HLIO - Earnings call transcript Q4 2021 | Helios Technologies, Inc.

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Operator

Greetings, and welcome to Helios Technologies Fourth Quarter 2021 Financial Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Tania Almond, Investor Relations for Helios Technologies.

Tania Almond

Thank you, operator, and good day, everyone. Welcome to the Helios Technologies fourth quarter 2021 financial results conference call. release press a issued yesterday afternoon. We

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

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

we and are: On with with Officer. our open our providing our They will next goals, Fulton, Josef fourth Chief the Financial Executive our spend accelerated XXXX, minutes Matosevic, our the growth to Chief Officer; me and call outlook progress our your several line will quarter Tricia and discussing then President the for reviewing results, questions.

X, turn to will you harbor If safe statement. Slide you find our

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

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

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

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

Josef Matosevic

and you, good thank day, Tania, everyone.

that of will highlights Many XXXX. With and reference results We our by of thanks year thoughts management excellent and can X colleagues are around times, X, incredible please team these world. year acknowledge to has world of challenging quarter are full the our innovation, system everyone that them. our and results believe, for would demonstrating Helios Slide of with direct and full occurring, all to flexibility. resilience like I and we all and the for impacted that, of our business and in an I this that been determination, we delivered directly this I and our quarter summarize the the begin, implementation to Before conflict. realized prayers uniquely each execution from be through events

growth organic for efforts. and in our a year, to XX% Our of the XX% quarter testament the are

are or meeting share exceeding customers' We gaining by expectations. our market

We we challenges are breakthrough global meet and robust create the are innovating agility to of to solve solutions to problems, complex the exercising economy.

won streamline our businesses. of last exactly This system also exceed expertise our we innovation an we growth an and couplings continue example, history, This by excited first in sale a drove For launching contains expectations family customer is is the in to type XX the announce, and for flywheel I'm that in This of be as sale will teams and three to product product that new control we life greatest described faster the Day, cartridge across combined to valves. number recent international CFP, some synergy Investor at XXXX, came development division's years. CVT new our products. of cycle. the is releases coming organic experience the through our display,

not Choice the big be was DLG. a is by trophy, pleased we We innovation announced electronic we chosen systems could Engineers' won recognition. Faster this hose also hydraulic components that for for our another coupling. the just team, and sponsored as more about XXXX, our ABC award for of and Faster deal winner This

on growth, is equity growth, Finally, Companies. return. return sales based on stock Helios named XXXX total was Midsized on America's just of and Forbes' ranking Best earnings list The

There's is driven much receive at work as the X,XXX-plus colleagues. done We the being beginning, I as recognition. by And to performance humbled behind said this our well. are our scenes very daily

We are inflationary simplify costs, pressures. executing and address out on roadmap take processes to manufacturing our

make choices, balancing efficiently We versus our meet buy the to are growth customers' most carefully demands. needs and

We to demand, strong will a finds we have position expect, capacity are as the meet where to be in needed, the and new ensure also we world its normal. very investing

continued collaborate we organization taking This to R&D leverage persistence and solutions to of the material engineering labor conditions less our outbreaks. that As global the is supply our remain market teams, operating the and fact we can inflation responsiveness the ideal share. the talent we expect, than despite with across challenges, continue of provide with constraints, greater variant

our growth as well team as great stepping help the times, we we but implemented operations. flexibility, shortages we strategies It to and costs, have recognize to in is of in that increase We challenge. difficulties strategy. demonstrating As pricing supply organic alone unprecedented and staffing that address are before, continue I up the continued note financial can these have believe, not to resilience important discussed is with our investing and have in acquisition advancing

at forma pro addition ratio $XX the to net $XXX debt And revolver. in just EBITDA balance below have the we available on million Our cash year-end, sheet our is Xx. to of million adjusted on

and is market million In 'XX, helped growing cash us address to experiencing. top-tier flow These in $XXX industry we to share. inventory in contributing even significant our shortages the invested in are lead material operating the maintain investments fact, as times, generated we industry have

our plan in well growth is further and continue on and execute we to profits positioned 'XX, we believe, augmented to drive strategy. to are Our

will on Slide Tricia details. and review X financial then some me Let X, and provide more highlights

quarter XX% impacted freight and was margin had net increased which quarter cost environment. operating the million fourth sales $XXX XX.X%, of material the acquisitions. macro increases, We on based EBITDA labor by million, to from inefficiencies including in $XX.X Our in adjusted sales

the the margin and continues team XX.X%. outperform, growth, every challenge, for EBITDA to year, addition a job up year. year, greater ability more acquisitions. in Helios $X.XX, share the in financial our quarter non-GAAP to and over an outstanding Tricia? and outlook cash team several review little excel For not over call demand, did through could excellent I the of results turn drive our now was full will was and strong reflecting adjusted prouder. the EPS Diluted detail. I delivering bit constantly to The be and last to of the full XX% a Tricia, We to capture the

