Financial Data and Key Metrics - Consolidated net sales increased 20% YoY to $614.5 million in Q4 FY22, driven by strong demand in the Flight Support Group (FSG) [10][11] - Consolidated operating income rose 27% YoY to $147.4 million, with operating margin improving to 24% from 22.6% in Q4 FY21 [11][12] - Net income increased 13% YoY to $97.2 million, or $0.70 per diluted share, compared to $86.1 million, or $0.62 per diluted share, in Q4 FY21 [12] - The effective tax rate increased to 23% in Q4 FY22, up from 18.3% in Q4 FY21, primarily due to unrealized losses in life insurance policies [13] Business Segment Performance Flight Support Group (FSG) - FSG net sales increased 33% YoY to a record $346 million, driven by 22% organic growth and contributions from acquisitions [17] - Operating income for FSG surged 60% YoY to $77.8 million, with operating margin improving to 22.5% from 18.7% in Q4 FY21 [18][19] - The growth was fueled by increased demand for commercial aerospace products and services, as well as higher sales of specialty products and aftermarket replacement parts [17][18] Electronic Technologies Group (ETG) - ETG net sales increased 6% YoY to $268.5 million, primarily due to acquisitions, partially offset by a slight decline in organic sales [22] - Operating income for ETG rose 4% YoY to $79.9 million, with operating margin slightly declining to 29.7% from 30.4% in Q4 FY21 [24][25] - The backlog remained elevated due to strong orders and supply chain delays, which are expected to benefit FY23 as shipments resume [23] Market and Strategic Outlook - The commercial aerospace market, HEICO's largest end market, continued to grow in FY22, with strong growth trends expected to continue into FY23 [28] - The defense market was flat in FY22, but global unrest and increased defense spending are expected to create a favorable environment for defense suppliers in FY23 [29] - Supply chain issues, particularly for electronic components, delayed certain deliveries in FY22, but these challenges are expected to mitigate in FY23 [29] - HEICO anticipates net sales growth in both FSG and ETG in FY23, driven by demand for the majority of its products [28] Management Commentary on Operating Environment and Future Prospects - Management expressed optimism about FY23, citing steady improvement in businesses during FY22 and a strong culture of ownership and entrepreneurial excellence [9][31] - The company remains committed to its conservative policies, strong balance sheet, and liquidity, which enable continuous investment in R&D and acquisitions [30] - HEICO's decentralized organizational structure and focus on long-term growth have been key drivers of its consistent outperformance [38][43] Acquisitions and Strategic Developments - In September 2022, ETG completed the acquisition of Trad Test and Radiation and Ironwood Electronics, both expected to be accretive to earnings within a year [14] - ETG also entered into an agreement to acquire approximately 95% of Exxelia International, which is expected to close in Q1 FY23 and will be HEICO's largest acquisition to date [15] - All acquisitions are expected to contribute to HEICO's earnings per share within a year of closing [15] Other Important Information - HEICO's 401-K plan, which matches employee contributions with HEICO stock, has resulted in many employees becoming millionaires, aligning their interests with shareholders [41] - The company's decentralized culture and focus on operational excellence have been key factors in maintaining its strong performance despite numerous acquisitions [38][42] Q&A Session Summary Question: How has HEICO maintained its culture and operational excellence despite numerous acquisitions? - HEICO's decentralized structure and focus on long-term growth have been key to maintaining its culture and operational excellence [38][43] - The company emphasizes strong relationships between management and employees, as well as a generous 401-K plan that aligns employee interests with shareholders [39][41] Question: What are the expectations for FSG margins in FY23? - FSG margins are expected to moderate in FY23 as the mix of products normalizes, particularly as the impact of COVID-19 diminishes [53] - The record 22.5% operating margin in Q4 FY22 was driven by strong growth in specialty products, which may not be sustained in FY23 [53] Question: How is HEICO positioned in the defense market? - HEICO expects to benefit from increased defense spending, particularly due to global unrest, but supply chain issues and procurement delays remain challenges [65] - The company's backlog in the defense market remains strong, supporting optimism for future growth [29][65] Question: What is the outlook for supply chain issues in ETG? - Supply chain issues, particularly for electronic components, reached record levels in Q4 FY22, but there are signs of improvement, with some "green shoots" emerging [65][95] - HEICO expects these issues to mitigate in FY23, but the timing remains uncertain [29][65] Question: How will Exxelia impact HEICO's margins? - Exxelia is expected to be dilutive to ETG margins in FY23, but the long-term opportunity is significant, as it aligns with HEICO's strategy of acquiring