HELIOS TECHNOLOGIES, INC.
For the period ended Apr 4, 2026. Filed May 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 4, 2026 · Filed May 12, 2026
HLIO$47.44-21.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-27; filed 2025-11-04.
0001193125-25-264784
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-04; filed 2026-05-12.
0001193125-26-219232
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 100 previous paragraphs and 89 current paragraphs.
39 unchanged; 36 reworded; 13 added; 24 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
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.
Current report
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.
Current report
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").
Current report
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.
Current report
We will continue to monitor developments in trade policy and assess the potential impact on our cost structure, supply chain, and customer demand.
Current report
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 had served as the Senior Vice President, Managing Director of Enovation Controls since May 3, 2021.
Current report
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.
Current report
On December 8, 2025, the Board, announced that Billy Aldridge had been appointed to the corporate officer position of President of Helios’ Electronics Segment effective January 4, 2026. Mr. Aldridge had been serving as the Senior Vice President, Managing Director, Electronics Segment since March 31, 2025.
Current report
First quarter sales were positively impacted by increased demand across several of our end markets, including recreational, mobile, agriculture, health and wellness, and industrial end markets. Sales focused on the marine category within recreational have remained depressed. Sales in the EMEA and Americas regions were up while sales in the APAC region were down during the first quarter compared to the prior year. The year over year decline in sales in the APAC region is due to the Divestiture. Excluding the Divestiture related sales of $14.2 in the first quarter of 2025, sales in the APAC region increased compared to the prior year.
Current report
Americas - sales increased $6.8, 13.6%, primarily from stronger demand in the mobile end market.
Current report
APAC - excluding favorable changes in foreign currency rates of $0.8, sales decreased $6.2, 16.1%. The primary driver of the year over year decline was the Divestiture.
Current report
Sales increased across all regions. The increase in the Americas and EMEA is primarily due to the recreational and market in the first quarter compared to the prior year. The year over year increase in APAC sales is primarily due to demand in the health and wellness end market.
Current report
Operating income as a percentage of sales increased 430 basis points to 15.9% in the first quarter of 2026 compared to the prior year period due to the higher gross margin and fixed cost leverage as a result of higher volume. Operating expenses were $2.0 higher than the year ago period mainly due to higher wages and benefit costs, as well as higher research and development costs.
Removed paragraphs (24)
Previous report
Our previously announced restructuring activities within our Hydraulics segment related to the creation of our two new Regional Operational Centers of Excellence ("CoE") are complete. The Hydraulic Manifold Solutions CoE, located in Mishawaka, Indiana, is now doing the manifold machining and integrated package assembly for Sun Hydraulics, Faster Inc., and Daman. The Hydraulic Valve and Coupling Solutions CoE, located in Sarasota, Florida, is manufacturing and assembling cartridge valve technology and quick release couplings. We also continue to add capabilities and activities to our recently expanded Tijuana, Mexico facility to support our Electronics segment. Initial efforts focused on circuit board assembly and wire harness production. We paused activities as a result of the changing tariff landscape but continue to evaluate plans to move additional production activities to Tijuana.
Previous report
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.
Previous report
During the first three quarters of 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.
Previous report
We import goods into the U.S. primarily from Mexico, Italy and China. Based on the tariffs in effect as of the date of this Form 10-Q, many of these goods are exempt from the recent tariffs imposed. Due to the dynamic tariff environment, it is not possible to predict if these exemptions will remain in place, or if tariff rates imposed will change. Tariffs on product we import from China represent the greatest exposure, as some of those products imported are subject to tariffs of up to 55% under the current structure.
Previous report
Consolidated net sales for the year-to-date period were higher by $1.8, 0.3%. Changes in foreign currency exchange rates had a favorable impact to our year-to-date quarter sales of $1.1, 0.2%.
Previous report
Third quarter sales were positively impacted by increased demand in our recreational, mobile and agriculture end markets. Sales in the agriculture end market were up compared to the prior year period, an improvement from year over year declines in the prior six quarters. Sales for the year-to-date period were positively impacted by increased demand for products in our recreational and mobile end markets, offset partially by a decrease in the industrial and agriculture end markets. Sales in the health and wellness end market were relatively flat in both the third quarter and year to date periods. Sales were up in all regions driven by stronger demand in both segments during the third quarter compared to the prior year period. Sales in the EMEA and APAC regions were up while sales in the Americas region were down in the year-to-date period compared to the prior year.
