Quarterly Report for Quarter Ending April 4, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words "expects," "anticipates," "believes," "intends," "plans," "will" and similar expressions identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Form 10-Q with the Securities and Exchange Commission. These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed in this report and those identified in Part I, Item 1A, "Risk Factors" included in our Form 10-K. In addition, new risks emerge from time to time, and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, our future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements.

OVERVIEW

We are a global leader in highly engineered motion control and electronic controls technology for diverse end markets, including agriculture, construction, data centers, energy, health and wellness, industrial, marine, material handling, and recreational vehicles.

We operate under two business segments: Hydraulics and Electronics. The Hydraulics segment designs and manufactures hydraulic motion control and fluid conveyance technology products, including cartridge valves, manifolds, and quick release couplings, as well as engineers hydraulic solutions and in some cases complete systems. The Electronics segment designs and manufactures customized electronic controls systems, displays, wire harnesses, and software solutions.

With our global operating network, we have the advantages of leveraging sales, marketing, innovation, customer relationships and operational capabilities across all our businesses. We continue to drive best practices and are committed to leveraging resources to best serve our customers and explore new opportunities.

Restructuring Activities

In January 2025, the Company began restructuring the Helios Center of Engineering Excellence ("HCEE"). Consistent with the Company's previously announced restructuring plan, during the end of the second quarter 2025, management ceased operations at the San Antonio office and reassigned resources to the operations at our other major facilities across the business, and eliminated certain positions. As a result of this planned change in the HCEE business operations, the workforce intangible asset associated with the HCEE acquisition was reviewed by management and it was determined that the remaining net book value of the asset should be accelerated and amortized over a useful life ending June 2025.

We initiated some optimization activities at the beginning of 2026 that will result in the movement of production activities between locations in order to drive operational efficiencies and reduce costs. We are consolidating the North American operations of the Hydraulics Faster entity in Toledo, Ohio, and will subsequently close the Faster operation in Quebec, Canada, that was obtained as part of the acquisition of the assets of Taimi R&D, Inc. in July 2022. The activities began in the first quarter of 2026 and are expected to be completed by the third quarter of 2026. In addition, we are moving additional production activities within our Electronics segment to our low cost manufacturing center of excellence in Tijuana, Mexico. These activities were paused in 2025 as a result of the uncertain and changing tariff landscape and are now being re-initiated. Transition activities will take place throughout 2026.

Restructuring costs totaled $0.6 and $0.3, for the three months ended April 4, 2026 and March 29, 2025.

Global Economic and Geopolitical Conditions

We expect the challenging macroeconomic conditions to continue, characterized by economic uncertainty and market disruption driven by inflationary pressures, political uncertainty, potential changes to current global trade policies and modifications of existing trade agreements, the potential negotiation of new trade agreements and imposition of new

(and retaliatory) tariffs, and the ongoing geopolitical conflicts in Ukraine and the Middle East. We are continuously monitoring these economic and geopolitical conditions and remain focused on liquidity management, pricing discipline, cost savings initiatives and production efficiency as ways to mitigate the risks associated with the uncertainty.

Refer to Item 1A "Risk Factors" of our Form 10-K for additional discussion of risks related to global economic conditions.

Tariffs

The global trade environment remains highly dynamic, with significant changes to U.S. tariff policy enacted during 2025 and continuing into 2026. These measures include new tariffs, modifications to existing programs, and ongoing legal and regulatory developments. Such tariffs were implemented under several legal frameworks, including the International Emergency Economic Powers Act ("IEEPA").

In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under IEEPA were not authorized. The decision ruling did not address the timing or extent of potential refunds of previously paid tariffs under IEEPA, and uncertainty remains regarding the ultimate resolution of these matters. While certain tariffs have been invalidated, others remain in effect. We will pursue refunds for IEEPA tariffs paid but due to uncertainty around actual payout amounts and timing, we have not made any adjustments to the consolidated financial statements for potential refunds as of April 4, 2026.

We export products from our U.S. locations to more than 40 countries. Our total U.S. exports were approximately $45.1 or 19.7% of total sales in the three months ended April 4, 2026.

