HEICO Corporation Reports Record Net Sales (Up 39%), Operating Income (Up 33%) and Net Income (Up 17%) for the Second Quarter of Fiscal 2024
HEICO (NYSE:HEI.A)(NYSE:HEI) announced record financial results for the second quarter of fiscal 2024. The company reported a 17% increase in net income to $123.1 million, or $.88 per diluted share. Net sales grew 39% to $955.4 million, and operating income increased 33% to $209.2 million. For the first six months of fiscal 2024, net income rose 20% to $237.8 million, while net sales and operating income increased by 41% and 36%, respectively. The Flight Support Group saw a 65% increase in net sales, while the Electronic Technologies Group experienced a 6% rise. EBITDA for the second quarter increased 35% to $252.4 million. The company highlighted its strong cash flow and reduced debt ratios, with a focus on continued product development and market penetration.
- Net income increased 17% to $123.1 million or $.88 per diluted share.
- Net sales grew 39% to $955.4 million.
- Operating income up 33% to $209.2 million.
- First six months net income rose 20% to $237.8 million.
- First six months net sales up 41% to $1,851.8 million.
- First six months operating income increased 36% to $389.4 million.
- Flight Support Group's net sales increased 65% to $647.2 million.
- Electronic Technologies Group's net sales rose 6% to $319.3 million.
- EBITDA for the second quarter increased 35% to $252.4 million.
- Cash flow from operating activities increased 82% to $141.1 million.
- Operating margin decreased to 21.9% from 22.8% year-over-year.
- Flight Support Group's operating margin dropped to 23.0% from 25.5%.
- Electronic Technologies Group's operating margin fell to 21.6% from 22.4% in the first six months.
- Higher intangible asset amortization and inventory obsolescence expenses impacted margins.
- Lower SG&A efficiency affecting Electronic Technologies Group.
Insights
HEICO Corporation's record financial performance in the second quarter of fiscal 2024 highlights impressive growth across multiple metrics. Key figures include a 17% increase in net income to
Moreover, HEICO's EBITDA growth of 35% to
However, the slight drop in operating margin from 22.8% to 21.9% signals potential cost pressures or increased expenditure that merits monitoring. This could be due to higher intangible asset amortization and inventory expenses, as well as the termination of a contingent consideration agreement.
For retail investors, these results suggest strong earnings momentum and potential for sustained growth. HEICO's diversified portfolio across aerospace, defense and electronics could provide resilience against sector-specific downturns.
The aerospace sector's contribution to HEICO's outstanding quarterly results is particularly noteworthy. The Flight Support Group reported a 65% increase in net sales, reaching a record
Fifteen consecutive quarters of net sales growth in this segment highlight the company's strategic positioning and product relevance in the aerospace market. However, a decrease in operating margin to 23.0% from 25.5% suggests rising costs or pricing pressures that need to be analyzed in future quarters. These might stem from increased amortization expenses and inventory management costs.
Investors should appreciate the resilience and growth in the aftermarket aerospace sector, but also remain cautious about cost management strategies moving forward. The balance between sales growth and operational efficiency will be important in sustaining long-term profitability.
HEICO's Electronic Technologies Group demonstrated solid performance, with a 6% increase in net sales to
Operating margin improvements from 22.5% to 23.6% underscore the efficiency gains and effective cost management within this group. Despite the lower organic sales in other electronics products, the steady demand in defense sectors helps balance the overall performance.
For investors, HEICO's strong foothold in the defense industry provides a stable revenue stream and potential for growth. Given the global defense market's resilience, HEICO's strategic investments and product offerings align well with industry trends.
HOLLYWOOD, FL and MIAMI, FL / ACCESSWIRE / May 28, 2024 / HEICO CORPORATION (NYSE:HEI.A)(NYSE:HEI) today reported an increase in net income of
Net sales increased
Net sales increased
Our commercial aerospace sales growth has resulted in fifteen consecutive quarters of sequential growth in net sales at the Flight Support Group.
