HLIO - Earnings call transcript Q3 2017 | Helios Technologies, Inc.

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Operator

Greetings and welcome to the Sun Hydraulics Corporation Third Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Ms. for Relations Investor Howard, Sun Hydraulics. Karen Ms. you, Thank Howard.

You may begin. now

Karen Howard

morning certainly third appreciate Thank XXXX you, time We good and call. our Manny, your everyone. today results conference financial quarter for

Dangel, market the in release our and On the Fulton, Financial be press Tricia Chief close. distributed Wolfgang our me that reviewing with are the Tricia President Chief results Executive line and Officer, and will yesterday's Officer. after Wolfgang were published

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information of additional in presentation consider in or GAAP. should You results the substitute this prepared as isolation not accordance with a for

up back his the the turn slides. the for through with line as well and tables and quarter, to Wolfgang Wolfgang measure the the questions open outlook detail perspective for release, go accompany comparable to that results, answers. before today's we'll GAAP of reconciliations in started financial we the earnings some will get our provided will for non-GAAP have We Tricia of then highlights as on in it

now my Wolfgang. pleasure that, to introduce it So is with

Wolfgang Dangel

good everyone. Slide X. and morning Karen, Please to Thank you, turn

We We’ve I’ll be have very with our teams in our activities pleased into through as together been XXXX. a deploy team's moment. segments had of two a especially closely continue XXXX. working exciting performance execute progressing to business our on vision to that lot from we are going

results pro Let with $XX Sales demand has of by business, up as prices. quarter. year specifically my oil power the quarter representing our $XX the as quarter, the highlighting quarter. taking growth, start markets, from quarter. me in the first all in XX% over also in The Enovation economic million controls considerably realized on the forma financial Sales Controls slide. grew XX% around and million about doubled $XX.X third the for strong of hold, the the business growth with to significant contributed nearly recreational year, third quarter prior million many in a the driven our are vehicle in well I’ll Consistent the by over talk our the organic improvement rest the globe as which growth Controls Enovation markets stable half third our next the XXXX benefiting of business technology with initiatives on basis. compared significant

XX% The continued segments organic business over consolidated growth our Asia which debt, both has quarter. our strong of growth through Asia, year October. XX%. in Our particularly realized sales trends in third in we been increased prior Included in the grew

value which of at slide basis, $X.XX in double excludes change the XXXX line, in the both for more small It earnings number Turning third a deck quarter quarter of the the the than calculated fair The release. non-GAAP a is $X.XX end the this contingent non-GAAP EPS of acquisition, sales as representing on result will consideration to Controls were proactively share be table bottom EBITDA almost the per a Tricia $X.XX. for and or detail. XX% every of is is more $XX.X quarter. relating to in possible. as working organization hard our and to our to to million, our service day testament more customers discuss than Enovation adjusted within many people global This doubled Similarly, the the productive

of our on sales $XXX range consolidated stronger and our top Finally, revenue XXXX. X% given million end the to the we an end. of growth the than guidance in now million again segments, that both reflects once expect in for revenue $XXX increasing about expected increase X% are on bottom the range We

be softest extended infers schedule our our which nothing results quarter year, that December touch have segment. our economic we shutdown the patterns is the season. in and climate, which of accordance electronic normal experience with plan. on the You steady fourth impacted of of frequently having segment by softness our hydraulic within strategic the buying a This worth industry around fourth our in Please seasonal Also from will this holiday quarter OEMs that several quarter made will due could notice vision our the turn investments to some X, to Slide XXXX seasonality in I referred.

and planning, of hydraulics may not drive parts application of have field, have that in application the sales globe. X with relationship you had where experts experts our In segments covering As up we’re any to none. the identified and and we a field sales in past we better in did we our only historically limited the specialists growth Accordingly adding in Americas, by in been opportunity OEMs in Americas, the establishing strategic the to know marketplace. number other direct the application the have we may

about X XX I of we’ve to to benefits expected our Generally, in seeing sales years momentum we compared that to previously. of as geographic on to engineers takes three application in such the report as anticipate up investments you realize select additional and the speed, personal. get reported it and with the we more we rest will continue in that our have investments to we quarter, gain world began these the to in add specialists want market. these this up return we’re growth Additionally

we in see record from executing seen significant closed the in past the operational electronic Since are acquisition been this previously curve-out affiliated segment, last sales in quarters, to quarter. two Regarding while the we’ve Controls December, the resulting growth the third pleased have we businesses. again Enovation our

