Core Insights - Helios Towers plc has positive growth prospects driven by colocations on existing towers, supporting a buy rating following Q4 and Fiscal Year 2024 results [1] Group 1 - The company is experiencing growth due to the strategic use of existing tower infrastructure for colocations [1]

Financial Data and Key Metrics Changes - Sales for the first quarter of 2025 were $195 million, exceeding the top end of guidance by $5 million, but still below prior year levels due to ongoing end market weakness [9][18] - Adjusted EBITDA margin was 17.3%, with cash from operations increasing by 7% year over year to $19 million despite sales contraction [10][24] - Diluted EPS was $0.22, down 21% from the previous year, primarily due to an 8% decline in sales [20] Business Line Data and Key Metrics Changes - Hydraulic sales declined by 11% year over year, reflecting weakness in agriculture, mobile, and industrial end markets [21] - Electronics sales remained relatively unchanged, with growth in health and wellness and recreational markets offsetting declines in industrial and mobile sectors [23] - Gross margin for hydraulics contracted by 170 basis points, while electronics gross margin held steady [19][22] Market Data and Key Metrics Changes - Asia Pacific sales in the electronics segment increased by 24% year over year, driven by growth in the health and wellness end market [18] - Overall, sales declined in all regions compared to the previous year, highlighting persistent weakness in most end markets [18] Company Strategy and Development Direction - The company is refocusing on customer-centric initiatives to drive business success and improve shareholder returns [7][8] - A strategy to mitigate tariff impacts includes localizing production and leveraging existing manufacturing capabilities in China and the APAC region [30][31] - The company aims to capitalize on market share opportunities created by competitors relying on Chinese manufacturing [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the downstream effects of prolonged tariff escalations, including rising costs and pricing pressures [9] - Despite challenges, there are positive trends in order intake, with a focus on improving customer relationships and product offerings [12][13] - The company expects second quarter sales to range from $198 million to $206 million, indicating a sequential increase from the first quarter [35] Other Important Information - The company has reduced debt by 15% over the last twelve months and has a strong liquidity position with nearly $400 million available [11][27] - Capital expenditures for 2025 will focus on maintenance and productivity enhancements with evident returns on investment [26] Q&A Session Summary Question: Insights from the listening tour and specific actions taken - Management highlighted the importance of customer engagement and accountability, emphasizing a shift from a passive to a more aggressive sales approach [44][45] Question: Impact of tariffs on manufacturing and costs - The company is transferring manufacturing to mitigate tariff impacts, with minimal investment required due to existing operations in the region [49][50] Question: Competitive positioning around tariffs - Management sees market share gain opportunities due to competitors' reliance on Chinese imports, particularly in hydraulics and electronics [59][60] Question: Demand changes and guidance for Q2 - Management noted positive order intake trends and expects to see some revenue from tariff-related opportunities in Q2, but significant impacts are anticipated in the back half of the year [65][66] Question: Portfolio assessment and potential divestitures - The company is open to evaluating its portfolio for strategic fit and financial performance, focusing on debt reduction before considering acquisitions [85]

Financial Data and Key Metrics Changes - Sales for Q1 2025 were $195 million, exceeding the top end of guidance but below prior year levels due to continued end market weakness [10][19] - Adjusted EBITDA margin was 17.3%, with cash from operations increasing by 7% year over year to $19 million despite sales contraction [11][25] - Diluted EPS was $0.22, down 21% from the previous year, primarily due to an 8% decline in sales [21] Business Line Data and Key Metrics Changes - Hydraulic sales declined by 11% year over year, reflecting weakness in agriculture, mobile, and industrial end markets [22] - Electronics sales remained relatively unchanged, with growth in health and wellness and recreational markets offsetting declines in industrial and mobile sectors [24] Market Data and Key Metrics Changes - Asia Pacific sales in the electronics segment increased by 24% year over year, driven by a return to growth in the health and wellness end market [19] - Overall sales declined in all regions compared to the previous year, with foreign exchange negatively impacting sales by $2.3 million [19] Company Strategy and Development Direction - The company is refocusing on customer-centric initiatives to drive business success and improve shareholder returns [7][8] - A strategy to mitigate tariff impacts includes leveraging regional manufacturing capabilities and enhancing local production to reduce costs [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about prolonged tariff escalations affecting costs and end market demand but remains committed to long-term strategic decisions [9][30] - The company anticipates a sequential sales increase in Q2 2025, projecting sales between $198 million and $206 million [36] Other Important Information - The company has reduced debt by 15% over the last year and has maintained a strong liquidity position with nearly $400 million available [12][27] - The company is prioritizing capital expenditures for impactful projects with quick payback periods [12][26] Q&A Session Summary Question: Insights from the listening tour and specific actions taken - Management highlighted the importance of customer engagement and aggressive market strategies, moving from a passive to a more proactive approach [44][46] Question: Impact of tariffs on manufacturing and costs - Management indicated that transferring manufacturing to local regions is already in progress, with minimal investment required due to existing capabilities [49][51] Question: Competitive positioning around tariffs - Management sees significant market share gain opportunities due to competitors relying on Chinese manufacturing, which is now less cost-competitive [60][62] Question: Guidance for Q2 and demand changes - Management noted that order intake has exceeded sales for five consecutive months, indicating positive demand trends despite uncertainties [100][104]

