Helios Sales Up, But Goodwill Impairment Hits Net Income

Ticker: HLIO · Form: 10-Q · Filed: Nov 4, 2025 · CIK: 1024795

Helios Technologies, INC. 10-Q Filing Summary
FieldDetail
CompanyHelios Technologies, INC. (HLIO)
Form Type10-Q
Filed DateNov 4, 2025
Risk Levelhigh
Pages15
Reading Time18 min
Sentimentmixed

Sentiment: mixed

Topics: Goodwill Impairment, Net Sales Growth, Profitability Decline, Divestiture Gain, Cash Flow, Share Repurchases, Motion Control Technology

Related Tickers: HLIO

TL;DR

**HLIO's sales growth is overshadowed by a massive goodwill impairment, signaling potential acquisition missteps and a red flag for future profitability.**

AI Summary

Helios Technologies, Inc. reported mixed financial results for the three and nine months ended September 27, 2025. For the three-month period, net sales increased by 13.3% to $220.3 million from $194.5 million in the prior year, but net income decreased by 9.6% to $10.3 million from $11.4 million. This decline was primarily due to a significant goodwill impairment charge of $25.9 million. Operating income plummeted to $1.3 million from $22.2 million year-over-year. For the nine-month period, net sales saw a modest increase of 0.3% to $628.2 million from $626.4 million. However, net income decreased by 15.5% to $28.9 million from $34.2 million, also impacted by the $25.9 million goodwill impairment. The company's cash and cash equivalents increased to $54.9 million as of September 27, 2025, up from $44.1 million at December 28, 2024. A key business change was the divestiture of a business, resulting in a gain of $18.8 million, net of CTA Loss, and an 'Other Receivable - Sale of Business' of $38.4 million. The company also repurchased $9.2 million in treasury stock during the nine-month period.

Why It Matters

Helios Technologies' latest 10-Q reveals a concerning goodwill impairment of $25.9 million, which significantly eroded net income despite a healthy increase in quarterly sales. This impairment suggests potential overvaluation of past acquisitions or deteriorating performance in certain segments, which could signal underlying operational challenges for investors. While the company's strategic divestiture generated a notable gain, the overall profitability dip could impact investor confidence and potentially pressure HLIO's stock price. Competitively, this impairment might indicate that Helios is struggling to integrate or extract value from its acquired assets as effectively as some peers, potentially affecting its long-term market position in motion and electronic controls.

Risk Assessment

Risk Level: high — The goodwill impairment of $25.9 million for both the three and nine months ended September 27, 2025, is a significant red flag, indicating that the carrying value of an acquired business unit exceeds its fair value. This directly led to a sharp decline in operating income to $1.3 million for the quarter, down from $22.2 million, and a 15.5% drop in nine-month net income to $28.9 million. This suggests potential issues with past acquisitions or deteriorating market conditions for certain segments.

Analyst Insight

Investors should scrutinize the details of the goodwill impairment to understand which segment or acquisition is underperforming and its future outlook. Consider reducing exposure to HLIO until management provides a clear strategy to address the underlying issues causing the impairment and demonstrates a return to consistent, profitable growth without such significant write-downs.

Financial Highlights

debt To Equity
0.69
revenue
$220.3M
operating Margin
0.6%
total Assets
$1,555.8M
total Debt
$400.6M
net Income
$10.3M
eps
Not Disclosed
gross Margin
33.1%
cash Position
$54.9M
revenue Growth
+13.3%

Key Numbers

Key Players & Entities

FAQ

What caused the significant drop in Helios Technologies' net income for Q3 2025?

Helios Technologies' net income for the three months ended September 27, 2025, decreased to $10.3 million from $11.4 million in the prior year, primarily due to a $25.9 million goodwill impairment charge. This charge significantly impacted operating income, which fell to $1.3 million from $22.2 million.

How did Helios Technologies' net sales perform in the latest quarter?

Helios Technologies reported a strong increase in net sales for the three months ended September 27, 2025, reaching $220.3 million. This represents a 13.3% increase compared to $194.5 million in net sales for the same period in the previous year.

