HELIOS TECHNOLOGIES, INC. (HLIO)
SIC breadcrumb: Manufacturing > SIC Major Group 34 > SIC 3490 Miscellaneous Fabricated Metal Products
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1024795. Latest filing source: 0001193125-26-087747.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 839,000,000 | USD | 2026 | 2026-03-03 |
| Net income | 48,400,000 | USD | 2026 | 2026-03-03 |
| Assets | 1,514,500,000 | USD | 2026 | 2026-03-03 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-03. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001024795.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2012 | 2013 | 2014 | 2016 | 2017 | 2018 | 2019 | 2021 | 2022 | 2023 | 2024 | 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 196,934,000 | 342,839,000 | 508,045,000 | 554,665,000 | 523,000,000 | 885,400,000 | 835,600,000 | 805,900,000 | 839,000,000 | |||
| Net income | 43,775,000 | 23,304,000 | 31,558,000 | 46,730,000 | 60,268,000 | 14,200,000 | 98,400,000 | 37,500,000 | 39,000,000 | 48,400,000 | ||
| Operating income | 64,071,000 | 34,459,000 | 61,491,000 | 75,554,000 | 90,115,000 | 35,400,000 | 137,300,000 | 79,900,000 | 81,800,000 | 66,000,000 | ||
| Gross profit | 93,892,000 | 71,349,000 | 136,525,000 | 192,683,000 | 212,282,000 | 196,200,000 | 298,500,000 | 261,700,000 | 252,300,000 | 271,200,000 | ||
| Diluted EPS | 1.44 | 1.45 | 1.65 | 0.87 | 1.88 | 0.44 | 3.02 | 1.14 | 1.17 | 1.45 | ||
| Operating cash flow | 62,846,000 | 38,506,000 | 49,382,000 | 77,450,000 | 90,480,000 | 108,600,000 | 109,900,000 | 83,900,000 | 122,100,000 | 127,300,000 | ||
| Capital expenditures | 10,667,000 | 6,187,000 | 22,205,000 | 28,380,000 | 25,025,000 | 14,600,000 | 31,900,000 | 34,300,000 | 27,000,000 | 23,700,000 | ||
| Dividends paid | 38,357,000 | 10,744,000 | 10,260,000 | 11,003,000 | 11,525,000 | 11,600,000 | 11,700,000 | 11,800,000 | 11,900,000 | 12,000,000 | ||
| Assets | 222,764,000 | 444,777,000 | 459,766,000 | 1,042,165,000 | 1,021,751,000 | 1,297,000,000 | 1,463,700,000 | 1,590,400,000 | 1,505,400,000 | 1,514,500,000 | ||
| Liabilities | 24,505,000 | 208,380,000 | 187,093,000 | 511,397,000 | 444,115,000 | 689,189,000 | 668,800,000 | 735,800,000 | 641,000,000 | 583,000,000 | ||
| Stockholders' equity | 198,259,000 | 236,397,000 | 272,673,000 | 530,768,000 | 577,600,000 | 607,800,000 | 794,900,000 | 854,600,000 | 864,400,000 | 931,500,000 | ||
| Cash and cash equivalents | 56,843,000 | 74,221,000 | 63,882,000 | 23,477,000 | 22,123,000 | 25,216,000 | 43,700,000 | 32,400,000 | 44,100,000 | 73,000,000 | ||
| Free cash flow | 52,179,000 | 32,319,000 | 27,177,000 | 49,070,000 | 65,455,000 | 94,000,000 | 78,000,000 | 49,600,000 | 95,100,000 | 103,600,000 |
Ratios
| Metric | 2012 | 2013 | 2014 | 2016 | 2017 | 2018 | 2019 | 2021 | 2022 | 2023 | 2024 | 2026 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | 11.83% | 9.20% | 9.20% | 10.87% | 2.72% | 11.11% | 4.49% | 4.84% | 5.77% | |||
| Operating margin | 17.50% | 17.94% | 14.87% | 16.25% | 6.77% | 15.51% | 9.56% | 10.15% | 7.87% | |||
| Return on equity | 22.08% | 9.86% | 11.57% | 8.80% | 10.43% | 2.34% | 12.38% | 4.39% | 4.51% | 5.20% | ||
| Return on assets | 19.65% | 5.24% | 6.86% | 4.48% | 5.90% | 1.09% | 6.72% | 2.36% | 2.59% | 3.20% | ||
| Liabilities / equity | 0.12 | 0.88 | 0.69 | 0.96 | 0.77 | 1.13 | 0.84 | 0.86 | 0.74 | 0.63 | ||
| Current ratio | 8.62 | 4.55 | 3.20 | 2.12 | 2.52 | 1.98 | 2.55 | 2.74 | 2.77 | 2.90 |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001024795.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-07-02 | 0.92 | reported discrete quarter | ||
| 2022-Q3 | 2022-10-01 | 0.63 | reported discrete quarter | ||
| 2023-Q1 | 2023-04-01 | 213,200,000 | 13,900,000 | 0.42 | reported discrete quarter |
| 2023-Q2 | 2023-07-01 | 227,600,000 | 16,800,000 | 0.51 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 201,400,000 | 3,500,000 | 0.11 | reported discrete quarter |
| 2023-Q4 | 2023-12-30 | 193,400,000 | 3,400,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-30 | 212,000,000 | 9,200,000 | 0.28 | reported discrete quarter |
| 2024-Q2 | 2024-06-29 | 219,900,000 | 13,600,000 | 0.41 | reported discrete quarter |
| 2024-Q3 | 2024-09-28 | 194,500,000 | 11,400,000 | 0.34 | reported discrete quarter |
| 2024-Q4 | 2024-12-28 | 179,500,000 | 4,800,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-29 | 195,500,000 | 7,300,000 | 0.22 | reported discrete quarter |
| 2025-Q2 | 2025-06-28 | 212,500,000 | 11,400,000 | 0.34 | reported discrete quarter |
| 2025-Q3 | 2025-09-27 | 220,300,000 | 10,300,000 | 0.31 | reported discrete quarter |
| 2026-Q1 | 2026-04-04 | 228,400,000 | 19,700,000 | 0.59 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001193125-26-219232.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words "expects," "anticipates," "believes," "intends," "plans," "will" and similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange Commission. These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed in this report and those identified in Part I, Item 1A, "Risk Factors" included in our Form 10-K. In addition, new risks emerge from time to time, and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, our future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.
OVERVIEW
We are a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including agriculture, construction, data centers, energy, health and wellness, industrial, marine, material handling, and recreational vehicles.
We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance technology products, including cartridge valves, manifolds, and quick release couplings, as well as engineers hydraulic solutions and in some cases complete systems. The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses, and software solutions.
With our global operating network, we have the advantages of leveraging sales, marketing, innovation, customer relationships and operational capabilities across all our businesses. We continue to drive best practices and are committed to leveraging resources to best serve our customers and explore new opportunities.
