What happened
Helios Technologies (HLIO +3.14%) missed earnings estimates for the quarter and lowered full-year guidance. The news hit shares of this unusually volatile industrial stock hard, sending shares down as much as 20% in Tuesday trading.
So what
Helios makes motion control and hydraulics systems for a range of industries, including construction, agriculture, recreation vehicles, marine, and health. The stock has been all over the place over the past five years, at one point down nearly 50% before nearly doubling in 2021.
The most recent quarter was not one to get Wall Street excited again. Helios reported adjusted earnings of $0.81 per share in the quarter, just short of the $0.84-per-share estimate, though revenue of $227.6 million was about $5 million more than what was expected.
Revenue was up 7% from the first quarter, and operating margin improved by 140 basis points.
"Our businesses are working cohesively to drive best-in-class product development providing the innovation our customers require for success," CEO Josef Matosevic said. "Expanding our capabilities enables us to better serve a more diversified global market. Our results in the quarter and year-to-date demonstrate this progress even against headwinds of the macroenvironment."
NYSE: HLIO
Key Data Points
Now what
Unfortunately, the second half of Helios' year is not going to be as profitable as analysts had hoped. The company cut its full-year earnings guidance to between $3.04 and $3.12 per share, down from $3.95 to $4.10 per share and well below the consensus $3.73 estimate. The company also cut its full-year revenue guidance to $880 million to $900 million, down from a range of $910 million to $940 million.
The company blamed the cuts on "reduced visibility" about end markets, in particular Asian markets, as well as storm damage at a manufacturing facility. Helios is also investing more heavily than it had planned on additional capacity in anticipation of future growth.
It is worth noting that even at the lower range, Helios is still projecting a three-year compound annual growth rate of 19%, including acquisitions. And Matosevic remains optimistic, saying, "our revolutionary technology, products and solutions allow the company to be well-positioned to address the advancing megatrends of increased electrification, reduced emissions footprint, higher energy efficiency, and convenient user interface."
That future might come, but it will take time. Given the pressures on the near-term outlook, investors appear content to watch from the sidelines for now.
