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What changed in HELIOS TECHNOLOGIES, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of HELIOS TECHNOLOGIES, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+288 added−278 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in HELIOS TECHNOLOGIES, INC.'s 2024 10-K

288 paragraphs added · 278 removed · 218 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

69 edited+16 added−27 removed32 unchanged
Biggest changeElectronics We are an international leader in custom-tailored solutions for many industrial and commercial applications, including engines, engine-driven equipment and specialty vehicles with a broad range of rugged and reliable instruments such as displays, controls and instrumentation products through our Enovation Controls, Zero Off, Murphy and HCT brands.
Biggest changeThe systems we design and manufacture: • may include electro-hydraulic, remote control, electronic control, hydraulic machine control and human-machine interface displays; • are highly efficient; • increase and optimize productivity; • introduce safer operating procedures; • are smaller in size than competitive products; • allow for automation of existing equipment; • allow for ease of maintenance; and • reduce energy costs. 8 Electronics We are an international leader in custom-tailored solutions for many industrial and commercial applications, including engines, engine-driven equipment and specialty vehicles with a broad range of rugged and reliable instruments such as displays, controls and instrumentation products through our Enovation Controls, Zero Off, Murphy and HCT brands.
In addition to looking for strong management teams and good cultural fit, the objective of our acquisition strategy is to enhance Helios by: 5 • Growing our current product portfolio or adding new technologies and capabilities that complement our current offerings; • Expanding geographic presence; • Bringing new customers or markets; • Meeting growth and profitability goals; and • Leveraging operational synergies and earnings accretion.
In addition to looking for strong management teams and good cultural fit, the objective of our acquisition strategy is to enhance Helios by: 5 • Growing our current product portfolio or adding new technologies and capabilities that complement our current offerings; • Expanding our geographic presence; • Bringing new customers or markets; • Meeting growth and profitability goals; and • Leveraging operational synergies and earnings accretion.
Enovation Controls differentiates itself through product quality, ruggedness, customization ability and service with a focus on mid-sized niche markets that are not well served by the large competitors. Our engagement and speed to market set us apart from larger competitors.
Enovation Controls differentiates itself through product quality and ruggedness, customization ability and service with a focus on mid-sized niche markets that are not well served by the large competitors. Our engagement and speed to market set us apart from larger competitors.
ITEM 1. BUSINESS Our Business Overview and Strategy Helios Technologies, Inc. (“Helios,” the “Company,” “we,” “us” or “our”), and its wholly owned subsidiaries, is a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including construction, material handling, agriculture, industrial, mobile, energy, recreational vehicles, marine, and health and wellness.
ITEM 1. BUSINESS Our Business Overview and Strategy Helios Technologies, Inc. (“Helios,” the “Company,” “we,” “us” or “our”), and its wholly owned subsidiaries, is a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including construction, material handling, agriculture, industrial, mobile, energy, recreational vehicles, marine, aerospace, and health and wellness.
Low-cost producers generally have a limited product range compared with full line or cartridge valve and quick release coupling only producers, which restricts their ability to be competitive. We believe that we compete based upon the quality, reliability, value, speed of delivery and technological characteristics of our products and services.
Low-cost producers generally have a limited product range compared with full line or cartridge valve and quick release coupling only producers, which restricts their ability to be competitive. 11 We believe that we compete based upon the quality, reliability, value, speed of delivery and technological characteristics of our products and services.
As an innovative manufacturer of electronic controls and displays, we serve a variety of markets including off-highway, recreational marine, powersports and specialty vehicles, agriculture, water pumping, power generation, engine-driven industrial equipment, and health and wellness. We partner directly with OEMs and support a worldwide network of authorized distributors and systems integrators.
As an innovative manufacturer of electronic controls and displays, we serve a variety of markets including off-highway, recreational marine, powersports and specialty vehicles, agriculture, water pumping, power generation, engine-driven industrial equipment, and health and wellness. We partner directly with OEMs ("Original Equipment Manufacturer") and support a worldwide network of authorized distributors and systems integrators.
Electronics We offer a wide range of advanced electronics manufacturing capabilities that deliver integrated electronic control solutions to diverse end markets. Manufacturing value streams incorporate high speed surface mount technology (“SMT”), production lines with 3D solder paste inspection, 3D automated optical inspection and x-ray inspection to ensure quality and process control.
Electronics We offer a wide range of advanced electronics manufacturing capabilities that deliver integrated electronic control solutions to diverse end markets. Manufacturing value streams incorporate high speed surface mount technology, production lines with 3D solder paste inspection, 3D automated optical inspection and x-ray inspection to ensure quality and process control.
They are designed to be able to operate reliably at higher pressures than most competitors, making them equally suitable for both industrial and mobile applications. 7 Hydraulic systems are increasingly taking signals from on-board electronic control systems, making it necessary for hydraulic products to be capable of digital communication.
They are designed to be able to operate reliably at higher pressures than most competitors, making them equally suitable for both industrial and mobile applications. Hydraulic systems are increasingly taking signals from on-board electronic control systems, making it necessary for hydraulic products to be capable of digital communication.
Established supplier relationships and manufacturing capabilities in precision machining, finishing, heat treatment, process automation, and test allow us to deliver best in class quality and market leading hydraulic control solutions. We leverage Lean Six Sigma best practices and automation to continually improve the safety, quality, and productivity of our operating processes.
Established supplier relationships and manufacturing capabilities in precision machining, finishing, heat treatment and test allow us to deliver best in class quality and market leading hydraulic control solutions. We leverage Lean Six Sigma best practices and automation to continually improve the safety, quality, and productivity of our operating processes.
Electronics Competition within the electronics market is very broad with competitors ranging from large multinational companies with full electronics offerings, such as Continental and Garmin, to small niche companies that specialize in one product type. Enovation Controls is a niche player in the displays, controllers, gauges and instrumentation panel markets.
Electronics Competition within the electronics market is very broad with competitors ranging from large multinational companies with full electronics offerings such as Continental, Garmin, and Bosch, to small niche companies that specialize in one product type. Enovation Controls is a niche player in the displays, controllers, gauges and instrumentation panel markets.
We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance technology products, including cartridge valves, manifolds, quick release couplings as well as engineers hydraulic solutions and in some cases complete systems.
We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance technology products, including cartridge valves, manifolds and quick release couplings as well as engineers complete hydraulic system solutions and in some cases complete systems.
In synergy with our Sun Hydraulics LLC business, our engineering teams have combined the advantages and features of MultiFaster® and Sun electro-hydraulic cartridge valves into an integrated manifold, reducing complexity and increasing reliability of the hydraulic circuit as a result.
In synergy with our Sun Hydraulics business, our engineering teams have combined the advantages and features of MultiFaster® and electro-hydraulic cartridge valves into an integrated manifold, reducing complexity and increasing reliability of the hydraulic circuit as a result.
We design, engineer and distribute hydraulic coupling solutions primarily in the agriculture, construction equipment and industrial markets. In 2021, our QRC subsidiary, Faster S.r.l, was selected as a recipient of the John Deere Supplier Innovation Award for 2020, for its multi-connection couplings with integrated valve system.
We design, engineer and distribute hydraulic coupling solutions primarily in the agriculture, construction equipment and industrial markets. In 2021, our FCT subsidiary, Faster S.r.l, was selected as a recipient of the John Deere Supplier Innovation Award for 2020, for its multi-connection couplings with integrated valve system.
In 2022, Faster won the Systems and Components Trophy – Engineers Choice from DLG for its innovative Faster ABC electronic hydraulic hose coupling. DLG recognizes components or systems with novel or significantly improved concepts that can make a significant contribution to the development and production of agricultural machinery and other off-highway machinery.
In 2022, Faster won the Systems and Components Trophy – Engineers Choice from DLG (the German Agricultural Society) for its innovative Faster ABC electronic hydraulic hose coupling. DLG recognizes components or systems with novel or significantly improved concepts that can make a significant contribution to the development and production of agricultural machinery and other off-highway machinery.
We believe our user friendly software configuration tools allow engineers and non-engineers alike to create customized systems to solve complex problems on their equipment making the user experience more seamless. Our panel solutions offer customized design and simple, turnkey solutions and our Custom Hardware Solutions team offers engineers dedicated to applications, wire harnesses, panels and software development.
We believe our user friendly software configuration tools allow engineers and non-engineers alike to create customized systems to solve complex problems on their equipment making the user experience more seamless. Our panel solutions offer customized design and simple, turnkey solutions and our Custom Hardware Solutions team has engineers dedicated to applications, wire harnesses, panels and software development.
Protect the business through customer centricity, and drive cash generation through the launch of new products and leveraging existing products; 2. Think and act globally to better leverage our assets, accelerate innovation and diversify end markets by driving intra- and inter-company initiatives and by building in the region for the region; 3.
Protect the business through customer centricity while driving cash generation through the launch of new products and leveraging existing products; 2. Think and act globally to better leverage our assets, accelerate innovation and diversify end markets by driving intra- and inter-company initiatives and by building in the region for the region; 3.
We align our internal key performance indicators with our strategy to ensure our short-term actions will deliver long-term expectations. Our culture of innovation is at the core of our business. We have approximately 230 engineers in support of product innovation, as well as technical support and customer service.
We align our internal key performance indicators with our strategy to ensure our short-term actions will deliver long-term expectations. Our culture of innovation is at the core of our business. We have over 230 engineers in support of product innovation, as well as technical support and customer service.
In addition to acquisitions such as Balboa and Joyonway, this effort includes the development of new partners globally. These efforts assist in our ability to diversify our global customer base, allowing us to grow more quickly, diversify the end-markets we serve and expand our customer base.
In addition to acquisitions such as Balboa Water Group and Joyonway, this effort includes the development of new partners globally. These efforts assist in our ability to diversify our global customer base, allowing us to grow more quickly, diversify the end-markets we serve and expand our customer base.
FCT includes our quick release couplings (“QRC”) products, which allow users to connect and disconnect quickly from any hydraulic circuit without leakage and ensure high-performance under high temperature and pressure using one or multiple couplers. Quick connection of multiple hydraulic lines can be accomplished through the use of our casting solution or our signature MultiFaster® product line.
FCT includes our quick release couplings products, which allow users to connect and disconnect quickly from any hydraulic circuit without leakage and ensures high-performance under high temperature and pressure using one or multiple couplers. Quick connection of multiple hydraulic lines can be accomplished through the use of our casting solution or our signature MultiFaster® product line.
Develop our talent , our most critical resource, through a culture of customer centricity encompassing the embracement of diversity, engagement of the team, focus on shared, deeply rooted values and promotion of a learning organization.
Develop our talent , our most critical resource, through a culture of customer centricity encompassing the embracement of inclusion, engagement of the team, focus on shared, deeply rooted values and promotion of a learning organization.
The Company’s executive offices are located at 7456 16th St E, Sarasota, Florida 34243, and our telephone number is (941) 362-1200. Our website is www.heliostechnologies.com. 15
The Company’s executive offices are located at 7456 16th St E, Sarasota, Florida 34243, and our telephone number is (941) 362-1200. Our website is www.heliostechnologies.com. 14
Schultes provides additional manufacturing know-how and expands our business into new end markets with attractive secular tailwinds. • In May 2023, we completed the acquisition of i3 Product Development (“i3”). i3 is a custom engineering services firm, with over 55 engineers specializing in electronics, mechanical, industrial, embedded and software engineering. i3 specializes in working to transform customer’s ideas into industrial design solutions through rapid prototyping and creating 3D models in-house.
Schultes provides additional manufacturing know-how and expands our business into new end markets with attractive secular tailwinds. • In May 2023, we completed the acquisition of i3 Product Development (“i3”). i3 is a custom engineering services firm, with engineers specializing in electronics, mechanical, industrial, embedded and software engineering. i3 specializes in working to transform customers' ideas into industrial design solutions through 6 rapid prototyping and creating 3D models in-house.
Product categories include traditional mechanical and electronic gauge instrumentation, plug and go CAN-based instruments, robust environmentally sealed controllers, hydraulic controllers, pumps and water flow systems, engineered panels, process monitoring instrumentation, printed circuit board assembly and wiring harness design.
Product categories include traditional mechanical and electronic gauge instrumentation, plug and go CAN-based instruments, robust environmentally sealed controllers, hydraulic controllers, pumps and water flow systems, engineered panels, process monitoring instrumentation, printed circuit board assembly and wiring harnesses.
Our global channel partner network includes representation in many industrialized markets, and approximately 46% of segment sales are attributed to our channel partners who generally combine our products with other hydraulic components to design a complete hydraulic system. Sales direct to OEMs for integration in their machines make up the remaining 54%.
Our global channel partner network includes representation in many industrialized markets, and approximately 49% of segment sales are attributed to our channel partners who generally combine our products with other hydraulic components to design a complete hydraulic system. Sales direct to OEMs for integration in their machines make up the remaining 51%.
Over the last few years, we restructured our sales teams to create a more dedicated focus on distributor sales. Overall, approximately 25% of 2023 segment sales were derived from independent authorized distributor channel partners. We continue to execute on our strategic initiative to further diversify our channels to market and end markets served.
Over the last few years, we restructured our sales teams to create a more dedicated focus on distributor sales. Overall, approximately 22% of 2024 segment sales were derived from independent authorized distributor channel partners. We continue to execute on our strategic initiative to further diversify our channels to market and end markets served.
OEM sales constituted 75% of total Electronics segment sales in 2023. Building strong, lasting partnerships with OEMs is a priority. We rely on direct customer contacts to stimulate demand for our products. We work closely with our OEM customers to design and deliver innovative and reliable products for specific applications.
OEM sales constituted 78% of total Electronics segment sales in 2024. Building strong, lasting partnerships with OEMs is a priority. We rely on direct customer contacts to stimulate demand for our products. We work closely with our OEM customers to design and deliver innovative and reliable products for specific applications.
Many of the current Faster, Taimi, Sun and NEM brand products can be easily combined to form an integrated hydraulic circuit, or system, of high technological content. These circuits and systems provide engineered solutions that combine manifolds, CVT and QRC technology and allow users enhanced control of existing equipment, providing a competitive advantage and opportunities for higher margin.
Many of the current Faster, Taimi, Sun Hydraulics and NEM brand products can be easily combined to form an integrated hydraulic circuit, or system solution, of high technological content. These circuits and systems provide engineered solutions that combine manifolds, MCT and FCT technology and allow users enhanced control of existing equipment, providing a competitive advantage and opportunities for higher margin.
By providing integrated architecture of hardware and software that is customized to match specific OEM products, Balboa Water Group creates a value proposition making it difficult to easily switch suppliers.
By providing integrated architecture of hardware and software that is customized to match OEM product specifications, Balboa Water Group creates a value proposition making it difficult to easily switch suppliers.