Restructuring Activities
In January 2025, the Company began restructuring the Helios Center of Engineering Excellence (“HCEE”). Consistent with the Company's previously announced restructuring plan, during the end of the second quarter 2025, management ceased operations at the San Antonio office and reassigned resources to the operations at our other major facilities across the business, and eliminated certain positions. As a result of this planned change in the HCEE business operations, the workforce intangible asset associated with the HCEE acquisition was reviewed by management and it was determined that the remaining net book value of the asset should be accelerated and amortized over a useful life ending June 2025.
We initiated some optimization activities at the beginning of 2026 that will result in the movement of production activities between locations in order to drive operational efficiencies and reduce costs. We are consolidating the North American operations of the Hydraulics Faster entity in Toledo, Ohio, and will subsequently close the Faster operation in Quebec, Canada, that was obtained as part of the acquisition of the assets of Taimi R&D, Inc. in July 2022. The activities began in the first quarter of 2026 and are expected to be completed by the third quarter of 2026. In addition, we are moving additional production activities within our Electronics segment to our low cost manufacturing center of excellence in Tijuana, Mexico. These activities were paused in 2025 as a result of the uncertain and changing tariff landscape and are now being re-initiated. Transition activities will take place throughout 2026.
Restructuring costs totaled $0.6 and $0.3, for the three months ended April 4, 2026 and March 29, 2025.
Global Economic and Geopolitical Conditions
We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, political uncertainty, potential changes to current global trade policies and modifications of existing trade agreements, the potential negotiation of new trade agreements and imposition of new
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(and retaliatory) tariffs, and the ongoing geopolitical conflicts in Ukraine and the Middle East. We are continuously monitoring these economic and geopolitical conditions and remain focused on liquidity management, pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.
Refer to Item 1A "Risk Factors" of our Form 10-K for additional discussion of risks related to global economic conditions.
Tariffs
The global trade environment remains highly dynamic, with significant changes to U.S. tariff policy enacted during 2025 and continuing into 2026. These measures include new tariffs, modifications to existing programs, and ongoing legal and regulatory developments. Such tariffs were implemented under several legal frameworks, including the International Emergency Economic Powers Act ("IEEPA").
In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under IEEPA were not authorized. The decision ruling did not address the timing or extent of potential refunds of previously paid tariffs under IEEPA, and uncertainty remains regarding the ultimate resolution of these matters. While certain tariffs have been invalidated, others remain in effect. We will pursue refunds for IEEPA tariffs paid but due to uncertainty around actual payout amounts and timing, we have not made any adjustments to the consolidated financial statements for potential refunds as of April 4, 2026.
We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $45.1 or 19.7% of total sales in the three months ended April 4, 2026.
Due to the fluidity of the tariff environment and potential subsequent changes to effective dates, amounts of announced tariffs, and various exemptions for imports into the U.S. (especially in light of the recent decisions invalidating certain previously announced tariffs), we are unable to fully quantify the impact such tariffs will have on our results of operations when and if enacted. Our expectation, however, is to continue to leverage our regional production capabilities, source components from local suppliers, and take certain pricing actions, which we believe may mitigate the impact of higher tariff costs. We cannot provide any assurances that these or other actions that we take will be able to offset any or all tariff-related costs. Additionally, increased prices could impact demand for our products, including our ability to attract new customers or cause increases in existing customer attrition. If our attempts to mitigate tariff-related costs are not sufficient or executed in a timely manner, our business, results of operations, and our financial and/or operating costs may be adversely affected.
We will continue to monitor developments in trade policy and assess the potential impact on our cost structure, supply chain, and customer demand.
Industry Conditions
The capital goods industries in general, and the Hydraulics and Electronics segments specifically, are subject to economic cycles. We utilize industry trend reports from various sources, as well as feedback from customers and distributors, to evaluate economic trends. We also rely on global government statistics such as Gross Domestic Product and Purchasing Managers Index to understand macroeconomic conditions.
Hydraulics
According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products increased 2% during the first three months of 2026 compared to the first three months of the prior year while the U.S. index of orders of hydraulic products increased 22% during the same period. In Europe, the CEMA (European Agricultural Machinery Association) Business Barometer reported in March 2026 that the general business climate index for the European agricultural machinery industry has dropped back into negative territory for the first time since its upturn a year ago. The decline in the overall index is a downward adjustment in expectations for the coming six months, since the upturn has not materialized in many segments, particularly in harvesting and arable equipment. The report indicated the outlook appears to be slightly positive and the participants expect their company's
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turnover to increase in the single-digit range. Western and Northern Europe, as well as Oceania are continued to be viewed with confidence while North America is ranking at the bottom of the confidence index.
Electronics
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports first quarter 2026 output of semiconductors and other electronics components decreased from the prior quarter. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were up 17.6% in February after being up 9.1% in January compared with the same months last year. PCB bookings in 2026 were down 4.3% in February compared to the prior year and decreased 10.8% for the same period last year. The book to bill ratio, calculated as the value of orders booked over the past three months divided by the value of sales in the same period, was above 1.1 for each month, indicating a stronger demand environment to start the year. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments increased 7.6% in February compared to the prior year while being flat year over year in January. EMS bookings increased 1.7% in February year over year after decreasing 3.3% in January, highlighting the sector's choppiness in the quarter. On April 8, 2026, the Global Electronics Association released the "Annual Survey of the European EMA Industry 2026." The survey highlights that industrial electronics market shows early recovery signals while profitability stabilized or improved for many companies despite lower revenues. The sentiment for 2026 points to modest improvement, not a strong rebound.
Executive Officer and Board Transitions
On January 6, 2025, the Company announced that the Board of Directors of the Company promoted Sean Bagan to President and Chief Executive Officer of the Company, effective January 6, 2025. In connection with Mr. Bagan’s appointment, Chairman Philippe Lemaitre, serving as Executive Chairman, resumed his role as Non-Executive Chairman. The Board subsequently nominated Mr. Bagan for election to the Board at the 2025 Annual Meeting of Shareholders. Mr. Bagan also continued to serve as Chief Financial Officer while the Company conducted a search process to identify a permanent Chief Financial Officer to backfill his previous role.
On March 13, 2025, Mr. Lemaitre notified the Company of his decision to retire and not seek re-nomination at the 2025 Annual Meeting of Shareholders. He had served on Helios’ Board since 2007 and as Chair since 2013. On March 13, 2025, the Board elected Laura Dempsey Brown to serve as the new Non-Executive Chair of the Board, effective March 13, 2025.
On March 31, 2025, Lee Wichlacz, the President of Electronics, was separated from the Company, and Billy Aldridge was named as Senior Vice Presi
[Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The operating results of the Hydraulics and Electronics segments included in Management’s Discussion and Analysis of Financial Condition and Results of Operations are presented on a basis consistent with our internal management reporting. Segment information included in Note 16 of the Notes to the Consolidated Financial Statements included in this Annual Report is also presented on this basis. All differences between our internal management reporting basis and accounting principles generally accepted in the U.S. (“U.S. GAAP”), specifically the allocation of certain corporate, divestiture-related, and acquisition-related costs, are included in Corporate and Other.