Company Performance - Helios Technologies reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.36 per share, but down from $0.53 per share a year ago [1] - The earnings surprise for this quarter was 22.22%, following a previous surprise of 13.79% when earnings were $0.33 per share against an expectation of $0.29 [2] - The company achieved revenues of $195.5 million for the quarter, surpassing the Zacks Consensus Estimate by 4.32%, but down from $212 million in the same quarter last year [3] Market Outlook - Helios Technologies shares have declined approximately 37.9% since the beginning of the year, compared to a 3.9% decline in the S&P 500 [4] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $188.4 million, and for the current fiscal year, it is $1.52 on revenues of $734.1 million [8] Industry Context - The Manufacturing - General Industrial industry, to which Helios Technologies belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of Helios Technologies may be influenced by the overall outlook for the industry, as top-ranked industries tend to outperform lower-ranked ones significantly [9]

Q1 2025 Financial Performance - Revenue for Q1 2025 was $195 million, a decrease of 8% year-over-year[13] - Adjusted EBITDA margin was 173%, down 90 bps year-over-year[13] - Diluted Non-GAAP EPS was $044, a decrease of 17% year-over-year, but $008 above current consensus[13] Segment Performance - Hydraulics segment sales were $1264 million, an 11% decrease year-over-year[40] - Electronics segment sales were $691 million, a 1% decrease year-over-year[43] - Hydraulics segment operating income was $174 million, a 20% decrease year-over-year[40] - Electronics segment operating income was $80 million, a 13% increase year-over-year[43] Cash Flow, Debt, and Capital Allocation - Free cash flow for Q1 2025 was $129 million[45] - Total debt was $445 million, with liquidity of $399 million[54] - Net debt to adjusted EBITDA ratio was 27x[55] Outlook and Tariffs - Q2 2025 net sales are expected to be between $198 million and $206 million, representing a decrease of 10% to 6% relative to Q2 2024[64] - Q2 2025 adjusted EBITDA margin is expected to be between 175% and 185%, representing a decrease of 260 bps to 160 bps relative to Q2 2024[64] - Estimated total direct cost impacts from tariffs are approximately $15 million[57]

Exhibit 99.1 NEWS RELEASE FOR IMMEDIATE RELEASE Helios Technologies Reports First Quarter Financial Results; Exceeds its Quarterly Estimates on Stronger Demand Trends; Continued Balance Sheet Improvement SARASOTA, FL, May 6, 2025 — Helios Technologies, Inc. (NYSE: HLIO) ("Helios" or the "Company"), a global leader in highly engineered motion control and electronic controls technology, today reported financial results for the first quarter ended March 29, 2025. "Our first quarter results demonstrated a bette ...

Company Overview - Helios Technologies, Inc. (HLIO) shares increased by 11.4% to close at $28.74, following a notable trading volume that exceeded typical levels [1] - The company has experienced a 30.5% loss in stock value over the past four weeks [1] Recent Developments - The rise in Helios Technologies' shares was influenced by the Trump administration's announcement of a temporary halt on reciprocal tariffs for several countries, aimed at mitigating market sell-off and recession fears [2] Financial Performance Expectations - Helios Technologies is projected to report quarterly earnings of $0.35 per share, reflecting a year-over-year decline of 34% [3] - Expected revenues for the upcoming quarter are $186.6 million, which is a 12% decrease compared to the same quarter last year [3] Earnings Estimate Trends - The consensus EPS estimate for Helios Technologies has remained unchanged over the last 30 days, indicating a lack of upward momentum in earnings estimate revisions [5] - Historical data suggests a strong correlation between earnings estimate revisions and short-term stock price movements, highlighting the importance of monitoring these trends [4] Industry Context - Helios Technologies operates within the Zacks Manufacturing - General Industrial industry, where another company, Ferguson plc (FERG), saw an 11.2% increase in its stock price, closing at $164.60 [5] - Ferguson plc's consensus EPS estimate has decreased by 11.4% over the past month, indicating a 12.9% decline from the previous year's report [6]

Core Insights - Helios Towers plc is identified as a positive outlier in the current volatile public market environment, particularly in the telecom infrastructure sector in Africa and the Middle East [1]. Company Overview - Helios Towers plc is recognized as a leading telecom infrastructure player in Africa and the Middle East, indicating its significant market presence and operational capabilities [1]. Market Context - The article highlights the compelling and volatile momentum in public markets, suggesting that Helios Towers plc stands out positively amidst this backdrop [1].