Previous report
Year-to-date gross profit increased $2.0, 1.0%, primarily from the impact of higher volume and lower direct labor costs, partially offset by higher material costs and the net impact of tariffs. Gross margin increased by 23 basis points as the impact of higher volume and lower labor more than offset higher material costs and the net impact of tariffs.
Previous report
A reduction in the i3 projected profit contributions to the Company over the short and mid-term due to de-emphasizing i3 sales that do not align with the Company's core business led to an impairment charge of $25.9 million of goodwill at our i3 reporting unit, a component within our Electronics segment. This is the primary driver of the decrease in operating income as a percentage of sales in both the third quarter and year to date periods compared to the prior year.
Previous report
Year-to-date operating income as a percentage of sales prior to the goodwill impairment charge compared with the prior year period decreased 51 basis points to 10.5%. The decrease is due to higher operating expenses as a percentage of revenue, primarily from higher wages and benefit costs and higher amortization related to the HCEE accelerated intangible amortization as a result of restructuring activities partially offset by the gross margin changes.
Previous report
On December 20, 2022, the Organisation for Economic Co-operation and Development (“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 multinational enterprise’s (“MNE’s”) top-up tax for a jurisdiction to be zero and would allow the MNE to avoid undertaking detailed Global Anti-Base Erosion (“GloBE”) calculations in respect of that jurisdiction during the Transition Period if it can demonstrate one of the three transitional tests.
Previous report
The Company continues to evaluate the impact of Pillar Two legislation and application of safe harbors. Based on its current assessment, the Company does not expect it to have a material impact in 2025 to its effective tax rate.
Previous report
Year-to-date net sales for the Hydraulics segment decreased by $8.9, 2.1%, compared with the prior year period. The decline in sales was driven by softness in the industrial and agriculture end markets, partially offset by improved demand in the mobile end market. Changes in foreign currency exchange rates had an unfavorable impact of $1.1, 0.3%.
Previous report
Americas - sales increased $1.6, 3.1%, primarily from stronger demand for our FCT products.
Previous report
APAC - excluding unfavorable changes in foreign currency rates of $0.4, sales increased $6.2, 15.3%, with increased demand in China and Australia.
Previous report
Americas - sales declined $9.5, 5.7%, primarily from generally softer demand in the region.
Previous report
EMEA - excluding favorable changes in foreign currency rates of $3.2, sales decreased $3.1, 2.5%, primarily driven by decreased demand in France and Germany..
Previous report
APAC - excluding unfavorable changes in foreign currency rates of $1.8, sales increased $2.3, 1.9%, with increased demand in China and Australia.
Previous report
Year-to-date gross profit decreased $0.5, 0.4%, as lower material and direct labor costs offset most of the impact of lower volume. Gross margin increased 60 basis points as lower material and direct labor costs as a percentage of sales more than offset the impact of lower fixed costs leverage on lower volume.
Previous report
Operating income as a percentage of sales was 16.3% in the year-to-date period, a decline of 40 basis points compared to the prior year as the gross margin decrease was partially offset by lower operating expenses as a percentage of sales.
Previous report
Year-to-date net sales for the Electronics segment increased $10.7, 5.1%, compared with the prior year period. All end markets increased with the largest increase coming from the recreational end market. Changes in foreign currency exchange rates had minimal impact.
Previous report
Sales increased year over year across most end markets except for health and wellness in the Americas region, while sales increased year over year in all end markets in the EMEA region in the third quarter. For the year-to-date period, sales increased across all end markets in the Americas and EMEA regions. APAC sales increased over the comparable third quarter and year-to-date period in APAC driven by the health and wellness end market.
Previous report
Year-to-date gross profit increased $2.5, 3.7%, primarily due to higher volume, partially offset by higher freight and duties. Freight and duties included a $2.4 expense related to a product import classification change. Gross margin declined 50 basis points over the same period to 32.1%. Excluding the freight and duties expense related to the product import classification change, gross margin was 33.2%, an improvement of 60 basis points over the prior year.
