HELIOS TECHNOLOGIES INC
For the period ended Jun 29, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 29, 2024 · Filed Aug 6, 2024
HLIO$47.44-21.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-30; filed 2024-05-09.
0000950170-24-056684
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-29; filed 2024-08-06.
0000950170-24-091785
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 92 current paragraphs.
40 unchanged; 28 reworded; 22 added; 6 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Second quarter consolidated net sales declined $7.7, 3.4%, below the prior-year second quarter. We experienced organic net sales decline of $8.9, 3.9%, which was offset partially by sales from acquisitions totaling $1.2. Changes in foreign currency exchange rates had an unfavorable impact to our second quarter organic sales of $0.9, 0.4%.
Current report
Consolidated net sales for the year-to-date period were lower by $8.9, 2.0%. Organic sales declined $13.9, 3.2%, which was offset partially by sales from acquisitions totaling $5.0. Changes in foreign currency exchange rates had an unfavorable impact to our year-to-date sales of $1.3, 0.3%.
Current report
Sales were negatively impacted by reduced demand for products in our agriculture, mobile, industrial and recreational end markets, offset partially by an increase to the health and wellness end market. Sales were up in the APAC region and down in the Americas and EMEA regions during the second quarter and year-to-date periods compared to the prior year.
Current report
Year-to-date gross profit decreased $9.0, 6.1%, from lower volume, higher labor costs and unfavorable foreign currency impacts of $0.3, partially offset by contributions from acquisitions. Gross margin declined 140 basis points, primarily due to lower fixed costs leverage on lower volume, a higher mix of revenue in lower margin products and higher labor costs, partially offset by improvements in pricing and material costs.
Current report
Second quarter operating income as a percentage of sales declined 120 basis points to 11.8%. The decline is due to the gross margin level changes as SEA expenses as a percentage of revenue were relatively flat compared with the prior year period.
Current report
Year-to-date operating income as a percentage of sales declined 160 bps to 10.7%. The decline is due to the gross margin decrease as well as a slight increase in SEA labor costs and incremental costs from acquisitions, which were partially offset by a decrease in travel and marketing costs.
Current report
Net interest expense increased by $0.7 to $8.5 in the second quarter of 2024 due to the June 2024 debt refinancing activities that included the write-off of $0.5 unamortized debt issuance costs in connection to individual banks exiting the loan syndicate and higher interest rates in the current period offset with a lower outstanding debt balance. Average net debt decreased to $470.9 during the second quarter of 2024 compared with $500.6 during the second quarter of 2023, The reduction in average net debt is due to the paying down of debt incurred from the prior year acquisitions. Year-to-date net interest expense totaled $16.7, an increase of $2.7. Average net debt for the year-to-date period increased to $475.0 compared with $457.0 during the prior-year period. The increase in the year-to-date average net debt balance is due to carrying a higher debt balance throughout the period as a result of borrowings related to the Schultes and i3 acquisitions during the first half of 2023.
Current report
Second quarter net sales for the Hydraulics segment decreased by $6.7, 4.4%, compared with the prior year second quarter. The decline in sales in the second quarter was primarily driven by softness in the agriculture end market. While industrial and mobile end markets were slightly down compared to the prior year-period. Changes in foreign currency exchange rates had an unfavorable impact of $0.8, 0.5%.
Current report
EMEA - excluding unfavorable changes in foreign currency rates of $0.4, sales declined $8.1, 15.8%, primarily driven by softness in the Agricultural end market, with generally all end markets in the region down year over year.
Current report
Regional sales performance in the year-to-date period compared to the prior-year period was driven by:
Current report
Americas- sales decreased $5.1, 4.3% excluding $1.9 of acquisition related sales. The decline was driven by reductions in the agriculture, mobile and industrial end markets.
Current report
EMEA - excluding favorable changes in foreign currency rates of $0.1, sales were down $12.5, 12.4%, primarily driven by softness in the Agricultural end market, with generally all end markets in the region down year over year.
