Okay, good. Good morning, everyone. Thanks for joining us for Helios Technologies. We're very pleased to have CEO Josef Matosevic, CFO Sean Bagan, and VP of Investor Relations and Communications Tania Almond with us today. As is normal for the way I do these presentations, I'm going to start by putting forward three bear cases on the stock. And the Helios people are gonna tell me why I'm an idiot for suggesting such things. Then I will finish with three bull cases, at which time they will flip and begin telling me what a genius I am for suggesting those things. There should be slides for this. Anyway, I've got them up here. I can read them. The first bear case, subsystem and system sales contracts have been slower to materialize than the expectations the company set itself in 2023. Investors don't understand the growth algorithm in these new and expanded products and markets. Well, thanks for having us, Nathan. One more year. Another year. Yeah. You know, let me start maybe just by framing out. You know, we really don't manufacture, design, and build commodities or products. We are a highly engineered precision company, and what transpired last year in 2022, in 2023, in the second quarter, we start to see a little pullback in the market, and that was our opportunity to reevaluate all the system sales that we have been working on for the last year and a half, two years. That was our opportunity to reevaluate. Do we pull ahead some investments, so we can support that growth long term at a time where the market pulls back, or do we ride it out and stretch it out? Considering that we, again, that we're a highly engineered company, and we didn't wanna make a mistake, to us, it was the perfect time to pull those investments ahead. 'Cause if I would have dropped that expansion and that Center of Excellence and regional structure all at once, above and beyond manufacturing the product and supporting our customers, we would have made a mistake. So we chose to double down on our investments, knowing that it would pull back even further and complete those investments. That's one data point. The second data point is, you know, all the way until 2022, we were just a $300-$350 million company. We tripled the size of the company, you know, in less than two years and start hitting the wall on the capacity. We operated at 80%-85% of capacity, and we didn't have enough bandwidth to support the growth. So having said all that, we have completed our investment portfolio. We have invested not just CapEx, but significant amount of OpEx dollars, which drove our decline in margins. That's done. We have our Center of Excellence that will support not just the organic growth funnel, but also the system sales and subsystem opportunity within each segment. So there's three different arms that support your question here. Arm one is there will be subsystems within the electronic segment, within the customer base, the current customer base and new diversified customers. There will be a subsystem opportunity in the hydraulic segment with existing and new customers, and then there will be a full system sale that we have been working on, leveraging both segments into one integrated package. The key is, I know most of our investors know us, that our solutions are highly sticky. So every capital we invested in, every acquisition we have made, support that growth of the sticky solution. So once you get spec'd in through a manifold, through a cartridge valve, through an Enovation controller, Faster coupling, and all our brands, it just becomes a very, very sticky solution, and we can, you know, demand our premium margins that our investors are used to for so many years. So did it go slower as anticipated? To go back to your question, it did go slower as anticipated. Number one, we needed to complete those investments, so we don't make a mistake. Number two, we needed to complete the design and the engineering, and in many cases, it drove our customers' redesign as well. Number three, the market pullback had something to do with that, clearly. But, in terms of where we are currently, and I apologize if I jump ahead, is we have entered diversified markets in the subsystem area, and this is ramping up very nicely with the existing capacity. We have also entered subsystem opportunity in both segments with diversified customers to offset the cyclicality or seasonality if it continues or comes again at some point in time. I think you kind of answered that. Yeah, I know. Next bear case that I've got on here. So I'm gonna ask a couple more questions on the subsystem and system sales side of the business. Clearly, the acquisition strategy over the last probably eight years has built the business so that it can and so that it can develop and deploy these systems and subsystems and move into different markets, commercial food service, that you haven't been in before. So maybe you could just for the benefit of people who don't know the story as well, talk about, you know, the pieces that have been put together, how those go together. And then the market share that you're looking to take on the machinery side of it through outsourcing from customers, and then the entry into commercial food service, which is all incremental revenue. Certainly. So in our case, let's just pick a, i f it's Ag market or construction or mining equipment, everything starts with a manifold. Our manifold has a proprietary cavity, that once you spec in that manifold, you can only use Helios Technologies products. It's high pressure, high tolerances, very low leakage to no leakage, and traditionally, it outlasts every single equipment we sell our systems to. So it goes from a manifold to some cartridge valves, to Faster couplings, to Helios proprietary wire harness application, Enovation controllers in some cases, but board controllers. And