Breaking Down Helios Technologies, Inc. (HLIO) Financial Health: Key Insights for Investors

You're looking at Helios Technologies, Inc. (HLIO) right now and wondering if the recent turnaround is a genuine shift or just a blip, and honestly, the Q3 2025 numbers suggest a real inflection point for the industrial technology firm.

After a tough stretch, the company is finally showing that its strategic moves are paying off, delivering $220 million in Q3 revenue-a solid 13% year-over-year increase-and a diluted non-GAAP earnings per share (EPS) of $0.72, which is up 22% from the prior year. That's a strong beat. The biggest takeaway is that management is confident enough to raise its full-year 2025 revenue guidance to a range of $820 million to $830 million, alongside an adjusted EPS forecast of $2.43 to $2.50.

But it's not all clear skies; while the gross margin expanded to 33.1%, you still need to map the risks, like the $25.9 million goodwill impairment charge related to the i3 Product Development business. The good news is they are executing on the balance sheet, cutting total debt to $419 million by the end of Q3. So, you need to dig into the segment performance-Hydraulics and Electronics-to see where the growth is sticky. Let's break down exactly what these numbers mean for your investment strategy.

Revenue Analysis

You need to know where Helios Technologies, Inc. (HLIO)'s money is coming from to assess its risk profile, and the 2025 data shows a crucial pivot. The company has guided for full-year 2025 net sales between $820 million and $830 million, a clear signal of stabilization and a return to growth after a long slump. This is a material change from the prior years, and it's defintely something to watch.

The revenue story is now a tale of two segments: Hydraulics and Electronics. Historically, Hydraulics has been the bedrock, but the Electronics segment is now the clear growth engine, which validates the company's strategic shift toward advanced motion control and electronic solutions. The third quarter of 2025 (Q3 2025) was a turning point, delivering $220 million in total revenue, a 13% increase year-over-year (YoY). That's the first quarter of YoY growth in nearly three years.

Here's the quick math on segment contribution for Q3 2025, which gives you a snapshot of the current mix:

• Hydraulics delivered $141.3 million in sales, growing 9% YoY.
• Electronics generated roughly $79 million, but exploded with 21% YoY growth.

The Hydraulics segment, which makes highly engineered hydraulic cartridge valves and quick-release couplings, still accounts for the majority, roughly 64% of total sales. But the Electronics segment, which focuses on customized control systems and displays for markets like recreational vehicles and health & wellness, is where the momentum sits. You can see the shift in priorities reflected in their Mission Statement, Vision, & Core Values of Helios Technologies, Inc. (HLIO).

Looking at the full fiscal year 2025, management's guidance implies a growth rate of approximately 4% over fiscal 2024, once you adjust for the divestiture of the Custom Fluidpower (CFP) business. This divestiture, which included $15.6 million in prior-year sales, is a key change, streamlining operations but also removing a lower-margin revenue source. The growth is coming from everywhere, too; Q3 2025 sales were up double digits across all three geographic regions: the Americas, APAC, and EMEA.

The table below shows the segment split and growth rates, illustrating the Electronics segment's disproportionate impact on the overall growth narrative. One segment is the cash cow, but the other is the future.

The strategic action is clear: Helios Technologies, Inc. is successfully trading some legacy revenue (like the CFP divestiture) for higher-growth, higher-margin electronic sales. Your next step should be to track the Q4 2025 segment performance-Finance: confirm Electronics' sequential margin improvement continues by the next earnings call.

Profitability Metrics

You're looking at Helios Technologies, Inc. (HLIO) and wondering if the operational improvements are truly translating to the bottom line. The quick answer is: yes, but a major one-time event masked the core strength in the near-term. The key is to look past the statutory net income number for the trailing twelve months (TTM) ended September 27, 2025, and focus on the impressive margin expansion happening at the gross and operating levels.

Here's the quick math on their recent performance. For the TTM ending in Q3 2025, the Net Profit Margin slipped to 4.2% from 4.6% a year earlier. Honestly, that drop is almost entirely explained by a substantial one-off loss of $31.1 million recorded during that period. That's a big, one-time hit, but it doesn't reflect the underlying business health.

