Helios Raises Outlook as Margins Widen
Second-quarter sales rose 9% to $231.9 million as profitability strengthened.
Helios Technologies (HLIO), the engineered motion-control and electronic-controls maker, raised its annual outlook after wider margins offset a slowdown in sales growth.
The quarter extended a rebound that began late last year. Sales increased 1.5% sequentially from $228.4 million and remained above fourth-quarter 2024's $210.7 million. Reported growth slowed from 17% in the first quarter, while pro-forma constant-currency growth eased to 16% from 23%.
Second-quarter revenue rose 9% year over year. Diluted earnings increased 94% to $0.66 a share, and adjusted earnings rose 49% to $0.88 a share. Those earnings growth rates moderated from 168% and 82%, respectively, in the first quarter.
Profitability strengthened across the company. Gross margin expanded 280 basis points from a year earlier and 180 basis points sequentially to 34.6%. Adjusted operating margin rose 280 basis points to 17.8%, while adjusted EBITDA increased 25% to $49.3 million and its margin widened 260 basis points to 21.2%.
Hydraulics drove the sequential sales increase, rising 5% to $146.4 million as operating margin reached 19.7%, up from 17.7% a year earlier and 16.8% in the first quarter. Electronics sales declined 4% sequentially to $85.5 million, while operating margin fell to 13.1% from 15.9% in the first quarter despite a 490-basis-point year-over-year expansion.
Regional performance diverged. Electronics sales in Asia-Pacific rose 43% to $13.4 million, accelerating from 39% growth in the first quarter. Electronics growth slowed in the Americas and Europe, the Middle East and Africa, while Hydraulics sales in Asia-Pacific fell 8%, an improvement from the first quarter's 14% decline.
Helios now expects 2024 sales of $880 million to $900 million, compared with its previous range of $840 million to $870 million. It projects adjusted earnings of $3.05 to $3.25 a share, up from $2.75 to $3.00, and an adjusted EBITDA margin of 20.2% to 21.0%. For the third quarter, the company expects sales of $215 million to $222 million, implying a sequential decline, alongside adjusted earnings of $0.70 to $0.77 a share.
Operating cash flow reached a second-quarter record of $42 million, and net debt declined to $263.5 million from $383.2 million a year earlier. Leverage fell to 1.4 times adjusted EBITDA from 2.6 times, giving Helios room to repurchase $6.0 million of shares during the quarter.