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) Helios Technologies, Inc. is a global leader in highly engineered motion and electronic controls technology, operating through Hydraulics and Electronics segments, focusing on organic growth, strategic acquisitions, and operational excellence - Helios Technologies operates in two segments: Hydraulics (motion control and fluid conveyance) and Electronics (customized electronic control systems, displays, software)[13](index=13&type=chunk)[14](index=14&type=chunk) - The company's strategy focuses on growth, diversification, and market-leading financial performance through customer centricity, global operations, market diversification, and talent development[17](index=17&type=chunk) - Acquisition strategy aims to enhance Helios by growing product portfolio, expanding geographic presence, bringing new customers/markets, meeting growth/profitability goals, and leveraging operational synergies[17](index=17&type=chunk)[20](index=20&type=chunk) - In 2024, no acquisitions were executed, following several in 2022 (Taimi, Daman) and 2023 (Schultes, i3 Product Development)[22](index=22&type=chunk) - The Hydraulics segment's 2024 sales distribution was **41% Americas**, **29% EMEA**, and **30% APAC**[46](index=46&type=chunk) - The Electronics segment's 2024 sales distribution was **80% Americas**, **10% EMEA**, and **10% APAC**, with a defined initiative to grow sales in EMEA and APAC[52](index=52&type=chunk) - Helios employed over **2,500 colleagues worldwide** at the end of fiscal year 2024, with **54% in the Americas**, **26% in EMEA**, and **20% in APAC**[60](index=60&type=chunk) - The company owns approximately **300 active patents and trademarks**, which are important for defending intellectual property but no single item is material to the business as a whole[66](index=66&type=chunk) [ITEM 1A. RISK FACTORS](index=15&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces various risks that could materially affect its future results, including global economic and political conditions, supply chain disruptions, intense competition, and the ability to innovate - Key risks include global economic trends, supply chain disruption, capital market conditions, geopolitical conflicts, competition, and the ability to innovate[77](index=77&type=chunk) - The company is subject to inflationary pressures on operating costs (labor, supplies, transportation) and may not be able to fully offset these with pricing increases[79](index=79&type=chunk)[80](index=80&type=chunk) - Failure to comply with anti-corruption laws (e.g., FCPA, U.K. Bribery Act) could result in fines, criminal penalties, and reputational damage[84](index=84&type=chunk) - Health epidemics, pandemics, and similar outbreaks could disrupt operations, supply chains, and customer performance, leading to increased costs[89](index=89&type=chunk)[90](index=90&type=chunk) - The growth strategy, including market expansion and acquisitions, carries risks such as integration challenges, overstating acquisition value, and diversion of management attention[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - Intense competition, including from full-line hydraulic systems producers and low-cost manufacturers, could adversely affect revenue and earnings[102](index=102&type=chunk)[106](index=106&type=chunk) - As of December 28, 2024, total indebtedness was approximately **$451 million**, which could limit financial flexibility and growth opportunities[121](index=121&type=chunk) - Goodwill constitutes **33.1% of total assets** as of December 28, 2024, making the company susceptible to significant non-cash impairment charges if fair value estimates decline[123](index=123&type=chunk) - Fluctuations in foreign currency exchange rates can impact sales, earnings, and financial condition, especially given that **53% of net sales were outside the U.S. in 2024**[124](index=124&type=chunk)[136](index=136&type=chunk) - The inability to protect intellectual property (patents, trademarks, trade secrets) could reduce competitive advantage and profitability, particularly in foreign countries with weaker protections[129](index=129&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) - Increased cybersecurity threats, including those enabled by generative AI, pose risks to data, systems, and business continuity, potentially leading to financial harm and reputational damage[140](index=140&type=chunk) - The company is subject to product liability and warranty claims, which could materially decrease liquidity and harm reputation[141](index=141&type=chunk)[142](index=142&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=30&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments from the SEC - No unresolved staff comments[152](index=152&type=chunk) [ITEM 1C. CYBERSECURITY](index=30&type=section&id=ITEM%201C.%20CYBERSECURITY) Helios Technologies employs a comprehensive cybersecurity risk management framework, utilizing external standards and implementing organizational and technical safeguards, with oversight from executive leadership and the Board's ESG Committee - Helios assesses, identifies, and manages cybersecurity risks using external standards (e.g., Center for Internet Security framework) and aims for CIS implementation group level 2 compliance[154](index=154&type=chunk)[155](index=155&type=chunk) - Organizational safeguards include employee training, business continuity planning, and cybersecurity insurance, reviewed annually or more frequently[156](index=156&type=chunk) - Technical safeguards include Multi-Factor Authentication (MFA), Zero Trust principles, password complexity policies, and XDR (Extended Detection and Response) with a Security Operations Center (SOC) for real-time monitoring[157](index=157&type=chunk) - Annual corporate-wide internal and external penetration tests are performed by a third party to assess vulnerabilities, with results reviewed by executive leadership and the ESG Committee[158](index=158&type=chunk) - The Incident Response Policy outlines steps for cybersecurity incidents, with material incidents escalated to a cross-functional team (VP IT, CFO, General Counsel) and reported to the ESG Committee[159](index=159&type=chunk) - The VP, Information Technology, with over **25 years of experience**, leads the cybersecurity framework, with oversight from the ESG Committee of the Board of Directors[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk) [ITEM 2. PROPERTIES](index=32&type=section&id=ITEM%202.