then we have an OpenView platform that allows the equipment to get connected and actually communicates with the customer's system and provides the proper, necessary, usable data for the customer to operate its applications. And then on the commercial food service side, that's obviously an area that I am very familiar with. You know, the biggest bottleneck over the last decades have been no QSR or, or restaurant, if it's a Michelin star restaurant or any restaurant, will have one brand equipment in the kitchen. They come from many different manufacturers. If it's Ali, Welbilt, Middleby, Hoshizaki, you name it. That pieces of equipment go through a very harsh environment, so it requires certain application for durability. Our controllers are sealed, bonded, rugged, and can sustain any harsh environment. And now we have the capability, through M&A, to have hardware, to have the motherboard, to have software application, and to have a tracking mechanism that pulls everything together. So the notion of connecting the different appliances into one system is the key here. Our Cygnus application through i3 is patented and protected for an additional 15 years, so we have an advantage and can demand a premium. But the customers have recognized and continue to recognize that supply chain and having different entities to deal with creates additional waste in the system, creates additional cost and additional applications that they really don't wanna pay for. So, you know, we have tapped into that market, in the commercial food service market, in three different areas, and we are methodically ramping up, making sure we don't stumble at this large market application. But the entry is official and confirmed, and this will be a very nice segment for us over the years to come. So it's very early in the foray into the commercial food service market for Helios. It certainly seems like a high value-add product for the end user. Can you talk about how you go about penetrating that end market, how you go about dealing with the different OEMs for the commercial food service equipment, so that you can be into all of those products, so that you know, it provides the value to the customer at the end for interoperability? Yeah. We know exactly where we wanna play. And you have three different areas in the commercial food service. You got the hot side, cold side, and the beverage application. And when you look at our capability and our products, there's a space for us. So hot side and cold side will be our primary focus, coupled by a software application that we have developed that makes us pretty much the only ones in the market. And working with the customers, there will be a partnership of co-developments in many areas, but hot side, cold side is the areas we can play and have the pricing power we need, with our products. Okay, I'm gonna skip the second one 'cause I think we already addressed that, and I'm gonna go to the third one. The company's recent record at forecasting its business, especially with 2023 revisions, has been unreliable. It's difficult for investors to get comfortable with the 2024 guidance. Yeah, so before Sean jumps in here, you know, maybe just to level set the playing field here. Clearly, as we have grown in some areas, our systems, our processes, you know, haven't followed. We have acquired companies with different application, different European systems, so it became more difficult to forecast. But I think I own a lot of that, because when I made the decision to pull some investments ahead in a low, pulled back economy, I did this because it was the proper timing, so I don't overload the manufacturing operations with performance and expansion. So that threw the forecasting off a little bit as well, because, you know, we don't have many add-backs on our balance sheet, so every dollar we spend on an add-backs goes against our margins. So I own quite a bit of that, to be, be just very transparent. That didn't make it easy on the finance folks as we sped this up, and then you had supply chain issues to deal with, with expansion and equipment and, b ut we also had some gaps in the system. You know, we, Sun Hydraulics has been the founding member of the company for 53 years, and we had a very old system to deal with that needed to be upgraded. So it's a, it's combination of many different elements that drove that journey, but I'm probably the biggest driver in terms of that investment. And, Sean, you can add. Yeah. Thanks, Josef, and thanks, Nathan, for hosting this great conference and your interest in Helios, allowing us to tell our story. So I joined the company last summer in August, and as I approached this topic of kind of setting expectations and guidance and really understanding the business, it really came down to the people, process, and systems, and to really look at how the company's evolved, as Josef has highlighted, from a $200 million company just 8 years ago to where we are today. It's a true transformation, and so lots of variables at play. But with that has come a lot of great talent as well through acquisitions, and so it's, f or me, it's more aligning the resources to be better business partners. So we have presidents of each of the operating entities and really putting that right-hand person next to them to provide the data and the insights, and moving from being a good accounting shop to also seeing out the windshield. And so with that comes a lot of the process, and so try to instill more discipline around our forecasting, not only from a systematic process, but also bringing more insights into the business, whether that's customer insights, supplier insights, our internal data. And then finally, from a system perspective, it's investing in those areas for data analytics. Also, with all the acquisitions come a lot of different ERPs that are