Q3 2025 Helios Technologies Inc Earnings Call
Greetings and welcome to the Helios Technologies, third quarter 2025 Financial results conference call.
At this time, all participants are in a listen-only mode.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Tanya almond vice president of investor relations and corporate Communications. Thank you. You may begin.
Thank you, operator and good day everyone. Welcome to the Helios Technologies, third quarter, 2025 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 HL. Io.com you also find the slides that will accompany our conversation today, as well as our prepared remarks.
Here with me today. Are Shaun began president and chief executive officer, Michael Conway, our Chief Financial Officer and Jeremy Evans. Our chief accounting officer.
Please join us in welcoming Michael for his first earnings call with Helios.
He joined the Helios team just three weeks ago.
Sean will start the call with highlights from the third quarter, then hand it over to Michael for a brief introduction.
Jeremy will then review our third quarter Financial results in detail?
Sean will conclude our prepared remarks with expectations for the remainder of 2025.
We will then open the call to your questions.
If you turn to slide 2, 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, 10K.
For 2024, along with upcoming 10q to be filed with the Securities and Exchange Commission.
You can find these documents on our website or at se.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 gaps with non-gaap measures in the tables that accompany today's slides.
Reference slides, 3 and 4. Now with that, it's my pleasure to turn the call over to Sean.
Thanks Tanya and welcome everyone. We appreciate you joining us today.
Our third quarter delivered positive, measurable results, analogous to the current changing Autumn season since I joined Helios 9 quarters ago, our business have persevered through various Market down Cycles. I am pleased to finally report that the third quarter was a harvest season for Helios as we return to growth and delivered above 20% adjusted Eva margin
After planting strategic initiatives and weathering challenges. We're now seeing results in the same way that farmers do after spending months, planting nurturing and waiting often through unpredictable weather. Before finally, harvesting in the fall Helios Technologies is evolving through restructuring innovating, and expanding, and the core remains incredibly strong.
Growth often requires visible change, and now the progress is coming through in our financial results.
We believe the third quarter marks a turning point for Helios. We delivered a 13% sales increase with gross across all, 3 of our regions and both business segments, this growth was driven by a strong performance from our electronics business. In fact, it was a record quarter for Innovation controls with strong demand returning in the recreational industry. That's not to Discount the growth in Hydraulics which was achieved in what continues to be a soft Marketplace.
Our focus on our go to market strategy and accelerated. Pace of innovation is winning, back customers and taking market share.
Of note, over the last 5 months, our weekly average order volume has outperformed the same periods in the last 3 years. Our customer centricity at high level of customer. Engagement is capturing new business wins and growing our sales funnel. Our new products across both segments have had great reception, where we have been showcasing them at Major trade shows such as Ibex utility Expo. The battery show IBT Expo, Bama con Expo India and the international Pool Spa patio Expo,
In addition to our customer focused initiatives, our teams also dedicated time to strengthening our culture and giving back to the communities in which we work.
We are doing this work with purpose as we strive to be the employer of choice and the communities we live
It is getting noticed with numerous external Awards and accolades among other examples. We continue to our annual sponsorship of the Clyde Nixon business. Leadership award named after a former Sun, Hydraulics, chairman and CEO. This award is presented at the Sarasota County's Economic Development, corporation's, annual meeting and honors, a Sarasota County Business leader, who exemplifies the personal Integrity. Business excellence and Community commitment of the late, clad Nixon.
Additionally, during our recent Helios Leadership Summit, our team prepared books filled with inspirational messages for the children. Served by Easter Seals Southwest, Florida Chapter, these servant leadership qualities. Go back to our Founders specifically, Bob koski's unique approach to his Infamous horizontal management style and his philanthropic mindset.
Moving to our results as expected, our higher sales in the third quarter, contributed to margin expansion. This shows through in our operating model. When you look at the sequential sales, step up from 2 Q2 to 3 Q, 25 of 8 million and the associated incremental margins, at the gross profit line all the way through to the adjusted Ava, and earnings per share. We are continuing to invest in engineering resources, to drive our future product Pipeline, and our upgrading production capabilities, which will have a productivity payoff in the future.
