HLIO - Earnings call transcript Q3 2020 | Helios Technologies, Inc.

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Operator

Greetings, and welcome to Helios Technologies Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. of and President Helios. Communications Vice Almond, Investor Corporate Relations for Tania you, Thank Ms. Almond.

may You begin.

Tania Almond

and everyone. results good Helios operator, earlier you, Thank morning, quarter issued press year-to-date today. We Technologies Welcome and XXXX call. financial conference a release third the to

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

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

Tricia next of amended They questions. presentation. Slide me to President third providing you we Please and minutes Officer; acquisition will and On will of our our If Chief then Officer. and will credit Financial have X, the Safe Matosevic, the Harbor find we the Fulton, are section line moved some facilities, into quarter call Chief Josef a statement. several our the your with note, information the reviewing recap spend our recently Executive turn results, of up to year-to-date our open supplemental the announced

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

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

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

to of non-GAAP today's the the comparable turn reconciliations that pleasure call it's that, measures provided accompany in now to over with my have Josef. We slides. With tables GAAP

Josef Matosevic

to impact know everyone. to with low continues much the visibility X, in still and Thank good and there some will We for QX. all and and you, economy our that customers. highlights is Slide I turn Tania, uncertainty Please market COVID-XX morning, summarize the global

work stated last to customers, recover. execution; position focus pandemics to into their all this our strong Helios flow such as our care team successfully for of and of facilities, to COVID, maximizing pandemic. due have a Balboa, on thank enhancing close I credit disciplined efficiencies, members completing through regular operational for been duties. As objectives growth, continue strategic this great managing amended We They want throughout supply stay quarter, to our while to maintaining cash customers, chain, very navigate diligence our all generate our on are to our markets taking

have and a again, high thank very once team performing you. We

expectations, have This quarter that gross decremental margins operating and expected exceeded expanded than delivered better margin. revenue results we our

in quickly continue adjust markets. to agile Our businesses rapidly very changing are our and demand to

in I is segment an aligns with we fit announced continued enabling The of make exceed adjusted and average EBITDA. with weighted and glove they multi-year and demonstrate million our full Vision-XXXX multiple of strength We flexibility Water the a of financial estimated two to framework proprietary market times growth the Electronics is our for EPS products; low-cost capital operations. manufacturing from generating and over AC organic $XXX.X is wellness $XX adjusted Balboa manufacturing have cost us within this step year with out This patented capital strategy. to million, both debt facility a acquisition utilize and X.X Electronic purchase control new and The controls in highlights within build with our day X for with health one suite a Slide Balboa this acquisition. Balboa from Please well growth. $XX top to one. M&A Helios fits leading a technology, Group, and electronic supply have just the to overall. is cash return ago. state-of-the-art our Balboa industry. XXXX completely represents capabilities we positions of is in on solution and into Balboa turn Helios This recap excluding cash the power for Balboa reduced to million. chain; Helios’ by synergies. of player. integrated to us first strengthened really our realized like innovative of the quarter net segment will our accretive acquisition cash It solid invested to a perfect price journey is weeks and Year-to-date, a is leader a a expected historical with our industry the

Slide on for in highlights Moving to financial X the some quarter.

this continued segment, and quarter in sequentially sales up million increase $XXX Electronics Our growth a Ag by strong in were supported markets. our the

demand meet by Some been of was created timing this as buying. consumer that OEMs issue strength COVID pushed has to a

review gross and more and to up year to was Our We reflecting and to efforts bit expectations, per XXXX now our a full result which still believe outlook beat forecast Tricia? as faster financial productivity. margins measures is detail. share continued internal our the the in trough Tricia little we will of containment will over forecasted. turn results instead than on margin as QX. the and year-over-year our sales earnings QX sequentially cost in track, Sales both I improve increased call

Tricia Fulton

Josef, you, morning, and good Thank everyone.

consolidated for review X a Slide results. to turn quarter of third our Let's

continued the impact year-over-year consolidated growth While our the COVID-XX during delivered quarter. the we pandemic sales from quarter, sequential to trailing significant

would we trough quarter on referenced in third call, we said Josef XXXX. our be last the believe As quarter’s

exceeded to with demand the a September month. expectations. build definitely a Similar we these orders saw last through quarter strong our results quarter, So very being