Tricia Fulton

you, Thank and On and good day, consolidated everyone. review Josef, Slide will quarter X fourth our I X, results.

and chain. outstanding our across the As period, in noted, market operated delivered strong to outperformed we Josef our continue a tight labor the lead executed growth and our demand supply global markets, meeting Net we grew XX% over responsiveness even quarter, driven focus plans fourth in and by growth take we times, market customers, on the as challenges our prior of year share. to sales faced as and the the

strong or prior very during a million quarter, from quarter. growth volumes. in XX% even As foreign XX% the with Josef fourth in million year's organic higher $X.X somewhat the increased line currency headwind. over margin Fourth $XX mentioned, $XX last with and of delivered quarter, year profit million the quarter we Gross gross XX.X% period was

of the manner While deliver addressing ensure volumes quarter, aggressively we substantially, created in beginning challenging inefficiencies into in were quarter, a up labor in constraints Omicron we also could the our QX. continued and customers. the to timely labor supply products were to and

costs higher to staffing while overcome supply, multiple and input higher managing shortages freight difficulties pricing done operations. of and business, implement have continue costs, carefully strategies, also We with the the to

driving though being is benefits by manufacturing are Our even current the strategy results, macro masked the partially environment.

make made region been last constraints. lot offset the and our EBITDA maximize the margin our have region, time teams as higher This segment, was integrate the was plans partially chain the year. in reflecting by business cost formulating spending Our over reimagine for each efforts. the volumes points ago, have strategies, the a and we labor to XX.X%, down versus we a of from period for XX year how supply disciplined acquisitions management we buy and same of impact Adjusted basis

for from regions, strong effective in XX% our year efficiencies, Our disciplined execution Fourth previously rate quarter XX%, exchange to a up had gross tax tax demand compared markets currency the demand lower strategy. inefficiencies in higher for to growth margin from costs. obviously in Slide to year segment the to from an Omicron just Please mentioned. fourth X volume, operating and spite $XXX higher all of period, foreign manufacturing prior point the was profit $X.XX period, impacted prior as primary reflects acquisition, quarter from down of rates. reflecting as review the year continued on fourth year of acquisitions. I segment rate non-GAAP Americas over logistics up in million benefit QX strong prior of improved was than by the tax quarter with $XX operational million period, this as freight raw million outperformance operating growth XX% were due in benefited bit XX the a EPS XX.X% including fourth of and up XX% improved prior million, industries, broad-based increase over due quarter regarding reflecting $XX effective in basis EMEA the to XX.X% Hydraulics the turn fourth turn the one-time the end across higher XXX Electronic with benefited review period. the geographic results. our operating Electronics was segment our quarter. Balboa to for segment in operating from period. fourth sales This Organic cash The quarter. Hydraulics to in and well although leverage sales lower Slide expansion ago Organic the $X.XX, related $X.X across margin Hydraulics range. segment this labor headwind well expected was release pricing. reduced was a year from the our the Diluted period, reserves transfer volume as on growth results. in material, full the Please XX.X% very This in over our our strong of year XX% and our quarter were year $XX.X million controversies compared tax rate disclosed The prior the

macroeconomic supply the gross from acquisitions with related are constraints margin volumes. supply recreational labor markets sales increased strong of chain Electronics quarter million challenges. margin reflects limited modestly the wellness margin period, quarter operating XXXX $XX.X quarter. end $X up segment XX.X% contracted million inefficiencies was Omicron in fourth We profile although the and acquisition for the the $XX.X additional margin quarter for fourth Electronics and QX, income versus of Electronics in the different Balboa by of Operating the demand XXXX. higher weeks impacted of reflects of costs segment XX The we owned profit higher basis in in prior in difficult chain was also million Balboa from health the year X although the to gross seeing the and and points. XXXX macro The quarter. operating environment markets, both in

to challenges to see who some variant, from colleagues labor several We started last as have the in weeks, the regarding begun returning were latest relief impacted work.