The Company's manufacturing locations are subject to the workplace safety rules and regulations of OSHA and local safety and health laws. The Company believes that it is in compliance with the requirements of these laws.
The Company's manufacturing locations are subject to the workplace safety rules and regulations of OSHA, local safety and health laws, and similar regulations promulgated in other countries. The Company believes that it is in compliance with the requirements of these laws.
We believe our recent strategic acquisitions have expanded our addressable markets by gaining know-how and intellectual property, which grant us access into industrial multi-connections, mostly automatically actuated, in fields like steel mills, automotive engine test beds, aeronautics and plastic injection.
Our strategic acquisitions have expanded our addressable markets by providing additional know-how and intellectual property, which grant us access into industrial multi-connections, mostly automatically actuated, in fields like steel mills, automotive engine test beds, aeronautics and plastic injection.
However, in the event that the Company is unable to comply with OSHA or other environmental requirements, the Company could be subject to substantial sanctions, including restrictions on its business operations, monetary liability and criminal sanctions, any of which could have a material adverse effect upon the Company's business. 14 Sustainability Corporate responsibility and sustainability are reflected in the Company’s business strategy.
However, in the event that the Company is unable to comply with OSHA or other environmental requirements, the Company could be subject to substantial sanctions, including restrictions on its business operations, monetary liability and criminal sanctions, any of which could have a material adverse effect upon the Company's business.
The board of directors has oversight over, and recently reviewed, the Company’s principles of corporate and social responsibility. The Company is committed to reducing emissions, recycling and minimizing its environmental footprint and has implemented several strategies to achieve these goals.
Sustainability Corporate responsibility and sustainability are reflected in the Company’s business strategy. The Board of Directors has oversight over, and recently reviewed, the Company’s principles of corporate and social responsibility. The Company is committed to reducing emissions, recycling and minimizing its environmental footprint and has implemented several strategies to achieve these goals.
We are dedicated to building an inclusive workforce, and our commitment to shared values such as accountability, integrity, inclusion, innovation, and leadership creates an inviting environment for our colleagues and their ideas. 12 At the end of our 2023 fiscal year, we employed approximately 2,700 colleagues worldwide.
We are dedicated to building an inclusive workforce, and our commitment to shared values such as accountability, integrity, inclusion, innovation, and leadership creates an inviting environment for our colleagues and their ideas. At the end of our 2024 fiscal year, we employed over 2,500 colleagues worldwide.
To support the execution of our strategy, our financial strategy is oriented around delivering industry leading operating margins, a strong balance sheet and sufficient financial flexibility to support organic and acquisitive growth while continuing to sustain our longstanding history of over twenty-six years of dividend payments.
To support the execution of our acquisition strategy, our financial focus is oriented around delivering industry leading operating margins, a strong balance sheet and sufficient financial flexibility to support organic and acquisitive growth while maintaining our longstanding history of over twenty-seven years of dividend payments.
Established manufacturing centers provide scale in North America, and we continue to expand centers in both Asia and Europe to meet growing global demand. Manufacturing locations in the U.S., Canada, Mexico, Italy, Germany, South Korea, China and India provide a range of manufacturing options.
Established manufacturing centers provide scale in North America, and we continue to optimize centers in both Asia and Europe to gain efficiencies and meet global demand over time. Manufacturing locations in the U.S., Canada, Mexico, Italy, Germany, South Korea, China and India provide a range of manufacturing options.
Approximately 57% of our employees are located in the Americas region, 27% in the EMEA region and 16% in APAC. In addition, we have a committed service agreement with a third party that currently supports nearly 430 jobs in Mexico and serves as an integral part of our supply chain.
Approximately 54% of our employees are located in the Americas region, 26% in the EMEA region and 20% in APAC. In addition, we have a committed service agreement with a third party that currently supports nearly 525 jobs in Mexico and serves as an integral part of our supply chain.
Our factory and supplier management is grounded in a people first approach that leverages the talents of our diverse global operations team. All global sites operate to high standards of stewardship and social responsibility. Hydraulics Our Hydraulics operations footprint leverages manufacturing centers in North America, Europe, and Asia.
Our factory and supplier management is grounded in a people first approach that leverages the talents of our diverse global operations team. All global sites operate to high standards of stewardship and social responsibility. Structured programs ensure our supply chains comply with Conflict Minerals standards. Hydraulics Our Hydraulics operations footprint leverages manufacturing centers in North America, Europe, and Asia.
Our new product initiatives in the Electronics Segment are focused on general market products that will require less customization by our engineering teams and provide a quicker sales cycle, making it easier for the products to be utilized in multiple new end markets and OEM applications. 11 Geographically, our 2023 Electronics segment sales represented 84% to the Americas, 9% to EMEA and 7% to APAC.
Our new product initiatives in the Electronics Segment are focused on general market products that will require less customization by our engineering teams and provide a quicker sales cycle, making it easier for the products to be utilized in multiple new end markets and OEM applications.
Export Controls and Trade Policies We are subject to numerous domestic and foreign regulations relating to our operations worldwide. In particular, we are subject to trade and import and export regulations in multiple jurisdictions, including sanctions administered by the Office of Foreign Asset Controls of the U.S. Treasury Department (OFAC).
In particular, we are subject to trade and import and export regulations in multiple jurisdictions, including sanctions administered by the Office of Foreign Asset Controls of the U.S. Treasury Department ("OFAC").
Our 2023 Hydraulics segment sales were distributed fairly evenly among our three major geographic regions with 42% to the Americas, 31% to Europe, the Middle East and Africa (“EMEA”) and 27% to Asia Pacific (“APAC”). We market and sell hydraulic products and engineered solutions through value-add distributors and directly to OEMs.
Our 2024 Hydraulics segment sales were distributed fairly evenly among our three major geographic regions with 41% to the Americas, 29% to Europe, the Middle East and Africa (“EMEA”) and 30% to Asia Pacific (“APAC”). 10 We market and sell hydraulic products and engineered solutions through value-added distributors and directly to OEMs.
These laws and regulations are complex, change frequently and have become more stringent over time. Compliance with government regulations, including environmental regulations, has not had a material effect on our capital expenditures, earnings or competitive position and based on current information and the applicable laws and regulations currently in effect, is not expected to.
Compliance with government regulations, including environmental regulations, has not had a material effect on our capital expenditures, earnings or competitive position, and based on current information and the applicable laws and regulations currently in effect, is not expected to.
With the Balboa and Joyonway brands, we are also an industry leader in the health and wellness market providing globally comprehensive electronic control systems with proprietary and patented technology for therapy bath and traditional and swim spas from a single source.
With the Balboa Water Group and Joyonway brands, we are also a global industry leader in the health and wellness market providing comprehensive electronic control systems with proprietary and patented technology for therapy bath, cold plunges, traditional hot tubs and swim spas.
These include Delta Power Company, Stucchi and CEJN. Low-cost producers, such as Winner and Valvole Italia, are competitors who have emerged in low-cost production areas such as APAC and Europe. These competitors will typically attempt to copy our products and like products designed by competitors.
Low-cost producers, such as Winner and Valvole Italia, are competitors who have emerged in low-cost production regions that will typically attempt to copy our products and like products designed by competitors.
Manufacturing Strategy As part of our transformation to an integrated operating company, we have developed a unified operations strategy across the companies in our Electronics and Hydraulics segments. This strategy leverages the breadth of our global footprint and depth of our manufacturing capabilities.
Manufacturing Strategy 9 As we have been further integrating our operating companies, we have developed a more harmonious operations strategy across the companies in our Electronics and Hydraulics segments. This strategy leverages the breadth of our global footprint and depth of our manufacturing capabilities.
The Board and its committees will continue to assist the Company in its oversight of corporate social responsibilities, significant public policy issues, health and safety and climate-change related trends.
The Company is also fully committed to the safety of its employees and the safety of those who use its products. The Board and its committees will continue to assist the Company in its oversight of corporate social responsibilities, significant public policy issues, health and safety and environmental related trends.
We continued to execute on our acquisition strategy with two more flywheel acquisitions in 2023: • In January 2023, we completed the acquisition of Schultes Precision Manufacturing, Inc. (“Schultes”). Schultes is a highly trusted specialist in manufacturing precision machined components and assemblies for customers requiring very tight tolerances, superior quality, and exceptional value-added manufacturing processes.
It also expands Daman’s capacity for core organic growth. • In January 2023, we completed the acquisition of Schultes Precision Manufacturing, Inc. (“Schultes”). Schultes is a highly trusted specialist in manufacturing precision machined components and assemblies for customers requiring very tight tolerances, superior quality, and exceptional value-added manufacturing processes.
Additionally, our CVT ecoline™ family is a collection of products focused on increasing the energy efficiency of hydraulic systems. Also, an aggressive segment of new product development that focuses on disruptive technology is yielding results with the announcement of the ENERGEN™ product. ENERGEN™ is the first hydraulic cartridge valve with the capability to convert hydraulic flow into electrical power.
Also, an aggressive segment of new product development that focuses on disruptive technology is yielding results with the announcement of the ENERGEN™ product. ENERGEN™ is the first hydraulic cartridge valve with the capability to convert hydraulic flow into electrical power. 7 Our FCT products transfer hydraulic fluid from one point to another.
In connection with our acquisitions, we may assume significant environmental liabilities, some of which we may not be aware of, or may not be quantifiable, at the time of acquisition. In addition, new laws and regulations, the discovery of previously unknown contamination or the imposition of new requirements could increase our costs or subject us to new or increased liabilities.
In addition, new laws and regulations, the discovery of previously unknown contamination or the imposition of new requirements could increase our costs or subject us to new or increased liabilities.
Increased business in higher risk countries could subject us and our officers and directors to increased scrutiny and increased liability. In addition, becoming familiar with and implementing the infrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly.
In addition, becoming familiar with and implementing the infrastructure necessary to comply with laws, rules and regulations applicable to new business activities and mitigating and protecting against corruption risks could be quite costly. 13 Export Controls and Trade Policies We are subject to numerous domestic and foreign regulations relating to our operations worldwide.
Full-line producers, such as Parker Hannifin, Danfoss/Eaton and Bosch Rexroth/HydraForce, can provide complete hydraulic systems to their customers, including components functionally like those manufactured in our Hydraulics segment. Similar to Helios, component-only producers are entities that offer only CVT or QRC products, while additional parts of the hydraulics system are obtained from other manufacturers.
Competition Hydraulics Competitors in the hydraulics market are broken down into three categories: full-line hydraulic systems producers, component-only producers of MCT or FCT products and low-cost producers. Most competitors market globally. Full-line producers, such as Parker Hannifin, Danfoss/Eaton and Bosch Rexroth/HydraForce, can provide complete hydraulic systems to their customers, including components functionally like those manufactured in our Hydraulics segment.
We use, generate and dispose of hazardous substances and waste in our operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims. We are required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change.
Environmental Regulations Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management and workplace safety. We use, generate and dispose of hazardous substances and waste in our operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims.
In 2022, we announced that through an expansion of the Daman campus in Mishawaka, Indiana, Helios would form the Hydraulic Manifold Solutions Center of Excellence for North America.
In 2022, we announced that through an expansion of the Daman campus in Mishawaka, Indiana, Helios would form the Hydraulic Manifold Solutions Center of Excellence for North America. This facility became fully operational in the fourth quarter of 2023 and houses the manifold machining and integrated package assembly operations from Sun Hydraulics and the integrated package business from Faster.
Hydraulics We are evolving how we classify the key technologies within our Hydraulics segment into two categories based on Hydraulic system architecture: motion control technology (“MCT”) and fluid conveyance technology (“FCT”). MCT includes components used to control the flow and pressure of fluids in a system.
Financial information about our business segments is presented in Note 16 of the Notes to the Consolidated Financial Statements. Hydraulics We have evolved how we classify the key technologies within our Hydraulics segment into two categories based on Hydraulic system architecture: motion control technology (“MCT”) and fluid conveyance technology (“FCT”).
The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses, and software solutions for a variety of end markets. During 2021, we augmented our strategy to transform our business from a holding company to a global integrated operating company.
The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses, and software solutions for a variety of end markets. We are a global operating company and the framework of the Helios Business System, (“HBS”) (pictured below), is at the heart of all we do.
We will continue to use this long successful approach while augmenting our strategy by pursuing system sales at key global OEM’s to drive growth. We will accelerate promotion of the Helios brand through system sales while remaining focused on our well-established operating brands. Hydraulics In 2023, 68% of Helios’ sales were derived from the Hydraulics segment.
Our two segments are comprised of approximately 125 direct sales and application specialists serving our customers’ needs. We will continue to use this long successful approach while supplementing our strategy by pursuing system solutions at key global OEM’s to drive growth. Hydraulics In 2024, 67% of Helios’ sales were derived from the Hydraulics segment.
There is a well-defined initiative to grow sales in EMEA and APAC as part of our growth strategy. Additionally, synergies identified at the time of acquisition utilize customer relationships from the Hydraulics segment to create pull through of electronic products, and joint product development has created additional sales opportunities for both segments.
Additionally, we utilize customer relationships from the Hydraulics segment to create pull through of electronic products, and joint product development has created additional sales opportunities for both segments. The system solutions approach will further drive pull through between the segments.
However, our patents are important in the defense of our intellectual property from competitors who exploit product development that is not otherwise legally protected by its creator. 13 Governmental Regulations We are subject to a variety of federal, state and local laws and regulations, including in foreign jurisdictions, relating to our business practices, labor and employment, construction, land use and taxation, among others.
However, our patents are important in the defense of our intellectual property from competitors who exploit product development that is not otherwise legally protected by its creator.
FCT includes components used to convey fluids and fluid power through a system and are designed to grant maximum flexibility of design and reliability. MCT includes our cartridge valve technology (“CVT”) where we pioneered a fundamentally different design platform employing a floating nose construction that results in a self-alignment characteristic.
MCT includes components used to control the flow and pressure of fluids in a system. FCT includes components used to convey fluids and fluid power through a system and are designed to grant maximum flexibility of design and reliability.
Multipoint functional testing is conducted to ensure quality control of assembled products. Products are serialized and test data is captured against serial numbers and stored in a manufacturing execution system (“MES”) database for product traceability. Our culture of continuous improvement and people first approach spans across both segments. Structured programs ensure our supply chains comply with Conflict Minerals standards.
Multipoint functional testing is conducted to ensure quality control of assembled products. Products are serialized and test data is captured against serial numbers and stored in a manufacturing execution system database for product traceability. Sales and Marketing In 2024, no single customer made up more than 5% of consolidated net sales across the Company.
In response to this we have aggressively expanded our CVT offering of electrically actuated cartridge valves for both the mobile and industrial hydraulics markets and gained significant technology advancements in electro-hydraulic products in addition to parts-in-body and directional control valves with the acquisition of NEM.