EBITDA increased
Consolidated Results
Laurans A. Mendelson, HEICO's Chairman and CEO, commented on the Company's second quarter results stating, "We are very pleased to report strong record quarterly consolidated net sales driven by record quarterly operating results at the Flight Support Group and improved results at the Electronic Technologies Group, as well as strong contributions from our fiscal 2023 acquisitions. These results reflect
Our total debt to net income attributable to HEICO ratio was 5.39x as of April 30, 2024, down from 6.14x as of October 31, 2023. Our net debt to EBITDA ratio was 2.45x as of April 30, 2024, down from 3.04x as of October 31, 2023. See our reconciliation of total debt to net debt at the end of this press release.
Cash flow provided by operating activities increased
As we look ahead to the remainder of fiscal 2024, we continue to anticipate net sales growth in both the Flight Support Group and the Electronic Technologies Group, principally driven by contributions from our fiscal 2023 acquisitions and demand for the majority of our products. Additionally, we plan to continue our commitment to developing new products and services and further market penetration, while maintaining our financial strength and flexibility."
Flight Support Group
Eric A. Mendelson, HEICO's Co-President and President of HEICO's Flight Support Group, commented on the Flight Support Group's record setting second quarter results stating, "Continuing our growth trend, we achieved quarterly increases of
The Flight Support Group's net sales increased
The Flight Support Group's operating income increased
The Flight Support Group's operating margin was
Electronic Technologies Group
Victor H. Mendelson, HEICO's Co-President and President of HEICO's Electronic Technologies Group, commented on the Electronic Technologies Group's second quarter results stating, "Improved demand resulted in double-digit organic net sales growth of our defense and aerospace products, which contributed to our improved quarterly results.
The Electronic Technologies Group's net sales increased
The Electronic Technologies Group's net sales increased
The Electronic Technologies Group's operating income increased
The Electronic Technologies Group's operating income increased
The Electronic Technologies Group's operating margin improved to
The Electronic Technologies Group's operating margin was
Non-GAAP Financial Measures
To provide additional information about the Company's results, HEICO has discussed in this press release its EBITDA (calculated as net income attributable to HEICO adjusted for depreciation and amortization expense, net income attributable to noncontrolling interests, interest expense and income tax expense), its net debt (calculated as total debt less cash and cash equivalents), and its net debt to EBITDA ratio (calculated as net debt divided by EBITDA), which are not prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
These non-GAAP measures are included to supplement the Company's financial information presented in accordance with GAAP and because the Company uses such measures to monitor and evaluate the performance of its business and believes the presentation of these measures enhance an investor's ability to analyze trends in the Company's business and to evaluate the Company's performance relative to other companies in its industry. However, these non-GAAP measures have limitations and should not be considered in isolation or as a substitute for analysis of the Company's financial results as reported under GAAP.
These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. These measures should only be used to evaluate the Company's results of operations in conjunction with their corresponding GAAP measures. Pursuant to the requirements of Regulation G of the Securities and Exchange Act of 1934, the Company has provided a reconciliation of these non-GAAP measures in the last table included in this press release.
(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes, the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually identical in all economic respects. The only difference between the share classes is the voting rights. The Class A Common Stock (HEI.A) carries 1/10 vote per share and the Common Stock (HEI) carries one vote per share.)
There are currently approximately 83.7 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 54.8 million shares of HEICO's Common Stock (HEI) outstanding. The stock symbols for HEICO's two classes of common stock on most websites are HEI.A and HEI. However, some websites change HEICO's Class A Common Stock trading symbol (HEI.A) to HEI/A or HEIa.
As previously announced, HEICO will hold a conference call on Wednesday, May 29, 2024 at 9:00 a.m. Eastern Daylight Time to discuss its second quarter results. Individuals wishing to participate in the conference call should dial: US and Canada (888) 256-1007, International (929) 477-0448, wait for the conference operator and provide the operator with the Conference ID 1602283. A digital replay will be available two hours after the completion of the conference for 14 days. To access the replay, please visit our website at www.heico.com under the Investors section for details.
HEICO Corporation is engaged primarily in the design, production, servicing and distribution of products and services to certain niche segments of the aviation, defense, space, medical, telecommunications and electronics industries through its Hollywood, Florida-based Flight Support Group and its Miami, Florida-based Electronic Technologies Group. HEICO's customers include a majority of the world's airlines and overhaul shops, as well as numerous defense and space contractors and military agencies worldwide, in addition to medical, telecommunications and electronics equipment manufacturers. For more information about HEICO, please visit our website at www.heico.com.
