundation for new, innovative product development.
    Electronics Segment
    • Invested in the development of new products for customer-supported projects that we expect will reap rewards for many years to come.
    • Combined Balboa’s AC technology with Enovation’s display and controls leadership. This will enable technology integration that will reduce the investment of years, dollars and human capital resources as well as accelerate our ability to expand into new markets.
    • Added BJN Technologies, restructured leadership and opened the HCEE. We believe we are uniquely positioned as a market leader in niche applications of hydraulics and electronics to lead in the integration of the two industries. We expect that this will be defining for the future of Helios and make us incredibly tough to follow.

    Corporate Responsibility

    Here at Helios, corporate responsibility and sustainability are not only reflected in our business strategy, but are a part of who we are as people and members of our communities. In addition to the diversity and safety initiatives we implement every day, we are committed to reducing emissions, recycling, and minimizing our environmental footprint. We have implemented several strategies to achieve these goals and they are evolving. We are also disclosing more of our initiatives and their results in our annual proxy statement.

    Our Board values the benefits that diversity brings our organization, and we are pleased to report that 60% of our corporate officer positions are held by experienced and talented women. Our commitment to diversity is strongly aligned with our leadership structure and global business goals. As a unified leadership team, we are committed to ensuring we have the most talented, diverse workforce and management team we can globally.

    We are investing in and strengthening our ability to innovate and are very excited about the many changes we are implementing to drive growth, profitability, and shareholder value at Helios. I have great confidence in the ability of the Helios team to continue to successfully lead this great company and believe it will show in our results in the years to come.

    A Strong, Exciting Future

    In closing, I wish to thank all our stakeholders who contribute to our success, including our employees, customers, partners, and suppliers around the globe, as well as our Board of Directors.

    I recognize that we have work ahead of us to make this great company even more successful. I am proud of all we have accomplished during 2020, but want you to know we are just getting started.

    Finally, I wish to express my sincere appreciation to you, our shareholders. Your confidence and trust in the Helios organization, and our ability to achieve our strategic goals while expanding shareholder value makes it possible for us to work as hard as we do. I hope you are as excited about our future as we are!

    Respectfully,

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