The real story is in the operational efficiency gains. The Gross Profit Margin expanded to 33.1% in Q3 2025, which is a 200 basis point (bps) expansion year-over-year. This isn't a fluke; it's the third consecutive quarter of sequential gross margin expansion, with Q3's margin improving 130 bps over Q2 2025.

This margin expansion is a direct result of management's focus on cost management and operational leverage. They're getting more out of their facilities and supply chain. The Hydraulics segment, for example, saw its gross margin expand by 90 bps in Q3 2025 due to better fixed cost leverage on higher volume.

What this estimate hides is the impact of the goodwill impairment charge. In Q3 2025, Helios Technologies recorded a $25.9 million goodwill write-down related to the i3 Product Development ('i3PD') business, which drove down the reported operating income. However, before that non-cash charge, the operating income as a percentage of sales was 15.3%, a significant improvement. For the full fiscal year 2025, the company expects its Adjusted EBITD (Earnings Before Interest, Taxes, and Depreciation) Margin to land between 19.1% and 19.4%. That's defintely a strong indicator of core profitability.

To put Helios Technologies' profitability in context, let's compare the TTM Net Profit Margin of 4.2% against some industry peers and averages:

While the reported TTM Net Margin is below a key competitor like Applied Industrial Technologies, the Gross Margin of 33.1% is actually quite healthy and above the 28.8% average for a similar capital-intensive sector like Aerospace & Defense. This suggests the challenge isn't in product pricing or manufacturing costs, but rather in managing selling, engineering, and administrative (SEA) expenses, plus the impact of those one-off charges.

The trend is clear: Gross and Operating Margins are moving up, but net profitability is still being weighed down by non-core items and higher SEA expenses, which includes investments in the Electronics segment. The path to a higher Net Margin-analysts project it could reach 10.8% by 2028-rests on sustaining this gross margin momentum and seeing a payoff from the restructuring efforts.

For a deeper dive into the company's financial structure, you should check out the full analysis: Breaking Down Helios Technologies, Inc. (HLIO) Financial Health: Key Insights for Investors.

Your next step: Track Q4 2025 results closely to see if the Adjusted EBITD Margin guidance of 19.1% to 19.4% is met, which will confirm the underlying operational strength.

Debt vs. Equity Structure

You want to know how Helios Technologies, Inc. (HLIO) pays for its growth-is it through borrowing or by using shareholder capital? The direct takeaway is that Helios Technologies is actively deleveraging (reducing debt) in 2025, but its overall debt-to-equity ratio still sits above the industry average, signaling a heavier reliance on debt to finance its operations and acquisitions.

As of September 27, 2025, the company's total debt stood at $419.1 million. This is a significant figure, but the good news is that management has been focused on paying it down, achieving its ninth consecutive quarter of debt reduction. This reduction is a clear strategic priority, driven by strong cash flow from operations and portfolio optimization, like the sale of the Custom Fluidpower (CFP) business, which closed at the beginning of the fourth quarter of 2025. Here's the quick math on the balance sheet:

• Total Debt (Sep 2025): $419.1 million
• Total Shareholder Equity (Sep 2025): $917.9 million

The total debt figure is comprised of both current and long-term obligations. For instance, as of March 29, 2025, the company reported $279.2 million in net long-term non-revolving debt and $147.5 million drawn on its revolving lines of credit. This mix shows a balance between stable, long-term financing and flexible, short-term borrowing capacity.

The key metric here is the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of its shareholders' equity. As of September 2025, Helios Technologies' D/E ratio was approximately 45.7% (or 0.457). To be fair, this is a manageable level, but it is notably higher than the Industrials sector average, which hovers around 33.8% for long-term debt to equity. This tells you that while the company is profitable, it carries a higher financial leverage risk than many of its peers. The focus is to get that net debt-to-Adjusted EBITDA leverage ratio down to around 2.0x by year-end 2025, a much healthier target than the 2.4x it hit in Q3 2025.

In terms of recent activity, Helios Technologies has been proactive. In June 2024, the company amended its credit facility to extend the debt maturity for five years, pushing it out to June 25, 2029. This move included upsizing the revolving credit facility from $400 million to $500 million and establishing a new $300 million term loan, all while reducing borrowing spreads. This refinancing effort is defintely a smart way to lock in favorable terms and secure financial flexibility for future growth, even as they prioritize debt reduction right now. They're positioning for opportunity.