customers. of between we’ll As products investments recently followed. The two Tricia to make to in pleased some will ensure launched to during for would seamless temporary quarter note, report as segment of about just that that XX cost October be production facilities completed. movement the hydraulic our this to We the new obvious I’m inventory successfully be our lines our the was project the acquisition Recall the knowledge of that strength relevant Controls chunk rationale availability the the Enovation XMD electro-hydraulic quickly and engineering hydraulics knowledge to talent significant part of could of our with electronics between first electronics team. driver valve was segments. to for that strategic announcement our engineering hydraulic result development engineering obtain

three valve quickly forestry, high this week, are first valve. other expect industrial the Bluetooth a second valve operator team’s are handling. agriculture, markets of including commitment spaces in equipments This Announced completed We products the marine, as launch These of and introduced product many applications, all configurable include as the hydraulic our a of to to and Target our how new product. new electro-hydraulic pleased construction, well electrically safety emphasizing project. wide drive operated last line is industries, with Sun finalize used of range earth in the two new we cartridge variety moving material FLeX XXXX. and

ideally has and product new [indiscernible] excited the a application our about the marketplace. and industry FLeX for electro-hydraulic cubic our variety We’re enhance launch in been mobile products wide existing of Sun a comparable hydraulics are of in decade.. represents in broader valves These nearly way industrial the a both especially to outperform largest product proven serving demanding marketplace.

components segments strategic of for spend development to intelligent and portion systems, the include we of significant product R&D Our a continue. smart of our this goals our the control consistent and on introduction expect hydraulic such more

had investment the making that a valves hydraulics in strategic in organization - and previously China, in a segments preference first those are of - Shanghai them each office. of we our our small our area, Another electronic in

more the houses This bit quarter. are review into expended taken which to With and grow sales within for Korea, strategic our move that facility production We’ve in made which spoke facility We quarter in is the I them and of us allowing the payments in step the region which year-to-date the as Tricia, the service, planned. region, call inventory results and last is new collocated functions warehouses larger project efficiency our over about initial land turn combine have create the a and the now to geography. to engineering will from that and old the for facility, we that overview, a one for progressing will we to administratively, financial China building South detail. complement goals

Tricia Fulton

Wolfgang and morning you, on third review Xth Slide I’m with Thank good of starting results. consolidated our quarter the everyone.

were the grew business any products business sales had or our for Enovation the the have XX%. immaterial $XX.X increases $XX that price Controls to an XXXX quarter comparability. last The XXXX. of in This million, XX% includes million pricing year’s up quarter. Third did on organic compared indicating impact Most not

the a the press on for We here will had sales chart impact are information. supplemental Foreign in region, touch by slides currency I translation a as release, the chart. which well sales back the summarizing quarter. in now XXX,XXX inserted of this favorable the designated as bar

geographic start organic Controls the all EMEA million, XX% Americas in As growth. In over Americas the improvement than weighted to $XX XX% well in quarter each to present and Enovation driven business, total. Pacific experiencing up over ago sales XXXX realized consolidated Asian $XX.X quarter of our doubled noted, million US, business as little and by the the third heavily market continued markets driving growth the region to to $XX.X we to our up year-over-year of year of We is previously progressive sales to as the XX% that was more to time. we the Controls growth million. Enovation has a third region. realized the The

and business XX% Americas APAC XX% in XX%, and the grew Our respectively. EMEA organic

to We specialists have investments the believe sales application expansion. in made market sales we which of in generating marketing, the complement sales addition are field, including the and

was and up adjusted consolidated driven was in on leverage by $XX.X and offset realized of than both third curve-out our base SEA, associated million, cost expense. cost activities increase public company fixed stock the sold were partially from last that XX.X% the development quarter. representing quarter. product efficiencies in benefits year’s sales year’s doubled That profitability, from Regarding improvement resulted with of implementation The in and those XX.X% and cost higher sales audit goods in the more and our third by this to EBITDA

more $X.XX mention impacted were Turning to adjusted share release. the a double items our third few line, bottom last reported $X.XX. I in year’s results of consolidated to than want per earnings quarter earnings that our

expense, amortization point net to incremental primarily and Enovation out of interest debt in resulted tax for the quarter, I’d pretax realized our approximately to the $X.X per to to most that acquisition, amounted share. per this million from cash of acquisition Controls $X to million net expense, First, amount of want amounts used that the also of tax, which we third due $X.XX share. net $X.XX

