HLIO - Earnings call transcript Q2 2019 | Helios Technologies, Inc.

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Operator

Greetings and welcome to the Helios Technologies Second Quarter 2019 Financial Results Conference Call. At this time all participants are in a listen only mode the brief question and answer session will follow the formal presentation if anyone should require operator assistance during the conference, please press *0 on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Karen Howard, Investor Relations for Helios. you. Thank Ms. begin. may you Howard,

Karen Howard

you, Jerry, Helios financial Welcome the morning, conference and second quarter good Technologies XXXX everyone. and call. to Thank first results half

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

not have at that release, on available website do it's www.heliostechnologies.com. our you If

that will there our discussions You'll slides also accompany today. find

If slide you'll you on find deck, our through look the Slide safe X harbor statement.

may we we future well are actual factors that Q&A. be These As where risks that some results you the presentation as other to to apply to aware, as events forward-looking this statements uncertainties cause during from statements during today. could are make materially also differ and subject will and

by as Securities earnings on in www.sec.gov. These in be which want other risks in believe documents These that provided and filed useful point out financial the performance. company are can uncertainties other our we I as well today's some Exchange factors Commission. the with release and we website documents at call found and to during measures, will are also discuss or evaluating our non-GAAP the

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

that the the We today's GAAP slides. have in non-GAAP release tables accompany provided as reconciliations comparable as of earnings measures well in to

our perspective of to turn and for quarter outlook lines back Wolfgang up before we'll Wolfgang second details will and we for XXXX guidance through quarter our results the will open it for the of the key of Tricia started half go then the and his highlights first questions for get XXXX. on answers. the and year, summarizing with financial

to now And my with pleasure introduce it's Wolfgang. that,

Wolfgang Dangel

X% million, sales year's increase We Thank Good start on X. Slide $XXX will Karen. of second you, quarter. I a reported over morning, everyone. last

of or X%. segments, Hydraulics as drove currency, this segment in Custom sales resulted while segments the X our our CFP organic sales decline flat, in by were Our excluding Electronics growth our of Organic X% contracted Fluidpower acquisition quarter. the change a

an during later. also anticipated from as our stronger rate the quarter. Tricia our to Currency segment had going order impact second report remains the unfavorable will strong into quarter We Hydraulics had as overall, we And you solid. backlog sales

in expectations. also We facilities the capacity our our increased installed with of Sarasota line

products sales mix not align did capacity. with However, of the CVT maximizing that

to Accordingly, were our product Basically, provide compared pace expected, we productivity this realized of the do than allow impacted we the year-over-year improvement and of we year, detail first over operation quarter by improvement resulting very next but was capacity to me specific we families with earnings related lower prior pleased which Tricia but constraints more this, XXXX. Despite generated sequential and output. the quarter. have the anticipate revenue will on quarter. quality comment with sequential of the that

lower on as margins improved margins than first both sales result, reported consolidated segments, and as well operating gross Our the operating quarter.

a our been have cost profitability focused on perspective. as from improving productivity as perspective We well management

a reported respectively XX.X% million over a income of $XX.X EBITDA X% the year was and non-GAAP comparable represents million cash On of that Adjusted X% basis, income. up to million line, $XX.X bottom or basis. share, $XX.X Turning $X.XX net we net last per sales. on or

less since very by during on than to for XXXX. We the closed remaining EBITDA continue ratio in work net goal which times balance net debt of anticipate times our and to million to was X.X sheet earnout quarter in acquisition quarter X the on $XX.X increased the payment of of a based acquisition. impacted $XX.X we our performance strong half a we This our its Enovation this December and debt Referring adjusted the business' XXXX. the towards leverage, achieving Controls with first million expected our

Please achieved the XXXX. of and quarter we business in Slide summarize turn highlights second the X to I'll

Our in a the are and enable the of first softness recreational oil the segment contracts customer initiated and customer quarter we we in global more products realizing and is the base. markets where some Electronics amended in project implementing gas diversified distribution still to to broader,

which knew roll of years. into in will that the between out XXXX, next model major we launches we are coming Additionally, in we some year couple anticipate

weather has softer Our been of year's the at Electronics segment successful this very to improving sales. impact productivity and costs managing

year-over-year both are levels in and record second quarter. the gross improvement operating margin in We sequential and achieving margin to

a have few impacted our segment. Hydraulics that updates I to on report

I slide lower CVT than previous to sales anticipated were sales due that mentioned the On product mix.