not see with though in we Slide turn Additionally, our also in relief review have material million flow. period. of prior for the chain, to operations yet. compared some a $XX.X of Please started was quarter the cash Cash year $XX.X supply million pockets from in XX fourth to

operations. For full million $XXX.X generated we in the from cash year,

We demand shortages. timely deliveries our carefully amidst efforts requirements provide capital with balancing are significant customers, to our our working material and to

inventories, order to backlog. our items, in We have with longer especially lead address increased time

companies, of $X.X up CapEx. productivity, quarter million of For additional and in $XX.X capacity year and CapEx was million, with investments in reflects for XXXX. XX% CapEx the XXXX, the compared the and quarter, from of up revenue. fourth CapEx acquired X% about was This full maintenance million, the XXXX $X.X

expecting a quarter. are in about to X% flow revenue. strong CapEx of $XX.X in cash the to We was XXXX million X% be Free fourth

the typical Our year, previous over was rate, which been consistently our three cash flow conversion has free for years. XX% XXX% than the rate lower

release resurgence While capital to was in in significant demand, XXXX, onset the the expanded working working our up there capital in with during a with XXXX, of growth. keep COVID of

ability balance our rapidly sheet. on Regarding XX, demonstrate to structure our delever we capital Slide our consistently

disciplined quickly then and cash strategy leverage flex Our operations. from for using is strategic generated acquisitions, to up delever

of below We long-term Xx. leverage EBITDA are target net forma our of range pro debt now to adjusted

flywheel. from the We at of net we impressive, to cash to to in quarter down cash EBITDA as adjusted is cash shows improved we to will for XXXX, at future and $XXX $XX.X end million the the net of This pay used reduce debt debt, was quarter. use acquisitions. considering end continue Total Xx million. power debt our debt reload in We

$XXX of our on revolving million total million. with available credit, $XXX lines had also of We liquidity

a distributions products acquisitive shareholders. new reminder, reduction, organic capital As our priorities to remain and technologies, growth debt through growth and

XX, for and turn XXXX. to discuss outlook our initial let's I will Slide Now

assumes Our markets growth only, or further rates, quarter-end constant by guidance environment. as assumption organic pandemic the on that our global XXXX as for is using currency based the the not geopolitical well impacted are

revenue by As growth is the of establishing our XXXX. the of our the implies least this XXXX $XXX billion million at outlook target of annual our to an rate million, range midpoint a range. of result at $XXX in our we for are to which X% This outperformance $X be in revenue approximately to path of directly on quarter,

the of In effect. percentage-wise, lightest expect relatively but first be timing the expect and This do second we strategies to the half the of quarterly flow, be partially balanced terms revenue taking to half pricing of year. first due the is quarter to

we inefficiencies. is the XX%, but to the the outlook given the ending well finds full margin freight, ended end XX.X% account where everyone on and the impacts XXXX of themselves materials EBITDA adjusted takes chain top range, in constraints, operationally as labor slightly challenging year as year, times than of inflationary higher Our into at supply

macro we range, but the of low current would feel it is tighten environment here. through step we in up year, to the As prudent start the to like end this

leverage efficiencies dollars our This expectations headwinds. million X% operational of midpoint million, of continue our annual to $XXX or these the We strategy to the range. roughly offset implies, for and EBITDA are at range adjusted the increase in $XXX to manufacturing

our through related invest the improvement manufacturing items rewards over to to strategy, the reap into non-CapEx term. margin continue of we long Additionally,

$XX.X to be should is $XX.X in $XX million and XXXX XX% Depreciation $XX interest levels to between range amortization approximately be to expect current at to The million expected XXXX. million down on be outlook effective the expense million to while down We rate $XX to XX%. borrowing of million $XX rates. for to to in is million, tax

midpoint approximately diluted per a $X.XX represents EPS We the XXXX. our X% be the results share range. of to cash XXXX non-GAAP This expect to increase over in at $X.XX

are We all strategy even address our delivering environment ourselves unusual driving the and forward in. find that as results, highly operating with augmented we we

the in innovative on efforts base, customers investing manufacturing people leveraging our logistics headwinds from focused Our fixed solutions, operations offset materials, our and are advancing providing expanding help and higher costs. cost addressable capacity, our future our and markets, to

had a another Josef, exciting just new Before I I turn the call company XX have remarks, are the that personal XX CFO. back as to These fiscal has off company years we over offer times experienced wanted and year. years with my start to few of the most as its of my living tremendous honor amazing the timeframe. the the through that I evolution

for excited the really I'm really with augmenting Over our more the turn have executing in a direction functions, and that, through path coming the intensity I Josef and amazing I'm by seen last team, turned strategic we the years, our about years. for up Slide several on our to step with. have be working and that growth turn team strategy our I mature the along invigorated over acquisitions. With I both call final we to grow ourselves as organization could and have please that some organic comments. the not management really and back XX, will our constructed

