HELIOS TECHNOLOGIES, INC.
For the period ended Oct 3, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
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.
Oct 3, 2026 · Filed Nov 6, 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 2026-07-04; filed 2026-08-11.
0001193125-26-344521
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-10-03; filed 2026-11-06.
0001193125-26-451705
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 94 previous paragraphs and 90 current paragraphs.
38 unchanged; 38 reworded; 14 added; 18 removed; 0 previous and 0 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 (14)
Current report
Restructuring costs totaled $2.7 and $1.4, for the nine months ended October 3, 2026, and September 27, 2025, respectively.
Current report
General note: NM indicates that the percentage change is not meaningful.
Current report
Year-to-date consolidated net sales increased $61.8, or 9.8% compared to the prior-year period which included $46.7 of sales related to the Divestiture. Foreign currency translation had a favorable impact of approximately $9.5, or 1.5%, on year-to-date net sales. Year-to-date 2026 net sales also included a $4.7 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Current report
Third quarter operating income as a percentage of net sales increased 1,160 basis points to 12.2%. The increase is primarily due to the $25.9 non-cash goodwill impairment charge related to i3PD recorded in the prior year period. Operating expenses, excluding amortization of intangible assets and goodwill impairment, were $2.4 higher than the prior year period, mainly due to research and development expenses, higher incentive compensation costs, and higher employee benefit costs.
Current report
Year-to-date operating income as a percentage of net sales increased 670 basis points to 13.1%. The increase was primarily due to the goodwill impairment charge recorded in the prior-year period, higher gross margin in the current year, and lower operating expenses, excluding amortization of intangible assets and goodwill impairment as a percentage of net sales. Operating expenses, excluding amortization of intangible assets and goodwill impairment, were $8.2 higher than in the prior-year period, primarily due to higher research and development expenses, employee benefit costs, marketing expenses, and bad debt expense.
Current report
APAC - sales decreased $8.2, 17.7%. Excluding favorable changes in foreign currency rates of $1.3 and Divestiture related sales of $17.5, APAC sales increased $8.0, 27.7%, driven by generally stronger demand in the mobile end market.
Current report
Third quarter gross profit increased $0.2, 0.4%, compared to the prior year third quarter, primarily due to higher volume, partially offset by higher freight, employee benefit costs, and utilities costs. Gross margin decreased 20 basis points to 32.3%, primarily due to higher direct labor, freight and overhead costs as a percentage of net sales.
Current report
Third quarter operating income as a percentage of net sales increased 10 basis points to 17.3%, primarily due to fixed cost leverage on higher volume and lower operating expenses, partially offset by lower gross margin. Operating expenses were $0.3 lower than in the prior-year period, primarily due to lower costs as result of the Divestiture, partially offset by employee benefit costs.
Current report
Year-to-date operating income as a percentage of net sales increased 160 basis points to 17.9%, primarily due to higher gross margin and fixed cost leverage on higher volume, partially offset by higher operating expenses. Operating expenses were $1.0 higher than in the prior-year period, primarily due to higher research and development expenses and employee benefit costs.
Current report
General note: NM indicates that the percentage change is not meaningful.
Current report
Third quarter gross profit increased $3.0, 11.1% compared to the prior year third quarter, primarily due to higher volume. Gross margin improved 40 basis points, primarily due to fixed cost leverage on higher volume, partially offset by higher electronic component costs and freight expense. Gross profit in the Electronics segment for the three months ended October 3, 2026 included a $0.2 benefit related to IEEPA tariff refunds.
Current report
Operating income in the third quarter of 2025 included a $25.9 goodwill impairment charge related to i3PD, which is included in the Electronics segment. Excluding the impairment, prior year Electronics operating income was $12.2 and operating margin was 15.5%. Compared to the prior year period, excluding the impairment, operating income increased $0.2, as higher gross profit was largely offset by higher operating expenses, and operating income as a percentage of net sales decreased 120 basis points to 14.3%. Excluding the impairment, operating expenses were $2.8 higher than the prior year period, primarily due to higher research and development expenses, employee benefit costs, incentive compensation costs, and bad debt expense.