purchase drove realized in third particular Gross Americas Please business for Controls grew as with agreement. with reported to the Based and XX% X hydraulics increased for release by initiatives, to contingent year and purchase the this XX% last and improvement gross the non-GAAP, $XX.X to at Sales sales driving up million leverage margin. of minor expenses consideration, the realized we continuing to of to margin higher The and margin, income, XX.X% at million new region arrive sales represents our in improved to in segment the support per item last in region. $X.X Slide the price operating to there last of turn on including SEA report our Irma. we of review earnings operating the as adjustment This accounting although quarter. our of or Enovation earn-out operating margin saw an volume, Slide We XX.X% review million was our share. realized result. primarily to growth operations XX% unfavorable for leverage XX.X%. additional electronics APAC $XX.X improvement. volume, a $X.XX increased on gross shown higher XX% from quarter in $XX.X with our for tax We year’s Finally, rules, approximately million talent. the further third from third accordance adjustment Sarasota addition margin income year-over-year APAC turn This to quarter EPS impact of which the Similar favorably deck. resulted in XX% additional to the million pretax Americas XX.X% reconciliation a on operating the on expenses. gross $X.X Hurricane the in X this slide the profit which in the growth XXX,XXX end net the segment results. trend to increased to net Operating to by region quarter an Please the sales operating the the on amount SEA strength compares an our both compared higher margin quarter.

stock realized as million HCT Enovation growth controls the business, growth forma end company margin quarter, quarter, in well compared power third in margin cost Slide and attribute gross $XX.X and forma curve-out quarter, Controls Similar XXXX third up sales. pro business, numbers the the implementation the product to were business new over and by reminder, Controls well demand and review to The as vehicle This organic increasing expenses. efficiencies of and audits include the with initiatives, overall development X of million period includes and operating pre-acquisitions million from $XX.X approximately in turn market. the contributed the of our of XXXX business, grew for last indicating generated associated and to XXXX this HCT. proactive the public consolidated quarter activities Sales as XX% strong XXXX $XXX.X Enovation both the a XX% As with products Enovation electronics sales XX% results. over segment XX.X% second for our the million this On same resulted as the impacted the trailing market was that period higher Controls basis, only numbers that XX%. recreational year-to-date very segment $XX.X we Enovation pro Please last Controls a realized year. segment include a quarter. small our

currency Foreign last year. had year-to-date, impact $X.X unfavorable million with an translation compared

nearly of consolidated XX% in quarters XXXX of from year. our profitability, the adjusted was XX% first to representing doubled sales last Regarding EBITDA that three XX.X%, up

to line, Turning the $X.XX year. per up last bottom share were from earnings $X.XX, adjusted

items tax reported first results begin with, is $X.X deck. arrive as As for in that I $X.XX noted included our for This reflected in consolidated the positive sales mention we release. year-to-date year, the and our and end to impacted our net income, to quarter, amounts million adjustment to earnings the this and earnings reconciliation at both I at net some of of To inventory amortization reported of pretax the step-up. per quarter EPS, release slide want showing an is non-GAAP, share. in of It and

Next, $X.X our amounts to of net that amortization expense amounted share. tax $X.XX million, per to

incremental of $X.X of approximately share. interest amount realized Third, net $X.X million we to net tax, per this expense,

contingent as was approximately to of adjustment Please million to amounts XX.X%, realized This share. to XX.X% to margin income, $XXX.X an XX% of Gross reflected Operating region, item per $XX.X hydraulic income non-GAAP, profit XX% XX $X.XX grew strengthen XX% APAC Slide favorably arrive in XX% particular gross last to is this a million $X.X XX% to Enovation in increased period sales the $XX.X for and segment our contributed our up with three volume. and net net XX.X% margin year-to-date year higher improved of consideration at EPS. by same driving margin Sales the or on million from year. margin. of realized for increased and of margin respectively. turn first first the XX% XXXX. recorded margin, leverage generated on pretax which compares segment. The XX% pro-forma also we of Slide million quarters turn tax which sales is Americas to gross grew Finally, for year-to-date the On the review million operating Controls sales of segment. first profitability the XX.X% $XX.X cost gross the Controls quarters the XXXX. Enovation $XX.X for basis, segments million three higher benefiting Like of realized the and operating XX the our XX.X% a three quarters with to operating compared XXXX. fixed quarter, to last over to Please electronic review of

profitability growth As this exceeding and sales Wolfgang initial is indicated, our expectations.

