Helios Technologies, Inc.

Welcome to the Helios Technologies first quarter 2023 earnings conference call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. As a reminder, this call is being recorded. This morning, the company was having intermittent technical difficulties during the pre-testing on their phone lines. They have posted their prepared remarks on their website in case any issues arise with the sound quality of the call. It is now my pleasure to introduce Tanya Ullman, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator, and good day, everyone. Welcome to the Helios Technologies First Quarter Financial Results Conference Call. We issued a press release announcing our results yesterday afternoon. If you do not have that release, it is available on our website at hlio.com. You will also find slides there that will accompany our conversation today. On the line with me are Joseph Matasevich, our President and Chief Executive Officer, and Tricia Fulton, our Executive Vice President and Chief Financial Officer. They will spend the next several minutes reviewing our first quarter results, discussing our progress with our augmented strategy, reiterating our outlook for 2023, and then we will open the call to your questions. If you turn to slide 2, you will find our Safe Harbor Statement. As you may be aware, we will make some forward-looking statements during this presentation and the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These risks and uncertainties and other factors have been provided in our latest 10-K filing as well as our upcoming 10-Q to be filed with the Securities and Exchange Commission. You can find these documents on our website or at fec.gov. I'll also point out that during today's call, we will discuss some non-GAAP financial measures which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of comparable GAAP with non-GAAP measures in the table that accompany today's slides. Please reference slides 3 and 4 now. With that, it's my pleasure to turn the call over to Joseph.

Tanya, thank you, and thanks to everyone on the line joining us. The vision we have laid out is really starting to come together. The Helios team continues to execute on our augmented strategy. Thank you to all the Helios colleagues for your tireless work and critical contribution in executing our shared vision. We started 2023 with strong top-line results. Our team delivered very good sequential revenue growth of 9%, including double digits from electronics coming off the fourth quarter. We are encouraged by the continued improvement we have seen in our health and wellness business over the last few months. We are protecting the business by achieving a sequential increase on our gross margin while navigating the macro environment, supply chain, and FX impact. We are proactively investing through operating expenses over the first half of this year. This will accelerate the integration of our augmented strategy to align our long-term cost structure as we continue this journey and prepare for the next wave of global growth. We view this investment as more of a step function in how it will play out through financials. There are several investment areas. First, following the acquisition and integration of several companies, we announced the opening of two new centers of excellence to be completed in Q3. This is part of the construction we are highlighting on slide four, currently taking place at Daemen, adding 50,000 square feet. We just turned the lights on and took down the temporary wall between the addition and existing building. We are also starting construction right next to our existing Balboa facility in Mexico to add 68,000 square feet. Second, we continue to do the work we previously outlined relating to our manufacturing and operating roadmap projects. We have several initiatives we will execute throughout 2023 and beyond that will drive efficiencies and improvements across the business. An example of this is moving targeted board assembly and wire harness production from Tulsa to Tijuana. In fact, we have been implementing these actions to increase capacity. New customer opportunities have been created midstream that we are responding and adjusting to. Third, we are happy to announce that we are moving to a regional organization structure for our hydraulics segment. After reaching a critical mass from the addition of several flywheel acquisitions, the time has come to adjust our structure to position us for the next wave of growth. A lot of time and planning has been invested to make this happen. For our new regional structure, Matteo Arturini, our longtime president of QRC, will have full oversight for the hydraulics in EMEA. Rick Matic, who has been our long-standing head of manufacturing and operations, was just promoted to president of hydraulics for the Americas. In December, Lee Wickluck joined Helios as the president of the electronics segment. Matteo, Rick, and Lee will work together to support our customers in APEC with our local leadership team in that region. We now have our updated structure in place that brings strong leadership, knowledge of our brands and customers, great team chemistry, and leaders who work extremely well together. We expect this new regional structure, the company's center of excellence, and our manufacturing and operating strategy to support growth well beyond our 1 billion total company milestones. We believe that time is right to make those important investments, which will have a short-term impact on our operating margins. We are executing to our full-year outlook with our manufacturing and operating strategy, driving productivity and efficiencies, protecting full-year margin and earnings while navigating a challenging operating environment. Now turning to slide five. last week we announced a definitive agreement to acquire i3 product development i3 has over 55 engineers with expertise in electronics mechanical industrial embedded and software engineering that will further diversify our end markets through their experience across medical off-highway recreational and commercial marine power sports health and wellness, ag, consumer goods, industrial and sports, and fitness. Innovation is the lifeblood of any successful organization. We expect the acquisition of i3 to turbocharge our efforts to be the most innovative company focused on the intersection of hydraulics and electronics. It will equip Helios with significant value-added professional services capabilities to solve customers' most complex needs and provide customization for Helios platforms and solutions. Their patented remote platform will provide support in the field for customers and their IoT devices. Over the 28-year history, i3 made a pivot in 2017 to broaden their focus to include cloud, connectivity, IoT, and electronics. Since that time, the growth has really taken off. It will be a powerful combination to apply the capabilities and expertise against the scale of the global Helios business as we approach $1 billion in annualized revenue. I3 fits perfectly into the telematics and data analytics roadmap we have been articulating for quite some time. Their culture is very aligned with ours. It is a rare opportunity to find a company of this caliber that provides top-notch engineering and software capabilities that will plug perfectly into our own roadmap vision. We are very pleased to welcome them to the Helios family. Now let me turn the call over to Tricia to review the financial results and reiterate our outlook. She will then hand it back to me for a few final comments. Tricia, please.