In response to this, we have aggressively expanded our MCT offering of electrically actuated cartridge valves and have significant technology in PiB and directional control valves with NEM. Additionally, our MCT ecoline™ family is a collection of products focused on increasing the energy efficiency of hydraulic systems.
While always protecting our existing business, we will provide strategic OEM partners with “system solutions” that ensure the safety, reliability, connectivity and control of their applications. Our two segments are comprised of approximately 125 direct sales and application specialists serving our customers’ needs.
Strategy One of the key drivers of future growth for both the Electronics and Hydraulics segments is our system solution approach that leverages electronic and hydraulic solutions from our trusted brands. While always protecting our existing business, we will provide strategic OEM partners with “system solutions” that ensure the safety, reliability, connectivity and control of their applications.
The Electronics segment includes products sold under the Enovation Controls, Murphy, Zero Off, HCT, Balboa Water Group and Joyonway brands. Financial information about our business segments is presented in Note 16 of the Notes to the Consolidated Financial Statements included in this Annual Report.
Business Segments Our Hydraulics segment includes products sold under the Sun Hydraulics, Faster, Custom Fluidpower, Seungwon, NEM, Taimi, Daman and Schultes brands. The Electronics segment includes products sold under the Enovation Controls, Murphy, Zero Off, HCT, Balboa Water Group and Joyonway brands.
Our services for design and development include on-site installation and testing with reviews to ensure the solution works with the application out of the box. 9 Technology and Innovation In 2021, we established the Helios Center of Engineering Excellence (“HCEE”) to serve both the Electronics and Hydraulics segments of Helios.
Engineers focus entirely on custom and standard solutions built to desired specifications. Our services for design and development include on-site installation and testing to ensure the solution works with the application out of the box. Technology and Innovation We are an innovative products and technology focused company.
Their solutions are used across many sectors, including medical, off-highway, recreational and commercial marine, power sports, health and wellness, agriculture, consumer goods, industrial, sports and fitness. Business Segments Our Hydraulics segment includes products sold under the Sun Hydraulics, Faster, Custom Fluidpower, Seungwon, NEM, Taimi, Daman and Schultes brands.
Their solutions are used across many sectors, including medical, off-highway, recreational and commercial marine, power sports, health and wellness, agriculture, consumer goods, industrial, sports and fitness. In 2024, the Company continued to explore and evaluate potential acquisitions, but no acquisitions were executed.
Acquisitions Over the last three years under our augmented strategy, we have added to our portfolio of niche technologies through acquisitions: • In January 2021, we acquired all of the assets of BJN Technologies, LLC, an innovative engineering solutions provider, and formed the Helios Center of Engineering Excellence, LLC (“HCEE”).
Acquisitions Over the last three years under our strategy, we have added to our portfolio of niche technologies through acquisitions: • In July 2022, we completed the acquisition of the assets of Taimi R&D, Inc.
Our businesses may also be impacted by additional domestic or foreign trade regulations ensuring fair trade practices, including trade restrictions, tariffs and sanctions. Environmental Regulations Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management and workplace safety.
Our businesses may also be impacted by additional domestic or foreign trade regulations ensuring fair trade practices, including trade restrictions, tariffs and sanctions, including the recently announced and potentially contemplated tariffs by the new U.S. presidential administration.
We have constructive and productive dialog on a regular basis with union leaders. To the best of our knowledge, there is no labor dispute, strike, controversy, slowdown, work stoppage or lockout pending or threatened against or affecting the Company, nor is there any basis for any of the foregoing.
In Italy, approximately 540 of our employees are represented by a union. We maintain constructive and productive relationships with union leaders, engaging in regular dialogue to ensure alignment and address workforce needs. To the best of our knowledge, there are no pending or threatened labor disputes, strikes, or work stoppages affecting the Company.
This design provides better performance and reliability advantages compared with most competitors’ product offerings. Our cartridge valves are offered in several size ranges and include both electrically actuated and hydro-mechanical products.
MCT also includes a range of common cavity solutions with our Sun, Seungwon and NEM brands as well as parts in body ("PiB") solutions from NEM. Our cartridge valves are offered in several size ranges and include both electrically actuated and hydro-mechanical products.
We continue to explore acquisition opportunities as a way to accelerate growth in line with our history of acquiring companies with niche technologies, as well as strong profitability. Our acquisition strategy includes bolt-on flywheel acquisitions and transformational acquisitions.
With the current initiatives to pay down debt and to invest in organic sales and operational efficiencies, we are positioning the business to explore future acquisition opportunities as a way to supplement our organic growth with niche technologies and strong profitability.
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At that same time, we introduced the framework of the Helios Business System, “HBS” (pictured below), which is at the heart of all we do. We are accomplishing this transformation into a global integrated operating company by leveraging sales, marketing, innovation, customer relationships and operational excellence across all our businesses.
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With our global operating network we work to leverage sales, marketing, innovation, customer relationships and operational excellence across all our businesses. We are committed to leveraging our resources to best serve our customers and explore new opportunities. 4 Our trusted global brands deliver technology solutions that ensure safety, reliability, connectivity and controls.
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Our progress to date, through a very complex macro operating environment, is a direct reflection of the commitment of our talented workforce executing our augmented strategy. 4 Our trusted global brands deliver technology solutions that ensure safety, reliability, connectivity and controls.
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MCT includes our Sun Hydraulics cartridge valve technology where we pioneered a fundamentally different design platform employing a floating nose construction that results in a self-alignment characteristic. This design provides better performance and reliability advantages compared with most competitors’ product offerings.
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This allowed us to centralize our innovation and technology advancements to better leverage Helios’ product portfolio and global talent. • In July 2021, we completed the acquisition of NEM S.r.l. (“NEM”), an innovative hydraulic solutions company providing customized material handling, construction, industrial vehicle and agricultural applications to its global customer base, predominantly in Europe and Asia.
Added
Our talented engineering teams within our Hydraulics and Electronics Segments and our central engineering teams work cross-functionally and seamlessly to develop innovative, industry leading products that address our customers' needs while also addressing the trend toward electrification of machines and full electro-hydraulic system solutions.
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Located in northern Italy’s Emilia Romagna region, one of the world’s most innovative and technology-friendly areas in the hydraulics industry, NEM enhances Helios’ electro-hydraulic product offering, provides geographic expansion and adds scale to address new markets.
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Geographically, our 2024 Electronics segment sales were 80% in the Americas, 10% in EMEA and 10% in APAC. There is a well-defined initiative to grow sales in EMEA and APAC as part of our growth strategy.
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NEM enables us to grow our original equipment manufacturer (“OEM”) business throughout the world by leveraging their strong brand name in the Cartridge Valve Technology (“CVT”) OEM markets in Europe.
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Component-only producers are entities that offer only MCT or FCT products, while additional parts of the hydraulics system are obtained from other manufacturers. These include Delta Power Company, Stucchi and CEJN.
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They also add SAE Cavity Cartridge Valves (SAE-CVT), Parts-in-Body valves (PiB), and Directional Control Valves (DCV) to the Helios Hydraulics segment product portfolio. • In October 2021, we completed the acquisition of assets related to the electronic control systems business of Shenzhen Joyonway Electronics & Technology Co., Ltd and its related entities (collectively “Joyonway”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are alleged to have infringed upon the intellectual property rights owned by others, our business and results of operations could be materially adversely affected. Competitors or other third parties may allege that we, or consultants or other third parties retained or indemnified by us, infringe on their intellectual property rights.
Biggest changeFor example, we are attempting to increase our technical capabilities and sales in China, where laws may not afford the same intellectual property protections. 24 If we are alleged to have infringed upon the intellectual property rights owned by others, our business and results of operations could be materially adversely affected.
Further, if we fail to keep pace with evolving technological innovations in the markets we serve, our business will be adversely affected. We are subject to fluctuations in the prices of parts and raw materials and dependent on our suppliers of these parts.
Further, if we fail to keep pace with evolving technological innovations in the markets we serve, our business will be adversely affected. We are subject to fluctuations in the prices of parts and raw materials and are dependent on our suppliers of these parts.
The risks associated with usage of open source software cannot be eliminated and could potentially have a material adverse effect on our business, financial condition and results of operations. Risks Relating to Our Business: Other We are dependent upon key individuals and skilled personnel. Our success depends, to some extent, upon several key individuals.
The risks associated with usage of open source software cannot be eliminated and could potentially have a material adverse effect on our business, financial condition and results of operations. 25 Risks Relating to Our Business: Other We are dependent upon key individuals and skilled personnel. Our success depends, to some extent, upon several key individuals.
In addition, although in some cases a third party may have agreed to indemnify us for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. 25 If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition, although in some cases a third party may have agreed to indemnify us for such costs, such indemnifying party may refuse or be unable to uphold its contractual obligations. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
Furthermore, regardless of the outcome, product liability claims can be expensive to defend, divert the attention of management and other personnel for significant periods of time and cause reputational damage. We are subject to a variety of claims, investigations and litigation that could adversely affect our results of operations and harm our reputation.
Furthermore, regardless of the outcome, product liability claims can be expensive to defend, divert the attention of management and other personnel for significant periods of time and cause reputational damage. 27 We are subject to a variety of claims, investigations and litigation that could adversely affect our results of operations and harm our reputation.
Disruptions or shutdowns at any of our facilities could be caused by: • maintenance outages to conduct maintenance activities that cannot be performed safely during operations; • prolonged power failures or reductions; • breakdown, failure or substandard performance of any of our machines or other equipment; • noncompliance with, and liabilities related to, environmental requirements or permits; • disruptions in the transportation infrastructure, including railroad tracks, bridges, tunnels or roads; • fires, floods, earthquakes, tornadoes, hurricanes, microbursts or other catastrophic disasters, national emergencies, political unrest, war or terrorist activities; or • other operational problems. 22 If some of our facilities are shut down, they may experience prolonged startup periods, regardless of the reason for the shutdown.
Disruptions or shutdowns at any of our facilities could be caused by: • maintenance outages to conduct maintenance activities that cannot be performed safely during operations; • prolonged power failures or reductions; • breakdown, failure or substandard performance of any of our machines or other equipment; • noncompliance with, and liabilities related to, environmental requirements or permits; • disruptions in the transportation infrastructure, including railroad tracks, bridges, tunnels or roads; • fires, floods, earthquakes, tornadoes, hurricanes, microbursts or other catastrophic disasters, national emergencies, political unrest, war or terrorist activities; or • other operational problems. 21 If some of our facilities are shut down, they may experience prolonged startup periods, regardless of the reason for the shutdown.
Any failure to comply with applicable legal and regulatory trading obligations could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments, loss of import and export privileges, reputational damage and a reduction in the value of our common stock. 18 Risks Relating to Our Business: Environmental, Health & Safety We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows .
Any failure to comply with applicable legal and regulatory trading obligations could result in criminal and civil penalties and sanctions, such as fines, imprisonment, debarment from governmental contracts, seizure of shipments, loss of import and export privileges, reputational damage and a reduction in the value of our common stock. 17 Risks Relating to Our Business: Environmental, Health & Safety We face various risks related to health epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and/or cash flows .
Significant changes in the value of the foreign currencies relative to the U.S. dollar could impair our cash flow, results of operations and financial condition. In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations.
Significant changes in the value of the foreign currencies relative to the U.S. dollar could impair our cash flow, results of operations and financial condition. 23 In addition, fluctuations in currencies relative to the U.S. dollar may make it more difficult to perform period-to-period comparisons of our reported results of operations.
To the extent we issue additional equity securities, the ownership of our existing shareholders would be diluted and our earnings per share could be reduced. We may not pay dividends on our common stock.
To the extent we issue additional equity securities, the ownership of our existing shareholders would be diluted and our earnings per share could be reduced. 28 We may not pay dividends on our common stock.
Increasing natural disasters in connection with climate change could also be a direct threat to our third-party vendors, service providers or other stakeholders, including disruptions on supply chains or information technology or other necessary services for our operations. 19 Federal, state and local governments, as well as some of our customers, are beginning to respond to climate change issues.
Increasing natural disasters in connection with climate change could also be a direct threat to our third-party vendors, service providers or other stakeholders, including disruptions on supply chains or information technology or other necessary services for our operations. 18 Federal, state and local governments, as well as some of our customers, are beginning to respond to climate change issues.
Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to: (i) our ability to respond to global economic trends and changes in customer demand domestically and internationally, including as a result of standardization and the cyclical nature of our business, which can adversely affect the demand for capital goods, (ii) supply chain disruption and the potential inability to procure goods; (iii) conditions in the capital markets, including the interest rate environment and the continued availability of capital on terms acceptable to us, or at all; (iv) global and regional economic and political conditions, including inflation (or hyperinflation), exchange rates, changes in the cost or availability of energy, transportation, the availability of other necessary supplies and services and recession; (v) changes in the competitive marketplace that could affect our revenue and/or cost basis, such as increased competition, lack of qualified engineering, marketing, management or other personnel and increased labor and raw materials costs; (vi) risks related to heath epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and cash flows; (vii) risks related to our international operations, including the potential impact from ongoing geopolitical conflicts in Ukraine and the Middle East; (viii) new product introductions, product sales mix and the geographic mix of sales nationally and internationally; (ix) stakeholders, including regulators, views regarding our environmental, social and governance goals and initiatives, and the impact of factors outside of our control on such goals and initiatives; and (x) the risk factors identified below together with other risks and uncertainties described elsewhere in this Annual Report and described from time to time in our future reports filed with the SEC.
Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to: (i) our ability to respond to global economic trends and changes in customer demand domestically and internationally, including as a result of standardization and the cyclical nature of our business, which can adversely affect the demand for capital goods, (ii) supply chain disruption and the potential inability to procure goods; (iii) conditions in the capital markets, including the interest rate environment and the continued availability of capital on terms acceptable to us, or at all; (iv) global and regional economic and political conditions, including inflation (or hyperinflation), exchange rates, changes in the cost or availability of energy, transportation, the availability of other necessary supplies and services and recession; (v) changes in the competitive marketplace that could affect our revenue and/or cost basis, such as increased competition, lack of qualified engineering, marketing, management or other personnel and increased labor and raw materials costs; (vi) risks related to heath epidemics, pandemics and similar outbreaks, which may have material adverse effects on our business, financial position, results of operations and cash flows; (vii) risks related to our international operations, including the potential impact from ongoing geopolitical conflicts in Ukraine and the Middle East; (viii) risks related to our recent and ongoing management transitions; (ix) new product introductions, product sales mix and the geographic mix of sales nationally and internationally; (x) stakeholders', including regulators', views regarding our environmental, social and governance goals and initiatives, and the impact of factors outside of our control on such goals and initiatives; and (xi) the risk factors identified below together with other risks and uncertainties described elsewhere in this Annual Report and described from time to time in our future reports filed with the SEC.