Current report
Operating income for the first nine months of 2025 included the $25.9 goodwill impairment charge related to i3PD. Excluding the impairment, prior year-to-date Electronics operating income was $26.1 and operating margin was 11.9%. Compared to the prior year period, excluding the impairment, year-to-date operating income increased $11.7, as higher gross profit was partially offset by higher operating expenses. Operating income as a percentage of net sales increased 260 basis points to 14.5%. Excluding the impairment, operating expenses were $8.1 higher than the prior year period, primarily due to higher research and development expenses, employee benefit costs, incentive compensation costs, and bad debt expense.
Current report
As of October 3, 2026, the Company has repurchased 734,970 shares under the Share Repurchase Program authorization. At October 3, 2026, approximately $56.6 remained available for repurchase under its authorization.
Removed paragraphs (18)
Previous report
Restructuring costs totaled $1.8 and $1.2, for the six months ended July 4, 2026 and June 28, 2025, respectively.
Previous report
Second quarter consolidated net sales increased $19.4, 9.1%, above the prior-year first quarter. Changes in foreign currency exchange rates had a favorable impact on our second quarter sales of $2.9, 1.3%.
Previous report
Consolidated net sales for the year-to-date period were higher by $52.3, 12.8%. Changes in foreign currency exchange rates had a favorable impact on our year-to-date quarter sales of $8.5, 1.8%.
Previous report
Consolidated net sales for the three and six months ended July 4, 2026 included a $4.1 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Previous report
Gross profit for the three and six months ended July 4, 2026 included a $1.2 benefit related to IEEPA tariff refunds.
Previous report
Second quarter operating income as a percentage of sales increased 370 basis points to 14.0%. The increase is due to the gross margin changes and lower operating expenses as a percentage of revenue. Operating expenses were $2.2 higher than the prior year period, mainly due to higher benefit costs, research & development expenses, and bad debt expense partially offset by lower wages and lower amortization. The higher amortization in the prior year period is primarily attributable to the HCEE restructuring activities in the prior year.
Previous report
Year-to-date operating income as a percentage of sales increased 400 basis points to 13.6%. The increase is due to the gross margin changes and lower operating expenses as a percentage of revenue. Operating expenses were $4.3 higher than the prior year period, primarily from higher benefit costs, research & development expenses, travel expenses, marketing expenses, and bad debt expense, partially offset by lower wages and lower amortization.
Previous report
APAC - excluding favorable changes in foreign currency rates of $1.1, sales decreased $6.4, 15.7%. The primary driver of the year over year decline was the Divestiture.
Previous report
Second quarter gross profit increased $4.1, 8.8% compared to the prior year first quarter primarily due to higher volume and net tariff impacts, partially offset by higher freight and energy costs. Gross margin improved 160 basis points, primarily due to the Divestiture and lower material costs partially offset by higher direct labor and variable overhead costs as a percentage of sales.
Previous report
Operating income as a percentage of sales increased 200 basis points to 19.7% in the second quarter of 2026 due to the gross margin level improvement and fixed cost leverage as a result of higher volume. Operating expenses were $0.4 higher than the prior year period, primarily due to higher benefit costs and research and development expenses.
Previous report
Year-to-date operating income as a percentage of sales increased 240 basis points to 18.3% compared to the prior year period. This is primarily due to higher gross margin and higher fixed cost leverage as a result of higher volume. Operating expenses increased by $1.3 year over year primarily due to an increase in benefit costs and research and development expenses.
Previous report
Net sales in the Electronics segment for the three and six months ended July 4, 2026 included a $1.2 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Previous report
Second quarter gross profit increased $8.6, 41.0% compared to the prior year second quarter, primarily due to higher volume and net tariff impacts. Gross margin improved 530 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 lower material costs as a percentage of sales, partially offset by unfavorable customer mix. The prior year period included a $2.4 freight and duties expense related to a product import classification change.
Previous report
Gross profit in the Electronics segment for the three and six months ended July 4, 2026 included a $0.4 benefit related to IEEPA tariff refunds.
