Helios Technologies Stock Surges After Solid Q3 Results, Raised FY21 Guidance

Helios Technologies Inc HLIO reported third-quarter FY21 sales growth of 82% year-over-year to $223.2 million and organic sales growth of 30%, beating the consensus of $195.93 million.
Sales reflected strong demand across all markets, particularly agriculture, construction equipment, recreation, and health & wellness. Results included $63.8 million in sales from acquisitions.
The gross margin contracted by 210 bps to 36.2%. The operating income increased to $40.7 million (+122% Y/Y), and the margin expanded by 330 bps to 18.2%. Adjusted operating margin expanded by 320 bps to 22.5%.
Adjusted EPS improved to $1.07 compared to $0.53 in 3Q20, beating the consensus of $0.80.
Adjusted EBITDA improved to $55.9 million (+95% Y/Y), and margin expanded by 170 bps to 25.1%.
Hydraulics segment sales were $133.4 million (+36% Y/Y), Gross margin of 37.6%, up 150 bps driven by improved leverage on higher volume, production labor efficiencies, and a favorable sales mix; and Operating margin of 23.8% improved 460 bps.
Electronics segment sales were $89.8 million (+268% Y/Y), Gross margin 34.9% down by 1,190 bps reflecting the different business model of the Balboa acquisition, and Operating margin 20.5%, up by 130 bps.
Helios generated cash from operating activities for the third quarter $32.5 million, compared to $36.7 million a year ago.
The company held cash and equivalents of $47.7 million as of October 2, 2021, up $22.5 million from the end of 2020.
FY21 Outlook: Helios expects revenue of $840 million - $860 million vs. consensus of $818.31 million (prior expectation $800 million - $830 million).
It sees Adjusted EBITDA of $197 million - $211 million (prior $188 million - $203 million). Adjusted EBITDA margin outlook unchanged at 23.5% - 24.5%.
It expects Non-GAAP Cash EPS of $3.75 -$4.10 (prior $3.60 -$3.80) vs. consensus of $3.75.
Price Action: HLIO shares are trading higher by 9.90% at $102.54 on the last check Monday.

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