Accordingly, such impact on our manufacturing operations and delivery limitations could have a material adverse effect on our business, financial condition, results of operations and cash flows. 21 If we are unable to continue our technological innovation and successful introduction of new commercial products in an efficient, cost-effective manner, our business will be adversely affected.
Accordingly, such impact on our manufacturing operations and delivery limitations could have a material adverse effect on our business, financial condition, results of operations and cash flows. 20 If we are unable to continue our technological innovation and successful introduction of new commercial products in an efficient, cost-effective manner, our business will be adversely affected.
In the future, continued weakening or improvement in the economy will directly affect orders and influence results of operations. 16 Our business could be harmed by adverse global and regional economic and political conditions, including inflation, changes in the cost or availability of energy, transportation and other necessary supplies and services, as well as the impact of tariffs.
In the future, continued weakening or improvement in the economy will directly affect orders and influence results of operations. 15 Our business could be harmed by adverse global and regional economic and political conditions, including inflation, changes in the cost or availability of energy, transportation and other necessary supplies and services, as well as the impact of tariffs.
We may not succeed in developing and implementing policies and strategies to counter the foregoing factors effectively in each location where we do business and the foregoing factors may cause a reduction in our sales, profitability or cash flows or cause an increase in our liabilities. 17 Failure to comply with laws, regulations and policies, including the U.S.
We may not succeed in developing and implementing policies and strategies to counter the foregoing factors effectively in each location where we do business and the foregoing factors may cause a reduction in our sales, profitability or cash flows or cause an increase in our liabilities. 16 Failure to comply with laws, regulations and policies, including the U.S.
The failure to efficiently and effectively achieve such transitions could increase our costs and decrease our profitability. 20 We also may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions, as well as integration-related costs following the completion of any such acquisitions.
The failure to efficiently and effectively achieve such transitions could increase our costs and decrease our profitability. 19 We also may incur significant costs such as transaction fees, professional service fees and other costs related to future acquisitions, as well as integration-related costs following the completion of any such acquisitions.
In the Electronics segment, the patents in our portfolio are scheduled to expire at various dates through 2041. In the Hydraulics segment, the patents in our portfolio are schedule to expire at various dates through 2053. We may also face difficulties protecting our intellectual property rights in foreign countries.
In the Electronics segment, the patents in our portfolio are scheduled to expire at various dates through 2041. In the Hydraulics segment, the patents in our portfolio are schedule to expire at various dates through 2054. We may also face difficulties protecting our intellectual property rights in foreign countries.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused, occasionally in conflicting manners, on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.
Pricing and availability of finished goods, raw materials, energy, transportation and other necessary supplies and services for use in our businesses can be volatile due to numerous factors beyond our control, including general, domestic and international economic conditions, natural disasters, labor costs, production levels, competition, consumer demand, import duties and tariffs, currency exchange rates, international treaties and changes in laws, regulations and related interpretations and global political instability (such as related to the ongoing conflict between Russia and Ukraine, as well as the Israel-Hamas war).
Pricing and availability of finished goods, raw materials, energy, transportation and other necessary supplies and services for use in our businesses can be volatile due to numerous factors beyond our control, including general, domestic and international economic conditions, natural disasters, labor costs, production levels, competition, consumer demand, import duties and tariffs, currency exchange rates, international treaties and changes in laws, regulations and related interpretations and global political instability (such as related to the ongoing conflicts in Ukraine and in the Middle East).
We will continue to expand the scope of operations outside the U.S., both through direct investment and distribution, and we believe that international sales will continue to account for a substantial portion of net sales in future periods. 26 Our future results could be harmed by a variety of factors already stated in this Risk Section as well as those below: • expropriation of property without fair compensation; • governmental actions that result in the deprivation of contract or proprietary rights; • difficulty in staffing and managing geographically widespread operations; • the unionization of, or increased union activity, such as strikes or work stoppages, with respect to, our workforce outside the U.S.; • differing labor regulations; • requirements relating to withholding taxes on remittances and other payments by subsidiaries; • difficulty in enforcement of contractual obligations under non-U.S. law; • refusal or inability of foreign banks to make payment on letters of credit in connection with foreign sales, and our inability to collect from our foreign customers in such circumstances; • restrictions on our ability to own or operate subsidiaries, repatriate dividends or earnings from our foreign subsidiaries, or to make investments or acquire new businesses in these jurisdictions; and/or • the burden of complying with multiple and potentially conflicting laws.
Our future results could be harmed by a variety of factors already stated in this Risk Section as well as those below: • expropriation of property without fair compensation; • governmental actions that result in the deprivation of contract or proprietary rights; • difficulty in staffing and managing geographically widespread operations; • the unionization of, or increased union activity, such as strikes or work stoppages, with respect to, our workforce outside the U.S.; • differing labor regulations; • requirements relating to withholding taxes on remittances and other payments by subsidiaries; • difficulty in enforcement of contractual obligations under non-U.S. law; • refusal or inability of foreign banks to make payment on letters of credit in connection with foreign sales, and our inability to collect from our foreign customers in such circumstances; • restrictions on our ability to own or operate subsidiaries, repatriate dividends or earnings from our foreign subsidiaries, or to make investments or acquire new businesses in these jurisdictions; and/or • the burden of complying with multiple and potentially conflicting laws.
Competitive actions, such as price reductions, consolidation in the industry, improved delivery and other actions, could adversely affect our revenue and earnings. We could experience a material adverse effect to the extent that our competitors are successful in reducing our customers’ purchases of products and services from us.
Competitive actions, such as price reductions, consolidation in the industry, improved delivery, more successful utilization of data and other emerging technologies, like artificial intelligence, and other actions, could adversely affect our revenue and earnings. We could experience a material adverse effect to the extent that our competitors are successful in reducing our customers’ purchases of products and services from us.
International sales represent a significant proportion of our consolidated sales. Approximately 54% of our net sales were outside of the U.S. in both 2023 and 2022.
International sales represent a significant proportion of our consolidated sales. Approximately 53% of our net sales were outside of the U.S. in 2024 and approximately 54% in 2023.
Trade restrictions, including withdrawal from or modification of existing trade agreements, negotiation of new trade agreements and imposition of new (and retaliatory) tariffs against certain countries or covering certain products, including developments in U.S.-China trade relations, could limit our ability to capitalize on current and future growth opportunities in international markets and impair our ability to expand the business.
Trade restrictions, including withdrawal from or modification of existing trade agreements, negotiation of new trade agreements and imposition of new (and retaliatory) tariffs, including the recently announced and potentially contemplated tariffs by the new U.S. presidential administration, against certain countries or covering certain products, including developments in U.S.-China trade relations, could increase our costs, limit our ability to capitalize on current and future growth opportunities in international markets and impair our ability to expand the business.
If we issue additional equity, a shareholder’s interest in us will be diluted. 23 Our existing indebtedness could adversely affect our business and growth prospects. As of December 30, 2023, we had total indebtedness of approximately $525 million.
If we issue additional equity, a shareholder’s interest in us will be diluted. 22 Our existing indebtedness could adversely affect our business and growth prospects. As of December 28, 2024, we had total indebtedness of approximately $451 million.
We face various risks related to health epidemics, pandemics and similar outbreaks, including any ongoing global outbreak of COVID-19. Any continued spread of COVID-19 may lead to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital.
We face various risks related to health epidemics, pandemics and similar outbreaks. The spreading of any one such health outbreaks may lead to disruption and volatility in the global capital markets, which increases the cost of capital and adversely impacts access to capital.
Sales by us or our shareholders of a substantial number of shares of our common stock in the public markets, or the perception that these sales might occur, could cause the market price of our common stock to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities. 28 We may issue common stock or equity securities senior to our common stock in the future for a number of reasons, including to finance our operations and business strategy, as consideration in acquisitions or for other reasons.
Sales by us or our shareholders of a substantial number of shares of our common stock in the public markets, or the perception that these sales might occur, could cause the market price of our common stock to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.
International growth and expansion into markets such as Europe, Asia and Latin America may cause us difficulty due to greater regulatory barriers than in the U.S., the necessity of adapting to new regulatory systems, problems related to entering new markets with different economic, social and political systems and conditions and significant competition from the primary participants in these markets, some of which may have substantially greater resources and political influence than we do.
For example, certain foreign governments may require suppliers for a project to obtain products solely from local manufacturers or may prohibit the use of products manufactured in certain countries. 26 International growth and expansion into markets such as Europe, Asia and Latin America may cause us difficulty due to greater regulatory barriers than in the U.S., the necessity of adapting to new regulatory systems, problems related to entering new markets with different economic, social and political systems and conditions and significant competition from the primary participants in these markets, some of which may have substantially greater resources and political influence than we do.
Fluctuations in exchange rates may affect our operating results and impact our financial condition. Fluctuations in the value of the U.S. dollar may increase or decrease our sales or earnings.
Reference the Critical Accounting Policies and Estimates section for additional considerations. Fluctuations in exchange rates may affect our operating results and impact our financial condition. Fluctuations in the value of the U.S. dollar may increase or decrease our sales or earnings.
The nature and severity of COVID-19 conditions will be uncertain and continuing adverse impacts and/or the degree of the nature and severity of such conditions may vary dramatically by geography and by business.
The nature and severity of health outbreak conditions are uncertain and adverse impacts and/or the degree of the nature and severity of such conditions may vary dramatically by geography and by business.
As a global company, we are subject to taxation in the U.S. and numerous non-U.S. jurisdictions. Significant judgment is required to determine our consolidated income tax provision and related liabilities.
Changes in tax rates, laws or regulations and the resolution of tax disputes could adversely impact our financial results. As a global company, we are subject to taxation in the U.S. and numerous non-U.S. jurisdictions. Significant judgment is required to determine our consolidated income tax provision and related liabilities.
We are dependent on various information technologies throughout our Company to administer, store and support multiple business activities. Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Increased cybersecurity threats and more sophisticated and targeted computer crime and cybersecurity incidents could pose a risk to our data, systems, networks, products, solutions and services. We are dependent on various information technologies throughout our Company to administer, store and support multiple business activities.
We also have certain long-lived assets and other intangible assets which could be at risk of impairment or may require reserves based upon anticipated future benefits to be derived from such assets. Any change in the valuation of such assets could have a material effect on our profitability. Reference the Critical Accounting Policies and Estimates section for additional considerations.
We also have certain long-lived assets and other intangible assets which could be at risk of impairment or may require reserves based upon anticipated future benefits to be derived from such assets. Any change in the valuation of such assets could have a material effect on our profitability. Goodwill makes up 33.1% of total assets as of December 28, 2024.
The laws of foreign countries in which our products are sold or manufactured may not protect our intellectual property rights to the same extent as the laws of the U.S. For example, we are increasing our technical capabilities and sales in China, where laws may not afford the same intellectual property protections.
The laws of foreign countries in which our products are sold or manufactured may not protect our intellectual property rights to the same extent as the laws of the U.S.
The loss of the services of one or more of these individuals could have a material adverse effect on our business. Future operating results depend to a significant degree upon the continued contribution of key management, technical personnel and the skilled labor force. As the Company continues to expand internationally, additional management and other key personnel will be needed.
Future operating results depend to a significant degree upon the continued contribution of key management, technical personnel and the skilled labor force. As the Company continues to expand internationally, additional management and other key personnel will be needed.
We cannot at this time predict the impact of any variants and the effect to our workforce and potential material adverse effect on our business, financial position, results of operations and/or cash flows. Our operations are subject to environmental, health and safety laws and regulations, and we may face significant costs or liabilities associated with environmental, health and safety matters.
We cannot at this time predict the impact of any health outbreaks and the effect to our workforce and potential material adverse effect on our business, financial position, results of operations and/or cash flows.
For example, unstable political conditions or civil unrest could negatively impact our order levels and sales in a region or our ability to collect receivables from customers or operate or execute projects in a region. Increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services.
For example, unstable political conditions or civil unrest could negatively impact our order levels and sales in a region or our ability to collect receivables from customers or operate or execute projects in a region.
In addition, because some of our international sales are to suppliers that perform work for foreign governments, we are subject to the political and legal risks associated with foreign government projects. For example, certain foreign governments may require suppliers for a project to obtain products solely from local manufacturers or may prohibit the use of products manufactured in certain countries.
In addition, because some of our international sales are to suppliers that perform work for foreign governments, we are subject to the political and legal risks associated with foreign government projects.
If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted. We may be unable to perform fully on our contracts, and our costs may increase as a result of the COVID-19 outbreak.
If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the any health epidemic, pandemic or similar outbreak, our operations would likely be impacted.
These cost increases may not be fully recoverable or adequately covered by insurance. It is possible that any continued spread of COVID-19 could also cause further disruption in our supply chain; cause delay, or limit the ability of customers to perform, including in making timely payments to us; impact investment performance; and cause other unpredictable events.
It is possible that the spreading of any health epidemic, pandemic or similar outbreak could also cause further disruption in our supply chain; cause delay, or limit the ability of customers to perform, including in making timely payments to us; impact investment performance; and cause other unpredictable events.
We periodically evaluate our need to hedge our exposures to foreign currencies and enter into forward foreign exchange contracts as we deem necessary, which contracts may not adequately hedge our exposure to foreign currencies. Changes in tax rates, laws or regulations and the resolution of tax disputes could adversely impact our financial results.
Volatility in currency exchange rates may decrease our sales and profitability and impair our financial condition. We periodically evaluate our need to hedge our exposures to foreign currencies and enter into forward foreign exchange contracts as we deem necessary, which contracts may not adequately hedge our exposure to foreign currencies.
Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations. 27 Due to the nature of our business and products, we may be liable for damages based on product liability and other tort and warranty claims.
Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions.
We also may face allegations that our employees have misappropriated intellectual property rights of their former employers or other third parties. From time to time, we receive notices from other companies that allege we may be infringing certain of their patents or other rights.
Competitors or other third parties may allege that we, or consultants or other third parties retained or indemnified by us, infringe on their intellectual property rights. We also may face allegations that our employees have misappropriated intellectual property rights of their former employers or other third parties.
For purposes of accounting, the assets and liabilities of our foreign operations, where the local currency is the functional currency, are translated using period-end exchange rates, and the revenues and expenses of our foreign operations are translated using average exchange rates during each period. 24 In addition to currency translation risks, we incur currency transaction risk whenever we enter into either a purchase or a sales transaction using a currency other than U.S. dollars.
For purposes of accounting, the assets and liabilities of our foreign operations, where the local currency is the functional currency, are translated using period-end exchange rates, and the revenues and expenses of our foreign operations are translated using average exchange rates during each period.