Certain statements in this press release constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements. Factors that could cause such differences include, among others: the severity, magnitude and duration of public health threats, such as the COVID-19 pandemic; our liquidity and the amount and timing of cash generation; lower commercial air travel, airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales; our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; product development or manufacturing difficulties, which could increase our product development and manufacturing costs and delay sales; cyber security events or other disruptions of our information technology systems could adversely affect our business; and our ability to make acquisitions, including obtaining any applicable domestic and/or foreign governmental approvals, and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; and economic conditions, including the effects of inflation, within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues. Parties receiving this material are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
HEICO CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
| Three Months Ended April 30, | ||||||||
| 2024 | 2023 | |||||||
Net sales | $ | 955,395 | $ | 687,841 | ||||
Cost of sales | 583,600 | 421,329 | ||||||
Selling, general and administrative expenses | 162,642 | 109,422 | ||||||
Operating income | 209,153 | 157,090 | ||||||
Interest expense | (38,512 | ) | (11,373 | ) | ||||
Other income | 460 | 343 | ||||||
Income before income taxes and noncontrolling interests | 171,101 | 146,060 | ||||||
Income tax expense | 36,200 | 31,000 | ||||||
Net income from consolidated operations | 134,901 | 115,060 | ||||||
Less: Net income attributable to noncontrolling interests | 11,755 | 9,940 | ||||||
Net income attributable to HEICO | $ | 123,146 | $ | 105,120 | ||||
| Net income per share attributable to HEICO shareholders: | ||||||||
Basic | $ | .89 | $ | .77 | ||||
Diluted | $ | .88 | $ | .76 | ||||
| Weighted average number of common shares outstanding: | ||||||||
Basic | 138,386 | 136,916 | ||||||
Diluted | 140,059 | 138,600 | ||||||
| Three Months Ended April 30, | ||||||||
| 2024 | 2023 | |||||||
Operating segment information: | ||||||||
Net sales: | ||||||||
Flight Support Group | $ | 647,232 | $ | 392,202 | ||||
Electronic Technologies Group | 319,322 | 301,759 | ||||||
Intersegment sales | (11,159 | ) | (6,120 | ) | ||||
| $ | 955,395 | $ | 687,841 | |||||
Operating income: | ||||||||
Flight Support Group | $ | 148,876 | $ | 99,912 | ||||
Electronic Technologies Group | 75,263 | 67,979 | ||||||
Other, primarily corporate | (14,986 | ) | (10,801 | ) | ||||
| $ | 209,153 | $ | 157,090 | |||||
HEICO CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
| Six Months Ended April 30, | ||||||||
| 2024 | 2023 | |||||||
Net sales | $ | 1,851,758 | $ | 1,308,756 | ||||
Cost of sales | 1,133,194 | 798,445 | ||||||
Selling, general and administrative expenses | 329,201 | 223,787 | ||||||
Operating income | 389,363 | 286,524 | ||||||
Interest expense | (77,119 | ) | (17,441 | ) | ||||
Other income | 1,139 | 982 | ||||||
Income before income taxes and noncontrolling interests | 313,383 | 270,065 | ||||||
Income tax expense | 53,000 | (a) | 52,000 | (b) | ||||
Net income from consolidated operations | 260,383 | 218,065 | ||||||
Less: Net income attributable to noncontrolling interests | 22,539 | 19,918 | ||||||
Net income attributable to HEICO | $ | 237,844 | (a) | $ | 198,147 | (b) | ||
Net income per share attributable to HEICO shareholders: | ||||||||