Overview
We are a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including construction, material handling, agriculture, industrial, mobile, energy, recreational vehicles, marine and health and wellness.
We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance technology products, including cartridge valves, manifolds, and quick release couplings as well as engineers hydraulic solutions and in some cases complete systems. The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses, and software solutions for a variety of end markets.
With our global operating network, we have the advantages of leveraging sales, marketing, innovation, customer relationships and operational capabilities across all our businesses. We continue to drive best practices across all of our businesses and are committed to leveraging resources to best serve our customers and explore new opportunities.
Acquisitions
Our acquisition activity over the past three years, driven by our strategic vision, has enabled us to diversify our product offerings and the markets we serve and expand our geographic presence.
In January 2023, we completed the acquisition of Schultes Precision Manufacturing, Inc. Schultes is a highly trusted specialist in manufacturing precision machined components and assemblies for customers requiring very tight tolerances, superior quality, and exceptional value-added manufacturing processes. Currently serving the hydraulic, aerospace, communication, food services, medical device, and dental industries, Schultes brings the manufacturing quality, reliability, and responsiveness critical to its customers’ success. Schultes provided additional manufacturing know-how and expanded our business into new end markets with attractive secular tailwinds.
In May 2023, we completed the acquisition of i3 Product Development. i3PD is a custom engineering services firm, with engineers specializing in electronics, mechanical, industrial, embedded and software engineering. i3PD specializes in transforming customer’s ideas into industrial design solutions through rapid prototyping and creating 3D models in-house. Their solutions are used across many sectors, including medical, off-highway, recreational and commercial marine, power sports, health and wellness, agriculture, consumer goods, industrial, sports and fitness.
In 2024 and 2025, the Company continued to explore and evaluate potential acquisitions, but no acquisitions were executed.
Global Economic Conditions
Geo-Political Conflict
We continue to monitor the ongoing conflicts in Ukraine and in the Middle East and evaluate the broader economic impact those conflicts could have on our operations, supply channels and the operations of our partners and customers. We do not have operations in these regions at this time and those conflicts have not and are not expected to have a material impact on our financial condition or results. Refer to Item 1A Risk Factors of this Annual Report for additional discussion about geo-political risks.
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Tariffs
During the fiscal year 2025, additional tariffs were imposed on goods imported into the U.S. from China, Mexico and Canada. In addition, tariffs on steel and aluminum were increased and various reciprocal tariffs were also imposed. These costs are reflected in the cost of sales on our Consolidated Statements of Operations. Such tariffs were implemented under several legal frameworks, including the International Emergency Economic Powers Act ("IEEPA"). Courts have found that IEEPA does not authorize the President of the United States to impose tariffs, and the enforcement of other tariffs may prove inconsistent over time. It remains to be seen whether the federal government may impose further tariffs under other statutory regimes or legal theories. These decisions introduce future uncertainty regarding potential refund processes and future trade policy actions and could affect the Company's cost structure and supply chain planning. We are unable to predict the ultimate outcome or effectiveness of any current or future tariff policies.
We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $133.2 or 15.9% of total sales in the year ended January 3, 2026, of which exports to China were $13.4 or 1.6% of total sales in the period. Trade relations between the U.S. and other countries are fluid and we are unable to predict if tariffs (including retaliatory tariffs) imposed by other countries on our U.S. exports will change in the future.
Due to the fluidity of the tariff environment and potential subsequent changes to effective dates, amounts of announced tariffs, and various exemptions for imports into the U.S. (especially in light of the recent federal court decisions invalidating certain previously announced tariffs), we are unable to fully quantify the impact the tariffs will have on our results of operations when and if enacted. Our current expectation, however, is to leverage our regional production capabilities, source components from local suppliers, and raise our prices, which we believe may mitigate the impact of higher tariff costs, though we are not able to provide assurances that we will be able to offset any or all tariff-related costs. Additionally, increased prices could impact demand for our products, including our ability to attract new customers or cause increases in existing customer attrition. If our attempts to mitigate tariff-related costs are not sufficient to offset our increased tariff-related costs adequately or in a timely manner, our business, results of operations, and our financial and/or operating costs may be adversely affected.
Industry Conditions
The capital goods industries in general, and the Hydraulics and Electronics segments specifically, are subject to economic cycles. We utilize industry trend reports from various sources, as well as feedback from customers and distributors, to evaluate economic trends. We also rely on global government statistics such as Gross Domestic Product and Purchasing Managers Index to understand higher level economic conditions.
Hydraulics
According to the National Fluid Power Association (the fluid power industry’s trade association in the U.S.), the U.S. index of shipments of hydraulic products decreased 4% in 2025, after decreasing 15% in 2024 and decreasing 4% in 2023. In Europe, the CEMA Business Barometer reported in December 2025 that the general business climate index for the European agricultural machinery industry has declined from November to December. The majority of survey participants expect incoming orders to decline in the coming six months as the current business situation is assessed similarly to the previous month. CEMA further reported that Tractor and harvesters’ manufacturers see a deterioration in the current situation. A comparison of countries shows a slight improvement for the current situation in German and France, while in Spain the situation has deteriorated. Export business has been improving for three months due to improved orders outside of the EU. Australia and New Zealand are expected to be areas of growth ahead of Western Europe and Africa. This is expected to help compensate for the decline in the United States.
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Electronics
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports output of semiconductors and other electronics components increased sequentially each quarter in 2025. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were up 11% in December after being up 21.1% in November and up 24.4% in October compared with the same months last year. PCB bookings in 2025 were up 11.0% in December compared to the prior year, while bookings for the full year were higher by 15.0%. The book to bill ratio, calculated as the value of orders booked over the past three months divided by the value of sales in the same period, was above 1.2 for each month, indicating the stronger demand environment that started the year continues. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments decreased 0.4% in 2025, however increased 5.6% in December compared to the prior year. EMS bookings increased 5.1% in December year over year after decreasing 4.1% in November and increasing 6.4% in October, highlighting the sector's choppiness in the quarter.
Restructuring Activities
During 2025, we incurred $1.6 of costs related to our restructuring activities, down from $5.3 in 2024. Restructuring activities include activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") which are now complete. We also continue to add capabilities and activities to our recently expanded Tijuana, Mexico facility to support our Electronics segment. Initial efforts have focused on circuit board assembly and wire harness production.
The initial phase of the restructuring activities to better optimize our European regional operations is complete. This included transitioning some manufacturing of manifolds and integrated package assembly to our Roncolo, Italy location. To create capacity in Roncolo, we moved some turning and lathing operations from Roncolo to our Rivolta, Italy location. These activities included transferring equipment and operations between facilities. Additional phases of this project are currently paused, we continue to evaluate plans for restructuring activities to optimizing operations in the European Region.
