Financial Data and Key Metrics Changes - The company reported a 13% increase in sales year-over-year, reaching $220 million, exceeding the guidance range of $215 million [14][22] - Adjusted EBITDA margin was above 20%, marking a significant recovery [5][11] - Gross profit increased by 21% year-over-year to $73 million, with gross margin expanding by 200 basis points to 33.1% [15][19] - Diluted EPS was $0.31, down 9% year-over-year, while diluted non-GAAP EPS was $0.72, up 22% [16][19] Business Segment Data and Key Metrics Changes - The electronics segment grew by 21% year-over-year, driven by strong performance in the recreational and industrial markets [14][18] - Hydraulics sales increased by 9% year-over-year, supported by improving demand in mobile and agriculture markets [17][19] - The electronics segment's gross profit and gross margin expanded by 38% and 420 basis points, respectively [18] Market Data and Key Metrics Changes - Year-over-year sales increased double digits across all three regions, with APAC growing by 10% and the Americas by 6% [14][15] - EMEA experienced a typical seasonal decline of 6% [14] - The mobile, recreational, and agriculture markets showed signs of recovery compared to year-over-year comparables [14][15] Company Strategy and Development Direction - The company is focused on organic growth driven by innovation and has launched new products that provide incremental sales streams [24][25] - A restructuring initiative is in place to streamline operations and optimize the portfolio [10][21] - The company aims to reduce its leverage ratio to around two times by year-end, allowing for strategic investments in 2026 [11][51] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering 2026 with growth, citing improved demand trends and healthier dealer inventory levels [21][68] - The company anticipates fourth-quarter sales in the range of $192-$202 million, representing a 10% increase year-over-year [22] - Management highlighted the importance of volume growth to achieve mid-20s EBITDA margins in the future [34][36] Other Important Information - The company closed the sale of Custom Fluidpower, recording a gain of $21 million, while also writing down $25.9 million of goodwill related to i3 Product Development [9][10] - The company is committed to maintaining its long dividend history and opportunistically repurchasing shares [11][24] Q&A Session Summary Question: Can you provide insight into recent commercial wins and visibility into 2026? - Management highlighted recent wins in various sectors, including agriculture and recreational markets, indicating a positive outlook for 2026 [30][31] Question: What will it take to return to adjusted EBITDA levels seen in fiscal 2021? - Management noted that increased volume and effective cost management are crucial for achieving mid-20s EBITDA margins [34][36] Question: What is the current state of the recreational vehicle market? - Management indicated that while retail demand has not rebounded, dealer inventory levels are healthier, which is a positive sign for future growth [44][46] Question: Is there any further portfolio reshaping planned? - Management stated that there are no imminent changes but emphasized ongoing evaluations of the portfolio [48][50] Question: What are the plans for the i3 Product Development operation? - Management clarified that the focus is on integrating talented engineers into the broader Helios portfolio rather than pursuing standalone projects [74][76]

Financial Data and Key Metrics Changes - In Q3 2025, adjusted free cash flow was $99 million with a conversion rate of 36.8% despite not receiving payments from a key customer in Mexico [10][19] - EBITDA margin expanded by over 70 basis points due to cost initiatives, despite facing tariff and pricing pressures [10][16] - The company has paid four quarterly dividends of $0.25 per share and repurchased approximately $193 million worth of shares over the past five quarters [12][22] Business Line Data and Key Metrics Changes - North America saw a slight sequential increase due to seasonal recovery in Canada and improvement in offshore business, although U.S. land revenue declined [7] - Latin America improved revenues by 10% sequentially, primarily driven by Mexico, despite still being down approximately 60% year-over-year [8] - The MENA and Asia regions posted another quarter of sequential growth, led by the UAE, Qatar, Australia, and Thailand [8] Market Data and Key Metrics Changes - The ESSR region remained flat quarter-on-quarter, with some countries offsetting weakness in the UK [8] - Pricing pressure was noted in commodity-type services, particularly in the Middle East, while differentiated product lines remained stable [32][34] - The company anticipates that Saudi Arabia is nearing a bottom and expects year-on-year growth in the second half of 2026 [9][38] Company Strategy and Development Direction - The company is focused on cost optimization and margin expansion rather than chasing market share at unfavorable cash outcomes [27][34] - A multiyear cost optimization program is in place to achieve sustainable productivity gains through technology and lean processes [28][75] - The company is investing in infrastructure modernization and technology adoption to drive future growth [14][28] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding slight improvements in Mexico and overall market conditions, despite ongoing uncertainties [15][46] - The company expects a soft market to persist in the first half of 2026, with potential recovery in the second half driven by offshore activity [16][68] - Management remains confident in the company's ability to navigate challenges and capitalize on stable or improving activity levels [17][29] Other Important Information - The company expanded its credit facility by $280 million and announced a private offering of $1.2 billion in senior notes [22] - The net leverage ratio is approximately 0.5 times, with liquidity around $1.6 billion, indicating a strong balance sheet [23] - The company launched over 20 new products at its FORWARD conference, emphasizing innovation as a key growth driver [14][78] Q&A Session Summary Question: Pricing pressure in certain markets - Management noted pricing pressure primarily in commodity-type services, especially in the Middle East, but emphasized their commitment to maintaining margins [32][34] Question: Outlook for Saudi Arabia - Management indicated that improvements in Saudi Arabia will be driven predominantly by gas, with some recovery in oil activity expected [38] Question: Stability in Mexico - Management expressed cautious optimism about stabilization in Mexico, with recent positive developments in payment collections [46][48] Question: DRE margins improvement - Management attributed margin improvements to cost structure stabilization and increased activity in Latin America [52][54] Question: Fourth quarter free cash flow guidance - Management set a conservative free cash flow guidance of $100 million, with potential for higher outcomes depending on payment collections from Mexico [58][61] Question: Overall spending outlook for 2026 - Management anticipates a soft first half of 2026, with a rebound expected in the second half driven by offshore markets and production enhancement initiatives [68][70] Question: Cost optimization impact on margins - Management highlighted ongoing cost optimization efforts and structural improvements aimed at enhancing margins in a flat to up environment [74][75] Question: ERP implementation benefits - Management discussed the long-term benefits of a cloud-based ERP implementation, expected to enhance operational efficiencies and margins [81][82]