Helios Technologies, Inc. (HLIO) | The Buildout — AI Infrastructure
The Verdict
Helios Technologies makes engineered motion-control and electronic-control products for industrial OEMs and distribution. Its role in the AI infrastructure buildout is as a component supplier into two early data-center layers: Faster quick-release couplings for liquid-cooling thermal management, and Innovation Controls displays for advanced control and monitoring. The company is not a data-center integrator, but it provides some of the connective hardware at the thermal and control layer.
| Market Cap | — |
| Revenue (TTM) | $872M |
| Revenue Growth | +10.5% |
| EBITDA Margin (TTM) | 16.1% |
| Net Debt | $40M |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Q1 FY2026 revenue of $228.4 million beat the high end of the $218–223 million outlook; pro forma growth was 23% excluding CFP and FX.
- Adjusted EBITDA margin reached 20.4%, the third consecutive quarter above 20%, with operating income up 76% year over year.
- Twelve consecutive months of double-digit order intake, with backlog up double digits year over year.
- First-quarter cash from operations hit a record $24 million, and free cash flow hit a record $17 million.
- The regular dividend was raised 33% to $0.12 per share, the first regular dividend increase, with 117 consecutive quarters paid.
What We’re Watching
- Faster data-center thermal products had no revenue as of Q1 FY2026; the expected H2 2026 ramp has no disclosed customer names or order values.
- Visibility is roughly 12 weeks, and second-half 2025 pro forma growth of about 21% makes the comparison difficult.
- US agriculture and marine remain challenged, and Electronics growth depends partly on one unnamed large OEM.
- Tariff costs are fluid: roughly $8 million hit H2 2025, and IEEPA/IEPA refunds are excluded from guidance.
The core execution thesis is strengthening: management beat Q1 guidance, raised full-year targets, and delivered a cleaner balance sheet. The data-center thesis is intact but still unproven because the main Faster product line has no revenue and no named customers. The central open question is whether order momentum and the H2 2026 data-center ramp convert into disclosed revenue before the comparison base turns harder.
Earnings Beat
Helios reported Q1 FY2026 revenue of $228.4 million, up 17% from $195.5 million a year earlier. Gross margin was 29.5%, EBITDA was $45.0 million, and net income was $19.7 million. Cash from operations was a first-quarter record of $24 million.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $228M | $211M | $196M | +16.8% |
| Gross margin | 29.5% | 33.6% | 30.6% | -110bps |
| EBITDA | $45M | $41M | $33M | +36.4% |
| EPS | $0.59 | $0.59 | $0.22 | +170.7% |
| Adjusted EBITDA margin | 20.4% | n/a | 17.3% | +17.9% |
2025 was our year of repositioning, 2026 is where that work finds its stride.— Sean Bagan, President and CEO, May 12, 2026
Management tone: Management struck a confident but measured tone, emphasizing record results and firsts while being direct about mixed end markets. On the call, executives answered tariff, M&A, and second-half comparison questions by walking through segment differences rather than claiming broad strength.
Management Guidance
Management raised FY2026 total sales guidance to $840–870 million from $820–860 million and held adjusted EBITDA margin guidance at 19.5–21.0%. Hydraulics segment sales were guided to $520–535 million and Electronics to $320–335 million. Q2 FY2026 sales were guided to $227–232 million, adjusted EBITDA margin to 20–21%, and non-GAAP EPS to $0.78–0.83. Guidance assumes constant currency at end-of-Q1 rates and excludes IEEPA/IEPA refunds.
Trajectory
The top line is growing year over year but the quarterly sequence is decelerating; the financial context flags revenue direction as decelerating even as Q1 FY2026 revenue of $228.4 million rose 17% from $195.5 million. Margins are split: the data spine shows gross margin compressing, while operating margin expanded 280 basis points and EBITDA margin expanded 190 basis points. The CFP divestiture and FX changes distort reported growth; pro forma constant-currency growth was 23%.
The Model
The model projects FY+1 revenue of $870 million and EBITDA of $177 million, a 20.3% margin, and FY+2 revenue of $936 million and EBITDA of $198 million, a 21.2% margin. The near-term projection sits within management's FY2026 revenue guidance, reflecting continued order conversion; FY+2 adds growth from new products and data-center ramp, with margin expansion tied to mix and operating leverage.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $839M | $870M | $936M |
| YoY Growth | — | +3.7% | +7.6% |
| EBITDA | $129M | $177M | $198M |
| EBITDA Margin | 15.3% | 20.3% | 21.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 7.9% above analyst consensus.