China. fact, in EMEA as share remained businesses the we from year-over-year the QX the sales last to In Ag over growing the prior September. strength, for our were show X% X% year, continue Enovation market Sales only our region year, resilient. QRC had growth from APAC and quarter increase continued in in to as market down

the sales customers’ heavily year to prior business were CVT by the decline impacted the from However, pandemic X% trailing compared a due in in sequentially where our the impact This end-markets and XX% and continued softness largely our Americas in quarter. the with quarter, more is COVID-related operations. to the down

the positive note, quarter. our Americas On trailing from Electronics the grew XX% segment sequentially in the region

We have with recreational seen with in some recovery this catch-up production to OEMs segment increasing consumer and of their demand. demand marine higher vehicle

in in along the strong Our drive and beyond. acquisition additional of Balboa in markets opportunities runway growth segment, with the expanded provides Electronics current XXXX and to pipeline

we and producing quarter, results. strong Our implemented are operational this cost again profitability improvements was reduction as previous productivity

basis to had Americas. was of EMEA the year the favorable This basis the up decreased sales due the share. XX.X%. to disposal as operating gross the adjusted XX adjusted a higher The currency. year basis ago segment by Sales of the for as some was and margins the points decline in end-market Hydraulics despite for Operating X% management declined strength asset, effects from were for XX.X%. for region in softer one-time management cost margin and currency, foreign well points turn XX primary effective currency, impact. of and impact margin million XX% improved the Slide Gross was X in of restructuring market X% pandemic. margin to by impact quarter a sales cost the influenced and our from The volume geographic year-over-year XX%, period an in to initiatives quarter sales last perspective, excluding quarter we margins decline which intangible the expenses impact as segment higher to XXX million, sequentially the $X.X to foreign quarter. current and operating offset EBITDA of excluding the efforts in results. for grew production in basis decremental XX.X%. demand, year-over-year driver on XX% benefited review lower income of excluding points to was Please From a $X the take lower XX Our a points efficiencies APAC driven China reflecting the profit by third increased expanded related income the by Operating just declined top-line. Hydraulics the was

were to or Electronics third a X FDA Slide results. for operating review our a million As segment turn expenses $X.X by Please result, quarter XX%. of lower

this recall been has heavily the year. will this affected segment You COVID-XX by impact of

year which capacity catch-up run-off both. by in and The customer for sharp $X.X was year, trailing quarter. from from million this certain consumer offset involve in is the are million working is full demand or some in had to earlier the now last third demand for the shift recreational base, at operations increase down somewhat increase $X.X obligations. revenue vehicles contractual changes from sequentially sequential intentional in quarter segment shut that down up Many While period the XX% OEMs our with

As lower, year-over-year million, and we our immediate the cost the saving aligned demand variable implemented and by to have Gross nonetheless volume and previously large profits impacted referenced, were declines. many measures workforce gross our the of X.X%. over business. operating of the up second Operating declined margin was points within profit level improvements but XX.X%, benefiting expanded XX margin $X.X basis to significantly from XX.X% quarter

OEM this and invest engineering solutions. we reminder, related these segment to to future continue a to effort projects utilizes support As significant customer-focused

In million generated from and to of approximately encouraged same cash in the higher CapEx we September, cash we year were year, third year our our a flow, Slide generated million significantly million, we for $XX.X from Excellence. in of cash by comparable net with million in we of of operating see than manufacturing flow. flow. period significant in in is segment activities, the $X.X quarter free are consolidation Electronics last when mentioned, investing we $XX this from Engineering operating review to cash activities free resulting of the in turn down of coming Please $XX.X project million cash As $XX.X Center orders last Year-to-date and XXXX. Year-to-date, previously improvement double-digits. net X

priority the be range million in to We to million economic $XX defer projects, but of are for other CapEx critical investments the until full high invest expecting to conditions as year in we continue and improve. $XX