Current report
APAC - excluding unfavorable changes in foreign currency rates of $1.2, sales increased $4.8, 5.9%, from stronger demand in China, Australia and India.
Current report
Operating income as a percentage of sales declined 130 basis points to 16.4% in the second quarter of 2024 as the decline in gross margin was partially offset by lower SEA expenses. SEA expenses went down by $1.7, mainly due to lower labor and benefit costs.
Current report
Year-to-date operating income as a percentage of sales decreased 240 basis points to 15.9%. Primarily due to the gross margin decline and an increase in SEA expense as a percent of sales of 30 bps. SEA expenses went down by $0.8, due to lower labor and benefit costs with other savings in marketing and travel costs. However, SEA expenses as a percent of sales increased 30 bps on lower sales.
Current report
Year-to-date net sales for the Electronics segment increased $3.1, 2.2%. Organic sales were flat excluding incremental acquisition sales of $3.1. Strength in the health and wellness end market was offset by declines in the industrial, recreational and mobile end markets. Changes in foreign currency exchange rates had an unfavorable impact of $0.2, 0.1%.
Current report
While health and wellness saw strong demand in the Americas, market softening in the other end markets drove the overall decline in the second quarter and year to date periods.
Current report
Operating income as a percentage of sales declined 210 basis points to 13.9% in the second quarter of 2024 compared to the prior year period due to the slight decline in gross margin and higher SEA expenses. SEA expenses increased $1.3 in part due to additional costs associated with the 2023 acquisition.
Current report
Year-to-date operating income as a percentage of sales decreased 180 basis points to 12.1% compared to the prior year period. This is primarily due to SEA expenses increasing by $3.2, in part due to additional costs associated with the 2023 acquisition.
Current report
In connection with the debt refinancing in June 2024, while the term loan credit facility aggregate principle amount of $300.0 remained unchanged, the cash flow activity reflects repayments and borrowings on the non-revolving debt that were direct results of the refinancing. The company also incurred $3.1 of debt issuance costs in connection with the debt refinancing. These costs are captured within the Other Financing Activities caption in the Statement of Cash Flows. Additionally in June 2024, the Company received $7.1 in proceeds in connection with the termination of the interest rate swaps.
Current report
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. The amendment extended the debt maturity for five years and increased the Company’s revolving credit facility (the “Revolving Credit Facility) to $500.0, with the aggregate principle amount of the term loan credit facility (the “Term Loan Facility”) remaining at $300.0. The amendment also revised the accordion feature to permit an increase of up to an additional $400.0. Borrowings under the line of credit bear interest at defined rates plus an applicable margin based on the Company’s leverage ratio. Scheduled principal payments under the Term Loan Facility are payable in quarterly installments beginning on September 28, 2024 and continuing on the last day of each following fiscal quarter, beginning at $3.75 before increasing to $5.6 in June 2026 and $7.5 in June 2028. All remaining principal and unpaid accrued interest are due on the Term Loan Facility maturity date, which is June 25, 2029.
Current report
In May 2024, $0.5 was paid to the former owners of Balboa in connection with the last payment due on the contingent consideration liability.
Removed paragraphs (6)
Previous report
First quarter consolidated net sales declined $1.2, 0.6% over the prior-year first quarter. We experienced organic net sales decline of $5.1, 2.4%, which was offset partially by sales from acquisitions totaling $3.9. Sales were impacted by reduced demand for products in our mobile, industrial and agricultural end markets, offset partially by an increase to the health and wellness and off-road vehicle end markets. Consolidated net sales were slightly up in the Americas and APAC regions and down in the EMEA region during the first quarter. Changes in foreign currency exchange rates had an unfavorable impact to our first quarter organic sales of $0.3, 0.1%.
Previous report
First quarter operating income as a percentage of sales declined 200 basis points to 9.6%. In addition to the gross margin level changes, SEA expenses increased by $0.9 mainly due to higher wages and the 2023 acquisitions.
Previous report
Net interest expense increased by $2.0 to $8.2 in the first quarter of 2024. Average net debt increased to $488.2 during the first quarter of 2024 compared with $446.0 during the first quarter of 2023, due to higher interest rates in the current period and higher debt from borrowings to fund acquisitions.
