Helios Technologies (HLIO) Stifel 2024 Cross Sector Insight Conference summary

Strategic investments, growth initiatives, and business model

• Accelerated investments during market pullback supported long-term growth, completed a Center of Excellence, and regional structure, impacting margins but positioning for future expansion.

• Transitioned from a holding company to an integrated operating company, leveraging regional Centers of Excellence and system solutions to diversify markets and drive growth.

• Focused on innovation, acquisitions, and expanding manufacturing capacity to support future demand and fill technology and geographic gaps.

• Diversified into new markets, including commercial food service, with a focus on high-value, rugged, and integrated solutions.

• Recurring revenue streams are being developed through software and remote service platforms.

Acquisition strategy and product innovation

• Acquisitions have built capabilities in hardware, software, and data analytics, enabling premium product offerings and organic growth in niche markets.

• Proprietary technologies, such as eSense counterbalance valves, address safety and performance standards in various industries.

• Long-term relationships with major customers, like John Deere, are leveraged for expanded system sales.

• Diversification across geographies and end markets reduces cyclicality and supports consistent performance.

• Streamlined customer experience through integrated teams, aiming for higher margins and increased revenue.

Segment performance and market trends

• Hydraulics segment saw sequential improvement in Q1 2024, with first positive YoY growth in APAC since 4Q22; strength in industrials offset softness in agriculture.

• Electronics segment delivered strong sequential and YoY growth, driven by health & wellness and new wins in commercial food service.

• Hydraulics revenue for 2023 was $566M (68% of total), with mobile, industrial, and agriculture as key end markets.

• Electronics revenue for 2023 was $270M (32% of total), with significant exposure to health & wellness and recreational markets.

• Both segments are targeting growth in emerging markets such as commercial food service, marine, and automation.