HLIO - Earnings call transcript Q2 2020 | Helios Technologies, Inc.

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Operator

Greetings, and welcome to Helios Technologies Second Quarter 2020 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] Please note, this conference is being recorded. I would now like to turn the call over to your host, Deborah Pawlowski, Investor Relations for Helios Technologies. you. Thank

begin. may You

Deborah Pawlowski

good and Welcome conference year-to-date and Technologies call. the second quarter XXXX morning, you, to everyone. Helios Thank financial results

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

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

accompany also our today. find slides will will that You conversation there

If you deck Slide look through the on Safe two, slide our find Harbor you will statement.

we As well materially you These other may make Securities as with results could in other are factors are subject from we and statements are and be as also filed that Q&A provided events aware, in company during Commission. documents and actual this by factors risks session. to the that during well where to today. future uncertainties and These the cause Exchange as other will presentation risks release as forward-looking our uncertainties to apply statements earnings differ some the and

today's can non-GAAP we our documents find website during our at will I'll useful You performance. also we that out discuss on sec.gov. some believe which financial point evaluating measures, or are these call, in

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

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

over pleasure turn call Josef. it's to Josef? my that, now to with So the

Josef Matosevic

everyone. and Thank good morning, you, Deb,

Technologies. is a to saying me this Slide start a have strong on providing lead and me Directors management to team. been our the joined best-in-class bright work of begin brands. unusual innovative future by to the enterprising and I They with legacy the strategy. how I Board energetic COVID-XX. nimble, adapt excited two first Before their opportunity let company customer circumstances I am It its I appreciate Helios here, Helios have we to as demonstrated level, impressed of Vision focus, months advance towards XXXX and next we with my In as have X,

to continue all the efficiencies, of health safety we Throughout improved our the strong considering to face developing expand of serve new We our reduced market, costs technologies while our look the and addressable even and employees. customers, headwinds. organization, in and

delivered later In that detail exceeded we expectation, talk presentation. in fact, results our which will about in the we more

flow, stay into as pandemic through and objectives a strong disciplined importantly, to to generate position focused to navigate strategic for cash this Our and is growth continue to recover. markets

are supported efforts to by these sheet. Our strategic continuing invest balance strong select are challenging initiatives. during in a times, we Even very

OEM way of OEM includes We and new software with production the tool markets. power ACE have several pilot in projects construction an This and hydraulic MCx controllers. ag supports, under our

We innovative hydraulics with innovations capabilities strong potential these to our organically. are creating solutions are our electronics the controls, that of at our grow heart combine and

customer prospects, have controlled impressed key we create innovative and We our where are potential solutions. opportunities markets. diversify also been have to through with end can value our technology I identified addressing

strategic continue markets I While a are markets. second to Slide turn end quarter. seeing to industrial be summarize in X, recovery beginning the many we will of Please our the highlights challenged, and for business

given headwinds that COVID-XX-related the world. stalled is the in spread the around to quite the economies were quarter, aware, everyone As strong contain efforts the second

production implemented remained business from cost through economic to We pandemic the continued the productivity. was changing rapidly our supply the in global the chain of the our to some Hydraulics All to and manage conditions. operational segment of industry capacity despite to been Through efforts our where better-than-expected cases, sales, our segment, and decremental agility dynamics. has efforts to factories and management segments COVID-XX customers' have the achieve have both and downturn COVID-XX demands. while segments Due of the able a address to able quickly been ag we very of improve measures teams containment better-than-expected performed meet resilient, to this, of our market adjusted a we both all are able the Electronics us enabled to achieve in of challenging adjust lower positive consolidated XX%. market Despite operating the plan margin businesses,

and reduce EBITDA cash We capabilities debt, our $XX our X.X flow. ratio. of from we and $XX net-debt-to-adjusted position generated position liquidity our realized net times to the that our improved $XX operations further nearly so free cash and by debt strong demonstrated Additionally, cash furthering million strong generating in used million cash million, maintaining