%20PROPERTIES) Helios Technologies maintains its corporate headquarters in Sarasota, FL, and operates various manufacturing and distribution facilities globally for its Hydraulics and Electronics segments, which are believed to be well-maintained and adequate for current business operations - Corporate headquarters are leased in Sarasota, FL, serving as a corporate office and customer experience center[167](index=167&type=chunk) Primary Operating Facilities Square Footage (in thousands) as of December 28, 2024 | Segment | Region | Owned | Leased | Total | | :-------- | :------- | :---- | :----- | :---- | | Hydraulics | Americas | 1,953 | 4 | 1,957 | | Hydraulics | Europe | 116 | 763 | 879 | | Hydraulics | Asia/Pacific | 73 | 236 | 309 | | **Hydraulics Total** | | **2,142** | **1,003** | **3,145** | | Electronics | Americas | 533 | 377 | 910 | | Electronics | Europe | 18 | 7 | 25 | | Electronics | Asia/Pacific | — | 63 | 63 | | **Electronics Total** | | **551** | **447** | **998** | - Properties are adequately maintained and suitable for current business operations[169](index=169&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=33&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Helios Technologies is involved in routine litigation incidental to its business but does not anticipate any material adverse effects on its consolidated financial position or results of operations from these proceedings - The company is involved in routine litigation incidental to its business[172](index=172&type=chunk) - No pending litigation is expected to have a material adverse effect on consolidated financial position or results of operations[172](index=172&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=33&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Helios Technologies, Inc - Mine Safety Disclosures are not applicable[174](index=174&type=chunk) PART II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=34&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Helios Technologies' common stock trades on the New York Stock Exchange under the symbol HLIO, with **33,296,057 shares outstanding** as of February 14, 2025, and a history of paying quarterly dividends of **$0.09 per share**, with no stock repurchases in 2024 - Common Stock trades publicly under the symbol **HLIO** on the New York Stock Exchange since November 1, 2021[176](index=176&type=chunk) - As of February 14, 2025, there were **102 shareholders of record** and **33,296,057 shares of common stock outstanding**[6](index=6&type=chunk)[177](index=177&type=chunk) - The company has historically paid regular quarterly dividends of **$0.09 per share** and intends to continue this in 2025, subject to Board discretion[178](index=178&type=chunk) - No stock repurchases were made during the year ended December 28, 2024[180](index=180&type=chunk) Five-Year Stock Performance (December 28, 2019 - December 28, 2024) | Index | 12/28/2019 | 1/2/2021 | 1/1/2022 | 12/31/2022 | 12/30/2023 | 12/28/2024 | | :-------------------------------- | :--------- | :------- | :------- | :--------- | :--------- | :--------- | | Helios Technologies | $100.00 | $118.24 | $234.57 | $122.04 | $102.29 | $102.27 | | Russell 2000 Index | $100.00 | $119.99 | $137.77 | $109.61 | $128.17 | $143.80 | | Dow Jones US Diversified Industries Index | $100.00 | $112.22 | $123.43 | $113.39 | $147.20 | $205.72 | [ITEM 6. [RESERVED]](index=35&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Helios Technologies experienced a **3.6% decline in consolidated net sales** in 2024, primarily due to reduced demand in agriculture, mobile, industrial, and recreational marine markets, partially offset by growth in Health and Wellness and APAC, while operating income increased due to lower payroll and benefit costs and reduced restructuring expenses - Consolidated net sales for 2024 declined by **$29.7 million (3.6%) to $805.9 million**, primarily due to organic sales decline of **$34.7 million**, partially offset by **$5.0 million from acquisitions**[205](index=205&type=chunk)[206](index=206&type=chunk) - Sales were most impacted by reduced demand in agriculture, mobile, industrial, and recreational marine markets, while Health and Wellness sales increased by almost **20% year-over-year**[206](index=206&type=chunk) - Operating income as a percentage of sales increased by **60 basis points to 10.2%** in 2024, driven by lower payroll and benefit costs (including a **$5.5 million reversal of unvested stock compensation**) and reduced SEA restructuring costs[208](index=208&type=chunk) - Net income and EPS were favorably impacted by a **$3.8 million contingent gain** from insurance reimbursement for business interruption losses in Italy[209](index=209&type=chunk) Consolidated Results of Operations (in millions, except per share data) | Metric | 2024 | 2023 | $ Change | % Change | | :------------------------ | :----- | :----- | :------- | :------- | | Net sales | $805.9 | $835.6 | $(29.7) | (3.6)% | | Gross profit | $252.3 | $261.7 | $(9.4) | (3.6)% | | Gross profit % | 31.3% | 31.3% | | | | Operating income | $81.8 | $79.9 | $1.9 | 2.4% | | Operating income % | 10.2% | 9.6% | | | | Net income | $39.0 | $37.5 | $1.5 | 4.0% | | Diluted net income per share | $1.17 | $1.14 | $0.03 | 2.6% | - Restructuring activities in 2024 incurred **$5.2 million in costs** (down from **$12.1 million in 2023**), focusing on Hydraulics CoEs and expanding the Tijuana, Mexico facility for Electronics[202](index=202&type=chunk) - Sean Bagan was promoted to President and CEO effective January 6, 2025, while continuing as CFO during the search for a permanent replacement[203](index=203&type=chunk) - Net cash provided by operating activities increased by **$38.2 million (45.5%) to $122.1 million** in 2024, primarily due to a reduction in inventories[235](index=235&type=chunk) - Cash used in investing activities decreased by **$123.6 million (80.3%) to $30.3 million** in 2024, mainly due to no acquisition-related payments[236](index=236&type=chunk) - Net cash used in financing activities totaled **$78.4 million** in 2024, compared to **$57.9 million provided in 2023**, reflecting net debt repayments of **$68.0 million**[237](index=237&type=chunk) - The company refinanced its debt in June 2024, extending maturity for five years and increasing the revolving credit facility to **$500.0 million**, with the term loan facility remaining at **$300.0 