Helios Technologies, Inc.

Greetings, and welcome to Helios Technologies' fourth quarter 2021 financial results. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tanya Allman, Investor Relations for Helios Technologies.

Thank you, Operator, and good day, everyone. Welcome to the Helios Technologies Fourth Quarter 2021 Financial Results Conference Call. We issued a press release yesterday afternoon. If you do not have that release, it is available on our website at hlio.com. You will also find slides there that will accompany our conversation today. On the line with me are Joseph Matasevich, our President and Chief Executive Officer, and Tricia Fulton, our Chief Financial Officer. They will spend the next several minutes reviewing our fourth quarter results, discussing our progress with our accelerated growth goals, providing our outlook for 2022, and then we will open the call to your questions. If you turn to slide two, you will find our safe harbor statement. As you may be aware, we will make some forward-looking statements during this presentation and also during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These risks and uncertainties and other factors will be provided in our 10-K to be filed with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. I'll also point out that during today's call, we will discuss some non-GAAP financial measures, which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of comparable GAAP with non-GAAP measures in the tables that accompany today's slides. With that, it's now my pleasure to turn the call over to Joseph.

Tanya, thank you, and good day, everyone. Before we begin, I would like to acknowledge the world events that are occurring and offer our thoughts and prayers for everyone that has been directly impacted by this conflict. With that, please reference slides three and four, and I will summarize our highlights for the quarter and full year 2021. We delivered an excellent quarter and full year in these uniquely challenging times. A direct result of this incredible execution from our management team and all of our colleagues around the world. Many thanks to each of them. I believe we are demonstrating through the implementation of our Helios business system the results that can be realized with innovation, determination, resilience, and flexibility. Our organic growth of 26% in the quarter and 27% for the year are a testament to our efforts. We are gaining market share by meeting or exceeding our customers' expectations, we are innovating to create breakthrough solutions to solve complex problems, and we are exercising robust agility to meet the challenges of the global economy. For example, 2021, the combined CVT family expertise drove product development teams to exceed expectations by launching 22 new products. This is the greatest number of new product releases in the division's recent history and will be a flywheel for organic growth in the coming years. I'm excited to announce we also won our first system sale across three of our businesses. This is an international sale that came in through CFP and contains an innovation control display, FASTA couplings, and sound cartridge valves. This is exactly the type of synergy that we described at our last investor day as we continue to streamline our customer experience lifecycle. We also just announced another innovation award that we won for our FASTA ABC electronic hydraulic hose couplings. FASTA was chosen as the winner of the Systems and Components Trophy, Engineer's Choice for 2022, sponsored by DLG. This is a big deal for our team, and we could not be more pleased about this recognition. Finally, Helios was just named on Forbes' 2022 list of America's Best Midsize Companies. The ranking is based on earnings growth, sales growth, return on equity, and total stock returns. We are very humbled to receive this recognition. And as I said at the beginning, our performance is driven daily by our 3,500 plus colleagues. There's much work being done behind the scenes as well. We are executing on our manufacturing roadmap to take out costs, simplify processes, and address inflationary pressures. We are carefully balancing the make versus buy choices most efficiently meet our customers' needs and growth demands. We are also investing where needed to ensure we have the capacity to meet demand and expect we will be in a very strong position as the world finds its new normal. As we collaborate across our organization to leverage the global R&D talent of our engineering teams, we expect we can provide the solutions and responsiveness to continue taking greater market share. This is despite the fact that operating conditions remain less than ideal with continued supply constraints, material inflation, and labor challenges with the persistence of the variant outbreaks. As I have discussed before, we have implemented pricing strategies to help address the continued increase in costs shortages of supply, and difficulties with staffing operations. We recognize that we are not alone in these unprecedented times, but believe our team is demonstrating resilience and stepping up to the challenge. It is important to note that we have great financial flexibility and can continue investing in organic growth as well as advancing our acquisition strategy. Our pro forma net debt to adjusted EBITDA ratio is just below two times. And in addition to the 29 million of cash on the balance sheet at year end, we have 158 million available on our revolver. In fact, we generated 113 million in operating cash flow in 21, even as we invested in inventory to address the significant material shortages the industry is experiencing. These investments have helped us maintain top-tier industry lead times and are contributing to our growing market share. Our plan is to drive further growth and profits in 2022, and we believe we are well-positioned to continue to execute on our augmented strategy. Let me review some financial highlights on slides 5 and 6, and then Tricia will provide more details. Our fourth quarter net sales increased 44% to $218 million, including $26.4 million in sales from acquisitions. We had adjusted EBITDA margin in the quarter of 22.7%, which was impacted by material cost increases, labor, and freight inefficiencies based on the macro operating environment. For the full year, our adjusted EBITDA margin was 24.6%. Diluted non-GAAP cash EPS was 101, up 68% over last year, reflecting strong demand, our ability to capture a greater share of growth, and the addition of several excellent acquisitions. We constantly drive to outperform, and the team did an outstanding job delivering in the quarter and for the full year. The Helios team continues to excel through every challenge, and I could not be prouder. I will now turn the call over to Tricia to review the financial results and outlook in a little bit more detail. Tricia?