on segment. Moving by financial quarter, of at in some Sales $XXX second in and Hydraulics orders highlights. came the shipments due Slide to million X, in past supported our

share margin Both and sales more we overview, of review per XXXX, was financial quarter over to our effect now Electronics share and due the COVID-XX beat executing turn our will healthy Tricia? the adjusted business, earnings earnings volume, The a year EPS sales non-GAAP planned its and six their identified. Also, of for to we the relative impact were $X.XX. productivity meet EBITDA plans. realized detail. both GAAP and second internal GAAP by and bit customers to the Operationally, lower Our exceeded last markets. was that on had planned able expectations. expectation to our savings call initiatives results cost first Hydraulics than per segment in and a cash and I to Tricia With months end

Tricia Fulton

everyone. morning, good and Josef, you, Thank

a begin results. Slide second consolidated Let's our with X, review quarter on of

QX to due quarter COVID-XX, China. in production share year levels. the into also trough as coming more down sales faster pandemic, to of and most showing has last in a Electronics which be. saw resulting demand orders segment. we in continue continued bright in end over significant heavily in APAC but recovery production both market sales QX. of the a falloff COVID-XX but we and further should growth from The market clear Electronics than growth July. X%, markets customers resilient limited capacity impacted, affected due segment which that to XX% and thought by a was orders quarter recovery EMEA were we June for Americas the from a While it take The were was the saw the and in strong the by May perspective, our year in were months XX% shutdown, sales from in would rebound ag originally remainder out QX, difficult the of was QX for for offset spot, from declined were global we the April

reductions was our is opportunities in our as and executed of will drive of significant previously and growth are the actions in the we referred As mentioned, for pipeline operating costs and XXXX measures corporate reduction of on Operational XX% demand. this income. profitability in limited beyond. our light a operations, Those in the result compensation Board decremental solid cost took I've segment that to officers, operations U.S. across reduce margin adjusted layoffs and to by the lower included

segment This the market a down from last expanded decline of XX of amortization, the points only year benefited They of the operating allocable X% the region, excluding foreign in demand transition reported some FDA on cost to Americas back accumulated directly take our Slide Sales by that impact, was the the pandemic. $X.X operating imbalance and and was during in the heavily segment oil in with quarter the led basis revenue from our adjusted impact to X declined effects X currency. points the initiatives, impacted, points Gross that to Our earnings impacted of to been for XXX XX.X%, gross Hydraulics reduced impact On profit million market which the for severely Americas for the expenses APAC currency, management periods, had a second market million. the $X.X China and down saw Consistent and This containment excluding second segment the release driver to containment of tables Corporate reflecting growth and due by for EBITDA in but Slide From not down unfavorable year. primary I the the also COVID-XX cost point quarter top in result to share. to in has Other from XX.X%. operating basis end of by as to operations topline, softer dramatic geographic QX Hydraulics Operating just results. offset the margin declined the a our due impact. in we measures turn segment decline in by Please excluding but as year-over-year end demand. numbers. a period for cost were Electronics to the XX and segments, results. EMEA regions stay-at-home we margin the a slides. segment the are EMEA CEO lower to basis of off down currency, in market, and foreign volume, impact the of income XX.X%. efforts segment margin the such a and in prior a decline strength supply the lower out review not Please OEMs shut Many sales conditions. decrementals better-than-expected included in for operating affected of The fall our quarter last quarter our cost review X%, with was XX% perspective, want gas are COVID-XX as XX% turn the was that, cost XX%

which in obligations. also from some We customer changes certain carryover in intentional base, continue contractual experience shift our to involve

variable these and As in projects, although we measures demand markets are were the results. invest utilizes aligned impact. volume nonetheless XX.X%, recreational, marine engineering to excluding contracted the XX% of only compared many immediately such margin and dropped customer lower focused immediate our to cost the to to that impacted to related saving select for unfavorable improvement margins year, OEM same sales. a but This last percentage June, as by currency there previously large Slide our points demand, implemented throughout orders points couple operating COVID. a Please of view period with consolidated the X were segment Sales and we to relatively decline. solutions. continue margin referenced, Gross X.X% Encouragingly, and significant strong seeing effort are future to saw we support of in turn workforce XX.X first-half down