of are We attaining the pleased structure. to our and goals. capital to or XX Please with very team's a and flow attention review exceeding focus for their turn Slide cash

net due by XXXX, is quarters three capital. working The of quarters three $XX.X first offset generated with from $XX.X the XXXX. in million of increase million activities, higher to increase we of During income in operating compared first the an cash partially

have didn’t shutdown the down XXXX of facility To at as repaid of sales XXXX, XX, XXXX carried at capital especially July we $XXX - revolving growth, Total and as ensure going available at well ability the location. debt then of quarter. after million needed repaid third We being $X customer million We production quarter that to and $XXX we April X, We had during inventory was million September at additional our capacity from additional the curve-out. a $XXX XXXX. in a interrupt meet credit working million setup of the new inventory to for September lines debt million $XXX Controls having first and during XX, $XX Enovation million X, support an demands, XXXX. XXXX, a the extra

due expenditures XXXX. $XX of our cash of We fourth first quarterly investments other million million consideration our debt. with as quarter previously cash, as dividend, and and July our in quarter, net $XX.X in former earn-out. prepayments as million October acquisitions earned As owners the Enovation finished to April paid and are short-term and debt next regular in primary Controls, of or vision contingent the our and two mentioned we we would or million XXXX, the the occur payments support capital $XX.X The XXXX of of $XXX use that than of to

down we $XXX million our $XX net That had XX%. net net short-term million to $XX XX%. to capitalization the had XXXX, was At of capitalization net debt of debt. or cash at to Our and end of debt million debt net in and investments

turn flow cash it considerable Wolfgang, outlook, in Q&A. for for you strong improvement during to to we make has like our allowed before So, year. us back line matrix open that the perspective your to and profile I’d

Wolfgang Dangel

in for to Please the It industrial early all are XXXX. turn strong performing nearly in that and economies and then slide be the and for remainder is capacity spending well, XX. the an Tricia. nearly increasing XXXX Thanks, seemed supporting around all point into appears at of or mid demand XXXX, total The production rate The a growth have centers utilization in to the to industrial acceleration peaked continued U.S. growth flowing growing of consumer growth slowing and may regions good. Leading globe indicators rate. year. theory accelerated supported by U.S. industry very

globe, Canada, in an at around Brazil, and growing accelerated look rate we As industrial currently production is the Europe.

end However, towards is India slowing expecting than and growth expected India region experiencing growth, the China other global year, looking which other both growth is in all currently, XXXX. flowing by reportedly of accelerating next

expected rate, in Sun. construction benefiting our industry. growths order housing applications. are but to economic at well in in the starts U.S. industrial accelerated sale-unit construction handling concentrations production is As is is housing Currently trends the some growing general shift redemption important construction This us, phases overall activity are market. and weakness material multi-unit to but the are for the we accelerating, XXXX, machinery manufacturing retention. are to sector, expand which look industry expected Those to starts our in the current boards of given despite cartridge U.S.

While with grow anticipated the of rate. by production growth, to as at some is for suggest but expected volatility. expected American Association Institute Printed also in sectors continue electronic it’s the XXXX, the Indicators be to to Circuits slower North published

outlook. Slide season. I initiative, So, Please growth strategic our in from for year is is of impact of shutdowns thoughts a We broad the turn additional XX business to electronic sure OEMs that business, regarding around our for has of addition to that generally next our the execution segment. benefit Enovation for slide. year, the Since our the quarter sales for of the given gross resulting we most technology on the services globally. understand I enjoying address Sun revenue to electronic remainder schedule seasonality vehicle accordingly our have guidance, so, make the our quarter which or expectations Accordingly of and to this expected about holiday will typical want because you visibility raise trends extended with one fourth and on of that the the have recent to December Controls business the first our our for segment, significant economic establishment

and reason XXXX, normal is in experienced the that any not will expected to gross be the don’t sustained. bounce in that this recognizing not while back of have believe we are first rate to However, XXXX quarter growth significant

environment, For in given stable patterns our will seasonally maybe weaker be those business economic of quarter well, our a in industry. our purchasing hydraulic you fourth who historical know that

