HELIOS TECHNOLOGIES, INC. Q2 FY2025 earnings call

• Milestones: Celebrated 55th anniversary of Helios Technologies. Second Quarter Performance: Sales $212M exceeded outlook; adjusted EBITDA margin 18.6%; generated $37M cash from operations; reduced debt by $67M; repurchased 200,000 shares. CFP Divestiture: Sold Custom Fluidpower to Questas Group for ~$54M; proceeds to be used for debt reduction and investment; improves margin rates. Operational Efficiency: Restructured organizational structure to focus on products and brands; eliminated fixed costs, reallocated personnel; appointed Ian Walsh to Board for governance.

Hydraulics: Sales declined 3% year-over-year. However, gross profit and gross margin grew by 4% and 220 basis points respectively, due to lower material and direct labor costs, partially offset by lower volume and tariff impacts. Foreign exchange had a favorable $1.5 million impact. Electronics: Sales were down 4% year-over-year. Gross profit declined by 18% and gross margin by 530 basis points primarily due to higher freight, duties, material costs, and a less favorable product mix. Regionally, EMEA grew 5% y/y, Americas and APAC declined, but APAC Electronics segment had 27% y/y growth in health and wellness.

• Anticipate year-over-year growth every month from July 2025. Third Quarter: Sales expected $208M-$215M (up ~9% y/y midpoint); adjusted EBITDA margin 19.5%-20.5%; diluted non-GAAP EPS $0.60-$0.68. Fourth Quarter: Sales growth to accelerate; confident in 2025 sales exceeding 2024 levels; CFP divestiture to contribute to margin improvement.

• Tariff impacts on direct costs, with total estimated impact to second half 2025 reduced to ~$8M but still a risk. - End market uncertainties, including continued weakness in broader industrial and recreational markets. - Potential recession and changing tariff headlines affecting business.

Q: Update on strategic agreement with WaterGuru and impact of interest rate changes.

A: WaterGuru strategic relationship launched in Q2, ramping up with hardware and cassette integration; interest rate reductions would help consumer discretionary exposures, reduce interest expense, and aid debt repayment.

Q: Housekeeping on interest expense dip and CFP closing timing.

A: Interest expense dip due to debt repayment, prioritization, and refinancing; CFP expected to close in 60-90 days, impacting Q4 revenue and EBITDA with ~$15M revenue and ~$2M EBITDA impact if closing in Q4.