In January 2025, the Company began restructuring the Helios Center of Engineering Excellence (“HCEE”). Consistent with the Company's previously announced restructuring plan, during the end of the second quarter 2025, management ceased operations at the San Antonio office and reassigned resources to the operations at our other major facilities across the business, and eliminated certain positions. As a result of this planned change in the HCEE business operations, the workforce intangible asset associated with the HCEE acquisition was reviewed by management and it was determined that the remaining net book value of the asset should be accelerated and amortized over a useful life ending June 2025.
Executive Officer Transition
In July 2024, the Board of Directors terminated the former President and Chief Executive Officer, Josef Matosevic. Sean Bagan was immediately appointed to serve as Interim President and Chief Executive Officer in addition to his role as Chief Financial Officer, and Philippe Lemaitre as Executive Chairman in addition to his role as Chairman, while the search for a replacement was underway. On January 6, 2025, the Company announced that the Board of Directors of the Company promoted Sean Bagan to President and Chief Executive Officer of the Company, effective January 6, 2025. In connection with Mr. Bagan’s appointment, Chairman Philippe Lemaitre, serving as Executive Chairman, resumed his role as Non-Executive Chairman.
The Board subsequently nominated Mr. Bagan for election to the Board at the 2025 Annual Meeting of Shareholders. Mr. Bagan also continued to serve as Chief Financial Officer while the Company conducted a search process to identify a permanent Chief Financial Officer to backfill his previous role.
On March 13, 2025, Mr. Lemaitre notified the Company of his decision to retire and not seek re-nomination at the 2025 Annual Meeting of Shareholders. He had served on Helios’ Board since 2007 and as Chair since 2013. On March 13,
39
2025, the Board elected Laura Dempsey Brown to serve as the new Non-Executive Chair of the Board, effective March 13, 2025.
On March 31, 2025, Lee Wichlacz, the President of Electronics, was separated from the Company, and Billy Aldridge was named as Senior Vice President, Managing Director, Electronics Segment. Mr. Aldridge has served as the Senior Vice President, Managing Director of Enovation Controls since May 3, 2021, and will now have responsibility for the complete group of operations that comprise the Electronics segment.
On June 5, 2025, the Board appointed Ian Walsh to serve as a member of the Board effective June 5, 2025. Mr. Walsh was also appointed to serve on the Board's Audit Committee and Governance Committee. He serves as a member of the class of directors whose term will expire at the 2026 Annual Meeting of Shareholders.
On August 28, 2025, the Board, announced that Michael Connaway had been appointed to the corporate officer position of Executive Vice President, Chief Financial Officer, effective as of October 13, 2025. In connection with Mr. Connaway's appointment, Sean Bagan, President, Chief Executive Officer, and Chief Financial Officer, no longer held the corporate officer position of Chief Financial Officer as of October 13, 2025.
On August 28, 2025, the Board also announced that Jeremy Evans had been appointed to the corporate officer position of Senior Vice President, Chief Accounting Officer and Corporate Controller, effective September 1, 2025.
On November 17, 2025, the Board, announced that Jeremy Evans had been named the Company’s Executive Vice President and Chief Financial Officer effective immediately. Mr. Evans succeeded Michael Connaway who was separated from the Company, previously joining Helios on October 13, 2025. Mr. Connaway’s departure was not related to any disagreement with the Company on any matter relating to its accounting practices, financial statements, internal controls or operations.
40
2025 Results and Comparison of Years Ended January 3, 2026 and December 28, 2024
(In millions, except per share data)
The following is a discussion of our results of operations and liquidity and capital resources for the year ended January 3, 2026; comparisons are with the corresponding reporting period of 2024, unless otherwise noted.
The following table presents our consolidated results of operations:
For the year ended
January 3, 2026
December 28, 2024
$ Change
% Change
Net sales
$
839.0
$
805.9
$
33.1
4.1
%
Gross profit
$
271.2
$
252.3
$
18.9
7.5
%
Gross profit %
32.3
%
31.3
%
Operating income
$
66.0
$
81.8
$
(15.8
)
(19.3
)%
Operating income %
7.9
%
10.2
%
Net income
$
48.4
$
39.0
$
9.4
24.1
%
Diluted net income per share
$
1.45
$
1.17
$
0.28
23.9
%
Consolidated net sales for the 2025 year increased $33.1, 4.1%. Sales were impacted most by stronger demand for products in our mobile and recreational marine markets. Sales in the industrial end market declined year over year while sales in the agriculture and health and wellness end markets were flat to slightly up year over year. The demand environment improved as the year progressed with consolidated net sales growth realized in the second half of the year more than offsetting year over year sales decline in the first half. In 2025, consolidated net sales were up in all regions, with sales to EMEA outpacing sales to the Americas and APAC. There was an favorable impact of $4.4 on consolidated net sales from changes in foreign currency exchange rates during the year. Fiscal 2025 also benefited from an extra week of sales due to our fiscal calendar compared to prior year.
The year-over-year comparison is impacted by the sale of the outstanding equity interest in Guwing Holdings Pty. Ltd. ("Guwing"), and Guwing's 100% ownership of the share capital of Custom Fluidpower Pty. Ltd. ("CFP") to a non-related party (the "Divestiture") that was completed on September 27, 2025. As a result of the Guwing and CFP sales were impacted approximately $14.3 in 2025.
Gross profit increased $18.9, 7.5%, in 2025 driven by higher volume and lower direct labor costs of $3.8 partially offset by higher material costs of $17.0. Gross margin was up 100 basis points year-over-year. The margin improvement was primarily due to lower overhead costs as a percentage of sales driven by leverage on higher volume and increased productivity, partially offset by a slight increase in material costs as a percentage of sales and the net impact of tariffs.
Operating income as a percentage of sales decreased 230 basis points to 7.9% in 2025 compared with the prior year period. Operating margin was unfavorably impacted during 2025 most significantly from a goodwill impairment of $25.9 in the third quarter of 2025 related to our i3PD business. Prior to the goodwill impairment charge, 2025 operating income as a percentage of sales increased 80 basis points to 11.0% compared with the prior year period. The increase is primarily due to the gross margin improvement, lower selling, engineering and administrative ("SEA") restructuring costs of $3.7, and lower research and development costs of $1.1 partially offset by higher payroll and benefit costs compared with the prior year period. The prior year period payroll and benefit costs included a $5.5 reversal of unvested stock compensation in connection with the officer transition in July 2024.