Due to the fluidity of the tariff environment and potential subsequent changes to effective dates, amounts of announced tariffs, and various exemptions for imports into the U.S. (especially in light of the recent decisions invalidating certain previously announced tariffs), we are unable to fully quantify the impact such tariffs will have on our results of operations when and if enacted. Our expectation, however, is to continue to leverage our regional production capabilities, source components from local suppliers, and take certain pricing actions, which we believe may mitigate the impact of higher tariff costs. We cannot provide any assurances that these or other actions that we take will be able to offset any or all tariff-related costs. Additionally, increased prices could impact demand for our products, including our ability to attract new customers or cause increases in existing customer attrition. If our attempts to mitigate tariff-related costs are not sufficient or executed in a timely manner, our business, results of operations, and our financial and/or operating costs may be adversely affected.

We will continue to monitor developments in trade policy and assess the potential impact on our cost structure, supply chain, and customer demand.

Industry Conditions

The capital goods industries in general, and the Hydraulics and Electronics segments specifically, are subject to economic cycles. We utilize industry trend reports from various sources, as well as feedback from customers and distributors, to evaluate economic trends. We also rely on global government statistics such as Gross Domestic Product and Purchasing Managers Index to understand macroeconomic conditions.

Hydraulics

According to the National Fluid Power Association (the fluid power industry's trade association in the U.S.), the U.S. index of shipments of hydraulic products increased 2% during the first three months of 2026 compared to the first three months of the prior year while the U.S. index of orders of hydraulic products increased 22% during the same period. In Europe, the CEMA (European Agricultural Machinery Association) Business Barometer reported in March 2026 that the general business climate index for the European agricultural machinery industry has dropped back into negative territory for the first time since its upturn a year ago. The decline in the overall index is a downward adjustment in expectations for the coming six months, since the upturn has not materialized in many segments, particularly in harvesting and arable equipment. The report indicated the outlook appears to be slightly positive and the participants expect their company's

turnover to increase in the single-digit range. Western and Northern Europe, as well as Oceania are continued to be viewed with confidence while North America is ranking at the bottom of the confidence index.

Electronics

The Federal Reserve's Industrial Production Index, which measures the real output of all relevant establishments located in the U.S., reports first quarter 2026 output of semiconductors and other electronics components decreased from the prior quarter. The Institute of Printed Circuits Association ("IPC") reported that total North American printed circuit board ("PCB") shipments were up 17.6% in February after being up 9.1% in January compared with the same months last year. PCB bookings in 2026 were down 4.3% in February compared to the prior year and decreased 10.8% for the same period last year. The book to bill ratio, calculated as the value of orders booked over the past three months divided by the value of sales in the same period, was above 1.1 for each month, indicating a stronger demand environment to start the year. The IPC also reported that North American electronics manufacturing services ("EMS") shipments increased 7.6% in February compared to the prior year while being flat year over year in January. EMS bookings increased 1.7% in February year over year after decreasing 3.3% in January, highlighting the sector's choppiness in the quarter. On April 8, 2026, the Global Electronics Association released the "Annual Survey of the European EMA Industry 2026." The survey highlights that industrial electronics market shows early recovery signals while profitability stabilized or improved for many companies despite lower revenues. The sentiment for 2026 points to modest improvement, not a strong rebound.

Executive Officer and Board Transitions

On January 6, 2025, the Company announced that the Board of Directors of the Company promoted Sean Bagan to President and Chief Executive Officer of the Company, effective January 6, 2025. In connection with Mr. Bagan's appointment, Chairman Philippe Lemaitre, serving as Executive Chairman, resumed his role as Non-Executive Chairman. The Board subsequently nominated Mr. Bagan for election to the Board at the 2025 Annual Meeting of Shareholders. Mr. Bagan also continued to serve as Chief Financial Officer while the Company conducted a search process to identify a permanent Chief Financial Officer to backfill his previous role.

On March 13, 2025, Mr. Lemaitre notified the Company of his decision to retire and not seek re-nomination at the 2025 Annual Meeting of Shareholders. He had served on Helios' Board since 2007 and as Chair since 2013. On March 13, 2025, the Board elected Laura Dempsey Brown to serve as the new Non-Executive Chair of the Board, effective March 13, 2025.

On March 31, 2025, Lee Wichlacz, the President of Electronics, was separated from the Company, and Billy Aldridge was named as Senior Vice President, Managing Director, Electronics Segment. Mr. Aldridge had served as the Senior Vice President, Managing Director of Enovation Controls since May 3, 2021.

On June 5, 2025, the Board appointed Ian Walsh to serve as a member of the Board effective June 5, 2025. Mr. Walsh was also appointed to serve on the Board's Audit Committee and Governance Committee. He serves as a member of the class of directors whose term will expire at the 2026 Annual Meeting of Shareholders.

