HELIOS TECHNOLOGIES INC

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. 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.

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 and assembling cartridge valve technology and quick release couplings. 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

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.

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 13% during the first nine months of 2024 compared to the first nine months of the prior year while the U.S. index of orders of hydraulic products declined 14% during the same period. Monthly shipments and orders continue to trend downward, declining about 18% and 19%, respectively, for the three months ended September 28, 2024 over the year ago period, and 8% and 3%, respectively, compared to the previous quarter. In Europe, the CEMA Business Barometer reported in September 2024 that the general business climate index for the European agricultural machinery industry has improved slightly but business continues to be at a very low level compared to prior years. The CEMA Barometer report also indicated that incoming orders both within and outside of Europe remain below prior year levels and there are no European markets with positive confidence levels. The CECE (Committee for European Construction Equipment) September report noted that the sales and order trends in Europe continue to be depressed and that a near term pessimistic outlook remains. The general economic climate was the number one reported factor limiting sales.

Previous 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.

Current wording

The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports third quarter 2024 output of semiconductors and other electronics components increased from the second quarter 2024, the second sequential quarterly increase, 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 down 24.1% in September, up 35% in August and down 21% in July compared with the same months last year. PCB bookings in 2024 have been flat to down compared to the prior year in seven of the nine months, with September being down 4%, August being up 44% and July being down 25%. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments were up 10.3% in September, down 4% in August and up 2% in July compared to the prior year. EMS bookings were up 20% in September, up 16% in August and flat in July year over year. IPC also indicated that the electronics sector demand index fell 7.3% in September and sentiment among electronics manufacturers declined with cost concerns and demand weaknesses cited as primary reasons.

Previous wording

2024 Second Quarter Results and Comparison of the Three Months Ended June 29, 2024, and July 1, 2023

Current wording

2024 Third Quarter Results and Comparison of the Three Months Ended September 28, 2024, and September 30, 2023

Previous 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.

Current wording

The following is a discussion of our third 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

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 wording

Consolidated net sales for the year-to-date period were lower by $15.8, 2.5%. Organic sales declined $20.8, 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 $0.6, 0.1%.

Previous 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.

Current wording

Supply chain and pricing did not have a material impact on our consolidated sales in the third quarter and year-to-date periods compared to the prior year periods. Although inflation continues to run above the federal reserve target rate of 2.0%, we did see a more stable pricing environment compared with the prior year period.

Previous wording

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 wording

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 third quarter and year-to-date periods compared to the prior year.

Previous 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.

Current wording

Third quarter gross profit increased $0.8, 1.3%, above the prior year third quarter as the impact of lower volume was offset by lower material costs, reductions in variable overhead and favorable foreign currency impacts of $0.2. Gross margin increased by 150 basis points as the impact of lower fixed costs leverage on lower volume and a higher mix of revenue in lower margin products were offset by improvements in material costs and variable overhead.

Previous wording

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 wording

Year-to-date gross profit decreased $8.2, 4.0%, from lower volume, higher labor costs and unfavorable foreign currency impacts of $0.1, partially offset by contributions from acquisitions. Gross margin declined 50 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.

Previous wording

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 wording

Third quarter operating income as a percentage of sales increased 450 basis points to 11.4%. The increase is due to the gross margin level changes and lower SEA expenses as a percentage of revenue, primarily from lower payroll and benefit costs, compared with the prior year period, including a $5.5 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Previous wording

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 wording

Net interest expense increased by $0.3 to $9.0 in the third quarter of 2024. The prior year period interest expense benefited $1.8 from a recognized gain on an interest rate swap agreement. Excluding the impact of the interest rate swap agreement, net interest expense was lower by $1.5M due to carrying a lower debt balance throughout the period and lower interest rates. Average net debt decreased to $447.2 during the third quarter of 2024 compared with $510.8 during the third 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 $25.7, an increase of $3.1 year over year, due to carrying higher debt throughout the period and the write-off of $0.5 unamortized debt issuance costs as part of our debt refinancing in Q2. Average net debt for the year-to-date period increased to $464.6 compared with $455.9 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.

Previous 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.

Current wording

The provision for income taxes for the third quarter of 2024 was 14.2% of pretax income compared to 30.5% for the prior-year third quarter. The year-to-date provision was 20.3% and 23.8% 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. The change in the comparable prior-year quarter and year-to-date is primarily due to an overall increase in discrete tax benefits driven by the officer transition in July 2024.

Previous wording

The company continues to evaluate the impact of Pillar Two and application of safe harbors. The company does not expect it to have a material impact in 2024 to their effective tax rate.

Current wording

The company continues to evaluate the impact of Pillar Two and application of safe harbors. The company does not expect it to have a material impact in 2024 to its effective tax rate.

Previous wording

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 wording

Third quarter net sales for the Hydraulics segment decreased by $2.6, 2.0%, compared with the prior year third quarter. The decline in sales in the third quarter was primarily driven by softness in the agriculture end market, while industrial and mobile end markets were up compared to the prior year-period. Changes in foreign currency exchange rates had a favorable impact of $0.6, 0.5%.

Previous 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%.

Current wording

Year-to-date net sales for the Hydraulics segment decreased by $14.6, 3.4%. We experienced organic net sales decline of $16.5, 3.8%, 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 $0.5, 0.1%.

Previous wording

Regional sales performance in the second quarter compared to the prior year quarter was driven by:

Current wording

Regional sales performance in the third quarter compared to the prior year quarter was driven by:

Previous wording

Americas - sales declined $1.1, 1.8%, primarily from generally softer demand in the region.

Current wording

Americas - sales declined $3.6, 6.5%, primarily from generally softer demand in the region.

Previous wording

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 wording

EMEA - excluding favorable changes in foreign currency rates of $0.4, sales declined $2.5, 6.4%, primarily driven by softness in the agriculture end market.

