Dear Fellow Shareholders;

I continue to be very excited about the future of Helios! We are delivering on our promises, driving outsized growth through innovation and diversification, and executing our plan to create greater value for our customers, employees, communities, and shareholders.

In 2021 we had accelerated our growth targets to achieve $1 billion in sales by 2023, two years earlier than planned, driven by strong organic growth complemented by acquisitions. We are also driving profitability with an expectation to achieve approximately 25% adjusted EBITDA margin with a cash earnings compound annual growth rate of 22% or greater.

In fact, we reported excellent 2021 results, which advanced us measurably toward these goals. We demonstrated throughout the year that by implementing our Helios Business System, results can be realized with innovation, determination, resilience, and flexibility. Our organic growth of 27% was a testament to our efforts.

I would like to congratulate the entire Helios family for putting our goals within our reach despite the volatile macro-economic environment.

Solid Execution Delivers Outsized Performance

Strong execution resulted in better-than-expected financial performance. In 2021 we delivered:

• Sales of $869 million, up 66% from $523 million in 2020
• GAAP net income of $105 million, up 637% from $14.2 million in 2020
• Diluted GAAP EPS of $3.22, up 632% from $0.44 in 2020
• Diluted Non-GAAP cash EPS of $4.25, up 90% from $2.24 in 2020
• Paid 100th consecutive quarterly dividend – 25 years of uninterrupted return of capital to shareholders even while investing in growth

It is important to note that we have great financial flexibility and can continue investing in organic growth as well as advancing our acquisition strategy. Our pro-forma net debt to adjusted EBITDA ratio was 1.89x¹ below our target of 2.0x at year end and we had over $187 million in liquidity to fund growth.

In fact, during 2021, we generated $113 million in operating cash flow even as we invested in inventory to address the significant material shortages the industry has been experiencing. These investments have helped us maintain top-tier industry lead times and are contributing to our growing market share.

Leveraging Hydraulics and Electronics Leadership

To affect our plan, we clarified our purpose and mission, defined our strategy and supporting tactics, and then put the right structure in place to execute effectively. As a result, during the year we advanced several colleagues to more challenging roles. We also created a structure that increased speed to market with new innovations, simplified our relationships with our customers and enabled sharing of valuable resources.

We expanded our electronic controls technology and enabled further diversification of end markets with the integration of our acquisition of Balboa Water Group that we closed at the end of 2020. The BJN Technologies acquisition in January formed the foundation for the Helios Center of Engineering Excellence (HCEE), which centralized our technology advancements and new product development, enabling us to better leverage existing talents across our businesses.

The NEM acquisition in July enhanced our electro-hydraulic product offering, further developed our presence in OEM markets, provided geographic expansion and added scale to address new markets.

In October, we acquired the assets of China’s Shenzhen Joyonway. This acquisition has strengthened our supply chain through broader geographic reach, increased our manufacturing capacity and provides the ability to better service our customers in keeping with our “in the region, for the region” strategy.

We continued our migration from a holding company to an operating company through 2021. We are integrating several functional areas that will enhance the customer experience lifecycle. We are simplifying the Helios experience by migrating toward a globally integrated sales team, innovation team, and manufacturing team. We believe this augmented approach will reduce customer contact points and create internal efficiencies that will ultimately improve customer satisfaction, increase revenue, drive higher margins, and make Helios that much tougher to follow.

Entering 2022 with Positive Momentum

Over the next few years, we believe we can build on the impressive results of the last two years to achieve our strategic goals by strictly adhering to the four pillars of our augmented strategy. We will (i) Protect the business, (ii) Think and act globally, (iii) Diversify our markets and sources of revenue, and (iv) Develop our talent.

Our strategy for organic growth hinges on the continual evaluation of what we sell, together with where and how we sell it. This drives our manufacturing strategy, our innovation and product development, as well as our customer relationships.

In Hydraulics, we see growth from potential new product innovations in diversified applications and machine automation, in addition to new end market opportunities in recreation, pharmaceutical, thermo-dynamics, and health and wellness. In fact, in 2021 the combined CVT family expertise drove product development teams to exceed expectations by launching 22 new products. This is the greatest number of new product releases in the division’s recent history and will be a flywheel for organic growth in the coming years.