Previous report
Prior to the goodwill impairment charge in our i3PD reporting unit, operating income as a percentage of sales increased 490 basis points to 15.3% in the third quarter of 2025 compared to the prior year period due to the higher gross margin and lower operating expenses as a percentage of sales. The prior year period included a $1.8 reversal of unvested stock compensation in connection with the officer transition in July 2024.
Previous report
Year-to-date operating income as a percentage of sales increased 20 basis points to 11.8% compared to the prior year period prior to the goodwill impairment charge. This is primarily due to lower R&D expenses as a percentage of sales more than offsetting the gross margin decline. R&D expenses decreased by $1.4 year over year.
Reworded paragraphs (36)
Previous wording
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.
Current wording
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.
Previous wording
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, quick release couplings as well as engineers hydraulic solutions and in some cases complete systems. Our Hydraulics segment includes products sold under the Sun Hydraulics, Faster, Custom Fluidpower, NEM, Taimi, Daman and Schultes brands. The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses and software solutions for a variety of end markets including industrial and mobile, recreational and health and wellness. The Electronics segment includes products sold under the Enovation Controls, Murphy, Zero Off, HCT, Balboa Water Group and Joyonway brands.
Current wording
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.
Previous wording
Restructuring costs totaled $1.4 and $4.4, for the nine months ended September 27, 2025 and September 28, 2024.
Current wording
Restructuring costs totaled $0.6 and $0.3, for the three months ended April 4, 2026 and March 29, 2025.
Previous wording
We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven 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 (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.
Current wording
(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.
Previous wording
We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $35.8 or 16.2% of total sales in the three months ended September 27, 2025, of which exports to China were $2.2 or 1.0% of total sales in the period. For the nine months ended September 27, 2025, our total U.S. exports were approximately $93.6 or 14.9% of total sales, of which exports to China were $12.5 or 2.0% of total sales. Based on the tariffs in effect as of the date of this Form 10-Q, products we export to China from the U.S. are subject to tariffs up to 10%. 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.
Current wording
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.
Previous wording
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., 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.
Current wording
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.
Previous wording
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 6% during the first nine months of 2025 compared to the first nine months of the prior year while the U.S. index of orders of hydraulic products increased 7% during the same period. In Europe, the CEMA (European Agricultural Machinery Association) Business Barometer reported in September 2025 that the general business climate index for the European agricultural machinery industry has improved since our second quarter in addition to expectations in the upcoming months due to positive assessments for both orders and sales. Both the current business sentiment and expectations for turnover in the next six months trended upward in the third quarter. The report also indicated that the confidence index remains low for France, Netherlands and UK, especially when broken into the larger segments of tractors and harvesting equipment, while improvement was reflected for other important markets with Spain and Italy leading the European market ranking.
Current wording
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 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.
Previous wording
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports third quarter 2025 output of semiconductors and other electronics components increased from the prior quarter, the sixth sequential quarterly increase. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were up 32% in September after being up 12.8% in August and up 20.7% in July compared with the same months last year. PCB bookings in 2025 were up 1.8% in September compared to the prior year, with bookings for the first nine months of the year were higher by 10.5%. 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 the stronger demand environment that started the year continues. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments decreased 1.2% in September compared to the prior year. EMS bookings decreased 3.2% in September year over year after decreasing 4.3% in August and increasing 7.9% in July, highlighting the sector's choppiness in the quarter.
Current wording
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.
Previous wording
On January 6, 2025, the Company announced that the Board of Directors ("Board") promoted Sean Bagan to President and Chief Executive Officer of the Company, effective January 6, 2025. 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. In connection with Mr. Bagan’s appointment, Chairman Philippe Lemaitre, serving as Executive Chairman, resumed his role as Non-Executive Chairman.
Current wording
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.
Previous wording
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. In connection with Mr. Connaway's appointment, Sean Bagan, President, Chief Executive Office, and Chief Financial Officer, will no longer hold the corporate officer position of Chief Financial Officer as of October 13.
Current wording
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.