Previous report
EMEA - excluding favorable changes in foreign currency rates of $0.5, sales declined $4.4, 8.9%, primarily from softer demand within the agriculture market
Previous report
Operating income as a percentage of sales declined 370 basis points to 15.3% in the first quarter of 2024. SEA expenses went up by $0.7, mainly due to higher wages and the 2023 acquisitions.
Previous report
SEA expenses increased by $2.1, 15.6%, in the first quarter of 2024 compared to the prior year first quarter, primarily from increased wages and the 2023 acquisitions.
Reworded paragraphs (28)
Previous wording
Our previously announced restructuring activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") are substantially complete. The Hydraulic Manifold Solutions CoE, located in Mishawaka, Indiana, is now doing the manifold machining and integrated package assembly for Sun Hydraulics, Faster Inc., and Daman. The Hydraulic Valve and Coupling Solutions CoE, located in Sarasota, Florida, is manufacturing cartridge valve technology (CVT) and quick release couplings (QRC). There still remain some integration and optimization activities we expect to be completed in 2024.
Current wording
Our previously announced restructuring activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") are substantially complete. The Hydraulic Manifold Solutions CoE, located in Mishawaka, Indiana, is now doing the manifold machining and integrated package assembly for Sun Hydraulics, Faster Inc., and Daman. The Hydraulic Valve and Coupling Solutions CoE, located in Sarasota, Florida, is manufacturing cartridge valve technology (CVT) and quick release couplings (QRC). There still remain some integration and optimization activities we expect to be completed in 2024. We also continue to add capabilities and activities to our recently expanded Tijuana, Mexico facility to support our Electronics segment. Initial efforts have focused on circuit board assembly and wire harness production.
Previous wording
We have also initiated some restructuring activities to better optimize our European regional operations. We are transitioning some manufacturing of manifolds and integrated package assembly to our Roncolo, Italy location. To create capacity in Roncolo, we are moving some turning and lathing operations from Roncolo to our Rivolta, Italy location. These activities include transferring equipment and operations between facilities. We expect the transition to largely take place throughout 2024.
Current wording
We have also initiated some restructuring activities to better optimize our European regional operations. We are transitioning some manufacturing of manifolds and integrated package assembly to our Roncolo, Italy location. To create capacity in Roncolo, we are moving some turning and lathing operations from Roncolo to our Rivolta, Italy location. These activities include transferring equipment and operations between facilities. The activities are proceeding as planned and we expect them to continue throughout 2024 and into 2025.
Previous wording
We expect to see challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, political uncertainty, the ongoing Russia-Ukraine war and the Israeli-Hamas war. We do not have operations in these regions at this time and those conflicts have not and are not expected to have a material impact on our financial condition or results. In addition, we are continuously monitoring these economic and geopolitical conditions and remain focused on pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.
Current wording
We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, political uncertainty, the ongoing Russia-Ukraine war and the Israeli-Hamas war. We do not have operations in these conflict regions at this time and those conflicts have not and are not expected to have a material impact on our financial condition or results. In addition, we are continuously monitoring these economic and geopolitical conditions and remain focused on liquidity management, pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.
Previous wording
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 8% during the first three months of 2024 compared to the first three months of the prior year while the U.S. index of orders of hydraulic products declined 9% during the same period. Monthly shipments have been down year over year each month back to September 2023, with March declining 16%. Looking at the first three months of 2024 compared to the prior three months, shipments and orders are up 2% and 1% respectively. The three month average order volume has trended up through the first three months of 2024 compared to the second half of 2023. In Europe, the CEMA Business Barometer reported in March 2024 that the general business climate index for the European agricultural machinery industry continued to deteriorate. The CEMA Barometer report also indicated an expectation for turnover to decline over the next six months with the full year 2024 to be down in the single-digit range. The CECE (Committee for European Construction Equipment) recently reported that the business climate index related to Europe took a step back in March with the view of current business environment and future expectations being negative on average. The CECE reported that the rate of decline of incoming orders in Europe is getting smaller but that declines are expected to continue through 2024.