high-quality businesses [120][130] Question: What is HEICO's approach to M&A in the current market? - HEICO remains disciplined in its M&A approach, focusing on acquisitions that generate strong cash flow and align with its long-term growth strategy [157][159] - The company completed eight acquisitions in FY22 and continues to evaluate opportunities in both FSG and ETG [162] Question: How is HEICO managing wage and inflation pressures? - HEICO allows its subsidiaries to manage local wage and material cost pressures, while working with customers to protect margins through pricing adjustments [173] - The company's decentralized structure enables it to respond effectively to regional economic conditions [173] Question: What is HEICO's strategy in the PMA market? - HEICO continues to focus on expanding its PMA portfolio, with a record number of parts approved in FY22, driven by strong customer relationships and a diversified product offering [136][137] - The company is cautious about entering high-risk markets, such as the hot section of jet engines, and prefers to maintain its focus on lower-risk, high-reward opportunities [197][201]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 21% to a record level in Q3 fiscal '22 compared to Q3 fiscal '21, while operating income improved by 28% [9][13] - Consolidated operating margin rose to 22.6% in Q3 fiscal '22 from 21.4% in Q3 fiscal '21 [9] - Net income attributable to non-controlling interest increased to $10.5 million in Q3 fiscal '22 from $6.8 million in Q3 fiscal '21 [10] - Effective tax rate increased to 27% in Q3 fiscal '22 from 15.7% in Q3 fiscal '21, with management estimating a more realistic operational tax rate of 21% [11][12] Business Line Data and Key Metrics Changes - Flight Support Group's net sales surged by 39% to $330.3 million in Q3 fiscal '22, driven by a 25% organic growth and contributions from acquisitions [21] - Operating income for the Flight Support Group increased by 68% to $70.8 million, with operating margin improving to 21.4% from 17.7% [22] - Electronic Technologies Group's net sales rose by 2% to $244.2 million, with a slight operating income decrease to $68 million due to lower defense product sales [25][27] Market Data and Key Metrics Changes - The backlog for the Electronic Technologies Group increased by approximately 16% since October 31, '21, indicating strong orders despite supply chain delays [25] - The company experienced around $25 million in revenue delays primarily due to supplier issues, with expectations for recovery in future periods [26] Company Strategy and Development Direction - The company plans to utilize its financial strength to pursue high-quality acquisitions to accelerate growth and maximize shareholder returns [16] - Recent acquisitions include Accurate Metal Machining and Exxelia International, with Exxelia expected to generate approximately EUR 190 million in revenue during calendar year '22 [17][18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the recovery of global commercial air travel, although caution is advised due to potential pandemic variants and supply chain disruptions [29] - The company refrained from providing specific fiscal '22 net sales and earnings guidance due to uncertainties in the operating environment [29] Other Important Information - The company paid a regular semiannual cash dividend of $0.09 per share, marking its 88th consecutive semiannual cash dividend [17] - The total debt to shareholders' equity ratio improved to 9.9% as of July 31, '22, down from 10.3% as of October 31, '21 [15] Q&A Session All Questions and Answers Question: Can you provide more details on the Exxelia acquisition? - Management expressed excitement about the Exxelia acquisition, highlighting its complementary markets and the potential for expansion [33][34] Question: What is driving growth in the defense segment? - Management noted strong growth in non-defense markets such as space and medical, while defense product sales have lagged due to U.S. government outlays [36][37] Question: What are the expectations for airline inventory levels? - Management indicated that airlines are not significantly stocking inventory but are purchasing parts directly for aircraft maintenance [39][42] Question: Can you provide visibility on the delayed revenue recovery? - Management expects the bulk of the delayed revenue to be recovered in the fourth quarter, with some extending into the first quarter of the following fiscal year [52] Question: How does the company view the competitive landscape in the PMA market? - Management remains confident in HEICO's unique processes and product credibility, viewing new entrants as less of a threat [82]

HEICO Corporation (NYSE:HEI) Q2 2022 Earnings Conference Call May 24, 2022 9:00 AM ET Company Participants Laurans Mendelson – Chairman and Chief Executive Officer Eric Mendelson – Co-President and President of HEICO's Flight Support Group Victor Mendelson – Co-President and President of HEICO's Electronic Technologies Group Carlos Macau – Executive Vice President and Chief Financial Officer Conference Call Participants Gautam Khanna – Cowen Larry Solow – CJS Securities Peter Arment – Baird Jason Holcomb – ...