project quarter. realize first expansion are goal manufacturing we did the margin improvement sequential our at and XX% capacity by underway well that However, in completed of least we consolidation achieving gross we the of this year our towards facility from end

of Sarasota Our in our facility continuing. engineering center is third excellence project

of a As global as of house research region. and range end report Shanghai, will this the I'm also year. perform for administrative operating as to sold began test of June, and development in new to selected near activities products schedule. a and in by certain and facility will is well CVT pleased Initially, the it that this activities expected shipping reminder, our our and products assembly be complete opened China, ahead in factory

growing project customers. within to facility ramp cartridge complete in the Over Asian this capability value-add we the plan to production our further the rollout This few our up next regional for years, Ultimately the bringing manufacturing initiative share strategic strengthens region. the which complementary in Korea market new This region to our facility market last make expanded the South gains. to demand year. continue capacity in where of we is for we China in region, support

to our driving want projects of synergy Finally, progress realization make I continue comment goals. our to we on the that acquisition many

Europe cost Faster in the produce which regard high with volume X drive and a for facilities began capacity, cartridge valves term synergy. we parts near will manufacturing Faster's U.S. at vertical integration critical both Specifically, and to components will CVT initially representing savings. ultimately of cost Faster and capability production efficiency

ramp mid-XXXX. savings phase up for full Europe to of the This initiative. will cost expect We manufacturing accordance the CVT region, in the in region realization in in represents first our with the

The plan mass industrial this $X for the cartridge valve European production maintaining market. of project profitability complete of sector involve our next in while sales financial billion will To capability phase of superior leadership are with strategic all technology the strength. components important initiatives global Vision critical these exceeding XXXX in to goods achieve reiterate, and

quarter for will more over in I call first turn With Tricia the the to of XXXX bit and half the second that to review detail. a overview, financial now results

Tricia Fulton

Thank morning, Wolfgang, everyone. good you, and

Let's X% consolidated review begin quarter. of our with up were on million that or Slide second drove quarter CFP growth, X year's $XX.X last $X.X compared Sales million. contributing with a results.

changes Our impact currency organic business rates. excluding sales of in the declined X%

organic summarizing sales of here million the The decline in this by $X on is was press are the of bar touch region, in table unfavorable well release the $X.X which I a a of had in information. There the impact. the as million slides sales as back designated Currency increases. supplemental charts sales price now net on will left.

virtually and second quarter, As was market during APAC the EMEA Americas in realized whereas sales the see, XXXX declined. you flat year-over-year the growth can

APAC, XX%, XX% and Americas, larger of XX% to the contributor the and EMEA prior Sales the quarter. to addition regions Americas, XX%, In the consolidated were APAC With now our to the and in sales EMEA is respectively quarter, this XX% total, and CFP, a respectively. was APAC the base. of the second region year XX%

Regarding profitability, our remained consolidated adjusted strong margin at XX.X%. EBITDA

release. amortization were up in adjustments intangible earnings second in to the slide Turning this acquisition-related compared at as to $X.XX, earnings deck reconciliation quarter. bottom primarily share assets year's year's consist quarter, non-GAAP line, second non-GAAP of last the of to the per tables back cash cash in reflected the arrive of The and

to year's a reported in the quarter point the in X earnings of and Please for included second costs, Consistent segment They slides. charges. results. additional Last segment in want are that with I included accumulated in tables including operating turn periods, our amortization, release are out Corporate to Hydraulics acquisition-related of quarter back acquisition-related not Other prior our operating our review segments Slide and numbers. the

Hydraulics currency X% CFP acquisition. we flat which and impact. by organically. of On region. flat The currency, excluding APAC the rates price of sales sales increases. the declined the million million flat of effects From region, growth benefited for a geographic an in sales perspective, organic basis, exchange saw were the driven APAC net impact were Americas Sales X% was excluding million organic the grew EMEA the $X.X XX% unfavorable had but segment a quarter of $XX.X CFP's for the of year-over-year $X.X

of which the quarter. increased scheduling offset value-add business impacted expanded quarter. our business on sales, the during margin to during limited but was the mix gross CFP lower model contracted its growth sales modestly. output mentioned, organic gross of X% gross The products quarter unfavorable Gross to had impact was due this sales Wolfgang by CVT which and of XXX-basis integrator margin business but the due the by profit point higher a the As production margin

results. administrative as investments million Electronics in for turn Hydraulics segment Slide SEA, operating review our X as Helios included $XX.X for change expenses, our Please of well million. X% growth selling, or second structure. engineering to corporate the operating quarter Higher CFP to $X.X and income the decreased segment business, and to support a