Previous report
Operating income as a percentage of sales increased 490 basis points to 13.1% in the second quarter of 2026 compared to the prior year period due to the higher gross margin partially offset by an increase in operating expenses as a percentage of sales. Operating expenses were $3.3 higher than the prior year period primarily due to an increase in benefit costs, research and development expenses, and bad debt expense.
Previous report
Year-to-date operating income as a percentage of sales increased 460 basis points to 14.5% compared to the prior year period. This is primarily due to higher gross margin and higher fixed cost leverage as a result of higher volume. Operating expenses increased by $5.3 year over year primarily due to an increase in benefit costs, research and development expenses and bad debt expense.
Previous report
Capital expenditures totaled $18.0, 3.9%, of sales for the first two quarters of 2026, an increase of $6.5 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 report
On February 20, 2025, the Board approved and publicly announced 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 six months ended July 4, 2026, the Company repurchased 149,378 shares of its common stock for $10.7, including applicable excise tax to be paid in a future period. As of July 4, 2026, the Company has repurchased a total of 479,378 shares of its common stock for $24.3, including applicable $0.1 excise tax, and has $75.9 of remaining availability to repurchase outstanding common stock under its Share Repurchase Program.
Reworded paragraphs (38)
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, 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.
Current wording
We report our results through two reportable segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance products, including cartridge valves, manifolds, and quick release couplings, and engineers hydraulic solutions and in some cases complete systems. The Electronics segment designs and manufactures customized electronic control systems, displays, wire harnesses, and software solutions.
Previous wording
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 have consolidated the North American operations of the Hydraulics Faster entity in Toledo, Ohio, and are closing 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 were substantially completed at the end of the second quarter of 2026. Some wrap up activities remain that are expected to be completed in 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 and expected to take place throughout 2026.
Current wording
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 have consolidated the North American operations of the hydraulics Faster entity in Toledo, Ohio, and have closed 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 were substantially completed at the end of the second quarter of 2026. We are also moving production within our Electronics segment to our low cost manufacturing Centers of Excellence in Tijuana, Mexico and Dongguan, China. These activities were paused in 2025 as a result of the uncertain and changing tariff landscape and have been re-initiated and are expected to continue to take place throughout 2027. In addition, the Company has initiated integration activities related to the acquisition of Radio Sound. Costs associated with the integration are recorded in Restructuring charges and integration is expected to be completed in early 2027.
Previous wording
We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, volatile oil prices, 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
We expect the volatility in the macroeconomic environment to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, volatile oil prices, political uncertainty, potential changes to current global trade policies and modifications of existing trade agreements, the potential negotiation of new trade agreements, the 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.
Previous wording
In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the IEEPA were not authorized. During the three months ended July 4, 2026, the Company received approximately $5.5 of refunds related to tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Consistent with its accounting policy under ASC 450-30, Gain Contingencies, the Company did not recognize any benefit associated with the IEEPA tariff recoveries until realization was assured through receipt of the cash refunds. The refunds reduced cost of sales by approximately $5.3 and increased other income by approximately $0.2 for related interest. The Company also recorded an estimated reduction of revenue for amounts expected to be returned to certain customers in accordance with ASC 606. As a result, the net benefit recognized in gross profit was approximately $1.2.
Current wording
In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the IEEPA were not authorized. During the three and nine months ended October 3, 2026, the Company received approximately $0.6 and $6.1, respectively, of refunds related to tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). Consistent with its accounting policy under ASC 450-30, Gain Contingencies, the Company did not recognize any benefit associated with the IEEPA tariff recoveries until realization was assured through receipt of the cash refunds. These refunds, together with approximately $0.2 of tariff refunds received from a supplier during the third quarter, reduced cost of sales by approximately $0.8 and $6.1 for the three and nine months ended October 3, 2026, respectively. The IEEPA refunds also increased other income by approximately $0.2 for related interest during the nine months ended October 3, 2026. The Company also recorded estimated reductions of revenue of $0.6 and $4.7 for the three and nine months ended October 3, 2026, respectively, for amounts expected to be returned to certain customers in accordance with ASC 606. As a result, the net benefit recognized in gross profit was approximately $0.2 and $1.4 for the three and nine months ended October 3, 2026, respectively.