Financial Data and Key Metrics Changes - Consolidated operating income and net sales improved by 23% and 17% respectively in Q1 FY22 compared to Q1 FY21, driven by 13% organic net sales growth and contributions from fiscal '21 acquisitions [9][10] - Consolidated net income per diluted share increased by 24% to $0.63 in Q1 FY22 from $0.51 in Q1 FY21 [22] - Total debt to shareholders' equity improved to 10.1% as of January 31, 2022, down from 10.3% as of October 31, 2021 [10] Business Line Data and Key Metrics Changes - Flight Support Group's net sales increased by 37% to $272.7 million in Q1 FY22, with operating income rising by 103% to $52.4 million [17][18] - Electronic Technologies Group's net sales were $222.3 million in Q1 FY22, slightly down from $223.6 million in Q1 FY21, with operating income decreasing to $55.6 million from $60.1 million [20][21] Market Data and Key Metrics Changes - The Flight Support Group reported strong organic growth of 30%, reflecting increased demand for commercial aerospace products and services due to recovery in global air travel [17] - The Electronic Technologies Group experienced growth in medical and electronics products, but faced a decrease in defense and space product sales due to Omicron-related disruptions [20] Company Strategy and Development Direction - The company plans to utilize its financial strength to pursue high-quality acquisitions to accelerate growth and maximize shareholder returns [10] - Recent acquisition activity includes an agreement to acquire 74% of Pioneer Industries LLC, expected to be accretive to earnings within the first 12 months [14][15] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the recovery of global commercial air travel despite potential pandemic variants and supply chain disruptions [30] - The company does not provide specific fiscal '22 net sales and earnings guidance but emphasizes strong liquidity and investment in R&D [30] Other Important Information - Cash flow from operating activities was $78 million in Q1 FY22, down from $107.2 million in Q1 FY21, primarily due to increased working capital investment [11] - The company declared a semiannual cash dividend of $0.09 per share, marking the 87th consecutive dividend since 1979 [12] Q&A Session Summary Question: R&D spending and margin pressure - R&D spending is broad across product lines, with potential seasonality; margins may vary by quarter [34][35] Question: Supply chain concerns from airlines - The company is gaining market share due to competitors' supply issues and increased customer approval of parts [39][40] Question: Structural gains in margins post-pandemic - Margins have surprised positively, and there is potential for recovery to historical levels [52][54] Question: Impact of Omicron on orders - The quarter was consistent despite Omicron, with strong forecasts for future growth [55] Question: Inflation and pricing impact - The company is confident in maintaining margins despite inflation, passing costs to customers [59] Question: Near-term impact of geopolitical events - The decentralized nature of the business allows for quick adaptation to supply issues; titanium supply is manageable [62][63] Question: Acquisition pipeline and competition - The company has a full acquisition pipeline but faces competition from private equity; cultural fit is a priority [97][99]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) HEICO Corporation's unaudited condensed consolidated financial statements for the three months ended January 31, 2022, include balance sheets, statements of operations, comprehensive income, shareholders' equity, and cash flows, with detailed accompanying notes [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) HEICO Corporation's unaudited condensed consolidated financial statements for the three months ended January 31, 2022, include balance sheets, statements of operations, and cash flows with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of January 31, 2022, total assets increased slightly to **$3.51 billion** from **$3.50 billion**, while total liabilities decreased to **$913.6 million** from **$948.9 million**, leading to an increase in total shareholders' equity to **$2.34 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Jan 31, 2022 | Oct 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$3,513,895** | **$3,498,407** | | Total Current Assets | $974,562 | $937,385 | | Goodwill | $1,446,250 | $1,450,395 | | **Total Liabilities** | **$913,550** | **$948,881** | | Total Current Liabilities | $273,880 | $294,880 | | Long-term debt, net | $235,650 | $234,983 | | **Total Shareholders' Equity** | **$2,342,056** | **$2,296,939** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended January 31, 2022, HEICO reported a **17.3%** increase in net sales to **$490.3 million** and a **23.1%** rise in operating income to **$98.8 million**, with net income attributable to HEICO increasing **23.1%** to **$86.9 million** and diluted EPS reaching **$0.63** Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $490,343 | $417,902 | 17.3% | | Operating Income | $98,822 | $80,285 | 23.1% | | Net Income Attributable to HEICO | $86,921 | $70,596 | 23.1% | | Diluted EPS | $0.63 | $0.51 | 23.5% | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to **$78.0 million** in Q1 FY22 from **$107.2 million** in the prior year, primarily due to increased working capital, while investing activities used **$20.0 million** and financing activities used **$39.9 million** Cash Flow Summary (in thousands) | Activity | Three months ended Jan 31, 2022 | Three months ended Jan 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $77,980 | $107,199 | | Net cash used in investing activities | ($19,959) | ($25,271) | | Net cash used in financing activities | ($39,920) | ($91,407) | | **Net increase (decrease) in cash** | **$16,520** | **($7,449)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail HEICO's accounting policies and financial statement components, including COVID-19 