HLIO

Image source: The Motley Fool. Tuesday, Aug. 11, 2026 at 9:00 a.m. ET Vice President, Investor Relations and Corporate Communications - Tania Almond President and Chief Executive Officer - Sean Bagan Executive Vice President, Chief Financial Officer - Jeremy Evans Operator: Greetings, and welcome to the Helios Technologies Second Quarter 2026 Financial Results Conference Call. As a reminder, this conference is being recorded.[Operator Instructions] It is now my pleasure to introduce Tania Almond, Vice President, Investor Relations and Corporate Communications. Please go ahead. Tania Almond: Thank you, operator, and good day, everyone. Welcome to the Helios Technologies Second Quarter 2026 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 (sic) [ heliostechnologies.com ]. You will also find slides there that accompany today's discussion as well as our prepared remarks. Joining me today are Sean Bagan, President and Chief Executive Officer; and Jeremy Evans, Executive Vice President, Chief Financial Officer. Sean will begin the highlights from the second quarter. Jeremy will then review our financial results in more detail and provide our outlook for the rest of the year. Sean will return with some closing comments, and then we will open the call for questions. Before we get started, please turn to Slide 2, where 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 2025, along with our 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 GAAP with non-GAAP measures in the tables that accompany today's slides. Please reference Slides 3 through 5 as I now turn the call over to Sean. Sean Bagan: Thanks, Tania, and welcome, everyone. We're pleased you could join us today. It was 5 months ago at Investor Day that we introduced The CORE Strategy, laid out our 2030 financial targets and committed to a set of measurable objectives. Two quarters into that plan, our first half performance shows we are off to a strong start. The CORE Strategy is working and the stabilization plan for the business that our team mapped out over the last 2 years is now complete. We have entered a new phase of our journey defined by sustained growth that is underpinned by a fortified balance sheet. At Investor Day, we were still in the midst of that comeback, beginning to climb. Today, we're continuing to grow into the second half, gaining altitude faster than expected and we're positioned to keep climbing into 2027. We delivered another strong set of results in the second quarter. Sales of $232 million were at the high end of our guidance range and adjusted earnings exceeded the top end of our outlook. This marks our fourth consecutive quarter of double-digit pro forma sales and adjusted earnings growth, which is a solid indicator that the strategic actions we've taken continue to translate into consistent operating and financial performance. Based on the solid first half results and improving visibility into the balance of the year, we are raising our full year outlook. 2026 could represent the highest annual sales in Helios' history. Importantly, the order and business win dynamics behind these numbers remain robust. Our order intake grew double digits over the year ago period for the fourth quarter in a row, giving us increasing confidence in near-term demand. Our order growth is primarily driven by the combination of last year's business wins ramping and new wins continuing at a healthy pace. These wins span both segments. In Hydraulics within MCT, Sun saw its strongest growth in China across mobile and industrial and is on pace to have a record year in its APAC region. Within FCT, Faster continues to benefit from strengthening demand from our customers in construction and agriculture, and we've rolled out a new product portfolio, completed the qualifications needed to meet industry standards and have been building some inventory to position us to start penetrating the data center thermal management market. In Electronics, we are realizing growth across recreational, health and wellness and industrial applications, supported by the investments we made in our ability to solve complex problems for our customers. All of this gives us growing confidence that the changes we have made are driving sustainable results. The quality of our earnings continues to improve as well. Higher volumes, favorable segment mix and our operational initiatives drove another quarter of solid year-over-year margin expansion, reflecting the operating leverage inherent in our business model and the progress we're making in continued footprint optimization and productivity. Impressively, we generated record operating cash flow in a second quarter, with that cash generation allowing us to further strengthen the balance sheet, reduce our leverage ratio, increase organic investments and return capital to shareholders through our longstanding dividend and additional share repurchases. This balanced approach is fully aligned with the value creation framework we laid out as part of The CORE Strategy. Stepping back and reflecting on our first half results, we are tracking ahead of our organic growth and margin commitments. Our sales engine is performing. Our innovative products and road maps continue to take market share. Our operational excellence initiatives are supporting ongoing margin expansion toward the long-term targets we shared at Investor Day. We will stay focused on disciplined execution and investing in high-return opportunities, positioning Helios for continued progress against our targets. With that, I'll turn the call over to Jeremy, who will review the second quarter financial results in more detail and our raised 2026 outlook. Jeremy, over to you. Jeremy Evans: Thank you, Sean, and good day, everyone. As I review our second quarter results, please refer to Slides 6 through 8. Second quarter sales were $232 million, up 9% compared with $212 million in the prior year period and at the high end of the expectations we laid out on our first quarter call. When adjusting for the CFP divestiture and foreign exchange impacts, sales were up 16% year-over-year. Gross profit increased 19% in the quarter to $80 million, and gross margin expanded 280 basis points year-over-year to 34.6%. This is the fourth straight quarter of year-over-year gross margin expansion. In addition to volume and mix, the margin improvement reflects ongoing operational initiatives and benefits from our portfolio and footprint actions, along with the positive contribution from approximately $1 million of net IEEPA tariff refunds. From an operational perspective, we continued to execute on footprint optimization initiatives that support margin expansion, increase productivity and drive operating leverage. During the quarter, we closed the Faster facility in Canada and further consolidated our Faster North American operations. We expect these actions to drive efficiency and cost benefits starting in the second half of 2026. Second quarter operating income rose 48% year-over-year to $33 million, and operating margin expanded 370 basis points to 14.0%, with non-GAAP adjusted operating margin up 280 basis points to 17.8%. Adjusted EBITDA increased 25% to $49 million, and adjusted EBITDA margin expanded 260 basis points to 21.2%, marking the fourth consecutive quarter with adjusted EBITDA margin above 20%. Our operating expenses increased by $2.2 million year-over-year, primarily driven by employee benefit costs and an isolated bad debt expense. Excluding these 2 items, we managed expenses in a disciplined way, keeping them essentially flat year-over-year on a consolidated basis while increasing investment in research and development and delivering solid sales growth. This is an important contributor to the operating leverage you see in our expanding operating and EBITDA margins. Diluted EPS in the quarter was $0.66, up 94% compared with the prior year period, and adjusted diluted EPS of $0.88 rose 49%, exceeding the high end of our outlook by $0.05 per share. The upside reflects strong sales growth, margin expansion, disciplined operating performance and the net impact of IEEPA tariff refunds. Turning to the segments, please refer to Slide 9. Growth remained wide-ranging, driven by both segments and all regions. Hydraulics sales in the second quarter were $146 million, up 14% year-over-year on a pro forma basis, normalizing for the impact of foreign exchange and the divestiture. We saw growth across the Americas and EMEA, with APAC up significant double digits on a pro forma basis. By end market, mobile saw the most strength, with the construction category continuing its growth. Agriculture also contributed to the year-over-year growth, while sales to the industrial end markets were relatively flat year-over-year. Hydraulics' gross profit increased 9% year-over-year and gross margin expanded by 160 basis points to 34.6%, driven by higher volumes, mix and the benefit of the IEEPA tariff refund. Operating expenses were roughly flat year-over-year in absolute dollars and lower as a percent of sales, with segment operating income growing 16% to $29 million and operating margin up 200 basis points to 19.7%. In Electronics, second quarter sales were $86 million, up 19% year-over-year, with growth in all regions and particularly robust performance in APAC. Enovation Controls delivered a record for a second quarter, with demand remaining healthy across recreational markets, including continued strength with a large OEM customer that has been a key contributor to recent volume outperformance. We are realizing growth in health and wellness, mobile and industrial, while core markets in marine remained soft. Electronics' gross profit in the quarter increased 41%, and gross margin expanded 530 basis points to 34.6%, reflecting fixed cost leverage on higher volume and direct labor cost efficiencies, as we optimize our footprint and processes, as well as the benefit of the IEEPA tariff refund. Segment SEA expenses increased as we continued to invest in R&D, resulting in the segment operating margin expanding 490 basis points to 13.1% and operating income nearly doubling to $11 million. On Slide 10, we generated a second quarter record of $42 million of cash from operations and $31 million of free cash flow. CapEx in the quarter was $11 million, or 4.9% of sales, an increase from prior quarters and reflecting our increase in strategic organic investments. Our trailing 12 months adjusted free cash flow conversion remained healthy, and our cash conversion cycle improved by 11 days compared to the same period last year. Flipping to Slide 11, we have updated our capital allocation priorities as our trailing 12 months net debt-to-adjusted EBITDA leverage ratio has improved to 1.4x, down from 2.6x in the prior year period and below our target operating range of 1.5x to 2.5x. In addition, our net debt declined to $264 million, the lowest since the third quarter of 2020. We have shifted our priority to investing in organic growth opportunities, maintaining our increased level of returning capital to shareholders and pursuing strategic acquisitions. We extended our history of paying cash dividends to 118 consecutive quarters, or over 29 years, with