Previous wording
2025 Third Quarter Results and Comparison of the Three Months Ended September 27, 2025, and September 28, 2024
Current wording
2026 First Quarter Results and Comparison of the Three Months Ended April 4, 2026, and March 29, 2025
Previous wording
The following is a discussion of our third quarter of 2025 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2024, unless otherwise noted.
Current wording
The following is a discussion of our first quarter of 2026 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2025, unless otherwise noted.
Previous wording
Third quarter consolidated net sales increased $25.8, 13.3%, above the prior-year third quarter. Changes in foreign currency exchange rates had a favorable impact to our third quarter sales of $1.8, 0.9%.
Current wording
First quarter consolidated net sales increased $32.9, 16.8%, above the prior-year first quarter. Changes in foreign currency exchange rates had a favorable impact to our first quarter sales of $5.6, 2.5%.
Previous wording
Third quarter gross profit increased $12.5, 20.7%, above the prior year third quarter primarily from the impact of higher volume and lower direct labor costs as a percentage of sales partially offset by net tariff impacts. Gross margin increased by 200 basis points as the impact of higher fixed costs leverage on higher volume and lower direct labor costs more than offset the impact of net tariffs.
Current wording
First quarter gross profit increased $15.0, 25.0%, above the prior year first quarter primarily from the impact of higher volume and lower direct labor costs as a percentage of sales partially offset by higher overhead costs and net tariff impacts. The increase in overhead costs was driven by higher energy and equipment maintenance costs. Gross margin increased by 220 basis points as the impact of higher fixed costs leverage on higher volume, favorable segment mix, and lower direct labor costs more than offset the impact of higher overhead and net tariffs.
Previous wording
Prior to the goodwill impairment charge, third quarter operating income as a percentage of sales increased 97 basis points to 12.4% compared with the prior year period. The increase is due to the gross margin level improvement partially offset by higher operating expenses. Operating expenses were $7.5 higher than the year ago period, mainly due to higher wages and benefit costs and costs associated with the Divestiture. The prior year period included a $5.5 reversal of unvested stock compensation in connection with the officer transition in July 2024.
Current wording
First quarter operating income as a percentage of sales increased 440 basis points to 13.1% compared with the prior year period. The increase is due to the gross margin level improvement and fixed cost leverage as a result of higher volume. Operating expenses were $2.1 higher than the year ago period mainly due to higher wages and benefit costs, research and development costs, as well as higher marketing and travel related costs.
Previous wording
Net interest expense decreased by $2.1 to $6.9 in the third quarter of 2025 primarily due to lower debt outstanding compared to the prior year period. Average net debt decreased to $373.7 during the third quarter of 2025 compared with $447.2 during the third quarter of 2024. The reduction in average net debt is due to the paying down of debt incurred from prior year acquisitions. Year to date interest expense totaled $21.3, a decrease of $4.4. The prior year to date period interest expense benefited $3.6 from a recognized gain on an interest rate swap agreement. Excluding the impact of the interest rate swap agreement, interest expense was lower by $8.0 due to carrying a lower debt balance throughout the period and lower average interest rates. Average net debt for the year-to-date period decreased to $384.8 compared with $464.6 during the prior-year period.
Current wording
Net interest expense decreased by $2.3 to $5.1 in the first quarter of 2026 primarily due to lower debt outstanding compared to the prior year period and a lower spread on our credit facility borrowings, because of reduced leverage. Average net debt decreased to $289.2 during the first quarter of 2026 compared with $402.6 during the first quarter of 2025. The reduction in average net debt is due to the paying down of debt incurred from prior year acquisitions.
Previous wording
The provision for income taxes for the third quarter of 2025 was 19.8% of pretax income compared to 14.2% for the prior-year third quarter. The year-to-date provision was 22.3% and 20.3% of pretax income for 2025 and 2024, respectively. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.
Current wording
The provision for income taxes for the first quarter of 2026 was 23.1% of pretax income compared to 23.5% for the prior-year first quarter. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.
Previous wording
Third quarter net sales for the Hydraulics segment increased by $11.9, 9.2%, compared with the prior year third quarter. The increase in sales in the third quarter was driven by improved demand in the mobile and agriculture end markets, partially offset by softness in the industrial end market. Changes in foreign currency exchange rates had a favorable impact of $1.8, 1.4%.