Josef Matosevic

the June streams. pillars out business mission year, Helios We with last our along key laid very you much, value Tricia. Thank had system in of

include value into We financial as new deliver growth, a think as start we are. to and to sophisticated, cash The diversification protect launches, number organization. more and and believe the and those business continues the We while and year, cash will product four flywheel products. a market-leading I existing the ensure reflect value new performance, developed X, worth streams drive taking oriented, it's the spend. to through moment globally plan what reiterate, leverage streams the flow priorities learning customer-centric engine we we

as innovation diversifying leverage and and that And our well great investing our improvements. act are of revenue. time. strategy, manufacturing to sources growth, and assets, better markets. expanding on X, for globally over margins customer improved Number to we in will reducing diversify markets while two, global productivity execute end drive create our and newly will think developed will risk opportunities and centricity, cultivate Number capacity continue by We as accelerate and operating cyclicality,

values, acquisition rooted technology, share continuous and well diversity, improvement, promoting We us as will And focusing values. customer corporate of that team, and add four our our streams capacity create centricity, will a differentiation, make with through the learning engaging as interlaced finally, value develop Helios organization. very follow. number culture to X, are tough strategy talent deeply embracing and shared a These our

think that 'XX going can do, we we are framework. this are you results said see I in we by what our guided doing to

at XXXX, achieve adjusted in We have team's to EBITDA path billion our to confidence are with accelerated on least tier execute. our milestone our clearly of great by $X revenue ability in margins. I top

are deliver can As XXXX, strong and we growth we that margins. we confident drive enter

tremendous have will we We I an as these inflationary be am and potential beyond as that unleashed, and macroeconomic organization, optimistic challenges. it further move very

As before us, those Q&A, full year, believe, becoming open goals. continued let's company. I please. With your than think last, demonstrating and against support thank for our you, we on the results, shareholders, progress sight that about the the that, a I have Every excited larger I'm said we confidence. set when before, and like opportunities up are With long-term lie our for lines I more to this clearly year have much

Operator

Dobre first Baird. from proceed. Mig is question Our Please Instructions] [Operator with

Tania Almond

there? Mic, are you

Mig Dobre

I'm phone. I'm difficulty okay? having you me hear some my sorry, can with

Tania Almond

hear Yes, you we can now.

Mig Dobre

Great. Okay.

Sorry about that.

managed supply the looking we're at in of about own you've manage challenge. as talked you've everyone, of chain but, much competitors. you well, - efforts performance of is, start supply that are to exceeded like lead times quarter, well end fourth EBITDA your that talked your revenue from the how to the kind I'd deliver as top being maintaining in of I'm the of your your But hearing guidance. internal about curious of than where guess, the Obviously, You sort terms to kind you I that just better sort you're fact a that So chain?

of superior kind all. it of idea market So I'm leading color on some can if at that, quantify looking And share whole this times you lead gains. to for

you that well? out gains. are pointed us the context provide share that market that can seeing around as those fact You you Any

Josef Matosevic

said times, as in Mic. the versus during Yes, and knew, now, this a few certainly, demand. in we could Look, times next cyclical be be the material step very supply terms of COVID journey we will

manufacturing base, very or in we folks competencies internally that we that's basically, So our versus globally, actually structured protecting to towards weeks. step X should where much initiated identifying about, a strategy, buy, between meaning, and X we how approach country, anywhere lead capacity times industry supply then within America, how our core invested maintain see low-cost should we where much have talking we our our that clearly having X, - we and need North developed make been

driving many but So the we a of do host like have that we internally. you going manufacturing clearly, virtue as strategy - there with was through things significant challenges position those as improvements processes better done other may ourselves companies and are our just are think, do, structural not to of business, not we

Mig Dobre

you the as as share referenced? far that And gains

Josef Matosevic

Yes.

we X, customers if us. and look months, in new those X seen strong most way indication particular, and the coming the of have our a pretty customers last calling, last to So, are at over from many you -

and maintain - our and we been of virtue ranging XX XX strategy, better they X we lead were the to able XX to weeks. anywhere were weeks was lead to to weeks which - able time that times our have X actually from Just weeks, extended getting hearing,

to. So referring that's what I'm

the backlog pretty up So, filled nicely the across has board.