good ERPs and support the businesses, but really what sits on top to really aggregate it and tell the story. So building those risk-adjusted plans with risks and opportunities and ensuring we're not getting ahead of ourselves on investments and pacing our investments with the planned growth of the company. Nathan, if I could just add, you know, to your point about just confidence in 2024 guidance. We did not build any of these larger system sale deals that we're talking about at all into the 2024 guidance, right? The smaller ones. We reported, you know, Q1, we felt was very solid and affirmed full year 2024 guidance. We feel like we're, you know, getting some momentum through the year, and there's less time to get through to the 2024 at this point in terms of visibility perspective. Yeah. For what it's worth, the 2024 guidance looks pretty achievable after the first quarter and the trends going so far in the second quarter. So, much happier to see more conservative outlook and guidance that's more achievable and kind of represents what you're sure of rather than what you hope for. So for what it's worth, I think 2024 guidance looks pretty easy. Pretty decent. Maybe we won't call it easy. Okay, onto the bull cases. Helios Flywheel acquisition strategy has built internal capabilities to innovate new products that can penetrate new markets and more deeply penetrate existing markets, driving above market growth for many years. We've kind of touched on how this has enabled new product development and move into new markets. Maybe you can just, you know, talk a little bit more about the other capabilities that it's brought to the company and how you can leverage those into existing markets, existing customers. Yeah. So every company we have acquired is based on the notion of how do we become even more stickier and generate earnings above and beyond the norm? The vision that I have laid out a few years ago hasn't changed. The strategy hasn't changed. The capability we have gained is clearly in the hardware, software, algorithm, predictability in terms of data. We have folks on the mechanical engineering, electrical engineering. So what we were after is to complete the product offering in niche markets where we can demand premium margins and grow organically to new product innovation. For an example, when you see folks lifting people in the air, when you hit that button and they go up, it's relatively smooth. When you hit the button and masts are coming down, it starts jiggling, right? We have a counterbalance valve with an eSense technology, that independent what the weather conditions are, independent what the climate is, it goes up and down in a very, very same smooth way. So that's, so there is a safety standard application that's driven by the state, by the government, that we understood, so we gained that capability as well. Other markets we couldn't participate before is energy consumption, you know, windmills, offshore drilling, where the most reliable application have to be working. We have that capability now. We have a good low cost manufacturing with existing workforce in Tijuana, Mexico, right next door to each other, that structured the product cost around sales and marketing, so that will help improve the margins. So between growing our existing relationship into more of a system, example, Faster has been the exclusive supplier to John Deere for 31 years. So having that relationship, having additional capability, has provided us a potential new opportunity to, to sell to, and there's many other customers like this. So. Okay, I'll go on to the next one. Many of the businesses are experiencing cyclical downturns and inventory destocking, which has been happening across the industrial landscape. The businesses in 2023 and 2024 are operating at a level below average, in terms of revenue, with room for material cyclical improvement on the other side of the downturn. Yeah. Look, and that is one of the area that we're going to do a much better job as a company going forward. Now, since the product offering is, is completed, since the integrations are completed, the two segments are well structured. We have the team in place, and now we're going to communicate this a little bit more effectively. What does that mean in terms of our advantages and our capability, and how will the margin progress over time? What does subsystem and systems really mean to our investors, our customers? And equally important, our lead times. Our lead times is a very, very strong competitive advantage. We run between 6 and 10 weeks lead times in every business now, where our next closest competitors are 22 weeks, 24 weeks, going up to 40 weeks. So, we're in a different cycle and have been for a long, long time, but there's a reason for that. Sean, I don't know if you wanna- Yeah, I think, and even tying it back into the last question for me, what I observed with the acquisition strategy, the Flywheel acquisition, in addition to this, having a better product offering to become stickier and support those system solutions, it really has come with diversification, whether that's geographic or the end markets we serve, the customers. When you look at the business today, about half of it's in the Americas, about a quarter in Asia Pacific and a quarter in EMEA region. So we do definitely feel cyclical downturns, but not as we continue to grow and evolve, you won't see as big of the peaks, because right now there's a couple that we talk about and we know. The agricultural segment is a challenge right now, the marine and recreational products. What you're gonna see with our performance throughout the year, it's pretty consistent in terms of the quarters and continuing to balance some of that cyclicality because of that diversification we have. I was just gonna add to that, you know, thinking about