the $XX on forma cash, reduced million quarter, the third Year-to-date, we debt the reduced by of million end which our facilities At had Regarding certain $XX debt of our capital net to pro $XX nearly accordion, EBITDA of target and we gross subject $XXX we credit $XX by $XXX in times. net to our quarter, on to third in million. revolving Slide our the lowered debt structure we million quarter. adjusted over requirements. by million a and debt At XX, net was million ratio compliance the our available level our end two our

we be last finance the strong expect continue to our and to basis, leverage benefit hand remain organic on year-end On reduction be X.X EBITDA net We transaction, of following we target ratio expect adjusted approximately debt mentioned, to we pro two cash to to close our Josef would amended from in facilities estimated, Balboa less month using credit our debt forma to times. XXXX leverage committed times and a cash to of and As acquisition. net announced flows initiatives. support debt the growth than existing the a long-term

acquisition debt approval. the in We $XXX closing the company’s and The to wanted lender million. details senior previous facility, amended accordion of quarter. our million a five a This on from million of increases $XXX expect a you to million announced close consists just facility. amends to fourth loan million subject agreement We credit feature, credit XX. $XXX into and a term our facility for $XXX the Helios million the entered to $XXX highlight facilities Slide $XXX and the year secured capacity credit revolving credit

final make previously made the than We order more a up of a confidence where before strong strong to also and trough with will the Q&A. has I We more lumpy QX, for and remarks it very outlook forecasting syndicates. that, amended facilities banking would very year turn thought credit we of this With which from discuss the pleased these Slide remainder for XX, note let’s our opening show our Frankly, normal. timing were challenging are be to pandemic and our Josef oversubscribed had the year.

line detailed today. XXXX, excluding to to adjusted margin XX% suspended the from it closing million $XXX EBITDA I believe the will of months deliver full two $XXX key We view on but of our guidance, for as range your the we outlook for are track based remarks. we million; back items on now revenue year have a contribution turn wanted to our the of XXXX provide previously of of year to We with year our Josef, acquisition. approximately remaining, you and full on couple for in any Balboa

Josef Matosevic

our you, Last as critical meeting would see we strategic we Tricia. quarter, M&A said Thank to that on we goals. act opportunities

and segment. bring the The are Balboa our Balboa addition the diversifies excited accelerates proprietary the family into of Helios addressable and technology end-markets. to We and very our to innovate, ability Electronics expands

much business meet that intend customers’ a view through combination to leveraging products, end-markets. against of value spectrum Vision-XXXX. the be as and would a significant into how of have grow and a a strategic This able execute Electronics additional We growth, larger across to needs we segment will technologies our inorganic full services, streams, organic evolution be we of

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

Operator

[Operator Jeff Please Hammond with question. from proceed with Our first question Capital. Instructions] comes your KeyBanc

Jeff Hammond

everyone. Good Hey. morning,

Tricia Fulton

Jeff. Good morning,

Josef Matosevic

Jeff. morning, Good

Jeff Hammond

the That million. EBITDA in any nuances imply on year-to-date to better is So fourth quarter. are the margins you want just $XX.X significant my is question pretty understand in and that getting like that. looks decrementals third it if $XX your million, are I guidance would to there –

Tricia Fulton

of lot our saw A we than had just where are flow volume margin. down it’s expected that the and said from to we was into top-line QX We Yes. perspective. stronger related you also on a the that,

normal QX bit stronger So, we expect see holidays. now decrementals also lower with do and numbers, seasonality on a little to

Jeff Hammond

backlog And kind is you year-over-year update looks where as can on then, that of basis us in XXXX? a And the Hydraulics? you Okay. just what on exit you think like

Tricia Fulton

Yes.

through the able businesses. had, in returned and backlog are able normal about were have We the backlog. levels to work now CVT normalized We we business, to that QX in at work through that we backlog talked the we we were in specifically that to

Jeff Hammond

a exiting XQ? give what number you us is on Can backlog year-on-year

Josef Matosevic

you would I knew ask that.

Tricia Fulton

We are order numbers and going that don’t backlog give we to continue practice.