Net income increased $9.4, 24.1% while earnings per share (“EPS”) increased 23.9% in 2025. The current year benefited from a $15.2 net gain after tax related to the Divestiture and a decrease in interest expense of $11.9 compared to 2024, including the favorable impact of $5.4 interest rate swap gain recognized in the fourth quarter. The prior year benefited from a contingent gain of $3.8 related to the insurance reimbursement for business interruption losses incurred in the third quarter of 2023 at a manufacturing location in Italy. There was no impact from foreign currency transaction losses as losses were $1.3 in both 2025 and 2024 . There was an increase in tax expense of $2.5 in 2025 compared to 2024.
41
Segment Results
Hydraulics
The following table presents the results of operations for the Hydraulics segment:
For the year ended
January 3, 2026
December 28, 2024
$ Change
% Change
Net sales
$
540.8
$
537.2
$
3.6
0.7
%
Gross profit
$
174.8
$
165.8
$
9.0
5.4
%
Gross profit %
32.3
%
30.9
%
Operating income
$
91.4
$
86.4
$
5.0
5.8
%
Operating income %
16.9
%
16.1
%
Net sales for the Hydraulics segment increased by $3.6, 0.7%. Net Sales increased in 2025 due to improved demand in the mobile end market. Net sales in the agriculture market were relatively flat year-over-year, although there was stabilization of sales throughout the year and growth in the second half. Net sales in the industrial end market declined year-over-year and remained depressed throughout the year. There was increased demand in the EMEA region while sales to the Americas and APAC declined from prior year. The decline in APAC sales was primarily driven by the Divestiture in the third quarter of 2025. Discrete impacts to our organic sales included nominal favorable pricing changes of $3.1, 0.7%, and a favorable change in foreign currency exchange rates of $4.4, 0.8%. Fiscal 2025 also benefited from an extra week of sales due to our fiscal calendar compared to prior year.
The following table presents net sales based on the geographic region of the sale for the Hydraulics segment:
For the year ended
January 3, 2026
December 28, 2024
$ Change
% Change
Americas
$
216.3
$
219.1
$
(2.8
)
(1.3
)%
EMEA
168.5
157.1
11.4
7.3
%
APAC
156.0
161.0
(5.0
)
(3.1
)%
Total
$
540.8
$
537.2
In 2025, we completed the restructuring activities within our Hydraulics segment related to the creation of our two new regional operational Centers of Excellence. We also initiated some restructuring activities to better optimize our European regional operations. We incurred $1.3 of restructuring costs related to these activities in 2025 including labor, travel and other expenses associated with the manufacturing relocation. $0.4 of the costs are included in cost of goods sold and $0.9 are reflected in operating expenses. In 2024, we incurred $4.5 restructuring costs related to the creation of the two new regional operational Centers of Excellence and optimization of our European regional operations. $3.3 of the costs are included in cost of goods sold and $1.2 are reflected in operating expenses.
During 2025, gross profit increased $9.0, 5.4%, primarily due to higher volume. Gross margin increased by 140 basis points primarily due to lower overhead costs as a percentage of sales driven by leverage on higher volume, increased productivity, and targeted pricing actions.
Operating income as a percentage of sales increased 80 basis points to 16.9% due to the higher gross margin partially offset by an increase in operating expenses. Operating expenses increased $4.0, 5.0%, mainly due to higher labor and benefit costs, higher research and development costs of $0.8, and higher travel costs of $0.7. The prior year operating expenses included a $3.7 reversal of unvested stock compensation in connection with the officer transition in July 2024 and $1.2 in costs related to cleanup, repair and labor incurred as a direct result of Hurricane Milton. Operating expenses as a percent of sales increased 60 basis points to 15.4% in 2025.
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In the third quarter of 2023, the Company experienced aggregate losses related to a fire and a weather-related incident at one of its manufacturing locations in Italy resulting in the shut-down of operations for a period of time and disruption in production as recovery efforts ensued. Impacted operations were restored. At the end of 2024 we recorded a contingent gain related to the open insurance claims. The total reimbursement recorded was $9.1, of which $5.3 was offset against actual costs as a result of the incident and the remaining $3.8 was recorded as a gain in 2024 included in Other Income. The reimbursement payments were collected in 2025.
In October 2024, the corporate headquarters and Hydraulics segment operations located in Sarasota, Florida were impacted by Hurricane Milton. Operations were impacted for eighteen shifts leading up to and following the storm. Actual costs for cleanup, repair and labor related to the Hydraulics segment were $1.2. There were no insurance reimbursements received nor are expected to be received for this event.
Electronics
The following table presents the results of operations for the Electronics segment:
For the year ended
January 3, 2026
December 28, 2024
$ Change
% Change
Net sales
$
298.2
$
268.7
$
29.5
11.0
%
Gross profit
$
96.4
$
86.5
$
9.9
11.4
%
Gross profit %
32.3
%
32.2
%
Operating income
$
9.7
$
29.6
$
(19.9
)
(67.2
)%
Operating income %
3.2
%
11.0
%
Net sales for the Electronics segment increased by $29.5, 11.0% in 2025 compared with the prior year period, with growth across all regions. Sales increased in the America’s region within several of our end markets including recreational, industrial and mobile. The recreational end market was up over 25% driven by strong demand from our OEM customers. The APAC region's sales increased driven by health and wellness end market sales to China. Sales in the EMEA region increased year over year on generally improved demand. Discrete impacts to our organic sales included pricing changes that were favorable by $1.9, 0.7%. Fiscal 2025 also benefited from an extra week of sales due to our fiscal calendar compared to prior year.
The following table presents net sales based on the geographic region of the sale for the Electronics segment:
For the year ended
January 3, 2026
December 28, 2024
$ Change
% Change
Americas
$
235.9
$
215.9
$
20.0
9.3
%
EMEA
30.1
26.7
3.4
12.7
%
APAC
32.2
26.1
6.1
23.4
%
Total
$
298.2
$
268.7
In 2024, we had restructuring activities within our Electronics segment to shift product lines to our low cost manufacturing facility in Tijuana and to adjust our labor base in line with current demand levels. We incurred $0.7 of restructuring costs including labor, travel and other expenses associated with the manufacturing relocation. $0.1 of the costs are included in cost of goods sold and $0.6 are reflected in operating expenses. In 2025, we paused our restructuring activities related to shifting product lines to the low cost manufacturing facility in Tijuana as a result of the uncertainty around trade tariffs. Costs incurred in 2025 as part of the HCEE restructuring which reallocated resources across the organization as well as eliminated certain positions and subsequent leadership change totaled $0.7.
During 2025, gross profit increased $9.9, 11.4%, primarily due to higher volume and increased productivity, partially offset by higher material costs and freight and duties. Freight and duties included a $2.4 expense related to a product import classification change. Gross margin increased 10 basis points over the same period to 32.3%. Excluding the freight and duties expense related to the product import classification change, gross margin was 33.1%, an improvement of 90 basis points over the prior year.