results. of review and EBITDA charge unit were of related in and of goodwill of of economic see operations our the the $XX $XX turn XX% consolidated shift taken XX, Electronics free pandemic. million XX% COVID-related The to result first-half and end respectively. operating points for adjusted compared to cost we million year to for review the QX. to margin first-half efficiencies our from COVID-XX, margin in intentional with profit XX.X%, from Electronics leverage customer oil months XX% Hydraulics first-half of and XX.X% Please total, of management reduction release results. the decreased EMEA during Slide six rapid operating a Consolidated net year. obligations, cash and fixed cash our in the the base. from the sales the first-half cost impairment Operating the Gross actions share which base. loss XX.X%, CapEx Due basis demand, due capitalization. XX well we engineering just last operating booked Please was declined reduced falloff of turn of to to These Hydraulics previous in demand drive this Gross operating approximately a $XX first XXXX. Americas, and the quarter decline to This segment resulting $X.XX. margin generated year-to-date Sarasota reflecting primarily $XXX,XXX in XXXX we of XX period, excellence. and the margin earnings In was cash lower and customer to when XX operating gross per in flow the achievements six of uncertainty margin Margins business a by gas a of industry the of of GAAP despite expansion. revenue. Sales million, of project share $X.XX. investing a the flow, as the compared activities, primarily net XX%, our per of segment million and COVID-XX the the For for well XX XXXX, period. points cash a year, first second nonrecurring review with further resulting cash we segment our This Slide XXXX. the resulted efforts faster to year, due in in the improved basis with XX.X%, included Slide basis XX% of declined the from for margin our flow. recovery, to to our of consolidation during significantly free contracted turn decline million the efficiencies from prior from will generated million markets, our a of position XXXX, growth a we Please cost cash unusual XX.X%. our benefit for align $X.X APAC in increased expanded in activities Year-to-date engineering were up to Sales contractual a regions the In down realized flow basis the of $XX of topline consolidation production just Non-GAAP in free us center in of year of $XX cash as XX this manufacturing is points. were months points production segment XX when to last

year. the are of for million to million full $XX $XX to range be expecting We in the CapEx

We are projects, continuing until investments economic and improve. to but invest other in priority high conditions critical deferring

we in the by and second reduced quarter, gross nearly $X $XX capitalization, debt by our Regarding debt net our million, million.

quarter, end net-debt-to-adjusted of EBITDA trailing first-half debt consistent quarter our the $XX second by remained debt $XX the the reduced At XXXX, and approximately the million our times, and at our of ratio X.X net we million. During XXXX. yearend with by gross

indicate forma from ample and remarks. We XX% continue can $XXX quarter. credit our liquidity. let million validated We have operating that is back scenario credit our which the remain over compliance this about under for the turn analyses, and to to pro facility end annual to performance needs. we $XX we cash over under sales subject we million considered on expect covenants flow cover can Josef all the that, our continue quarter, to that Last At and of cash, we our positive also to me had requirements. XX%, the with analyses cash the ranging our revolving the certain our scenarios. maintain call year million quarter, available accordion, which facility in that to to with compliance These talked prepared $XXX With declines demonstrated conclude

Josef Matosevic

Thank you, Tricia.