The balance is clear: use debt for strategic, accretive acquisitions to fuel growth, then aggressively pay it down using strong operating cash flow. This is a common, but risky, playbook. The consistent, over 28-year history of paying a quarterly dividend, which was $0.09 per share in Q2 2025, also shows a commitment to returning capital to shareholders, balancing the debt focus with equity-holder rewards. For a deeper dive into who is buying and why, you should read Exploring Helios Technologies, Inc. (HLIO) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at Helios Technologies, Inc. (HLIO) and asking the right question: can they cover their near-term bills? The short answer is yes, and their liquidity position is defintely a strength right now, driven by disciplined debt reduction and improved working capital management.

As of the third quarter of 2025 (ending September 27), the company's liquidity ratios show a healthy buffer. The Current Ratio sits at approximately 2.93x, meaning Helios Technologies, Inc. has nearly three dollars in current assets for every dollar of current liabilities. This is a very strong position. Even when you strip out inventory-which gives you the Quick Ratio (or acid-test ratio)-the figure remains robust at 1.2x, as reported for September 2025.

Current and Quick Ratios (Liquidity Positions)

A Current Ratio near 3.0x is excellent for a manufacturing business like this; it signals ample capacity to meet short-term obligations like accounts payable and payroll. Here's the quick math on the Q3 2025 position:

• Total Current Assets: $449.0 million
• Total Current Liabilities: $153.2 million
• Current Ratio: 2.93x
• Quick Ratio (September 2025): 1.2x

The Quick Ratio of 1.2x is particularly reassuring. It confirms that even without selling a single new product from their warehouse, the cash and receivables alone cover all immediate debts. This is a clear sign of short-term financial stability.

Analysis of Working Capital Trends

The real story isn't just the ratio numbers, but the trend. Helios Technologies, Inc. has been actively focused on optimizing its working capital (current assets minus current liabilities). In the third quarter of 2025, they reported a decreased cash conversion cycle, which is a big win. That means they are turning inventory into cash faster and extending payment terms with suppliers, essentially using less of their own cash to run the business. Plus, the firm has reduced its total debt for the ninth consecutive quarter, with total debt at September 27, 2025, down to $419.1 million, a 13% reduction from the prior year.

Cash Flow Statements Overview

The cash flow statement for the first nine months of 2025 paints a picture of a business generating cash internally and using it to pay down debt and invest strategically. For the nine months ended September 27, 2025, the company generated significant positive cash flow from operations, which is what you want to see.

Here's the breakdown of the cash flow activities, in millions of US dollars:

The $81.3 million in Operating Cash Flow is the engine of the business. The negative Investing Cash Flow of ($21.6 million) is mostly due to capital expenditures, which is normal for a growth-focused industrial company. The negative Financing Cash Flow of ($51.1 million) is a huge positive, as it shows a deliberate effort to reduce debt and return capital to shareholders via dividends and share repurchases. They are paying their own way.

Potential Liquidity Concerns or Strengths

The primary strength is the consistent generation of cash from operations and the deliberate reduction of debt, which has improved their net debt-to-adjusted EBITDA leverage ratio to 2.4x as of Q3 2025. This significantly lowers their financial risk. A minor concern, though not a major one given the strong ratios, is that the third-quarter operating cash flow of $25.2 million was down 28% compared to the prior year, primarily due to a temporary increase in accounts receivable related to a surge in sales growth.

Still, the overall picture is one of improving financial flexibility, which you can see reflected in their Mission Statement, Vision, & Core Values of Helios Technologies, Inc. (HLIO).

Valuation Analysis

You want to know if Helios Technologies, Inc. (HLIO) is a buy, a hold, or a sell right now. The quick answer is that while traditional multiples suggest a premium, a deeper look at long-term cash flow indicates the stock is defintely undervalued, which aligns with the strong analyst consensus.

As of November 2025, Helios Technologies, Inc. stock is trading near $52.09, after a solid run that saw its price climb from a 52-week low of $24.76 to a high of $58.80. The stock has been a strong performer this year, up approximately 16.59% year-to-date, but its valuation metrics present a mixed picture you need to untangle before making a move.

