β‘ Research prep loaded: Swipe to π Research, β Questions, and β οΈ Risks tabs for the full prep package.
π
Thursday, March 19 β Travel + Reception
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10:45 AMβοΈ Depart PHL β SRQ (American Airlines)~2.5 hr flight. Land ~1:15 PM. Plenty of time for hotel before 6 PM reception.
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AfternoonCheck into hotel, settle in
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6:00 β 8:00 PMWelcome Receptionπ HLIO HQ β 7456 16th Street East, Sarasota, FL 34243Business casual. Mgmt team will be there β opportunity for informal face time with Bagan, Evans, Tania.
π Friday, March 20 β Investor Day
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8:00 AMRegistration & Breakfastπ Mote Science Education Aquarium, Sarasota
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8:30 AM β 1:30 PM"Igniting the Momentum: The CORE 2030 Strategy"Presenters: Sean Bagan (CEO), Jeremy Evans (CFO), executive leadership teamAgenda: Innovation strategy, market/wallet share capture, serviceable market expansion, 2030 financial targets
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1:30 PMLunch / Networking
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2:00 β 3:00 PMπ Sun Hydraulics Factory Tour (shuttle provided)β οΈ Closed-toe shoes required. Both you and Bob RSVP'd.π Original Sun Hydraulics production facility, Sarasota
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3:45 β 4:15 PMβοΈ NetJets: SRQ β PHLCitation Latitude, 2 passengers (John + Bob)Arrive PHL ~6:09 β 6:39 PM
π₯ Key Contacts
| Sean Bagan | President & CEO (since Jan 2025). You hosted him in KOP in Sept 2025. |
| Jeremy Evans | EVP, CFO. Key person for 2030 financial targets detail. |
| Tania Almond | VP IR & Corp Comms. Primary relationship. π (941) 362-1333 / (410) 960-4411 βοΈ tania.almond@heliostechnologies.com |
| Bob Mitchell | Managing Partner / CIO (traveling with you) π (484) 654-1380 βοΈ bmitchell@conestogacapital.com |
π€οΈ Sarasota Weather
| Thursday | Sunny, mid-50s AM β mid-70s PM, light breeze |
| Friday | Sunny, mid-50s AM β mid-70s PM |
π Packing Checklist
- Closed-toe shoes β required for factory tour
- Business casual (sport coat, no tie)
- Light jacket β 50s in the morning
- Business cards
- iPad / notepad
- Phone charger / battery pack
- Sunglasses
π Factory Tour β What to Observe
- Capacity utilization β how full are the lines?
- Automation level vs. what you'd expect from peers
- New equipment / capex evidence
- Inventory levels (raw materials, WIP, finished goods)
- Employee morale / tenure signals
- Safety standards and certifications displayed
- Customer logos / references visible on floor
π¬ Icebreakers & Conversation Starters
| Mote Marine | Partnership announced this week. Community commitment + brand. Good opening with Tania. |
| Faster MultiQTCβ’ | Announced March 3. Ask about early customer reception and order pipeline. |
| Sept 2025 KOP | Reference your last in-person with Bagan + Tania. "How have things evolved since September?" |
| JPM Initiation | Jan 2026, OW $80 PT. "Seeing broader sell-side interest since JPM picked you up?" |
Price
~$64
Mkt cap ~$2.1B
52-Wk Range
$24.76β$76.47
+167% off low
P/E (FY26E)
~23x
Cons ~$2.75
Net Leverage
1.8x
Down from 2.6x
PT Range
$74β$85
15β30% upside
Thesis Snapshot
Position: CCA holds HLIO across strategies. Tier 1 coverage name.