a quarterly dividend of $0.12 per share. We also repurchased approximately 79,000 shares for a total of $6 million in the quarter, leaving $76 million remaining on our share repurchase authorization. Year-to-date, we have returned $18 million to shareholders through dividends and share repurchases, up 40% versus the first 6 months of 2025. We view this balanced approach of continued disciplined investments and capital returns while meeting our debt service obligations as a key element of our value creation framework. Slide 12 reflects the 2026 financial priorities that we established at the start of the year. This quarter, we made progress against them all. We remain focused on operational execution and investing in high-return opportunities as we carry this momentum into the second half. Turning to Slides 13 and 14, with that strength behind us and improved visibility into the third quarter, we are raising the full-year outlook. We now expect sales to be in the range of $880 million to $900 million for the year, compared with $839 million as reported in 2025 and $792 million on a pro forma basis excluding CFP sales. This implies 12% growth over 2025 at the midpoint, driven primarily by volume growth in our core platforms and the ramping of recent commercial wins. At the midpoint of this range, we would achieve the highest annual sales in the company's history, topping our 2022 level, which is even more impressive when you consider the fact that we divested $60 million in run rate CFP sales last year. At the segment level for the full year, we expect Hydraulics sales in the range of $555 million to $565 million, up approximately 13% at the midpoint on a pro forma basis. For Electronics, we expect sales in the range of $325 million to $335 million, up 11% at the midpoint. We expect 2026 adjusted EBITDA margin to be in the range of 20.2% to 21.0%, raising the bottom of the previous range, reflecting gross margin expansion, operating expense discipline and the full-year benefit of our portfolio and footprint actions. We expect adjusted diluted EPS in the range of $3.05 to $3.25, reflecting 23% growth at the midpoint. For the third quarter of 2026, we expect sales to be in the range of $215 million to $222 million, up 8% over last year's third quarter at the midpoint when taking the divestiture into consideration. At the segment level for the third quarter, we expect Hydraulics sales in the range of $133 million to $138 million, up approximately 9% at the midpoint on a pro forma basis. For Electronics, we expect sales in the range of $82 million to $84 million, up 5% at the midpoint. We expect consolidated adjusted EBITDA margin for the third quarter to be in the range of 19.8% to 20.6%, down 30 basis points at the midpoint compared to the previous year and adjusted diluted EPS of $0.70 to $0.77 per share, up 2% at the midpoint compared to the previous year. As we constructed our raised outlook, we continue to remain cognizant of tougher comparisons in the second half, driven by the timing of end market recoveries and the ramp of certain commercial wins. We also are considering ongoing external factors, including rising energy and fuel prices, tariff dynamics, broader inflationary pressures and geopolitical tensions. Despite these factors, our raised full year outlook reflects the strength we see in our order trends, new business wins, and operational execution, balanced against these considerations. With that, please turn to Slide 15 and I'll turn the call back to Sean for his closing remarks. Sean Bagan: Thanks, Jeremy. As I conclude our prepared remarks, let me reflect on the course we charted 5 months ago and the progress we've made. At the halfway point of this fiscal year, we've' crossed an important inflection point. This is no longer a story of business stabilization -- it's a story of profitable, broad-based growth. The progress we have made isn't the result of 1 great quarter or 1 favorable market -- it's the outcome of thousands of people across Helios executing our strategic priorities every day and staying focused on serving our customers. I want to thank every Helios colleague for their commitment, collaboration and relentless focus on execution. The momentum we've built is a direct reflection of their efforts, and I'm proud of what we've accomplished together, and even more excited about what's ahead. Heading into the second half, I'm encouraged by what I see across our businesses. What gives me the most confidence isn't just the favorable trends in our results or the financial performance we've delivered in the first half. It's the quality of that performance. We're growing through new business wins, bringing innovative products to market, improving our operations, and generating strong cash flow to keep investing in our future while returning capital to shareholders. We've moved from turnaround to takeoff, and we're entering the second half with increasing altitude, momentum and confidence while navigating through a turbulent macro environment. To our customers, distributors, suppliers, and shareholders, thank you for your continued trust and partnership. We remain focused on executing with discipline, creating long-term value and building an even stronger Helios for the years ahead. With that, operator, let's open the lines for Q&A, please. Operator: [Operator Instructions] Our first question, we'll hear from Mig Dobre with Baird. Mircea Dobre: So Sean, if I heard correctly in your prepared remarks, you talked a little bit about some footprint or restructuring action that you were taking at Faster. I'd like to hear more about that as to what's going on there? And maybe more broadly, how you're thinking about capacity and your footprint in Hydraulics business. Related to this, your CapEx guidance, 4.5% of sales, that's a pretty healthy number. So you guys are obviously continuing to invest. Maybe you can clarify as to what the areas of investment and what you see as the most compelling opportunities. Sean Bagan: Mig, thanks for the insightful questions. So I'll start, and then I'll pass it to Jeremy to talk through some of the CapEx dynamics. But with respect to the Hydraulics footprint, specifically Faster, so what we're referencing there is, first, a consolidation of our American operations, which resulted in a facility in Toledo, Ohio. It is called Maumee, where we've established a presence. But now we're building that out. We've added a North American General Manager that we've hired from the outside and moving some of the operations from Mishawaka, Indiana, where we're continuing to see tremendous growth out of Daman and our manifold assemblies. We have worked through all of those operational challenges, so it creates more capacity there. In fact, they had their -- it's a data point. They had a record order week 2 weeks ago at Daman. So we continue to see a lot of growth there. And so that frees up availability to add some more automation and equipment in that Indiana facility. And as such, then we also closed a Canadian facility for Faster as it related to a tiny acquisition and move that production effectively over to Italy. So just some moving pieces. And then as we're gearing up and ramping up for our entry into the thermal data center coupling market, having the capacity, distribution, inventory available here as the U.S. represents the largest market opportunity for that. And Jeremy, maybe you could speak to some of the CapEx dynamics and tightening of the range. Jeremy Evans: Sure. The updated guidance reflects a CapEx range of 4% to 4.5%. And part of that guidance change is due to increasing our sales expectations. So we've actually taken the top end of that range down a little bit. But it reflects a few things. First is the investment that we've been making in the thermal management just in creating capacity to make the data center couplings, establish a clean room for that. So that's a piece of it. Second, we continue to invest in our low-cost centers for engineering, specifically Tijuana, Mexico. We've got low-cost manufacturing as well in India, in China. And we had a plan to leverage those centers more. And when the tariff situation really began to flare up in early 2025, we put some of those efforts on hold. And now that the tariff situation seems to have stabilized, we're putting some of those activities back in motion. And so it's just setting up those facilities to receive some incoming manufacturing activities. And those are the, I would say, 2 primary focus of the incremental spend, with a third component being continue to invest in our automation and productivity capabilities. We've had some aged machines throughout the facilities that we're starting to upgrade, as well as some targeted productivity enhancements as well. Mircea Dobre: I guess my follow-up on the Electronics business. You've had a lot of growth in the first half here organically. And when I'm looking at the full year guidance for revenue, that implies solid double-digit growth. It seems to me that the end markets that you're exposed to here are not growing anywhere near double digit organically. So maybe I'm misunderstanding something here, correct me if I'm wrong. But if what I'm saying is correct, how should we think about this outgrowth? What's driving the outgrowth? Is it specific customer wins? I think you hinted at that. Maybe give us more context there? And how sustainable do you think this could be as we think about 2027? Sean Bagan: Yes, I'll take that one, Mig. So on the Electronics side, Billy Aldridge and his team have been very aggressive from a go-to-market perspective and had numerous wins. We talked a lot about those ones at Investor Day. We showed a chart and that trend has continued. When we get here to the back half and as we tried to telegraph as we set out our operating plan this year, the back half obviously gets much tougher. So very impressive growth in the first half, easier comps. Our challenge now is to continue to grow here in the back half. You can see in the third quarter, we're still projecting mid-single-digit growth from the Electronics segment. But I think part of your question and your observation there in terms of the markets are more challenged certainly than on the Hydraulics side. And one of the big reasons there continues to be interest rates. A lot of the products that we supply into those OEMs are financed product. And so as the interest rates haven't come down, that hasn't stimulated growth. And you see that whether it's with the marine market that we see as the most challenged still or even just the recreational market. What is encouraging is what Billy has done from an organizational perspective is really combining the businesses to drive synergy, drive 1 head of engineering that drives the same engineering processes, product plans and how we can leverage our manufacturing plants better. And so we're moving some production to a lower cost manufacturing facility in Tijuana that will help with our margin profile. But we really are encouraged because that health and wellness market, which is a significant portion of our Electronics segment, has rebounded off of those COVID highs and post-COVID lows. It's