Due by Let we uncertainty up not providing up we for me the wrap open our our prepared COVID-XX, before related Q&A. guidance year. for remarks be discussing outlook the continued on Slide lines to XX, to the will

Our on July, as through the us conversations into with encouraging expectations. June more perspective giving were our moved we a better customers

XX%. our year U.S. our cases, customers of planning, scenario expect However, to in given cautious revenue end in consider increased are XX% ranging the not trend in end that especially We to the the from the do drops low at

business targets. may have quarter our for a dues, and meeting conditions expect for year. as past act we trough the caught generation monitoring remainder In importance from year, basis, debt. earlier carefully to should CVT comments, with up We're the there. a our cash understanding we the will M&A as customers the opportunities quarter be market this the better third see has I daily of fourth to my the to critical Given We communicating driving and its with improve goals mentioned regard on and of reducing the with on

strong our sheet. our our organization, employees additional and value brands, well-respected leverage streams strength XXXX dedicated including will actions global Vision balance developing These and of capabilities augment are strategy. We our Helios the to

markets We as streams products course. will clarity end growth, are efforts strategy final these stages and greater and with businesses will refining the the the through growth. believe to value share our them operating accelerate well in our new to of into new expansion required enhancement due on specifically as in We provide the acquisitive the also

strategic the drive quarter. the businesses in we that and economic able am I this both, of video person, been confident our this can growth have expect finish activities To our growth. during Enovation details more their Faster through our visit strategy. fall, current I to to believe and an solid to operating lead will we planning long-term Hydraulics on with and engage how abilities Helios Sun I leverage we execute this past in close, become challenges, via presidents to As organic even stronger foundation we provide conferencing organization.

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

Operator

from At comes Please your this KeyBanc question. a [Operator Markets. with proceed Hammond time Our question-and-answer Instructions] we'll of question Capital first line be the Jeff conducting with session.

Jeff Hammond

Hey, good everyone. morning,

Tricia Fulton

Jeff. Morning,

Josef Matosevic

Good morning, Jeff.

Jeff Hammond

covered us kind late. up. about it's just, And you I this, maybe through year-on-year? Can jumped Either of much order is? But Sorry, July? getting where quarter talked level backlog just down you on backlog caught of can some the the just and of bit set the sequentially, you little due how some into through on trends walk if down a past you or

Tricia Fulton

Yes.

So, let's drop us. we for We quarter. a a start in a April, pickup throughout June was in growth in with in the orders big saw saw the and order bottom quite July. May, And further further which in the significant drop trends

we due quarter. point, we still July couple saw So that so And out shipping to do past business. of demand due that We next weeks. work over expect of current at for of by be most end of go we'll QX. mid-QX, the we and business respect the through the June the by into that CVT order from encouraged in our in the an time had to what perspective, backlog With we're frame past as backlog, at

Jeff Hammond

same certainly of lot leisure you cited number surprise a a end weaker it perspective. seems Electronics, had reasons. like the and are what lot modeling, pleasant a then I than markets But of being our at And time, a from demand Okay. been

maybe programs, us of And better start into when business you in this sense solid to some demand just transition? and see feather so of second-half, just kind act you as your shape of the with you that of that then little give program as on complete of how changeover you And leisure the business of side? see a that the a kind some

Tricia Fulton

Yes.

period. were because shut you're right. markets and really end were recreational that down The April May, hard their in during So, most of hit OEMs

by in demand unable some point caused of consumer come their strong up to but they're shutdown, in markets. chain demand, the the recreational really However, rollouts seeing some them the we continued back COVID. the keep with of because model to Because XXXX, some the has by and are have are new been encouraged they're of that pushed June that the constraints demand that supply July, XXXX end of in to seeing

Jeff Hammond

And get of XXXX around, program I your new most models will that pushed? new the wins guess, now original are

Tricia Fulton

yes, are rollout had not out have that of significant Well, the really change we in which some seen we pushed more dates but XXXX, the XXXX of rollouts. any XXXX, got into the

Josef Matosevic

cancellations terms The So is has that full, been will numerous purposes, and discussions pipeline in of just no XXXX summary, be Jeff, pipeline. and firm there the rollouts. really for in the just staying pre-planning

ahead some into be may And pushed QX.

be we'll very that's closely. monitoring So

Jeff Hammond

back Okay, in queue. thanks. I'll get

Josef Matosevic

Thanks, Jeff.