We also continue to generate positive cash flow and reduce debt.
After our ninth consecutive quarter of paying down debt, our net debt to adjusted Eva. Leverage ratio, has improved to 2.4 times
During the quarter, we closed the sale of custom fluid power and recorded a gain of 21 million. We are excited to have cfp remain in the sun family as a continued Hydraulics, distributor in Australia under an exclusive distribution agreement for the region.
This followed the action to close our hcw operation and put engineering resources back into our core businesses. Another example of our evaluation of the footprint realignment, this is a continuous Focus as we evaluate how best we optimize our operations to serve our customers where we can command strong Market positions.
Also, as part of our ongoing portfolio evaluation this quarter, we wrote down 25.9 million of Goodwill related to I3 product development. A company, we acquired in May 2023, we have refocused, I3, PD Engineers on projects, aligned with helios's Core Business and strategic goals, including the no roads and signis reach software platforms supported by a leadership change that has added more software sales expertise
Adjusted our expectations for the rate of adoption of new software capabilities.
Overall for Helios, we remain focused on profitably, growing the business driving ebit down margin back into the 20s and improving our return on invested Capital. Our Capital priorities remain to invest in organic growth. Reduced debt maintain our long dividend history and opportunistically repurchase shares with continued margin expansion. We expect to lower our leverage ratio to around 2 times by year. End with the fourth quarter, cash flow generated from operations, combined with utilizing the cash received on October 1st from the sale of cfp.
As we continue to strengthen our balance sheet, we will have more optionality to make sure strategic Investments as we advance into 2026.
Finally, I would like to take this opportunity to welcome Michael Conway, as our new CFO, our employees partners, and shareholders will find his insightfulness, strong grasp of finance, and breadth of experience. A nice addition for Helios, we now have our full leadership team in place to harness our Collective energy and create the momentum to drive us forward. Let me turn the call over to Michael now to introduce himself.
Thanks, Sean.
These are certainly exciting times at Helios.
And I'm very excited and honored to be here.
I joined Helios because I see great potential for this business.
I know that we have businesses that have strong course with well-respected histories.
Great Market positions with global brand recognition, deep customer, relationships and quality products that serve critical needs within the applications. They are used
With the progress on Shaun's leadership, it is evident, there is tremendous value that we can create going forward.
I believe that my experience can be well applied here. And look forward to contributing to company. Growth driving cash, and earnings improvements, and helping the team, create increasing shareholder value over time.
With that, let me pass it over to Jeremy to cover the details of the solid third quarter results.
Thanks, Michael. It's great to have you join us and good morning everyone. As I review our third quarter results, please reference slides 5 through 8.
Sales on the quarter, were 220. Million up to 13% year-over-year in exceeding. The top end of our guidance range which was 215 million
This reflects strong performance in the electronic segment, which grew 21% while Hydraulics increased 9%.
Encouragingly we saw the mobile recreational and agriculture markets. Turn green this quarter relative to year-over-year comparables.
There were some orders from the fourth quarter, that customers pulled forward a contribution to the outperformance.
Sequentially sales were up 4% or 8. Million is the man continued to improve across multiple and markets. Regionally year-over-year, sales, increased double digits across all 3 geographies,
Sequentially. We had 10% growth in APAC and 6% growth in the Americas. Offsetting, the typical seasonal decline in Amia, which was down 6%.
Note foreign exchange favorably impacted sales by 1.8 million compared with the year ago. Period.
Gross profit increased 21%, year-over-year to 73 million with gross margin. Expanding, 200 basis points. To 33.1% driven primarily by better capacity utilization from higher volumes, favorable mix and operational efficiency improvements, which more than offset pair of headwinds.
Sequentially.
Gross margin improved 130, basis points reflecting incremental, leverage from higher volume primarily in the electronic segment.
We continue to look for ways to improve gross. Margin through efficiency and capacity. Utilization while focusing on our Core Business.
Our initiatives to restructure hcw.