X% we global as a certain oil all allowing the to was second and of down in the The softer with diversified obligations was customer releasing recreational decrease products undertook gas in compared the the more end year. base. well and that as Revenue to first by last of quarter impact continued broader, and quarter us contractual demand offer customer impacted markets

XX.X% to sales, in margin efforts, cost increases. despite XXX-basis up prior increased margin of price XX.X% levels. improved the production quarter, XX.X%, lower gross to by in efficiencies quarter expansion management and the driven second from revenue quarter Operating year's point Second a the

first $XX.X excluding sales about organic Slide organic on Faster impact in turn of million of consolidated million of XX% to $XXX,XXX our over a half businesses. XXXX. Sales consolidated for our unfavorable changes contributed acquisition of period CFP had X up same $X.X review revenue the were results. rates of currency our and impact the Please a which business sales declined and

table press by there now sales designated the supplemental on a which in this charts as left. slides region bar the well the on of sales Again, summarizing is release back in will the are as the touch I information. here

of now sales CFP, contributors larger our and are EMEA the APAC addition to the regions and base. With Faster

For and respectively. the of of XX%, were first XX% EMEA XX% and APAC regions to the sales XXXX, months X Americas, consolidated the total

$XX.X profitability, period consolidated year. last to Regarding increased the EBITDA same compared adjusted XX% our million of

Turning earnings year's up XX% over to $X.XX, per the share were bottom cash half. line, last Non-GAAP first

Sales million for XX% results. and a Hydraulics first to contributed exchange million Slide organic for The the included XXXX half. by first Faster our segment to of turn grew excluding Hydraulics impact and the the growth in revenue operating $X.X foreign XX changes review Please currency growth unfavorable CFP acquisition rates. of half segment $XX.X X% of compared

primarily in applied results operating of due margin Gross had profit XXXX. This model first million. from half XXX-basis XX% XX% which CFP's XXXX. increase increased on acquisitions. drivers significant business first to which The by $XX.X the same income a point increased to half Hydraulics the impact of to The contracted

with by segment result to points markets, the increased of XX Also, and significant The Electronics review points Please XXX lower decreased efforts results. growth half the Faster softer Despite segment to account which XXXX operating in production to due SEA cost primarily margins compared Sales gross intentional efficiency. CFP $XX.X first and shift of the by These to electronics in our drove which in are million was Slide the turn decline XX% due basis increased operating basis for base, first margin acquisitions half. and of demand customer for mainly to operating increased management and for year the end model XX.X%. rollouts. the of the margin improvements XX.X% the primarily revenue, timing increase. XXX

activities activities operating flow half. adjusted cash which of of review of first we statement. that free of because to back is was operating our flow from flow In $XX.X Slide from the free in reported half, a the flow $XX.X I million in operating capitalization. turn first of we million that and generated the consideration to we the want payments explain used for $XX.X Please comparable and cash section cash to the million contingent added cash XXXX cash adjusted cash XX

representative back Enovation earnout portion acquisition it represents to operations, more It in of exceeded XXXX is of which the is of payments the our that pertain at flow. arrive the we metric fair earnout section added flow financing adjusted this to remainder statement. the it cash of date the of The current believe the Controls we liability. value current cash period final in period doesn't operating Since the

contingent or acquisition. the the That the of amount million. Enovation Controls that earnout third full consideration was payment was quarter final The and the in we $XX.X paid associated second with

strong achieved, performance had was debt all in the earnout demonstrating of we expected. Given the a in parties. The resulted net quarter which for increase the an that win-win business, maximum payment during

was up CapEx in the XXXX. $XX.X million million, $XX.X of first from half

$XX and Center for Capital also CVT Faster still in As expenditures planned, our for for equipment new improvements completion estimated of machinery our CVT the and and business. XXXX. for Engineering between are the enhancements consolidation to equipment was Excellence, new leasehold million Sarasota, increase for technology project manufacturing primarily the including China of our be for manufacturing of facility, million $XX addition

finished EBITDA of that are forma focused which to times. our X down quarter of profile, the first Regarding below achieve cash capitalization, net our adjusted With expect half flow we XXXX. pro to in on with times X.X strong the debt we getting we

Wolfgang, we on for and the guidance perspective to Q&A. outlook XXXX your open before I'd turn lines you for back to like it our