Management raised FY2026 total sales guidance to $840–870 million from $820–860 million and held adjusted EBITDA margin guidance at 19.5–21.0%. Hydraulics segment sales were guided to $520–535 million and Electronics to $320–335 million. Q2 FY2026 sales were guided to $227–232 million, adjusted EBITDA margin to 20–21%, and non-GAAP EPS to $0.78–0.83. Guidance assumes constant currency at end-of-Q1 rates and excludes IEEPA/IEPA refunds.
What Could Go Right — and Wrong
- Faster data-center thermal-management products generate first revenue in H2 2026 with named customers or orders.
- Order intake stays double digit through the seasonally large Q2 order period, converting to second-half sales.
- US agriculture recovery broadens, pulling Faster orders into revenue alongside Europe and Asia strength.
- New products including the QMEH valve, Zero series, OpenView S70, and Faster coupling block convert early wins into repeat orders.
- Electronics growth broadens beyond the unnamed large OEM and recreational demand.
- Order growth moderates below double digits; H2 2025 pro forma growth of about 21% creates an air pocket.
- Faster data-center products remain pre-revenue through H2 2026, while Amphenol, Dover, and Eaton consolidate.
- The unnamed large Electronics OEM pulls back, exposing concentration in the fastest-growing segment.
- Tariff pass-through, freight fuel surcharges near 2022 levels, and European energy costs compress margins.
- Footprint optimization in North America and Europe slips, disrupting revenue or margins.
Looking Ahead
The next twelve months are about converting order momentum and new products into revenue. Management expects the Faster data-center thermal ramp in H2 2026, while the Q2 order season and footprint optimization in North America and Europe add execution milestones. The revised FY2026 outlook from the August 10, 2026 Q2 release remains the missing near-term data point.
- H2 2026Faster data-center thermal ramp — Tests first revenue and named customers for the new thermal-management products.
- Through 2026Footprint optimization — Management cited footprint optimization in North America and Europe and the full-year benefit of portfolio and footprint actions as margin drivers.
- Through 20262025 new business wins phase in — About $60 million of 2025 wins convert, with second-half potential tied to new products.
- Through 2026OpenView S70 display rollout — Data-center control and monitoring platform seeks design wins and orders.
- Through 2030CORE 2030 strategy — Targets double sales by 2030 and 20%+ adjusted operating margin.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $806M | $839M | $872M | +4.1% |
| Gross Margin | 31.2% | 32.3% | 32.0% | +102bps |
| EBITDA | $146M | $129M | $1.3B | -11.7% |
| EBITDA Margin | 18.1% | 15.3% | 16.1% | 274bps |
| Net Income | $39M | $48M | $61M | +24.4% |
| Free Cash Flow | $92M | $104M | $682M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)32.0%
- EBITDA Margin (TTM)16.1%
- Net Margin (TTM)7.0%
- ROIC6.4%
- FCF Conversion76.7%
- SBC / Revenue0.7%
The Company
Helios Technologies is a global industrial technology company supplying highly engineered motion-control and electronic-control products through two segments: Hydraulics and Electronics. Hydraulics includes cartridge valves, manifolds, quick-release couplings, and complete hydraulic-system solutions; Electronics includes customized control systems, displays, wire harnesses, and software. Its data-center relevance comes from Faster quick couplings aimed at thermal management and Innovation Controls products for control and monitoring.
The 10-K extract covers Americas facilities totaling 2,016,000 square feet for Hydraulics and 906,000 square feet for Electronics; EMEA and APAC square footage was not in the supplied extract. Management cited footprint optimization in North America and Europe and the full-year benefit of portfolio and footprint actions as margin drivers.
Business Segments
Competitive Landscape
The 10-K frames competition in Hydraulics across full-line producers, component-only producers, and low-cost producers, and in Electronics across large multinationals and small niche players. Management's operational edge is framed around improved lead times and execution rather than absence of competitors.
- Parker HannifinNamed in the 10-K as a full-line hydraulic competitor; neighbor read-through notes ag remains under pressure.
- Danfoss/EatonNamed in the 10-K as a full-line hydraulic competitor.
- Bosch Rexroth/HydraForceNamed in the 10-K as a full-line hydraulic competitor.
- Delta Power CompanyNamed in the 10-K as a component-only MCT/FCT producer.
- ContinentalNamed in the 10-K as a large multinational electronics competitor.
Supply Chain
Helios is a component and subsystem supplier to OEMs and distribution, positioned in the thermal-management and control layer rather than as a data-center integrator. No neighbor transcript in the source package directly mentions HLIO.
More on HLIO: Earnings recap