Current wording
First quarter net sales for the Hydraulics segment increased by $12.8, 10.1%, compared with the prior year first quarter. The increase in sales in the first quarter was driven by improved demand in the mobile and agriculture end markets. Prior year sales included $14.2 in sales related to the Divestiture. Changes in foreign currency exchange rates had a favorable impact of $5.3, 3.8%.
Previous wording
Regional sales performance in the third quarter compared to the prior year quarter was driven by:
Current wording
Regional sales performance in the first quarter compared to the prior year quarter was driven by:
Previous wording
EMEA - excluding favorable changes in foreign currency rates of $2.2, sales increased $2.3, 6.4%, driven by generally stronger demand in the region for both our MCT and FCT products.
Current wording
EMEA - excluding favorable changes in foreign currency rates of $4.4, sales increased $6.9, 18.2%, driven by generally stronger demand in the mobile and agriculture end markets.
Previous wording
Third quarter gross profit increased $5.0, 12.2%, or 90 basis points, primarily due to better fixed cost leverage on higher volume and lower direct labor costs as a percentage of sales.
Current wording
First quarter gross profit increased $6.9, 18.4% compared to the prior year first quarter primarily due to higher volume. Gross margin improved 220 basis points, primarily due to better fixed cost leverage on higher volume, the Divestiture, and lower material costs partially offset by higher direct labor and variable overhead costs as a percentage of sales.
Previous wording
Operating income as a percentage of sales decreased 160 basis points to 17.1% in the third quarter of 2025 due to the gross margin level improvement being offset by higher operating expenses. Operating expenses were $5.1 higher than the year ago period, mainly due to higher wages and benefit costs. The prior year period included a $3.7 reversal of unvested stock compensation in connection with the officer transition in July 2024.
Current wording
Operating income as a percentage of sales increased 300 basis points to 16.8% in the first quarter of 2026 due to the gross margin level improvement and fixed cost leverage as a result of higher volume. Operating expenses were $0.9 higher than the year ago period, mainly due to higher wages and benefit costs, as well as higher research and development costs.
Previous wording
Third quarter net sales for the Electronics segment increased $13.9, 21.4%, compared with the prior year third quarter. Compared to the prior year period, the third quarter sales increase was driven by the recreational end market. Sales in the mobile and industrial end markets increased slightly, while sales to the health and wellness end market decreased slightly. Changes in foreign currency exchange rates had minimal impact.
Current wording
First quarter net sales for the Electronics segment increased $20.1, 29.1%, compared with the prior year period. Compared to the prior year period, the first quarter sales increase was driven by the recreational, health and wellness, and mobile end markets. Sales in the industrial end markets increased slightly, while sales to the agriculture end market decreased slightly. Changes in foreign currency exchange rates had minimal impact.
Previous wording
Third quarter gross profit increased $7.5, 38.3% compared to the prior year third quarter, primarily due to higher volume. Gross margin improved 420 basis points, primarily due to the impact of higher fixed costs leverage on higher volume, lower direct labor costs as a percentage of sales and a favorable product mix.
Current wording
First quarter gross profit increased $8.1, 36.0% compared to the prior year first quarter, primarily due to higher volume. Gross margin improved 170 basis points, primarily due to the impact of higher fixed costs leverage on higher volume and lower direct labor costs as a percentage of sales partially offset by unfavorable customer mix.
Previous wording
Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the third quarter of 2025, these costs totaled $9.2 for amortization of acquisition-related intangible assets of $7.6, $1.4 for activities related to the Divestiture and $0.2 for officer transition costs. Compared to the third quarter of 2024, these costs increased by $0.4, primarily due to costs related to the Divestiture partially offset by lower amortization of acquisition-related intangible assets and lower officer transition costs. Year-to-date, corporate and other costs totaled $26.6 for amortization of acquisition related intangible assets of $24.1, $1.8 for activities related to the sale of CFP and $0.7 related to officer transition costs, compared to $25.6 in the 2024 year-to-date period that included amortization of acquisition related intangible assets of $23.6, $1.3 for officer transition costs and $0.7 related to our acquisition and integration activities.
