Helios Technologies (HLIO) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $219.9M, down 3% year-over-year but up 4% sequentially, with Hydraulics up 2% and Electronics up 7% from Q1 2024.

• Cash from operations reached $33.8M, up 30% year-over-year and 90% sequentially; debt reduced for the fourth consecutive quarter.

• Gross margin improved 40 bps sequentially to 32.1%, but contracted 120 bps year-over-year due to lower volume and higher labor costs.

• Diluted EPS was $0.41 (GAAP) and $0.64 (Non-GAAP), with Non-GAAP EPS up 21% sequentially but down year-over-year.

• Focus remains on margin protection, operational improvements, cash generation, and leadership transition.

Financial highlights

• Q2 2024 net sales: $219.9M (down 3% year-over-year); gross margin: 32.1% (down 120 bps); operating income: $26.0M (11.8% margin, down 12%).

• Adjusted EBITDA margin was 20.1%, up 190 bps sequentially but down 190 bps year-over-year.

• Net income for Q2 was $13.6M, down 19% year-over-year; diluted EPS: $0.41 (down 20%).

• Cash from operations was $33.8M, up 30% year-over-year; free cash flow for Q2 was $25.7M.

• Inventory reduced by 4% YTD; cash and cash equivalents at quarter-end: $45.0M.

Outlook and guidance

• Full-year 2024 net sales guidance revised to $825–$840M, reflecting cautious outlook amid softening demand.

• Adjusted EBITDA margin expected at 19.5%–21%; Non-GAAP EPS projected at $2.25–$2.45.

• Q3 sales expected at $192–$200M, with adjusted EBITDA margin of 20%–21%.

• CapEx for 2024 forecasted at 3.5%–4.0% of sales; effective tax rate expected at 21%–23%.

• Management expects challenging macroeconomic conditions to persist, with flexibility to adjust capital allocation if needed.