Current wording
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 9% during the first six months of 2024 compared to the first six months of the prior year while the U.S. index of orders of hydraulic products declined 8% during the same period. Monthly shipments have been down year over year each month back to September 2023, with June declining almost 20%. The monthly average order volume has trended down each month in the first half of 2024. In Europe, the CEMA Business Barometer reported in June 2024 that the general business climate index for the European agricultural machinery industry continues to show signs of deterioration. The CEMA Barometer report also indicated an expectation that the business environment has not yet bottomed out. The CECE (Committee for European Construction Equipment) recently reported that the business climate index related to Europe remains in a state of crisis.
Previous wording
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports first quarter 2024 sales of semiconductors and other electronics components declined slightly from Q4 2023 but remain higher than sales levels seen in recent years in comparable periods. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were down 24% in March, 12% in February and 4% in January compared with the same months last year. PCB bookings in the first 3 months of 2024 were up compared to the prior year, with March being down only 2% while February was up 26%. The quarterly increase in order bookings was seen as a reversal of a downward trend and a positive sign for demand. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments were down 4% in March, but up 26% in February and 3% in January compared to the prior year. EMS bookings trended up in the quarter as well with February and March up 5% and 26%, respectively while January was down 12% year over year.
Current wording
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports second quarter 2024 sales of semiconductors and other electronics components increased from the first quarter 2024 and remain higher than sales levels seen in recent years in comparable periods. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were up 1.0% in June, down 7% in May and up 9% in April compared with the same months last year. After a strong increase in February compared the prior year, PCB bookings in the subsequent months of 2024 have been flat to down compared to the prior year, with June being down 3% and May being down 6%. IPC also indicated that the sentiment among electronics manufacturers has slipped in recent months to the lowest level in a year. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments were down 2% in June, up 5% in May and down 2% in April compared to the prior year. EMS bookings were down 4% in June after being up 2% in May and 34% in April year over year.
Previous wording
2024 First Quarter Results and Comparison of the Three Months Ended March 30, 2024, and April 1, 2023
Current wording
2024 Second Quarter Results and Comparison of the Three Months Ended June 29, 2024, and July 1, 2023
Previous wording
The following is a discussion of our first quarter of 2024 results of operations and liquidity and capital resources; comparisons are with the corresponding reporting period of 2023, unless otherwise noted.
Current wording
The following is a discussion of our second quarter of 2024 results of operations and liquidity and capital resources; comparisons are with the corresponding reporting period of 2023, unless otherwise noted.
Previous wording
Supply chain and pricing did not have a material impact on our sales in the first quarter compared to the prior year period. Although inflation persists, we did see a more stable pricing environment this quarter compared to the prior year period.
Current wording
Supply chain and pricing did not have a material impact on our consolidated sales in the second quarter and year-to-date periods compared to the prior year periods. Although inflation persists, we did see a more stable pricing environment compared with the prior year period.
Previous wording
First quarter gross profit decreased $3.8, 5.4%, over the prior year first quarter driven by lower volume, higher material and labor costs and unfavorable foreign currency impacts of $0.3. Gross margin declined by 160 basis points, impacted by lower fixed costs leverage on lower volume, a higher mix of revenue in lower margin products, and other cost impacts noted above.
Current wording
Second quarter gross profit decreased $5.2, 6.9%, below the prior year second quarter driven by lower volume, higher labor costs and unfavorable foreign currency impacts of $0.2, partially offset by contributions from acquisitions. Gross margin declined by 120 basis points, impacted by lower fixed costs leverage on lower volume, a higher mix of revenue in lower margin products, higher labor and foreign currency impacts, partially offset by improvements in pricing and material costs.
Previous wording
The provision for income taxes for the first quarter of 2024 was 23.2% of pretax income compared to 22.8% for the prior-year first quarter. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.