However, that businesses our provide to at cost realized, including associated integration given into which will The Controls Tulsa. end to Enovation the center system. of will September, HCT North Nevada initiative as will the we Enovation closing moving used in for HCT $X.X operations Tulsa, and do closed be economic restructuring opportunity the payments case. well California our is products not be million, the segment. approximately the and spent HCTs will benefits into inventory with employees which charges and announced American this XXXX the we we combination businesses for as combine strategic in electronic QX. is of from strong location, these of XXXX accept that to equipment believe We in two the severance a the be Controls in as growth our competency In facility City,

growth cost the for improvements. processes HCT and modernized of the establishment with manufacturing new product in lines Additionally, efficiency production

the and so during businesses hurricanes want people that on devastating I quarter. this comment past many Finally, affected to

employee power our couple proceeded All in we and our impact and the I five we production running. a on Regarding base that that in pleased have through to the working as Sun. breadth diversity both report Sun a and September, and our and days that a to industry are up the estimate make geographic relived of that lost pick we customer fourth I’m all, minimal quarter. within progress to of operations specifically, resulted we standpoint, in regained From to from an sector perspective demand about impact get based

On in the mid-term the reconstruction for refurbishment may other XXXX. affected the for where XX demand regions, in hand as product and incremental Please to continues be next quarters. summarized there the we through our of hurricane guidance some proceed the Slide couple

mentioned the which As thus guidance only that modestly, changed depreciation other to this increase I revenue our us our than from far earlier led last category year has our is guidance updating trends quarter.

this as closing which to quarter. post on X% at the at million see our increase You can end. X% buildings bottom end of We about top over purchase of and last later of guidance we will XXXX timing by of $X that guidance represents here. our can the see million our are that about here revenue provided driving you quarter. Those guidance segments million $XX $XX we the due range the consolidated business did to depreciation the This in by the be lower Tulsa increase increased the

up answers. for and open the let’s that, questions line with So,

Operator

Robert go Instructions] Dobre [Operator Baird. is from ahead. Mig of Please first W. question Our

Unidentified Analyst

[ph], it’s Joe Boyarsky for this everyone, I’m morning morning. Mig Good

Wolfgang Dangel

Good morning, Joe.

Unidentified Analyst

Good morning.

on can growth and on the kind Asia off the continue has at and here of of growth hydraulics, I these and of And Pac sales to update prepared Asia in to continued So, you kind within us in starting rates? those, kind Pac initiatives on you touched can know run remarks, sales upon but accelerate. accelerate

Wolfgang Dangel

the to pretty Joe, earlier on. of update much on with alignment what Yes it’s an give you in I reported major initiative, just some

and have the we marketplace. been in So, customer intensifying contacts activities

would much least, of last growth on We And, but engineering marketplace construction but sets sector the capable the additional staggering and I probably But adding with an have team. been obviously it’s to existing in more not hydraulic in natural perspective, internal application team. some also the the accretive a contribute machinery from to skill of we’ve adding China. rebounding side this seen activity in to more strength

Unidentified Analyst

Thanks know Got million, And, and sales $XX it, in about you would of going on expected switching QX I place QX, anything or and seasonality? talked the QX were that the really else more for to $X of segment, I in million. the that’s seasonality to magnitude then sales $XX but color. guidance million, $X.X that about QX million electronic have is okay. the than seasonality there

Wolfgang Dangel

much pretty That’s the there. only reason

we As and pretty we that seeing. the the of earlier much of are we some expect on, shutdowns December OEMs mentioned so OEMs in that’s

Unidentified Analyst

out the M&A, big Okay, And, about got it. they just how of announcement from Enovation incremental sales then vision year a the M&A color the pipeline part a were from is any and looking? the now on XXXX target is acquisition, is an

Wolfgang Dangel

Yes.

of I daily at the obviously pipeline webcast. been we But during And, the we acquisitive earlier reported whole with that activity. mean, has of ongoing activity our of discussion. stages embedded into some have them various we [Frost Bank], motive operandi the of So, are as filling are becoming

within So, we’ve up we and and build at pleased have this I’m I team resources where Sun the to say point. competence activity, are pretty overall

Unidentified Analyst

of QX, that mean, how QX in guidance SG&A the I $X.X And, assuming flow then Got the million it, for SG&A, through compare will included it flow does QX? SG&A, in margin final year? the does expense is to question, restructuring through that and

Tricia Fulton

of flow The as SG&A, it in through flow majority that there of sold the margin well guidance. goods through it will is will is cost a part small included

Unidentified Analyst

on Congratulations a okay. it, Got solid quarter.

Wolfgang Dangel

you, Thank Joe.