Wolfgang Dangel

Tricia. impacting of uncertainty the the turn regions, macroeconomic to trade U.S./China Please notably are several factors is and future surrounding most XX. Slide the geopolitical war There most the current Perhaps outlook. Thanks, several Brexit. to relating significant our

Foreign many currency rates dollar certainly have strengthening U.S. currencies. with impacted, been significantly against exchange global the

and is still which of end demonstrated markets such some our and that varying of decision mining quarter geographies from believe degrees. basis, making activity sequential is impacting several resilience. economic a markets On and the affecting We U.S. year, to first slowing uncertainty the this as construction, end global

However, softened. markets, handling, further material several of other our including end have recreational and

decline the has been the started agriculture Americas. the equipment that have business. as a slowing phase construction Leading interest to does a bellwether predict suggest But in in our last currently by market news landing. that a is for that good Historically, recently, we gas track remains U.S. a South and Korea. in market weak to European week's growth are in we indicators oil Most see soft sources we cut. confirmed economic that continue rate

the major nearly all growth economies negative either a or Around slowdown world, experiencing already global of are growth.

decelerated. to is and the Specifically, recover a economic to in Western are Again, China expected the news similar the economies Europe recession good relatively growth in all global has is quickly. mild that U.S., currently

regions have the growth. to XXXX markets driven penetrating in we introduce taken relationships ability our want markets end economic our have Further, with continuing innovative cycles. solutions. successfully more said broadening and expand traditional coverage to field, expand making we that as in OEMs, space, from products remind diversified to where I been to and expect we and to actions you our have broaden investments new weather we outpace into white by we plan, before accordance is being with increasing macroeconomic the and Vision the to This have our

second thoughts for Helios of for Please regarding for outlook turn the our XXXX. half our Slide to XX

in First in forecast. expected changes an are and to proving last tariffs the intensified our been further causing foreign This headwind even be to has more rates exchange foremost, than by year. significant week's earlier announcement, us reevaluate currency

the to consolidated this is expect quarters a for follow we two of Regarding year. XXXX, first the similar to cadence pattern of quarters revenue that remaining the two

and our the the considered the end we are gas, which and macroeconomic year. we recreational softening, overall agricultural, as recently handling construction oil most guidance In region material APAC for environment, in reevaluated markets and have

aggressively continuing market-leading manufacturing new invest want to However, that technologies innovative in I we I as products. are to and emphasize mentioned earlier,

significant the year. strategic time, provide are the to goals. critical cost the challenging same are of rates exchange Hydraulics flexibility to achieve uncertainty, in At growing a of our profitability our to light These changes revenue Referring through the we and cycle. currency phase to us are this economic investments our base softening in segment, business headwind navigate

However, the impacts the outlook CVT for sales our remainder strong year. of product backlog favorably our

June. continuing just from facility China production are opened in we that our to in Also, ramp output up new

segment comparison. mentioned are therefore in we to by engagement not the launches past year-over-year have affecting a the highly Turning driven and consistent Electronics, product quarterly OEM on this basis, is

Also, as efficiencies Tricia first contractual to whereby are diversified this the to an ability We impacted sales allow proven us optimize project to. with well strategy in our as OEMs superior customer certain market we our gross for to year margin obligations base. remain levels operational confident to products global in initiated effort by the being amended provide maintain all referred the broader, our in go customer quarter a to and more to

proceed to Please XX% guidance of that over is million, or revenue revenue prior due X.X% Hydraulics for We guidance indicates XX, currency. guidance revenue XXXX. revenue our A $XX for where by segment updated consolidated provided our percentage of guidance by updated Reducing growth high consolidated reduction XX% lowered to our to million. we've Slide midpoint, about $XX our the XXXX. our

We Electronics by revenue $X softening reduced million GAAP EPS to the guidance markets. revenue is lower our be and $X.XX our $X.XX. these between levels, At for segment our expected now due to

$X.XX. EPS Non-GAAP is Our between be $X.XX to and cash expected

of to last on remain XX business inclusion XXXX basis Finally, with to and lower our margin of to year. XX%. margin note points EBITDA is expected CFP adjusted between adjusted consolidate margin that an We very is XX.X% want strong model the EBITDA impact have expected for integrative approximate all compared

committed investing outpace the business goals. profitable we to as we Vision diligently want towards long remind to for term I work XXXX market remain Finally, the to cycle that you throughout growth

Now for the lines let's open Q&A.