Previous wording
We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $36.0 or 15.5% of total sales in the three months ended July 4, 2026. For the six months ended July 4, 2026, our total U.S. exports were approximately $81.0 or 17.6% of total sales.
Current wording
We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $40.6 or 17.7% of total sales in the three months ended October 3, 2026. For the nine months ended October 3, 2026, our total U.S. exports were approximately $121.6 or 17.6% of total sales.
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 increased 3% during the first six months of 2026 compared to the first six months of the prior year while the U.S. index of orders of hydraulic products increased 18% during the same period. In Europe, the CEMA (European Agricultural Machinery Association) Business Barometer reported in June 2026 that the general business climate index for the European agricultural machinery industry has declined significantly, pushing the sector back into recession after just over a year. The decline is driven by notable deterioration in both the current business evaluation and turnover expectations.
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 5% during the first nine months of 2026 compared to the first nine months of the prior year while the U.S. index of orders of hydraulic products increased 16% during the same period. In Europe, the CEMA (European Agricultural Machinery Association) Business Barometer reported in September 2026 that the general business climate index for the European agricultural machinery industry has dropped back into recession territory after a brief improvement in August. The setback was mainly driven by a downward revision of expectations for the next six months, bringing future expectations closer to the still-negative assessment.
Previous wording
The Federal Reserve’s Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports second quarter 2026 output of semiconductors and other electronics components increased from the prior quarter. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were up 12.0% in June compared with the same month last year. PCB bookings in 2026 were up 31.5% in June compared to the prior year and June year to date bookings increased 29.0% 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 1.3 for June 2026, indicating the strong demand environment that started the year continues. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments increased 6.7% in June compared to the prior year while being up 5.2% and 3.1% year over year in May and April, respectively. EMS bookings increased 29.3% in June year over year after increasing 28.7% and 4.6% in May and April, respectively, highlighting the sector's strong demand 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 third quarter 2026 output of semiconductors and other electronics components increased 12% from the prior quarter. The Institute of Printed Circuits Association (“IPC”) reported that total North American printed circuit board (“PCB”) shipments were down 6.4% in September compared with the same month last year. PCB bookings in 2026 were up 229.4% in September compared to the prior year and September year to date bookings increased 56.1% 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 1.8 for September 2026, indicating the strong demand environment that started the year continues. The IPC also reported that North American electronics manufacturing services (“EMS”) shipments decreased 10.8% in September compared to the prior year while being up 1.0% and down 0.3% year over year in August and July, respectively. EMS bookings increased 41.7% in September year over year after increasing 53.5% and 44.3% in August and July, respectively, highlighting the sector's strong demand in the quarter.
Previous wording
2026 Second Quarter Results and Comparison of the Three Months Ended July 4, 2026, and June 28, 2025
Current wording
2026 Third Quarter Results and Comparison of the Three Months Ended October 3, 2026, and September 27, 2025
Previous wording
The following is a discussion of our second quarter of 2026 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2025, unless otherwise noted.
Current wording
The following is a discussion of our third 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
The following table presents our consolidated results of operations:
Current wording
The following table presents our condensed consolidated results of operations:
Previous wording
Second quarter sales were positively impacted by increased demand across several of our end markets, including mobile, recreational, agriculture, and health and wellness end markets. Demand in the industrial end market decreased compared to the prior year period while sales focused on the marine category within recreational have remained depressed. Sales in the EMEA, Americas and APAC regions were up during the second quarter compared to the prior year. The year over year smaller increase in sales in the APAC region is due to the business disposed of in the Divestiture. Excluding the Divestiture related sales of $15.0 in the second quarter of 2025, sales in the APAC region increased more significantly compared to the prior year.
Current wording
Third quarter consolidated net sales increased $9.4, or 4.3%, compared to the prior-year period. Foreign currency translation had a favorable impact of approximately $1.0, or 0.5%, on third quarter net sales. In addition, third quarter 2026 net sales included a $0.6 reduction resulting from expected customer credits associated with IEEPA tariff refunds. Third quarter sales were positively impacted by demand across several of our end markets, including mobile, health and wellness, agriculture and recreational. Demand in the industrial end market increased modestly compared to the prior year period, while marine sales within the recreational end market increased year-over-year for the first time in seven quarters. Sales in the Americas and EMEA regions were up during the third quarter compared to the prior year, while sales in the APAC region decreased due to the Divestiture. Excluding the Divestiture related sales of $17.5 in the third quarter of 2025, sales in the APAC region increased 32.2%.