Operator

of line proceed Blair. comes Our with Drab the next with question. question William Please your from Brian

Brian Drab

Hi. Good morning.

we now macro impacts? segment potential those minute many potential a in for back year, where quantifying on programs talking that for can there in XXXX? really - those programs hard in about? way talking Is with and spend Electronics, normal are Next about to Just we the snap any are environment more in you another how

Josef Matosevic

Yes.

And So going not here, ago, new as the really will they're they XX, at the and market pipeline go of if a into they mentioned XX only questionable, will NPIs, across are funnel look, spectrum is really is happen the previously you to we to XX, look XXXX, at three second Brian full. when happen. the or

rollout funded to, certainly good XXXX. and So early was as prefunded that a cases, the confidence in is will some into starting, here some as or of XXXX, QX cases, there QX, what but happen committed with in in level

Brian Drab

of a typical remind can you how said for just year too you just many, look XX there NPIs, I if And to not year, there's XX are frame like what Okay. and reference? guess, is many me this

Tricia Fulton

see production pretty talked in of strong mean that XXXX. less and going there Yes. XXXX very into we in we for XXXX, programs lull were business. a and XXXX, we even calls cycle. I this what XXXX, in some definitely that in beginning about product it this, this into bit to knew starting that are earlier development We're was on and out Certainly, years roll significant a

Brian Drab

I thinking since on be impact can you expecting are further you're about quarter? cuts quarter? in are how And guiding. comment cost and to decrementals on decremental third Okay. the know you the if in third potential that not What don't you

Tricia Fulton

somewhere we But, specifically Yes. decremental rebounds that I'm perspective. not We saw starting this expect year, know looking at quickly from the believe very it, of Hydraulics out going QX come to to out trough decrementals of the XX%. with that certainly, segment in on business full coming QX. beginning decrementals see for to the when comment around the the we're we in a signs And it. challenges, be and we being we from of some it

so business prepared employees programs some of in in in already, business, past once that anticipation the that we're September, and do significantly and a through furlough week want announced don't we be work off shutdown to demand, to expect a orders we rolling have see start working to to then that. So we until we are CVT what the QX change in in cost the moving actual have a demand. pickup including early due But we been for structure, things our to planned QX, lower one

Brian Drab

Thanks taking questions. Okay, it. my for got

Operator

comes of question. proceed with Dobre Our Please Mig your next the from question Baird. line with

Mig Dobre

with now it your got the understand kind the to like, morning, everyone. of to back, happening for where with yes. perspective to here. kind really to it been backlog. this because progression I not all what's where to I've us QX but into started dynamic And struggled few really go And exactly to seems XXXX. informs me on, quarters, try to want back important moving and point to I Jeff only we're you, Good be is Hey. I want becoming a go to a to pieces of QX, good off have honest

you, my you're guess burn us however as you much terms to QX, is trying exited? backlog where you question in you dollar looking Hydraulic at where Tricia, the I So understand backlog can to quarter to tell backlog, to call started conversion, reduction of want contributed or how and you I'm backlog segment it? revenue, or

Tricia Fulton

give Yes. a backlog I'll color We on little but the you don't give numbers, bit of backlog.

the focus backlog. We the let's business, always portion. due at in have backlog So, past but past this least, due on portion

if about perspective QX CVT mid-August. it due and ended to half able business, the in of of look the So half QX, by ship from past in were other we through at QX where that in a we to we expect we work

Mig Dobre

the here, all $X if yes. would then was been is past million, much. this past an $XX If quarter didn't really due example it impact impact. have extreme But essentially, a then Well, this material that million, really it using the

even broader organic the was? Americas get think more your because you versus industry. us maybe the Or Association Can Fluid know ask to you delta I data at you from tell compare Power trend you on look what the to you so of, comment industry decline differently, your business, your So question were you that how X%, it, maybe call broadly? if to this do reported fared the