Current wording
Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the first quarter of 2026, these costs totaled $7.7 for amortization of acquisition-related intangible assets of $7.6 and $0.1 for depreciation. Compared to the first quarter of 2025, these costs decreased by $0.7, primarily due to reduction of amortization related to acquired intangible assets.
Previous wording
Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first nine months of 2025, cash provided by operating activities totaled $81.3. At the end of the third quarter, we had $54.9 of available cash and cash equivalents on hand and $360.3 of available credit on our revolving credit facilities. We also have a $400.0 accordion feature available under our Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, intended to support potential future acquisitions.
Current wording
Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first three months of 2026, cash provided by operating activities totaled $23.9. At the end of the first quarter, we had $64.2 of available cash and cash equivalents on hand and $395.4 of available credit on our Revolving Credit Facilities. We also have a $400.0 accordion feature available under our Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, that is intended to support potential future acquisitions.
Previous wording
Cash on hand increased $10.8 in the first three quarters of 2025 to $54.9 as of September 27, 2025. Changes in exchange rates during the nine months ended September 27, 2025, positively impacted cash and cash equivalents $2.2. 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 paying down borrowings on our credit facilities.
Current wording
Cash on hand decreased $8.8 in the first quarter of 2026 to $64.2 as of April 4, 2026. Changes in exchange rates during the three months ended April 4, 2026, negatively impacted cash and cash equivalents $0.7. 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 paying down borrowings on our credit facilities.
Previous wording
Year-to-date cash from operations decreased by $5.1 to $81.3. 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 $5.4 in the first three quarters of 2025 compared to the same period in 2024. Changes in net operating assets and liabilities negatively impacted cash flow by $10.5 in the third quarter, compared to the prior year period, primarily from an increase in accounts receivable and inventory. Changes in inventory increased cash by $1.0 in comparison to an increase of cash by $16.2 in the first three quarters of 2025 and 2024, respectively. Days of inventory on hand decreased to 118 days as of September 27, 2025, compared with 139 days as of September 28, 2024. Changes in accounts receivable reduced cash by $35.4 and $5.5 in the first three quarters of 2025 and 2024, respectively. Days sales outstanding decreased slightly to 55 days as of September 27, 2025, compared with 57 days as of September 28, 2024. Changes in accounts payable increased cash by $20.3 in comparison to a reduction of cash of $13.4 in 2025 and 2024, respectively. Days payables outstanding for the 2025 year increased to 46 days from 39 days during 2024.
Current wording
Year-to-date cash from operations increased by $4.9 to $23.9. 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 $11.3 in the first quarter of 2026 compared to the prior period. Changes in net operating assets and liabilities negatively impacted cash flow by $6.4 in the first quarter, compared to the prior year period, primarily due to an increase in other current assets, along with increases in inventory and accounts receivable, partially offset by a decrease in accounts payable. Changes in inventory decreased cash by $3.7 in comparison to an increase of cash by $1.1 in the first quarter of 2026 and 2025, respectively. Days of inventory on hand decreased to 112 days as of April 4, 2026, compared with 126 days as of March 29, 2025. Changes in accounts receivable reduced cash by $22.4 and $15.3 in the first quarter of 2026 and 2025, respectively. Days sales outstanding decreased slightly to 55 days as of April 4, 2026, compared with 56 days as of March 29, 2025. Changes in accounts payable increased cash by $11.8 in comparison to an increase of cash of $4.8 in 2026 and 2025, respectively. Days payables outstanding for the 2026 year increased to 53 days from 41 days during 2025.
Previous wording
Cash used in investing activities totaled $21.6 in the first three quarters of 2025, compared to $22.1 in the first three quarters of the prior year.
Current wording
Cash used in investing activities totaled $7.2 in the first quarter of 2026, compared to $6.8 in the first quarter of the prior year.
Previous wording
Capital expenditures totaled $18.2, 2.9%, of sales for the first three quarters of 2025, a decrease of $1.4 over the prior year comparable period. Capital expenditures for 2025 are forecasted to be approximately 3.0% to 3.5% of sales, for investments in machinery and equipment, improvements to manufacturing technology and maintaining or replacing existing machine capabilities.
