Helios Technologies Baird 2026 Global Industrial Conference

Super. Yeah. Thanks, Mig, and thanks for all of you joining and those on the webcast as well. Appreciate your interest in Helios. With me, Jeremy Evans, our CFO. Also, just want to also point out Tania Almond, our Head of Investor Relations, very experienced. She reminded me at our third quarter earnings release, it was our 125th earnings cycle she has been through her career, but she leads Investor Relations and our corporate communication. And then our board member since 2020, Laura Dempsey Brown, has joined us as well. She also serves as the Chair of the Board. Welcome. Thanks for joining us. For those that are not as familiar with Helios, I would like to just start back and highlight we are based in Sarasota, Florida, an industrial technology diversified company that was founded in 1970 as Sun Hydraulics. And up until 2016, that is what the business was.

Today, we are 56 years old. 2016 came around, and there was a 10-year strategy to become a billion-dollar company by 2025. At that time, from 2011 to 2016, sales had kind of stagnated, but it was a very profitable company, roughly $200 million of sales for six years in a row, $100 million of cash on the balance sheet, no debt, and the strategy was set forth to diversify through M&A. From a period of 2016 to 2023, the company embarked on 12 acquisitions that has clearly diversified the company into two operating segments, both electronics and hydraulics. During that period of time, about $1.3 billion was deployed on those acquisitions. I joined the company about three and a half years ago as the CFO.

My first year was as CFO, and then my next six months was as the Interim CEO/CFO, and for the past two years have been the Permanent CEO. One of the first things I did when I became CEO was acknowledged that we had acquired and changed the makeup of this company. So really stepped back to look at the portfolio, look at the strategy of the company, and also just the makeup of the businesses, and then from there, laid out what we deemed as our 1.0, 2.0, 3.0 strategy that we unveiled at our Investor Day earlier this year in March called the CORE strategy. Since that time, we have returned to growth. We had 12 quarters in a row, three years in a row of declining sales.

It was clear to me in that CFO capacity and as I started my CEO tenure that we had a sales problem. We started with the strategy, then we restructured the company, then we changed the people, and now we are very focused by business, Sun Hydraulics, Faster, Enovation, and Balboa. As I mentioned, Sun was the founding business, and now today, that is less than half of our business, so it speaks to the diversification that you can see on this slide of the end markets and the channels that we serve and the two segments. This year will be roughly $900 million in sales. We, as I mentioned, divested a business, so our jumping off point is even $100 million less than that in 2025. We have had five quarters in a row of double-digit sales increases and earnings growth.

You can see from the pie chart, very diversified in terms of not relying on any one customer, not relying on any one market, and we continue to lean into that diversification and build our go-to-market strategies around that. Maybe, Mig, with that, we can jump into some of the questions.

Yeah. It is very different drivers between the two businesses. Last year in June was our inflection point where we started to grow again, and so the third quarter was the first quarter of those five that I mentioned of double-digit growth. What we pointed back to is that strategic work we did with a very targeted approach of how we were going to change our go-to-market engine. We brought in a lot of new sales leaders. As I mentioned, we changed the structure of the company and how we go to market in the different regions, and beyond that, got a very targeted approach to those growth and adjacent markets. We aspire to be a market leader in the markets we serve, and we operate in very niche markets. Today, our addressable markets are roughly $12 billion.

At $900 million, we are less than 10% share leader, but we are not playing the market share game. We are going to markets where we feel we are entitled to win and have differentiated technology and customer solutions. Within hydraulics, we have two big businesses, Sun Hydraulics and Faster, and then in the electronics segment, we have two large businesses, Enovation Controls and Balboa. Our growth has been broad-based. All four businesses, we expect to grow double digits this year, and we go back to that strategic planning, targeted focus, and changes in go-to-market. When you look at the two segments, hydraulics is definitely driven by the ag market, construction market, but also on the Sun Hydraulics side, the mobile equipment. We belong to the NFPA, National Fluid Power Association.

That gives us real good market indicators for those mobile markets, and that has started to grow again, where the past couple years it had been down, but it is low single digits. As I mentioned, we will grow that business double digits, so we are more than double the market growth there, and it is really that distributor engagement that you referenced, Mig, in terms of how we are engaging with our distributors in terms of using data and analytics and targeted accounts and applying our application engineers and our sales teams to help close more sales, and looking at territories and ensuring we are aligned with the right partners globally. On the Faster side, it is much more direct to OEM. We are very proud of our customer base, long-term customer base, John Deere, AGCO, CNH, Caterpillar, Kubota, Bobcat, and really, some of those markets have definitely been challenged.

Construction obviously has been growing nicely, but the ag is in a multi-year down cycle. I know we got a positive reading finally on the large equipment after many years, but we have had some success in the small tractor, compact tractor, but also that Faster team diversifying away from purely ag into construction, and now we are real excited about entering the data center thermal management market. I will let you talk electronics.

Within electronics, we have got health and wellness is a key end market. That is where Balboa services. If you go back before COVID, that was a fairly steady load, a mid-single-digit growth business. During COVID, extreme COVID demand. When we acquired the company, if you look back 12 months pre-acquisition, they were roughly $130 million in sales. During COVID, they peaked at $250 million. They were the most profitable business unit that we had. After COVID, the demand cut off, and so just as fast as it ramped, it cut off. We are now back to that kind of low to mid-single-digit growth. We have actually done better than that this year. One of the things that we believe we are benefiting from is we are seeing a shift in production from the Americas into Asia, and specifically China, where our OEM customers are moving operations over there.

We have seen roughly a 10% shift. The business is not staying in the APAC market. It is being exported back either to Europe or U.S., but we have a really strong operation there. We acquired a company named Joyonway, been investing in them, so we are seeing really strong growth there. In the recreation space, that is another big piece of electronics, part of Enovation Controls. We have had success with several OEMs. We have had a large OEM where we have been growing business with them. That really kicked in in the second half of last year, so we are starting to lap that comp. I think in that side, it is about 70% of electronics is consumer-facing, so got to monitor interest rates. I would say just the general market, not a lot of tailwinds there, but we believe that we have new business wins.

We are doing a product refresh, which we think gives us a better opportunity as we move forward to secure more base of business, and we are also looking to diversify. How do we take our electronic platforms that are primarily displays, electronic control modules, wiring harnesses, how do we take that and grow that into adjacent markets, new customers? Also want to touch on, we did a very, very small acquisition of, acquired the assets of a company called Radio Sound. That got us into audio solutions. Why is that important? One of our strategies is to own the end user experience or own the cab when it comes to electronics. So through our displays, through our control modules, now we can connect to a sound system.