Operator

Instructions] [Operator Please The a Thank go ahead, Blair. be from Q& Drab, question Brian you, first William session. now is sir. A we’ll conducting

Brian Drab

for thanks questions. my Hi, taking good morning,

Wolfgang Dangel

Brian. morning Good

Brian Drab

business good how in capacity that experienced the to know, the utilize like shift mix you the can first, constraints that year half constraints? better? product to just going you of Just to to on understand, is you the favorable add capacity that also, for you I'd the your the visibility the categories capacity second in had enable that's And

Wolfgang Dangel

let Brian. Yes, second with me start question, the

is yes, we we capacity still where we answer the want capacities constraints. and So obviously still have the can add to

manufacturing to was memory, the the So significant general just far, project in goals. Sarasota aiming consolidation two refresh at site

was to end this first of by the capacity one by The XX% year. increase

was to We margins. also are and the to exceed second goal manufacturing day productivity of rate. underway to end that well and streamline the accomplish the at or Obviously improve

margin seeing load This degree are this to lower mix. due volume sequential where but portion had improvement, of we the the Now a we is we business. fully some of compared to the expected higher not didn't situation the see in and that to series simply manufacturing, high-volume the mix mix

constraints, I time, Over will continue second not address the the this expect coming in capacity balance was And out, think quarter. itself we back but the that that to the will case we second part of your to - where the those the low increase the an basically volume, part of year. question, integral - capacity in getting total by areas we high to end high the XX% of of That's mix in a areas. in

Brian Drab

a that more will be Electronics revenue to do the do that still still, view Okay, getting goals, at target? business here I that that million were as each specifically for do and envision goals thank you recession. had aggressive $XXX look the that And at okay of XXXX little point the guess know you you it know, you we're are for longer-term incorporated your a business, And be, point? you then, this you those to businesses I you. X% a long-term targeting growth ahead this in mild you

Wolfgang Dangel

operate Yes, we a volatile all I in think here, of know that environment first Brian. we

from still no growth now are away for realistic. compounded Neither you that between to outlined the in numbers nor Electronics There to, very and is reason Hydraulics XXXX business So referring we've the that. the for move are business.

XXXX factored you recession in said, in between XXXX As we mild quite correctly a anyhow. and

how term. thing the see shakes we think in near to this out I have

volatility laid confident is we But visibility rates out. the little extraordinary that recent think think CAGR because I very in I seen over more the have are difficult a overall, of we we that bit weeks.

Brian Drab

questions you. Okay, I’ll later. of Thank the for save rest my

Wolfgang Dangel

Thanks Brian.

Operator

The next Please from question & ahead, Sidoti Mondillo, Sir. Joe Company. is go

Joseph Mondillo

that, into everyone. tariffs. would that those, morning, good curious you can Hi, just September I what's the Thank how affecting you're Xst about you. about How wanted that the first be baked you, they much are provide guidance? great. color thinking ask, Any to on

Wolfgang Dangel

Yes, specifics of those are rounds those effect directly September go I - us. mean, new tariffs on Joe, into specific X to impacting not

a environment creates in lot already it we the as overall However, have seen. turmoil of economic

triggering So investment activity. a lot are obviously, a and taking at builders with look very of probably now machine investments second the cautious CapEx

with it's of created trickle So round this tariffs. uncertainty next is think the effect the of I that

pointed as because And days, export, shifting high from currency more trade obviously, live I we well two a impact. to potential it the the saw last have conflict. we And about we still currency a some would obviously a currency script, mean concerned we is degree over a out negative in as from into exposure conflict that there are as we have the situation

feel, we the at on We that given see guidance factors the uncertainty that is confident this those time that can think guidance. all embedded we and new that the of point way now it degree I the in in of have based

accomplish we given comfortable have ranges can So that with those. I that we that the feel

Joseph Mondillo

But question quarter trends some order like back and be July? it they the it through that how last little of been I than a I commentary - a what a the business quarter. maybe the stronger months? little your, more the that because you're expecting it's was then second call first new of the I guess related and second to on I Okay, I thought over didn’t this have of backlog. was through How backlog. have the the - month actually several at considering I'm the positive in come the half wondering backlog. on CVT guess sounds quarter trended maybe to expecting But

Wolfgang Dangel

Yes.