now stabilized, and we get decent market data in terms of how that market is performing, and it's really shifted. There's quite a lot of growth coming out of Asia, and we have our footprint there with Joyonway. The North American market is more challenged, but we continue to see opportunities to go deeper there and diversify. Our WaterGuru relationship is providing some nice growth. As we've talked about our Purezone product that we have come to market with, and we're developing a whole range of new Balboa product that will be coming out here over the next 6 to 9 months that will help grow that as well. So yes, the markets remain challenged. Part of that's macroeconomic, but we're also outpacing that with wins. And as we talk about internally all the time across all of our business, we operate in smaller niche markets, and we're not going to pay as much attention to what markets are doing. Our focus is on outgrowing the markets and continuing to expand our breadth of products and going deeper with those existing customers, and that's exactly what Billy and his sales team have done. Operator: And next we'll move to Jeff Hammond with KeyBanc Capital Markets. Jeffrey Hammond: So Sean, I think the concern originally in your guide was, "Hey, we can only see so far out, and we've got some tough comps." Maybe you can remind us some of the moving pieces in the fourth quarter. But it does seem like the program wins that you got last year are ramping and it seems like you're stacking more wins. And it feels like on the margins, maybe the markets are getting better, at least in Hydraulics. So just maybe talk through the cadence and why we step down if we've got all this momentum, both from a market and win perspective. Sean Bagan: Yes. So the way we constructed the plan is we've laid out heavier first half, lighter second half. I think we still see that playing out. If you look at 4 of the last 5 years, it's 52% to 54% of revenue in the first half and then back half, obviously, the remainder. And last year was the anomaly. I would point to what you mentioned in terms of the starting of the ramp of the wins because it took time to get our go-to-market engine going. And so generally, seasonality-wise, if you call it, that's just how it plays out. What our hesitation and why we didn't come out of the gate with more confidence in the back half is, obviously, there was a lot of uncertainty as we began the year. But our order visibility is really about a quarter out. Anytime you look at our order backlog, it's just about -- just over 1 quarter's worth of sales for us, given that some of the shorter cycles in terms of order for distribution or orders for our Balboa business. Now the OEMs provide longer-term forecasts, but they don't lock them until it gets closer to the near quarter. So again, some of those data points that we're looking at, we wanted to be cautious going in. Now that we've seen the momentum, we've seen the ramp of the wins, our pace of new wins this year has also continued to support the higher pace, that gave us the confidence to raise. And in fact, as we got to July, we had our best July ever from a revenue perspective and our best July order intake ever as a company. And that's something, too, because we're stripping out roughly $60 million of annualized revenue with our CFP business. So we believe we have the momentum, and it's going to continue to carry. And the other part there is that new product -- portfolio of products we launched last year that's continued this year, will continue to accelerate in the back half, gives us a lot of confidence. Jeffrey Hammond: And then 2 more. One, on data center, I think you said you're positioning some inventory. Just what's your line of sight on wins or customer announcement there? Obviously, you must have some visibility if you're starting to create space and starting to build inventory. And then separately, industrial end market, which maybe is a little bit of a catchall, but seemed flat in 2Q. But I think in the guide commentary, you moved it up. Maybe just talk about that end market and what you're seeing there. Sean Bagan: Yes, sure. So from a data center perspective, obviously, we're trying to penetrate and enter a new large market. That's with a product we know very well out of Faster in our couplings. And before you obviously become a supplier, you need your product validated and the technical validation is more stringent certainly than we've experienced from an ag or construction perspective. Certainly, product quality, reliability are paramount. You can't be leaking fluid in a data center. But then obviously, ramping up our own manufacturing capabilities, demonstrating that we can deliver timely product and have availability within all the regions, it's a big undertaking. Now we have started to build some inventory. We have not built in any revenue into our back half guidance, and that's just being cautious. But again, I think we said that last quarter, we'd be disappointed if we didn't generate some revenue, but we now have samples out with about a dozen prospective customers that are sampling our products. So we believe an order would be imminent here in the back half. But it's taken some investment and upfront realignment back to Mig's question on some of the changes we've been making from a plant perspective to get ready for this. This represents our single largest opportunity across Helios today. And so we're treating it that way and are very excited about the opportunity it presents to help support our CORE Strategy growth. Jeremy, maybe you can take the second part. Jeremy Evans: Yes. I'll touch a little bit on the end markets and comment about industrial. First, we track the orders and the sales down to our end market level. And if you look at industrial on an as-reported basis, for us, it's down, but that includes the sales that were through our CFP entity that were divested. But when we take that out, we see that in the first half, industrial is fairly stable, just up a little bit. We've got it characterized as stable in our presentation that we put out yesterday. I think where we're seeing the strength from an end market perspective continues to be mobile, and that is where we roll up construction and construction for us has been up, as well as the health and wellness. That market, as Sean described, has recovered and we're seeing some decent growth there year-over-year. The other area that's up is aerospace, and we have that within our Hydraulics segment. It's on a smaller base, but we're seeing nice growth there as well. So it's really the mobile, aerospace and health and wellness that we see as the positive catalyst for the growth in our outlook. Industrial for us is more stable. And then the one market that is fairly large for us in Electronics is that recreation marine. We still haven't seen that turn. That market is still depressed when we track what we see coming in from an order perspective. Operator: And next, we'll hear from Tomo Sano with J.P. Morgan. Tomohiko Sano: I would like to ask about the gross margin has expanded for 4 consecutive quarters. How should we think about sustainability? And if you decompose mix, productivity and footprint actions in back half and then some color for the components into 2027, please? Jeremy Evans: Tomo, this is Jeremy. Specific to the gross margin expansion, as we've been communicating, the biggest lever that we have when it comes to gross margin is our volume and just filling up the capacity that we have. And as we've returned to growth, we're seeing that come through. Our incremental margins in Q2 were a little higher, but they are being impacted by the IEEPA tariff refund. So there's roughly a $1 million benefit flowing through our gross profit. If you strip out the IEEPA tariff refund impact, it was still good flow-through, more consistent with what we would expect as our volume ramps. We continue to drive the productivity and leveraging the low-cost centers of manufacturing. The more recent activities, the Faster consolidation, the closing of the Faster Canada office and some of the things we have in motion are going to play out more in the second half of the year and when we get into 2027. For the quarter and the first half, I would say that was minimal compared to how we exited 2025. But what we're really seeing is the volume ramp. There are some cost pressures that we see there as well, specifically on the product components that we have to mitigate, specifically around printed circuit boards and memory chips and some of the aluminum that we're managing through. But definitely pleased with how we've been able to expand the gross margins, and it's a clear focus, one of the priorities that we set out as we entered the year. Tomohiko Sano: And follow- up on The CORE Strategy versus the measurable objectives under The CORE Strategy, after 2 quarters, what's tracking best? And what's proving more challenging than expected? Sean Bagan: I would say, Tomo, the best certainly is our organic growth. We're committing to a 5% organic outgrowth of the market GDP, if you will, model, and we're pacing well ahead of that. And I think implied with our full year guidance, that holds. And certainly, as Jeremy just highlighted, that's the number one lever for us in terms of driving profitability and return metrics. So I think when you look at roughly just over 100 basis points of expansion from operating income and EBITDA on an adjusted basis, we're pacing ahead of that as well, implied with our midpoints of our full year guidance. So we feel great about our progress out of the gate. And now the challenge will be the sustainment of it. We really characterized this past second quarter as us completing that stabilization phase and now it's growing on tougher comps. That said, when we look at the second half, whether you measure it on a 2-year or a 3-year basis, we are actually accelerating our growth. And so we think the trajectory is there. Certainly, from an M&A perspective, that's a core part of our growth plan, and that's really going to be driven by our ability to delever and have our balance sheet in much better shape. And certainly, that also was a turning point in the second quarter with our adjusted net leverage getting down below 1.5x, which we said we want to operate in that 1.5x to 2.5x. So that gives us more optionality in our capital allocation moving forward, and we've highlighted that on that prepared slide in our earnings material. That debt paydown is now going to be deprioritized as we continue to look for opportunities to invest, whether it's with our share repurchase program in ourselves or outside M&A opportunities as well. But generally feeling really good about our early innings, 2 quarters out of 20 of our 2030 plan, ahead of plan. Operator: And our next question, we'll hear from Chris Moore with CJS Securities. Christopher Moore: A couple. So China was one of the hardest hit geographies during COVID. It looks like currently seeing strength there, both in Electronics and Hydraulics, finally getting back to where you were. The question really is, do you see China potentially as a nice growth driver from here? Jeremy Evans: Chris, this is Jeremy. Yes, China as well as the APAC market, but really driven by China, has been a bright spot for us, both in Hydraulics and Electronics. In Electronics, we have the Joyonway business down there. That came through an acquisition, and we've really seen it over the last several quarters, increase -- the business increase the capabilities that we have. We have a great team down there and the Electronics management team is really executing well. And then when we look at Hydraulics, there was some business shift middle of last year, driven by the tariff escalation. But even beyond that, we've seen the business there grow. And the business that we exited with CFP was primarily in APAC. When you strip that out, we're seeing a really, really strong growth within Hydraulics as well. One of the dynamics that we see is that a lot of manufacturers and OEMs are moving manufacturing into China and exporting out of China into Europe. So we're seeing a little bit of that dynamic. We think that's driving it, but also just having a strong presence there, a strong management team with solid execution, we think we're growing with our customers there as well. So it's definitely a good market. Christopher Moore: Got it. Very helpful. And maybe just a couple more on data center. So as Sean said, it might be the biggest opportunity that sits in front of you right now. Hopeful for perhaps some orders in Q4. Just from a cadence perspective, when you look at it, would be '27 start to ramp revenue a little bit, '28 is probably where it gets more meaningful. Is that a fair way to look at it? Or could there be big orders at some point in '27? I'm just trying to understand how you're thinking about it at this stage. Jeremy Evans: Yes. That's how we're looking at it internally. As we said, we don't have anything in the '26 outlook, but we would, again, be disappointed if we didn't see orders come through. We've got a little bit of sales in our '27 expectation with a gradual ramp from there. Obviously, one of the criteria is just getting qualified, if you will, by the large hyperscalers and some of the other customers in the market. We have been building prototypes and building some inventory. We've got product samples out with various customers now that are evaluating the products. And so it's just the process that you have to go through, it's very lengthy. But we would expect some sales in '27 and then a gradual ramp outward. Sean Bagan: The other piece I'd add to that, Chris, is later this month, we've got some key internal meetings that will help us chart that plan out even further. And then in September, we're going to have our grand opening of the aforementioned Toledo Faster facility. We've got some key customers coming and some key prospective customers upcoming meetings that we'll be able to put some good color around that later this year and obviously as we guide into next year. But again, I'll reiterate, it's by far our largest opportunity in front of us and it's a little bit of our ability to scale with it because there's such a shortage of couplings and quick disconnects within that market space. So we're pretty excited, obviously. Christopher Moore: And just a final one there. I know you have some out to hyperscalers. Ultimately, who are you selling to? Are you selling directly to hyperscalers? Are you selling through distributors? Or are you selling through both channels? Sean Bagan: Mainly to integrators that are building the equipment, building the cooling racks. But to Jeremy's point, the product needs to get validated by the hyperscaler. So we've got NDAs with multiple hyperscalers and going through all of that process. But our sale will be to an integrator, typically. Jeremy Evans: Just to clarify, the comment about having product samples out, that's not primarily focused on the hyperscalers. It's other potential customers that we're talking to. Operator: [Operator Instructions] Next, we'll hear from Nathan Jones with Stifel. Nathan Jones: I'll do one on data centers as well. Sean, you've been talking about this being the largest growth opportunity in front of Helios. Can you talk about what you think the addressable market is? And you also mentioned that there's a shortage of supply in here. Is there product differentiation where you think your product performs better than other products? Or is that not necessary, It's just you have to be qualified, you have to show you have a product that does the job here and there's so much demand that you'll be able to gain share, I guess, that way? Sean Bagan: Yes. So we had -- in terms of addressable market to start with, we did have a little bit in our Investor Day materials. But effectively, we see that opportunity for that data center space almost -- larger than our existing addressable markets when you look at ag and construction. And so massive opportunity for us. But again, we're entering later and having to displace either existing strong competitors, albeit competitors that we run up against and compete with and win against in other markets, or as I mentioned, just the shortage in the market of having a quality product. Now, the differentiated product, what we're best at, and we feel really great about is our leakage rates, right? And that's super important in the data center application. And so we've tested competitive product and feel very good about where ours stack up from a performance perspective, but also bringing some of the MultiFaster-type technology to the market as well. So we're going to continue to launch a series of products. We've announced some, but we will continue to do that and believe we are positioned very well to capitalize on that. Otherwise, we wouldn't be making the amount of investments we've made as well on that. Nathan Jones: I guess my follow-up question is going to be around capital allocation. Obviously, the balance sheet's in really good shape now. So I guess one following up to Mig's question on CapEx, 4% to 4.5% this year. What do you think the sustainable rate of CapEx is? And then I assume given some of the Investor Day targets, that we're moving into a period where we're going to see more M&A. Can you talk about what the strategic priorities for M&A are? What kind of size of deals you're looking at? Any help you can give us there. Sean Bagan: Sure. So I'm going to just take the first part on the CapEx and Jeremy will talk M&A as well. But first, yes, this year is a little bit higher from a percentage of sales or dollar perspective. We're typically running anywhere from 3% to 4%. The last couple of years since I joined the company, there was no need to add capacity and the opportunities for the growth at that point wasn't about that. Now it's a bit of, we've spent some capital on optimization, we've spent some capital on equipment and we're going to continue to do that to become more efficient in our plants that have the paybacks. But as we now see the growth returning, we'll continue to optimize that footprint. But we're nowhere near needing significant capacity expansion as we can continue to grow likely about 50% of what our current sales are with our existing footprint. The other piece, though, that just from a capital allocation and a CapEx perspective of how we are prioritizing and evaluating capital with the highest returns, you look at our Hydraulics business and the significant uptick we've started to see and why we've raised our guidance, gives us a lot of confidence to continue to invest. We look at between Rick Martich's MCT business, the legacy Sun Hydraulics business and Matteo Arduini's Faster business over in Italy. We really look at that NFPA data. We parse that with PMI, industrial production, all increasing, and so we need to be ready. We can't get back to the point where we've been in the past where we get behind on delivery dates, and we're not hitting commitments and deadlines. And so we look at inventory levels, for instance, with the Sun distributors. We've seen that come down for 4 quarters in a row in a period when the market is increasing. So we know they're at restocking levels. So that's a really good sign, and that's coming through in the orders. And so while I'm weaving this back to, as we think about capital allocation priority, we're going to invest in ourselves first here in the near term because we're getting that growth. Back to Tomo's question, we're double the pace of what we committed to in our CORE Strategy and if we can continue to do that, we see that as lower risk, higher probability of success than M&A. That said, M&A is going to play a key part of our future growth because our strong cash flow generation continues to push our debt down and push our leverage ratio down, and we're going to allocate capital adequately to drive shareholder returns. And so as we think about M&A and we gear up for more of it, Jeremy and I have not done one of those since we've been at Helios and we're thinking about it a lot different than it was done in the past, and we've had the opportunity to really assess. What we look at, though, is we really like the portfolio of what we have. Particularly the large companies that we bought are starting to really generate nice returns. And as we go forward, I'll pass it to Jeremy to talk more about our philosophy. Jeremy Evans: Yes. It's really important is that we identify acquisition opportunities that really complement our existing portfolio. As Sean said, we're really excited about what we have. The teams have been executing really well. And you've heard us talk about our long-range planning process that we kicked off for the first time in 2024. In 2025, we used that time to really develop the CORE Strategy and come up with those financial targets that we set out for 2030. And we're heading into that same planning process this year and M&A is going to be a big piece of that, talking through what are those white spaces that we want to address, what are those strategic areas that we believe we need to get into and accelerate growth. Some of it comes down to a build versus buy. What can we do internally? What can we accelerate if we go inorganically? But also, what are some of those emerging trends that we're seeing and who are the companies and capabilities that can help us get there faster, but also in an accretive way? So we're going to take a very disciplined approach. It starts as we have done for the last 2 years, getting the management team together, really working through and aligning on the focus areas. And from that will be a springboard into an execution. Operator: And there are no further questions at this time. I would like to turn the floor back to Tania Almond for closing remarks. Tania Almond: Great. Thank you, operator, and thanks, everyone, for joining us today. We hope you can enjoy the last few weeks of summer. We'll be on the road and look forward to seeing many of you at the fall conference circuit. Please reach out to me if you have any follow-up questions, and have a great day. Operator: Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Before you buy stock in Helios Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Helios Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* Now, it’s