Current wording
The provision for income taxes for the second quarter of 2024 was 23.0% of pretax income compared to 22.9% for the prior-year second quarter. The year-to-date provision was 23.1% and 23.1% of pretax income for 2024 and 2023, respectively. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.
Previous wording
First quarter net sales for the Hydraulics segment decreased by $5.3, 3.6%, compared with the prior year first quarter. We experienced organic net sales decline of $7.2, 4.9%, from the prior year, which was partially offset by acquisition sales totaling $1.9. Sales in the first quarter to the mobile, industrial and agriculture end markets were down compared to the prior year-period. These declines were partially offset by higher sales from the smaller niche markets. Changes in foreign currency exchange rates had an unfavorable impact of $0.2, 0.1%.
Current wording
Year-to-date net sales for the Hydraulics segment decreased by $12.0, 4.0%. We experienced organic net sales decline of $13.9, 4.6%, from the prior year, which was partially offset by acquisition sales totaling $1.9. Sales to the agriculture, industrial and mobile end markets were down compared to the prior year-period. Changes in foreign currency exchange rates had an unfavorable impact of $1.1, 0.4%.
Previous wording
Regional sales performance in the first quarter compared to the prior year quarter was driven by:
Current wording
Regional sales performance in the second quarter compared to the prior year quarter was driven by:
Previous wording
Americas - excluding the impact of acquisitions, sales declined $4.0, 6.9%, primarily from softer demand in the region
Current wording
Americas - sales declined $1.1, 1.8%, primarily from generally softer demand in the region.
Previous wording
APAC - excluding unfavorable changes in foreign currency rates of $0.7, sales increased $1.4, 3.5%, primarily from increased demand in China
Current wording
APAC - excluding unfavorable changes in foreign currency rates of $0.4, sales increased $3.3, 8.1%, with increased demand in China, Australia and India.
Previous wording
First quarter gross profit declined $5.5, 11.0%, from lower volume while gross margin declined by 260 basis points, primarily from fixed cost absorption on lower volume and higher labor costs. Changes in foreign currency exchange rates had an unfavorable impact of $0.1.
Current wording
Second quarter gross profit declined $4.8, 9.7%, from lower volume while gross margin declined by 180 basis points, primarily from fixed cost absorption on lower volume and higher labor costs. Changes in foreign currency exchange rates had an unfavorable impact of $0.1.
Previous wording
As previously noted 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, which resulted in the shut-down of operations for a period of time and disruption in production as recovery efforts ensued. There are insurance claims open related to these incidents and the Company is working closely with the insurance carrier to assess the claims and evaluate potential recoveries. Losses from damage to the building, equipment and supplies are expected to be fully offset by probable insurance recoveries, which represents anticipated insurance proceeds not in excess of the associated losses, for which receipt has been deemed probable. Any recoveries in excess of losses incurred will be recognized when all contingencies related to the claim have been resolved. Management is hopeful these claims will be resolved in 2024.
Current wording
As previously noted 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, which resulted in the shut-down of operations for a period of time and disruption in production as recovery efforts ensued. There are insurance claims open related to these incidents and the Company is working closely with the insurance carrier to assess the claims and evaluate potential recoveries. Losses from damage to the building, equipment and supplies are expected to be fully offset by probable insurance recoveries, which represents anticipated insurance proceeds not in excess of the associated losses, for which receipt has been deemed probable. Any recoveries in excess of losses incurred will be recognized when all contingencies related to the claim have been resolved. Management is working to resolve these claims in 2024.
Previous wording
First quarter net sales for the Electronics segment increased $4.1, 6.3%, compared with the prior year first quarter. We experienced organic net sales growth of $2.1, 3.2%, with incremental acquisition sales of $2.0. Compared to the prior year period, first quarter sales in the health and wellness and off-road vehicle markets increased, while sales to the industrial and marine end markets decreased. Changes in foreign currency exchange rates had an unfavorable impact of $0.1, 0.2%.
