Helios Technologies Q4 Earnings Call Highlights

Helios Technologies (NYSE:HLIO) reported fourth-quarter fiscal 2025 results that management described as a “turnaround year,” with sales and earnings growth across both operating segments and record cash generation. Company leaders said performance finished ahead of recent expectations and marked the first year of full-year sales growth in three years.

Fourth-quarter sales rose 17% as both segments grew

For the fourth quarter, Helios posted sales of $211 million, up 17% from $180 million in the prior-year period. Management noted the comparison was affected by the divestiture of its Custom Fluidpower (CFP) business at the end of September; excluding CFP’s $16 million contribution in the prior-year quarter, fourth-quarter sales increased 29% year over year on a pro forma basis.

Growth was described as broad-based, with hydraulics sales up 10% reported (27% pro forma) and electronics sales up 31%. CEO Sean Bagan said sales and orders accelerated in the second half of the year, which he attributed to go-to-market initiatives and new product activity.

Margins expanded on volume, mix, and productivity actions

Higher sales and improved absorption drove gross profit up 31% in the quarter to $71 million. Gross margin expanded 350 basis points to 33.6%, which the company attributed to higher volumes, improved mix, and productivity and cost actions, partially offset by residual tariff impacts. CFO Jeremy Evans said Helios has delivered four consecutive quarters of gross margin expansion.

Fourth-quarter operating income nearly doubled versus the prior year, with operating margin expanding 480 basis points to 12.2%. On a non-GAAP basis, adjusted operating margin was 16.4% in the quarter, up 310 basis points year over year.

Diluted EPS for the quarter was $0.58, which Evans said was helped by a $5.4 million one-time benefit in net interest expense tied to an interest rate swap associated with the company’s June 2024 refinancing. Diluted non-GAAP EPS was $0.81, up 145% year over year. Adjusted EBITDA margin in the quarter was 20.1%, Helios’ second consecutive quarter above 20%.

Full-year results: return to growth, record cash flow, and debt reduction

For fiscal 2025, Helios reported sales of $839 million, up just over 4% (up 6% pro forma excluding CFP). Gross profit increased 7.5% to $271 million, and gross margin improved 100 basis points to 32.3%. Evans said the CFP divestiture benefited the consolidated margin profile, describing CFP as a drag on margins despite improvements under Helios ownership.

Operating income for the year declined 19%, which Evans attributed primarily to a goodwill impairment charge taken in the third quarter related to i3 Product Development. Full-year diluted EPS increased 24% to $1.45, while diluted non-GAAP EPS rose 22% to $2.56.

Helios generated $46 million of cash from operations in the quarter and a record $127 million for the year, alongside a second consecutive year of record free cash flow. Management highlighted working capital improvements, citing a more structured approach to inventory management, receivables collection, and payables optimization that contributed to improvements in the cash conversion cycle.

The company used operating cash flow and CFP divestiture proceeds to pay down $82 million of debt in 2025, ending the year with a net debt-to-adjusted EBITDA leverage ratio of 1.8x. Evans said available liquidity surpassed total debt by year-end.

Segment commentary: construction strength, mixed consumer trends

Hydraulics: On a pro forma basis, hydraulics revenue grew 27% in the quarter. Evans said demand in mobile applications was supported by construction markets across regions, while agriculture showed “early signs of recovery,” with sales to the ag market up for a second consecutive quarter. He pointed to more robust activity in Europe and China driving demand for Faster’s ag-focused applications. Segment gross margin expanded 440 basis points to 34.1% on volume leverage, productivity initiatives, and the CFP divestiture.

In the Q&A, Bagan emphasized that the agriculture improvement was more consistent with channel normalization than a strong end-market rebound, citing healthier inventory levels. He also said the Sun Hydraulics business grew despite market softness, which he framed as an indicator of share gains tied to go-to-market execution and product launches.

Electronics: Electronics revenue increased 31% year over year. Evans highlighted continued strength in recreational demand tied to a particular customer seeing meaningful market growth, along with solid industrial and mobile demand supported by construction equipment needs and infrastructure spending, especially in the U.S. He also noted year-over-year growth in health and wellness, while acknowledging “pockets of volatility” in consumer-exposed demand, particularly recreational marine. Electronics operating income increased 76% to $9.5 million, and operating margin expanded 330 basis points.

2026 outlook: stronger start expected, risks include tariffs and chip supply

For the first quarter of 2026, Helios expects sales of $218 million to $223 million, and adjusted EBITDA margin of 19.5% to 20.5%. The company guided to diluted non-GAAP EPS of $0.65 to $0.70. Management said the first-quarter outlook reflects momentum from the back half of 2025 and visibility into backlog and order trends.

For full-year 2026, Helios expects net sales of $820 million to $860 million. On a pro forma basis excluding CFP, Evans said the midpoint implies 6% growth driven by volume growth in core platforms and the ramp of recent commercial wins. Segment guidance calls for:

• Hydraulics net sales of $510 million to $530 million (about 5% growth at the midpoint on a pro forma basis).
• Electronics net sales of $310 million to $330 million (about 7% growth at the midpoint).

Helios expects 2026 adjusted EBITDA margin of 19.5% to 21.0% and diluted non-GAAP EPS of $2.60 to $2.90. Evans reminded investors that 2025 non-GAAP EPS included the $5.4 million interest rate swap benefit.

Addressing questions on conservatism in the back half of the year, Bagan said the company expects to lap tougher comparisons from a strong second half of 2025, while also factoring uncertainty tied to geopolitics, supply challenges, and electronics chip availability. Evans said Helios expects higher year-over-year tariff expense in the first quarter, but that most of the cost is being recovered through pricing actions. He also said the company is monitoring potential memory chip constraints and has worked to lock in 2026 supply and build inventory buffers.

Helios reiterated plans to discuss longer-term strategy at its March 20 Investor Day in Sarasota, Florida, where management said it will unveil its “Core 2030 Strategy.”

About Helios Technologies (NYSE:HLIO)

Helios Technologies, Inc develops and manufactures engineered motion control and electronic control products for a wide range of industrial and mobile equipment applications. The company’s Hydraulics segment designs and produces hydraulic cartridge valves, manifold systems, pumps and motors, filtration solutions and off-highway joysticks. Its Electronic Controls segment offers programmable electronic control units, wireless telematics, human-machine interfaces and software to optimize performance, efficiency and safety for equipment OEMs and end users.

Through its global network of manufacturing facilities, service centers and technology centers, Helios Technologies serves markets in agriculture, construction, material handling, mining, municipal and recreational vehicles, as well as industrial automation and infrastructure equipment.