Basic | $ | 1.72 | (a) | $ | 1.45 | (b) | ||
Diluted | $ | 1.70 | (a) | $ | 1.43 | (b) | ||
Weighted average number of common shares outstanding: | ||||||||
Basic | 138,325 | 136,786 | ||||||
Diluted | 139,976 | 138,590 | ||||||
| Six Months Ended April 30, | ||||||||
| 2024 | 2023 | |||||||
Operating segment information: | ||||||||
Net sales: | ||||||||
Flight Support Group | $ | 1,265,948 | $ | 763,480 | ||||
Electronic Technologies Group | 605,264 | 556,818 | ||||||
Intersegment sales | (19,454 | ) | (11,542 | ) | ||||
| $ | 1,851,758 | $ | 1,308,756 | |||||
Operating income: | ||||||||
Flight Support Group | $ | 284,967 | $ | 183,521 | ||||
Electronic Technologies Group | 130,591 | 124,516 | ||||||
Other, primarily corporate | (26,195 | ) | (21,513 | ) | ||||
| $ | 389,363 | $ | 286,524 | |||||
HEICO CORPORATION
Footnotes to Condensed Consolidated Statements of Operations (Unaudited)
(a) During the first quarter of fiscal 2024, the Company recognized a
(b) During the first quarter of fiscal 2023, the Company recognized a
HEICO CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
| April 30, 2024 | October 31, 2023 | |||||||
Cash and cash equivalents | $ | 204,161 | $ | 171,048 | ||||
Accounts receivable, net | 504,362 | 509,075 | ||||||
Contract assets | 110,158 | 111,702 | ||||||
Inventories, net | 1,088,101 | 1,013,680 | ||||||
Prepaid expenses and other current assets | 61,919 | 49,837 | ||||||
Total current assets | 1,968,701 | 1,855,342 | ||||||
Property, plant and equipment, net | 326,740 | 321,848 | ||||||
Goodwill | 3,285,468 | 3,274,327 | ||||||
Intangible assets, net | 1,333,337 | 1,357,281 | ||||||
Other assets | 451,599 | 386,265 | ||||||
Total assets | $ | 7,365,845 | $ | 7,195,063 | ||||
Short-term and current maturities of long-term debt | $ | 4,382 | $ | 17,801 | ||||
Other current liabilities | 554,781 | 647,541 | ||||||
Total current liabilities | 559,163 | 665,342 | ||||||
Long-term debt, net of current maturities | 2,385,267 | 2,460,277 | ||||||
Deferred income taxes | 119,987 | 131,846 | ||||||
Other long-term liabilities | 490,253 | 379,640 | ||||||
Total liabilities | 3,554,670 | 3,637,105 | ||||||
Redeemable noncontrolling interests | 368,369 | 364,807 | ||||||
Shareholders' equity | 3,442,806 | 3,193,151 | ||||||
Total liabilities and equity | $ | 7,365,845 | $ | 7,195,063 | ||||
HEICO CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| Six Months Ended April 30, | ||||||||
| 2024 | 2023 | |||||||
Operating Activities: | ||||||||
Net income from consolidated operations | $ | 260,383 | $ | 218,065 | ||||
Depreciation and amortization | 86,336 | 56,784 | ||||||
Share-based compensation expense | 9,463 | 6,055 | ||||||
Employer contributions to HEICO Savings and Investment Plan | 8,802 | 6,533 | ||||||
Deferred income tax benefit | (11,532 | ) | (9,596 | ) | ||||
Amendment and termination of contingent consideration agreement | - | (9,057 | ) | |||||
Payment of contingent consideration | (6,203 | ) | (6,299 | ) | ||||
(Decrease) increase in accrued contingent consideration, net | (5,326 | ) | 1,842 | |||||
Decrease (increase) in accounts receivable | 5,309 | (21,222 | ) | |||||
Decrease (increase) in contract assets | 3,172 | (9,267 | ) | |||||
Increase in inventories | (71,103 | ) | (75,251 | ) | ||||
Decrease in current liabilities, net | (76,338 | ) | (9,698 | ) | ||||
Other | 49,829 | 5,547 | ||||||
Net cash provided by operating activities | 252,792 | 154,436 | ||||||
Investing Activities: | ||||||||
Acquisitions, net of cash acquired | (46,208 | ) | (524,231 | ) | ||||
Capital expenditures | (26,325 | ) | (21,921 | ) | ||||