Jeff Hammond

particular why sneak quite in, in Asia weak? one driving versus – wondering, And I that’s so the If And you am that were just just I stark. think are difference more end-markets Americas, what Europe could it’s Okay. weakness? the and

Josef Matosevic

customer Jeff, of the kind for continues dealing What’s roadshow feel a really inventory I weeks of our be a Yes. just a couple What’s just mixed going. so, it bag. mini backlog. we good are to got back get just from and into and where distribution just retail the

getting up to a QX we strong. a from be all to calls. very And we our as sudden, an you market For Ag into uptick went and QX, QX example, the to QX, anticipated resiliency of strong finished here. got and And very start phone trough turned be

So, Right day. now firm data difficult. on the you every seeing extremely to point, a give pause it’s it’s single

went all to The be That other down example would on strength. the construction to period. to within four six of We from happened side. week mix

very On the Dealers inventory the our the really of forward. just minimal side, side flattish it’s excited that mining us, about side, low. on mining going In we kind is for strong. replenishing and recreational to path are are really

growing just any is American a So, be North see Europe Asia any for segment internationally, to time kind the soon. don’t of I remains for concerns sites, that will deteriorate us. that And strong us.

well. relatively doing are we So,

So the data best right feel us. to points of just that kind

Tricia Fulton

as with the year And you on extremely especially clearly, time, strong bit. seeing Americas, COVID, is recall this the little we the down business, in last thing a at CVT in Americas. that were other demand One demand now

year-over-year, it’s comparison tough pretty that So, a for geography.

Jeff Hammond

Thanks, Okay. so much.

Josef Matosevic

Jeff. you, Thank

Operator

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

Mig Dobre

taking my Good Thanks for questions. morning everyone.

Josef Matosevic

Good morning.

Mig Dobre

might looking are Electronics in better at understand sounds was there to it just quarter, guess, I the itself. better than expected. when would relative the expected? like the more story you what say outlook than to two I your to be we the me Electronics am trying mean, to I segments But than

Josef Matosevic

Yes. Certainly.

strengthen packets that was the obviously full contributing business success. on to on side side, you that to And But Hydraulics from unit strength there So, it is feels adding nice to market the our notice extremely with the the year. dealer the QRC Asia replenishment nice grow continuing did of but a clearly, Electronics And to us. contribution and QX Asia, well, CVT a also standpoint. of to continues are continued Mig, and strength just good

just just adding and – a already again, to be know. what our very be out So, color QX to have We it for we we versus of more is quarter turned us. don’t hesitation trough more and strong anticipate

with demand close. we that working the is balancing extremely So supply what are

the all that’s to is So, mix.

Mig Dobre

feeling orders I Hydraulics exiting declining flattish. to good in Ag. confused the business in Jeff feeling with the time like the about thing – is September that third. earlier what having on are you now you with The flat are up maybe It following Electronics, Europe. being right, about improving. Well. the I are your Mining to trough fourth in was of equating up Asia. I to gone being are to is am sounds hard It the you about of sounds think you am that a feeling sort your from about am are your you get like at It good that, I relative on now if double-digits construction commentary, has like good in about quarter kind sounds like quarter saying end-markets trying discussion is

So, help of you this What’s on? can kind going untangle here? knot

Tricia Fulton

the inventory and still we see Electronics that recreational seeing the we will we year, side, the this that demand the many holidays. that though, seasonality think quarter vehicle related is shut on we of to we side. low, are well. to know QX side downs Even I as do is very normal OEMS dealer need very seasonal that do that is business, the always given And high, in are expect on have So, for lowest that’s that what remember the Electronics

that that the Ag we bit Ag. seeing in. as of we how related orders little we to we’ll coming are seeing much in outside strong talked I there On in of lumpiness the are markets still the Hydraulics the side a some lumpiness is and are Certainly side, about we demand it’s we the think, and door some can. out on get what lot But a Hydraulics as seeing of of

are those for manner. more consistent continue in But orders So, bit that see to a to we that. think come we’ll time a us expect little hopeful it’s I difficult

Mig Dobre

you I in in the is quarter? us with a orders recognize of relative like segment heading understand business? progressed quarter quarter? the we sort a the prior to there Hydraulics what frame the Or the look lumpiness, have able where orders to directionally, are but whole as this to Are I for through am trying for

Tricia Fulton

Yes.