Bull Case
- Turnaround inflecting under Bagan: first full-year sales growth in 3 years in FY25
- Self-help + cyclical recovery = double engine for earnings power
- Balance sheet improving (1.8x net leverage, down from 2.6x) unlocks M&A optionality
- Portfolio simplification (CFP divestiture) refocuses on core manufacturing
- Electronics segment diversifying revenue mix with durable growth vectors
- Investor Day should provide multi-year financial targets that crystallize the earnings trajectory
Bear Case
- Industrial cycle still fragile: PMI barely positive, recovery uneven
- Tariff headwinds ($8M in 2H25, higher expected early 2026)
- Electronics chip supply risk (memory shortage, geopolitical)
- Hydraulics structural risk: electrification may erode TAM over time
- Valuation has run: stock +167% off 52-week low
- FY26 guide implies 2H deceleration from Q4 exit rate
CORE 2030 Strategy Preview
What We Know
- "CORE 2030" branding: focus on core competencies, organic growth, long-term value creation
- Pillars: drive innovation, capture market/wallet share, expand serviceable markets
- 2030 financial targets to be disclosed (main event)
- Management has referenced this as the catalyst to articulate the medium-term earnings algorithm
- JPM flagged Investor Day as next major catalyst, raised PT to $85
Key Unknowns Watch
- Specific 2030 revenue / EBITDA / EPS targets
- Organic growth CAGR assumption
- EBITDA margin target (current ~20%, history peaked mid-20s)
- Role of M&A: bolt-on vs transformative?
- TAM expansion: new end markets or adjacencies?
- Electronics revenue mix target by 2030 (currently ~37%)
- Capex / R&D investment levels
- Whether "CORE" is an acronym or just branding
Financial Targets β Street Expectations
| Metric | FY26E | FY27E | Implied Direction |
|---|---|---|---|
| Revenue | $840β858M | $885β900M | Mid-to-high single digit organic growth |
| Adj. EBITDA Margin | 19.5β21.0% | ~21%+ | Expansion through operating leverage |
| Adj. EPS | $2.73β2.85 | $3.10β3.30 | 15β20% growth path |
| Net Leverage | ~1.2x | ~0.7x | Rapid deleveraging β M&A capacity |
| FCF Conversion | >100% | >100% | Sustained strong cash generation |
Bull case 2030: If mgmt targets $1.0β1.2B revenue with 22β25% EBITDA margins, implies ~$5β6+ EPS power. Key question: organic-only or includes M&A?
Q4 2025 Earnings Recap
Revenue
$210.7M
+17% Y/y | +29% pro forma
Gross Margin
33.6%
+350 bps Y/y
EBITDA Margin
20.1%
+270 bps Y/y
Adj. EPS
$0.81
vs $0.72 cons | +145% Y/y
FCF (Q4)
~$40M
19.1% of sales | ~150% conversion
Hydraulics β $132.1M
- +10% Y/y reported, +27% pro forma
- Mobile, construction, ag all strong
- EMEA +33%, Americas +22%
- Operating margin 18.7%, up 490 bps
- Incrementals ~42% Strong
Electronics β $78.6M
- +31% Y/y organic
- Health & wellness, industrial, mobile demand + new customer wins
- Incrementals ~22% Watch
- Mix/investment drag on margins
FY26 Guidance
| Metric | 1Q26 | FY26 |
|---|---|---|
| Revenue | $218β223M +12% vs St | $820β860M |
| Hydraulics | β | $510β530M (~5% growth) |
| Electronics | β | $310β330M (~7% growth) |
| EBITDA Margin | 19.5β20.5% | 19.5β21.0% |
| Adj. EPS | $0.65β0.70 vs $0.60 St | $2.60β2.90 |
What Street Liked
- Q4 beat magnitude (revenue +7% above consensus)
- 1Q26 guide materially above expectations
- Margin improvement trajectory, especially Hydraulics incrementals
- Record cash flow and deleveraging pace
- Management confidence / "just getting started" tone
What Street Watched
- FY26 full-year guide only in line at midpoint despite strong 1Q
- Electronics incrementals below Hydraulics
- Tariff headwinds expected to escalate
- Chip supply constraints for Electronics
- Consumer/marine end markets still weak
Sellside Consensus
| Broker | Rating | PT | FY26E EPS | FY27E EPS | Key View |
|---|---|---|---|---|---|
| JP Morgan | OW | $85 | $2.83 | $3.21 | Most bullish. CORE 2030 = catalyst. 17.5x EBITDA. |
| KeyBanc | OW | $82 | $2.85 | $3.30 | Self-help + cyclical recovery. Conservative guide. |
| Baird | OP | $81 | β | β | Margin expansion + Investor Day catalyst. |
| Stifel | Buy | $74β76 | $2.73 | $3.14 | Constructive on 1Q guide, cautious on macro. |
| CJS Securities | MO | $75 | $2.77 | $3.10 | Balanced. Raised from $62. |
Key debate: All 5 brokers call FY26 guidance conservative. At ~$64, stock trades ~15.7x 2026E EV/EBITDA, below mid-cycle historical multiples. Investor Day should help the multiple if targets are credible.