Previous wording
Second quarter gross profit increased $12.7, 18.8%, above the prior year second quarter primarily from the impact of higher volume and net tariff impacts. Gross margin increased by 280 basis points primarily due to higher fixed costs leverage on higher volume and net tariff impacts partially offset by higher material, freight, and utilities costs as well as higher direct labor costs as a percentage of sales. The increase in direct labor costs were attributed to increased overtime and benefit related expenses compared to the prior year period.
Current wording
Third quarter gross profit increased $3.2, 4.4%, above the prior year third quarter primarily from the impact of higher volume. Gross margin increased 10 basis points compared with prior year third quarter to 33.2%. Improved fixed cost leverage on higher volume and the benefit of the Divestiture were offset primarily by higher component cost, direct labor, freight and utility costs as a percentage of net sales. The increase in direct labor costs was attributed primarily to increased overtime and benefit related expenses compared to the prior year period. Gross profit for the three months ended October 3, 2026 included a $0.2 benefit related to IEEPA tariff refunds.
Previous wording
Year-to-date gross profit increased $27.7, 21.7%, while gross margin increased by 250 basis points primarily due to the impact of higher volume and net tariff impacts.
Current wording
Year-to-date gross profit increased $31.0, 15.5%, while gross margin increased by 160 basis points to 33.5% primarily due to the impact of higher volume. Gross profit for nine months ended October 3, 2026 included a $1.4 benefit related to IEEPA tariff refunds.
Previous wording
Net interest expense decreased by $0.4 to $4.7 in the second 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 $273.9 during the second quarter of 2026 compared with $391.4 during the second quarter of 2025. Year to date interest expense totaled $9.8, a decrease of $4.6. Average net debt for the year-to-date period decreased to $296.3 compared with $394.3 during the prior-year period. The reduction in average net debt is due to the paying down of debt incurred from prior year acquisitions.
Current wording
Net interest expense decreased by $2.2 to $4.7 in the third 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 total debt decreased to $330.3 during the third quarter of 2026 compared with $428.6 during the third quarter of 2025. Year to date interest expense totaled $14.5, a decrease of $6.8. Average total debt for the year-to-date period decreased to $348.1 compared with $435.3 during the prior-year period. The reduction in average total debt is due to the paying down of debt incurred from prior acquisitions.
Previous wording
The provision for income taxes for the second quarter of 2026 was 22.1% of pretax income compared to 23.8% for the prior-year second quarter. The year-to-date provision was 22.6% and 23.7% of pretax income for 2026 and 2025, 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 three months ended October 3, 2026 and September 27, 2025 was 25.0% and 19.8% of pretax income, respectively. The provision for income taxes for the nine months ended October 3, 2026 and September 27, 2025 was 23.3% and 22.3% of pretax income, respectively. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which the Company sells products. The increase in the effective tax rate for the three months ended October 3, 2026 was primarily attributable to a deferred tax benefit from the reversal of the deferred tax liability related to the i3PD goodwill upon its impairment, partially offset by tax expense associated with a prior-year gain from the Divestiture.
Previous wording
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.
Current wording
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 condensed consolidated financial statements.
Previous wording
Second quarter net sales for the Hydraulics segment increased by $5.5, 3.9%, compared with the prior year second quarter. The increase in sales in the second quarter was driven by improved demand in the mobile and agriculture end markets. Prior year sales included $15.0 in sales related to the Divestiture. Changes in foreign currency exchange rates had a favorable impact of $2.4, 1.7%.
Current wording
Third quarter net sales for the Hydraulics segment increased by $1.6, 1.1%, compared with the prior year third quarter. Prior-year sales included $17.5 related to the Divestiture. Excluding the impact of the divested business, Hydraulics segment net sales increased by $19.1, or 15.4%, compared with the prior-year third quarter, primarily driven by improved demand in the mobile and agriculture end markets. Changes in foreign currency exchange rates had a favorable impact of $0.6, 0.3%.
