Helios Technologies, Inc.

Greetings and welcome to the Helios Technologies third 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 Third 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 Sean Bagan, our Chief Financial Officer. They will review our third quarter results along with our updated outlook for the remainder of 2023. We will then open the call to your questions. If you turn to slide two, you will find our State 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 10Q 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 GAP. We have provided reconciliations of comparable GAPs with non-GAP measures in the tables that accompany today's slides. Please reference slides three through six now. With that, it's my pleasure to turn the call over to Joseph.

Thank you. Welcome to today's call. I want to take a moment to send our heartfelt sympathy to everyone being impacted by this new conflict in the Middle East. We are all living through very tenuous times. Shifting to the business, let me start by welcoming Sean to his first quarterly call with Helios. Sean joins us most recently from Polaris, where he spent 23 years advancing through their global ranks. He has a proven track record of building, growing, and transforming global businesses into highly productive and profitable operations. John has hit the ground running and is a great fit within our team and our company values. He joins us at a very important time as we face the dramatic shift in the market dynamics this quarter. I would like to thank the Helios team for their tenacity, in navigating these challenging conditions while maintaining focus on our long-term goals. We saw positive trends starting this year. Last quarter, signs of stalling started to show. As we advanced through August and September, they took a turn. As I noted on our last call, our near-term visibility is in fact less clear than our long-term outlook. EMA shows signs of weakening before it improves. The U.S. economy has pocket of softness. The APEC recovery is taking longer than even said region, especially China, had expected. Our customers in the Americas, currently representing 55% of total revenue, are beginning to hesitate. those customers are facing a less favorable environment for consumer spending and financial liquidity. This equates to what the Fed has been pushing for, a slowed economy to tamp down inflation. Given current conditions, we have been taking proactive actions to protect our margins by optimizing our cost structure while balancing our resources to deliver the top-notch service our customers have come to expect. Even with global macroeconomic and geopolitical uncertainty, I am confident our strategy is intact. While we manage through the short term, we must continue to lead and execute for the long term. For the last several years, we have been methodically investing for growth. We are well positioned to be able to drive significant leverage across the top and bottom lines when the markets start to recover. We are encouraged with the progress we are making across several customer projects we described last quarter. All these deals are still in play. The timelines for decisions on some have been pushed out based on the macro. Those customers are facing near-term challenges but remain opportunistic and committed. Most of these projects are currently expected to begin in 2024 and start to show contribution in the latter half of the year. We continue to demonstrate that our innovation and engineering excellence are paramount. For example, We recently announced two advanced new products from our electronics segment, both with initial customer examples. The first being the PowerView P70 and most recently, Climate Zone 2. We are also building on the value our acquisitions bring to create revolutionary technologies. We recently introduced remote support software by integrating i3 capabilities with its Cygnus support platform into our OpenPV software. Together, this creates a solution that will increase end-user satisfaction and loyalty, improve customer support, and enable a recurring revenue stream to capture this added value. In fact, Our i3 team has created a software platform for a commercial food service customer who has added the software to thousands of their units. This same customer intends to also leverage the Cygnus platform as it will connect directly with this new software. We are seeing traction with our new products and services. It has just been masked now by the macroeconomic