worth noting Stock Advisor’s total average return is 981% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Helios Technologies (HLIO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Helios reported second quarter results that exceeded Wall Street’s expectations, supported by broad-based growth across both its Hydraulics and Electronics segments. Management attributed the company’s performance to continued execution of its CORE Strategy, with CEO Sean Bagan highlighting, “Our order intake grew double digits over the year-ago period for the fourth quarter in a row, giving us increasing confidence in near-term demand.” Notably, margin expansion was driven by improved operational efficiency and a favorable mix, with the company also benefiting from productivity initiatives and targeted cost actions. Is now the time to buy HLIO? Find out in our full research report (it’s free). Revenue: $231.9 million vs analyst estimates of $230.3 million (9.1% year-on-year growth, 0.7% beat) Adjusted EPS: $0.88 vs analyst estimates of $0.80 (9.6% beat) Adjusted EBITDA: $49.3 million vs analyst estimates of $47.86 million (21.3% margin, 3% beat) The company lifted its revenue guidance for the full year to $890 million at the midpoint from $855 million, a 4.1% increase Management raised its full-year Adjusted EPS guidance to $3.15 at the midpoint, a 9.6% increase Operating Margin: 14%, up from 10.3% in the same quarter last year Market Capitalization: $2.69 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Mircea Dobre (Baird) asked about the rationale behind recent operational consolidations in Hydraulics and CapEx allocation. CEO Sean Bagan explained the moves were to increase efficiency and prepare for data center market entry, while CFO Jeremy Evans detailed investments in clean rooms and low-cost centers. Dobre (Baird) inquired about Electronics segment growth outpacing end markets. Bagan described how new customer wins and product launches, rather than market expansion, are powering Helios’ growth, with a focus on health and wellness and deeper penetration in existing niches. Jeffrey Hammond (KeyBanc Capital Markets) questioned the back half revenue cadence despite recent momentum. Bagan clarified that seasonality and short order visibility drive a cautious revenue outlook, but recent wins and strong July orders give management additional confidence. Christopher Moore (CJS Securities) probed China’s role as a growth vector. Evans explained that both Hydraulics and Electronics are seeing renewed strength in China, driven by increased local manufacturing and export activity. Nathan Jones (Stifel) asked about the addressable market for data center couplings and product differentiation. Bagan emphasized Helios’ low-leakage products and upcoming launches as key differentiators and noted that demand outstrips supply in this market. Looking forward, the StockStory team will watch (1) progress on data center market penetration and timing of initial orders, (2) sustained margin expansion as plant consolidations and automation investments take hold, and (3) growth in health and wellness and Asia-Pacific markets, especially as new product launches begin to scale. Execution on targeted M&A and the ability to maintain strong cash flow will also be key milestones. Helios currently trades at $81.48, in line with $81.52 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Helios Technologies stock has delivered a strong 59.7% return over the past year, yet the valuation checks send a mixed message, with a Discounted Cash Flow (DCF) intrinsic value estimate pointing to upside while market based multiples lean the other way. Helios Technologies is up 59.7% over the past year, which puts more focus on whether recent gains already reflect its long term cash flow potential. The company’s ability to convert earnings into steady cash flows can support the DCF based upside case. However, any pressure on margins or large investment needs may limit how much value investors are willing to pay for today. Helios Technologies currently passes only 2 of 6 valuation checks, so the broader picture leans more expensive than cheap. The issue now is whether the current share price already reflects the DCF based intrinsic value estimate or still leaves a reasonable margin between price and cash flow expectations. Helios Technologies delivered 59.7% returns over the last year. See how this stacks up to the rest of the Machinery industry. The Discounted Cash Flow (DCF) model looks at the cash Helios Technologies can generate for shareholders in future and brings it back to today. For Helios Technologies, the latest twelve month free cash flow is about $102.9 million, and the model assumes that cash flows keep growing from this base rather than shrinking. Using a 2 Stage Free Cash Flow to Equity approach, this cash flow profile translates to an estimated intrinsic value of about $102 per share. Compared with the current share price, the DCF output suggests the stock trades at roughly a 20.3% discount to that estimate. The gap reflects the model’s view that Helios Technologies can sustain and build on its current free cash flow over time. On this DCF view, Helios Technologies stock currently screens as undervalued relative to its projected cash flows. Our Discounted Cash Flow (DCF) analysis suggests Helios Technologies is undervalued by 20.3%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Helios Technologies. The P/E multiple suits Helios Technologies because it is a straightforward way to compare what you pay today with the earnings the company is already generating. Helios Technologies currently trades on a P/E of about 37.6x, which is higher than both the Machinery industry average of 27.6x and the peer group average of 22.6x. That indicates investors are paying a richer price for each dollar of current earnings than for many similar companies. The tailored fair P/E ratio for Helios Technologies is about 24.0x, which reflects what might be expected given its sector, size and risk profile. The gap between this fair multiple and the current 37.6x level is sizeable, so the stock screens as expensive on earnings even relative to a company specific benchmark rather than just broad industry averages. On the P/E multiple, Helios Technologies stock currently appears overvalued compared with both peers and its own fair earnings benchmark. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where Helios Technologies' valuation puzzle leaves off. They set out what growth, margin and earnings paths would need to hold for the stock to be worth materially more or less than today’s price on the Community page. Each narrative treats fair value as a thesis about how the business might develop over time, so you can see how that idea holds up as new information arrives. Community views on Helios Technologies sit far apart, with one camp focusing on automation upside and the other on pressure from industry change. Bull case: 14% undervalued Read the full Bull Case to see why Helios Technologies could be undervalued Bear case: roughly fairly valued Read the full Bear Case to see why Helios Technologies could be overvalued Do you think there's more to the story for Helios Technologies? Head over to our Community to see what others are saying! Helios Technologies sits between two different valuation stories. The Discounted Cash Flow (DCF) view points to upside based on the cash the business is expected to generate, while the richer market multiple suggests the stock is already priced for strong earnings and sentiment. The weak broader valuation checks mean that single DCF signal looks less convincing on its own. The crux for investors is whether Helios Technologies can sustain and grow cash flows enough to justify both the current multiple and the intrinsic value estimate, or whether the higher earnings valuation better reflects the balance of risk and reward from here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HLIO. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

GrowGeneration Corp. GRWG reported a second-quarter 2026 loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 4 cents. The loss also narrowed from 8 cents a year ago. GrowGeneration generated sales of $43.2 million in second-quarter 2026, which increased 5.5% year over year, led by strength in its commercial B2B business. The top line surpassed the Zacks Consensus Estimate of $43 million. Cultivation and Gardening sales increased to $34.9 million from $32.9 million in the prior-year quarter. Proprietary-brand sales rose to $13.8 million from $10.5 million, while non-proprietary brand sales declined to $21.1 million from $22.4 million.Storage Solutions sales increased to $8.3 million from $8.1 million. Within Cultivation and Gardening, durable-product sales climbed to $9.8 million from $6.7 million, while consumables declined to $25.1 million from $26.2 million. GrowGeneration Corp. price-consensus-eps-surprise-chart | GrowGeneration Corp. Quote The cost of sales increased 5.2% year over year to $30.9 million in the quarter. Gross profit moved up 6.3% year over year to $12.3 million. The gross margin was 28.5% in the quarter under review compared with 28.3% in the prior-year quarter. The upside was driven by a higher mix of proprietary-brand products within the company’s Cultivation and Gardening segment.Selling, general and administrative expenses increased 5% to $6.5 million in the quarter under review. However, total operating expenses fell 13.1% year over year to $14.7 million in the second quarter of 2026, aided by lower store operations and other operational expenses.Adjusted EBITDA was $0.3 million in the quarter against the prior-year quarter’s negative $1.3 million. At the end of the second quarter of 2026, GrowGeneration had cash and cash equivalents of $23.5 million, down from $30.4 million at the end of 2025. Inventory was $35.3 million, while prepaid and other current assets were $7.8 million at the quarter end. Total current liabilities, including accounts payable, accrued liabilities and payroll and payroll tax liabilities, were $25.6 million at the quarter’s end.GRWG also continued its capital-return program during the quarter. The company repurchased 0.7 million shares at an average price of $1.38 per share, leaving approximately $9 million available under its share-repurchase authorization. GRWG reaffirmed its 2026 sales guidance of $162-$168 million. The company expects proprietary-brand sales to reach 40% of Cultivation and Gardening revenues by the year-end and projects full-year gross margin between 27% and 29%.The company raised its full-year adjusted EBITDA outlook to $2-$3 million compared with its previously expected breakeven adjusted EBITDA. The upside is supported by the second-quarter performance, operating improvements and anticipated tariff-related benefits. For the third quarter of 2026, GRWG expects consolidated net sales of $44-$46 million, implying continued sequential growth. In the past year, GrowGeneration shares have gained 18% compared with the industry’s 21.4% growth. Image Source: Zacks Investment Research Bunge Global SA BG reported second-quarter 2026 adjusted earnings of $2 per share, up 52.7% year over year. The figure missed the Zacks Consensus Estimate of $2.03 by 1.5%. Bunge’s sales surged 88.3% to $24.04 billion and beat the consensus mark of $23.49 billion by 2.3%. Sales and volumes increased across all segments. GRWG currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some other top-ranked stocks from the Industrial Products sector are Helios Technologies, Inc HLIO and Fastenal Company FAST. HLIO and FAST carry a Zacks Rank #2 at present.The Zacks Consensus Estimate for Helios Technologies’ 2026 earnings is pegged at $3.09 per share. The company has a trailing four-quarter average earnings surprise of 13.1%. Helios Technologies’ shares have gained 53.5% in a year.The Zacks Consensus Estimate for Fastenal’s 2026 earnings is pinned at $1.26 per share, which indicates year-over-year growth of 15%. The company’s shares have grown 7.7% in a year. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GrowGeneration Corp. (GRWG) : Free Stock Analysis Report Fastenal Company (FAST) : Free Stock Analysis Report Bunge Global SA (BG) : Free Stock Analysis Report Helios Technologies, Inc (HLIO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