Previous wording
Year-to-date net sales for the Hydraulics segment increased by $18.3, 6.8%, compared with the prior year period. The increase in sales was driven by stronger demand in mobile and agriculture end markets. Changes in foreign currency exchange rates had an favorable impact of $7.7, 2.9%.
Current wording
Year-to-date net sales for the Hydraulics segment increased by $19.9, or 4.9%, compared with the prior-year period. Prior-year sales included $46.7 related to the Divestiture. Excluding the impact of the divested business, Hydraulics segment net sales increased by $66.6, or 18.4%, compared with the prior-year period, primarily driven by improved demand in the mobile and agriculture end markets. Changes in foreign currency exchange rates had a favorable impact of $8.3, or 2.0%.
Previous wording
Net sales in the Hydraulics segment for the three and six months ended July 4, 2026 included a $2.9 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Current wording
Net sales in the Hydraulics segment for the three and nine months ended October 3, 2026 included a $2.9 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Previous wording
Regional sales performance in the second quarter compared to the prior year quarter was driven by:
Current wording
Regional sales performance in the third quarter compared to the prior year quarter was driven by:
Previous wording
Americas - sales increased $2.9, 5.3%, primarily from stronger demand in the mobile end market.
Current wording
Americas - sales increased $6.0, 11.2%, primarily from stronger demand in the mobile end market.
Previous wording
EMEA - excluding favorable changes in foreign currency rates of $1.2, sales increased $4.5, 9.8%, driven by generally stronger demand in the mobile and agriculture end markets.
Current wording
EMEA - sales increased $3.8, 9.2%. Excluding unfavorable changes in foreign currency rates of $0.7, sales increased $4.5, 10.9%, driven by generally stronger demand in the mobile and agriculture end markets.
Previous wording
Year-to-date gross profit increased $11.0, 13.1%, primarily due to higher volume and net tariff impacts. Gross margin increased 180 basis points primarily due to the Divestiture and lower material costs as a percentage of sales partially offset by higher direct labor and variable overhead costs as a percentage of sales.
Current wording
Year-to-date gross profit increased $11.2, 8.6%, primarily due to higher volume and net tariff impacts. Gross margin increased 110 basis points primarily due to the Divestiture and lower material costs as a percentage of net sales partially offset by higher direct labor and variable overhead costs as a percentage of net sales.
Previous wording
Gross profit in the Hydraulics segment for the three and six months ended July 4, 2026 included a $0.8 benefit related to IEEPA tariff refunds.
Current wording
Gross profit in the Hydraulics segment for the three and nine months ended October 3, 2026 included a $0.8 benefit related to IEEPA tariff refunds.
Previous wording
Second quarter net sales for the Electronics segment increased $13.9, 19.4%, compared with the prior year period. Compared to the prior year period, the second 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 $0.5 impact.
Current wording
Third quarter net sales for the Electronics segment increased $7.8, 9.9%, compared with the prior year period. Compared to the prior year period, the third quarter sales increase was driven by the health and wellness, recreational, mobile and industrial end markets. Sales in the agriculture end market increased slightly. Third quarter sales included $0.4 from Radio Sound, Inc. Changes in foreign currency exchange rates had a favorable impact of $0.4. Net sales in the Electronics segment for the three months ended October 3, 2026 included a $0.6 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Previous wording
Year-to-date net sales for the Electronics segment increased $34.0, 24.2%, compared with the prior year period. Overall strength in the recreational, health and wellness, mobile, and industrial end markets more than offset the slight decrease in agricultural end markets. Changes in foreign currency exchange rates had $0.8 impact.
Current wording
Year-to-date net sales for the Electronics segment increased $41.9, 19.1%, compared with the prior year period. Overall strength in the recreational, health and wellness, mobile, and industrial end markets more than offset a slight decrease in sales in the agriculture end market. Year-to-date sales included $0.4 from Radio Sound, Inc. Changes in foreign currency exchange rates had a favorable impact of $1.2. Net sales in the Electronics segment for the nine months ended October 3, 2026 included a $1.8 reduction resulting from expected customer credits associated with IEEPA tariff refunds.