Previous 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.

Current wording

APAC - excluding favorable changes in foreign currency rates of $0.2, sales increased $2.9, 7.7%, with increased demand in China, Australia and India.

Previous wording

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 wording

Americas- sales decreased $8.7, 5.0% excluding $1.9 of acquisition related sales. The decline was driven by reductions in the agriculture, mobile and industrial end markets.

Previous wording

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 wording

EMEA - excluding favorable changes in foreign currency rates of $0.5, sales were down $15.0, 10.8%, primarily driven by softness in the agriculture end market, with generally all end markets in the region down year over year.

Previous wording

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 wording

APAC - excluding unfavorable changes in foreign currency rates of $1.0, sales increased $7.7, 6.5%, from stronger demand in China, Australia and India.

Previous 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.

Current wording

Third quarter gross profit declined $0.2, 0.5%, primarily from lower volume while gross margin increased by 50 basis points, primarily from reduced overhead expenses. Changes in foreign currency exchange rates had a favorable impact of $0.2.

Previous wording

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 wording

Year-to-date gross profit declined $10.4, 7.4%, from lower volume while gross margin declined by 140 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

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 wording

Operating income as a percentage of sales increased 480 basis points to 18.7% in the third quarter of 2024 due to the gross margin improvement and lower SEA expenses. SEA expenses went down by $6.0, mainly due to lower labor and benefit costs, including a $3.7 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Previous wording

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 wording

Year-to-date operating income as a percentage of sales decreased 30 basis points to 16.7% as the gross margin decline was partially offset by lower SEA expense as a percent of sales of 110 bps. SEA expenses went down by $7.0, primarily due to lower labor and benefit costs, including the reversal of unvested stock compensation in connection with the officer transition in July 2024.

Previous 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%.

Current wording

Third quarter net sales for the Electronics segment decreased $4.3, 6.2%, compared with the prior year third quarter. There was no impact from acquisitions in the third quarter. Compared to the prior year period, third quarter sales in the health and wellness end market increased, while sales to the recreational, industrial, and mobile end markets decreased. Changes in foreign currency exchange rates had no impact.

Previous wording

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 wording

Year-to-date net sales for the Electronics segment decreased $1.2, 0.6%. Organic sales were down $4.3, 2.0%, 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 $0.1, 0.0%.

Previous wording

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 wording

While the health and wellness end market had strong demand in the Americas, market softening in other end markets drove the overall decline in the third quarter and year to date periods in the region. Health and wellness end market drove the growth in EMEA and APAC regions over the comparable periods.

Previous 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.

Current wording

Third quarter gross profit increased $1.0, 5.4% compared to the prior year third quarter, as the lower volume was offset by a decrease in material costs. Gross margin increased by 330 basis points to 30.1% 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

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.

Current wording

Year-to-date gross profit increased $2.2, 3.3%, primarily due to the contribution from acquisition revenues and lower material costs. Gross margin improved over the same period by 130 basis points to 32.6% as lower material costs offset the impact of a higher mix of revenue in products with a lower margin profile. Material costs have trended lower year-to-date compared to the prior year, due to decreased inflationary pressures.

Previous wording

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 wording

Operating income as a percentage of sales increased 430 basis points to 10.4% in the third quarter of 2024 compared to the prior year period due to the improvement in gross margin and lower SEA expenses. SEA expenses decreased $1.6 primarily due to lower labor and benefit costs, including a $1.8 reversal of unvested stock compensation in connection with the officer transition in July 2024.

Previous wording

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 wording

Year-to-date operating income as a percentage of sales increased 30 basis points to 11.6% compared to the prior year period. This is primarily due to the gross margin improvement partially offset by SEA expenses increasing by $1.8, in part due to additional costs associated with the 2023 acquisition.

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 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.

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 third quarter of 2024, these costs totaled $8.8 for: amortization of acquisition-related intangible assets of $7.9, $0.1 related to our acquisition and integration activities and $0.8 for officer transition costs. Compared to the third quarter of 2023, these costs remained primarily flat. Year-to-date, corporate and other costs totaled $25.6 for: amortization of acquisition related intangible assets of $23.6, $0.7 related to our acquisition and integration activities and $1.3 for officer transition costs. Compared to the 2023 year-to-date period that included amortization of acquisition related intangible assets of $24.7, $3.4 related to our acquisition and integration activities and $1.0 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 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.

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 nine months of 2024, cash provided by operating activities totaled $86.4. At the end of the third quarter, we had $46.7 of available cash and cash equivalents on hand and $325.8 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 $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.

Current wording

Cash on hand increased $14.3 in the first three quarters of 2024 to $46.7 as of September 28, 2024. Changes in exchange rates during the nine months ended September 28, 2024, positively impacted cash and cash equivalents $0.6. 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 $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.

Current wording

Year-to-date cash from operations increased by $36.2 to $86.4. 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 $1.9 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 $38.1 in the first three 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 $16.2 and reduced cash by and $14.4 in the first three quarters of 2024 and 2023, respectively. Days of inventory on hand increased to 139 days as of September 28, 2024, compared with 133 days as of September 30, 2023. Changes in accounts receivable reduced cash by $5.5 and $1.5 in the first three quarters of 2024 and 2023, respectively. Days sales outstanding decreased slightly to 57 days as of September 28, 2024, compared with 59 days as of September 30, 2023, as a result of initiatives to improve our collection patterns.

Previous 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.

Current wording

Cash used in investing activities totaled $22.1 in the first three quarters of 2024, compared to $144.5 in the first three 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 three quarters of 2023.

Previous 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.

Current wording

Capital expenditures totaled $19.6, 3.1%, of sales for the first three quarters of 2024, a decrease of $5.9 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.