On August 28, 2025, the Board, announced that Michael Connaway had been appointed to the corporate officer position of Executive Vice President, Chief Financial Officer, effective as of October 13, 2025. In connection with Mr. Connaway's appointment, Sean Bagan, President, Chief Executive Officer, and Chief Financial Officer, no longer held the corporate officer position of Chief Financial Officer as of October 13, 2025.

On August 28, 2025, the Board also announced that Jeremy Evans had been appointed to the corporate officer position of Senior Vice President, Chief Accounting Officer and Corporate Controller, effective September 1, 2025.

On November 17, 2025, the Board, announced that Jeremy Evans had been named the Company's Executive Vice President and Chief Financial Officer effective immediately. Mr. Evans succeeded Michael Connaway who was separated

from the Company, previously joining Helios on October 13, 2025. Mr. Connaway's departure was not related to any disagreement with the Company on any matter relating to its accounting practices, financial statements, internal controls or operations.

On December 8, 2025, the Board, announced that Billy Aldridge had been appointed to the corporate officer position of President of Helios' Electronics Segment effective January 4, 2026. Mr. Aldridge had been serving as the Senior Vice President, Managing Director, Electronics Segment since March 31, 2025.

2026 First Quarter Results and Comparison of the Three Months Ended April 4, 2026, and March 29, 2025

(In millions, except per share data)

The following is a discussion of our first quarter of 2026 results of operations and liquidity and capital resources. Comparisons are with the corresponding reporting period of 2025, unless otherwise noted.

The following table presents our consolidated results of operations:

First quarter consolidated net sales increased $32.9, 16.8%, above the prior-year first quarter. Changes in foreign currency exchange rates had a favorable impact to our first quarter sales of $5.6, 2.5%.

First quarter sales were positively impacted by increased demand across several of our end markets, including recreational, mobile, agriculture, health and wellness, and industrial end markets. Sales focused on the marine category within recreational have remained depressed. Sales in the EMEA and Americas regions were up while sales in the APAC region were down during the first quarter compared to the prior year. The year over year decline in sales in the APAC region is due to the Divestiture. Excluding the Divestiture related sales of $14.2 in the first quarter of 2025, sales in the APAC region increased compared to the prior year.

First quarter gross profit increased $15.0, 25.0%, above the prior year first quarter primarily from the impact of higher volume and lower direct labor costs as a percentage of sales partially offset by higher overhead costs and net tariff impacts. The increase in overhead costs was driven by higher energy and equipment maintenance costs. Gross margin increased by 220 basis points as the impact of higher fixed costs leverage on higher volume, favorable segment mix, and lower direct labor costs more than offset the impact of higher overhead and net tariffs.

First quarter operating income as a percentage of sales increased 440 basis points to 13.1% compared with the prior year period. The increase is due to the gross margin level improvement and fixed cost leverage as a result of higher volume. Operating expenses were $2.1 higher than the year ago period mainly due to higher wages and benefit costs, research and development costs, as well as higher marketing and travel related costs.

Net interest expense decreased by $2.3 to $5.1 in the first quarter of 2026 primarily due to lower debt outstanding compared to the prior year period and a lower spread on our credit facility borrowings, because of reduced leverage. Average net debt decreased to $289.2 during the first quarter of 2026 compared with $402.6 during the first quarter of 2025. The reduction in average net debt is due to the paying down of debt incurred from prior year acquisitions.

The provision for income taxes for the first quarter of 2026 was 23.1% of pretax income compared to 23.5% for the prior-year first quarter. These effective rates fluctuate relative to the levels of income and different tax rates in effect among the countries in which we sell our products.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we expect certain provisions of the OBBBA to change the timing of cash payments in the current fiscal year and future periods, we do not expect the legislation to have a material impact on our Consolidated Financial Statements.

SEGMENT RESULTS

Hydraulics

The following table presents the results of operations for the Hydraulics segment:

First quarter net sales for the Hydraulics segment increased by $12.8, 10.1%, compared with the prior year first quarter. The increase in sales in the first quarter was driven by improved demand in the mobile and agriculture end markets. Prior year sales included $14.2 in sales related to the Divestiture. Changes in foreign currency exchange rates had a favorable impact of $5.3, 3.8%.

The following table presents net sales based on the geographic region of the sale for the Hydraulics segment:

Regional sales performance in the first quarter compared to the prior year quarter was driven by:

Americas - sales increased $6.8, 13.6%, primarily from stronger demand in the mobile end market.

