Helios Technologies, a global leader in highly engineered motion control and electronic controls technology, reported its first quarter 2024 financial results, showcasing a solid start to the year. The company's net sales for the quarter reached $212 million, while its annual net income stood at $37.5 million and annual revenue at $835.6 million. Additionally, the company's annual operating cash flow was $83.9 million, and its annual free cash flow was $43.5 million.

Financials

In the first quarter, Helios' net sales declined slightly by 0.6% year-over-year to $212 million, with organic net sales declining 2.4% offset by $3.9 million in sales from acquisitions. The company experienced a decline in demand for its products in the mobile, industrial, and agricultural end markets, which was partially offset by an increase in the health and wellness and off-road vehicle end markets. Geographically, the company saw sales improvements in the Americas and Asia-Pacific regions, while the EMEA region declined.

Gross profit for the quarter decreased by 5.4% year-over-year to $67.2 million, with gross margin contracting 160 basis points to 31.7%. This was driven by lower volume, higher material and labor costs, and unfavorable foreign currency impacts. Operating income as a percentage of sales declined 200 basis points to 9.6%, impacted by the gross margin level changes and a $0.9 million increase in selling, engineering, and administrative expenses.

Segment Performance

The company's Hydraulics segment reported a 3.6% year-over-year decline in net sales to $142.4 million, with organic sales down 4.9% partially offset by $1.9 million in acquisition-related sales. The segment's gross profit declined 11.0%, and gross margin contracted 260 basis points to 31.3%, primarily due to fixed cost absorption on lower volume and higher labor costs.

In the Electronics segment, net sales increased by 6.3% year-over-year to $69.6 million, with organic growth of 3.2% and $2.0 million in acquisition-related sales. The segment's gross profit increased by 8.1%, and gross margin expanded by 50 basis points to 32.6%, driven by the higher sales volume and lower freight costs.

Recent Developments

Helios' management team remains encouraged by the improvements seen in the first quarter, particularly in the health and wellness and off-road vehicle markets, as well as the recovery in the Asia-Pacific region. The company is also making progress in its commercial food service initiatives, having secured three wins in the quarter, which are not yet included in the 2024 guidance.

Outlook

Looking ahead, Helios is affirming its full-year 2024 guidance, expecting net sales in the range of $840 million to $860 million, adjusted EBITDA margin between 19.5% and 21%, and diluted non-GAAP earnings per share of $2.35 to $2.75. For the second quarter of 2024, the company is guiding for net sales between $213 million and $218 million and an adjusted EBITDA margin of 19.0% to 20.5%.

The company's financial priorities for 2024 include strengthening the underlying financial discipline and structure, driving consistent and predictable performance, and improving returns on its investments. Helios is focused on executing its strategy, leveraging its strong foundation, and capitalizing on the growth opportunities in its key markets.

Conclusion

Overall, Helios' first quarter results demonstrate the company's ability to navigate the current market conditions, with improvements in profitability and a positive outlook for the remainder of the year. The company's diversified end markets, strategic investments, and disciplined approach to operations position it well for continued success.