Helios Technologies Q2 2026 earnings: Margin expansion supports a raised outlook

Helios Technologies (NYSE: HLIO) reported Q2 FY2026 revenue of $231.9 million, up 9% from $212.5 million, while diluted EPS rose 94% to $0.66 from $0.34 for the quarter ended July 4, 2026. Profit increased faster than sales, Electronics led segment growth, and second-quarter operating cash flow reached a record $42 million, supporting a higher full-year outlook.

Core financial results

On a pro forma basis adjusting for the effects of a divestiture and foreign exchange, sales grew 16%. Gross margin expanded as higher volume, new products and operating leverage more than offset cost pressures; the quarter also included a $1 million benefit from net IEEPA tariff refunds.

Operating income grew 48%, compared with the 9% reported sales increase. Net income also benefited from lower net interest expense, which declined to $4.7 million from $7.0 million.

Adjusted EPS, adjusted EBITDA and free cash flow are non-GAAP measures and should be considered alongside the company’s GAAP results.

Business and segment performance

Electronics generated most of the company’s incremental sales and delivered the larger margin improvement. Hydraulics grew more moderately on a reported basis, although its pro forma sales growth was 14% after adjusting for the divestiture and foreign-exchange effects.

Electronics sales increased across every reported region: 17% in the Americas, 7% in EMEA and 43% in APAC. Hydraulics was less consistent, with sales rising 6% in the Americas and 12% in EMEA but declining 8% in APAC.

The segment results explain why consolidated profit expanded much faster than revenue. Electronics operating income rose 90% to $11.2 million, while Hydraulics operating income increased 16% to $28.9 million. Corporate and other operating costs declined to $7.6 million from $9.0 million.

Profitability, cash flow and the balance sheet

The $42 million of quarterly operating cash flow was a second-quarter record, while free cash flow reached $31 million. For the first six months of FY2026, operating cash flow was $65.8 million, compared with $56.0 million in the prior-year period, even as accounts receivable and inventory used cash.

Helios ended the quarter with $68.0 million in cash, compared with $73.0 million at the start of the fiscal year. Long-term non-revolving debt declined to $226.1 million from $256.2 million, while revolving credit remained nearly unchanged at $105.4 million. The company’s net-debt-to-adjusted-EBITDA ratio fell to 1.4 times from 2.6 times a year earlier.

Capital allocation included $6.0 million of share repurchases during the quarter and the company’s 118th consecutive quarterly cash dividend. These actions occurred alongside debt reduction rather than being funded by an increase in revolving borrowings.

FY2026 guidance raised

Helios raised both ends of its full-year sales and adjusted EPS ranges. It also increased the lower end of its adjusted EBITDA margin outlook by 70 basis points while retaining the previous upper bound. At the midpoint, management said the sales range would represent the highest annual revenue in the company’s history.

The guidance assumes constant currency based on exchange rates at the end of Q2. Adjusted EBITDA margin and adjusted EPS are non-GAAP measures.

Management commentary

CEO Sean Bagan attributed the margin improvement to higher volume, new products and operating leverage. He also noted that Q2 marked the fourth consecutive quarter of double-digit pro forma sales and order-intake growth.

CFO Jeremy Evans said new business wins and visibility into near-term demand supported the higher outlook. Management nevertheless acknowledged tougher second-half comparisons and continuing uncertainty related to geopolitics, tariffs and inflation.

Recent insider transactions

The supplied six-month summary reports 23,323 shares purchased across 13 transactions and 13,027 shares sold across two transactions, resulting in net purchases of 10,296 shares. It lists total insider ownership at approximately 458,680 shares and net purchases equal to 2.30% of insider holdings.

The latest detailed records include two sales by officer Matteo Arduini and several derivative-security exercises or conversions by directors. These disclosures do not, by themselves, establish insiders’ views about the company’s outlook.

Risks investors should monitor

• Second-half comparisons: Management expects tougher year-over-year comparisons, which could make the first half’s growth rates more difficult to sustain.
• Tariffs and inflation: The quarter included a $1 million net tariff-refund benefit. Future tariff developments and broader inflationary pressure could affect costs and margins differently.
• Regional divergence: Hydraulics sales declined 8% in APAC despite growth in the Americas and EMEA. Continued regional weakness could limit segment growth.
• Reported versus pro forma growth: Reported sales rose 9%, compared with 16% growth after adjusting for the divestiture and foreign exchange. These factors remain important when evaluating underlying growth and the constant-currency outlook.

Summary

Helios Technologies’ Q2 FY2026 results combined reported sales growth with faster expansion in operating profit, earnings and margins. Electronics was the primary growth driver, while operating leverage, lower interest expense and improved cash generation strengthened the overall result. The raised FY2026 outlook points to continued confidence in near-term demand, but second-half comparisons, tariff costs, inflation and Hydraulics’ regional performance remain the main areas to monitor.