Helios Technologies, Inc.

greetings and welcome to the Helios Technologies second quarter 2025 financial results conference call. At this time, all participants are in the 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 and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tanya Almond, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Thank you, Operator, and good day, everyone. Welcome to the Helios Technologies Second Quarter 2025 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 the slides that will accompany our conversation today as well as our prepared remarks. Here with me is Shawn Bagan, President, Chief Executive Officer, and Chief Financial Officer. While our search process for a new CFO is ongoing, please welcome back our Vice President, Corporate Controller, Jeremy Evans as well. Sean will start the call with highlights from the second quarter as well as comments on our CFP divestiture announcement, then hand it over to Jeremy to review our second quarter financial results in detail and our current thinking on the latest tariff impacts on our business. Sean will then conclude our prepared remarks with our latest thoughts on our 2025 outlook, financial and operational priorities, and key focus areas. We will then 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 those presented today. These risks and uncertainties and other factors can be found in our annual report on Form 10-K for 2024, along with 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 three and four now. With that, it's my pleasure to turn the call over to Sean.

Thanks, Tanya, and welcome, everyone. We appreciate you joining us today. Before we walk through our second quarter results, I'd like to take a moment to recognize a special milestone in our company's journey. This year marks the 55th anniversary of Helios Technologies, a moment of gratitude and celebration. I had the privilege of celebrating this meaningful milestone with the Sun Hydraulics team on Saturday evening, a perfect midsummer outing in the local community at the Bradenton Marauders game, the minor league affiliate of the Pittsburgh Pirates. With two outs and two runners on base in the bottom of the ninth, the Marauders were down by two runs. Then, in a thrilling finish, Tony Blanco Jr. launched a walk-off home run to seal a dramatic 6-5 comeback win. The symbolism couldn't be more fitting for the Sun Hydraulics and Helios teams as we look ahead with renewed energy and determination to make a strong comeback in the second half of the year. We would not be here today without the vision, determination, and relentless spirit of those who came before us, specifically from our largest operating company, Sun Hydraulics. From our founders, Bob Kosky and John Allen, who laid the groundwork with bold ideas and a pioneering mindset, to the generation of employees and partners who helped build and sustain this company through decades of change and growth, this milestone belongs to all of them. To every individual who has contributed to our story over the past 55 years, thank you. Your commitment, your belief in our purpose, and your dedication to excellence have shaped who we are today. As we honor that legacy, we remain firmly focused on the future, committed to innovation, to our customers, and to creating long-term value for our shareholders. Now let's turn to the highlights of our second quarter performance. We are pleased to have delivered Second quarter results that surpassed our internal expectations, demonstrating resilience and disciplined execution in a continued dynamic environment with challenge and markets. While sales and earnings declined in the quarter compared to the prior year, the performance reflects solid progress against our 2025 key focus areas and financial priorities, which positions us extremely well for the second half of the year. Sales in the quarter were $212 million exceeding our outlook on stronger than expected hydraulic segment sales, also aided by foreign exchange. Adjusted EBITDA margin of 18.6% was also above our outlook, even while somewhat dampened by unfavorable product mix and tariff impacts. In addition to stronger than expected second quarter sales, margins, and earnings, we also generated near record cash from operations of $37 million and used that to further strengthen our balance sheet. We continue to reduce debt, which is lower by $67 million from the year-ago period, improving our net debt to adjusted EBITDA leverage ratio to 2.6 times. We are targeting a sub-two times leverage ratio that will give us flexibility from a capital allocation perspective. We initiated our previously announced share repurchase authorization by repurchasing 200,000 shares of common stock at an average price of $32 per share in the quarter. We believe that to be an excellent use of our capital, especially as we consider the opportunities before us to deliver organic growth and return adjusted EBITDA margins to the 20% plus range. Also recently announced, we have signed a definitive agreement to sell Custom Fluid Power, our Australian-based hydraulic fluid power and service provider business, to Questis Group for $83 million Australian dollars or approximately $54 million Australian. USD equivalent at current foreign exchange rates. On a standalone basis, the custom fluid power business, also referred to as CFP, has been a remarkable growth company under the Helios umbrella. Since purchasing the business in 2018, CFP sales have expanded every year, growing to $92 million Australian dollars or $61 million USD equivalent for fiscal year 2024. More impressive, earnings have more than doubled over that same comparable period, including adjusted EBITDA USD equivalent growing from approximately $4 million to $8 million. As we are refocusing our go-to-market strategy and prioritizing our capital allocation to improve our ROIC, it became clear Helios and CFP would be better served as strategic partners versus related parties. Headquartered in Sydney, Questis is one of Australia's leading providers of hydraulic solutions and currently has approximately 850 employees across 37 locations. We believe Questis is the ideal owner for CFP. Importantly, we have solidified our long-term relationship with Questis through an exclusive distribution agreement between them and Sun Hydraulics for that region. This fosters a partnership where each party's success contributes to the other's advancement. Our plan is to use the cash proceeds from the transaction primarily for further debt reduction, as well as investment into our core manufacturing and innovation. While the divestiture will reduce our sales and earnings run rates, it will improve margin rates within our hydraulic segment and at a consolidated Helios level. In the quarter, we also made progress aligning our businesses to better serve our customers by structuring our people and processes around our products and brands within our hydraulics and electronics segments. This structure enables our go-to-market strategy and improves accountability for performance. This approach keeps the operating teams closer to our customers to better understand their needs. In addition, we have simplified the business. As mentioned last quarter, we have eliminated fixed costs and reallocated personnel resources from the Helios Center of Engineering Excellence in San Antonio, Texas. This has enabled us to concentrate our talent within our brands and drive accountability with the engineering teams for the products we bring to market. We're taking decisive steps to refocus the organization in order to drive better outcomes. We are working hard to make Helios a better business through relentless commitment to customer needs, cost discipline, refined capital allocation, and operational efficiency. From a governance perspective, this quarter we also fortified our board of directors through the appointment of Ian Walsh. Ian is currently the CEO of FDH Arrow. His strong leadership experience in manufacturing, commercial aerospace, and defense industries illustrates the very relevant operational and strategic expertise he brings. This returns the board to seven total members. I will now turn the call over to Jeremy to cover the details of our second quarter financial results, and then I will come back to discuss our outlook and highlight the innovations we are advancing in our markets.