Helios (HLIO) 6 Aug 24 2024 Q2 Earnings call transcript

In a recent earnings call, Helios Technologies provided a comprehensive overview of its financial performance and strategic outlook for the remainder of 2024. The company, which operates in the hydraulics and electronics sectors, has been navigating a challenging macroeconomic environment marked by inflation, lower PMI readings, and agricultural cycle weakness. Despite these headwinds, Helios Technologies remains optimistic about its future prospects, highlighting its focus on maintaining operational efficiency and exploring growth opportunities.

Strategic Priorities and Operational Highlights

During the call, Sean Bagan, Interim President, CEO, and CFO, provided an update on Helios Technologies' second-quarter results. The company reported a sequential increase in sales, driven by a recovery in its Balboa Water Group segment and strong performance in its electronics business. Notably, Helios Technologies' adjusted EBITDA margin expanded in the quarter, demonstrating the company's ability to mitigate the impact of volume reductions through operational improvements.

Bagan also discussed the company's efforts to strengthen its financial position, including a successful refinancing of its credit agreement that increased its available liquidity and optimized its capital structure. This financial restructuring will enable Helios Technologies to better support its growth initiatives and weather market uncertainties.

Navigating Challenges and Seizing Opportunities

Despite the macroeconomic challenges, Helios Technologies remains committed to its strategy of delivering value and differentiation through its highly engineered hydraulics and electronics products, services, and system solutions. The company is particularly focused on maintaining strong relationships with its customers, leveraging its expertise to help them solve complex problems and capitalize on emerging trends, such as increased efficiency, energy savings, and electrification.

One such trend is the growing interest in telemedicine and IoT solutions, which Helios Technologies is exploring through its Cygnus Reach software solution. This technology, which provides remote support for IoT smart devices, has the potential to disrupt the market and differentiate Helios Technologies from competitors.

Looking Ahead

Looking ahead, Helios Technologies is moderating its sales expectations for the second half of 2024, reflecting the challenging market conditions. The company is focused on streamlining its operating costs and driving operational efficiencies to maintain profitability and position itself for growth. Despite the near-term challenges, Helios Technologies remains confident in its long-term prospects, with a focus on innovation, diversification, and strategic partnerships.

In conclusion, Helios Technologies' earnings call underscored the company's resilience and strategic focus in the face of challenging market conditions. With a strong operational foundation and a clear vision for growth, Helios Technologies is well-positioned to navigate the current economic environment and capitalize on emerging opportunities.