impacts, revenue recognition, segment reporting for its Flight Support Group and Electronic Technologies Group, and asset details - The company's results continue to be adversely impacted by the COVID-19 pandemic, although Q1 FY2022 showed significant improvement in demand for commercial aerospace products compared to Q1 FY2021[20](index=20&type=chunk) - The company operates through two segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG)[19](index=19&type=chunk) Revenue by Segment (in thousands) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Flight Support Group | $272,681 | $199,334 | | Electronic Technologies Group | $222,336 | $223,550 | | Intersegment sales | ($4,674) | ($4,982) | | **Total consolidated net sales** | **$490,343** | **$417,902** | - As of January 31, 2022, the company had **$474.4 million** of remaining performance obligations, with **$273.9 million** expected to be recognized as revenue during the remainder of fiscal 2022[38](index=38&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the first quarter fiscal 2022 financial results, highlighting a **17%** increase in consolidated net sales and **23%** rise in operating income, primarily driven by the Flight Support Group's recovery, while maintaining strong liquidity despite refraining from full-year guidance [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Consolidated net sales increased **17%** to **$490.3 million** in Q1 FY22, primarily from a **37%** sales increase in the Flight Support Group, leading to a **23%** rise in operating income to **$98.8 million** and an improved operating margin of **20.2%** - The FSG's net sales increased by **37%** (**$73.3 million**), reflecting strong organic growth of **30%** from the recovery in global commercial air travel[66](index=66&type=chunk) - The ETG's net sales decreased by **1%** (**$1.2 million**), mainly due to a **3%** decline in organic net sales from decreased demand for defense and space products[66](index=66&type=chunk) Operating Income by Segment (in thousands) | Segment | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Flight Support Group | $52,376 | $25,822 | 102.8% | | Electronic Technologies Group | $55,588 | $60,128 | -7.5% | | Other, primarily corporate | ($9,142) | ($5,665) | 61.4% | | **Total Operating Income** | **$98,822** | **$80,285** | **23.1%** | - The consolidated operating margin increased to **20.2%** in Q1 FY22 from **19.2%** in Q1 FY21, driven by the FSG's operating margin expansion to **19.2%** from **13.0%**[71](index=71&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary cash uses include acquisitions and capital expenditures, with net cash from operations at **$78.0 million** in Q1 FY22, and it maintains adequate liquidity for the next twelve months with a **10.1%** total debt to shareholders' equity ratio - Net cash provided by operating activities was **$78.0 million** in Q1 FY22, down from **$107.2 million** in Q1 FY21, mainly due to a **$57.9 million** increase in net working capital[79](index=79&type=chunk)[80](index=80&type=chunk) - The company anticipates fiscal 2022 capital expenditures to be approximately **$45 million**[77](index=77&type=chunk) - As of January 31, 2022, the company was in compliance with all debt covenants and had a total debt to shareholders' equity ratio of **10.1%**[77](index=77&type=chunk) [Outlook](index=29&type=section&id=Outlook) Management anticipates continued recovery in global commercial air travel for fiscal 2022 but refrains from providing specific guidance due to uncertainties from COVID-19 variants, supply chain disruptions, and inflation - The company is cautiously optimistic about the continued recovery of global commercial air travel but acknowledges risks from new COVID-19 variants, supply chain issues, and inflation[76](index=76&type=chunk) - Due to market uncertainties, the company has decided it would not be responsible to provide fiscal 2022 net sales and earnings guidance at this time[76](index=76&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes in its assessment of market risk sensitivity from what was disclosed in its Annual Report on Form 10-K for the fiscal year ended October 31, 2021 - There have been no material changes in the company's assessment of its sensitivity to market risk since the last annual report[89](index=89&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that HEICO's disclosure controls and procedures were effective as of January 31, 2022, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that HEICO's disclosure controls and procedures were effective as of January 31, 2022[90](index=90&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[91](index=91&type=chunk) [Part II. Other Information](index=34&type=section&id=Part%20II.%20Other%20Information) [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and Interactive Data Files (Inline XBRL) - Exhibits filed with this report include CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and Section 1350, as well as Inline XBRL documents[94](index=94&type=chunk) [Signatures](index=35&type=section&id=Signatures) [Signatures](index=35&type=section&id=Signatures_child) The report is duly signed on February 25, 2022, by Carlos L. Macau, Jr., Executive Vice President - Chief Financial Officer, and Steven M. Walker, Chief Accounting Officer, on behalf of HEICO Corporation - The Form 10-Q was signed on February 25, 2022, by the company's Principal Financial Officer and Principal Accounting Officer[100](index=100&type=chunk)

HEICO Corporation (NYSE:HEI) Q4 2021 Results Conference Call December 16, 2021 9:00 AM ET Company Participants Laurans Mendelson - Chairman and CEO Eric Mendelson - Co-President and President of Flight Support Group Victor Mendelson - Co-President and President of Electronic Technologies Group Carlos Macau - Executive Vice President and CFO Conference Call Participants Pete Skibitski - Alembic Peter Arment - Baird Larry Solow - CJS Securities Kristine Liwag - Morgan Stanley Robert Stallard - Vertical Resear ...