Investments related to HEICO Leadership Compensation Plan | (14,410 | ) | (14,000 | ) | ||||
Other | 1,657 | 362 | ||||||
Net cash used in investing activities | (85,286 | ) | (559,790 | ) | ||||
Financing Activities: | ||||||||
(Payments) borrowings on revolving credit facility, net | (75,000 | ) | 448,000 | |||||
Distributions to noncontrolling interests | (15,372 | ) | (22,650 | ) | ||||
(Payments) borrowings on short-term debt, net | (13,924 | ) | 1,672 | |||||
Cash dividends paid | (13,831 | ) | (13,668 | ) | ||||
Payment of contingent consideration | (13,797 | ) | (12,610 | ) | ||||
Acquisitions of noncontrolling interests | (3,165 | ) | (2,733 | ) | ||||
Redemptions of common stock related to stock option exercises | (2,352 | ) | (14,811 | ) | ||||
Proceeds from stock option exercises | 4,151 | 4,074 | ||||||
Other | (1,905 | ) | 1,491 | |||||
Net cash (used in) provided by financing activities | (135,195 | ) | 388,765 | |||||
Effect of exchange rate changes on cash | 802 | 4,246 | ||||||
Net increase (decrease) in cash and cash equivalents | 33,113 | (12,343 | ) | |||||
Cash and cash equivalents at beginning of year | 171,048 | 139,504 | ||||||
Cash and cash equivalents at end of period | $ | 204,161 | $ | 127,161 | ||||
HEICO CORPORATION
Non-GAAP Financial Measures
(Unaudited)
(in thousands, except ratios)
| Six Months Ended April 30, | ||||||||
EBITDA Calculation | 2024 | 2023 | ||||||
Net income attributable to HEICO | $ | 237,844 | $ | 198,147 | ||||
Plus: Depreciation and amortization | 86,336 | 56,784 | ||||||
Plus: Net income attributable to noncontrolling interests | 22,539 | 19,918 | ||||||
Plus: Interest expense | 77,119 | 17,441 | ||||||
Plus: Income tax expense | 53,000 | 52,000 | ||||||
EBITDA (a) | $ | 476,838 | $ | 344,290 | ||||
| Three Months Ended April 30, | ||||||||
EBITDA Calculation | 2024 | 2023 | ||||||
Net income attributable to HEICO | $ | 123,146 | $ | 105,120 | ||||
Plus: Depreciation and amortization | 42,831 | 29,724 | ||||||
Plus: Net income attributable to noncontrolling interests | 11,755 | 9,940 | ||||||
Plus: Interest expense | 38,512 | 11,373 | ||||||
Plus: Income tax expense | 36,200 | 31,000 | ||||||
EBITDA (a) | $ | 252,444 | $ | 187,157 | ||||
| Trailing Twelve Months Ended | ||||||||
EBITDA Calculation | April 30, 2024 | October 31, 2023 | ||||||
Net income attributable to HEICO | $ | 443,293 | $ | 403,596 | ||||
Plus: Depreciation and amortization | 159,595 | 130,043 | ||||||
Plus: Net income attributable to noncontrolling interests | 43,408 | 40,787 | ||||||
Plus: Interest expense | 132,662 | 72,984 | ||||||
Plus: Income tax expense | 111,900 | 110,900 | ||||||
EBITDA (a) | $ | 890,858 | $ | 758,310 | ||||
Net Debt Calculation | April 30, 2024 | October 31, 2023 | ||||||
Total debt | $ | 2,389,649 | $ | 2,478,078 | ||||
Less: Cash and cash equivalents | (204,161 | ) | (171,048 | ) | ||||
Net debt (a) | $ | 2,185,488 | $ | 2,307,030 | ||||
Total debt | $ | 2,389,649 | $ | 2,478,078 | ||||
Net income attributable to HEICO (trailing twelve months) | $ | 443,293 | $ | 403,596 | ||||
Total debt to net income attributable to HEICO ratio | 5.39 | 6.14 | ||||||
Net debt | $ | 2,185,488 | $ | 2,307,030 | ||||
EBITDA (trailing twelve months) | $ | 890,858 | $ | 758,310 | ||||
Net debt to EBITDA ratio (a) | 2.45 | 3.04 | ||||||
| (a) See the "Non-GAAP Financial Measures" section of this press release. | ||||||||
Victor H. Mendelson (305) 374-1745 ext. 7590
Carlos L. Macau, Jr. (954) 987-4000 ext. 7570
SOURCE: HEICO Corporation
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