Leverage, our low-cost Tijuana facility divest cfp and refocus I3 PD resources, or examples of this decision to take in the past year.
operating income was down in the quarter compared to the prior year, primarily due to Goodwill impairment related to I3 PB
The cfp divest at your gains, mostly offset the Goodwill charge.
On an adjusted basis. Operating margin came in at 16.6% the third quarter in a row of expansion, while adjusted ebita margin declined 40 basis points year-over-year
Is operating profit. Had a 5.5 million benefit due to stock compensation reversal from the CEO termination.
Our effective tax rate. In the third quarter was 19.8% compared with 14.2%. In the year ago, period reflecting the mix of business and applicable statutory tax rates and the impact of both the Goodwill impairment charge and the gain on the sale of cfp.
Did an overall increase in discrete tax, benefits driven by the CEO termination in July of 2024.
Diluted EPS was $0.31 in the quarter, down 9% compared to last year.
diluted non-gaap EPS with 72 cents in the quarter up 22% over last year primarily from the sales growth and business improvements we have discussed
The sequential increase demonstrates, the strong operating, leverage of the business.
Turning to slide 9.
Hydraulics delivered 9% higher sales, year-over-year supported by improving demand from our customers, in the mobile and market, and early signs of improvement in agriculture.
Born exchange had a favorable, 1.8 million impact on the segment compared with the prior year period.
Hydraulics, gross profit and gross margin grew year-over-year, 12% and 90 basis points, respectively supported by operational efficiencies from improving lead times and continued volume strength at faster.
Sea expenses were up 5 million or 30% over the prior year period mainly due to the 3.7 million reversal of unvested stock compensation in connection with the CEO, termination in July 2024, in addition to higher wages and benefits reflecting Investments made in our core operations.
moving to slide 10 electronic sales, grew 21%, year-over-year driven by record performance and innovation
We saw growth from our customers in the recreational mobile and Industrial and markets. While our demand in the health and wellness Market was relatively flat.
Gross profit and gross margin expanded 38% and 420 basis points respectively. From the prior year, primarily due to higher volumes and more favorable mix
Operating income of negative -3.7 million reflects, the I3, PD, Goodwill impairment.
Prior to the Goodwill impairment charge operating income is the percentage of sales increased to 15.3% up 490 basis. Points compared to the prior year period, due to the higher gross margin and lower sea expenses as a percentage of sales.
the prior year, period included a 1.8 million reversal of unvested stock compensation in connection with the CEO termination
Slide 11 shows a trailing 12-month free, cash flow conversion rate of 223%.
We generated $18.5 million in free cash flow during the quarter, down from $28.8 million in the prior year.
This quarter's cash from operations was impacted by an increased accounts, receivable balance as a result of the higher sales.
Capex of 6.7 million or 3% of sales was consistent with our focus on maintenance and productivity, enhancements that deliver clear and measurable Returns on investment.
Turning to slide 12 at the end of the third quarter cash and equivalents were 55 million which did not include all of the proceeds from the sale of cfp and we had 36060 million available on our revolving lines of credit.
Our balance sheet is strong and provides us with great flexibility.
With that, I will now turn the call back over to Sean. Thanks, Jeremy.
Turning to slides 13 and 14. We have met our commitments over the last 8 consecutive quarters. As we have instilled, a stronger, Financial discipline, and processes for accountability and predictability. We have also outperformed our expectations for the first 9 months of this fiscal year, while, navigating the Tariff landscape and expect to end 2025. Well, positioned for further growth carrying into 2026.
As we mentioned last quarter, we expected an acceleration from recreational customers based on our order book and other Market factors such as improved Channel inventories,
With mobile. Also starting to show positive indicators. The broader macro and customer sentiment is turning upward.
Key industrial. Indicators are stabilizing and early cycle. Demand patterns are improving signals that support the beginning of an upcycled across some of our end markets.