Current wording
Second quarter net sales for the Electronics segment decreased $1.0, 1.3%, compared with the prior year second quarter. We experienced organic net sales decline of $2.2, 2.9%, with incremental acquisition sales of $1.2. Compared to the prior year period, second quarter sales in the health and wellness increased, while sales to the recreational, mobile and industrial end markets decreased. Changes in foreign currency exchange rates had an unfavorable impact of $0.1, 0.1%.
Previous wording
First quarter gross profit increased $1.7, 8.1% compared to the prior year first quarter, primarily due to the higher sales volume. Gross margin increased by 50 basis points to 32.6% as the increased leverage of our fixed cost base on the higher sales and lower freight costs more than offset the impact of a higher mix of revenue in products with a lower margin profile.
Current wording
Second quarter gross profit decreased $0.4, 1.5% compared to the prior year second quarter, primarily due to the lower sales volume. Gross margin decreased by 10 basis points to 34.6% as lower material costs partially offset the impact of a higher mix of revenue in products with a lower margin profile and slightly lower leverage of fixed costs.
Previous wording
Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the first quarter of 2024, these costs totaled $8.6 for: amortization of acquisition-related intangible assets of $7.9, $0.4 related to our acquisition and integration activities and $0.3 for officer transition costs. Compared to the first quarter of 2023, these costs decreased by $2.1, primarily from the net impact of other acquisition and integration activities and the roll off of certain officer transition costs.
Current wording
Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the second quarter of 2024, these costs totaled $8.2 for: amortization of acquisition-related intangible assets of $7.9, $0.1 related to our acquisition and integration activities and $0.2 for officer transition costs. Compared to the first quarter of 2023, these costs decreased by $1.3, primarily from the net impact of other acquisition and integration activities and the roll off of certain officer transition costs. Year-to-date, corporate and other costs totaled $16.7 for: amortization of acquisition related intangible assets of $15.7, $0.5 related to our acquisition and integration activities and $0.5 for officer transition costs. Compared to the 2023 year-to-date period that included amortization of acquisition related intangible assets of $16.4, $3.0 related to our acquisition and integration activities and $0.8 for officer transition costs.
Previous wording
Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first three months of 2024, cash provided by operating activities totaled $17.8. At the end of the first quarter, we had $37.3 of available cash and cash equivalents on hand and $196.9 of available credit on our revolving credit facilities. We also have a $300.0 accordion feature available on our credit facility, subject to certain pro forma compliance requirements, intended to support potential future acquisitions.
Current wording
Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first six months of 2024, cash provided by operating activities totaled $51.6. At the end of the second quarter, we had $45.0 of available cash and cash equivalents on hand and $308.3 of available credit on our revolving credit facilities. We also have a $400.0 accordion feature available on our credit Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, intended to support potential future acquisitions.
Previous wording
Cash on hand increased $4.9 in the first quarter of 2024 to $37.3 as of March 30, 2024. Changes in exchange rates during the three months ended March 30, 2024, negatively impacted cash and cash equivalents $1.2. 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 paying down borrowings on our credit facilities.
Current wording
Cash on hand increased $12.6 in the first two quarters of 2024 to $45.0 as of June 29, 2024. Changes in exchange rates during the six months ended June 29, 2024, positively impacted cash and cash equivalents $1.0. 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 paying down borrowings on our credit facilities.
Previous wording
Year-to-date cash from operations increased by $5.5 to $17.8. 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 $3.3 in the first three quarters of 2024 compared to the same period in 2023. Changes in net operating assets and liabilities improved cash flow by $8.8, compared to the prior year period, primarily from favorable differences from the prior year in cash flows from inventories and other current assets, offset by an increase in accounts receivable and accrued expenses and other liabilities. Investments in inventory reduced cash by $0.7 and $6.5 in the first quarter of 2024 and 2023, respectively. Days of inventory on hand increased to 135 days as of March 30, 2024, compared with 126 days as of April 1, 2023. Changes in accounts receivable reduced cash by $13.1 and $9.5 in the first quarter of 2024 and 2023, respectively. Days sales outstanding decreased slightly to 54 days as of March 30, 2024, compared with 60 days as of April 1, 2023, as a result of initiatives to improve our collection patterns.