Mic. So referring that's what to, I was

Mig Dobre

in And you what backlog, terms in relative growth get any be comparisons is 'XX, there's health better guidance. here, way resilient derived how X% of your if of all line your trying I'm new curious between given hydraulics and electronics. or do business what seeing for will the terms and top on And sense you differentiate visibility backlog Okay. very to the you're specifically, comment that also in just a that difficult how I'm based to on point, to wins? XXXX? Can to you at of the have wellness you customer think electronics component for

Josef Matosevic

Yes, certainly.

additional no. is difficult let's is answer one, also The going start the Clearly, we cliff? XX%, no. year? are off So an the going most health wellness. Mic, on with to the we business and to falling The this see Are XX% see answer

with We the coming is the our demographic side. base. again, on still which one on shift have really continue that and in but last regions, in invested Balboa very we diversified And in Asian facility the heavily the will ourselves, seeing and also just pretty also market, X.X this both markets Mexico, our the lead growth have with even side, have Enovation positioned we sides, are and of time, out we year, Baja, demand not to manufacturing European and years, see customer strong and rates we over on

strong that Vast the not and with terms last continue In we balanced to the the continue we Mic, between of and strategy we marketing, growth, very we growth look, the And weapon our introduced hydraulics around have we growth this electronics. that to done And sales really and our introduce, confidence everything product are lead and X.X have coupled a pricing. level strong. majority products truly years, it's backlogs cost and with over of new times augmented structuring organic here the competitive well built with have be have. overall,

be slight new organic that, year-end, based X%, at down to we driven, to acquisitive soon. or was achieved our goal we X%. pointed on as growth here leverage, And, We should some line have the below By on companies we work continue is our that only. out and primarily top to able be turn

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

Tricia Fulton

as backlog side all the we year the really in is visibility the have end pointed and some across first seen would for into especially good in half the the really the of on businesses markets I of pretty QX where that, we've our end towards also QX. indicators. Yes. And segments, the what add out, and good demand strong, Josef been of our has

I So by very we're think encouraged that.

Mig Dobre

one Okay. final one. have And if I may

a clarification pricing. sort on of Just

really QX You context the lighter, bit some would a pricing. guidance helpful. timing of with pricing Correct square And driven, I pretty guess, is would little based be trying can if in add a growth And that in on to be component comment. that being that maybe good given on the I'm everything talked the we're theory, about you of big seeing color world Josef's on that additional comment to X% Tricia, would, that I'm me pricing everywhere sort this - not X%. yes, wrong.

Tricia Fulton

or effect is it, strategies driven majority clearly by has in the of out some beginning Yes. are towards and of the some it volume. really QX rolling Most on the but Pricing organic time businesses of the QX. our pricing

year, half there. to wanted they be QX. in little and of aren't be certainly the understand a we of seeing but going a the primary effect effect we're driver a pricing more not what drive that the the piece everyone in growth But will organic in probably getting So full them, businesses. will full It of not in any the we back year bit of QX are to

not to a impact going it's So think on have pricing, are we're the big but I where happy with QX. we on

Operator

Nathan Jones Please question is with proceed. Stifel. next Our from

Tania Almond

Nathan, there? you are

Adam Farley

on Nathan. Farley Adam for is This

pricing M&A target And your range. about the Maybe X.Xx below economy? is in is could current pipeline? leverage How net active pipeline. like the Your what is your you talk the

Josef Matosevic

previously acquisitions our very obviously. As strong. shareholders, of be mentioned, our on business, disciplined the the very flywheel pipeline we and Adam, And continue stewards is to

pipeline separate as a as the done pipeline not months. been been last a is few environment, That breakthrough companies considering have that there focuses on unfortunately, with mixed they have macroeconomic strong, It's have working on bag. acquisitions. over and well - should. elements transformational Pricing this who probably both here we our also is We technologies have relatively

priced and some multiples So to the priced are In some seeing attractive market cases, just the in targets cases, decently nuts. actually are other are we that well. coming pretty

something in are any versus if business, do we not do to our strategy versus tough adding and to that really not to will continue top very us to We grow well companies can So differentiation follow. have yesterday line. dire make sticking into this buying we to the situation ourselves the

So, some clearly, closer targets. are on getting we

from been very transparent have about X. We this day

down and two, we will be just again, are, be look methodical, it will the will to to structured, lever start As line. add we top which to will at be not but it companies we it

Adam Farley

seems investments the in investments then on growth like Okay. those some internal And Could side, growth color it increasing are are XXXX. where on provide you going?