are quarter. We of is you disappointed, the right of been due output the which expected explained, think better the to kind direction. second first as in with I manufacturing were margins are project that is. very the pleased mix output of we leading us But mix, seeing to us I the still I all, it what a saying. I've believe that the what in situation, I leads also the sequential reconfirm improvement is So

your the high. I backlog, the when And do back XXXX, we coming evaluating firm and to levels. comparison still acceleration question down, elevated and to the to are question, still to prefer but the business slowing economy to to of those softening I a rates see second started we Now have half backlog. order growth. about industrial They talking are compared reasonably are that, always XXXX are they of mean started And order of levels, diversified still no

other thing we looking destocking. obviously are at The

at quite than so getting first but we this it's quarter, There they actually not in are stage. certainly were are are destockings So a more increasing, concerned. degree reasonable the to where

Joseph Mondillo

those up to compare rates the year-over-year? still also And are XXXX, when order you

Wolfgang Dangel

above rates still are we of Yes, order the XXXX.

Joseph Mondillo

sort I many on I there? clarify is in period. point capacity you're what - just that still Because at related expand to was going just Okay anticipating trying just question. think wasn't Sarasota May and capacity. so Could this just April plan then a the the reorg, or that reorganization clarify around - clear. Because we're wanted at last project to to finished time. and of on I the expansion this But or capacity focusing you issues time exactly

Wolfgang Dangel

and due two But of to by basically, the The down are But or the mix still lower three get of end improve nothing physically was productivity up. QX Yes, issue. manufacturing improve we streamline to the output lines the extraordinary. facilities first to and finalized so early those anticipated. in finetuning was obviously manufacturing, from April. throughput There move is that is a quarter

manufacturing As margins And able series you the the know capacity. installed we do from volume, we can mean utilize previous generate if environment, we fully discussions, high QX. to not can the during in great that were Joe, I really large

Joseph Mondillo

by is yearend, of improve timeline Okay, and the sort to correct? that

Wolfgang Dangel

balance. yearend, quarters. balance at over so would has installed a timeline by then be coming to in we of additional capacity be orders with do XX% two hopefully course better next better Yes, the want to also have and the the The

on the continuous sign be that think But will there. depends and it over and the improvement. the streamlining And So are I continuous right in a we QX of margin there improvement the category type QX in receiving. orders sequential direction is

Joseph Mondillo

appreciate you taking lot, a Thanks my questions. great. Okay

Wolfgang Dangel

Sure.

Operator

KeyBanc. The question Please ahead, sir. is Jeff from next go Hammond,

Unidentified Analyst

good is Hi, Jeff. this on for morning, Brad

back in that quarter to just to do in the second segment be that, expect we anything revenue surprise, sequential quarter? the out that from the margin we to kind quarter improvement any going to push thinking constraints? Just point, back should last as of going there model you Is particular? mix of the third related those third Hydraulics Just round about

Wolfgang Dangel

to hoped below need Well, only deplete Brad, the we have we bit for. a little thing consideration backlog we degree to the couldn't a take expectation. into Obviously, there is output was

that is So QX output and shifted the question for of will in answer then. to your terms yes, be revenue

Unidentified Analyst

you like you pushouts Euro the the performed I any a in Okay, kind how weakness in about in if can region and then seeing are OEM talk of concentrated know, quarter. Faster seems that specifically? wonder just you Ag. lot It of

Wolfgang Dangel

of the thirds I to Well, markets. agricultural well know entered, you considering to have the circumstances is business Faster has the two Faster say. done has tied actually reasonably

we harvest I from and OEM happy be Because planting think operational able new with to Faster of for business opportunities, are will marketing also, road. down up the where new are continuously perspective, performance a them they We digging sales seeds but from the perspective. an

The yesterday's helping. not agricultural you imports Ag market as tough U.S. very is all news and know is of stopping China basically

our very overall, the XX%, road. are United a of generated States. the with would know, of XX% lot down But Faster I encouraging in well discussions As engineering projects in revenue company we for positioned total for you and OEMS is is say the

worried not about are situation. we So current the

the well future positioned here. for are very We

Unidentified Analyst

appreciate I your Alright color.

Wolfgang Dangel

Sure.