What was the impact of the goodwill impairment on Helios Technologies' year-to-date results?

For the nine months ended September 27, 2025, the $25.9 million goodwill impairment contributed to a 15.5% decrease in net income, which fell to $28.9 million from $34.2 million in the prior year. Operating income for the nine-month period also declined to $40.3 million from $68.5 million.

Did Helios Technologies engage in any significant asset sales or divestitures?

Yes, Helios Technologies completed a divestiture of a business during the nine months ended September 27, 2025. This transaction resulted in a gain on sale of business, net of CTA Loss, of $18.8 million and created an 'Other Receivable - Sale of Business' of $38.4 million on the balance sheet.

What is Helios Technologies' current cash position?

As of September 27, 2025, Helios Technologies reported cash and cash equivalents of $54.9 million. This represents an increase from $44.1 million reported at December 28, 2024.

How much treasury stock did Helios Technologies repurchase?

During the nine months ended September 27, 2025, Helios Technologies repurchased $9.2 million worth of treasury stock. This activity is reflected in the Consolidated Statements of Shareholders' Equity.

What are the primary business segments of Helios Technologies?

Helios Technologies operates in two primary business segments: Hydraulics and Electronics. The Hydraulics segment includes motion control technology (MCT) and fluid conveyance technology (FCT), while the Electronics segment provides display and control solutions for various equipment and vehicles.

What are the key risks highlighted by the goodwill impairment for Helios Technologies?

The $25.9 million goodwill impairment indicates that the fair value of an acquired asset or business unit is less than its carrying value. This suggests potential risks such as overpaying for acquisitions, underperformance of acquired businesses, or adverse changes in market conditions affecting the value of those assets, which could impact future earnings.

How did Helios Technologies' debt levels change?

Helios Technologies' total current liabilities increased to $153.2 million as of September 27, 2025, from $138.6 million at December 28, 2024. Revolving lines of credit decreased to $138.8 million from $147.3 million, and long-term non-revolving debt, net, decreased to $261.8 million from $283.2 million.

What was the diluted earnings per share for Helios Technologies in Q3 2025?

For the three months ended September 27, 2025, Helios Technologies reported diluted net income per share of $0.31. This is a decrease from $0.34 per diluted share reported for the same period in the previous year.

Risk Factors

Industry Context

Helios Technologies operates in the industrial technology sector, providing solutions for various end markets. The industry is characterized by innovation, consolidation, and sensitivity to economic cycles. Companies often compete on technological advancement, product quality, and customer service. Recent trends include a focus on automation, digitalization, and sustainability.

Regulatory Implications

As a publicly traded company, Helios Technologies is subject to SEC regulations and accounting standards. The goodwill impairment charge and the gain on sale of business require accurate disclosure and adherence to accounting principles. Any future acquisitions or divestitures will also be subject to regulatory scrutiny.

What Investors Should Do

  1. Monitor the collection of the 'Other Receivable - Sale of Business'.
  2. Analyze the drivers behind the goodwill impairment.
  3. Evaluate the sustainability of revenue growth.
  4. Assess the impact of interest expenses on profitability.

Key Dates

Glossary

Goodwill Impairment
A reduction in the carrying value of goodwill on the balance sheet when its fair value is determined to be less than its carrying amount. This typically occurs when the acquired business is not performing as expected. (A significant $25.9 million charge in the current period drastically reduced operating income, highlighting potential issues with past acquisitions.)
Treasury Stock
Shares of a company's own stock that it has repurchased from the open market. These shares can be held for future use, such as employee stock options or acquisitions. (The company repurchased $9.2 million in treasury stock, indicating a return of capital to shareholders.)
CTA Loss
Cumulative Translation Adjustment loss. This arises from the translation of foreign currency financial statements into the reporting currency of the parent company. Losses occur when the exchange rate movements result in a decrease in the net assets of foreign subsidiaries. (Mentioned as a factor netted against the gain on sale of business, indicating international operations were part of the divestiture.)
Other Receivable - Sale of Business
An asset representing an amount owed to the company from the sale of a business. This could be a portion of the sale price not yet received. (A $38.4 million receivable was recorded due to a business divestiture, which needs to be collected.)