Is Helios Technologies, Inc. Overvalued or Undervalued?

The core of any valuation is comparing what the market is willing to pay to what the company is actually earning or owns. Here's the quick math on Helios Technologies, Inc. using key multiples:

• Price-to-Earnings (P/E) Ratio: The trailing P/E is around 25.84x, but some models show it as high as 51.75x, depending on the earnings base used. The forward P/E, which uses forecasted earnings, is a more reasonable 25.41x. To be fair, this is still higher than the broader Industrials sector average, suggesting the market is pricing in future growth expectations.
• Price-to-Book (P/B) Ratio: At approximately 1.88x, the P/B ratio is near its historical high. This multiple tells us investors are paying $1.88 for every dollar of the company's book value (tangible assets minus liabilities). For an industrial technology company, this premium is acceptable, but it's not a deep-value signal.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple is a cleaner measure of total company value relative to operating cash flow, stripping out capital structure and taxes. Helios Technologies, Inc.'s EV/EBITDA stands at about 14.59x. This is a bit rich compared to some peers, but it's a number often seen in companies undergoing margin expansion or strategic restructuring.

So, based purely on multiples, the stock looks fully valued, maybe even a little expensive. But valuation is not just about multiples; it's about future cash flow. A discounted cash flow (DCF) analysis, which projects earnings out over the next decade, suggests an intrinsic value per share closer to $69.07. This implies the stock is currently undervalued by about 24.5% based on its long-term earnings potential. That's a significant gap.

Stock Performance and Analyst Sentiment

The market has clearly been rewarding Helios Technologies, Inc.'s operational improvements and debt reduction, which is down 13% from the prior year period as of June 2025. Still, volatility is a factor. The stock price movement over the last 12 months, from $24.76 to $58.80, shows strong momentum but also a high beta of 1.32, meaning it swings harder than the overall market.

The dividend story is simple: Helios Technologies, Inc. is not a high-yield play, but it is a consistent one. The company pays an annual dividend of $0.36 per share, which translates to a modest dividend yield of about 0.67%. The good news is the payout ratio is a sustainable 35.61%, meaning they have plenty of room to cover the dividend and reinvest in the business.

Wall Street's professional analysts are largely bullish. The consensus rating is a 'Strong Buy' or 'Buy' from the analysts covering the stock. The average price target is conservative, sitting around $52.40, which is right where the stock is now. However, the highest price targets reach up to $67.33, which is a key data point supporting the DCF's 'undervalued' thesis.

The takeaway is that while the stock looks fairly priced today based on simple multiples, the strong analyst sentiment and the intrinsic value derived from a DCF model point to a clear upside for long-term investors. For a more complete picture of the company's fundamentals, you should read the full analysis: Breaking Down Helios Technologies, Inc. (HLIO) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Helios Technologies, Inc. (HLIO) after a quarter that showed a return to sales growth, but honestly, you can't ignore the financial headwinds that are still blowing. The core takeaway is this: while management is executing well on operational fixes, significant external and non-recurring financial charges in 2025 create a real drag on core profitability that you need to factor into your valuation.

External and Market Volatility Risks

Helios Technologies operates in a cyclical industry, which is the biggest external risk. The demand for their fluid power and electronic controls technology is tightly linked to capital expenditures in end-markets like construction and agriculture. This means earnings progression will always be volatile, no matter how good the internal operations are. The company's beta of 1.36 confirms this higher-than-market volatility.

Plus, geopolitical tensions and shifting trade policies continue to hit the bottom line. Management has specifically highlighted a looming tariff risk of approximately $15 million expected in the second half of fiscal year 2025. That's a direct hit to gross margins that can't be wished away. The industrial sector is just a tough place to be right now.

• Cyclical demand: Construction and agriculture markets swing hard.
• Tariff impact: Expect a $15 million headwind in H2 2025.
• High stock volatility: The company's beta sits at 1.36.

Operational and Financial Headwinds

The company's recent financial reports show a mixed bag of operational wins offset by some heavy one-time charges. For the twelve months ending September 2025, the net profit margin slipped to just 4.2%. This low profitability was heavily impacted by a substantial, one-off loss of $31.1 million. This kind of charge makes it defintely harder to see the true operating health.