EMEA - excluding favorable changes in foreign currency rates of $4.4, sales increased $6.9, 18.2%, driven by generally stronger demand in the mobile and agriculture end markets.

APAC - excluding favorable changes in foreign currency rates of $0.8, sales decreased $6.2, 16.1%. The primary driver of the year over year decline was the Divestiture.

First quarter gross profit increased $6.9, 18.4% compared to the prior year first quarter primarily due to higher volume. Gross margin improved 220 basis points, primarily due to better fixed cost leverage on higher volume, the Divestiture, and lower material costs partially offset by higher direct labor and variable overhead costs as a percentage of sales.

Operating income as a percentage of sales increased 300 basis points to 16.8% in the first quarter of 2026 due to the gross margin level improvement and fixed cost leverage as a result of higher volume. Operating expenses were $0.9 higher than the year ago period, mainly due to higher wages and benefit costs, as well as higher research and development costs.

Electronics

The following table presents the results of operations for the Electronics segment:

First quarter net sales for the Electronics segment increased $20.1, 29.1%, compared with the prior year period. Compared to the prior year period, the first quarter sales increase was driven by the recreational, health and wellness, and mobile end markets. Sales in the industrial end markets increased slightly, while sales to the agriculture end market decreased slightly. Changes in foreign currency exchange rates had minimal impact.

The following table presents net sales based on the geographic region of the sale for the Electronics segment:

Sales increased across all regions. The increase in the Americas and EMEA is primarily due to the recreational and market in the first quarter compared to the prior year. The year over year increase in APAC sales is primarily due to demand in the health and wellness end market.

First quarter gross profit increased $8.1, 36.0% compared to the prior year first quarter, primarily due to higher volume. Gross margin improved 170 basis points, primarily due to the impact of higher fixed costs leverage on higher volume and lower direct labor costs as a percentage of sales partially offset by unfavorable customer mix.

Operating income as a percentage of sales increased 430 basis points to 15.9% in the first quarter of 2026 compared to the prior year period due to the higher gross margin and fixed cost leverage as a result of higher volume. Operating expenses were $2.0 higher than the year ago period mainly due to higher wages and benefit costs, as well as higher research and development costs.

Corporate and Other

Certain costs are excluded from business segment results as they are not used in evaluating the results of, or in allocating resources to, our operating segments. For the first quarter of 2026, these costs totaled $7.7 for amortization of acquisition-related intangible assets of $7.6 and $0.1 for depreciation. Compared to the first quarter of 2025, these costs decreased by $0.7, primarily due to reduction of amortization related to acquired intangible assets.

LIQUIDITY AND CAPITAL RESOURCES

Historically, our primary source of capital has been cash generated from operations. We also use borrowings on our credit facilities to fund acquisitions. During the first three months of 2026, cash provided by operating activities totaled $23.9. At the end of the first quarter, we had $64.2 of available cash and cash equivalents on hand and $395.4 of available credit on our Revolving Credit Facilities. We also have a $400.0 accordion feature available under our Third Amended and Restated Credit Agreement, subject to certain pro forma compliance requirements, that is intended to support potential future acquisitions.

Our principal uses of cash are operating expenses, capital expenditures, servicing debt, acquisition-related payments, dividends to shareholders, and share repurchases.

We believe that cash generated from operations and our borrowing availability under our credit facilities will be sufficient to satisfy our operating expenses for the foreseeable future. In the event that economic conditions were to severely worsen for a protracted period of time, we would have several options available to ensure liquidity in addition to increased borrowings. Capital expenditures could be postponed since they primarily pertain to long-term improvements in operations, operating expense reductions could be made, acquisition activity could be delayed and finally, the dividend to shareholders as well as share repurchases could be reduced or suspended.

Cash Flows

The following table summarizes our cash flows for the periods:

Cash on hand decreased $8.8 in the first quarter of 2026 to $64.2 as of April 4, 2026. Changes in exchange rates during the three months ended April 4, 2026, negatively impacted cash and cash equivalents $0.7. Cash balances on hand are a result of our cash management strategy, which focuses on maintaining sufficient cash to fund operations while reinvesting cash in the Company and paying down borrowings on our credit facilities.

