Helios (HLIO) Q1 2025 Earnings Call May 07, 2025 09:00 AM ET Company Participants Tania Almond - VP of IR and Corporate CommunicationsSean Bagan - President, CEO & CFOJeremy Evans - Vice President - Corporate ControllerNathan Jones - Managing DirectorJeffrey Hammond - Managing Director Conference Call Participants Chris Moore - Senior AnalystMircea Dobre - Associate Director of Research & Senior Research Analyst Operator Greetings, and welcome to the Helios Technologies First Quarter twenty twenty five Fina ...

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]