At the same time Helios is owned. Self-help initiatives, are taking hold, we've strengthened our operating discipline streamlined, our portfolio and invested in capabilities, that expand our addressable markets
Building on 2 years of discipline, strategic planning and execution. We are well positioned to capture the next phase of growth with greater agility and profitability with our streamlined operations. We expect fourth quarter sales, to be in the range of 192 to 202 million up, 10% over the prior year period at the midpoint of the range. This would be at 20% growth rate at the midpoint adjusting for 15.6 million in cfp sales in the prior year. Comparable period
For the full year sales at the midpoint of the guidance adjusting for cfp would be 4% growth over fiscal 2024.
Keeping us at the 20% plus level.
For the full year, we expected just to debit the margin to be in the range of 19.1 to 19.4% with the midpoint about 25 basis points above the midpoint of our original guidance range from February this year.
We expect fourth quarter, diluted non-gaap earnings per share to be in the range of 67 to 74 cents, which more than doubles over last year at the midpoint for the full year. We expect diluted non-gaap EPS of 2.43 to $2.50 with the midpoint 12% above the high end of our original guidance from February.
We entered the year with a clear plan and stronger discipline. And today we're operating with greater Precision, accountability and focus to finding a new standard for Helios 1. We intend to keep refining and elevating with every step forward. I am incredibly proud of the progress made this year by the Helios team, and we are committed to capitalizing on our momentum as we continue to stack up wins.
Turning to slide 15 to 17. We remain focused on organic, growth driven by Innovation. The team has done a great job. Launching new products this year that provide incremental sales streams and allow us to attack adjacent markets. Our focus on investing in R&D and Innovation through the down cycle has positioned us well for when the cycle starts to turn
As you look at both our financial priorities as well as our key Focus areas we established for the year. I am pleased with how we are performing. We return to growth this quarter and expect to end the year with sales above 2024 levels with improved margins, a lower cash conversion cycle and reduced debt laying a strong foundation for 2026. We are targeting to host our next investor day on the morning of March 20th 2026 in Sarasota Florida. There will be more information provided as we get closer to the event.
As I conclude our prepared remarks, I want to revisit what I shared on last quarter's, call our Renewed Energy, and determination to deliver a strong comeback in the second half of the year today, I'm proud to say, we are doing just that our execution and progress reflect the unwavering dedication of every Helios employee around the world.
We are fortunate to have an extraordinary group of companies within the Helios family, many celebrating their own remarkable. Milestones alongside our founding company Sun Hydraulics, as it marks its 55th anniversary in 2025 as we honor that Legacy, our Focus remains squarely on the future driving Innovation serving our customers with excellence and creating lasting value for our shareholders. The actions we're taking today are designed to strengthen our foundation and amplify our momentum. I'm more confident than ever in my belief, that the future is very bright for Helios.
Thank you for being part of today's call and for your ongoing engagement with and support of Helios Technologies with that. Let's open the line for Q&A please.
Thank you. We will now be conducting a question and answer session.
If you would like to ask a question, please press star 1 on your telephone keypad,
You may press star 2 if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
1 moment, please while we pull for questions.
Thank you. Our first question comes from line of Chris Moore. With CJs Securities. Please receive with your questions.
Good morning, guys. Congrats on a nice quarter and the momentum.
Yeah, maybe we just talked about. Um,
You know, provide a little color on some of your recent commercial wins. You know how much visibility that that give you into into 26?
Hey Chris thanks uh I appreciate the kind words and yeah as you know, when we entered this year, we prioritize our go to market as our top initiative, we are coming off. Well we are now coming off 12 quarters of sales to clients so it feels really good to put up a put up a green number positive growth and certainly would attribute that to our uh refocus on. Go to market.
Proud to celebrate our 55th anniversary here at Sun Hydraulics. The fastest actually will be celebrating their 75th Anniversary next year and speaks to the deep Long, uh, customer relationships. They have and, and deep into the egg industry, AOS, a long-term customer of ours, and a recent nice win for, for the faster team that will start to stack in 2026 where, um, our customer Pro kind of their 3. European Brands spent vulture and massive Ferguson decided to, to to Really harmonize the the back end of the uh hydraulic attachments. And so they've chose us for our performance quality and and price frankly of our of our coupling. So that's that's just an example. But there's many of that within the faster team. The sun team is, is really all about distribution and partnering with our long-term Distributors, and just stacking up wins as as I like to say, within the organization, what whether, um, recent wins in the wind power, uh, alternative
Energy uh awp Earth moving. A leading OEM there through 1 of our Distributors. Uh the the light compact construction, equipment leader, uh specialized egg harvesting equipment. These are all small wins that are stacking and netting up and then you go over to the electronic segment and just at the international pool patio and Spa show in Vegas last week and a great win. Back example, the 1 of the uh higher
Premium hot tub, spa Brands bullfrog uh is a customer win back and they had 1 of our uh, displays on display at the show that were very excited to, to win, some of that business back. And then as I highlighted in our, uh, prepared remarks, Innovation had a record quarter. They are on the gas and Drive-In Innovation and growth for us across all of Helios. Um, I I would like to speak to 1 win that we've had recently that we haven't been able to announce it, but it's in a new space. And it, it shows our ability to really Target our go to market approach these adjacent opportunities. So this is in the neighborhood electric vehicle space, uh, that will take some time to to ramp and grow as, as we displaced a competitor. But it shows again our focus on go to market very targeted on, on where we're searching and um, I couldn't be more prouder of what the Innovation team has done. I would put off our Engineers against any of our competitors, whether that's software mechanical.
Application that's allowing us to go get these win backs and is key to supporting our our product strategy.
Wow, good, good stuff. I I appreciate that. Uh maybe just my follow-up. I was marching progression is is happening here. Fiscal 21 was an unusual year, you know, driven by about boa at just an e. But I was 24.6% what would it take, you know, over the next 2 or 3 years to get back to that level.
Yeah, I'm glad you highlighted. Uh, bboa because uh I highlighted that before that, that was about double what it currently is, in terms of its Revenue size during that year, and given that low-cost manufacturing, that was very accretive from an overall Helios mix perspective. But in addition we were coming off also highs with innovation in the Recreational Products when everyone, uh, was buying outdoor, uh, equipment at that time. Uh, so I think what we're showing now is the demonstration of the operating leverage, we have embedded within our business and whether you look at kind of sequential step UPS or year-over-year. We're, we're, we're showed a 200 basis points improvement in our girls profit margins, uh, here in the third quarter, but even sequentially, you look, uh, every quarter this year. Uh, so
It's going to come down to volume and, and we highlight that, and I will tie that back to why it's so important that we go create growth in this, go to market, it's no secret. The markets we're operating in are not healthy. They're they're still recovering. Now, we're seeing signs of growth. But really, in order to get that IBA margin back into those mid 20s, we need to, we need, we need more volume.
Um, the other piece that I would highlight there is, we've been very focused on the rest of the value drivers within the company and certainly the, um, operating expense, uh, of the company has been very well managed. Uh, we did want to continue to call out that last year in the compare has about a 5 and a half million dollar pickup that uh, was due to the prior CEOs, termination. But absent that, we've managed, our cost below 2024 levels and we're growing our sales. So uh on a year to date basis, we're up so you can see the operating expense leverage. We're also getting out of the business.
Very helpful. I appreciate it. Sean, I will jump back in line.
Thanks Chris.
Our next question comes from the line of Jeff Hammond with keybanc capital markets. Please receive with your question.
Um,
If you just start on a recreational vehicle that seems like a market maybe touched on it, check markets are still choppy. But, uh,
You know, is that what you're seeing destocking ending is their program? When share gains, or, or is there a real kind of demand recovery there and, and maybe same for for mobile which again seems pretty choppy, but, but you're kind of pointing the Green Arrow.
Yes. So starting with the recreational,
Uh we have what what we've seen is the market has from a retail perspective. Uh has not rebounded but what has changed is that the dealer Channel inventory levels are on a much healthier spot.