I we September were orders the think if what and saw better we strongest we – that in than we stated already that QRC year. saw last the

and some But Some that Josef QX are lumpiness the majority we to working we patterns CVT what seeing and the I between uncertainty are was have Where would placing more what from on side with and still some of comments say them what are and I on orders them down seeing related really the are the stronger to kind construction in are CVT where of are to are customer in of flat orders QRC distributors, QX which on terms made that inventory it’s we the through where flipped order of think of of side, shelves the now. the on is is up. going. they base dependent inventory distributor working kind construction specifically of it’s down

Mig Dobre

earlier. implied the then and itself final are was pointed cost out on decrementals structure question, Well, like high, Okay. the it my

excluding going way of we acquisition Thank there reason SG&A path? elements if be similar to down of the to are through not ask I the expecting SG&A you again to cost any follow of? Do why slightly you. if inflation a you different, guess, to would is question be in are the lead there cost inflation any am that this I So, sequentially, aware elements revenues any working that have side, are you

Tricia Fulton

we have of expect what to last be FDA couple they No, the different cost quarters. significantly over from been

lower margin gross margin at is the absorption the think because variability top-line of is, the are the fixed level. of I we the where seeing cost

Mig Dobre

Okay. Thank you,

Josef Matosevic

Thank you, Mig.

Operator

comes Stanley. Josh proceed Pokrzywinski your with with question. next question Our from Please Morgan

Josh Pokrzywinski

folks. morning, Good Hi.

Josef Matosevic

morning. Good

Tricia Fulton

Josh. Hey,

Josh Pokrzywinski

different going So, this way try I maybe a the am – again slightly from Jeff. to here

if I manufacturing quarter, suggest down at at for look On margin would that the the fourth is look there here. the I no, a had – variance nice like guidance take step at a have inventories, work if which

behind skew maybe would So, scenes nothing the the absorption margins. that on

fourth – get kind If the would into a margins you up that were additional proportional the on or month this before to would that end, that wider be that higher point, range trying what incremental November at get a the above revenue? step the quarter, December to or you of surprise, have cetera. et a is incremental sales outside range end? folks that be band as Or to year before in kind the done margin of of than kind across Would

Tricia Fulton

you we Well, we when than expected see strong can that had top-line. had stronger margins from QX

top-line. when we So, see revenue increased leverage definitely the have we on

cost than CVT, Electronics QRC Hydraulics that things that, of think Hydraulics side different revenues within I clearly the is fixed in There at absorption little that’s one the base QX, And quarter different higher on a absorptions of within the how to of looking the a rate are costs. we in units the side. the the between in but is is are predict and where understand to has or occurs. fixed business even each quarter bit a on difficult of there with overall

So, think my margins some comment that about of what’s into play gross in previous come I QX. in

Josh Pokrzywinski

or much that I then, thinking would earlier might of months Got understand Balboa, accretion that shifting it. next would Any through linear there. the close give then from seasonality folks within that twelve if build the it’s presumably us impact, helpful. kind how it first how chance on And before you update about That’s things will anything. kind close ballpark some immediate over of deal us like and be the you to Since around phasing or could that helpful. accretion fairly comments and

Balboa. some are We with punchy coming pretty numbers on up

of level set. have want kind that just sure to So make we

Josef Matosevic

Yes. Certainly.

Balboa. a in look, datapoints So, few

had but in that fair here they strong in expected recent results pretty going bottom-line. two little better the think went much go at backlog top-line, not from than right say expected the looking bit their a as last over the results, months, now to to direction, their forward. to just I continues also at the very it’s And

So, will the is one and we accretion see as XXXX therefore for Balboa overall day mentioned for us positioned well earlier. extremely

So, definitely excited about it.

Tricia Fulton

a accretive from last the business, Electronics out what of perspective, that, especially And comfortability overall coming COVID be of seeing now months the margin we to are Balboa level. and through should few the is segment at a

Josh Pokrzywinski

Appreciate it. That’s Got helpful. that. Thanks guys.

Operator

next from Stifel. Please Jones proceed with Our with your comes Nathan question question.

Nathan Jones

Good everyone. morning,

Josef Matosevic

Nathan. Good morning,

Tricia Fulton

Hi.