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Operating income as a percentage of sales decreased 780 basis points to 3.2% primarily due to the goodwill impairment recorded in our i3PD reporting unit during the third quarter. Prior to the goodwill impairment charge, operating income as a percentage of sales increased 100 basis points to 12.0% compared to the prior year period. Operating expenses increased $4.1, 7.0%, in 2025 primarily from an increase in wages and benefits, marketing expenses of $0.6, and travel of $0.5. The prior year operating expenses included the benefit of a $1.8 reversal of unvested stock compensation in connection with the officer transition in July 2024. Operating expenses as a percent of sales, excluding the goodwill impairment, decreased 80 basis points to 20.4% in 2024, reflecting increased leverage of operating expenses as a result of higher sales.
Corporate and Other
Certain costs are excluded from business segment results as they are not used in evaluating the results of, or allocating resources to, our operating segments. For the year ended January 3, 2026, these costs totaled $35.1 and included amortization of acquisition-related intangible assets of $31.7, $2.0 primarily related to costs associated with the Divestiture activities and $1.4 related to officer transition costs.
For the year ended December 28, 2024, these costs totaled $34.2 and included amortization of acquisition-related intangible assets of $31.5, $1.9 related to officer transition costs and $0.8 related to other costs which was primarily acquisition and integration related activities.
Interest Expense, net
Net interest expense decreased $11.9 during 2025 to $21.9 compared with $33.8 in 2024. The change is attributable to lower average debt levels during 2025, lower interest rates, and net impact of interest rate swaps of $5.4. Average net debt decreased by $99.1 during 2025 to $349.8.
Income Taxes
The provision for income taxes for the year ended January 3, 2026, was 22.5% of pretax income compared with 22.8% for the year ended December 28, 2024. The effective rate typically fluctuates relative to the levels of income and different tax rates in effect from year to year among the countries in which we sell our products.
The Organization for Economic Cooperation and Development (“OECD”), under its Pillar Two initiative, introduced a framework set of Global Anti-Base Erosion (“GloBE”) rules to impose a minimum tax on income earned by multinational enterprises (“MNE”). Specifically, the GloBE rules impose a minimum tax of 15 percent on MNE income that arises in each participating jurisdiction. Several countries, including the UK and EU member states, have agreed to adopt the OECD’s minimum tax rules and several countries, including the UK, have already implemented these rules.
On December 20, 2022, the OECD published Pillar Two guidance on safe harbors and penalty relief (the “Safe Harbor Guidance”). The Safe Harbor Guidance includes a Transitional Country-by-Country Report (“CbCR”) Safe Harbor, which would deem a MNE’s top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed GloBE calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests.
The Helios Technologies Inc Group is a MNE group that is within the scope and subject to the GloBE rules. The United States has not enacted legislation implementing the Pillar Two GloBE rules.
The company continues to evaluate the impact of Pillar Two and application of safe harbors. For the year ended January 3, 2026, there are no impacts to income tax expense related to Pillar Two. The company does not expect it to have a material impact in 2026 to their effective tax rate.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to
44
the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we expect certain provisions of the OBBBA to change the timing of cash payments in the current fiscal year and future periods, we do not currently expect the legislation to have a material impact on our consolidated financial statements.
2024 Results and Comparison of Years Ended December 28, 2024 and December 30, 2023
For the discussion and analysis of our 2024 results compared with our 2023 results, refer to our Annual Report on Form 10-K for the fiscal year ended December 28, 2024, filed with the SEC on February 25, 2025. The discussion is incorporated herein by reference.
Liquidity and Capital Resources
Historically, our primary source of capital has been cash generated from operations. We have also used borrowings on our credit facilities to fund acquisitions. During 2025, net cash provided by operating activities totaled $127.3 and as of January 3, 2026, we had $73.0 of cash on hand and $393.6 of available credit on our revolving credit facilities. At year end 2025, approximately half of the cash on hand was held in institutions in APAC, approximately 38% was held in institutions in EMEA, and the remainder was held in institutions in the Americas. We also have a $400.0 accordion feature available on our credit facility, which is subject to certain pro forma compliance requirements and is intended to support potential future acquisitions.
Our principal uses of cash have been paying operating expenses, making capital expenditures, servicing debt, making acquisition-related payments and paying dividends to shareholders.
We believe that cash generated from operations and our borrowing availability under our credit facilities will be sufficient to satisfy our operating expenses and capital expenditures for the foreseeable future. In the event that economic conditions were to severely worsen for a protracted period of time, we would have several options available to ensure liquidity in addition to increased borrowing. Capital expenditures could be postponed since they primarily pertain to long-term improvements in operations, operating expense reductions could be made and the dividend to shareholders could be reduced or suspended.
Cash flows
The following table summarizes our cash flows for the periods:
For the year ended
January 3, 2026
December 28, 2024
$ Change
Net cash provided by operating activities
$
127.3
$
122.1
$
5.2
Net cash provided by (used in) investing activities
20.3
(30.3
)
50.6
Net cash used in financing activities
(121.9
)
(78.4
)
(43.5
)
Effect of exchange rate changes on cash and cash equivalents
3.2
(1.7
)
4.9
Net increase in cash and cash equivalents
$
28.9
$
11.7
$
17.2
Cash on hand increased $28.9 to $73.0 at the end of 2025. Cash and cash equivalents were favorably impacted by changes in exchange rates by $3.2 and unfavorably impacted by changes in exchange rates by $1.7 during the years ended January 3, 2026, and December 28, 2024, respectively. Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and also paying down borrowings on our credit facilities.
45
Operating activities
Net cash from operations totaled $127.3 in 2025, an increase of $5.2, 4.3%, compared with the prior year. Cash earnings, calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities, increased by $16.4 compared to the prior year driven by higher volume and lower interest expense. However, changes in net operating assets and liabilities decreased cash by $11.1 compared to 2024, primarily from working capital dynamics. Reductions in inventory, net of acquisitions, decreased cash by $2.7 in 2025 compared with an increase in cash by $19.4 in 2024. Inventory on hand as of January 3, 2026, decreased by $1.5, 0.8%, compared to the 2024 year end. The decrease is related to the sale of Custom Fluidpower partially offset by higher sales. Days of inventory on hand decreased to 124 days for the 2025 year, compared with 134 days during the 2024 year. Changes in accounts receivable, net of acquisitions, decreased cash by $16.5 and increased cash by $7.3 in 2025 and 2024, respectively. Days sales outstanding for the 2025 year increased slightly to 51 days from 47 days during 2024. Changes in accounts payable, net of acquisitions, increased cash by $22.0 and decreased cash by $11.8 in 2025 and 2024, respectively. Days payables outstanding for the 2025 year increased to 49 days from 37 days during 2024, due to focused efforts to renegotiate terms with key suppliers.
Investing activities
Cash provided in investing activities totaled $20.3 in 2025 compared to cash used in investing activities of $30.3 in 2024. The proceeds from the sale of our Custom Fluidpower business in the third quarter of 2025 accounted for $47.3 of the fluctuation. Capital expenditures were $23.7 during 2025, $3.3, or 12.2%, lower than the prior year. Capital expenditures for 2026 are forecasted to be approximately 3.75% to 4.75% of sales for improvements to manufacturing technology and maintaining and replacing existing machine capabilities.
