Helios Technologies (HLIO) Q2 FY26 earnings call: guidance and Q&A

Details on Faster's restructuring (Canada closure, Maumee, OH expansion), Hydraulics capacity, and the areas of investment for the 4%-4.5% CapEx guidance.

Sean explained the consolidation of Faster's North American operations to Maumee, OH, which frees up capacity at Daman (Mishawaka, IN) for automation. The Canadian facility was closed, with production moved to Italy. Jeremy detailed CapEx investments: capacity for data center couplings (clean room), leveraging low-cost engineering/manufacturing centers (Tijuana, India, China) due to stabilized tariffs, and upgrading aged machines for automation and productivity.

“The updated guidance reflects a CapEx range of 4% to 4.5%. And part of that guidance change is due to increasing our sales expectations. So we've actually taken the top end of that range down a little bit. But it reflects a few things. First is the investment that we've been making in the thermal management just in creating capacity to make the data center couplings, establish a clean room for that.”

asked by Mig Dobre · answered by Sean Bagan

How the Electronics business is achieving solid double-digit organic growth when end markets are not; what's driving this outgrowth and its sustainability into 2027.

Sean attributed the outgrowth to aggressive go-to-market strategies and numerous business wins, outpacing challenging macroeconomic markets like marine and recreational, which are impacted by interest rates. He highlighted internal synergies from combining businesses, moving production to lower-cost facilities like Tijuana, and growth in health & wellness (especially in Asia) and new product development (Balboa, Purezone). The focus is on outgrowing niche markets through product breadth and deeper customer engagement.

“Yes, the markets remain challenged. Part of that's macroeconomic, but we're also outpacing that with wins. And as we talk about internally all the time across all of our business, we operate in smaller niche markets, and we're not going to pay as much attention to what markets are doing. Our focus is on outgrowing the markets and continuing to expand our breadth of products and going deeper with those existing customers.”

asked by Mig Dobre · answered by Sean Bagan

Why the growth cadence steps down in the second half despite momentum from program wins and potentially improving Hydraulics markets, given initial concerns about visibility.

Sean explained that the original plan anticipated a heavier first half and lighter second half due to historical seasonality (52-54% of revenue in H1) and typical order visibility of about one quarter. The raised guidance reflects increased confidence from sustained momentum, ramping wins, continued new wins, and record July revenue and order intake (even after the CFP divestiture). New product portfolios launched last year are also expected to accelerate in the second half.

“Now that we've seen the momentum, we've seen the ramp of the wins, our pace of new wins this year has also continued to support the higher pace, that gave us the confidence to raise. And in fact, as we got to July, we had our best July ever from a revenue perspective and our best July order intake ever as a company.”

asked by Jeffrey Hammond · answered by Sean Bagan

Line of sight on data center wins/customer announcements given inventory build, and an update on the industrial end market trends.

Sean stated that no data center revenue is built into H2 guidance, but samples are with a dozen prospective customers, and orders are expected to be imminent. He noted the lengthy qualification process. Jeremy clarified that the industrial end market is stable (up slightly when normalizing for the CFP divestiture), with strength primarily in mobile (construction), health & wellness, and aerospace. The marine market remains soft.

“Now we have started to build some inventory. We have not built in any revenue into our back half guidance, and that's just being cautious. But again, I think we said that last quarter, we'd be disappointed if we didn't generate some revenue, but we now have samples out with about a dozen prospective customers that are sampling our products.”

asked by Jeffrey Hammond · answered by Sean Bagan

Inquiring about the sustainability of four consecutive quarters of gross margin expansion and how mix, productivity, and footprint actions will decompose for H2 2026 and 2027.

Jeremy explained that gross margin expansion is primarily driven by volume leverage, filling existing capacity. He noted that Q2 incremental margins were slightly higher due to a $1 million IEEPA tariff refund. Recent Faster consolidation actions are expected to have a more significant impact on H2 2026 and 2027. He acknowledged ongoing cost pressures from components like PCBs, memory chips, and aluminum, but expressed satisfaction with the margin expansion.

“Specific to the gross margin expansion, as we've been communicating, the biggest lever that we have when it comes to gross margin is our volume and just filling up the capacity that we have. And as we've returned to growth, we're seeing that come through.”

asked by Tomohiko Sano · answered by Jeremy Evans

Details on the addressable market for data centers, the reported supply shortage, and whether Helios' product offers differentiation beyond just meeting demand.

Sean stated that the data center opportunity is massive, potentially larger than their existing addressable markets (agriculture and construction). He confirmed a supply shortage in the market and highlighted Helios' product differentiation, particularly in leakage rates, which is critical for data center applications. He also mentioned leveraging MultiFaster-type technology and a planned series of new product launches to capitalize on this opportunity.

“In terms of addressable market to start with, we did have a little bit in our Investor Day materials. But effectively, we see that opportunity for that data center space almost -- larger than our existing addressable markets when you look at ag and construction. And so massive opportunity for us.”

asked by Nathan Jones · answered by Sean Bagan