Current wording
Capital expenditures totaled $6.7, 2.9%, of sales for the first quarter of 2026, an increase of $0.6 over the prior year comparable period. Capital expenditures for 2026 are forecasted to be approximately 3.8% to 4.8% of sales, for investments in machinery and equipment, improvements to manufacturing technology and maintaining or replacing existing machine capabilities.
Previous wording
Net cash used in financing activities totaled $51.1 during the first three quarters of 2025, compared to $49.4 in the same period of the prior year. In the first three quarters of 2025, repayments, net of borrowings, totaled $32.2 compared to $42.0 in the first three quarters of 2024.
Current wording
Net cash used in financing activities totaled $24.8 during the first quarter of 2026, compared to $11.3 in the same period of the prior year. In the first quarter of 2026, repayments, net of borrowings, totaled $16.9 compared to $7.8 in the first quarter of 2025.
Previous wording
Borrowings on our term loans and revolving credit facilities as of September 27, 2025, totaled $280.3 and $138.8, respectively. See Note 9 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report for additional information regarding our credit facilities.
Current wording
Borrowings on our term loans and revolving credit facilities as of April 4, 2026, totaled $245.6 and $103.7, respectively. See Note 9 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report for additional information regarding our credit facilities.
Previous wording
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 principal 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.
Current wording
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.
Previous wording
During the third quarter of 2025, we declared a quarterly cash dividend of $0.09 per share payable on July 21, 2025, to shareholders of record as of July 7, 2025. The declaration and payment of future dividends is subject to the sole discretion of the Board, and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the Board.
Current wording
During the first quarter of 2026, we declared a quarterly cash dividend of $0.12 per share payable on April 27, 2026, to shareholders of record as of April 13, 2026. The declaration and payment of future dividends is subject to the sole discretion of the Board of Directors of the Company (the "Board"), and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the Board.
Previous wording
On February 20, 2025, the Board approved a multi-year share repurchase program (the "Share Repurchase Program"), authorizing the Company to repurchase up to $100.0 of our outstanding common stock. The Company may purchase shares at management’s discretion from time to time in the open market, through privately negotiated transactions, through investment banking institutions or through other means in accordance with applicable federal securities laws, including Rule 10b5-1 trading plans. To the extent that the Company repurchases its shares, the amount and timing of any repurchases are subject to a variety of factors including, but not limited to, general business and market conditions, share price, regulatory and legal requirements and capital availability. The program does not obligate the Company to acquire a minimum number of shares. The share repurchase program will be funded with cash on hand and cash generated from operations. During the nine months ended September 27, 2025, the Company repurchased 250,000 shares of its common stock for $9.2. As of June 28, 2025, the Company has $90.8 million of remaining availability to repurchase outstanding common stock under its Share Repurchase Program.
Current wording
On February 20, 2025, the Board approved a multi-year share repurchase program (the "Share Repurchase Program"), authorizing the Company to repurchase up to $100.0 of our outstanding common stock. The Company may purchase shares at management’s discretion from time to time in the open market, through privately negotiated transactions, through investment banking institutions or through other means in accordance with applicable federal securities laws, including Rule 10b5-1 trading plans. To the extent that the Company repurchases its shares, the amount and timing of any repurchases are subject to a variety of factors including, but not limited to, general business and market conditions, share price, regulatory and legal requirements and capital availability. The program does not obligate the Company to acquire a minimum number of shares. We expect the Share Repurchase Program to be funded with cash on hand and cash generated from operations. During the three months ended April 04, 2026, the Company repurchased 70,000 shares of its common stock for $4.7, including applicable $0.1 excise tax to be paid in a future period. As of April 4, 2026, the Company has repurchased a total of 400,000 shares of it's common stock for $18.3, including applicable $0.2 excise tax, and has $81.9 million of remaining availability to repurchase outstanding common stock under its Share Repurchase Program.
Previous wording
We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any material changes made during the first nine months of 2025, are disclosed in Note 2 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report on Form 10-Q.
Current wording
We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any material changes made during the first three months of 2026, are disclosed in Note 2 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report on Form 10-Q.
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Current report — wording carried from elsewhere
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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Previous report — wording carried elsewhere
Regional sales performance in the year-to-date quarter compared to the prior year quarter was driven by: