Helios Technologies, Inc.

Greetings, and welcome to the Helios Technologies 3rd Quarter 2025 Financial Results Conference Call. At this time, all participants are in 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 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 today are Sean Bagan, President and Chief Executive Officer, Michael Conaway, our Chief Financial Officer, and Jeremy Evans, our Chief Accounting Officer. Please join us in welcoming Michael for his first earnings call with Helios. He joined the Helios team just three weeks ago. Sean will start the call with highlights from the third quarter, then hand it over to Michael for a brief introduction. Jeremy will then review our third quarter financial results in detail. Sean will conclude our prepared remarks with expectations for the remainder of 2025. 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 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 gap with non-gap 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. Our third quarter delivered positive measurable results, analogous to the current changing autumn season. Since I joined Helios nine quarters ago, our business have persevered through various market down cycles. I am pleased to finally report that the third quarter was a harvest season for Helios as we returned to growth and delivered above 20% adjusted EBITDA margin. After planting strategic initiatives and weathering challenges, we're now seeing results in the same way that farmers do after spending months planting, nurturing, and waiting, often through unpredictable weather, before finally harvesting in the fall. Helios Technologies is evolving through restructuring, innovating, and expanding, and the core remains incredibly strong. Growth often requires visible change, and now the progress is coming through on our financial results. We believe the third quarter marks a turning point for Helios. We delivered a 13% sales increase with growth across all three of our regions and both business segments. This growth was driven by a strong performance from our electronics business. In fact, it was a record quarter for innovation controls with strong demand returning in the recreational industry. That's not to discount the growth in hydraulics, which was achieved in what continues to be a soft marketplace. Our focus on our go-to-market strategy and accelerated pace of innovation is winning back customers and taking market share. Of note, over the last five months, our weekly average order volume has outperformed the same periods in the last three years. Our customer centricity and high level of customer engagement is capturing new business wins and growing our sales funnel. Our new products across both segments have had great reception, where we have been showcasing them at major trade shows such as IBEX, Utility Expo, The Battery Show, IVT Expo, Bama Con Expo India, and the International Pool Spa Patio Expo. In addition to our customer-focused initiatives, our teams also dedicated time to strengthening our culture and giving back to the communities in which we work. We are doing this work with purpose as we strive to be the employer of choice in the communities we live. It is getting noticed with numerous external awards and accolades. Among other examples, we continued our annual sponsorship of the Clyde Nixon Business Leadership Award, named after a former Sun Hydraulics chairman and CEO. This award is presented at the Sarasota County's Economic Development Corporation's annual meeting and honors a Sarasota County business leader who exemplifies the personal integrity, business excellence, and community commitment of the late Clyde Nixon. Additionally, during our recent Kilios Leadership Summit, our team prepared books filled with inspirational messages for the Children Served by Easterseals Southwest Florida chapter. These servant leadership qualities go back to our founders, specifically Bob Koski's unique approach to his infamous horizontal management style and his philanthropic mindset. Moving to our results. As expected, our higher sales in the third quarter contributed to margin expansion. This shows through in our operating model when you look at the sequential sales step-up from 2Q25 to 3Q25 of $8 million and the associated incremental margins at the gross profit line all the way through to the adjusted EBITDA and earnings per share. We are continuing to invest in engineering resources to drive our future product pipeline and our upgrading production capabilities, which will have a productivity payoff in the future. We also continue to generate positive cash flow and reduce debt, After our ninth consecutive quarter of paying down debt, our net debt to adjusted EBITDA leverage ratio has improved to 2.4 times. During the quarter, we closed the sale of custom fluid power and recorded a gain of $21 million. We are excited to have CFP remain in the Sun family as a continued hydraulics distributor in Australia under an exclusive distribution agreement for the region. This followed the action to close our HCW operation and put engineering resources back into our core businesses. Another example of our evaluation of the footprint realignment. This is a continuous focus as we evaluate how best we optimize our operations to serve our customers where we can command strong market positions. Also, as part of our ongoing portfolio evaluation, this quarter we wrote down $25.9 million of goodwill related to i3 product development, a company we acquired in May 2023. We have refocused i3 PD engineers on projects aligned with Helios' core business and strategic goals, including the NoRoads and CygnusReach software platforms, supported by a leadership change that has added more software sales expertise. We have re-forecast sales for i3 PD and adjusted our expectations for the rate of adoption of new software capabilities. Overall for Helios, we remain focused on profitably growing the business, driving EBITDA margins back into the twenties and improving our return on invested capital. Our capital priorities remain to invest in organic growth, reduce debt, maintain our long dividend history and opportunistically repurchase shares. With continued margin expansion, we expect to lower our leverage ratio to around two times by year end with the fourth quarter cash flow generated from operations combined with utilizing the cash received on October 1st from the sale of CFP. As we continue to strengthen our balance sheet, we will have more optionality to make strategic investments as we advance into 2026. Finally, I would like to take this opportunity to welcome Michael Conaway as our new CFO. Our employees, partners, and shareholders will find his insightfulness, strong grasp of finance, and breadth of experience a nice addition for Helios. We now have our full leadership team in place to harness our collective energy and create the momentum to drive us forward. Let me turn the call over to Michael now to introduce himself.