EnerSys ENS reported its first-quarter fiscal 2027 results on Aug .12.  Its adjusted earnings came in at $3.66 per share, beating the Zacks Consensus Estimate of $2.82 by 29.8%. The bottom line increased 64.1% year over year, aided by margin expansion, IRC 45X benefits and a $30.9 million tariff refund.Net sales of $936 million topped the consensus estimate of $923 million by 1.4% and increased 4.8% year over year. Pricing contributed 3%, foreign currency translation added 1% and organic volume rose 1%. Backlog was flat year over year but increased 2% sequentially. Network & Infrastructure Solutions (NIS) sales rose 9.4% year over year to $428.3 million. Favorable volume and mix reflected strength in power electronics and data-center demand. Volume contributed 5%, price/mix added 4% and currency translation provided a 1% lift.Precision Power Solutions (PPS) sales surged 23.6% to $100.5 million. Volume advanced 16%, price/mix added 7% and acquisitions contributed 1%. Aerospace and defense demand, particularly counter-drone and missile-defense applications, supported the increase. Enersys price-consensus-eps-surprise-chart | Enersys Quote Industrial Mobility Solutions (IMS) sales fell 3.2% year over year to $406.8 million. Volume declined 5% as material-handling demand remained soft, partly offset by recovery in Transportation and improved price/mix.Adjusted operating earnings for IMS declined 10.5% to $37.7 million, with adjusted operating margin contracting 70 basis points to 9.3%. This contrasted with NIS and PPS, where adjusted operating margins expanded 280 and 300 basis points, respectively. Gross profit increased to $313.4 million from $253.2 million, while gross margin expanded 510 basis points to 33.5%. Excluding IRC 45X benefits, gross margin improved 440 basis points to 28.5%.Adjusted operating earnings advanced 47.2% to $178.8 million, with the margin rising 550 basis points to 19.1%. Excluding 45X benefits and tariff refunds, adjusted operating earnings increased 21% and the related margin improved 140 basis points to 10.8%, highlighting underlying operating leverage. First-quarter orders increased 7% year over year, driven by NIS, though they declined 9% sequentially on seasonality. The total book-to-bill ratio was 1.06, with NIS at 1.15, IMS at 1.04 and PPS at 0.73.EnerSys also advanced targeted growth initiatives. Its Fortix 172 kWh battery energy storage system received UL and NFPA 855 approval, while the DataSafe Noir lithium offering launched in June. The company also secured a revised roughly $150 million Department of Energy grant for its planned U.S. lithium cell manufacturing campus. Cash from operating activities totaled $230.2 million, while free cash flow was $217.8 million and free cash flow conversion reached 187%. Cash and cash equivalents stood at $530.7 million at quarter-end, with net debt at $521.5 million and net leverage at 0.8.The company returned $59.6 million to shareholders, including $50 million through share repurchases and $9.6 million through dividends. The board also raised the quarterly dividend 10% to $0.2875 per share for the second quarter of fiscal 2027. For the second quarter of fiscal 2027, EnerSys expects net sales of $955-$995 million. At the midpoint, this represents 2% year-over-year growth. IRC 45X benefits to cost of sales are projected at $42-$47 million.Adjusted earnings are projected at $3.15-$3.25 per share, with adjusted earnings excluding 45X benefits at $1.95-$2.05. The company expects first-half earnings growth to be driven primarily by margin expansion, followed by greater top-line growth later in fiscal 2027 as material handling recovers and strength continues in data centers, communications, aerospace and defense, and transportation. The company currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks are discussed below:Flowserve Corporation FLS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Flowserve’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 11.2%.  In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2026 bottom line has increased 1%.Graco GGG presently carries a Zacks Rank of 2. Graco’s earnings surpassed the consensus estimate in the last reported quarter by 12.4%. In the past 60 days, the Zacks Consensus Estimate for Graco’s 2026 earnings has increased 5.5%.Helios Technologies HLIO currently carries a Zacks Rank of 2. Helios Technologies’ earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 13.1%. In the past 60 days, the Zacks Consensus Estimate for HLIO’s 2026 earnings has increased 6.9%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Enersys (ENS) : Free Stock Analysis Report Flowserve Corporation (FLS) : Free Stock Analysis Report Graco Inc. (GGG) : Free Stock Analysis Report Helios Technologies, Inc (HLIO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Helios Technologies, Inc? Here are five stocks we like better. Strong Q2 performance: Sales rose 9% to $232 million, while adjusted EPS increased 49% to $0.88. Gross margin expanded to 34.6%, and record operating cash flow reached $42 million. Growth across both segments: Hydraulics pro forma sales grew 14%, while Electronics sales climbed 19%, supported by strength in Asia-Pacific, recreational markets and select industrial applications. Full-year outlook raised: Helios now expects 2026 sales of $880 million to $900 million and adjusted EPS of $3.05 to $3.25. The company also highlighted a developing data-center thermal-management opportunity, though related revenue is excluded from current guidance. Helios Gets Support Along 50-Day Line Ahead Of November 8 Earnings Report Helios Technologies (NYSE:HLIO) reported second-quarter 2026 sales growth, margin expansion and record second-quarter operating cash flow, prompting the company to raise its full-year outlook. Second-quarter sales totaled $232 million, up 9% from $212 million a year earlier. On a pro forma basis, excluding the effects of the CFP divestiture and foreign exchange, sales rose 16% year over year. President and Chief Executive Officer Sean Bagan said results marked the company’s fourth consecutive quarter of double-digit pro forma sales and adjusted earnings growth. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat “The CORE Strategy is working,” Bagan said, referring to the company’s strategic plan introduced at its investor day five months earlier. He said Helios has completed its stabilization plan and has shifted its focus toward sustained growth, supported by a stronger balance sheet. Gross profit increased 19% to $80 million in the quarter, while gross margin expanded 280 basis points to 34.6%. Helios said the improvement reflected higher volume, favorable mix, operational initiatives, portfolio and footprint actions, and approximately $1 million in net IEEPA tariff refunds. → 3 Dividend Champion Utilities for a Market That Can't Sit Still Operating income rose 48% to $33 million, and operating margin increased 370 basis points to 14%. Adjusted operating margin was 17.8%, up 280 basis points. Adjusted EBITDA increased 25% to $49 million, with adjusted EBITDA margin rising 260 basis points to 21.2%. Diluted earnings per share were $0.66, up 94% from the prior-year period. Adjusted diluted EPS was $0.88, a 49% increase that exceeded the high end of Helios’ previous outlook by $0.05 per share. → Is Wingstop's Growth Story Losing Steam? Chief Financial Officer Jeremy Evans said operating expenses increased by $2.2 million, primarily due to employee benefit costs and an isolated bad-debt expense. Excluding those items, he said expenses were essentially flat year over year while the company increased research-and-development spending. Hydraulics segment sales were $146 million. Sales increased 14% on a pro forma basis after normalizing for foreign exchange and the CFP divestiture. Helios reported growth in the Americas and Europe, the Middle East and Africa, while Asia-Pacific sales increased by significant double digits on a pro forma basis. Construction activity was a key contributor to mobile-market growth, while agriculture also increased. Industrial end-market sales were relatively flat year over year. Hydraulics gross margin expanded 160 basis points to 34.6%, and segment operating income increased 16% to $29 million. Segment operating margin rose 200 basis points to 19.7%. Electronics sales increased 19% to $86 million, with growth across all regions and particularly strong results in Asia-Pacific. Enovation Controls recorded a second-quarter sales record, supported by recreational-market demand and continued strength from a large original equipment manufacturer customer, the company said. Electronics also reported growth in health and wellness, mobile and industrial applications, though core markets and marine remained soft. Gross profit in the segment rose 41%, while gross margin expanded 530 basis points to 34.6%. Segment operating income nearly doubled to $11 million and operating margin increased 490 basis points to 13.1%. Bagan said Helios expects to continue outgrowing underlying end markets through commercial wins, product launches and deeper customer relationships. He cited opportunities in health and wellness, including new Balboa products expected to enter the market over the next six to nine months, as well as growth in China and broader Asia-Pacific markets. Helios generated a second-quarter record of $42 million in operating cash flow and $31 million in free cash flow. Capital expenditures totaled $11 million, or 4.9% of sales, reflecting increased strategic organic investment. The company said its cash conversion cycle improved by 11 days from the comparable period a year earlier. During the quarter, Helios closed a Faster facility in Canada and further consolidated Faster’s North American operations. Bagan said the company is moving certain activities into a Maumee, Ohio, location while freeing capacity at its Mishawaka, Indiana, operation, where Daman manifold assemblies have experienced growth. The company expects the