Previous wording
Sales increased across most end markets in both the Americas and EMEA regions in the second quarter and year-to-date period. APAC sales increased over the comparable second quarter and year-to-date period in APAC driven by the health and wellness end market.
Current wording
Net sales increased across both the Americas and APAC regions in the third quarter and year-to-date period. APAC sales increased over the comparable third quarter and year-to-date periods driven primarily by the health and wellness end market. In the Americas, the recreational end market was the primary driver for the growth. Net sales in EMEA were down in the third quarter but up in the year-to-date period.
Previous wording
Year-to-date gross profit increased $16.6, 38.2%, primarily due to higher volume in current year and net tariff impacts. Gross margin increased 350 basis points over the same period to 34.4%, primarily due to the impact of higher fixed costs leverage on higher volume, lower direct labor costs as a percentage of sales, and lower material costs as a percentage of sales, partially offset by an unfavorable customer mix.
Current wording
Year-to-date gross profit increased $19.8, 28.1%, primarily due to higher volume in the current year and net tariff impacts. Gross margin increased 240 basis points over the same period to 34.5%, primarily due to better absorption of fixed costs on higher sales volumes and lower direct labor costs as a percentage of net sales, partially offset by higher electronic component costs. Gross profit in the Electronics segment for the nine months ended October, 2026 included a $0.6 benefit related to IEEPA tariff refunds.
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 second quarter of 2026, these costs totaled $7.6 for amortization of acquisition-related intangible assets of $7.5 and $0.1 for costs related to the divestiture and officer transition costs. Compared to the second quarter of 2025, these costs decreased by $1.4, primarily due to reduction of amortization related to acquired intangible assets and officer transition costs. Year-to-date, corporate and other costs totaled $15.3 for amortization of acquisition related intangible assets of $15.1 and $0.2 related to the divestiture and officer transition costs. This compared to $17.4 in the 2025 year-to-date period that included amortization of acquisition related intangible assets of $16.5, $0.5 for officer transition costs, and $0.4 for divestiture 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 third quarter of 2026, these costs totaled $9.0 and included amortization of acquisition-related intangible assets of $7.5 and $1.5 for costs primarily related to merger and acquisition planning activities. Compared to the third quarter of 2025, these costs decreased by $0.2, primarily due to the absence of Divestiture related cost and a reduction of amortization related to acquired intangible assets. Year-to-date, corporate and other costs totaled $24.2 for amortization of acquisition related intangible assets of $22.6 and $1.6 primarily related to merger and acquisition planning activities. This compared to $26.6 in the 2025 year-to-date period that included amortization of acquisition related intangible assets of $24.1, $1.8 for Divestiture activities and $0.7 for officer transition costs.
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 six months of 2026, cash provided by operating activities totaled $65.8. At the end of the second quarter, we had $68.0 of available cash and cash equivalents on hand and $393.8 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.
Current wording
Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facility to fund acquisitions. During the first nine months of 2026, cash provided by operating activities totaled $105.7. At the end of the third quarter, we had $72.6 of available cash and cash equivalents on hand and $398.0 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 decreased $5.0 in the first two quarters of 2026 to $68.0 as of July 4, 2026. Changes in exchange rates during the six months ended July 4, 2026, negatively impacted cash and cash equivalents $1.0. 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 $0.4 from January 3, 2026 to $72.6 as of October 3, 2026. Effect of exchange rate changes during the nine months ended October 3, 2026, negatively impacted cash and cash equivalents by $0.6. Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting in the business, returning capital to shareholders, funding acquisitions and paying down borrowings on our credit facilities.
Previous wording
Year-to-date cash from operations increased by $9.8 to $65.8. 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 $24.7 in the first two quarters of 2026 compared to the same period in 2025. Changes in net operating assets and liabilities negatively impacted cash flow by $15.0 in the second quarter, compared to the prior year period, primarily from a higher increase in accounts receivable and inventory, a smaller increase in accounts payable partially and offset by an increase in other current assets driven by prepayments. Changes in inventory decreased cash by $7.9 in comparison to an increase of cash by $1.7 in the first two quarters of 2026 and 2025, respectively. Days of inventory on hand decreased to 115 days as of July 4, 2026, compared with 130 days as of June 28, 2025. Changes in accounts receivable reduced cash by $27.3 and $23.4 in the first two quarters of 2026 and 2025, respectively. Days sales outstanding decreased slightly to 55 days as of July 4, 2026, compared with 62 days as of June 28, 2025. Changes in accounts payable increased cash by $13.0 and $21.4 in the first two quarters of 2026 and 2025, respectively. Days payables outstanding increased to 53 days in 2026 from 53 days in 2025.