Uh, our largest customer is been on the gas from an innovation perspective, and has taken a lot of share. And and we've benefited from that. And honestly, the other piece here is with interest rates. And I've talked about this on prior calls, that this is a industry where a lot of that products is financed and with the lowering of interest rate environment, that's certainly could help. I, when when we
Look at it just in North America. I mean, even Canada's outperforming the US from that perspective because they're, you know, benchmark rates about 2 and a quarter that they just reduced to in October while, uh, our us fed still in that 375 to 4%, targeted range, but came down. And so I expect that to, to, to likely help. But when you look at those Channel, inventory levels, they're absolutely in a much healthier space. The non-current are finally clearing through with the, uh, oems running. Their Factory authorized clearance and types of things to pull that through so and dealer sentiment then gets a little bit better there. I don't expect dealers are going to go restock back up to Prior levels and that's not a bad thing. We need an inventories and healthier terms are good for that industry. Um and finally I would say our our largest customer is has very steady optimism that I frankly see it grounded in realism and um the worst of the channel, cleanups are behind us and so,
That gives us confidence and then, secondly, yes we are, uh, on the gas and we go to market perspective, um, looking for a new wins. I highlighted the any uh, 1 and I will tell you we're looking at others within that space, whether that's both with, uh, uh, just the off-road type vehicles or Marine,
Which is really excited about our no roads application that we have now launched the no roads marine and we expect that to help us uh get some new wins there in that in that segments as well.
Okay, great. Um,
so,
Appreciate the uh, you know cfp you know looks like a good good devices that you're in Don I3 moves. I think we understand any more portfolio reshaping. You think needs to happen from here? Or is this kind of, you know, where we where we're set and then you mentioned, you know, as you get leverage down, you know, you want to, you know, it should allow you to lean in on, on strategic Investments. And I'm just wondering, maybe how you're thinking in the same or differently than the prior management team about, you know about, you know, m&a. Thanks.
Yeah.
that's Jeff, so I would say
um,
From a portfolio perspective, nothing else imminent. I would say for me, this is just standard work that we're always evaluating the portfolio and the performances of the different businesses. But at this point, we're strongly committed to all of our businesses. It's no secret that our boa business has deteriorated from those coid highs, that certainly weren't sustainable. But we feel really good about the trajectory of that business and have a multi-pronged approach plan to improve their profitability as that volume returns coming off of that.
Evaluate that.
Yeah, and this is Jeremy. I'll touch on the m&a question. Uh, as we've said in Prior calls, our Focus has been on paying down debt, or or leverage ratio was down to 2.4 times, at the end of Q3, we think we could get that, uh, around 2 by the end of the year. Uh, and when you look at our, our cash flow, free cash flow, um, last 12 months, uh, you know, very high near record high cash flow. So we we do expect as we get into 2026 that. Um, you know, we will have uh, maybe different priority around Capital allocation, but as we said on prior call m&a, it's not going to be driven at the corporate level. It needs to make sense with what we have down in our in our, uh,
operating segments.
Hey, Joe.
Hey, good morning and uh, welcome aboard Michael.
So, so thank okay. So I, I guess I I'd start an electronics and I know we've talked about it already but, you know, the sales there, where the strongest in the last 3 years is you mentioned Innovation controls, had a record quarter, maybe just talked about any unusual items in the quarter. Any any, perhaps, pull forwards into the quarter. And then I know there's seasonality. But how do you kind of think about the sequential uh, sales progression and electronics from Q3 and Q4?
yeah, so Joe that on the, uh,
Electronics performance in the, in the third quarter. Um we we had in our prepared remarks, there was a little bit of pull through from the fourth quarter and that really was concentrated to that to the electronic segment. Um and it was more on that recreational Marine space, I think absent that 3 million dollars. We were just above the the the top end of our guide by about a point. Once you take that 3 million out and when you look at the hydraulic segment, although I understand your questions Electronics related, it was a very similar Trend, we're about a point above our top end of our guide with some things, getting a little bit more favorably across both segments.
Just, just the numeric quick on that 1, um, on the sequential. So you you kind of alluded to, um, you know, some of the, the sales pollens, but off of that 79 number in, uh, in Q3 call it 3 or 4 mil on sales Poland's, um, you know, driven by customer ordering patterns.
And then if you look at Q4, at the mid on electronics, which is 73, you would kind of add that back and you'd get a flat sequential on electronics.