actions to produce efficiency and cost benefits beginning in the second half of 2026. Capital spending is expected to support manufacturing capacity for data-center thermal-management couplings, low-cost engineering and manufacturing operations in Mexico, India and China, and automation and productivity projects. Evans said the company’s updated CapEx outlook is 4% to 4.5% of sales. Helios ended the quarter with net debt of $264 million, its lowest level since the third quarter of 2020. Its trailing 12-month net debt-to-adjusted EBITDA ratio declined to 1.4 times from 2.6 times a year earlier, below the company’s 1.5 to 2.5 times target operating range. The company paid a quarterly dividend of $0.12 per share and repurchased about 79,000 shares for $6 million during the quarter. Helios had $76 million remaining under its repurchase authorization and said year-to-date shareholder returns through dividends and buybacks totaled $18 million, up 40% from the first half of 2025. Helios raised its 2026 sales outlook to a range of $880 million to $900 million, compared with $839 million reported in 2025 and $792 million on a pro forma basis excluding CFP sales. At the midpoint, the guidance implies 12% growth from 2025 and would represent the highest annual sales in company history, according to management. Hydraulics sales are projected at $555 million to $565 million, representing approximately 13% pro forma growth at the midpoint. Electronics sales are expected at $325 million to $335 million, or 11% growth at the midpoint. Adjusted EBITDA margin is forecast at 20.2% to 21%. Adjusted diluted EPS is forecast at $3.05 to $3.25, representing 23% growth at the midpoint. For the third quarter, Helios expects sales of $215 million to $222 million, adjusted EBITDA margin of 19.8% to 20.6%, and adjusted diluted EPS of $0.70 to $0.77. Management said it is seeing strong order trends and commercial-win activity, but remains mindful of tougher comparisons in the second half, along with energy and fuel prices, tariffs, inflation and geopolitical tensions. Helios is also preparing to enter the data-center thermal-management market through Faster couplings. The company has completed qualifications required to meet industry standards, is building inventory and has product samples with approximately a dozen prospective customers. Management said it has not included data-center revenue in its 2026 guidance, though it would be disappointed if orders did not emerge in the second half. Evans said Helios expects modest data-center sales in 2027 followed by a gradual ramp, subject to customer qualification processes. Bagan said the company generally expects to sell to equipment integrators building cooling racks, while its products must also be validated by hyperscale data-center operators. Helios Technologies, Inc develops and manufactures engineered motion control and electronic control products for a wide range of industrial and mobile equipment applications. The company's Hydraulics segment designs and produces hydraulic cartridge valves, manifold systems, pumps and motors, filtration solutions and off-highway joysticks. Its Electronic Controls segment offers programmable electronic control units, wireless telematics, human-machine interfaces and software to optimize performance, efficiency and safety for equipment OEMs and end users. Through its global network of manufacturing facilities, service centers and technology centers, Helios Technologies serves markets in agriculture, construction, material handling, mining, municipal and recreational vehicles, as well as industrial automation and infrastructure equipment. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Helios Technologies Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Revenue: Second quarter sales were $232 million, up 9% year-over-year. On a pro forma basis, adjusting for the CFP divestiture and foreign exchange, sales increased 16%. Gross Profit: Increased 19% to $80 million, with gross margin expanding 280 basis points to 34.6%. Operating Income: Rose 48% to $33 million, with operating margin expanding 370 basis points to 14%. Adjusted EBITDA: Increased 25% to $49 million, with margin expanding 260 basis points to 21.2%. Earnings Per Share: Diluted EPS was $0.66, up 94%; adjusted diluted EPS was $0.88, up 49%. Segment - Hydraulics: Sales were $146 million, up 14% year-over-year on a pro forma basis. Gross margin expanded 160 basis points to 34.6%, and operating margin expanded 200 basis points to 19.7%. Segment - Electronics: Sales were $86 million, up 19% year-over-year. Gross margin expanded 530 basis points to 34.6%, and operating margin expanded 490 basis points to 13.1%. Cash Flow: Record second-quarter operating cash flow of $42 million and free cash flow of $31 million. Capital Allocation: Repurchased approximately 79,000 shares for $6 million in the quarter; returned $18 million to shareholders year-to-date through dividends and buybacks. Leverage: Trailing 12-month net debt to adjusted EBITDA improved to 1.4 times, down from 2.6 times in the prior year period. Full-Year 2026 Outlook: Raised sales guidance to $880-$900 million; adjusted EBITDA margin expected in the range of 20.2%-21%; adjusted diluted EPS expected in the range of $3.05-$3.25. Warning! GuruFocus has detected 6 Warning Signs with HLIO. Is HLIO fairly valued? Test your thesis with our free DCF calculator. Release Date: August 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Helios Technologies Inc (NYSE:HLIO) delivered strong Q2 2026 results with sales of $232 million, at the high end of guidance, and adjusted EPS of $0.88, exceeding expectations by $0.05. The company reported its fourth consecutive quarter of double-digit pro forma sales and adjusted earnings growth, with order intake growing double-digits for the fourth straight quarter. Gross margin expanded 280 basis points year-over-year to 34.6%, driven by higher volumes, favorable mix, and operational initiatives, marking the fourth straight quarter of margin expansion. Record operating cash flow of $42 million in Q2 allowed the company to reduce net debt to $264 million and lower leverage to 1.4x, below its target range, while returning $18 million to shareholders year-to-date. Helios Technologies Inc (NYSE:HLIO) raised its full-year 2026 outlook, now expecting sales of $880-$900 million (potentially the highest in company history) and adjusted EBITDA margin of 20.2%-21%, reflecting strong momentum and new business wins. The company faces tougher comparisons in the second half of 2026, with Q3 guidance implying only 8% sales growth and 2% adjusted EPS growth year-over-year. External headwinds include rising energy and fuel prices, tariff dynamics, broader inflationary pressures, and geopolitical tensions, which could impact performance. The marine end market remains soft, and the industrial end market is relatively flat, limiting growth in certain segments. The data center thermal management market opportunity has not yet generated revenue, with only samples out to prospective customers and no orders booked in 2026 guidance. Operating expenses increased by $2.2 million year-over-year due to employee benefit costs and an isolated bad debt expense, partially offsetting margin gains. Q: Sean, you mentioned the completion of the stabilization plan and a shift to a growth phase. Can you elaborate on the key drivers behind the strong first-half performance and the raised full-year outlook?A: Sean Bagan (President and CEO): The first-half performance demonstrates that our core strategy is working. We delivered our fourth consecutive quarter of double-digit pro forma sales and adjusted earnings growth, driven by a combination of ramping business wins from last year and new wins continuing at a healthy pace. Order intake grew double-digits for the fourth consecutive quarter. Based on this momentum and improved visibility, we are raising our full-year outlook, with 2026 potentially representing the highest annual sales in Helios' history. The quality of our earnings is also improving, with record operating cash flow in Q2, allowing us to strengthen the balance sheet and increase investments. Q: The electronics segment is growing at a double-digit rate, but the end markets appear challenged. What is driving this outgrowth, and how sustainable is it into 2027?A: Sean Bagan (President and CEO): The growth is primarily driven by aggressive go-to-market strategies and numerous business wins, which we detailed at Investor Day. While markets like marine and recreational are challenged by high interest rates, we are outpacing the market through new product development and deeper penetration with existing customers. The health and wellness market has rebounded and stabilized, with significant growth coming from Asia. We are also leveraging our combined businesses to drive synergies and moving production to lower-cost facilities to improve margins. We believe this outgrowth is sustainable as we continue to expand our product breadth and win new business. Q: Can you provide more detail on the data center thermal management opportunity? What is the line of sight on wins, and how should we think about the revenue ramp?A: Sean Bagan (President and CEO) and Jeremy Evans (CFO): This is our single largest opportunity. We have started building inventory and have product samples out with about a dozen prospective customers. We have not built any revenue into our 2026 guidance, but we would be disappointed if we didn't see orders in the back half. We expect some sales in 2027 with a gradual ramp from there. The process is lengthy as products must be validated by hyperscalers, but we are confident in our product's performance, particularly regarding leakage rates. We are investing in capacity, including a new facility in Toledo, Ohio, to support this market. Q: The gross margin has expanded for four consecutive quarters. How sustainable is this, and can you decompose the drivers between mix, productivity, and footprint actions?A: Jeremy Evans (CFO): The biggest lever for gross margin expansion is volume and filling existing capacity. Our incremental margins in Q2 were strong, though they included a roughly $1 million benefit from IEPA tariff refunds. Excluding that, the flow-through was consistent with expectations. We continue to drive productivity and leverage our low-cost manufacturing centers. The benefits from recent footprint actions, like the Faster facility consolidation, will play out more in the second half of 2026 and into 2027. We are managing cost pressures on components like printed circuit boards and aluminum, but we are pleased with the margin expansion and it remains a clear focus. Q: With the balance sheet now below your target leverage range, how are you thinking about capital allocation priorities, particularly regarding M&A and CapEx?A: Sean Bagan (CEO) and Jeremy Evans (CFO): Our leverage ratio has improved to 1.4 times, below our target range, giving us more optionality. Our priority has shifted to investing in organic growth opportunities, maintaining increased capital returns to shareholders, and pursuing strategic acquisitions. CapEx is expected to be 4% to 4.5% of sales