Nathan Jones

some versus us I’ll number savings to be? Can cost you total then, into remind that Maybe And to start cost? incremental What with cost temporary questions. cost the returnings how of translates or is XXXX planned going that what for structural is XXXX? cost

Tricia Fulton

cost efforts temporary. majority reduction we’ve the permanent. would XX% taken XX% COVID that are The throughout be and about of temporary We estimated were

when get we levels to I the we will were pre-COVID. higher revenue we that benefit some return at So think,

able that. we some when lot just certainly of temporary trade be shows get benefit majority travel, out these of related discretionary in new reduction and to now. are we we because into more includes and But which of that to customers are we end-markets going about are talking coming a something COVID. So But going do especially those that expenses, to that’s front the will and we of can’t right been from are have them

like So, cost see we to that the return P&L. will

Nathan Jones

margins be the next be should given your into from have XXXX what incremental the we in where year inform ex of margins next business effects? going easy might that XXXX? about year, growth some costs the view coming incremental How the temporary of going revenue given does thinking to comparisons play back in is of acquisition everybody for How

Tricia Fulton

budget we working that. Balboa our into plays We for to still also are how and this consider need through point now process at XXXX

with We done that aren’t process.

there I’d a COVID. not what to of now up again is those a is like. out So we come a hard on bit vaccine. from look on When commercial pick give rather a depend things going right It perspective. When how also can number

to quite we yet. provide want really when guidance. that definitely don’t I number So a XXXX give give information We’ll

Nathan Jones

how here the internal one the you in is, the to Maybe more some assets up the Is you chain doing months. There talk you kinds like still about was terms last Okay. are supply of those spot as some feel of the Can about been in disruption you ramping consolidation, to order on productivity the where feel have you a over done business work where there XX, you at improve be there you footprint around guys things. XX to moment? that it. in do are moved or good

Josef Matosevic

mindset. Well, I or supply been not any the Traditionally, don’t have but and this base, continuously think, is, improvement our of very to is our globally. with manufacturing because this loyal be areas answer wrong we I will never quarter-by-quarter question But, in here think area. to some there our – to is area, have mindset is get here, is are that, continuous operations and satisfied opportunities supply your in businesses chain our biggest clearly which improve with broadly data what points you the nothing leverage

cases, advantage of more single of chain going low-cost in XX% some is and source our So some to supply we take country. are

have very Now by supply adding Balboa to a stable base.

So laser forward. chain will the a supply area going ours focus of be clearly

nicely, the On have in really our of hours. position are mean does now terms was data terms where where overall in are and and it we businesses. our in to in of that see terms OEE in needle is What data our do and so the we move of just this one not have do throughput. business, areas our We forth. but of can so very that What the we are manufacturing I side, a all we requesting we

overall, now, But the it’s us like said, budgetary Tricia numbers we incorporating So executing. aligned then opportunities. that and matter start process, those get yes, just have communicated, get do of a into

Tricia Fulton

on little you XXXX of out bit QX CVT the to I saw, in strong QX and hit. QX project think as of of really a we Just able that, XXXX QX, came Nathan, were a COVID follow-on the and then and we produce margins side some to

that lower the then, anticipate do that the at gross and be margins that get side in generate to as up. margins strong that on very on and we Josef of levels. do those continue are have once margin They’ve excellent We the OEE we margins Electronics we the now top-line strong in on levels OEE business, mentioned at the are of able business, we even maintaining we well. the And the to QRC revenue volumes. producing So right very focus strong back those we’ll done an job already

Nathan Jones

Great. Thanks it very pass along. much. I’ll

Operator

Our [Operator with next with question. Blair. question comes Joe proceed Please Aiken Instructions] from your William

Joe Aiken

Brian. Hi. Thanks This questions. for is on taking my for Joe

Josef Matosevic

Good morning, Joe.