Tricia Fulton

the than we've indicate So, in would the performed NFPA Americas. numbers better

few believe in that it. a any, that if that And we past is business. pent-up would saw. we very really to prior demand We period were we So, been able it this if in ship due had cancellations, have

I business where generally that be. to in backlog not think And recall short, this having book-to-ship so level that up cycle if catching now past very quarters. we're that is the So, going to used be to many of seen due that we've for you'll we're we should

period the American exceed and built went the competitors little consolidation to our ability showing, certainly, reflected a at that we that that this what was more our But backlog was manufacturing up of we the were as think project. we least demand through did, in than time saw Some during North I significantly numbers NFPA in market. self-inflicted that

Josef Matosevic

just some help Mig, an you additional point that of maybe questions. data you ease answering get to Yes, and here your may in

million between you and million $XX backlog, digits. was single - if terms to in past it So clearly of in mentioned $X the numbers

the in So couple here, that a first-half for driver like largest was guidance. was even have few that shipping number was orders April, off due us in order September to firm and points August, in pattern more XX% backlog, the at May, the of the so a July into cliff to based June. we if said significant being that But a enough our strength was recovery understanding, to look about ago, June, clearly the comfortable the in better QX in and or saw of out need than you And leads us believe not give data not we that digits. past single on the XX% in a minutes Tricia the scale bottomed

no where there's backlog due There's So no XX% shipping. is. it skeletons here. That's exactly past hidden

So, I get you hope and at that your questions ease. some will of answer

Mig Dobre

When you're digits, - contribution Josef, to single growth? single single or am when is digit you're saying digit millions I understand to that that

Josef Matosevic

single million, Yes, digit Mig.

Mig Dobre

millions. digit Single

Okay.

Josef Matosevic

Yes.

Mig Dobre

so truly us orders, not actually was seen improvement still June. of order you give bottom trends, when a was And in terms whether orders? up down June you've then sense marks Or or - sequential May Can back a was to and it year-over-year? - Okay. in in the then year-over-year

Josef Matosevic

Mig. So certainly,

down. number year-over-year So still was

Mig Dobre

down. Still

Okay.

Josef Matosevic

previous to year, correct. comparing Year,

Mig Dobre

as in magnitude understand the into QX? that August QX, such decline to are the July revenue and order we reported looking the exceeds intake you're at And essentially and decline in of

Josef Matosevic

is Mig. That correct,

Mig Dobre

certainly here, on. as all one, is confused that I, why And not normal and pieces moving I'm strange to business what's of just I'm for all of trying I'm maybe, I'm about my this which we're here the sorry year, bit is seasonality you, questions Okay. then the as this of kind for a to sort follow-up thinking But a recognizing little my here. for understand here. quarter reflection downtick Tricia, the schedules very December you you whatnot. end production maybe here? of based we is that the what you're about fourth normal seasonal there and such market seasonality on is momentum revenue some production that into knowing think and can be and know should thinking in Do enough catching about XQ? a sometimes just support kind I'm of to guess, on wondering how today. I up kind Or going think

Tricia Fulton

this normal to at be I to giving we right minute a at if guidance, second-half think. at not the least first-half from I we're guys versus help there's little you when the going being clearly, bit we're But the the still around first-half, we perspective. XX-XX, than If but with better first-half second-half, uncertainty, a a don't look second-half, we're understand, seeing about we're seasonality. what total that. trying not It's some Yes. know look revenue

what the stated, in going then So, markets stated normal XXXX. is higher and seasonality, for that you the to seeing not, knowing have lend us, in which pickup our a that trough, demand in as as we're we but the year expectations for and back-half itself of that into would given QX end QX, our the

Mig Dobre

Got you.