the regions, you know, we've seen quite a pullback in APAC over the last couple of years, and so really in the first quarter, we started to see some, finally, some signs of life coming from China. You know, we do think it'll be a multi-year recovery, but the fact that we're finally starting to see some recovery starting to happen, just getting back to where we were in China, could be some very nice growth there for us. Yeah, and I think that's why it's a bull case here is, I think the businesses are underearning at the moment, just from a cyclical perspective. I mean, I think your biggest end market is Ag, which is clearly cyclically depressed. A bunch of your recreational businesses are still depressed. Balboa is still depressed, marine business still depressed. So maybe you can just talk about where you think some of these businesses are in the cycle, you know, and what kind of growth potential they have, just from recovery back to a mid-cycle level versus the cyclically depressed level that some of them are now. You call it bull case number two here. For us, it's the most exciting opportunity, getting the leverage that we have invested in and getting our ROIC. You know, we ran some models, you know, with Sean and his team, just over the last couple of weeks and, you know, as you mentioned, there's some markets still very depressed. So if we break it down in the hydraulics, right now, we have hydraulics and electronics. On the hydraulics side, we see a pullback in Europe on the Ag side, but North America is kind of stable-ish for us, still in the Ag market. Recreation with Enovation is still depressed, but Balboa is starting to recover very, very nicely, so it kind of balances it out, like Sean said. But at the same time, when you look at the diversified markets and how well they're progressing, if it's the commercial food service, we were just at the NRA and we are going to be at NAFEM as well, with a little bit of stronger, larger presence. So that's coming, that's coming up. Our business in China, we just did a roadshow for 10 days and pretty much went from Asia to Korea, name it. All of our businesses in APAC are starting to recover slowly. So when we looked at our models, just by the current volume where we are, we here over the next couple quarters, we clearly expect to get back to the somewhat normalized levels in terms of margin, meaning, you know, low twenties. But the big excitement will come as the markets start to recover, as we get more volume into the business and get the diversified markets spinning the way we planned. That's really the big opportunity for us over the next few years to come. Okay, I'm gonna jump onto the last one. With four minutes left: "Helios' global manufacturing strategy has the potential to unlock additional capacity for growth, as well as better optimize costs and supply chain, driving improvements in margins and ROIC. Yeah. I mean, Nathan, we agree. There's- I'm dumb when I read the bear cases. I'm smart when I read the bear cases. Well, no, I mean, it's factual. I mean, look, we would have not added, you know, the capacity we have added just to have good-looking buildings. There's a madness behind that strategy, and there's a customer appetite and commitments that came our way. At the same time, we are an operating company, so we structured the product cost around investments, around new product innovation, and this will materialize over the next years to come, and I think our investors will be pretty pleased with our ROIC going forward. So I think as you've put all these businesses together with acquisitions, that's enabled some of this global manufacturing strategy, where you can, you know, produce product in a better region, a more cost-effective region or closer to customers. Maybe you can just comment on some of the things that acquisition strategy has enabled, where you are in kind of that optimization process, 'cause I would imagine at the moment, you don't think everything's where it should be, and there's still some to do to squeeze some more value out of that. Yeah. So our strategy is in the region for the region manufacturing. So that's how we structured the operation and our supply chain. You know, we're about, you know, 80%-85% completed with that integration. Faster is the last piece. Over the next couple quarters, that will be also buttoned up and good to go. So our margins will come from... Our margin improvement over time will come from, obviously, the market rebounding and coming back to normalized levels. Our efficiencies that we have invested in through automated warehouse, where literally you don't touch any product anymore once it's manufactured, not only it minimizes labor, but minimizes supply chain costs, logistics costs. We have automations in place now that we didn't have before. We have a Center of Excellence where we manufacture all the manifolds in one factory with a backup plan and capability in another factory, another state, just in case Mother Nature comes in. It's a well-thought-out process that will get us to the end state as we previously laid out our vision. Just in terms of that, of that end state, there's two pieces, right? There's the capacity additions, and there's the, just the manufacturing optimization like moving manifold manufacturing out of Sarasota and into Indianapolis. Where are you in both pieces of those, and when should all of that be complete, and we can just look at, you know, it's more of a continuous improvement kind of environment rather than a restructuring kind of environment? Yeah. Second quarter of 2025. Well, that's a short answer. Okay, that's the end of my questions, and we're pretty much up on time anyway. So I'll say, thanks everyone for joining us for Helios, and thank you guys for joining us up here today. Thanks for having us. Thank you. Thank you.