Financing activities
Net cash used in financing activities totaled $121.9 in 2025, compared with net cash used by financing activities of $78.4 in 2024. In 2025, repayments, net of borrowings, totaled $94.9. Cash paid for acquisitions in 2024 was primarily financed with borrowings on our credit facility. Repayments, net of borrowings, totaled $68.0 in 2024.
Borrowings on our term loans and revolving credit facilities as of January 3, 2026, totaled $262.5 and $105.5, respectively. See Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report for additional information regarding our credit facilities.
46
In connection with the debt refinancing in June 2024, while the term loan credit facility aggregate principle amount of $300.0 remained unchanged, the cash flow activity reflects repayments and borrowings on the non-revolving debt that were direct results of the refinancing. The company also incurred $3.1 of debt issuance costs in connection with the debt refinancing. These costs are captured within the Other Financing Activities caption in the Statement of Cash Flows. Additionally in June 2024, the Company received $7.1 in proceeds in connection with the termination of the interest rate swaps.
In May 2023, we entered into an incremental facility amendment to our credit agreement with PNC Bank, National Association, as administrative agent, and various lenders party thereto. With the amendment we incurred a new term loan with an aggregate principal amount of $150.0 for which the proceeds were used to repay outstanding balances on our revolving credit facility.
On June 25, 2024, the Company amended and restated its credit agreement (the “Third Amended and Restated Credit Agreement”) with PNC Bank, National Association, as administrative agent, and the lenders party thereto. The amendment extended the debt maturity for five years and increased the Company’s revolving credit facility (the “Revolving Credit Facility) to $500.0, with the aggregate principle amount of the term loan credit facility (the “Term Loan Facility”) remaining at $300.0. The amendment also revised the accordion feature to permit an increase of up to an additional $400.0. Borrowings under the line of credit bear interest at defined rates plus an applicable margin based on the Company’s leverage ratio. Scheduled principal payments under the Term Loan Facility are payable in quarterly installments beginning on September 28, 2024 and continuing on the last day of each following fiscal quarter, beginning at $3.75 before increasing to $5.6 in June 2026 and $7.5 in June 2028. All remaining principal and unpaid accrued interest are due on the Term Loan Facility maturity date, which is June 25, 2029.
In May 2024, $0.5 was paid to the former owners of Balboa Water Group in connection with payment due on the contingent consideration liability. The contingent consideration liability was revalued and final payment is payable in 2026.
We have historically declared regular quarterly dividends to shareholders of $0.09 per share. We paid dividends totaling $12.0 and $11.9 for the years ended January 3, 2026 and December 28, 2024, respectively. The declaration and payment of future dividends is subject to the sole discretion of the Board of Directors, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, acquisition opportunities, future prospects and other factors deemed pertinent by the Board of Directors.
Contractual obligations
Credit facilities
Information on our credit facilities, including future maturities, is presented in Note 10 of the Notes to the Consolidated Financial Statements included in this Annual Report. Our revolving credit facility with PNC Bank matures and is payable in full in June 2029; however, we may make earlier payments. Our term loan with PNC Bank is payable in quarterly installments of $5.6 million through March 2028 with our next payment due December 2026 and quarterly installments of $7.5 million thereafter through the maturity date of June 2029, at which time the remaining balance will be due in full.
Interest rates on our credit facilities range from 3.7% to 5.5% as of January 3, 2026. Future interest payments are estimated to total $62.6, with annual payments ranging from $7.7 to $19.5 payable through the last maturity date of June 2029. Future payments assume the current interest rate environment, current currency exchange rates, future required payments on term loans and revolver borrowings consistent with January 3, 2026 debt levels. Future payments do not include an estimate of impacts from our derivative instruments.
Contingent consideration payments
Our contingent consideration liabilities total $0.4 as of January 3, 2026. The balance represents the fair value estimate of contractual contingent payment related to our acquisition of Balboa Water Group, which is payable in 2026.
47
Supplier purchases
We regularly place purchase orders with our suppliers for inventory and capital expenditures to be used in the ordinary course of business. Open purchase orders as of January 3, 2026 total $48.0 for purchases expected in 2026 and $0.1 for purchases expected in 2027.
Building purchase commitment
The Company is negotiating a lease-to-buy agreement for the purchase of a building with the option to purchase the building at any time during the lease period. Under the draft agreement, the company would commit to purchasing the building at the end of the 6-year lease term. The approximate purchase price is €27.0; however, the actual purchase price will be reduced by 60% of the payments made during the lease term.
Leases
We regularly enter into operating lease agreements for the use of machinery, equipment, vehicles, buildings and office space. Future maturities of our operating lease liabilities are presented in Note 7 of the Notes to the Consolidated Financial Statements included in this Annual Report.
Critical Accounting Policies and Estimates
We prepare our Consolidated Financial Statements in conformity with U.S. GAAP, which requires management to make certain estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The following policies are considered by management to be the most critical in understanding the judgments, estimates and assumptions that are involved in the preparation of our Consolidated Financial Statements.
Business Combinations
Business combinations are accounted for under the acquisition method of accounting, which requires recognition separately from goodwill, the assets acquired and the liabilities assumed at their acquisition date fair values. Assigning fair market values to the assets acquired and liabilities assumed at the date of an acquisition requires knowledge of current market values, and the values of assets in use, and often requires the application of judgment regarding estimates and assumptions. While the ultimate responsibility resides with management, for certain acquisitions we retain the services of certified valuation specialists to assist with assigning estimated values to certain acquired assets and assumed liabilities, including intangible assets and tangible long-lived assets. Acquired intangible assets, excluding goodwill, are valued using various methodologies such as the discounted cash flow method, which is based on future cash flows specific to the type of intangible asset purchased and the relief from royalty method, which is based on the present value of savings resulting from the right to manufacture or sell products that incorporate the intangible asset without having to pay a license for its use. These methodologies incorporate various estimates and assumptions, the most significant being estimated royalty rates, projected revenue growth rates, profit margins and forecasted cash flows based on the discount rate.
Intangible assets consist primarily of customer relationships, technology, trade names and brands and supply agreements. Amortization is on a straight-line basis over their estimated useful lives and the amortization is reflected in the Consolidated Statements of Operations. The useful lives used are as follows: Customer Relationships - 8 to 26 years; Trade Names and Brands - 10 to 20 years; Technology - 5 to 13 years; and Supply Agreements - 10 years. Intangible assets are tested for impairment if certain circumstances arise that would indicate the carrying amount of the assets may not be recoverable. Such circumstances can include, but are not limited to, a decrease in market price, economic decline, changes in the market, change in business operations or plans for disposition. The assessment of fair value for impairment purposes requires significant judgment by management, which could be negatively impacted by economic decline, market deterioration and changes in other market conditions. Additional information about intangible assets, including the gross and net carrying values for the reported periods and historical and future estimated amortization expense is presented in Note 8 of the Notes to the Consolidated Financial Statements included in this Annual Report. Additional information about our acquisitions, including acquired intangible assets deemed material to the Company’s financial results, is presented in Note 3 of the Notes to the Consolidated Financial Statements included in this Annual Report.