A major concern is the asset valuation risk. In Q3 2025, Helios Technologies recorded a significant $25.9 million goodwill impairment charge related to the i3 product development (i3PD). Goodwill impairment is a non-cash charge, but it signals that the acquired assets aren't generating the returns management expected. Here's the quick math on profitability and capital efficiency:

Another factor is leadership stability. In November 2025, the company appointed a new CFO, Jeremy Evans, replacing Michael Connaway, who had only been in the role for a few weeks. While the company stated the departure wasn't related to accounting disagreements, this kind of rapid turnover in a key executive role can create execution risk, especially when they are targeting an ambitious margin expansion to 10.8% over the next three years.

Mitigation and Actionable Resilience

To be fair, management is not just sitting still; they are actively working to mitigate these risks. They are leveraging their global manufacturing footprint and implementing price adjustments to fight the tariff impact. Operationally, they completed the divestiture of Custom Fluid Power (CFP), which resulted in a helpful $21 million gain.

On the balance sheet, they've shown financial discipline, reducing total debt to $419.1 million as of September 27, 2025, which is a 13% reduction from the prior year. This debt reduction lowers financial risk and provides more flexibility. Their core strategy is to drive organic growth through product innovation-they claim to have more product launches coming in the next 18 months than in the last decade.

For a deeper dive into the full financial picture, including the DCF valuation and strategic frameworks, you should check out the full analysis: Breaking Down Helios Technologies, Inc. (HLIO) Financial Health: Key Insights for Investors.

Growth Opportunities

You've seen the headlines, and honestly, the third quarter of 2025 was a turning point for Helios Technologies, Inc. (HLIO). After a period of soft performance, the company has returned to sales growth, and the numbers show a clear path forward, especially in their higher-margin segments. This isn't just a cyclical bounce; it's a result of deliberate strategic moves that map out a solid growth trajectory.

The core of Helios Technologies' near-term opportunity is a dual-engine approach: a disciplined focus on their core Hydraulics business (screw-in hydraulic cartridge valves and manifolds) and an accelerated push into the Electronics segment. The Electronics segment is the real star, with Q3 2025 sales jumping by a phenomenal 21% year-over-year, while Hydraulics grew by a respectable 9%. This mix shift is defintely a good thing for overall profitability.

• Product Innovations: New offerings like the Atlas Connect Gateway are key, moving the company toward higher-value, Internet of Things (IoT)-enabled products that boost OEM adoption. They also launched the Enovation S35 Display and Faster MultiSlide in 2025, keeping their innovation pace high.
• Market Expansions: Growth is happening globally, with sales increasing across all three geographic regions-APAC, the Americas, and AMIA-in Q3 2025. This geographic diversification reduces reliance on any single market's economic cycle.
• Strategic Streamlining: The sale of the Australian-based Custom Fluidpower (CFP) business for $54 million USD was a smart, non-cliched move to reduce debt and focus resources on core, higher-margin operations.

Here's the quick math on what analysts expect for the full 2025 fiscal year. Management raised the lower end of their guidance, and the consensus points to a strong finish. This shows confidence in their operational execution and the market's reception to their new products.

The competitive advantage for Helios Technologies is rooted in its niche market leadership in highly engineered motion control and electronic controls technology, which is hard to replicate quickly. They aren't trying to be all things to all customers; they focus on high-margin solutions for specific industrial applications. Plus, their balance sheet is solid, with a low total debt-to-equity ratio of 0.19 and a current ratio of 2.8 as of August 2025, giving them financial flexibility for organic growth and future tuck-in acquisitions. This financial discipline allows them to innovate even when end-markets are volatile. If you want to dive deeper into who is betting on this growth story, you can check out Exploring Helios Technologies, Inc. (HLIO) Investor Profile: Who's Buying and Why?

What this estimate hides is the potential for faster margin recovery if the Electronics segment continues to outperform and if they successfully integrate their digital platforms like NORS and Signis Reach into their core business. The risk, still, is the cyclical nature of some of their end-markets, but the shift to higher-value electronics helps buffer that exposure. The company's trailing 12-month free cash flow conversion rate of 223% as of Q3 2025 shows they are converting sales into cash very effectively, which is a sign of operational health.