Joe Aiken

want I kind want to the – on, start seasonality of good at business. morning. the just to just looking typical I of

see, step-up quarter the kind quarter. pretty fourth from material first of typically in the You

are quarter? of from Given to fourth talk potential just what quarter so first that And to you of are be harder and the for snap about the is you historically, the can trough some now kind back you maybe compared with far seeing quarter kind the in end-markets? even there think quarter expecting you the than of do your fourth

Josef Matosevic

here. about this this we It’s this. have if Joe, and – probably genuine know talked answer, would would comment we Well,

went to stayed have the on and a at I broken was market looking may and extremely record I and We these That of know, the we close here. road why the like one reasons customers. sound trends the to just

It’s that’s just but apologize, a bag. I So, mixed the fact.

who dealers placing left some just right. and distributors, and extremely they some are have well orders doing You are

Absolutely QX Do others are fall have the expect cliff? struggling. that to we not. You off

full just the it’s month guidance at planned looks, Looking what as based we – our outlined here. on it first year in here,

dealers a support could and we replenishment. are levels. happens, couple we key get our that We prepared have stronger material with something Joe. just don’t to inventory star If And here that know, So snaps opportunity say, an that. to

Tricia Fulton

who is going there Josef pointed there as out, in and or areas quite end-markets certainly, there. gaining then that But overall. Yes. certain But we seeing information up. would in the are open Americas they been see start to orders some to just are customers certain it��s say, that getting are is good pockets that specifically are not busters from, it slow distributors I anecdotal the

Josef Matosevic

Yes.

Europe COVID certain and two continues to strengthen in of news has you significantly and get Joe. that later days shutdowns. Sorry, areas then later a the have increased Europe then, you

factual. just So, we that’s out and there put information not any want accurate to

that’s extremely So continues hearing you do here are us. from to well. Asia what But

Joe Aiken

the for I on were you the up in September. double-digits And color business, Thanks orders it. Got Electronics said there. think

the quarter. previous You early in fourth continued I in are mentioned the on Can kind that typical of of that of rollouts the quarter? kind the on update and you fourth expecting potentially expecting Has start heading call, new the the in you know, strength that And are seasonality the you first could of that? order some here us program kind quarter quarter. into

Josef Matosevic

into first Yes. Question answer is, the of part the QX the has Joe, patterns far continued so number one, here.

the In new anticipate base. customer team is terms working with through the We of originally this NPI rollouts, it.

been We cancelled. will going believe have QX. there into some I year. shift do of But that to QX the gains or in has now is nothing next more QX this

call could ready deliver. phone of start products. one And get things, our those shipping COVID this to need the just come we another in, beyond So, and we to are

Joe Aiken

much. Thanks it. Got very Okay.

Operator

Please Hammond Capital. from is Our next Jeff KeyBanc with your question. proceed with question

Jeff Hammond

Hey.

and year. they lower versus you full in the Just one fourth quarter for to get still last Should quarter XX% - margin. the the XX% struggling just that am I mean, on get would not the to decrementals XX% that fourth as one XX% seem I the with of EBITDA like to margins of think something range be year? we you should much kind full

Tricia Fulton

at lower. looking mean are the are XX% for We EBITDA which that full margins would year, QX the

Jeff Hammond

Okay.

Okay. Balboa, of modeling seasonality the what is that about we about it? think just normal And as you business can then, talk on

Tricia Fulton

as can seasonality, normal don’t year that for know this at all business. we that a Yes. at look I

coming in. We still that some Josef came into orders seeing backlog are are had that we into and we XXXX and end have in XXXX of that starting They’ve XXXX strong or of going COVID out seeing strong as the orders already with referenced. QX they

going a are the normal pattern because we am I of either to not seasonal sure, impact. next COVID see So, year,

get for normal answer that look have for a more So, feel a I little cycle. like you. business, then in what strong I own until we can the might bit don’t a

Jeff Hammond

some Europe, around to down one Okay. again we’ve countries or the of start on been some just And any plants shut of then, over noise seeing kind risks any last your there?

Josef Matosevic

Yes.

we impacted So, do product as be anticipate our as not or either today, would we with it that internationally. shipping of locally stands

Jeff Hammond

a Thanks lot. Okay.

Tricia Fulton

you. Thank

Josef Matosevic

welcome, Jeff. You are

Operator

with Our Please with Mig next proceed Dobre question is a Baird. follow-up from your question.