Operator

Thank you.

is from Our ahead. Please of Joe next Company. go question Sidoti & Mondello

Joe Mondello

Hi everyone. good morning,

Wolfgang Dangel

Joe. Fine,

Joe Mondello

XXXX of that pretty or that seeing this seen? good compared tougher decelerate you things may a to So, the cited just just because wanted little a that decelerating, understand just in is and that maybe the so I growth you are press anywhere to comps slowing growth will any we’ve pockets that be to forward going that, you of get that indicate sort

Wolfgang Dangel

I I on talked certain think we’ve Joe, Asia creating of some to be one just pockets; obviously staggering impression of we in it’s the slow we can seen careful hand so continue not numbers growth minute with too a ago. about that want the Pacific

Secondly, be is we mean, still not, expected into turning tailwind of XXXX. the strong to I the are economy

pointed happen occasion, pretty about visibility, quarter, we let’s cash our we now, I QX, in November out challenge QX, QX, good we specific to so think valuate fine, seeing economy to on for is so probably us. are clear therefore would concern is is of QX numerous have going have that what the precise say so next it’s for doing I but can are give not any mid always a visibility As year. a difficult pockets to we Overall,

that foremost, the I’m think XXXX the and I’m I very about the the strategic both environment, to actually situations FY economy, here say about initiatives initiative the we as in the is strategic excited are on grip of have the taking feel holdings combination certain I our rollout way are and out less concerned. comfortable concerned areas many definitely plus meeting First seeing they progress so and of macro-economic

Joe Mondello

non accretive know the I Okay, but that, Enovation And, was some gave regarding cash including accretion, how amortization? information great. regarding you then Enovation

Tricia Fulton

accretive about $X.XX. was It

Joe Mondello

that follow ups imagined Okay, how line or looking seasonally of a of pretty perspective? a as sort is on significantly the gross sort at manage will does you I fourth and look follow up there or quarter margin at of revenue how the business more bottom segment, margins do such – well with the then any electronic a and

Tricia Fulton

lower in in overall margins a the fourth segment operating will decrease a and see lot, we little on electronic bit in drop obviously probably the margins help don’t quarter sales will incremental revenues the go some sales, margins not will The we that but much change expenses the gross variable also of what those down there that be margins with would as as drop. understand

Joe Mondello

the take XXXX, maybe weak the just like to segment, not in past a just here And, anything place seasonally wasn’t XXXX Okay. that of again be in sort at been given strong strong seeing in you’re just was seeing the was are you to strength is profitability with standpoint. revenue wondering a sort if as revenue the of we looking in profitability we are I in I that that in here what given surprising that hydraulics a quarter third XX% that that was growth. on was the line looking is little And, as may recovery at? there thought saw compared strength past or maybe has going given recoveries

Tricia Fulton

did believe to electronic it SEA few but we we inefficiencies seasons down related But the Yes, bit. that it a some a that in as in but be after the see the incremental curve-out, bit increased talked about the remarks, curve-out were and like prepared we to well inefficiencies even can’t with in and the stock. we little the related as the recognize sales segment those were audit specifically, forward things just certainly going overcome was did

Wolfgang Dangel

on, as And, I maybe of that impact a five the the end the side impact. which Joe only the may only mean, negative if I earlier attribute referring hydraulic that’s week, is day, probably full mentioned add, manufacturing hurricane is about days we the on at the I lost to you’re to

Joe Mondello

point. you good that? a of Is it’s any regarding there way what to quantify Yes, you for lost

Wolfgang Dangel

hurricane, and we it. demand I increase days the you’re I product. estimate quantify for as of quantify five up can those again, days. days then our the fourth is five estimate, ramping it’s estimate can’t ramping in in you’re didn’t the when manufacturing so but it’s we and last think for storm for because didn’t whole, what affected a said make as five exactly mean, an is The imagine probably you an But tailwind I preparing I weathering No, there would we the reconstruction see quarter down you’re probably hurricane that in, coming be an in an

Joe Mondello

of Okay. do last you XXXX anticipate And, just then in How balance regarding question at? sheet you’re me, starting cash flow, in more pay-down? being for debt aggressive and the terms looking

Tricia Fulton

pay-down as available cash. to debt plan We can the with as quickly we

the capital to more year be capital I think kept there us We expenditures probably but certainly more some cash expenditure related on pay-down side, have that quickly. cash significant normalized this from there, doing as we pretty will available outlay

Joe Mondello

implemented have what any does do Okay. looking going And, be XXXX? - XXXX, like idea XXXX, that that obviously it’s to you at CapEx, but looks of in in regarding

Tricia Fulton

vision be part XXXX X% will of as of going that estimate CapEx We forward sales. our X% to

Joe Mondello

a appreciate Thanks lot. it. okay. I Okay,

Operator

City question Breth And, the next from Kansas Please John is Instructions] [Operator ahead. you. go Thank Capital. of

John Breth

Tricia. Wolfgang morning and Good

Wolfgang Dangel

Good morning, John.