Current wording
Year-to-date cash from operations increased by $24.4 to $105.7. Changes in net operating assets and liabilities reduced cash flow by $6.9 in the three quarters, compared to $8.5 in the prior year period, as a higher increase in inventory and other current assets was offset by a smaller increase in accounts receivable and higher increases in accrued expenses and other liabilities and income taxes payable. Changes in inventory decreased cash by $20.9 in comparison to an increase of cash by $1.0 in the first three quarters of 2026 and 2025, respectively. Days of inventory on hand slightly increased to 119 days as of October 3, 2026, compared with 118 days as of September 27, 2025. Changes in accounts receivable reduced cash by $24.1 and $35.4 in the first three quarters of 2026 and 2025, respectively. Days sales outstanding decreased to 54 days as of October 3, 2026, compared with 55 days as of September 27, 2025. Changes in accounts payable increased cash by $20.9 and $20.3 in the first three quarters of 2026 and 2025, respectively. Days payables outstanding increased to 57 days as of October 3, 2026, compared with 46 days as of September 27, 2025. Days of inventory on hand is calculated as average inventory for the current and prior quarter-end divided by average daily cost of sales for the trailing three months. Days sales outstanding is calculated as period-end accounts receivable divided by average daily net sales for the trailing three months. Days payables outstanding is calculated as period-end accounts payable divided by average daily cost of sales for the trailing three months.
Previous wording
Cash used in investing activities totaled $19.2 in the first two quarters of 2026, compared to $13.2 in the first two quarters of the prior year. The year-over-year increase reflects an increase in capital expenditures to support organic growth opportunities.
Current wording
Cash used in investing activities totaled $29.0 in the first three quarters of 2026, compared to $21.6 in the first three quarters of the prior year. The year-over-year increase primarily reflects higher capital expenditures to support organic growth opportunities and the acquisition of Radio Sound, Inc. during the third quarter of 2026 for $1.7. Capital expenditures totaled $25.5, 3.7%, of sales for the first three quarters of 2026, an increase of $7.3 over the prior year comparable period.
Previous wording
Net cash used in financing activities totaled $50.6 during the first two quarters of 2026, compared to $38.5 in the same period of the prior year. In the first two quarters of 2026, repayments, net of borrowings, totaled $33.1 compared to $25.6 in the first two quarters of 2025.
Current wording
Cash used in financing activities totaled $76.5 during the first three quarters of 2026, compared to $51.1 in the same period of the prior year. In the first three quarters of 2026, repayments, net of borrowings, totaled $35.6 compared to $32.2 in the first three quarters of 2025.
Previous wording
Borrowings on our term loans and revolving credit facilities as of July 4, 2026, totaled $226.9 and $105.4, respectively. See Note 9 - Credit Facilities, for additional information regarding our credit facilities.
Current wording
Borrowings on our term loans and revolving credit facilities as of October 3, 2026, totaled $226.2 and $101.3, respectively. See Note 9 - Credit Facilities, for additional information regarding our credit facilities.
Previous wording
During the second quarter of 2026, we declared a quarterly cash dividend of $0.12 per share payable on July 24, 2026, to shareholders of record as of July 10, 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.
Current wording
During the third quarter of 2026, we declared a quarterly cash dividend of $0.12 per share payable on October 26, 2026, to shareholders of record as of October 13, 2026. 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.
Previous wording
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.
Current wording
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity or capital resources. In particular, we do not have any material interest in variable interest entities, which include special purpose entities and structured finance entities.
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 six months of 2026, are disclosed in Note 2 of the 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 nine months of 2026, are disclosed in Note 2 of the Notes to the condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q.