Helios Technologies (HLIO) Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Sales: $232 million, up 9% year-over-year; adjusted for divestitures and foreign exchange, sales increased 16%.

Gross Profit: Increased by 19% to $80 million; gross margin expanded by 280 basis points to 34.6%.

Operating Income: Rose 48% to $33 million; operating margin improved 370 basis points to 14.0%.

Adjusted EBITDA: Increased 25% to $49 million; adjusted EBITDA margin expanded to 21.2%.

Diluted EPS: $0.66, up 94% year-over-year; adjusted diluted EPS of $0.88 exceeded guidance by $0.05.

Cash Flow: Record operating cash flow of $42 million; free cash flow of $31 million.

Net Debt: Reduced to $264 million, with a leverage ratio of 1.4x, below the target range of 1.5x to 2.5x.

2Strategic Updates and Business Highlights

The CORE Strategy: The company is executing its CORE Strategy, aiming for sustainable growth and improved operational performance.

Order Growth: Continued double-digit growth in order intake, driven by business wins in both Hydraulics and Electronics segments.

Segment Performance:

Hydraulics: Sales of $146 million, up 14% year-over-year; strong performance in APAC, particularly in mobile and industrial applications.

Electronics: Sales of $86 million, up 19% year-over-year; growth driven by recreational, health, and wellness markets.

Operational Efficiency: Ongoing footprint optimization, including the consolidation of Faster operations, is expected to yield cost benefits in the second half of 2026.

3Forward Guidance and Outlook

2026 Sales Outlook: Raised to $880 million to $900 million, implying 12% growth over 2025.

Segment Sales Projections:

Hydraulics: $555 million to $565 million.

Electronics: $325 million to $335 million.

Adjusted EBITDA Margin: Expected to be between 20.2% and 21.0%.

Q3 2026 Guidance: Sales expected to be $215 million to $222 million, with adjusted diluted EPS of $0.70 to $0.77.

4Bad News, Challenges, or Points of Concern

Market Conditions: Some end markets, particularly recreational marine, remain soft, and the company is cautious about tougher comparisons in the second half.

External Factors: Rising energy prices, inflationary pressures, and geopolitical tensions could impact performance.

Electronics Segment Growth: While the segment has shown growth, there are concerns about the sustainability of this growth given the overall market conditions and interest rate impacts on financing for OEMs.

5Notable Q&A Insights

Footprint Optimization: The consolidation of Faster operations is aimed at enhancing capacity and efficiency, particularly in preparation for entering the data center market.

Data Center Market: This is viewed as the largest growth opportunity for Helios, with product samples currently being evaluated by prospective customers. Revenue from this segment is not included in the 2026 outlook, but initial sales are anticipated in 2027.

M&A Strategy: The company is prioritizing organic growth but is also preparing for potential acquisitions to complement its existing portfolio. The focus will be on high-return opportunities that align with the CORE Strategy. Overall, Helios Technologies demonstrated strong financial performance in Q2 2026, with positive growth trends and strategic initiatives in place, although challenges in certain markets and external economic factors remain points of caution.