Year-Over-Year Comparison

Compared to the prior year, Helios Technologies shows a mixed performance. Net sales for the third quarter increased by 13.3% to $220.3 million, indicating top-line growth. However, net income saw a significant decline of 9.6% to $10.3 million, primarily due to a $25.9 million goodwill impairment charge that also severely impacted operating income. For the nine-month period, revenue growth was minimal at 0.3%, while net income decreased by 15.5%, further highlighting the impact of the impairment. Cash and cash equivalents have improved, but overall profitability metrics have weakened due to the one-time charge.

Filing Stats: 4,397 words · 18 min read · ~15 pages · Grade level 8.3 · Accepted 2025-11-04 16:26:20

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 3 Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets as of September 27, 2025 (unaudited) and December 28, 2024 3 Consolidated Statements of Operations (unaudited) for the Three Months Ended September 27, 2025 and September 28, 2024 4 Consolidated Statements of Operations (unaudited) for the Nine Months Ended September 27, 2025 and September 28, 2024 5 Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 27, 2025 and September 28, 2024 6 Consolidated Statements of Shareholders' Equity (unaudited) for the Three Months Ended September 27, 2025 and September 28, 2024 7 Consolidated Statements of Shareholders' Equity (unaudited) for the Nine Months Ended June 28, 2025 and June 29, 2024 8 Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 27, 2025 and September 28, 2024 9 Condensed Notes to the Consolidated, Unaudited Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39

OTHER INFORMATION

PART II. OTHER INFORMATION 40 Item 1.

Legal Proceedings

Legal Proceedings 40 Item 1A.

Risk Factors

Risk Factors 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 3. Defaults Upon Senior Securities 40 Item 4. Mine Safety Disclosures 40 Item 5. Other Information 40 Item 6. Exhibits 41 2

: FINANCI AL INFORMATION

PART I: FINANCI AL INFORMATION

FINANCIAL STATEMENTS

Item 1. FINANCIAL STATEMENTS. Helios Technologies, Inc. Consolidated B alance Sheets (in millions, except per share data) September 27, 2025 December 28, 2024 (unaudited) Assets Current assets: Cash and cash equivalents $ 54.9 $ 44.1 Accounts receivable, net of allowance for credit losses of $ 2.3 and $ 2.4 133.7 104.6 Inventories, net 185.4 190.1 Income taxes receivable 12.2 15.1 Other current assets 24.4 30.3 Other Receivable - Sale of Business 38.4 — Total current assets 449.0 384.2 Property, plant and equipment, net 207.6 216.4 Deferred income taxes 2.3 2.1 Goodwill 497.6 498.9 Other intangible assets, net 377.3 384.0 Other assets 22.0 19.8 Total assets $ 1,555.8 $ 1,505.4 Liabilities and shareholders' equity Current liabilities: Accounts payable $ 73.9 $ 56.7 Accrued compensation and benefits 22.3 24.6 Other accrued expenses and current liabilities 26.2 25.8 Current portion of long-term non-revolving debt, net 18.5 16.0 Dividends payable 3.0 3.0 Income taxes payable 9.3 12.5 Total current liabilities 153.2 138.6 Revolving lines of credit 138.8 147.3 Long-term non-revolving debt, net 261.8 283.2 Deferred income taxes 59.0 41.1 Other noncurrent liabilities 25.1 30.8 Total liabilities 637.9 641.0 Commitments and contingencies Shareholders' equity: Preferred stock, par value $ 0.001 , 2.0 shares authorized, no shares issued or outstanding — — Common stock, par value $ 0.001 , 100.0 shares authorized, 33.4 and 33.3 shares issued; 33.1 and 33.3 outstanding at September 27, 2025 and December 28, 2024, respectively — — Capital in excess of par value 441.9 437.4 Treasury stock, at cost, 0.3 and 0 shares, respectively ( 9.2 ) — Accumulated other comprehensive loss ( 37.4 ) ( 75.6 ) Retained Earnings 522.6 502.6 Total shareholders' equity 917.9

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