So a bit little better. fourth quarter,

helpful. Okay. Very Thank color. the you for

Josef Matosevic

Mig. Thanks,

Operator

comes proceed question Please line Joe next question. Our of from Sidoti. your the with Mondillo with

Joe Mondillo

everyone. Hi. Good morning,

Josef Matosevic

Joe. Hey,

Joe Mondillo

what kind if us past I we're degree. you're any way I the pretty throwing or due would backlog. was mean, at year-over-year of Mig monthly just give that Is So maybe decline July sort go just deep I seeing a further. one what there outside indication changes? of of step wondering guessing April could pretty you darts order that think of provide through good mean, order actually there, but I could dug I

Josef Matosevic

was I mean, was Yes. the vengeance, rolling coming understand and data I in the I much up to that think much need get is can't and will even May April summarizing board, And stronger. your fell you pretty numbers Certainly, into pretty and what way are look, month-by-month. specific off once you July back a you is, have the models. is story the orders guys June in came now genuinely again, really across Joe. cliff, bottomed we But for out, and that here giving the very

speak clearly are bag. speak customers, And a distributors, the when the you with sort points recovery. to some data the mixed you of So OEM pointing when with get you

some are many are by guidance, data not was just a the there not out couple going the as having in in comfortable I cases uptick we them Some strong, pre-ordering, quite just them here points. internally with of here, this really more But the cautious getting discussed of are U.S.

say. So what I genuinely mean I

contrary. We to into understanding just want depth, a But to no to four that we weeks, have here. are the it and I and perspective. six well-positioned points data watch have firmer just another another a better

So Joe. that's where are, we kind of

Joe Mondillo

Okay. Understood.

segment margins you there the way margins gross a there looking help stabilize? what Electronics? very of in us the second was or the margins of the saw XXXX? of to would direction at have gross for, Electronics to directionally kind us the Or expect at as rebound can us point you that was any the far that that information understand just to going to As back-half into how try margin in the gross reason that the for than in believe any in is you just give about back-half is quarter, I least the second-half The the think weaker year, potentially,

Josef Matosevic

gross is, then I the profitability answer But over Tricia margin. for to some primary the Joe. protect numbers start and the will we certainly, hand here. yes, the to your so - will and Yes, question

yes, innovation on business additional the decision one hold a into them certain will and organization, of diversifying we due seen, a prepared the outlined ready innovation diversified drive organic folks to to remarks, We my the dovetails have made is and will we've certain the our the portion also in we But to piece value in engineering will. of in market, so I four to we additional launch being strong needed get overall, the to growth and the that. us question that to protect profitability, answer streams then your down that of to to hold pipeline position, fact layers market

Tricia Fulton

add we pretty couple of Just QX quarter. first hit little the trough that hard months a segment, the in was more took Electronics and to the bit Joe. color, a for

margins. to that expect see we to protect go point, will able Josef's to gross back profitability our topline be we increase, So and higher the and to

to have in Now revenue through where that topline the segment, But so roll QX. the we we keep impact the off in see QX of to will will mind able of repeatable contractual a onetime this in obligations the does from margins expect were that it event. we increase be and in as back buys, not are definitely up go

Joe Mondillo

decrementals was Okay. the the company for in forward? general XX%, overall going Tricia, comments your of And on that

Tricia Fulton

overall the the for company for was year. That

Joe Mondillo

doing? furloughs structure are Okay. in in third in at the and cost managing production, back second you - there any costs like see one with be, you structure? help there the cost past to regard through on And and could sound cost doing that's is the we what Are your break just the coming the are the Where a at mentioned CVT. things you're through you're just us where Or mean would up backlog moving quarter. due you And doesn't September week we pieces cost of quarter? given and all other least held structure? you're your this, but that I the understand Do last It managing question, with how side? there

Josef Matosevic

Yes, certainly.

discussions. units, look, So three very all the across planning cycles business detailed and

the if volume cycle One and here is pull. understanding Helios way, planning levers been need our and truly of the resilient we of not to the are strengths is coming that

been have shelves. the on plans So

there closely, has three factories, in modeled that three will the the shelf scenarios the the furloughs, business in But due the the our travel, see Joe, plans cost have down we in And of summary, fallen off, down, watching hours scenarios, out come flexing, outlined. We have by the XX% the topline spending I've of reducing different in down. nature situation. terms very XX% to on XX% terms obviously, and as of been good for

of whatever profitability. matter So profitability. it our to And our do to protect takes we are prepared fact, we will protect

Joe Mondillo

taking luck. for Thanks Okay. questions. Good my

Josef Matosevic

Thank you.