If we are unable to resolve these matters satisfactorily, or to obtain licenses on acceptable terms, we may face litigation.
From time to time, we receive notices from other companies that allege we may be infringing certain of their patents or other rights. If we are unable to resolve these matters satisfactorily, or to obtain licenses on acceptable terms, we may face litigation.
Given the volatility of exchange rates, we may not be able to effectively manage our currency or translation risks. Volatility in currency exchange rates may decrease our sales and profitability and impair our financial condition.
In addition to currency translation risks, we incur currency transaction risk whenever we enter into either a purchase or a sales transaction using a currency other than U.S. dollars. Given the volatility of exchange rates, we may not be able to effectively manage our currency or translation risks.
Added
We may be unable to perform fully on our contracts, and our costs may increase as a result of such health outbreaks. These cost increases may not be fully recoverable or adequately covered by insurance.
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Our operations are subject to environmental, health and safety laws and regulations, and we may face significant costs or liabilities associated with environmental, health and safety matters.
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The loss of the services of one or more of these individuals could have a material adverse effect on our business. We have recently experienced turnover in our senior management. We have promoted employees to fill certain roles and are conducting internal and external searches for other roles.
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We will continue to expand the scope of operations outside the U.S., both through direct investment and distribution, and we believe that international sales will continue to account for a substantial portion of net sales in future periods.
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Increased global cybersecurity threats and some sophisticated and targeted computer crime, including new potential threats enabled by the emergence of generative artificial intelligence, pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
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Cybersecurity incidents and similar attacks vary in their form and can include the deployment of harmful malware or ransomware, denial-of-services attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and data.
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Cybersecurity incidents can also include employee or personnel failures, fraud, phishing or other social engineering attempts or other methods to cause confidential information, payments, account access or access credentials, or other data to be transmitted to an unintended recipient.
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Cybersecurity threat actors also may attempt to exploit vulnerabilities through in software including that is software commonly used by companies in cloud-based services and bundled software.
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In addition, a cybersecurity incident or failure or disruption relating to our information or systems or that of our third-party business partners, or any failure by us or our third-party business partners to effectively address, enforce and maintain our information technology infrastructure and cybersecurity requirements may result in substantial harm to our business strategy, results of operations and financial condition, including major disruptions to business operations, loss of intellectual property, release of confidential information, alteration or corruption of data or systems, costs related to remediation or the payment of ransom, and litigation including individual claims or consumer class actions, commercial litigation, administrative, and civil or criminal investigations or actions, regulatory intervention and sanctions or fines, investigation and remediation costs and possible prolonged negative publicity, which in turn could adversely affect our reputation, competitiveness and results of operations.
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Due to the nature of our business and products, we may be liable for damages based on product liability and other tort and warranty claims.
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We may issue common stock or equity securities senior to our common stock in the future for a number of reasons, including to finance our operations and business strategy, as consideration in acquisitions or for other reasons.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor a discussion of whether and how any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition, see “Risks Relating to Our Business: Other––Increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services” in Item 1A, Risk Factors. 30 Corporate Governance Role of Management Helios Technologies, Information Systems organization is led by the Global Head of Information Technology and is responsible for administration of the cybersecurity and information security framework and risk management, including that of the Corporation, with oversight by the ESG Committee.
Biggest changeFor a discussion of 30 whether and how any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations or financial condition, see “Risks Relating to Our Business: Other––Increased IT security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks, products, solutions and services” in Item 1A, Risk Factors.
Role of the Helios Board The ESG Committee addresses risks related to the global enterprise, including material risks facing the businesses, risks the Company may face in the future, measures that management has employed to address those risks and other information relating to how risk analysis is incorporated into the Company’s corporate strategy and day-to-day business operations.
Role of the Helios Board of Directors The ESG Committee addresses risks related to the global enterprise, including material risks facing the businesses, risks the Company may face in the future, measures that management has employed to address those risks and other information relating to how risk analysis is incorporated into the Company’s corporate strategy and day-to-day business operations.
As part of this oversight function, the ESG Committee is responsible for overseeing cybersecurity-related risks. The ESG Committee includes cybersecurity topics in its quarterly updates to the full Board, which provides further oversight over our cybersecurity-related risks and the Company's strategies to address such risks.
As part of this oversight function, the ESG Committee is responsible for overseeing cybersecurity-related risks. The ESG Committee includes cybersecurity topics in its quarterly updates to the full Board of Directors , which provides further oversight over our cybersecurity-related risks and the Company's strategies to address such risks.
Helios’ Global Head of Information technology is an active member of InfraGard and has formal education in information technology with over 25-years’ experience in roles involving management of cybersecurity functions, cyber strategy, and leading and collaborating on information systems and related technologies.
Helios’ VP, Information Technology is an active member of InfraGard and has formal education in information technology with over 25-years’ experience in roles involving management of cybersecurity functions, cyber strategy, and leading and collaborating on information systems and related technologies.
No risks from IT security threats nor any previous IT security incidents have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, but we cannot provide any assurance that they will not be materially affected in the future by such risks or incidents.
No risks from cybersecurity threats nor any previous cybersecurity incidents have materially affected or are reasonably likely to materially affect us, in cluding our business strategy, results of operations or financial condition, but we cannot provide any assurance that they will not be materially affected in the future by such risks or incidents.
These safeguards are reviewed on an annual basis or more frequently as the business environment warrants and are adjusted as needed to account for changes in the Company and overall risk environment. Cybersecurity training is provided to employees through both online and classroom instructor led trainings.
These safeguards are reviewed on an annual basis or more frequently as the business environment warrants and are adjusted as needed to account for changes in the Company and overall risk environment. Cybersecurity training is delivered to employees through a combination of online modules and, where role-specific needs or circumstances warrant, instructor-led classroom sessions.
We have an Incident Response Policy and related processes that outline steps to be taken in the event of a cybersecurity incident across Helios, our partners and third-party hosted systems.
The results are reviewed with the executive leadership team and the Company’s ESG Committee of the Board of Directors. We have an Incident Response Policy and related processes that outline steps to be taken in the event of a cybersecurity incident that impacts Helios, our partners and third-party hosted systems.
We utilize external standards, such as the Center for Internet Security framework as a starting point for the design and development of our systems that assess risk and mitigation measures. An annual risk assessment is completed and presented to the executive leadership team and the Company’s Board of Directors.
We utilize external standards, such as the Center for Internet Security framework, as a starting point for the design and development of our systems that assess risk and mitigation measures. Helios is committed to achieving compliance with the CIS implementation group level 2 standards.
We incorporate technical safeguards such as Multi-Factor Authentication (“MFA”), principles of Zero Trust and password complexity policies for all accounts to help prevent unauthorized access to our systems and data. We also operate a Security Operations Center (“SOC”) to manage our real-time end point protection monitoring.
This approach ensures comprehensive training tailored to the requirements of various roles while maintaining flexibility and accessibility. We incorporate technical safeguards such as Multi-Factor Authentication (“MFA”), principles of Zero Trust and password complexity policies for all accounts to help prevent unauthorized access to our systems and data.
This penetration testing is performed by a third party and is used to evaluate our current posture towards IT security threats and to make adjustments, as needed, to protect our systems. The results are reviewed with the executive leadership team and the Company’s Board of Directors.
In addition, we also extend such testing to newly acquired companies and assets as part of the integration process. This penetration testing is performed by a third party and is used to evaluate our current posture towards cybersecurity threats and to make adjustments, as needed, to protect our systems.
The Global Head of Information Technology receives regular updates on cybersecurity developments, results of mitigation efforts and cybersecurity incident response and remediation. Helios IT management is responsible for developing and implementing its cybersecurity policies and is comprised of individuals with either formal education in information technology or cybersecurity or have relevant experience working in information technology and cybersecurity.
Helios information systems organization and its management team are responsible for developing and implementing its cybersecurity policies and is comprised of individuals with either formal education in information technology or cybersecurity or relevant experience working in information technology and cybersecurity. Additionally, leaders in Helios’ information technology function receive periodic training and education on cybersecurity related topics including certifications.
We engage in annual corporate-wide internal and external facing penetration tests, employing a battery of hacking tools to map out our assets and to assess vulnerabilities that could be exploited. In addition, we also extend such testing to newly acquired companies and assets as part of the integration process.
Additionally, we utilize XDR (Extended Detection and Response) installed on endpoints, along with our Security Operations Center (“SOC”) to manage real-time endpoint protection monitoring. We engage in annual corporate-wide internal and external facing penetration tests, employing a battery of hacking tools to map out our assets and to assess vulnerabilities that could be exploited.
Removed
All incidents are reported to the Global Head of Information Technology who then reviews significant incidents with a cross-functional working group, inclusive of the Company CFO and General Counsel, to assess the materiality or potential materiality.
Added
However, this does not mean that we meet any particular technical standards, specifications, or requirements, but rather we use external standards as a guide to help us identify, assess and manage cybersecurity risks and threats relevant to our business. An annual risk assessment is completed and presented to the executive leadership team and the Company’s Board of Directors.
Removed
An Incident Response Team that will determine response actions to be taken and coordinate all necessary communications is formed when an incident is deemed material or potentially material.
Added
When a cybersecurity incident occurs, the IT team promptly notifies the VP, Information Technology and assesses its potential impact on operations and business continuity. Incidents that pose a potential threat to operations or business continuity are escalated to a cross-functional team comprising the VP, Information Technology, the Chief Financial Officer (CFO), and the General Counsel.
Removed
Additionally, leaders in Helios’ information technology function receive periodic training and education on cybersecurity related topics including certifications.
Added
This team evaluates the incident's materiality, considering factors such as the nature, scope, and timing of the event, as well as its potential financial and operational. Based on the evaluation, incidents determined to be material are reported to the ESG Committee.
Added
This escalation ensures that the Board of Directors is informed of significant cybersecurity events that could impact the company's financial health or operations.
Added
Corporate Governance Role of Management Helios Technologies' Information Technology organization is led by the VP, Information Technology and is responsible for administration of the cybersecurity and information security framework and risk management, including that of the Corporation and its business units, with oversight by the ESG Committee .
Added
The VP, Information Technology receives regular updates on cybersecurity developments, results of mitigation efforts and cybersecurity incident response and remediation through monthly Advanced Threat Intelligence briefings and FBI bulletins via Infragard.
Added
Reports to the Board of Directors and ESG Committee include comprehensive updates on the current cybersecurity risk landscape, the status of ongoing mitigation efforts, and emerging incident trends. Additionally, these reports cover updates on third-party risk assessments, progress on cybersecurity initiatives such as technology upgrades, regulatory compliance measures, and employee training programs .

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe extent of utilization of our properties varies from time to time and among our facilities. 31 Hydraulics Segment Square Footage (in thousands) Region Owned Leased Total Americas 1,953 4 1,957 Europe 54 825 879 Asia/Pacific 73 184 257 Total 2,080 1,013 3,093 Electronics Segment Square Footage (in thousands) Region Owned Leased Total Americas 533 377 910 Europe 18 7 25 Asia/Pacific — 63 63 Total 551 447 998 ITEM 3.
Biggest changeThe extent of utilization of our properties varies from time to time and among our facilities. 31 Hydraulics Segment Square Footage (in thousands) Region Owned Leased Total Americas 1,953 4 1,957 Europe 116 763 879 Asia/Pacific 73 236 309 Total 2,142 1,003 3,145 Electronics Segment Square Footage (in thousands) Region Owned Leased Total Americas 533 377 910 Europe 18 7 25 Asia/Pacific — 63 63 Total 551 447 998 ITEM 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock price performance shown in the graph is not necessarily indicative of future price performance. 12/29/2018 12/28/2019 1/2/2021 1/1/2022 12/31/2022 12/30/2023 Helios Technologies $ 100.00 $ 137.62 $ 162.72 $ 322.80 $ 167.95 $ 140.77 Russell 2000 Index 100.00 126.50 151.79 174.28 138.66 162.14 Dow Jones US Diversified Industries Index 100.00 128.20 143.86 158.23 145.36 188.70 34 ITEM 6. [RESERVED] 35
Biggest changeThe stock price performance shown in the graph is not necessarily indicative of future price performance. 12/28/2019 1/2/2021 1/1/2022 12/31/2022 12/30/2023 12/28/2024 Helios Technologies $ 100.00 $ 118.24 $ 234.57 $ 122.04 $ 102.29 $ 102.27 Russell 2000 Index 100.00 119.99 137.77 109.61 128.17 143.80 Dow Jones US Diversified Industries Index 100.00 112.22 123.43 113.39 147.20 205.72 34 ITEM 6. [RESERVED] 35
Our board of directors currently intends to continue to pay a quarterly dividend of $0.09 per share during 2024.
Our Board of Directors currently intends to continue to pay a quarterly dividend of $0.09 per share during 2025.
Issuer Purchases of Equity Securities We did not repurchase any of our stock during the year ended December 30, 2023. 33 Five-Year Stock Performance Graph The following graph compares cumulative total return among Helios, the Russell 2000 Index and the Dow Jones US Diversified Industries Index, from December 28, 2018, through December 30, 2023, assuming $100 invested in each on December 29, 2018.
Issuer Purchases of Equity Securities We did not repurchase any of our stock during the year ended December 28, 2024. 33 Five-Year Stock Performance Graph The following graph compares cumulative total return among Helios, the Russell 2000 Index and the Dow Jones US Diversified Industries Index, from December 28, 2019, through December 28, 2024, assuming $100 invested in each on December 28, 2019.
We previously traded on the Nasdaq Global Select Market under the symbol HLIO since June 17, 2019 and prior to that under the symbol SNHY since our initial public offering on January 9, 1997. Holders There were 120 shareholders of record of Common Stock on February 16, 2024.
We previously traded on the Nasdaq Global Select Market under the symbol HLIO since June 17, 2019 and prior to that under the symbol SNHY since our initial public offering on January 9, 1997. Holders There were 102 shareholders of record of Common Stock on February 14, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents net sales based on the geographic region of the sale for the Hydraulics segment: For the year ended December 30, 2023 December 31, 2022 $ Change % Change Americas $ 234.4 $ 199.5 $ 34.9 17.5 % EMEA 177.6 186.5 (8.9 ) (4.8 )% APAC 153.8 165.3 (11.5 ) (7.0 )% Total $ 565.8 $ 551.3 39 Regional sales performance in 2023 compared to the prior year was driven by: Americas - pricing and our recent acquisitions contributed to a 17.5% increase in sales EMEA - excluding favorable changes in foreign currency rates of $3.3, sales declined $12.2, 6.5%, from softer demand in the region APAC - excluding unfavorable changes in foreign currency rates of $3.0, sales declined $8.5, 5.1%, from softer demand in the region In 2023, we continued our restructuring activities within our Hydraulics segment related to the creation of our two new regional operational Centers of Excellence.