this year, focused on data center capacity, low-cost centers, and automation. We are taking a disciplined approach to M&A, focusing on opportunities that complement our existing portfolio and help us achieve our 2030 targets. We are using our long-range planning process to identify white spaces and build versus buy opportunities. Q: You mentioned the industrial end market was flat in Q2. What are you seeing there, and how does it factor into your guidance?A: Jeremy Evans (CFO): On an as-reported basis, industrial is down, but that includes the divested CFP sales. Excluding that, industrial was fairly stable and slightly up in the first half. The strength we are seeing is in mobile (construction), aerospace, and health and wellness. Industrial is more stable for us, while the recreation marine market remains depressed. These trends are reflected in our raised outlook, with mobile, aerospace, and health and wellness being the positive catalysts. Q: China has been a bright spot. Do you see this as a potential long-term growth driver?A: Jeremy Evans (CFO): Yes, China and the broader APAC region have been a bright spot in both hydraulics and electronics. In electronics, our Joyonway business has increased its capabilities and execution. In hydraulics, we are seeing strong growth, partly driven by OEMs moving manufacturing into China and exporting to Europe. Our strong presence and solid management team are helping us grow with our customers there. We view China as a definite growth market for us. Q: Regarding the Q3 guidance, it implies a step-down in growth despite strong momentum. Can you explain the cadence and the moving pieces for the second half?A: Sean Bagan (CEO): Our plan was always heavier in the first half and lighter in the second half, which is typical seasonality. Our hesitation in providing more confidence for the back half was due to macro uncertainty, but our order visibility is about one quarter out. We have seen momentum continue, with July being our best month ever for both revenue and order intake. The ramp of new wins and our new product portfolio give us confidence. The step-down is a function of tougher comparisons and the timing of end-market recoveries, but we are still expecting solid growth. Q: Can you provide more color on the footprint optimization actions, specifically regarding Faster, and how they will impact the business?A: Sean Bagan (CEO): We are consolidating our North American operations for Faster. We established a presence in Toledo, Ohio, and are building that out, while moving some operations from Mishawaka, Indiana, to create more capacity there for our growing Daemen business. We also closed a small Canadian facility and moved that production to Italy. These actions are designed to drive efficiency and cost benefits starting in the second half of 2026. They also position For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Helios Technologies, Inc. HLIO reported strong second-quarter 2026 performance, driven by broad-based sales growth and improved profitability. Adjusted earnings were 88 cents per share, up 49% year over year, and beat the Zacks Consensus Estimate of 80 cents by 10%. Revenues came in at $231.9 million, up 9% year over year, and topped the consensus mark of $230.4 million by 0.7%. On a non-GAAP basis, Helios also emphasized that sales grew 16% on a pro forma basis, reflecting the divestiture of Custom Fluidpower (“CFP”) and the impact of foreign exchange. Reported sales were weighted to the Americas, which accounted for 52% of total revenues, while EMEA and APAC represented 26% and 22%, respectively. The top line exceeded expectations as both business segments contributed, with sales growth across the Americas and EMEA and overall APAC revenues also increasing year over year. Electronics segment’s sales increased 19% year over year to $85.5 million, driven by gains across all regions. Americas sales rose 17% to $63 million, EMEA revenues increased 7% to $9.1 million and APAC sales surged 43% to $13.4 million. Segment gross margin improved 530 bps to 34.6%, while operating income rose 90% to $11.2 million. Hydraulics segment’s sales rose 4% to $146.4 million. Americas sales increased 6% to $57.2 million and EMEA revenues advanced 12% to $51.8 million, while APAC sales declined 8% to $37.4 million. On a pro forma basis for the CFP divestiture, APAC Hydraulics sales increased year over year. Segment gross margin increased 160 bps to 34.6%, and operating income rose 16% to $28.9 million. Helios Technologies, Inc price-consensus-eps-surprise-chart | Helios Technologies, Inc Quote Gross profit rose 19%, with the gross margin expanding 280 basis points to 34.6%, supported by higher volume, favorable segment mix, the CFP divestiture and a benefit from IEEPA tariff refunds. Operating income increased 48% to $32.5 million, with operating margin improving 370 basis points (bps) to 14.0%. Adjusted EBITDA margin expanded 260 bps year over year to 21.2%, reflecting gross margin expansion and operating expense leverage, partly offset by research and development investments, employee benefit-related costs and an isolated bad debt expense. Management also highlighted record second-quarter operating cash generation. In the first six months of 2026, Helios generated net cash of $65.8 million from operating activities compared with $56 million in the year-ago period. Capital expenditure totaled $18 million in the same period, up 56.5% year over year. Free cash flow was $47.8 million in the first six months. Exiting the first six months of 2026, the company had long-term non-revolving debt of $226.1 million, down from $256.2 million at the end of 2025. Net debt-to-adjusted EBITDA improved to 1.4x compared with 2.6x in the year ago period, underscoring continued progress on deleveraging. Helios exited the period with cash and cash equivalents of $68 million compared with $73 million at the end of 2025. The company maintained its quarterly dividend at 12 cents per share and paid its 118th consecutive quarterly dividend during the second quarter. Helios also repurchased 149,000 shares for $10.6 million during the first six months of 2026. For 2026, Helios raised its revenue outlook to $880-$900 million from $840-$870 million. The company now projects an adjusted EBITDA margin of 20.2-21.0%, compared with 19.5-21.0% previously, and non-GAAP earnings per share of $3.05-$3.25, up from $2.75-$3.00. For third-quarter 2026, the company issued an outlook calling for revenues of $215-$222 million, adjusted EBITDA margin of 19.8-20.6% and adjusted earnings of 70-77 cents per share. The company currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Constellium SE CSTM came out with quarterly earnings of $1.04 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $0.91 per share. This compares with earnings of $0.25 per share a year ago.Constellium posted revenues of $2.75 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $2.1 billion.Generac Holdings Inc. GNRC came out with quarterly earnings of $2.91 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.95 per share. This compares with earnings of $1.65 per share a year ago.Generac Holdings posted revenues of $1.17 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.37%. This compares with year-ago revenues of $1.06 billion.Graco Inc. GGG reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Helios Technologies, Inc (HLIO) : Free Stock Analysis Report Graco Inc. (GGG) : Free Stock Analysis Report Generac Holdings Inc. (GNRC) : Free Stock Analysis Report Constellium SE (CSTM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management declared the two-year business stabilization plan complete, transitioning to a 'takeoff' phase defined by sustained growth and a fortified balance sheet. Performance was driven by the ramping of prior-year business wins and a healthy pace of new wins across both Hydraulics and Electronics segments. Hydraulics growth was particularly strong in the APAC region, specifically China, driven by mobile and industrial applications despite broader market uncertainties. Electronics outperformance was attributed to aggressive go-to-market strategies and a rebound in the health and wellness market, offsetting continued softness in marine markets. Margin expansion of 280 basis points was fueled by higher volumes, favorable segment mix, and operational efficiencies from footprint optimization initiatives. The company achieved record second-quarter operating cash flow, allowing for a reduction in net debt-to-adjusted EBITDA leverage to 1.4x, below the target range. Full-year 2026 sales guidance was raised to $880 million to $900 million, potentially representing the highest annual sales in the company's history. Management expects tougher year-over-year comparisons in the second half of 2026 due to the timing of end-market recoveries and the ramp of specific commercial wins. Capital allocation priorities have shifted toward organic growth investments and strategic M&A now that leverage is below the 1.5x to 2.5x target operating range. Guidance assumes ongoing headwinds from rising energy prices, tariff dynamics, inflationary pressures, and geopolitical tensions. The company is positioning inventory and capacity to penetrate the data center thermal management market, viewed as the single largest growth opportunity currently available. Helios closed a Faster facility in Canada and consolidated North American operations into a new facility in Toledo, Ohio, to drive efficiency starting in late 2026. Financial results included a $1 million benefit from net IEEPA tariff refunds, which contributed to the gross margin expansion in the quarter. Operating expenses were impacted by isolated bad debt expense and increased employee benefit costs, though core expenses remained disciplined. Management noted that while OEM forecasts are visible, they remain subject to change until the near quarter, leading to a cautious stance on long-term visibility. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Consolidation in North America aims to free up capacity for automation and prepare for entry into the data center thermal management market. CapEx of 4% to 4.5% of sales supports new clean rooms for data center couplings and investments in low-cost engineering centers in Mexico and India. Growth is outpacing challenged end markets through specific new business wins and a rebound in the health and wellness sector, particularly in Asia. Management is leveraging a unified engineering and manufacturing approach to drive synergies and move production to lower-cost facilities in Tijuana. The addressable market for data center cooling is estimated to be larger than the company's existing agriculture and construction markets. While no revenue is included in the 2026 outlook, management expects initial orders in the second half of 2026 with a gradual ramp throughout 2027. With leverage at 1.4x, the company will prioritize organic investment first but is actively identifying 'white space' for disciplined, accretive acquisitions. The new M&A philosophy focuses on strategic alignment with existing portfolios rather than the high-volume acquisition pace seen in previous years.