million**[241](index=241&type=chunk) - Goodwill for the i3 reporting unit is at risk for future impairment due to a relatively small excess fair value over carrying value (less than **3%**), representing **5.2% of total goodwill**[261](index=261&type=chunk) [Overview](index=37&type=section&id=Overview) Helios Technologies is a global leader in motion and electronic controls, leveraging its global network for sales, marketing, innovation, and operational excellence, with recent acquisitions diversifying product offerings and a leadership transition occurring in January 2025 - Helios Technologies is a global leader in highly engineered motion control and electronic controls technology, operating in Hydraulics and Electronics segments[187](index=187&type=chunk)[188](index=188&type=chunk) - Acquisitions in 2022 (Taimi, Daman) and 2023 (Schultes, i3 Product Development) diversified product offerings, markets, and geographic presence, but no acquisitions were executed in 2024[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk) - Geopolitical conflicts in Ukraine and the Middle East have not materially impacted financial condition or results, and supply chain constraints from the COVID-19 pandemic eased in 2024[196](index=196&type=chunk)[197](index=197&type=chunk) - Restructuring activities, including the creation of Hydraulics Regional Operational Centers of Excellence and expansion of the Tijuana, Mexico facility for Electronics, incurred **$5.2 million in costs** in 2024[202](index=202&type=chunk) - Sean Bagan was appointed Interim President and CEO in July 2024 and subsequently promoted to President and CEO on January 6, 2025[203](index=203&type=chunk) [2024 Results and Comparison of Years Ended December 28, 2024 and December 30, 2023](index=40&type=section&id=2024%20Results%20and%20Comparison%20of%20Years%20Ended%20December%2028%2C%202024%20and%20December%2030%2C%202023) In 2024, Helios Technologies experienced a **3.6% decline in consolidated net sales**, primarily due to organic sales decreases in agriculture, mobile, industrial, and recreational marine markets, partially offset by growth in Health and Wellness and APAC, while operating income increased by **2.4%** due to lower payroll and benefit costs and reduced restructuring expenses Consolidated Financial Performance (2024 vs. 2023) | Metric | 2024 (in millions) | 2023 (in millions) | $ Change | % Change | | :------------------------ | :----------------- | :----------------- | :------- | :------- | | Net sales | $805.9 | $835.6 | $(29.7) | (3.6)% | | Gross profit | $252.3 | $261.7 | $(9.4) | (3.6)% | | Gross profit % | 31.3% | 31.3% | | | | Operating income | $81.8 | $79.9 | $1.9 | 2.4% | | Operating income % | 10.2% | 9.6% | | | | Net income | $39.0 | $37.5 | $1.5 | 4.0% | | Diluted net income per share | $1.17 | $1.14 | $0.03 | 2.6% | - Organic net sales declined by **$34.7 million**, partially offset by **$5.0 million from acquisitions**; sales to Health and Wellness were up almost **20% YoY**, while Americas and EMEA sales were down, and APAC sales were up (driven by China)[206](index=206&type=chunk) - Gross profit declined due to lower volume and higher wage/benefit costs (**$6.1 million**), partially offset by lower restructuring costs (**$3.0 million**) and material costs; gross margin remained flat at **31.3%**[207](index=207&type=chunk) - Operating margin improved due to lower payroll/benefit costs (including a **$5.5 million reversal of unvested stock compensation**) and reduced SEA restructuring costs (**$3.9 million**), partially offset by increased R&D costs (**$0.9 million**)[208](index=208&type=chunk) - Net income and EPS were positively impacted by a **$3.8 million contingent gain** from insurance reimbursement for business interruption losses in Italy[209](index=209&type=chunk) [Segment Results](index=41&type=section&id=Segment%20Results) The Hydraulics segment experienced a **5.1% net sales decline** in 2024, driven by decreased demand in the Americas and EMEA, while the Electronics segment saw a slight **0.4% net sales decline** but achieved an **8.3% increase in gross profit** and a **19.8% increase in operating income** due to acquisition revenues, pricing, and lower material costs Hydraulics Segment Performance (2024 vs. 2023) | Metric | 2024 (in millions) | 2023 (in millions) | $ Change | % Change | | :---------------- | :----------------- | :----------------- | :------- | :------- | | Net sales | $537.2 | $565.8 | $(28.6) | (5.1)% | | Gross profit | $165.8 | $181.8 | $(16.0) | (8.8)% | | Gross profit % | 30.9% | 32.1% | | | | Operating income | $86.4 | $93.3 | $(6.9) | (7.4)% | | Operating income % | 16.1% | 16.5% | | | - Hydraulics net sales declined organically by **5.4%** due to decreased demand in Americas and EMEA (agriculture, mobile, industrial markets), partially offset by APAC growth (China, Australia)[211](index=211&type=chunk) - Hydraulics gross margin declined by **120 basis points** due to lower fixed overhead leverage on reduced volume and sales mix[213](index=213&type=chunk) - Hydraulics SEA expenses decreased by **$9.1 million (10.3%)**, including a **$3.7 million reversal of unvested stock compensation**[214](index=214&type=chunk) Electronics Segment Performance (2024 vs. 2023) | Metric | 2024 (in millions) | 2023 (in millions) | $ Change | % Change | | :---------------- | :----------------- | :----------------- | :------- | :------- | | Net sales | $268.7 | $269.8 | $(1.1) | (0.4)% | | Gross profit | $86.5 | $79.9 | $6.6 | 8.3% | | Gross profit % | 32.2% | 29.6% | | | | Operating income | $29.6 | $24.7 | $4.9 | 19.8% | | Operating income % | 11.0% | 9.2% | | | - Electronics organic net sales declined by **1.6%**, but acquisition sales contributed **$3.1 million**; Health and Wellness sales increased YoY, and APAC sales grew significantly (**44.2%**) driven by China[217](index=217&type=chunk) - Electronics gross margin increased by **260 basis points**, primarily from lower material costs (down **330 basis points** as a % of sales) and acquisition revenues[219](index=219&type=chunk) - Electronics operating income increased by **19.8%**, with SEA expenses up **$1.7 million** due to acquisitions and R&D, partially offset by a **$1.8 million reversal of unvested stock compensation**[220](index=220&type=chunk) [Corporate and Other](index=43&type=section&id=Corporate%20and%20Other) Unallocated costs, not used for segment performance evaluation, totaled **$34.2 million** in 2024, down from **$38.1 million** in 2023, primarily including amortization of acquisition-related intangible assets, officer transition costs, and other acquisition and integration-related activities - Unallocated costs totaled **$34.2 million** in 2024, down from **$38.1 million** in 2023[221](index=221&type=chunk)[222](index=222&type=chunk) - 2024 unallocated costs included **$31.5 million** for amortization of acquisition-related intangible assets, **$1.9 million** for officer transition costs, and **$0.8 million** for other acquisition and integration activities[221](index=221&type=chunk) [Interest Expense, net](index=43&type=section&id=Interest%20Expense%2C%20net) Net interest expense increased by **$2.6 million to $33.8 million** in 2024, up from **$31.2 million** in 2023, attributed to higher average debt levels and rising interest rates Net Interest Expense (in millions) | Year | Amount | | :--- | :----- | | 2024 | $33.8 | | 2023 | $31.2 | | **Change** | **$2.6 (Increase)** | - Increase in interest expense is attributable to higher average debt levels (**$448.9 million in 2024**) and higher interest rates[223](index=223&type=chunk) [Income Taxes](index=43&type=section&id=Income%20Taxes) The income tax provision for 2024 was **22.8% of pretax income**, a decrease from **23.8% in 2023**, primarily due to a shift in the mix of worldwide income and a decrease in valuation allowance, with **$37.1 million of undistributed foreign earnings** intended for indefinite reinvestment Income Tax Provision (as % of pretax income) | Year | Rate | | :--- | :--- | | 2024 | 22.8% | | 2023 | 23.8% | | **Change** | **(1.0) percentage points** | - The decrease in the effective tax rate is principally due to a shift in the mix of worldwide income and a decrease in valuation allowance[224](index=224&type=chunk) - Helios Technologies is subject to OECD Pillar Two GloBE rules but does not expect a material impact on its effective tax rate in 2025[225](index=225&type=chunk)[227](index=227&type=chunk) - As of December 28, 2024, **$37.1 million of undistributed earnings** from non-U.S. subsidiaries are intended for indefinite reinvestment[228](index=228&type=chunk) [2023 Results and Comparison of Years Ended December 30, 2023 and December 31, 2022](index=44&type=section&id=2023%20Results%20and%20Comparison%20of%20Years%20Ended%20December%2030%2C%202023%20and%20December%2031%2C%202022) For a detailed discussion and analysis of 2023 results compared to 2022, readers are referred to the Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed on February 27, 2024 - Discussion and analysis of 2023 results compared to 2022 are incorporated by reference from the Annual Report on Form 10-K for the fiscal year ended December 30, 2023[229](index=229&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Helios Technologies' liquidity is primarily supported by cash from operations and available credit facilities, with net cash from operations increasing significantly in 2024 due to inventory reductions, and the company refinancing its credit agreement to extend debt maturity and increase its revolving credit facility - Primary sources of capital are cash from operations and credit facility borrowings; as of December 28, 2024, cash on hand was **$44.1 million**, with **$352.4 million available credit** and a **$400.0 million accordion feature**[231](index=231&type=chunk) - Net cash provided by operating activities increased by **$38.2 million (45.5%) to $122.1 million** in 2024, driven by a **$19.4 million reduction in inventories**[235](index=235&type=chunk) - Cash used in investing activities decreased by **$123.6 million (80.3%) to $30.3 million** in 2024, primarily due to no acquisition-related payments[236](index=236&type=chunk) - Net cash used in financing activities was **$78.4 million** in 2024, compared to **$57.9 million provided in 2023**, reflecting **$68.0 million in net debt repayments**[237](index=237&type=chunk) Cash Flows Summary (in millions) | Cash Flow Type | 2024 | 2023 | $ Change | | :------------------------------------ | :----- | :----- | :------- | | Net cash provided by operating activities | $122.1 | $83.9 | $38.2 | | Net cash used in investing activities | $(30.3) | $(153.9) | $123.6 | | Net cash (used in) provided by financing activities | $(78.4) | $57.9 | $(136.3) | | Net increase (decrease) in cash and cash equivalents | $11.7 | $(11.3) | $23.0 | - The credit agreement was amended and restated on June 25, 2024, extending debt maturity to June 2029 and increasing the revolving credit facility to **$500.0 million**[241](index=241&type=chunk) - Contractual obligations include credit facilities (total debt **$450.6 million**), contingent consideration (**$0.4 million payable in 2025**), supplier purchases (**$66.1 million in 2025**), and a building purchase commitment (**€26.7 million expected purchase price**)[244](index=244&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Helios Technologies' financial statements rely on critical accounting policies and estimates, particularly for business combinations, goodwill, and income taxes, with the i3 reporting unit identified as having a small excess fair value, posing a risk for future impairment - Business combinations require significant judgment in assigning fair values to acquired assets and liabilities, especially intangible assets, using methodologies like discounted cash flow and relief from royalty[252](index=252&type=chunk) - Goodwill is tested annually for impairment at the reporting unit level using income-based (discounted cash flow) and market-based valuation methods, requiring significant management judgment on future performance and market conditions[255](index=255&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) - The i3 reporting unit's goodwill (**$25.9 million**, **5.2% of total goodwill**) is at risk for future impairment due to a relatively small excess fair value (less than **3%**) over its carrying value[261](index=261&type=chunk) - Income taxes involve significant judgment in determining deferred tax assets and liabilities, valuation allowances (**$2.3 million as of December 28, 2024**), and uncertain tax positions (**$5.4 million as of December 28, 2024**)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[420](index=420&type=chunk)[421](index=421&type=chunk) [Off Balance Sheet Arrangements](index=49&type=section&id=Off%20Balance%20Sheet%20Arrangements) Helios Technologies does not engage in any material off-balance