Biggest changeThe following table presents net sales based on the geographic region of the sale for the Hydraulics segment: For the year ended December 28, 2024 December 30, 2023 $ Change % Change Americas $ 219.1 $ 234.4 $ (15.3 ) (6.5 )% EMEA 157.1 177.6 (20.5 ) (11.5 )% APAC 161.0 153.8 7.2 4.7 % Total $ 537.2 $ 565.8 In 2024, we continued and are nearing completion of our restructuring activities within our Hydraulics segment related to the creation of our two new regional operational Centers of Excellence.
Additional information about our acquisitions, including acquired intangible assets deemed material to the Company’s financial results, is presented in Note 3 of the Notes to the Consolidated Financial Statements included in this Annual Report. Goodwill Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired.
Additional information about our acquisitions, including acquired intangible assets deemed material to the Company’s financial results, is presented in Note 3 of the Notes to the Consolidated Financial Statements included in this Annual Report. 45 Goodwill Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired.
In May 2023, we completed the acquisition of i3 Product Development. i3 is a custom engineering services firm, with over 55 engineers specializing in electronics, mechanical, industrial, embedded and software engineering. i3 specializes in working to transform customer’s ideas into industrial design solutions through rapid prototyping and creating 3D models in-house.
In May 2023, we completed the acquisition of i3 Product Development. i3 is a custom engineering services firm, with engineers specializing in electronics, mechanical, industrial, embedded and software engineering. i3 specializes in working to transform customer’s ideas into industrial design solutions through rapid prototyping and creating 3D models in-house.
Assumptions used in the analysis include estimated future revenues and expenses, working capital, capital expenditures and other variables. Assumptions made for future cash flows are developed based on consideration of current and future economic conditions, recent sales trends, planned timing of product launches or other relevant variables.
Assumptions used in the analysis include estimated future revenues and expenses, working capital, capital expenditures and other variables. Assumptions made for future cash flows are developed based on consideration of current and future economic conditions, recent and expected sales trends, planned timing of product launches and other relevant variables.
The difference relates principally to a shift in the mix of the Company's worldwide income and increase in valuation allowance established. The effective rate typically fluctuates relative to the levels of income and different tax rates in effect from year to year among the countries in which we sell our products.
The difference relates principally to a shift in the mix of the company's worldwide income and decrease in valuation allowance established. The effective rate typically fluctuates relative to the levels of income and different tax rates in effect from year to year among the countries in which we sell our products.
The Safe Harbor Guidance includes a Transitional Country-by-Country Report (“CbCR”) Safe Harbor, which would deem a MNE’s top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed GloBE calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests. The Helios Technologies, Inc.
The Safe Harbor Guidance includes a Transitional Country-by-Country Report (“CbCR”) Safe Harbor, which would deem a MNE’s top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed GloBE calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests.
Each reporting unit regularly prepares discrete operating forecasts and uses these forecasts as the basis for the assumptions in the discounted cash flow analysis. Within the discounted cash flow models, the Company uses a discount rate, commensurate with its cost of capital but adjusted for inherent business risks, and an appropriate terminal growth factor.
Each reporting unit regularly prepares discrete operating forecasts and long range plans and uses these forecasts as the basis for the assumptions in the discounted cash flow analysis. Within the discounted cash flow models, the Company uses a discount rate, commensurate with its cost of capital but adjusted for inherent business risks, and an appropriate terminal growth factor.
The discussion is incorporated herein by reference. Liquidity and Capital Resources Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions.
The discussion is incorporated herein by reference. Liquidity and Capital Resources Historically, our primary source of capital has been cash generated from operations. We have also used borrowings on our credit facilities to fund acquisitions.
Contractual obligations Credit facilities Information on our credit facilities, including future maturities, is presented in Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report. Our revolving credit facility with PNC Bank matures and is payable in full in October 2025; however, we may make earlier payments.
Contractual obligations Credit facilities Information on our credit facilities, including future maturities, is presented in Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report. Our revolving credit facility with PNC Bank matures and is payable in full in June 2029; however, we may make earlier payments.
As of December 30, 2023, the Company had approximately $29.3 million of undistributed earnings of its non-U.S. subsidiaries for which it has not provided for non-U.S. withholding taxes and state taxes because such earnings are intended to be reinvested indefinitely in international operations. 2022 Results and Comparison of Years Ended December 31, 2022 and January 1, 2022 For the discussion and analysis of our 2022 results compared with our 2021 results, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 28, 2023.
As of December 28, 2024, the Company had approximately $37.1 million of undistributed earnings of its non-U.S. subsidiaries for which it has not provided for non-U.S. withholding taxes and state taxes because such earnings are intended to be reinvested indefinitely in international operations. 41 2023 Results and Comparison of Years Ended December 30, 2023 and December 31, 2022 For the discussion and analysis of our 2023 results compared with our 2022 results, refer to our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 27, 2024.
Group is a MNE group that is within the scope and subject to the GloBE rules. The United States has not currently made any public announcement regarding implementation of Pillar Two initiative. The Company continues to evaluate the impact of Pillar Two and application of safe harbors.
The Helios Technologies Inc Group is a MNE group that is within the scope and subject to the GloBE rules. The United States has not currently made any public announcement regarding implementation of Pillar Two Framework. The company continues to evaluate the impact of Pillar Two and application of safe harbors.
Future payments assume the current interest rate environment, current currency exchange rates, future required payments on term loans and revolver borrowings consistent with December 30, 2023 debt levels. Future payments do not include an estimate of impacts from our derivative instruments. Contingent consideration payments Our contingent consideration liabilities total $0.5 as of December 30, 2023.
Future payments assume the current interest rate environment, current currency exchange rates, future required payments on term loans and revolver borrowings consistent with December 28, 2024 debt levels. Future payments do not include an estimate of impacts from our derivative instruments. Contingent consideration payments Our contingent consideration liabilities total $0.4 as of December 28, 2024.
The balance represents the fair value estimate of contractual contingent payment related to our acquisition of Balboa, which is payable in the last quarter of 2024. Supplier purchases We regularly place purchase orders with our suppliers for inventory and capital expenditures to be used in the ordinary course of business.
The balance represents the fair value estimate of contractual contingent payment related to our acquisition of Balboa Water Group, which is payable in 2025. Supplier purchases We regularly place purchase orders with our suppliers for inventory and capital expenditures to be used in the ordinary course of business.
To the extent the Company determines that it is more likely than not a deferred income tax asset will not be realized, a valuation allowance is established. The recoverability analysis of the deferred income tax assets and the related valuation allowances requires significant judgment and relies on estimates. At December 30, 2023, valuation allowances against deferred tax assets were $3.0.
To the extent the Company determines that it is more likely than not a deferred income tax asset will not be realized, a valuation allowance is established. The recoverability analysis of the deferred income tax assets and the related valuation allowances requires significant judgment and relies on estimates.
These reporting units could be subject to impairment if there is economic decline, expectations for growth are not met, a change to management’s operating outlook, or any significant change to the assumptions, estimates or other risks previously mentioned. Such impairment could negatively impact our operating results. 46 Income Taxes Income taxes are accounted for under the asset and liability method.
If there is economic decline, expectations for growth are not met, product launches are delayed, there is a change to management’s operating outlook, operational restructuring, or any other significant change to the assumptions, estimates or other risks previously mentioned, the reporting units could be subject to impairment. Income Taxes Income taxes are accounted for under the asset and liability method.
The following table presents net sales based on the geographic region of the sale for the Electronics segment: For the year ended December 30, 2023 December 31, 2022 $ Change % Change Americas $ 226.5 $ 270.9 $ (44.4 ) (16.4 )% EMEA 25.2 37.1 (11.9 ) (32.1 )% APAC 18.1 26.1 (8.0 ) (30.7 )% Total $ 269.8 $ 334.1 In 2023, we executed restructuring activities within our Electronics segment to shift product lines to the expanded facility in Tijuana and to adjust our labor base in line with current demand levels.
The following table presents net sales based on the geographic region of the sale for the Electronics segment: For the year ended December 28, 2024 December 30, 2023 $ Change % Change Americas $ 215.9 $ 226.5 $ (10.6 ) (4.7 )% EMEA 26.7 25.2 1.5 6.0 % APAC 26.1 18.1 8.0 44.2 % Total $ 268.7 $ 269.8 In 2024, we continued and are nearing completion of our restructuring activities within our Electronics segment to shift product lines to the expanded facility in Tijuana and to adjust our labor base in line with current demand levels.
Open purchase orders as of December 30, 2023 total $83.3 for purchases expected in 2024 and $3.3 for purchases expected in 2025. Building purchase commitment The Company is negotiating a lease-to-buy agreement for the purchase of a building with the option to purchase the building at any time during the lease period.
Open purchase orders as of December 28, 2024 total $66.1 for purchases expected in 2025 and $0.4 for purchases expected in 2026. Building purchase commitment The Company is negotiating a lease-to-buy agreement for the purchase of a building with the option to purchase the building at any time during the lease period.
At year end 2023, more than half of the cash on hand was held in institutions in APAC, approximately a quarter held in institutions in EMEA, and the remainder held in institutions in the Americas.
At year end 2024, approximately half of the cash on hand was held in institutions in APAC, approximately 40% was held in institutions in EMEA, and the remainder was held in institutions in the Americas.
Cash and cash equivalents were favorably impacted by changes in exchange rates by $0.8 and $3.0 during the years ended December 30, 2023, and December 31, 2022, respectively.
Cash and cash equivalents were unfavorably impacted by changes in exchange rates by $1.7 and favorably impacted by changes in exchange rates by $0.8 during the years ended December 28, 2024, and December 30, 2023, respectively.
In the third quarter of 2023, the Company experienced aggregate losses related to a fire and a weather-related incident at one of its manufacturing locations in Italy resulting in the shut-down of operations for a period of time and disruption in production as recovery efforts ensued. Impacted operations have been restored.
SEA as a percent of sales decreased 80 basis points to 14.8% in 2024. In the third quarter of 2023, the Company experienced aggregate losses related to a fire and a weather-related incident at one of its manufacturing locations in Italy resulting in the shut-down of operations for a period of time and disruption in production as recovery efforts ensued.
Cash paid for acquisitions in 2023 was primarily financed with borrowings on our credit facility; borrowings, net of repayments, during 2023 totaled $75.7. In 2022, borrowings, net of repayments, totaled $8.0. Borrowings on our term loans and revolving credit facilities as of December 30, 2023, totaled $322.1 and $203.3, respectively.
Cash paid for acquisitions in 2023 was primarily financed with borrowings on our credit facility. Borrowings, net of repayments, totaled $75.7 in 2023. Borrowings on our term loans and revolving credit facilities as of December 28, 2024, totaled $300.3 and $150.3, respectively.
Cash flows The following table summarizes our cash flows for the periods: For the year ended December 30, 2023 December 31, 2022 $ Change Net cash provided by operating activities $ 83.9 $ 109.9 $ (26.0 ) Net cash used in investing activities (153.9 ) (90.8 ) (63.1 ) Net cash provided by (used in) financing activities 57.9 (6.9 ) 64.8 Effect of exchange rate changes on cash and cash equivalents 0.8 3.0 (2.2 ) Net (decrease) increase in cash and cash equivalents $ (11.3 ) $ 15.2 $ (26.5 ) Cash on hand decreased $11.3 to $32.4 at the end of 2023.
Cash flows The following table summarizes our cash flows for the periods: For the year ended December 28, 2024 December 30, 2023 $ Change Net cash provided by operating activities $ 122.1 $ 83.9 $ 38.2 Net cash used in investing activities (30.3 ) (153.9 ) 123.6 Net cash (used in) provided by financing activities (78.4 ) 57.9 (136.3 ) Effect of exchange rate changes on cash and cash equivalents (1.7 ) 0.8 (2.5 ) Net increase (decrease) in cash and cash equivalents $ 11.7 $ (11.3 ) $ 23.0 Cash on hand increased $11.7 to $44.1 at the end of 2024.
Capital expenditures for 2024 are forecasted to be approximately 3%-4% of sales, for investments in machinery and equipment for capacity expansion projects, improvements to manufacturing technology and maintaining/replacing existing machine capabilities. 43 Financing activities Net cash provided by financing activities totaled $57.9 in 2023, compared with net cash used in financing activities of $6.9 in 2022.
Capital expenditures for 2025 are forecasted to be approximately 3.0%-4% of sales for improvements to manufacturing technology and maintaining and replacing existing machine capabilities. Financing activities Net cash used in financing activities totaled $78.4 in 2024, compared with net cash provided by financing activities of $57.9 in 2023. In 2024, repayments, net of borrowings, totaled $68.0.
An impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value.
An impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value. There are multiple steps in our process for testing goodwill impairment.
Electronics The following table presents the results of operations for the Electronics segment: For the year ended December 30, 2023 December 31, 2022 $ Change % Change Net sales $ 269.8 $ 334.1 $ (64.3 ) (19.2 )% Gross profit $ 79.9 $ 103.0 $ (23.1 ) (22.4 )% Gross profit % 29.6 % 30.8 % Operating income $ 24.7 $ 52.5 $ (27.8 ) (53.0 )% Operating income % 9.2 % 15.7 % 40 Net sales for the Electronics segment declined by $64.3, 19.2%.
Electronics The following table presents the results of operations for the Electronics segment: For the year ended December 28, 2024 December 30, 2023 $ Change % Change Net sales $ 268.7 $ 269.8 $ (1.1 ) (0.4 )% Gross profit $ 86.5 $ 79.9 $ 6.6 8.3 % Gross profit % 32.2 % 29.6 % Operating income $ 29.6 $ 24.7 $ 4.9 19.8 % Operating income % 11.0 % 9.2 % Net sales for the Electronics segment declined by $1.1, 0.4%.
Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and also paying down borrowings on our credit facilities. Operating activities Net cash from operations totaled $83.9 in 2023, a decrease of $26.0, 23.7%, compared with the prior year.
Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and also paying down borrowings on our credit facilities. 42 Operating activities Net cash from operations totaled $122.1 in 2024, an increase of $38.2, 45.5%, compared with the prior year.
For the year ended December 30, 2023, these costs totaled $38.1 for: amortization of acquisition-related intangible assets of $32.9, $4.0 related to other acquisition and integration activities and $1.2 officer transition costs.
For the year ended December 30, 2023, these costs totaled $38.1 and included amortization of acquisition-related intangible assets of $32.9, $4.0 related to other acquisition and integration activities and $1.2 of officer transition costs. Interest Expense, net Net interest expense increased $2.6 during 2024 to $33.8 compared with $31.2 in 2023.