Current wording
Year-to-date cash from operations increased by $13.2 to $51.6. 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 $3.4 in the first two quarters of 2024 compared to the same period in 2023. Changes in net operating assets and liabilities improved cash flow by $16.6 in the first two quarters of the period, compared to the prior year period, primarily from favorable differences from the prior year in cash flows from inventories and other current assets, offset by an increase in accounts receivable and accrued expenses and other liabilities. Investments in inventory increased cash by $6.3 and reduced cash by and $9.6 in the first two quarters of 2024 and 2023, respectively. Days of inventory on hand increased to 128 days as of June 29, 2024, compared with 122 days as of July 1, 2023. Changes in accounts receivable reduced cash by $19.5 and $8.5 in the first two quarters of 2024 and 2023, respectively. Days sales outstanding decreased slightly to 55 days as of June 29, 2024, compared with 56 days as of July 1, 2023, as a result of initiatives to improve our collection patterns.
Previous wording
Cash used in investing activities totaled $6.3 in the first quarter of 2024, compared to $94.6 in the first quarter of the prior year. The large difference is a result of $84.7 cash paid, net of cash acquired, for acquisitions in the first quarter of 2023.
Current wording
Cash used in investing activities totaled $15.4 in the first two quarters of 2024, compared to $135.8 in the first two quarters of the prior year. The large difference is a result of $114.8 cash paid, net of cash acquired, for acquisitions in the first two quarters of 2023.
Previous wording
Capital expenditures totaled $5.5, 2.6%, of sales for the first quarter of 2024, a decrease of $3.6 over the prior year comparable period. 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 or replacing existing machine capabilities.
Current wording
Capital expenditures totaled $13.6, 3.1%, of sales for the first two quarters of 2024, a decrease of $6.0 over the prior year comparable period. 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 or replacing existing machine capabilities.
Previous wording
Net cash used in financing activities totaled $5.4 during the first quarter of 2024, compared with cash provided of $73.8 in the prior year period. In the first quarter of 2024, repayments, net of borrowings, totaled $0.7. Cash paid for acquisitions in first quarter of 2023 was primarily financed with borrowings on our credit facility; borrowings, net of repayments, totaled $78.4.
Current wording
Net cash used in financing activities totaled $22.6 during the first two quarters of 2024, compared with cash provided of $90.1 in the prior year period. In the first two quarters of 2024, repayments, net of borrowings, totaled $18.2. Cash paid for acquisitions in first quarter of 2023 was primarily financed with borrowings on our credit facility; borrowings, net of repayments, totaled $101.8.
Previous wording
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. 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. As part of the Incremental Facility Amendment, we continue to have the ability to increase our revolving credit facility or incur a new term loan up to an additional borrowing limit of $300.0.
Current wording
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. 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.
Previous wording
During the first quarter of 2024, we declared a quarterly cash dividend of $0.09 per share payable on April 19, 2024, to shareholders of record as of April 4, 2024. The declaration and payment of future dividends is subject to the sole discretion of the board of directors, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the board of directors.
Current wording
During the second quarter of 2024, we declared a quarterly cash dividend of $0.09 per share payable on July 19, 2024, to shareholders of record as of July 5, 2024. The declaration and payment of future dividends is subject to the sole discretion of the board of directors, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the board of directors.
Previous wording
We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any changes made during the first three months of 2024, are disclosed in Note 2 to the Consolidated, Unaudited Financial Statements.
Current wording
We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any changes made during the first six months of 2024, are disclosed in Note 2 to the Consolidated, Unaudited Financial Statements.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Year-to-date gross profit declined $10.1, 10.1%, from lower volume while gross margin declined by 210 basis points, primarily from fixed cost absorption on lower volume and higher labor costs. Changes in foreign currency exchange rates had an unfavorable impact of $0.2.
Current report — wording carried from elsewhere
Year-to-date gross profit increased $1.1, 2.3%, primarily due to the higher sales volume. Gross margin improved over the same period by 10 basis points to 33.6% as lower material costs offset the impact of a higher mix of revenue in products with a lower margin profile.