Helios Technologies, Inc.

Greetings, and welcome to the Helios Technologies 4th Quarter Fiscal Year 2025 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, Investor Relations and Corporate Communications. Thank you. You may begin.

Thank you, Operator, and good day, everyone. Welcome to the Helios Technologies Fourth 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 slides there that will accompany our conversation today, as well as our prepared remarks. Joining me today are Sean Bagan, President and Chief Executive Officer, and Jeremy Evans, our Executive Vice President, Chief Financial Officer. Sean will start the call with highlights from the fourth quarter and the full year, then Jeremy will review our financial results in detail and establish our 2026 outlook. Sean will come back with some closing remarks, and then we will open the call to your questions. As an additional reminder, we have our upcoming Investor Day taking place in sunny Sarasota, Florida, on Friday, March 20th, for institutional investors and analysts. We are excited to be sharing our longer-term outlook, and we'll have colleagues from our flagship businesses on hand demonstrating some of our products. We are also offering an optional manufacturing facility tour of the original Sun Hydraulics production location. It's just three weeks away, and our leadership team is excited to see everyone in person. Please reach out to me if you'd like to RSVP. Now, turning 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 the upcoming 10-K 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 through 5 now. With that, it's my pleasure to turn the call over to Sean.

Thanks, Tanya, and welcome, everyone. We truly appreciate you joining us today and are pleased to have this opportunity to share the sustained progress our Helios Technologies team made in the fourth quarter, capping off what became a true turnaround year in 2025. Results finished ahead of recent expectations, with all businesses reporting quarterly sales and earnings growth, leading to four-year sales growth for the first time in three years, while also delivering record-free cash flow. This is my favorite time of year. The NCAA March Madness Basketball Tournament is right around the corner. Teams are competing for higher seeds that reflect their full body of work, and I see a clear parallel to our fiscal 2025 performance. As year progressed, we strengthened our position, finishing off with back-to-back quarters of year-over-year profitable sales growth. That's the equivalent of winning the first two rounds of the NCAA Tournament. It builds confidence and momentum, but championships require sustained excellence. Sales and orders accelerated in the second half of the year, reflecting the increasing impact of our go-to-market initiatives and our industry-leading innovative products. In conjunction with the ConExpo Trade Show this week, we are excited to begin the rollout of our next wave of products, and our plans for 2026 will be to continue that at an elevated pace. Throughout 2025, we overcame numerous challenges. At a macroeconomic level, the two most meaningful indicators for our hydraulic segment are PMI and industrial production, both showing extended contraction for much of the year, meaning weaker factory output conditions overall here in the U.S., while globally, regional differences existed with pockets of expansion. We are encouraged by some of the initial 2026 readings with both sentiment and actual production improving together. However, 2025 can best be characterized as slow and uneven and certainly not sustained growth. Additionally, we managed through other macro challenges presented by global tariffs, geopolitical uncertainty, and a weak consumer market. Despite all that, the results were the same. We controlled the things we could control, and we executed. I could not be prouder of our team, and I extend my sincere gratitude to each one of my colleagues. Fourth quarter sales exceeded our expectations up 17% to $211 million, resulting in 4% growth for the full year to $839 million. On a pro forma basis, excluding the custom fluid power for CFP divestiture, sales for the fourth quarter were up 29% and for the full year up 6%. Our margins are strengthening and benefiting from the higher volume along with our operational excellence efforts and cost control measures. We have had four consecutive quarters of gross margin expansion. Adjusted EBITDA in the quarter was 20.1%, our second quarter in a row back in the 20s. Operationally, we had numerous accomplishments in 2025. First, we returned to growth by executing on our customer-centric go-to-market strategic initiative. We redirected internal resources to more fully engage with our customers as well as accelerated the cadence of new product launches. This was reflected in the number of meaningful product launches in 2025 for both segments. We expanded our offerings with higher value solutions that complement existing products and represent a natural extension of our customers' existing purchases. We believe our strategy to develop high-value, mission-critical, ruggedized solutions for our customers in niche applications gives us a competitive edge. Second, we took decisive action to optimize our portfolio. With the CFP divestiture, we removed some hydraulics from owning the distribution business in Australia, reverting to our core and what we're best at, designing, developing, and manufacturing manifolds, cartridge valves, and integrated packages. Further, we are aligning our go-to-market approach in the Australian market with the rest of the business by leveraging an exclusive agreement with the buyer, Questis Group, to provide distribution and fulfillment services for Sun Hydraulics products in Australia. This fosters a partnership where each party's success contributes to the other's advancement. We also acted on our centralized engineering team, the Helios Center of Engineering Excellence operation, and reallocated engineering resources back into our core businesses. Continuous portfolio evaluation will be standard work for us moving forward. We introduced a new share repurchase program in 2025 and repurchased 1% of the company's outstanding shares throughout the year. This share buyback model as a form of shareholder return marks the first for the company. Importantly, we continued our longstanding practice of paying cash dividends, which we have done for 116 consecutive quarters or over 28 years. Finally, we fortified our leadership team in 2025. I was formerly named president and CEO, Billy Aldridge was promoted to president of the electronic segment, and Jeremy Evans was promoted to chief financial officer. With Rick Martich and Matteo Arduini leading the two large businesses in the hydraulic segment, supported by a fortified executive leadership team at the Helios level, we now have our full leadership team in place to harness our collective energy and create the momentum to drive us forward. This makes us even more confident regarding our expectations for 2026 and beyond. Before I turn the call over to Jeremy to provide the details regarding our financial results, I want to share how pleased I am that he is now officially in the CFO seat. When Jeremy and I joined forces with the Helios leadership team, we committed to building a predictable, performance-driven culture. Achieving or exceeding our forward quarterly guidance for nine consecutive quarters demonstrates the operational rigor and accountability that now define our team. Jeremy, over to you.