Josef Matosevic

many - introduced obviously, one to capacity. Yes. lead over. I'll component, in take have we we new and with be and can start introduce. as to our big it and are One times will due products Trisha the We - continue Tricia earlier, mentioned

just couple out releases a press very saw You recently. come of

as We are a and well, piece additional capacity, in and watching OpEx our our also capacity very adding of on OpEx and investment will dollars. closely, go people virtually the

it there. from one Tricia, take can big And So then you that's component.

Tricia Fulton

Yes.

pointed being Josef our have call, the I mean, targets much a on company. As set on we out larger

some well, make we sure on that clearly, out locations, operations as we're going side resources of out grow. manufacturing this some resources, additional of that and whether different well as resources infrastructure those to need around the make ready for in manufacturing our underway, that's well - much for is the to includes to we're or which we're So to playing potentially building be kind us innovation, sure engineering for FDA now larger but are move that or move that company, strategy, as we

Operator

Jon from Please comes Our question next Capital. proceed. Kansas Braatz with City

Jon Braatz

below Am two bit bit Josef, you - It when about - a cost you questions little limiting increases inflationary volume pressures? price before a the - price your were your matrix. Are - talk like previous I little less but that maybe bit price. correct a have seems pricing in decided that I - that? maybe would have take sense you I thought to the little would be greater, get

Josef Matosevic

already is, it ago, earnings have last John, a and much But tier still and of made gain, here, in remember, very very offering coming strong we balance taken also enjoy. have seen you market a some that be due earnings, we fact the a What versus position that our margins areas, we be couple and the maintain strong pricing shareholders top that with you've share to wanted in calls pricing throughout to targeted pretty year. to and will

didn't we kind It's all So went stand where taking can protect a the really fit and operating targeted our the off approach. can methodical size day-to-day, have it we of, one our shares we done need on knew of really so much we was because to. we market that not was win. really front It

John, a bit see, both. you So of little

Jon Braatz

Understand. Okay.

in be spending customer just for going sense the grain customer Do in to since plans, the any from or world Secondly, a there's wait have agricultural prices Ukraine, accelerate their you take when again, spending? talk do are you going surged. the And, get sort - and to of approach an your to sense your growers that that measured any uptick you more base, and absolutely base, invasion capital the around see? get

Josef Matosevic

been can say see at has has But the are the preparing see on and just obviously been have and think customers. we That don't plans terms participate. haircut of we on we is are the of very and in strong in and cycle. just back areas market, with continue where John. We now back of What to preparing a strong put discussions radar, been because not our quite honestly for small least hear have been going. where we the we internally there our certainly, we a lot to on Yes, the top it, is optimism shelf, but those on the in shelf, I shelf, continue another terms in see of industry

So - we John, well we see. yes,

Jon Braatz

Yes.

a in Okay. your to contributed speaking, a of there that it relative And Relatively weakness? little Is weaker sales, Asia there markets. other looked one bit was last question. little like than that terms is anything -

Tricia Fulton

we some kind are China well, it. But down note as of I or to to, there's pointing it tie construction, saw contributed China. did specific flat a but there's But markets we across and health China specific we did that nothing that don't wellness we end to think what. in softening that anything can multiple it where little timing see that

Operator

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

Jeff Hammond

go through is XQ, an XQ, dynamics how - really more better. to Labor given what little the margins of supply to chain still margin cadence about And little got bit to getting difficult like sounds a to a and bit XQ XQ of specifically? Just want then it issue. just, think

