Helios Technologies — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net sales reached a record $229.7 million in Q3 2026, a 4% increase year-over-year (YoY) and 13% growth on a pro-forma basis.
• Gross profit was $76.2 million, up 4% YoY, with a gross margin of 33.2%, an increase of 10 basis points (bps) from the prior year period.
• GAAP operating income was $28.1 million compared to $1.3 million in the prior year, driven by a $25.9 million goodwill impairment charge in the prior year.
• Net income was $17.6 million, a 71% increase YoY; diluted EPS was $0.53, up 71% YoY.
• Non-GAAP adjusted net income was $26.3 million, up 10% YoY; non-GAAP adjusted diluted EPS was $0.80, up 11% YoY.
• Adjusted EBITDA was $46.5 million, up 3% YoY, with an adjusted EBITDA margin of 20.3% (down 20 bps YoY).
• Cash from operations reached a record $40 million, up 59% YoY; free cash flow was $32.5 million.
• Net debt was $254.9 million as of October 3, 2026, down from $364.2 million in the prior year period; the net debt-to-TTM adjusted EBITDA ratio improved to 1.4x from 2.4x.

Guidance and Future Outlook:

• Raised full-year 2026 sales outlook to $895–$902 million (pro-forma), implying the highest annual sales in the company's history, up from the previous $880–$900 million range.
• Established fourth quarter 2026 sales guidance of $205–$212 million.
• Tightened full-year 2026 adjusted EBITDA margin guidance to 20.2%–20.4% (previously 20.2%–21.0%) and adjusted diluted EPS guidance to $3.08–$3.15 (previously $3.05–$3.25).
• Established fourth quarter 2026 adjusted EBITDA margin guidance of 18.5%–19.5% and adjusted diluted EPS guidance of $0.60–$0.67.
• Management expects Q4 growth to moderate from the Q3 pace but anticipates benefits from pricing actions to show more fully in 2027.
• Cost synergies from the Radio Sound acquisition are expected to be realized starting in early 2027.

Business Segments and Product Lines:

• Hydraulics Segment: Net sales were $142.9 million, up 1% YoY; gross margin was 32.3% (down 20 bps YoY); operating margin was 17.3% (up 10 bps YoY).
• Electronics Segment: Net sales were $86.8 million, up 10% YoY; gross margin was 34.7% (up 40 bps YoY); operating margin was 14.3% (up 3,180 bps YoY, excluding a $25.9 million impairment in the prior year).
• Acquisitions: Closed a strategic acquisition in Q3 2026 expanding Electronics capabilities; completed Faster's North American consolidation in Toledo, Ohio.
• New Customers/Orders: Began a new multi-year relationship with Indian Motorcycle in Electronics; secured Faster's first thermal management order following quarter-end.
• Asset Sales: Acquired select Radio Sound assets to expand audio and communications capabilities.

Market and Competitive Landscape:

• Sales growth was driven by both Hydraulics and Electronics segments, demonstrating breadth of growth.
• The company continues to execute a disciplined market-entry strategy in the data center market.
• Management noted persistent inflationary pressures and a dynamic supply environment.
• Footprint optimization initiatives were advanced to strengthen regional capabilities and reduce tariff exposure.

Risks and Challenges:

• The company faces persistent inflationary pressures and a dynamic supply environment.
• Forward-looking statements highlight risks including global economic trends, supply chain disruptions, interest rate environments, trade policy, tariffs, and geopolitical conflicts.
• Risks related to the integration of new acquisitions and the realization of cost synergies in 2027 are noted.

Management Commentary and Tone:

• CEO Sean Bagan described the quarter as a "record third quarter" with sales above the high end of the outlook and adjusted earnings exceeding expectations.
• CFO Jeremy Evans stated that results reflect continued progress against 2026 financial priorities and that the company remains disciplined while navigating a dynamic macro environment.
• Management highlighted the effectiveness of "The CORE Strategy" and the translation of strategy into tangible commercial and operational progress.

Other Key Points:

• Repurchased $19 million of common stock during the quarter.
• Paid the 119th consecutive quarterly cash dividend.
• Dividends declared per share were $0.12 in Q3 2026, up from $0.09 in the prior year period.
• Total assets were $1,514.2 million as of October 3, 2026.
• The company has paid a cash dividend every quarter since becoming a public company in 1997.