sheet financing arrangements, including interests in variable interest entities - The company does not engage in any off-balance sheet financing arrangements or have material interests in variable interest entities[268](index=268&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=50&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Helios Technologies is exposed to market risks primarily from changes in foreign currency exchange rates and interest rates, managing these through selective use of financial instruments, with a **1% increase in average interest rate** potentially increasing 2024 financing costs by **$4.0 million**, and a **10% decrease in foreign currency exchange rates** reducing 2024 annual sales by **$29.5 million** - Primary market risks are foreign currency exchange rates and interest rates[269](index=269&type=chunk) - A **one percentage point increase** in the average interest rate (**6.1% in 2024**) would have resulted in an approximate **$4.0 million increase** in 2024 financing costs[270](index=270&type=chunk) - Interest rate swap contracts were terminated on June 25, 2024[270](index=270&type=chunk) - A **10% decrease** in 2024 average foreign currency exchange rates would have resulted in a **$29.5 million decrease in annual sales** and a **$60.0 million reduction to equity**[273](index=273&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=51&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents the audited consolidated financial statements of Helios Technologies, Inc. for the years ended December 28, 2024, December 30, 2023, and December 31, 2022, with Grant Thornton LLP issuing an unqualified opinion on the financial statements and internal control over financial reporting, noting the evaluation of goodwill recovery as a critical audit matter - The consolidated financial statements for 2024, 2023, and 2022 are presented, including Balance Sheets, Statements of Operations, Comprehensive Income, Shareholders' Equity, and Cash Flows[274](index=274&type=chunk)[277](index=277&type=chunk) - Grant Thornton LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 28, 2024[277](index=277&type=chunk)[278](index=278&type=chunk)[288](index=288&type=chunk) - A critical audit matter was the evaluation of goodwill recovery for certain reporting units, due to significant management judgments in developing fair value measurements (growth rate, discount rate, market multiple, control premium, weighting)[282](index=282&type=chunk)[283](index=283&type=chunk) Consolidated Balance Sheets (in millions) | Asset/Liability | Dec 28, 2024 | Dec 30, 2023 | | :------------------------------------ | :----------- | :----------- | | Cash and cash equivalents | $44.1 | $32.4 | | Accounts receivable, net | $104.6 | $114.8 | | Inventories, net | $190.1 | $215.1 | | Total current assets | $384.2 | $396.7 | | Property, plant and equipment, net | $216.4 | $227.9 | | Goodwill | $498.9 | $514.0 | | Other intangible assets, net | $384.0 | $426.4 | | Total assets | $1,505.4 | $1,590.4 | | Accounts payable | $56.7 | $70.3 | | Total current liabilities | $138.6 | $144.9 | | Revolving lines of credit | $147.3 | $199.8 | | Long-term non-revolving debt, net | $283.2 | $298.3 | | Total liabilities | $641.0 | $735.8 | | Total shareholders' equity | $864.4 | $854.6 | | Total liabilities and shareholders' equity | $1,505.4 | $1,590.4 | Consolidated Statements of Operations (in millions, except per share data) | Metric | 2024 | 2023 | 2022 | | :-------------------------------- | :----- | :----- | :----- | | Net sales | $805.9 | $835.6 | $885.4 | | Gross profit | $252.3 | $261.7 | $298.5 | | Operating income | $81.8 | $79.9 | $137.3 | | Net income | $39.0 | $37.5 | $98.4 | | Diluted net income per share | $1.17 | $1.14 | $3.02 | | Dividends declared per share | $0.36 | $0.36 | $0.36 | Consolidated Statements of Cash Flows (in millions) | Cash Flow Type | 2024 | 2023 | 2022 | | :------------------------------------ | :----- | :----- | :----- | | Net cash provided by operating activities | $122.1 | $83.9 | $109.9 | | Net cash used in investing activities | $(30.3) | $(153.9) | $(90.8) | | Net cash (used in) provided by financing activities | $(78.4) | $57.9 | $(6.9) | | Net increase (decrease) in cash and cash equivalents | $11.7 | $(11.3) | $15.2 | | Cash and cash equivalents, end of period | $44.1 | $32.4 | $43.7 | [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=86&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[463](index=463&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=86&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Helios Technologies' management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 28, 2024, with no material changes occurring during the year - Disclosure controls and procedures were effective as of December 28, 2024, ensuring timely and accurate information disclosure[465](index=465&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 28, 2024, based on the COSO framework[467](index=467&type=chunk) - No material changes in internal control over financial reporting occurred during the year ended December 28, 2024[468](index=468&type=chunk) [ITEM 9B. OTHER INFORMATION](index=87&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter ended December 28, 2024 - No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter ended December 28, 2024[471](index=471&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=87&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to Helios Technologies, Inc - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[472](index=472&type=chunk) PART III [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=91&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information regarding Helios Technologies' directors, executive officers, corporate governance, and insider trading policy is incorporated by reference from the company's 2025 Proxy Statement - Information on executive officers, directors, and corporate governance is incorporated by reference from the 2025 Proxy Statement[474](index=474&type=chunk)[475](index=475&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=91&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information concerning executive compensation for Helios Technologies is incorporated by reference from the company's 2025 Proxy Statement - Information on executive compensation is incorporated by reference from the 2025 Proxy