Mig Dobre

Thank you for taking follow-up. the

a Going now of year Electronics, kind put intentional run-off on shift you guys outlook? revenue out from can back to customer that for was you’ve remind especially this year, what us full the the the impacts

Tricia Fulton

Yes.

compare to a making did that this we been had mid-single-digit each impact products on you number shipped item number as the basis quarter we’ve impact given a certainly, It’s relatively actual shipments give percent. But that it’s still XXXX not to to I to a we a are other this a the significant are of you if or on year hesitate So, full and some year-over-year revenue, at with XXXX. full with. an significant that participating customer related that point, intentional year.

Mig Dobre

the And, pretty at the into be helpful. through well? will are as going to this XXXX, stretch we this That’s year? end of much Or

Tricia Fulton

as specific insignificant. the probably are as as will will we be that as for XXXX not and vain It so be But be talking about, to continues minimal down. it that what it in XXXX significant Well, we could labeled there impact saw will between – product XXXX. XXXX to some be

Mig Dobre

much on. there then, there this? something or the – as many Okay. you are understand and new pieces. from are moving have And run-off us has this going different going introductions this is help as platforms would help new to back Is into that segment that like you then, the way look getting mean, away going how there is again, well. got a to Because, we I intros, product you’ve new XXXX, end-markets so that is got product

can So, on framework the new provide product intros? any you

Josef Matosevic

Yes.

are that you bright just significant us really look, and here fronts excited for is the maybe, spot super a mentioned. on all we So,

getting full. and just organically funnel new It’s profitably. has the launched developed. of standpoint. product start largely growth been to NPIs, the The a of is is terms from In matter The and nothing contribute a great that top-line customer towards canceled is, news

of have hand, On other the Balboa. you post-close

lines significant product have our on We a lines, neat need. addressable both because opportunity laser-focused the there and leverage is expand really markets and diversification to those product this are of very

no We the fill have here three spent explain of in with a Mig, the want going differentiations that product start time, with in say bit process extremely together, and to I we new to pause targeted quite is explain appetite Are can QX XXXX. it to offering the we here customers are testing that work strong. and discussions the later, how of we to

replenishment a get getting you But So to going you have recreational and inventories. strong dealers also have those the sub-normal on the sector as start level at the then more value the streams on. normal, here

just will in So, the a journey Electronics segment. it exciting going that on look, just really

are We five Engineering going the next into of innovation And strong technologies common on us Excellence Balboa invest platform. to and Enovation to years. carry that a breakthrough backbone next the Center will this continue the leverage R&D over developing

Mig. excited, really So,

Mig Dobre

volume price how Hydraulics you years am XXXX, for question Tricia, where put typically you about years, the markets business, growth, through are on pricing had a increase. the into Appreciate that. curious me, Last I thinking historically

for for well? are curious how intent So Electronics, I Thanks also, this And point about as at if you your am that’s that, XXXX? thinking

Tricia Fulton

side, as longer on – side. deal the are faster that are Yes, which the with significant on term customers well customers the we OEM as contracts. the Electronics Those

set we I individual pricing is distributor across pretty sale more So or at think all the businesses the option those. have well level. the some Where is, on for pricing

not in the CVT have significant mid-year since We had price business XXXX. increases

a about when opportunity there. So were were in be there honestly is position behind not we able to to some We in probably talk pricing shipments.

that. We have now caught up to

opportunity it is to change at us for sense at pricing. makes certain probably is products look to least there some So where

Mig Dobre

you. Okay. Thank

Josef Matosevic

Thanks, Mig.

Operator

this At to turn closing for you. back over Thank the I comments. like management to would time, call

Josef Matosevic

Thank you joining for us today.

forward Have updating a of in and very future we you team few have fourth early the accomplishments a much your company day, of have and and to year appreciate full we our growth. in all quarter March. We great made last and great stay Helios a look over We are results look the interest our months forward proud as on to healthy.

Tricia Fulton

Take you. care. Thank

Operator

teleconference. Thank you. This concludes today's

now at and disconnect your you time may thank lines You your for this participation.

Helios (HLIO) 2 Nov 202020 Q3 Earnings call transcript