Helios Technologies, Inc.

Greetings, and welcome to the Helios Technologies second quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tanya Allman, Vice President of Investor Relations and Corporate Communications. Thank you. You may begin.

Thank you, operator, and good day, everyone. Welcome to the Helios Technologies second 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 Matuszewicz, our President and Chief Executive Officer, and Tricia Fulton, Executive Vice President and Chief Financial Officer. They will spend the next several minutes reviewing our second quarter results, discussing our progress with our augmented strategy, reviewing our updated outlook for the second half of 2023, and then we will open the call to your questions. If you turn to slide two, 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 sec.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 tables that accompany today's slides. Please reference slides 3, 4, and 5 now. With that, it's my pleasure to turn the call over to Joseph.

Tanya, thank you. And thanks to everyone joining us. Our global team has stepped up to the plate and delivered. We had strong sequential growth in the quarter with revenue up 7%, including 6% organic growth over Q1. Operating margin increased 140 basis points while we continued investing to integrate our acquisitions and expand our capacity to meet growing customer demands. This translated to our bottom line increasing 21%. Thank you once again to our global team for their great performance. We have methodically invested over the last three years to develop or acquire new technologies, close product gaps, fill in geographic white spaces, and drive opportunities for growth by expanding our addressable end markets. All this work is on the verge of bearing fruit. Currently, we are in our next phase preparing for another growth cycle. And we are accelerating this transition. Our customers' appetite for our new offering is rapidly building. We want to be ready to address the indicated interest. As such, we are pulling forward investments and project timelines to enable this new capacity to take on step change growth starting in 2024. Our innovation and engineering excellence is the lifeblood of this organization. In the quarter, we closed our acquisition of i3 and we are already far along with the integration of i3 remote field service platform into the Helios solution. As a result, Recurring revenue could start to show up in our P&L as early as next year. Helios continues driving technological breakthroughs, and we are well positioned to capitalize on many megatrends with our solutions. This includes electrification, reducing emissions, and creating more energy-efficient solutions while continuously improving our user interface. Our long-term outlook at Helios is very bright. In the short term, we are faced with some near-term challenges for the second half of 23. We are seeing a slower than expected recovery in APEX. About 40% of our CVT hydraulics volume goes through APEX with two of our largest distributors located there. In North America, The distributed inventory levels have been trending in the right direction since the end of last year, but also a bit slower than expected. Additionally, our hydraulic colleagues in Europe dealt with a planned fire in the second quarter. Then in July, they had to endure a tornado, hailstorm, and flooding. I am grateful to report all of our teammates are safe, which is most important. These macro issues combined with the natural disasters is pressurizing our top line for the second half. As a result, our near-term visibility is in fact less clear than our long-term outlook. We are adjusting to current conditions while continuing to prepare for what we believe will be a very healthy 2024. Before I turn the call over to Tricia to review the financials, I would like to wish her well on her retirement. Trisha has been a cornerstone of our company during her 26 years of service, 17 of which she served as the CFO. On behalf of the board of directors and the entire company, I would like to express our gratitude for her significant contribution. We wish her the best in her next chapter of life. Starting tomorrow, Trisha passes the baton off to our new CFO, Sean Bagans. Sean joins us most recently from a 23-year career with Polaris. He has a proven track record of building, growing, and transforming global businesses into highly productive and profitable operations. We are excited to welcome Sean to the Helios family. I will now turn the call over to Tricia to review our financial results for the final time. She will then hand it back to me for some closing comments. Tricia, please.