Tricia Fulton

Good morning, John.

John Breth

marketplace new launch be? marketplace position, that position how During couple will your and in significant in announced improve stay does - how of the products from segment where Wolfgang, and what a can is that in of the the quarter electro-hydraulic segment. much you product how these you your competitive improve line within that your due that did the to

Wolfgang Dangel

offering mean, substantial seen we Excellent have from product have question expansion in here the shift existing the strong it’s John, so in electrification hydro-mechanical seen our trends of with that terms a industry, we aligning of to help machine a this customers the expansion us it higher give a access it go here through with valves existing us to for additional because valves, customers. to us, content hydraulic and significant per and electro will is I will

significant So, forward. it is moving

the I probably in said, just I product company. here over significant I the would as As launch like decade past the mean,

John Breth

you Wolfgang, opportunity looking at any the us way that is quantify the of these for introduction there you’re products? can with

Wolfgang Dangel

bucket. hydraulic offering is the can the third electro-hydraulics about the that the market that to of be say probably in at allocated we - to specific so marketplace, Look

in Our electro-hydraulics, billion that third in always position $XXX total million, that the has the has of in been $XXX past about market let’s is X talk in it weak so reasonably area, say million. we the $ so the places,

the in day area. target XX% end that of I of market to maybe in at range think we the the a XX% will double probably share digit

there, do down could the we if road mean, be revenue that the company. math significant I incremental for So,

John Breth

Thank you very much.

Operator

another is of Instructions] & [Operator go the of from Please line Joe you. Company. There ahead. Mondello question Sidoti Thank

Joe Mondello

question, guys, thought really like looked just obviously seasonally were was little I just the revenue in weak quarter, what they one strong regarding have maybe follow was quarter. up a consider they in you prior pretty would quarter saw Hey that bit we I third the profitability Enovation, margins good the in

of if seasonality us wondering the maybe we just So, strong and understand could seeing growth are normalized year help as you a like here? not just

Tricia Fulton

the little previously. just is be second given about them on sale. quarter year seasonality rollout quarters look side, to talked in incremental again bit mid-year. a But quarter, on electronic a were the there the From margins higher particular at the a reasons quarter stronger in the two we but the back tends little margins bit in previous weak you that back If were model perspective, third that that to the margins the that goes third growth historically for

So, year. if the forma of I and little same that’s what which of affects a are we the think thing seasonally again back margin. to last to numbers, we again But bit is then seeing the we go weaker due pro here XXXX the shutdowns, QX saw

Joe Mondello

And, that’s on revenue or..? referring to perspective you’re

Tricia Fulton

Yes.

Joe Mondello

about the unseasonal…? margin generally What

Tricia Fulton

change - is revenue. should doing from happening with per this grow margins Those happening the we say, the the inefficiencies. is margins in by something There no different revenues it’s that’s quarter extraordinary saw something there the all are unless seasonality what driven like is or the

Joe Mondello

you. thank Right, okay; okay,

Operator

for the time. further the There to questions queue to you. this back at I remarks. in conference no management closing over are like Thank turn would

Wolfgang Dangel

are at a you and meeting Baird look you all of all employees again your much to the and Sun then of of driving this February. thank forward Thanks We updating you. results. Thank full-year great very you on hardworking the obviously to you in Bye-bye. who our Thank have week day. participation. some these for Conference And, results

Operator

gentlemen, you. today’s concludes and teleconference. Thank Ladies this

your may at this you You thank participation. your And, for disconnect time. lines

Karen Howard	Investor Relations
Wolfgang Dangel	President, Chief Executive Officer
Tricia Fulton	Chief Financial Officer
Mig Dobre	Robert W. Baird
Joe Mondello	Sidoti & Company
John Breth	Kansas City Capital

Helios (HLIO) 7 Nov 172017 Q3 Earnings call transcript