Operator

Robert We Company. have question Dobre, from W. Mic a Baird &

Mircea Dobre

me you good you of maybe thanks, in get at and If help you Yes, on drag full some I'm one growth is morning. as number. what It's the the point? understand more color at looking question. than have can specifically, Hydraulics what of into guidance year more this kind baked So - actually the to outlook On look your outlook. FX sort embedded

TriciaFulton

of you XX% percentage high rates clearly currency. the being at, where guidance up in is come Yes, in that. decrease XX% of that could know, from exchange end to depends related on the to but anywhere It

business just about translation is them currency Faster very euros We’re Faster's back purposes. talking for dollars hurting in while definitely well, reporting from the into and doing the is

But at as big looking going challenge assumptions. pretty holding the making the for when to So remainder the that's for a current forward. of we're us we're our to exchange try forecast year rates

Mircea Dobre

to So, get I'm guidance what for And trying exchange, the trying acquisitions, half essentially about how first the I'm what half in here, you I'm thinking and are on at is foreign core your understand of compared what understand the a basis, year exactly for excluding excluding the in to second reported year to trying numbers, to Tricia. we seen Hydraulics. have really

Tricia Fulton

for mean Are the So just what I'm not period excluding them? saying entirety that we excluding or didn't acquisitions. the you Faster in sure you own

Mircea Dobre

growth. organic mean I

Tricia Fulton

Are about growth? organic you talking

Mircea Dobre

understand about guidance. talking organic I'm your growth growth. I'm to organic trying

Tricia Fulton

some We on was slightly, by down and end to sales the Wolfgang Hydraulics the bit on side. of what Yes a so, challenged really mix basis, markets flat we're challenged of our about, down side. the the so on on by slightly mismatch organic little talking the are

Wolfgang Dangel

exchange and expected second year. for the range would the impact, if acquisition Mic, the the -X% to foreign out, the be of X out half organic back you the back Hydraulics in you If of sales impact

Mircea Dobre

to half X the To year. for of the -X% second

Compared gross frame the helpful. should to you we on half think In want to second first half an which you've what margins? in year-over-year you -X% a about in year, basis, done environment X Okay, that's however have in the of growth or how it. to

Wolfgang Dangel

think and we as margin. outlined I I have we in overall, here as you sequential improvement mean seen in see already QX,

obviously continue We streamline to manufacturing.

out, productivity As will I we pointed see improvements. still

levers us. a have that couple will think be additional beneficial We I for of

we in still are for the half margin second feature where same the year. range So pretty we first perspective from in a the of half year, the of would the much

Mircea Dobre

I'm but or a I'm quarter? trying put this. to understand sorry - finetune in first the this, So second In the to the on half in first combined

Wolfgang Dangel

first the QX, half, half, the in first QX and In yes, Mic.

Mircea Dobre

backlog question this your help how a end us because I'm comments, your And And way know understand that asking us comments. and mean markets on deceleration me there backlog own there to going obviously backlog, I essentially then here. And your per guidance is your is closely, we by Understood. all that exactly on large supported is? on is track your for this pretty seems it that to

to on has it large the backlog and foremost? So backlog, down obviously is here? year backlog Is important. up How Is And What's sequentially? first is progressed date? how sequentially? going it the

Wolfgang Dangel

Backlog plateaued. has

You're talking about Hydraulics here, right?

Mircea Dobre

Right.

Wolfgang Dangel

we plateaued So With not, not you backlog there. this second of will has the the regard I year. particular number number, absolute will backlog during to quarter any give

information. detailed revealing We are not those,

Mircea Dobre

very that short Well, of but perspective this from is that, gain so fair color is side a business the understanding my business at comfort enough, just of a mean that cycle some is your here, least, level we still. I Hydraulics on

operate the of normally out don't some backlog like builders. machinery of You

can And such changed what's if so past of been on of to a given to you over trying backlog bit is where constraints. I or with call that this you here it in more half less XX the it market it maybe capacity the environment. months Is a understand size But that? big that? going than little the a slower quarter's has backlog? I'm ride Is I mean how figure? do actually have is production than out mean worth the

Wolfgang Dangel

intake into rate based the But here. the a mixture we economic you plus reflected Obviously Well, enough next the the indicated for to if I would over you're to the to anticipate two latest order say struggle. soften. guidance of the continue solid so both. enough are your to beyond When well particular as of it's trends out order is we the that have obviously it we continue backlog order ride solid a quarters environment that trends it take soften numbers an balance in seeing even and then certain before, those the is markets on if year, as anticipated will end fast out us too eating backlog, then we in that the ride degree, backlog

Mircea Dobre

sales margins good. guidance for - revenue. your kind down Electronics, gross step if it. were looking sequentially, so that's segment, your half, it so Last were I'm your got in second of bit question looking essentially at were Okay, I'm this a first. better me, at margins versus And little back flattish sequentially, the quarter a When for sequential in implies

on think on gross revenue perspective, how slightly - here? base you should half? should a impact lower sequentially What the we about cost how from margin back about this So Thank do absorption think you. maybe in the