Peer Context
Hydraulics / Motion Control Peers
| Company | Recent Signal |
|---|---|
| Parker Hannifin (PH) | FQ2 '26: organic growth driven by A&D. NA industrial returned to positive. Highlighting digitalization, software control, steer-by-wire at CONEXPO 2026. |
| Danfoss | Private. Leading in power solutions and climate. Investing in electrification and digital hydraulics. |
| Bosch Rexroth | Part of Bosch Group. Advanced industrial and mobile hydraulics. |
| Eaton (ETN) | Diversified power management. Hydraulics smaller piece. Electrification transition narrative. |
Industry Context
- Global hydraulic equipment market: ~$44B in 2026, growing at ~5% CAGR to ~$57B by 2031
- CONEXPO 2026 trends: digitalization, software control, steer-by-wire, electro-hydraulic integration
- Parker Hannifin highlighting "whole vehicle integration strategy connecting hydraulics with intelligence"
- PMI inflecting positive early 2026; industrial production improving. Recovery early-stage but gaining traction.
Read-through for HLIO: Large peers investing in digital/electro-hydraulic transition validates Electronics segment as strategic. Industry ~5% CAGR sets baseline; HLIO needs to show share gains and NPI-driven above-market growth.
12 Priority Questions
Thesis Confirmation
Question 1
CORE 2030 Financial Targets
What are the specific revenue, EBITDA margin, and EPS targets for 2030? What organic growth CAGR is embedded? How much assumes M&A?
Question 2
Revenue Bridge to 2030
Walk us through the growth algorithm: how much comes from market growth, share gains, new products/NPI, wallet share expansion, and new end market penetration?
CORE 2030 Strategy Specifics
Question 3
Serviceable Market Expansion
Which specific adjacencies or new verticals are you targeting? What is the current TAM vs the 2030 TAM assumption?
Question 4
Innovation Cadence
How does the NPI pipeline translate to revenue? Revenue contribution target from products launched in the last 3 years? R&D spending trend as % of sales?
Segment-Level Questions
Question 5
Hydraulics Path to 2030
Hydraulics margins hit 18.7% operating in Q4 with ~42% incrementals. What is the structural margin ceiling? Is 20%+ achievable? What role does Sun vs Faster play?
Question 6
Electronics Growth & Margin Trajectory
Electronics grew +31% organic but incrementals were only ~22%. Path to better margin conversion? Is Health & Wellness (Balboa) a growth driver or a drag? Electronics EBITDA margin target for 2030?
Question 7
Segment Revenue Mix
Where does management see the Hydraulics/Electronics split by 2030? Currently ~63/37. Goal to get Electronics to 40%+? 50%?
Capital Allocation
Question 8
M&A Pipeline
Net leverage approaching 1.2x by YE26, 0.7x by 2027. What's the M&A framework under CORE 2030? Bolt-on vs larger deals? Target end markets/capabilities? Maximum leverage for a deal?
Question 9
Buyback vs M&A
~$86M remaining buyback authorization. How do you balance repurchases vs M&A given the improving balance sheet? Target leverage range for capital deployment?
Competitive & Market Dynamics
Question 10
Electrification / Digital Risk
How does Helios position as OEMs adopt electro-hydraulic and fully electric solutions? Threat to core Sun cartridge valve business, or opportunity for Electronics crossover?