48
Goodwill
Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. We test goodwill for impairment at the reporting unit level, as of the third quarter period end date, on an annual basis and between annual tests whenever events or circumstances indicate the carrying value of a reporting unit may exceed its fair value. Examples of such circumstances could include, but are not limited to, a significant loss of market share, significant decline in operating results, change in management strategy or operations, economic decline, and other such significant disruptions to the business. The carrying value of assets is calculated at the reporting unit level. An impairment loss is recorded to the extent that the fair value of the goodwill within the reporting unit is less than its carrying value.
There are multiple steps in our process for testing goodwill impairment. The first step is identification of our operating segments, followed by the identification of the reporting units, such that the reporting unit has discrete financial information, its operating results are reviewed regularly by management, and its economic characteristics are different from the economic characteristics of the other components of the operating segment. As part of the annual test of goodwill impairment the Company considers economic factors and current business operations when assessing the reporting unit structures for the purposes of goodwill impairment testing. The reporting units comprised of our four prominent businesses and the 2023 acquisition of i3PD.
In certain circumstances the Company may elect to test goodwill using a qualitative assessment, assessing whether it is more likely than not that the fair value of the reporting unit is less than the carrying value. More often the Company will test goodwill using the income based and market based valuation methods, as quoted market prices are not available for all reporting units. When possible, we generally use a combination of market and income approach methodologies to estimate the fair value of our reporting units. The assessment of fair value for impairment purposes requires significant judgment by management. Management’s assumptions include projected future performance, expected future costs, expected new product releases and expected future economic and market conditions (i.e. inflation, tax rates, end-market growth or decline, and expected market share performance). If these assumptions and estimates are not met or operations are impacted by other factors the reporting units could be subject to goodwill impairment.
The income approach is generally based on a discounted cash flow analysis, which estimates the present value of the projected free cash flows to be generated by the reporting unit. Assumptions used in the analysis include estimated future revenues and expenses, working capital, capital expenditures and other variables. Assumptions made for future cash flows are developed based on consideration of current and future economic conditions, recent and expected sales trends, planned timing of product launches and other relevant variables. Each reporting unit regularly prepares discrete operating forecasts and long range plans and uses these forecasts as the basis for the assumptions in the discounted cash flow analysis. Within the discounted cash flow models, the Company uses a discount rate, commensurate with its cost of capital but adjusted for inherent business risks, and an appropriate terminal growth factor.
The market approach estimates the value of reporting units by comparing to guideline public companies or guideline transactions. Various valuation multiples of companies that are economically and operationally similar are used as data points for selecting multiples for the reporting units, which are deemed to be market-adjusted multiples based on key data points for guideline public companies. Changes in assumptions or estimates could materially affect the estimated fair value of our reporting units and the potential for impairment. We also reconcile the estimated aggregate fair value of our reporting units resulting from these procedures to our overall market capitalization.
The Company completed its annual goodwill impairment testing for 2025. In the second quarter of 2025, the Company announced a leadership change in the Electronics segment from Lee Wichlacz to Billy Aldridge. Under the new leadership in the third quarter of 2025, the Company evaluated the strategy and financial projections related to i3 Product Development ("i3PD"), a custom engineering services firm we acquired in May of 2023 that is part of our Electronics segment. That evaluation led to a reduction in the i3PD projected profit contributions to the Company over the short and mid-term due to de-emphasizing i3PD sales that do not align with the Company's core business. We performed a test for goodwill impairment as of the third quarter period end date and concluded goodwill was impaired.
The fair value of the i3PD reporting unit was determined based on an income approach methodology. A market approach methodology was evaluated but not used as the Company determined information for companies comparable to i3PD was not readily available. The income approach utilized a discounted cash flow analysis, which estimates the present
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value of the projected free cash flows to be generated by the reporting unit. Principal assumptions used in the analysis included the Company's estimates of future revenue and terminal growth rates, margin assumptions and discount rates. While assumptions utilized are subject to a high degree of judgment and complexity, the Company made every effort to estimate future cash flows as accurately as possible, given the high degree of economic uncertainty that existed. The Company concluded that the estimated fair value of the i3PD reporting unit was less than its carrying value, and as a result, recorded a non-cash, non-tax-deductible goodwill impairment charge of $25.9. This represents the full amount of goodwill for the i3PD reporting unit.
In 2024 and 2023 it was determined that the carrying amount of goodwill for each reporting unit was not impaired. In addition, in management’s assessment of reporting units for GWI testing, it was determined that the two prominent Electronics businesses share very similar economic characteristics, are operationally interdepended, and should be aggregated and tested as a single reporting unit. The test for goodwill impairment was performed for each business and for the consolidated reporting unit. Neither test indicated any impairment.
A third party was used to assist in the valuation and testing of the fair value of the reporting units. The third party provided estimates such as risk premiums, select multiples and discount rates, used in conjunction with Management’s estimates and assumptions to calculate the fair value of the reporting unit. These estimates require significant judgment. If there is economic decline, expectations for growth are not met, product launches are delayed, there is a change to management’s operating outlook, operational restructuring, or any other significant change to the assumptions, estimates or other risks previously mentioned, the reporting units could be subject to impairment.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent the Company determines that it is more likely than not a deferred income tax asset will not be realized, a valuation allowance is established. The recoverability analysis of the deferred income tax assets and the related valuation allowances requires significant judgment and relies on estimates. At January 3, 2026, valuation allowances against deferred tax assets were $3.2 million. Refer to our Note 12 to our consolidated financial statements for additional information on the composition of these valuation allowances.
Our annual tax rate fluctuates based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective government taxing authorities. Significant judgment is required in determining our tax expense and in evaluating our tax positions, including evaluating uncertainties. We review our tax positions quarterly and adjust the balances as new information becomes available. Indefinite reinvestment is determined by management’s judgment about, and intentions concerning, our future operations.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we expect certain provisions of the OBBBA to change the timing of cash payments in the current fiscal year and future periods, we do not currently expect the legislation to have a material impact on our consolidated financial statements.
We recognize and measure uncertain tax positions in accordance with ASC 740. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We adjust these reserves, as well as the
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related interest and penalties, where appropriate in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense.
See Note 12 of the Notes to the Consolidated Financial Statements included in this Annual Report for income tax amounts, including reserves.
Off Balance Sheet Arrangements
We do not engage in any off balance sheet financing arrangements. In particular, we do not have any material interest in variable interest entities, which include special purpose entities and structured finance entities.
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