Cash earnings (calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities) decreased by $47.4 compared to the prior year. However, changes in net operating assets and liabilities increased cash by $21.4 compared to 2022, primarily from favorable cash flows from AR, inventories and AP.
Cash earnings, calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities, decreased by $1.0 compared to the prior year. However, changes in net operating assets and liabilities increased cash by $39.2 compared to 2023, primarily from reduction in inventories.
Discrete impacts to our organic sales included pricing changes that were favorable by $13.4, 2.4%, and favorable changes in foreign currency exchange rates of $0.3, 0.1%.
Discrete impacts to our organic sales included nominal favorable pricing changes of $2.2, 0.4%, and an unfavorable change in foreign currency exchange rates of $0.5, 0.1%.
During 2023, net cash provided by operating activities totaled $83.9 and as of December 30, 2023, we had $32.4 of cash on hand and $200.1 of available credit on our revolving credit facilities.
During 2024, net cash provided by operating activities totaled $122.1 and as of December 28, 2024, we had $44.1 of cash on hand and $352.4 of available credit on our revolving credit facilities.
Material costs as a percentage of sales, excluding pricing changes and acquisition-related sales, was the same year-over-year on a consolidated basis. Gross margin declined by 240 basis points, impacted by lower fixed costs leverage on lower volume and cost impacts noted above. Changes in foreign currency exchange rates compared to 2022 reduced gross profit by $0.4.
Material costs as a percentage of sales, excluding targeted pricing benefits and acquisition-related sales, were down slightly year-over-year on a consolidated basis. This was offset by lower fixed overhead costs leverage on lower volume and cost impacts noted above. Changes in foreign currency exchange rates compared to 2023 reduced gross profit by $0.1.
Interest rates on our credit facilities range from 5.4% to 7.7% as of December 30, 2023. Future interest payments are estimated to total $68.5, with annual payments ranging from $38.1 to $30.2 payable through the last maturity date of June 2026.
Interest rates on our credit facilities range from 4.9% to 7.2% as of December 28, 2024. Future interest payments are estimated to total $112.2, with annual payments ranging from $10.8 to $27.7 payable through the last maturity date of June 2029.
The third party provides estimates (such as risk premiums, select multiples, discount rates, etc.) used in conjunction with Management’s estimates and assumptions to calculate the fair value of the reporting unit.
A third party was used to assist in the valuation and testing of the fair value of the reporting units. The third party provided estimates such as risk premiums, select multiples and discount rates, used in conjunction with Management’s estimates and assumptions to calculate the fair value of the reporting unit. These estimates require significant judgment.
Segment Results Hydraulics The following table presents the results of operations for the Hydraulics segment: For the year ended December 30, 2023 December 31, 2022 $ Change % Change Net sales $ 565.8 $ 551.3 $ 14.5 2.6 % Gross profit $ 181.8 $ 195.5 $ (13.7 ) (7.0 )% Gross profit % 32.1 % 35.5 % Operating income $ 93.3 $ 122.7 $ (29.4 ) (24.0 )% Operating income % 16.5 % 22.3 % Net sales for the Hydraulics segment grew by $14.5, 2.6%.
Segment Results Hydraulics The following table presents the results of operations for the Hydraulics segment: For the year ended December 28, 2024 December 30, 2023 $ Change % Change Net sales $ 537.2 $ 565.8 $ (28.6 ) (5.1 )% Gross profit $ 165.8 $ 181.8 $ (16.0 ) (8.8 )% Gross profit % 30.9 % 32.1 % Operating income $ 86.4 $ 93.3 $ (6.9 ) (7.4 )% Operating income % 16.1 % 16.5 % Net sales for the Hydraulics segment declined by $28.6, 5.1%.
In certain circumstances the Company may elect to test goodwill using a qualitative assessment, assessing whether it is more likely than not that the fair value of the reporting unit is less than the carrying value. More often the Company will skip the qualitative step and test goodwill using the following valuation methods.
The reporting units comprised of our four prominent businesses and the 2023 acquisition of i3. In certain circumstances the Company may elect to test goodwill using a qualitative assessment, assessing whether it is more likely than not that the fair value of the reporting unit is less than the carrying value.
Refer to Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report for additional information on the composition of these valuation allowances and information on the $1.3 income tax expense resulting from new valuation allowances established against deferred tax assets.
At December 28, 2024, valuation allowances against deferred tax assets were $2.3 million. Refer to Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report for additional information on the composition of these valuation allowances.
We incurred $1.9 of restructuring costs including labor, travel and other expenses associated with the manufacturing relocation; $0.4 of the costs are included in cost of goods sold and $1.5 are reflected in SEA expenses. During 2023, gross profit declined $23.1, 22.4%, primarily due to lower sales volume and material cost increases.
We incurred $0.7 of restructuring costs including labor, travel and other expenses associated with the manufacturing relocation. $0.1 of the costs are included in cost of goods sold and $0.6 are reflected in SEA expenses. During 2024, gross profit increased $6.6, 8.3%, primarily due to the contribution from acquisition revenues, pricing, and lower material costs.
Acquisitions Our acquisition activity, driven by our strategic vision, has enabled us to diversify our product offerings and the markets we serve and expand our geographic presence. Prior to 2016, we operated primarily in the hydraulics market with a small presence in electronics.
Acquisitions Our acquisition activity over the past three years, driven by our strategic vision, has enabled us to diversify our product offerings and the markets we serve and expand our geographic presence.
Global Economic Conditions Geo-Political Conflict We continue to monitor the ongoing conflicts between Russia and Ukraine and the Israel-Hamas war and evaluate the broader economic impact those conflicts could have on our operations, supply channels and the operations of our partners and customers.
In 2024, the Company continued to explore and evaluate potential acquisitions, but no acquisitions were executed. 36 Global Economic Conditions Geo-Political Conflict We continue to monitor the ongoing conflicts in Ukraine and in the Middle East and evaluate the broader economic impact those conflicts could have on our operations, supply channels and the operations of our partners and customers.
SEA as a percent of sales increased 5.4 percentage points to 20.5% in 2023 from 15.1% in 2022, negatively impacted by reduced leverage of our fixed costs on the lower sales. Corporate and Other Certain costs are excluded from business segment results as they are not used in evaluating the results of, or allocating resources to, our operating segments.
SEA as a percent of sales increased 70 basis points to 21.2% in 2024 from 20.5% in 2023, reflecting the impact of acquisitions and increased costs referenced above. Corporate and Other Certain costs are excluded from business segment results as they are not used in evaluating the results of, or allocating resources to, our operating segments.
See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report for additional information regarding our credit facilities. In May 2023, we entered into an incremental facility amendment to our credit agreement with PNC Bank, National Association, as administrative agent, and various lenders party thereto.
In May 2023, we entered into an incremental facility amendment to our credit agreement with PNC Bank, National Association, as administrative agent, and various lenders party thereto.
The Company completed its annual goodwill impairment testing for 2023, 2022, and 2021 and determined that the carrying amount of goodwill was not impaired. In 2023, a third party was used to assist in the valuation and testing of three reporting units.
The Company completed its annual goodwill impairment testing for 2024, 2023, and 2022, and determined that the carrying amount of goodwill for each reporting unit was not impaired.
Also, there were minimal effects on consolidated net sales from changes in foreign currency exchange rates during the year. 38 Gross profit declined $36.8, 12.3%, in 2023 driven by lower volume, different margin profiles of acquired businesses, higher restructuring costs of $4.7, higher wage and benefit costs of $2.4 and unfavorable foreign currency of $0.4, partially offset by pricing adjustments.
There was an unfavorable impact of $0.7 on consolidated net sales from changes in foreign currency exchange rates during the year. 38 Gross profit declined $9.4, 3.6%, in 2024 driven by lower volume and higher wage and benefit costs of $6.1M partially offset by lower restructuring costs of $3.0M and lower material costs. Gross margin was flat year-over-year.
The Institute of Printed Circuits Association (“IPC”) reported that North American printed circuit board (“PCB”) shipments and bookings decreased in December 2023 by 18.3% and 28.7%, respectively, compared with the same month last year. PCB shipments increased and bookings decreased in December 2023 by 1.0% and 14.1%, respectively, compared with November 2023.
The Institute of Printed Circuits Association (“IPC”) reported that North American printed circuit board (“PCB”) shipments decreased in December 2024 by 0.3% against the same month last year following a year over year increase in November of 4.7% and a year over year decline in October of 11.1%.
The following table presents our consolidated results of operations: For the year ended December 30, 2023 December 31, 2022 $ Change % Change Net sales $ 835.6 $ 885.4 $ (49.8 ) (5.6 )% Gross profit $ 261.7 $ 298.5 $ (36.8 ) (12.3 )% Gross profit % 31.3 % 33.7 % Operating income $ 79.9 $ 137.3 $ (57.4 ) (41.8 )% Operating income % 9.6 % 15.5 % Net income $ 37.5 $ 98.4 $ (60.9 ) (61.9 )% Diluted net income per share $ 1.14 $ 3.02 $ (1.88 ) (62.3 )% Consolidated net sales for the 2023 year declined $49.8, 5.6%.
The following table presents our consolidated results of operations: For the year ended December 28, 2024 December 30, 2023 $ Change % Change Net sales $ 805.9 $ 835.6 $ (29.7 ) (3.6 )% Gross profit $ 252.3 $ 261.7 $ (9.4 ) (3.6 )% Gross profit % 31.3 % 31.3 % Operating income $ 81.8 $ 79.9 $ 1.9 2.4 % Operating income % 10.2 % 9.6 % Net income $ 39.0 $ 37.5 $ 1.5 4.0 % Diluted net income per share $ 1.17 $ 1.14 $ 0.03 2.6 % Consolidated net sales for the 2024 year declined $29.7, 3.6%.
We incurred $10.2 of restructuring costs including labor, travel and other expenses associated with the manufacturing relocation; $6.0 of the costs are included in cost of goods sold and $4.2 are reflected in SEA expenses.
We also initiated some restructuring activities to better optimize our European regional operations. We incurred $4.5 of restructuring costs related to these activities including labor, travel and other expenses associated with the manufacturing relocation. $3.3 of the costs are included in cost of goods sold and $1.2 are reflected in SEA expenses.
We also have a $300.0 accordion feature available on our credit facility, which is subject to certain pro forma compliance requirements and is intended to support potential future acquisitions.
We also have a $400.0 accordion feature available on our credit facility, which is subject to certain pro forma compliance requirements and is intended to support potential future acquisitions. Our principal uses of cash have been paying operating expenses, making capital expenditures, servicing debt, making acquisition-related payments and paying dividends to shareholders.
During 2023, we incurred $12.1 of costs related to our restructuring activities. In the Hydraulics segment, we executed an operational restructure that involved the creation of our two new regional operational Centers of Excellence.
Restructuring Activities 37 During 2024, we incurred $5.2 of costs related to our restructuring activities, down from $12.1 in 2023. Restructuring activities include activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") which are nearing completion.
Taimi brings a differentiated, yet complementary product line to our hydraulics platform as well as strong engineering breadth. In September 2022, we completed another flywheel acquisition of Daman Products Company, headquartered in Mishawaka, Indiana.
Taimi brings a differentiated, yet complementary product line to our hydraulics platform as well as strong engineering breadth. In September 2022, we completed the acquisition of Daman Products Company, headquartered in Mishawaka, Indiana. Daman is a leading designer and manufacturer of standard and custom precision hydraulic manifolds and other fluid conveyance products for its customer base, predominantly in North America.
EMS shipments and bookings in December 2023 were up 6.2% and 2.3%, respectively when compared with November 2023. 2023 Results and Comparison of Years Ended December 30, 2023 and December 31, 2022 (In millions, except per share data) The following is a discussion of our results of operations and liquidity and capital resources for the year ended December 30, 2023; comparisons are with the corresponding reporting period of 2022, unless otherwise noted.
Bagan’s appointment, Chairman Philippe Lemaitre, serving as Executive Chairman, resumed his role as Non-Executive Chairman. 2024 Results and Comparison of Years Ended December 28, 2024 and December 30, 2023 (In millions, except per share data) The following is a discussion of our results of operations and liquidity and capital resources for the year ended December 28, 2024; comparisons are with the corresponding reporting period of 2023, unless otherwise noted.
The IPC also reported that North American electronics manufacturing services (“EMS”) shipments increased and bookings decreased in December 2023 by 1.3% and 7.0%, respectively when compared with the same month last year.
PCB bookings increased year over year in the last quarter with December up 59.6%, November up 29.1% and October up 3.5%. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments decreased 7.8% in December 2024 compared to the same month last year following year over year increases in October and November of 14.7% and 10.6%, respectively.
For the year ended December 31, 2022, these costs totaled $37.9 for: amortization of acquisition-related intangible assets of $28.1, $9.5 related to other acquisition and integration activities and $0.3 officer transition costs. Interest Expense, net Net interest expense increased $14.5 during 2023 to $31.2 compared with $16.7 in 2022.
For the year ended December 28, 2024, these costs totaled $34.2 and included amortization of acquisition-related intangible assets of $31.5, $1.9 related to officer transition costs and $0.8 related to other costs which was primarily acquisition and integration related activities.
Our term loan with PNC Bank is payable in quarterly installments of $5.0 through the maturity date of October 2025, at which time the remaining balance will be due in full. Our new term loan with PNC Bank is payable in full in October 2025 and is not subject to any required repayments prior to that date.
Our term loan with PNC Bank is payable in quarterly installments of $3.8 million through March 2026, quarterly installments of $5.6 million through March 2028 and quarterly installments of $7.5 million thereafter through the maturity date of June 2029, at which time the remaining balance will be due in full.
The Company does not expect it to have a material impact in 2024 to their effective tax rate.
For the year ended December 28, 2024, there are no impacts to income tax expense related to Pillar Two. The company does not expect it to have a material impact in 2025 to their effective tax rate.
Average net debt increased by $37.9 during 2023 to $447.4 compared with $409.5 in 2022. 41 Income Taxes The provision for income taxes for the year ended December 30, 2023, was 23.8% of pretax income compared with 19.2% for the year ended December 31, 2022.
The change is attributable to higher average debt levels during 2024 and higher interest rates. Average net debt increased by $1.5 during 2024 to $448.9. Income Taxes The provision for income taxes for the year ended December 28, 2024, was 22.8% of pretax income compared with 23.8% for the year ended December 30, 2023.
The first step is identification of our operating segments, followed by the identification of the reporting units, such that the reporting unit has discrete financial information, its operating results are reviewed regularly by management, and its economic characteristics are different form the economic characteristics of the other components of the operating segment. 45 The Company performed its assessment of segments for financial reporting and deemed there to be no change from the prior year, as the Company continues to review results and manage the business with a focus on the reporting segment level.