Question 11
Tariff & Supply Chain
Tariffs cost $8M in 2H25, expected higher in early 2026. Net tariff impact for FY26? How much can pricing offset? Supply chain actions on semiconductor components?
Margin Trajectory
Question 12
Long-Term Margin Algorithm
Where does consolidated EBITDA margin settle in a normalized demand environment? Prior cycle peaked in the mid-20s. Achievable again? What are the structural headwinds vs tailwinds?
Data Points to Confirm
- 2030 Revenue Target β consensus expects ~$1.0β1.2B; below $1B would disappoint
- 2030 EBITDA Margin Target β street expects 22β25%; current run-rate ~20%
- Organic Growth CAGR β 5β7% conservative, 7β10% bullish
- M&A Assumptions β included in targets or separate?
- NPI Revenue Contribution β % of revenue from products launched in last 3 years
- Wallet Share Metric β any KPI around revenue per customer or share of spend?
- Electronics Segment Margin β structural margin potential; currently lagging Hydraulics
- Hydraulics Operating Margin Ceiling β 18.7% in Q4, up 490 bps; 20%+ the new normal?
- Capex as % of Sales β current ~3%; does CORE 2030 require step-up?
- FCF Conversion Target β sustaining >100% important for bull case
- Leverage Guardrails β floor and ceiling for net leverage
- Commercial Wins Pipeline β >$50M referenced; validate and detail
- Faster Brand Ag Exposure β European/Chinese ag market growth outlook
- Balboa (Health & Wellness) β path to sustained growth after choppiness
What to Listen For
Tone & Confidence Signals
Bullish cues
- Specificity on targets, willingness to commit to 2030 numbers with conviction
- Upbeat body language around M&A capacity
- "Acceleration" language
Hedging cues
- Excessive macro caveats, wide target ranges
- Disclaimers about "depending on end market recovery"
- Vague M&A statements
Specific Things to Probe
- "Just getting started" vs actual proof: Bagan has used this phrase. Does the 2030 plan back it up with numbers?
- M&A readiness: "Active pipeline" / "well-developed funnel" / "disciplined but ready" Bullish vs "patient" / "nothing imminent" Neutral
- Electronics conviction: Does management treat Electronics as a growth engine or a secondary segment? Watch time allocation.
- Electrification positioning: Defensiveness about electric threats = Yellow flag. Confident explanation of hydraulics endurance + Electronics bridge = Green flag
- Tariff/macro hedging: Significant time on macro risks during a forward-looking event = Caution. Tone should be offensive, not defensive.
Thesis Risks
Thesis Risks
- Cyclical downturn: If industrial recovery stalls, FY26 guidance has less upside buffer
- M&A execution risk: Rapid deleveraging creates pressure to deploy. Bad deal destroys thesis.
- Electronics structural margin: If can't drive 25%+ EBITDA margins long-term, mix shift doesn't help
- Tariff escalation: $8M 2H25 impact could grow materially
- Chip supply: Memory chip constraints flagged explicitly
- Electrification disruption: Hydraulic TAM erosion as OEMs shift to electric. Long-tail but real.
- Customer concentration: Outsized dependence on specific OEMs or end markets
- Key man risk: Bagan is the turnaround CEO. Team depth matters.
Investor Day Risks
- Targets too conservative: 2030 revenue <$1B or EBITDA margin <22% = disappointment
- Targets too aggressive: Heroic M&A or unsustainable organic growth = credibility risk
- M&A-dependent plan: Primarily acquisition-driven vision may be discounted
- Lack of specificity: Buzzwords without KPIs, qualitative without quantitative
- Margin underwhelm: EBITDA target only ~21β22% (barely above current) = no margin story
- Management depth: If segment presidents can't present credibly, execution risk rises
- No new info: Rehashing Q4 themes without incremental detail = non-event, stock sells off
Bear Case Risks to Probe
- 2030 targets overly dependent on M&A (organic not enough)
- Margin targets don't improve meaningfully from current levels
- Electronics profitability remains structurally lower
- Management can't articulate a clear competitive moat beyond niche market positioning
- Capex or investment step-up larger than expected