Tricia Fulton

work well, some well. saw the But less I QX, call had QX to side as PPV pointed pressures cost out It's we a QX We days. labor were on had as in pretty we QX - also as XXXX, inefficiencies see We in the into we on mean, in the that we're XXXX that number. in Omicron. again phenomenal perspective. growth heading due challenging of to QX knowing really that from investments we pretty XXXX, were making to off going

bit of We it's we of QX, where a to lot starting to We not little are driven with yet to were we as in probably to QX all supply will manufacturing is really us, encouraged able And operations easing look happy the on we the what side into doing the work our in we quite we and growth. of that pricing seeing a by ability we're the a that looking drive by aren't chain really going being had to quarters, in on the strategy, improvement. on still but that's we're we operation really side, following on it's up year to end that So margin continue QX the we're but encouraging. earlier drive the were to Mic now XXXX get constraints, going material I which see strong chain pointed to supply and out XXXX. to QX. said

Jeff Hammond

you And what's chain supply it's early, I specific? said anything on better but side? the getting know

Tricia Fulton

most starting parts We're for, of months that little starting been in, were been just parts and able throughout for We've of in starting waiting We're now. we've get see on end a to to lead to but in they're we long parts. to come that did several times, flow QX. better very procure QX bit than

to QX worked started QX. in was electronics and a QX, as that the we it little particular, challenging, the end very of at free side, And On through up bit.

Operator

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

Mig Dobre

to on QX, margins wanted an of I seasonality you in into kind Omicron expect looking you obviously sequentially But up I asking any we revenue to was here. at has Do your we're QX. do I would QX QX. been have here, QX think know about holds? mean, too. off thinking Jeff follow issue what If margin that normal revenue, sequentially seasonality, think, in relative improvement normal in And Tricia? I'm

Tricia Fulton

And try in to to some This is difficult costs, margins in top cautious approaching way come matter and and environment get the through, us of QX. we PPV a And we're past trying products. the are for that flow it's attached to of to that make be to we all to to products on business improve still that PPV down we revenue? dues line throughout ship parts the fighting a be QX. what it's happen to that have Could higher fixed sure going have what's them. we're daily a predict seeing with be but really what able of next. to We're we're There's making our leverage lot that's the products seeing that a battle encouraging going still that we're

- can answer think, line take that's in a I top margin environment. cautiously so it's we optimistic the where on for that a think answer. tough we're the in very sign but short, I But good So is, possible, and

Mig Dobre

but properly the the margin of ramp than year, be to kind pretty guidance. you're get to to imply less mean, kind your to guess a talking EBITDA that expectations our about would fact of I of - start I of be that have could healthy all lot out we set, the able sort unknowns, XX% mean we to make I just potentially that's mid-point And, essentially of there's Right. saying, sure which what a

is, my So that I coming increases referenced sort question be you - cost you'd you the guess with at you where think cost previously on able of neutral are Do you these price think to QX on least call? balance? price be price a

Tricia Fulton

Yes.

we and in the achieve QX probably It's QX. happen entirely be certainly, neutral goal, own pricing that that's neutrality, is better price in improvement to drive is that perspective. that But, to from way out. globally in - of out cost the with whole right think could to cases, not the the margin as manufacturing some we purpose going I operations that continue rolling because rolling really internal our to our we're now. of or even strategy That's continue

Josef Matosevic

in have right I'm would me never conversation hope a have remind would I we we're very you, a do. Yes. Mic, think was year. challenges what it's And to the with chain of us, going about similar challenges similar and if last of be this beginning doing Trust And - here I a we the slightly different here what going don't certainly question track probably Europe record on situation. what's remiss there labor and be freight, telling in supply I at the we Asia, that would if We're established said situation now. and in I and

work the look on allowing us year So that that we XXXX could I out shareholders. we overall, and hope the be significant system. But win, side, of and place and strong of itself phasing to feel, it's beyond push to our for really, believe, strength, little with times. for a another bit year, pressure overachieve very we guidance. our just in full all have current here, and and these I the even systems a really But demonstrated we processes just products can have

But is caution So right here now. us of by there's we baked ahead to want market ourselves. that's some telling clearly because get design, in don't what the

Operator

time. the to management at hand are call to any for further you. like There comments. no back this Thank closing I'd questions

Josef Matosevic

Yes. Thank you.

So look thank our appreciate value to us May. much Have remain confident of and results ability you very for you, first outgrow all quarter really today. continue your joining a We of our interest please updating Helios, on deliver everyone, all to stakeholders. healthy. to great stay super and and We in in for in forward our day,

Operator

participation. much This your very for concludes Thank today's conference. you

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Helios (HLIO) 1 Mar 222021 Q4 Earnings call transcript