Operator

Please Our the of comes from proceed Nathan Instructions] question. with line question [Operator with Jones your next Stifel.

Adam Farley

morning. for is Hi, Farley, Nathan. good Adam Yes. on This

Tricia Fulton

Hi, Adam.

Josef Matosevic

Adam. morning. Hey, Good

Adam Farley

the about The growth. by to APAC actually EMEA, I and the regional most, showed Americas talk dynamics. followed sales declined Yes. wanted

I think mentioned you gains share there.

the So that believe these going levels you you is, any demand sustainable of are in APAC first region? forward? do revenue of part believe And there's do pent-up

Tricia Fulton

I don't think there's any pent-up demand APAC. in

of that exceed been I in region those original to budgets parts pre-COVID some to has demand levels. we has cases, - think the out strong, expect COVID in gone back region. of our And and in coming

think don't I coming think I demand it's it's APAC. So, actual pent-up, out of

Adam Farley

share up, a then economy Okay. take see it Americas I to there's you gradual the would as of in And think you'll follow forward pattern what do Again, roll you gains specifically, think is know the improvement in China growing but lot and for the do regionally? APAC?

Tricia Fulton

QX the that plus So on in the about in driving the Americas, business bit. Americas, so clearly was hit I that hard Electronics was segment, mean a XX% of overall that because is down

QX shutdown believe of I just started sure we are to we'll CVT specifically, in our Americas in of have little they And of this the I reaction think coming bit the of and that a what side, the we back we on then is that that Americas that. step where where demand. But side, to a inventories QX COVID. result as with see in on think OEM make this, a stronger we're CVT the the to seeing cycle, lull we a our in are out out understand a was with Electronics distributor the of taking

Adam Farley

more markets, relative are a which Then a driving on basis? on worse end markets are over shifting that relative resilient highlighted end color some maybe doing strength? guess and better ag to pretty you market. I Okay. What's And doing which Thanks.

Tricia Fulton

expected little a XXXX, year. it, had that continued seen are We same pickup we've the and than that the actually anticipated come coming But lull out see in bit believe and there. strong we throughout the Ag we our that of we be as saw a shutdowns Europe back to We started in for of when the was that have clearly markets better ag to of we've to very out year. some QX. going of OEMs we all

has we've continued see that to market gotten happy we're to through as the grow that, COVID clearly, shutdowns. lot a So of

Adam Farley

other or I any market construction? oil weak. end know Then strength Okay. gas and is weakness

Tricia Fulton

has back that's Americas resilient. really strong, the too though mean on on Yes. been construction perspective. recreational think in on of on an it's most the seeing and with happy seen some coming hard was the But industrial application Even in customers. Those been what to China it I we've construction the demand nicely. side Clearly, primarily side us globally the end from pretty market We've side started pickup see also we've hit, I to piece. signs are we're the some the in power. wind with mix for

Adam Farley

for my taking Thanks questions. Okay.

Tricia Fulton

Yes.

Josef Matosevic

Adam. Thanks,

Operator

queue, If are there further the no the would remarks. call turn for over Matosevic any questions in Josef to left like closing I to back

Josef Matosevic

Helios our employees to Helios quarter and a Also, on our who safe, I genuine great all in of a stay third all very participation hard-working like to November. updating interest would you this please. and forward Thank We and Have of your to are your you Technologies. look you these morning day, thank extend in results. for driving healthy

Operator

This concludes today's teleconference.

and time. wonderful at a you participation, disconnect You for have this Thank your may lines your now day.

Helios (HLIO) 9 Aug 202020 Q2 Earnings call transcript