Operating activities

Year-to-date cash from operations increased by $4.9 to $23.9. Cash earnings (calculated as net income plus adjustments to reconcile net income to net cash provided by operating activities, excluding changes in net operating assets and liabilities) increased by $11.3 in the first quarter of 2026 compared to the prior period. Changes in net operating assets and liabilities negatively impacted cash flow by $6.4 in the first quarter, compared to the prior year period, primarily due to an increase in other current assets, along with increases in inventory and accounts receivable, partially offset by a decrease in accounts payable. Changes in inventory decreased cash by $3.7 in comparison to an increase of cash by $1.1 in the first quarter of 2026 and 2025, respectively. Days of inventory on hand decreased to 112 days as of April 4, 2026, compared with 126 days as of March 29, 2025. Changes in accounts receivable reduced cash by $22.4 and $15.3 in the first quarter of 2026 and 2025, respectively. Days sales outstanding decreased slightly to 55 days as of April 4, 2026, compared with 56 days as of March 29, 2025. Changes in accounts payable increased cash by $11.8 in comparison to an increase of cash of $4.8 in 2026 and 2025, respectively. Days payables outstanding for the 2026 year increased to 53 days from 41 days during 2025.

Investing activities

Cash used in investing activities totaled $7.2 in the first quarter of 2026, compared to $6.8 in the first quarter of the prior year.

Capital expenditures totaled $6.7, 2.9%, of sales for the first quarter of 2026, an increase of $0.6 over the prior year comparable period. Capital expenditures for 2026 are forecasted to be approximately 3.8% to 4.8% of sales, for investments in machinery and equipment, improvements to manufacturing technology and maintaining or replacing existing machine capabilities.

Financing activities

Net cash used in financing activities totaled $24.8 during the first quarter of 2026, compared to $11.3 in the same period of the prior year. In the first quarter of 2026, repayments, net of borrowings, totaled $16.9 compared to $7.8 in the first quarter of 2025.

Borrowings on our term loans and revolving credit facilities as of April 4, 2026, totaled $245.6 and $103.7, respectively. See Note 9 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report for additional information regarding our credit facilities.

Scheduled principal payments under the Term Loan Facility are payable in quarterly installments beginning on September 28, 2024 and continuing on the last day of each following fiscal quarter, beginning at $3.75 before increasing to $5.6 in June 2026 and $7.5 in June 2028. All remaining principal and unpaid accrued interest are due on the Term Loan Facility maturity date, which is June 25, 2029.

During the first quarter of 2026, we declared a quarterly cash dividend of $0.12 per share payable on April 27, 2026, to shareholders of record as of April 13, 2026. The declaration and payment of future dividends is subject to the sole discretion of the Board of Directors of the Company (the "Board"), and any determination as to the payment of future dividends will depend upon our profitability, financial condition, capital needs, future prospects and other factors deemed pertinent by the Board.

Share Repurchase Program

On February 20, 2025, the Board approved a multi-year share repurchase program (the "Share Repurchase Program"), authorizing the Company to repurchase up to $100.0 of our outstanding common stock. The Company may purchase shares at management's discretion from time to time in the open market, through privately negotiated transactions, through investment banking institutions or through other means in accordance with applicable federal securities laws, including Rule 10b5-1 trading plans. To the extent that the Company repurchases its shares, the amount and timing of any repurchases are subject to a variety of factors including, but not limited to, general business and market conditions, share price, regulatory and legal requirements and capital availability. The program does not obligate the Company to acquire a

minimum number of shares. We expect the Share Repurchase Program to be funded with cash on hand and cash generated from operations. During the three months ended April 04, 2026, the Company repurchased 70,000 shares of its common stock for $4.7, including applicable $0.1 excise tax to be paid in a future period. As of April 4, 2026, the Company has repurchased a total of 400,000 shares of it's common stock for $18.3, including applicable $0.2 excise tax, and has $81.9 million of remaining availability to repurchase outstanding common stock under its Share Repurchase Program.

Off Balance Sheet Arrangements

We do not engage in any off-balance sheet financing arrangements. In particular, we do not have any material interest in variable interest entities, which include special purpose entities and structured finance entities.

Critical Accounting Policies and Estimates

We currently apply judgment and estimates that may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses for impairment of long-lived assets, inventory, goodwill, accruals, income taxes and fair value measurements. Our critical accounting policies and estimates are included in our Form 10-K, and any material changes made during the first three months of 2026, are disclosed in Note 2 of the Condensed Notes to the Consolidated, Unaudited Financial Statements included in this Quarterly Report on Form 10-Q.