Statement[479](index=479&type=chunk) [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=91&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Details on equity compensation plans and security ownership of certain beneficial owners and management are incorporated by reference from Helios Technologies' 2025 Proxy Statement - Information on equity compensation plans and security ownership is incorporated by reference from the 2025 Proxy Statement[480](index=480&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=91&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding certain relationships, related transactions, and director independence for Helios Technologies is incorporated by reference from the company's 2025 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement[481](index=481&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES](index=91&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information concerning principal accountant fees and services for Helios Technologies is incorporated by reference from the company's 2025 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement[483](index=483&type=chunk) PART IV [ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES](index=92&type=section&id=ITEM%2015.%20EXHIBIT%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements included in Part II, Item 8, and provides a comprehensive index of exhibits filed with the Form 10-K, including corporate documents, equity incentive plans, credit agreements, and certifications, many of which are incorporated by reference from previous SEC filings - Lists financial statements included in Part II, Item 8, and provides an index of exhibits[486](index=486&type=chunk) - Exhibits include corporate documents (Articles of Incorporation, Bylaws), equity incentive plans (ESPP, 2019/2023 Equity Incentive Plans), executive compensation agreements, and credit agreements (PNC Bank, Citibank)[488](index=488&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk) - Many exhibits are incorporated by reference from previous SEC filings[488](index=488&type=chunk)[489](index=489&type=chunk)[490](index=490&type=chunk) [ITEM 16. FORM 10-K SUMMARY](index=94&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This section indicates that there is no Form 10-K summary provided - No Form 10-K Summary is provided[493](index=493&type=chunk) [Signatures](index=95&type=section&id=Signatures) The Annual Report on Form 10-K was duly signed on behalf of Helios Technologies, Inc. by Sean Bagan, President, Chief Executive Officer, and Chief Financial Officer, and other directors on February 25, 2025 - The Report was signed by Sean Bagan, President, Chief Executive Officer, and Chief Financial Officer, and other directors on February 25, 2025[495](index=495&type=chunk)[496](index=496&type=chunk)[497](index=497&type=chunk)

Financial Data and Key Metrics Changes - Sales for the fourth quarter came in at the higher end of expectations, with a 4% improvement in the Americas, a 10% decline in EMEA, and a 5% decline in APAC compared to the previous year [12] - Gross profit declined by $7.9 million year-over-year, with gross margin contracting 360 basis points to 28.6% [14] - Adjusted EBITDA for the quarter was $32.3 million, or 16.7% of sales, reflecting the impact of lower volume and investments offset by cost reduction initiatives [16] - The effective tax rate for the fourth quarter was 23.3%, with diluted Non-GAAP EPS of $0.38, which included an $0.08 impact from increased interest expense [17] Business Line Data and Key Metrics Changes - Hydraulics segment sales were down 5% year-over-year, with gross profit declining by $7.4 million and gross margin contracting 390 basis points [18][20] - Electronics segment sales improved by $3.9 million, or 7% year-over-year, but faced a 14% sequential decline [21][22] - SEA expenses for the Hydraulics segment declined sequentially by $1.5 million, or 7%, compared to the third quarter [20] Market Data and Key Metrics Changes - The health and wellness market saw year-over-year growth for the first time since Q1 2022, although it had contracted in the first three quarters of 2023 [13] - The construction and industrial markets showed mixed results, with some recovery noted in Hydraulics [47] Company Strategy and Development Direction - The company is focused on operational excellence through investments in manufacturing strategy, including the establishment of Centers of Excellence and regional manufacturing expansions [5][6] - The strategy includes filling product and solution gaps, diversifying revenues, and building talent through acquisitions [7] - The company aims to execute a profitable sales growth plan while maintaining investment and cost discipline [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2024, highlighting the importance of execution and financial discipline to deliver returns on investments [29][27] - The company anticipates a challenging first half of 2024 but expects growth in the latter half, with revenue guidance of $840 million to $860 million [25][41] Other Important Information - The company generated free cash flow of $25 million in the fourth quarter, with capital expenditures at 4% of sales for the year [37] - The balance sheet remained stable, with cash and cash equivalents at $32.4 million and $200.1 million available on revolving lines of credit [38] Q&A Session Summary Question: What end markets have the lowest visibility and potential improvement? - Management noted mixed trends in Hydraulics, with construction and industrial areas showing some recovery, while Electronics faced challenges [47] Question: What is the mix of OEM and distributors in 2023 and expectations for 2024? - The company saw a shift towards OEMs, increasing from 55% in 2022 to over 60% in 2023, with expectations for this trend to continue [48] Question: What are the cash flow expectations for 2024? - Management indicated a focus on capital allocation in manufacturing operations, new product development, and additional capacity to support growth [49][50] Question: What is the underlying demand perspective across businesses? - Management characterized a small uptick in Hydraulics distributor inventory, with an overall increase in demand across most businesses, except for marine products [56] Question: What is the guidance for system sales and their impact? - Management indicated that while system sales are not included in guidance for 2024, there is a better than zero chance of benefits from these sales [86][87]