Uh, but embedded within that flat sequential is 2 quarters in a row of 20% plus year-over-year bees. So the electronic segment and in particular Innovation is continuing to show really good sales progression.
Great. Okay, great. That's that's very helpful and then, uh, maybe my follow-up switching the Hydraulics. I thought it was interesting that you, uh, highlighted that a was up for the first time in 6 quarters.
Maybe kind of talk about where the growth is coming from there and and maybe uh any geographical uh strength and and ah for for hydraulics.
Yes, the egg strength comes from our faster business, which is predominantly, direct to OEM and egg is their largest market. They serve, I'll acknowledge that the oems, uh, are not putting up really strong numbers. Who are our large customers, whether that's deer. And egg Co cnh. But even as you get
Where uh, kind of indications are signaling for 2026. Um, all of the oems are suggesting things may begin to recover, but what we clearly see is in our incoming orders and indicative orders from them, uh, year-over-year that that's a positive increase is. We're going to feel that earlier as a supplier into them. So we're optimistic. That's 2. Quarters in a row for our faster team that is growing year-over-year and continue to expect that to to Trend favorably in the fourth quarter. And as we enter 2026,
Got it. Okay, very helpful. Thanks for taking my questions.
Our next question, comes from line of Nathan Jones with stevil. Please receive with your question.
Good morning, everyone.
Good morning, Nathan. Hello. I'll follow up on some of these ducking questions because I think it's I mean it's probably a a, an important distinction to make because we get questions about this from investors on on haleya.
Um you guys don't actually need to say the John Day is and the caterpillars of the World selling small wheel loaders and tractors in order to see Revenue growth for Helios in 2026. What you need is the the First Signal of the bottom of the circle which is then stopping ducking inventory and actually producing.
Small machines, even if they're not actually selling more machines. Correct.
That's fair. Yes.
And so, and that's what you're seeing in the market. You've talked about, I think, you know, I just want to make it clear for people in, in recreation in Mobile and in a that's kind of market dynamics that you're seeing, which is indicative of a bottoming cycle for you guys to begin with. Yes,
yes, I would agree. The only caveat I'm going to put because I we talked deeply already about recreational and egg. When you go over to more of the end, markets, at Suns exposed to Aerial Work Platforms. Uh, type of. So there there's there's big macro signs obviously with PMI that's been mixed, but G, uh, geographically, it had been stronger and in China and Asian we've seen that in our sales as well. But beyond that it's it's the piece of us and our partnering from a go to market with our Distributors, to do that targeted account planning and you look at industrial production and the big beautiful Bill and what that will create in terms of infrastructure, we feel well positioned despite that our NFPA data telling us these markets have been down and so with us now growing and we think we're taking care but you're absolutely right on the, the egg and wreck
So, I think that, I mean, you talked about being well, positioned for growth in 2026. And, you know, without needing to, uh, to forecast, what caterpillar sales are going to be, or, what Deere sales are going to be, you should have some decent visibility to growth, just against the docking comps that you had in 25 to to offer any color on what you're thinking about 2026 at this point.
Yeah, so not, not in terms of full guidance and such but I I I feel with conviction that we will enter the year in 2026 with growth. Now, I will also highlight that we will have easier comps in the first half of the year than the second half as we enter 2026. But why I have conviction is what we're seeing in our demand Trends. Um, we, we haven't seen the level of order increases for multiple years and even October came in and double digits. Just as the prior 5 months, had done from a year-over-year perspective. The other thing I want to make sure is clear is that cfp revenues coming out? That was a roughly $60 million, a year business last year, in the fourth quarter. It was 15.6 million dollars. So we just got to keep that in mind that we're not anchoring on 2025 guidance at the midpoint of 825 and growth off of that are really just
Jumping off point is closer to 780 million.
Correct. Yes, particular. Well, obviously that's a satin or hydraulic segment, so it'll be more visible there. Um, but certainly at the Helios level, it helps as well.
Great. Thanks very much for taking my questions. I'll leave it there.
Thank you, Nathan.