Wolfgang Dangel

Mic, at a as margins I the in we level business. gross Electronics superior mean, said, are Yes, really

that. expect question, but elevated in range if factor recreational that you the If more softening on levels of that expect that the the Maybe probably further definitely right any XX% oil probably we in business particularly seeing the to Electronics your side around XX%. markets are XX% margin hold mean range, to we than I hydraulics the is gas an end will and business. in saw, quantify markets up other exposed right not they here Then improvement to the want there. were we comes and is of we up. XX%, peaking. hold those it's That's play end into somewhere unrealistic to they see the at will markets To

this into well. factored that's segment the So Electronics guidance new for as revenue

Mircea Dobre

helpful That’s very thank you.

Operator

ahead, sir. question from go Please Stifel. a Jones, have Nathan We

Nathan Jones

everyone. morning, Good

Wolfgang Dangel

Nathan. morning, God

Tricia Fulton

morning. Good

Nathan Jones

an give materialized projects from kinds outlook you assumed little synergies, upper contribution Wolfgang, know, there and of years? there's synergies. about I'd you those in revenue those can single-digit of over you're I on of to XXXX kind revenue like few if a know, the next synergies have to and the to talk that revenue those us the date working a update bit big is past the on, any what your for revenue so CAGRs,

Wolfgang Dangel

of I categories. X recall X of that of of particularly in December Enovation segregate I I'm we the as basically EBITDA with into are the by acquisition $X you these would of XXXX. XXXX, synergies where might goal pointed the Nathan, pleased revenue out, that Controls here. generating million After And end regard Yes, years we out laid

quite of customers really phase mean one projects. talking a that's about lot the first of now, product phase front got controller X, then kind where by in we used the success years are opportunity was up some to one the of the and Hydraulics joint basically digging in phase probably had we business half engineering here featuring we and a first developed are I right jointly development each was where that and activities, in for other, a

from some X pleased when And because I'm number and of phase phase XXXX particularly of be by I synergies. opportunities to increasing X about month then those now the this we then is forward until want end would realize see the of the

regarding I think we in very target, position. are original So the a solid

and think today already a say that chance it's original will very have fair reasonably the to good that exceeding of I we hit number target. even

Nathan Jones

do market. in some those products benefit to a part decision as expected you a seeing upfront of the have But Okay. pain the bit the later seeing you that terms made. Clearly this a and you of that sell in we're of should to in contractual the from the relating there little - contractual that you Then believe start When broader on with customers? the to some obligations Electronics to benefits sell-through obviously would customer from terms change or that segment, on pain the opportunity realize take now. specific have we other

Wolfgang Dangel

have seen I come probably I OEM then was in but fruition be would four that given at next we the in to OEM first projects. we point then time, about is of expect end XXXX during and time definitely that that out to year call and to the already talking for XXXX. specific projects the earnings specific that I by timeframe. in pointed say QX the have starting SOPs

be XXXX and would mainly that XXXX. So

we are this You we been the expected I to but seeing of process, the are we right, excited on that are hardship additional going say are And in. it's opportunities plan. according getting here about would so the frontend far,

optimistic term a pretty I'm mid right and term for the benefit. hit and thing take short this do was So to long the

Nathan Jones

to opportunity is business you is nonexclusive Have you customer's that if there do think or these do you opportunity the customer that had on believe products products forever? the regain gone here those or even basically that are

Wolfgang Dangel

been a of and to products basically in I these basically a time. these to the on point we It's available want case world. are at products the this the that. in focus not around very geography the of as globally has one making difficult past. on just mean, mean I spread Because full say it designated base also customers pay lot not and to banking we in is services to attention broader

I given We happy of little under back. under serve certain circumstances, come customer your circumstances, come question be consideration If whether too. specific very customer they have might to course to that certain we'd back, do mean, contractual that

Nathan Jones

thank taking questions. Okay, you for my

Wolfgang Dangel

Sure Nathan.

Operator

this the further back to closing ahead. for over questions go Instructions] are Please I'd like management turn no call at [Operator comments. time. to There

Wolfgang Dangel

and have day. are much on for your results. in updating for in Thank driving third you great November. you this look all who very to to a interest the and forward of We results Helios hardworking Technologies quarter your Helios your Thank employees thank these participation morning. you Also all you XXXX

Operator

teleconference. today's concludes This

your your disconnect Thank may You for participation. lines this you time. at

Helios (HLIO) 10 Aug 192019 Q2 Earnings call transcript