Helios Technologies’ Earnings Call: A Cautious Optimism

Helios Technologies Inc ((HLIO)) has held its Q1 earnings call. Read on for the main highlights of the call.

During Helios Technologies Inc.’s recent earnings call, the sentiment was a blend of optimism and caution. The company celebrated surpassing first-quarter sales estimates and improving its cash flow and debt situation. However, it also acknowledged challenges such as a decline in sales compared to the previous year and a contraction in gross margins. Helios is proactively addressing these issues by focusing on new product launches and strategic market initiatives, maintaining a cautiously optimistic outlook.

Exceeded First Quarter Sales Estimates

Helios Technologies reported first-quarter sales of $195 million, surpassing the top end of its guidance range. This achievement was attributed to early successes from its go-to-market strategies, even though sales were lower than the previous year.

Improved Cash Flow and Debt Reduction

The company generated $19 million in cash from operations, marking a 7% increase over the previous year. Additionally, Helios reduced its debt by $4 million, achieving a 15% decrease over the prior year and marking seven consecutive quarters of debt reduction.

Successful Cost Management

Helios effectively managed its cost of goods sold in line with lower sales and realized savings in SEA expenses year-over-year. The company also achieved an 11% reduction in inventory compared to the previous year.

Positive Trends in Order Intake

For five consecutive months, Helios saw orders exceed sales, indicating positive demand trends. The company reported notable wins in the health and wellness, recreational, construction, and aerial work platform markets.

New Product Launches and Innovations

Helios introduced several new products across its flagship brands, including Enovation Controls’ S35 display, Sun Hydraulics’ electro-proportional cartridge valves, and Balboa’s PureZone water chemistry management solution.

Sales Decline Compared to Prior Year

Despite the positive developments, Helios experienced a decline in sales across all regions compared to the previous year, with significant weaknesses in the agriculture, mobile, and industrial markets. The hydraulics segment saw an 11% decline over the prior year period.

Gross Margin Contraction

The company’s gross margin contracted by 110 basis points year-over-year due to lower volume and higher material costs, partially offset by reduced labor and overhead costs.

Impact of Tariffs on Future Costs

Helios anticipates a potential $15 million cost impact from tariffs in the second half of 2025 if no mitigation actions are taken. The company is concerned about the downstream effects on demand and pricing pressures.

Lower Earnings Per Share

Diluted EPS was reported at $0.22, a 21% decrease from the previous year, primarily due to an 8% decline in sales. Non-GAAP EPS also fell by 17% compared to last year.

Forward-Looking Guidance

Looking ahead, Helios Technologies provided guidance for the second quarter of 2025, projecting sales between $198 million and $206 million and an adjusted EBITDA margin of 17.5% to 18.5%. Despite potential tariff impacts, the company is implementing mitigation strategies like price adjustments and leveraging its global manufacturing footprint. Helios remains committed to growth through its go-to-market initiatives and strengthening its financial profile.

In summary, Helios Technologies Inc.’s earnings call highlighted a mix of achievements and challenges. While the company exceeded sales estimates and improved its financial standing, it faced sales declines and margin contractions. Helios is addressing these issues through strategic initiatives and remains cautiously optimistic about its future prospects.