All right, next question comes from the line of John Broz with Kansas City capital, please receive your question. Uh good. Good morning. Everyone.
It took the charge off on i3.
Uh, this quarter.
What are you doing? You know specifically to to turn that operation around and and and get it to make a, you know, a contribution uh to the bottom line. What, what, what kind of changes are you making their
Hey John, this is Jeremy. Uh I'll feel that 1 uh I want to First highlight that with that acquisition uh we gained access to a team of Highly talented engineers
and as we've been integrating them into the the rest of the Helios portfolio. Uh, we've actually been Consulting with them and having them help with some of the new product innovations that we've been coming out with and others that we have in the pipeline.
and as we
Evaluated that we we believe it makes a lot more sense to have those resources focus on projects that can benefit the the broader Helios portfolio. And so just to to remind everyone they they were a third party engineering design service firm that basically worked project by project. We didn't retain any of the IP for those projects. Uh, and and then they also had some software. Uh, that's where that signis reach platform came, uh, and we, we just think it's not a turnaround play, but it makes much more sense to refocus those resources on C.
Customers and projects that will benefit the broader Helios portfolio. Um, so that that's the main reason. The other piece I would say is, is rather than try to sell the software platforms on a standalone basis, which requires a lot of customization kind of a long Runway. Uh, we want to embed that software onto the products that we are launching and we are doing that with some of the Next Generation displays, uh, both in our electronics, and then, uh, also having them help out on the hydraulic side, as well. So it's, it's really less of a turnaround situation and more of leveraging those resources as, uh, to best add value to to the broader Helios portfolio, but as a result of that, um, some of that third-party Revenue, uh, projections. We've, we've dialed that back as well as we've adjusted the call it the adoption rate on the software uh, where it's going to be tied now into some of those uh, product releases and so a result
Of that Matt came out. We said we can't support the the Goodwill that we had on the balance sheet for that under the new strategy. Uh, and that's really what led to the right off this quarter and and John if I can, just if I can just accentuate because Jeremy explained that really well. But at the end of the day, this is just an example of overpaying for for an acquisition, that was pre-revenue and and and then scale and at the end of the day, then it's a mathematical equation based upon current business circumstances.
Answers. But that said I want to reiterate how important that the I3 team is to our overall strategy. We acquired, as Jeremy said, some very talented Engineers that have been cornerstones in some of the new products we've announced already and released recently, but also further stuff in the pipeline, and at the end of the day, I couldn't be more proud of those engineers. And the way they are, pumping out products, and our sales teams. Now, with their go to market approach, our kicking down doors. Our customer excitement is very high. And in this Fierce competitive World, our Helios team doesn't back down and we take on these challenges and we love being the underdog.
Okay, thank you, Sean. Uh, I I'm I'm looking forward at the new product pipeline. Um, obviously in the past, there was some emphasis placed on, uh, big OEM wins that would be quite sizable. Uh, when you look up the lineup, are there any singular new products that, uh, that really move the needle or, um, or are they sort of 1 off, uh, uh, in isolation?
Well, I that that's the plan is to, I always uh, launch products that catch the attention of oems and and they want to buy them. But we, at the end of the day are truly an extension of many of those OEM customer of ours. So, we are designing and developing products, uh, years in advance with them. But, but even the most recent 1, we announced, uh, the the the new Fast, the new multi,
But with our new multifaceted, we bring out features that like higher flow rates and, and more applications that it can go on or different deviations of that product, like earlier in the year. The, the multi-slide that went down streaming the market to the compact, um, excavation equipment and, and, and such. And so, we're always trying to innovate. But at the end of the day, the multi faster is the multi-connection, uh, that others have have got me. I I, I would say it's like the clinics. It's created its own brand, that others have copied
Okay, thank you, Sean. Appreciate it.
Thank you.
Thank you. We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.
Great. Thank you very much everyone for joining us today. We will be attending some different conferences between now and the end of the year, both in person and virtually. So we look forward to catching up with you. In person. If you have any follow-up questions, feel free to reach out to me directly, thank you and have a great day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.