The first step is identification of our operating segments, followed by the identification of the reporting units, such that the reporting unit has discrete financial information, its operating results are reviewed regularly by management, and its economic characteristics are different from the economic characteristics of the other components of the operating segment., As part of the annual test of goodwill impairment the Company considers economic factors and current business operations when assessing the reporting unit structures for the purposes of goodwill impairment testing.
In the event that economic conditions were to severely worsen for a protracted period of time, we would have several options available to ensure liquidity in addition to increased borrowing. Capital expenditures could be postponed since they primarily pertain to long-term improvements in operations, operating expense reductions could be made and the dividend to shareholders could be reduced or suspended.
Capital expenditures could be postponed since they primarily pertain to long-term improvements in operations, operating expense reductions could be made and the dividend to shareholders could be reduced or suspended.
We also rely on global government statistics such as Gross Domestic Product and Purchasing Managers Index to understand higher level economic conditions. 37 Hydraulics According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products decreased 4% in 2023, after increasing 20% in 2022 and increasing 21% in 2021.
Hydraulics According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products decreased 15% in 2024, after decreasing 4% in 2023 and increasing 20% in 2022.
In January 2023, we completed the acquisition of Schultes Precision Manufacturing, Inc. Schultes is a highly trusted specialist in manufacturing precision machined components and assemblies for customers requiring very tight tolerances, superior quality, and exceptional value-added manufacturing processes.
Schultes is a highly trusted specialist in manufacturing precision machined components and assemblies for customers requiring very tight tolerances, superior quality, and exceptional value-added manufacturing processes. Currently serving the hydraulic, aerospace, communication, food services, medical device, and dental industries, Schultes brings the manufacturing quality, reliability, and responsiveness critical to its customers’ success.
We experienced organic net sales decline of $70.1, 21.0%, which was partially offset by acquisition sales of $5.8. Organic sales declined in 2023 from decreased demand in all regions, as well as in several of our end markets including the health and wellness end market.
We experienced organic net sales decline of $4.2, 1.6%, which was partially offset by acquisition sales of $3.1. Organic sales declined in 2024 from decreased demand in the America’s region within several of our end markets including recreational, industrial and mobile. Health and wellness increased year over year and almost offset the losses in the other end markets.
Material costs as a percentage of sales increased by 110 basis points, excluding pricing changes and acquisition-related sales. Operating income as a percentage of sales decreased 580 basis points to 16.5%. SEA expenses increased $15.7, 21.6%, mainly due to acquisitions and corporate activities.
Material costs as a percentage of sales decreased by 330 basis points, excluding pricing changes and acquisition-related sales. 40 Operating income as a percentage of sales decreased 180 basis points to 11.0%.
Investments in inventory, net of acquisitions, reduced cash by $17.9 and $27.0 in 2023 and 2022, respectively. Inventory on hand as of December 30, 2023, increased by $23.5, 12.3%, compared to the 2022 year end.
Reductions in inventory, net of acquisitions, increased cash by $19.4 in 2024 compared with a decrease in cash by $17.9 in 2023. Inventory on hand as of December 28, 2024, decreased by $25.0, 11.6%, compared to the 2023 year end.
Our principal uses of cash have been paying operating expenses, making capital expenditures, servicing debt, making acquisition-related payments and paying dividends to shareholders. 42 We believe that cash generated from operations and our borrowing availability under our credit facilities will be sufficient to satisfy our operating expenses and capital expenditures for the foreseeable future.
We believe that cash generated from operations and our borrowing availability under our credit facilities will be sufficient to satisfy our operating expenses and capital expenditures for the foreseeable future. In the event that economic conditions were to severely worsen for a protracted period of time, we would have several options available to ensure liquidity in addition to increased borrowing.
We experienced organic net sales decline of $102.6, which was offset partially by sales from acquisitions totaling $52.8. Sales were impacted most by reduced demand for products in our health and wellness end market, which continued to be below the prior year.
We experienced organic net sales decline of $34.7 which was partially offset by sales from acquisitions totaling $5.0. Sales were impacted most by reduced demand for products in our agriculture, mobile, industrial and recreational marine markets. These end markets experienced lower year over year demand with declines persisting through the fourth quarter.
With the amendment we incurred a new term loan with an aggregate principal amount of $150.0 for which the proceeds were used to repay outstanding balances on our revolving credit facility. The new term loan is payable in full in October 2025 and is not subject to any required repayments prior to that date.
With the amendment we incurred a new term loan with an aggregate principal amount of $150.0 for which the proceeds were used to repay outstanding balances on our revolving credit facility. 43 On June 25, 2024, the Company amended and restated its credit agreement (the “Third Amended and Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent, and the lenders party thereto.
Currently serving the hydraulic, aerospace, communication, food services, medical device, and dental industries, Schultes brings the manufacturing quality, reliability, and responsiveness critical to its customers’ success. Schultes provides additional manufacturing know-how and expands our business into new end markets with attractive secular tailwinds.
Schultes provides additional manufacturing know-how and expands our business into new end markets with attractive secular tailwinds.
We generally use a combination of market and income approach methodologies to estimate the fair value of our reporting units. Management’s assumptions include projected future performance, expected future costs, and expected future economic and market conditions (i.e. inflation, tax rates, end-market or market share deterioration).
The assessment of fair value for impairment purposes requires significant judgment by management. Management’s assumptions include projected future performance, expected future costs, expected new product releases and expected future economic and market conditions (i.e. inflation, tax rates, end-market growth or decline, and expected market share performance).
Since the first half of 2022, there have been no COVID-related shutdowns or other significant new disruption to our business from the pandemic. Throughout 2022, and continuing into 2023, we faced constraints related to sourcing certain electronic and other components, which originated from the high demand for these products caused by the pandemic.
Supply Chain While there were no impacts to operations resulting from the COVID-19 Pandemic in 2024, for comparison purposes the results in the early part of 2023 faced constraints related to sourcing certain electronic and other components, which originated from the high demand for these products caused by the pandemic.
The marine market also experienced a notable decline; however, this was partially offset by improvement in the mobile and off-road vehicles end markets. Discrete impacts to our organic sales included pricing changes that were favorable by $5.2, 1.6%, partially offset by unfavorable changes in foreign currency exchange rates of $0.2, 0.1%.
The APAC region increased driven by a significant increase in sales to China. Sales in the EMEA region were relatively flat. Discrete impacts to our organic sales included pricing changes that were favorable by $2.8, 1.0%, and unfavorable changes in foreign currency exchange rates of $0.2, 0.1%.
We paid dividends totaling $11.8 and $11.7 for the years ended December 30, 2023 and December 31, 2022, respectively.
We have historically declared regular quarterly dividends to shareholders of $0.09 per share. We paid dividends totaling $11.9 and $11.8 for the years ended December 28, 2024 and December 30, 2023, respectively.
Daman is a leading designer and manufacturer of standard and custom precision hydraulic manifolds and other fluid conveyance products for its customer base, predominantly in North America. The acquisition of Daman 36 expands the Company's technologies and markets and provides an opportunity to produce integrated package offerings with multiple Helios brands.
The acquisition of Daman expands the Company's technologies and markets and provides an opportunity to produce integrated package offerings with multiple Helios brands. In January 2023, we completed the acquisition of Schultes Precision Manufacturing, Inc.
Net income and earnings per share (“EPS”) were unfavorably impacted by foreign currency transaction losses of $0.6 in 2023 compared to gains of $0.9 in 2022.
Net income and earnings per share (“EPS”) were favorably impacted by a contingent gain of $3.8 related to the insurance reimbursement for business interruption losses incurred in the third quarter of 2023 at a manufacturing location in Italy. They were unfavorably impacted by foreign currency transaction losses of $1.3 in 2024 compared to a loss of $0.6 in 2023.
The CECE (Committee for European Construction Equipment) business climate index bounced back slightly in November after seven consecutive months of decline. They reported the favorability was driven by both current business evaluation and future expectations.
The Committee for European Construction Equipment business climate index bounced back slightly in later part of 2024 after consecutive months of decline. They reported that sales in the European market are still declining but the momentum decelerates.
The restructuring plans are expected to improve the global cost structure of the business. Operating income as a percentage of sales decreased 5.9 percentage points to 9.6% in 2023 compared with the prior year period.
Operating income as a percentage of sales increased 60 basis points to 10.2% in 2024 compared with the prior year period.
The increase is driven primarily by lower volume of sales, temporary build-up due to constrained supply chain environment, and buildup of inventory to support the creation of the Centers of Excellence. Days of inventory on hand increased to 130 days for the 2023 year, compared with 111 days during the 2022 year.
The decrease is driven primarily by the execution of management's inventory reduction efforts and improved inventory management in response to lower sales. Days of inventory on hand increased to 134 days for the 2024 year, compared with 130 days during the 2023 year.
Electronics The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports production of semiconductors and other electronics components met the lowest level in the first quarter of 2023 when compared to the prior two years; however, this improved notably and consistently throughout 2023, to reach the record high in the fourth quarter of 2023 when compared to the prior two years.
Electronics The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports production of semiconductors and other electronics components declined through 2024 with an uptick at the end of December 2024.
We experienced organic net sales decline of $32.5, 5.9%, and acquisition sales totaled $47.0. Organic sales declined in 2023 due to decreased demand in all regions, as well as in several of our end markets including the mobile and industrial equipment markets.
We experienced organic net sales decline of $30.5, 5.4%, as acquisition sales only impacted results by $1.9. Net Sales declined in 2024 due to decreased demand in the Americas and EMEA regions and significant declines in the agricultural, mobile and industrial end markets. Sales to APAC grew from prior year, primarily driven by sales to China and Australia.
In Europe, the CEMA Business Barometer reported in January 2024 that the general business climate index for the European agricultural machinery industry has continued its downward slide in the area of deep recession territory. CEMA further reported that the direct customers of the manufacturers, the dealers, are not able to pass on their numerous orders to the end customers.
In Europe, the CEMA Business Barometer reported in January 2025 that the general business climate index for the European agricultural machinery industry has risen further but continues in negative territory.
Days sales outstanding for the 2023 year decreased slightly to 50 days, from 52 days during 2022, as our collection patterns remain consistent with the prior year. Investing activities Cash used in investing activities totaled $153.9 in 2023, an increase of $63.1, 69.5%, compared with the prior year. The increase in acquisition-related payments accounted for $46.9 of the fluctuation.
Changes in accounts receivable, net of acquisitions, increased cash by $7.3 and $16.3 in 2024 and 2023, respectively. Days sales outstanding for the 2024 year decreased slightly to 47 days from 50 days during 2023, as our collection patterns remain consistent with the prior year.
We were able to mitigate some of the impact with our procurement efforts, production schedule adjustments and product redesigns. The availability of components improved as 2023 progressed. Demand in the health and wellness market was favorably impacted by the pandemic in 2020 and 2021, as consumers invested in leisure products and activities.
We were able to mitigate some of the impact with our procurement efforts, production schedule adjustments and product redesigns. The availability of components improved through 2023 and did not have a significant impact to results in 2024. Industry Conditions The capital goods industries in general, and the Hydraulics and Electronics segments specifically, are subject to economic cycles.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2022, we had $261.3 million in borrowings outstanding under the revolving credit facility, $175.0 million in borrowings outstanding under the term loan and an aggregate notional amount of $245.0 million on our interest rate swap contracts.
Biggest changeThis analysis excludes any effects from interest rate swap contracts as such contracts were terminated on June 25, 2024. As of December 30, 2023, we had $199.8 million in borrowings outstanding under the revolving credit facility, $310.0 million in borrowings outstanding under the term loan and an aggregate notional amount of $220.0 million on our interest rate swap contracts.
This sensitivity analysis incorporates the effects of our interest rate swap contracts. Foreign Currency Risk Our exposure to foreign currency exchange fluctuations relate primarily to our locations in Italy, Australia, Germany, South Korea, the United Kingdom, China and India.
This sensitivity analysis incorporates the effects of our interest rate swap contracts. Foreign Currency Risk Our exposure to foreign currency exchange fluctuations relate primarily, but not limited to, our locations in Italy, Australia, Germany, South Korea, the United Kingdom, China and India.
Similarly, a 10% decline in foreign currency exchange rates relative to the U.S. dollar on our December 30, 2023 and December 31, 2022 financial position would have resulted in a $57.5 million and $54.4 million reduction to equity (accumulated other comprehensive loss), respectively, as a result of non-U.S. dollar denominated assets and liabilities being translated into U.S. dollars, our reporting currency. 48
Similarly, a 10% decline in foreign currency exchange rates relative to the U.S. dollar on our December 28, 2024 and December 30, 2023 financial position would have resulted in a $60.0 million and $57.5 million reduction to equity (accumulated other comprehensive loss), respectively, as a result of non-U.S. dollar denominated assets and liabilities being translated into U.S. dollars, our reporting currency. 48
Based on our level of variable rate debt outstanding during the year ended December 31, 2022, a one percentage point increase in the reference average interest rate, which generally equaled 3.5%, would have resulted in an approximate $1.7 million increase in financing costs for the year ended December 31, 2022.
Based on our level of variable rate debt outstanding during the year ended December 28, 2024, a one percentage point increase in the reference average interest rate, which generally equaled 6.1%, would have resulted in an approximate $4.0 million increase in financing costs for the year ended December 28, 2024.
The result of a 10% decrease in the 2022 average exchange rates of the currencies in which our transactions are denominated would have resulted in a decrease in annual sales of $32.6 million for the year ended December 31, 2022.
The result of a 10% decrease in the 2024 average exchange rates of the currencies in which our transactions are denominated would have resulted in a decrease in annual sales of $29.5 million for the year ended December 28, 2024.
These contracts were not designated as hedging instruments for accounting purposes. A discussion of our accounting policies for derivative financial instruments is included within Notes 2 and 9 of the Notes to the Consolidated Financial Statements included in this Annual Report.
These contracts were not designated as hedging instruments for accounting purposes. A discussion of our accounting policies for derivative financial instruments is included within Notes 2 and 9 of the Notes to the Consolidated Financial Statements included in this Annual Report. These forward foreign exchange contracts ended in 2023 and the Company did not enter into new contracts in 2024.
We pay interest on outstanding borrowings at interest rates that fluctuate based upon changes in various base rates. As of December 30, 2023, we had $199.8 million in borrowings outstanding under the revolving credit facility, $310.0 million in borrowings outstanding under the term loans and an aggregate notional amount of $220.0 million on our interest rate swap contracts.
We pay interest on outstanding borrowings at interest rates that fluctuate based upon changes in various base rates. As of December 28, 2024, we had $150.3 million in borrowings outstanding under the revolving credit facility and $300.3 million in borrowings outstanding under the term loans.

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