Financial Data and Key Metrics Changes - Consolidated operating income and net sales improved by 47% and 22% respectively in Q3 Fiscal '21 compared to Q3 Fiscal '20, which was heavily impacted by the pandemic [11] - Consolidated organic net sales growth was 17%, with total debt to shareholders' equity improving to 17.4% as of July 31, '21, down from 36.8% as of October 31, '20 [15][18] - Cash flow from operating activities increased by 33% to $124 million in Q3 Fiscal '21, up from $93.1 million in Q3 Fiscal '20 [18] Business Line Data and Key Metrics Changes - Flight Support Group reported a 250% increase in operating income and a 33% increase in net sales in Q3 Fiscal '21 compared to Q3 Fiscal '20, driven by increased demand for commercial aerospace products [12][28] - Electronic Technologies Group's net sales increased by 14% to $239.5 million in Q3 Fiscal '21, with operating income rising by 11% to $69 million [34][37] Market Data and Key Metrics Changes - The Flight Support Group's net sales for the first 9 months of Fiscal '21 were $666.7 million, down from $731.2 million in the same period of Fiscal '20, reflecting lower demand due to the pandemic [27] - Electronic Technologies Group's net sales for the first 9 months of Fiscal '21 increased by 11% to $706.2 million, driven by acquisitions and organic growth [36] Company Strategy and Development Direction - The company plans to utilize its financial strength to pursue high-quality acquisitions to accelerate growth and maximize shareholder returns [17] - Management expressed a cautious optimism regarding the recovery of commercial air travel and its impact on the markets served, while refraining from providing specific guidance for Fiscal '21 and '22 [58][59] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is a positive outlook for growth, uncertainties remain due to potential COVID-19 variants and their impact on travel [65][66] - The company is optimistic about regaining pre-pandemic levels of activity by the end of calendar '22, but acknowledges the unpredictability of the recovery [73] Other Important Information - The company completed four acquisitions during Fiscal '21 and expects these to be accretive to earnings within the first 12 months following closing [17][23] - The effective tax rate increased to 15.7% in Q3 Fiscal '21, up from 13.4% in Q3 Fiscal '20, primarily due to changes in tax regulations [51][52] Q&A Session Summary Question: What are the current trends in customer behavior and order patterns? - Management indicated that while there has been a recovery in commercial travel, the situation remains fluid due to the Delta variant, making it difficult to predict future order trends [62][63] Question: What is the outlook for the DER market and its relation to Camtronics? - Management highlighted that HEICO is a leader in the independent repair and overhaul market and sees potential in developing more DERs through Camtronics [82][84] Question: What are the expectations regarding bad debt expenses as government support tapers off? - Management expressed confidence that the stress on airline partners is behind them, indicating a positive outlook for future orders and market share growth [85] Question: Can you provide insights on order rates at the Flight Support Group? - Management noted that while there was a strong sequential growth in the previous quarter, they expect a more normalized growth rate moving forward, with optimism about market share gains [91][94] Question: What are the expectations for working capital dynamics as demand picks up? - Management anticipates that while there may be an investment in receivables as sales increase, overall working capital management remains strong [100][101] Question: What is the outlook for wide-body aircraft demand? - Management expects a surge in demand for wide-body aircraft parts as international travel recovers, likely starting in the spring [116]

Part I. Financial Information [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) Presents HEICO Corporation's unaudited condensed consolidated financial statements, reflecting significant Q3 2021 operating improvements driven by aerospace recovery - The company's results in the first nine months of fiscal 2021 continue to be impacted by the COVID-19 pandemic, with demand for commercial aviation products moderated compared to pre-pandemic levels However, Q3 2021 showed **significant improvement** over Q3 2020, with the Flight Support Group reporting **four consecutive quarters** of improving net sales and operating income[21](index=21&type=chunk) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheet shows total assets at **$3.46 billion**, liabilities reduced to **$1.02 billion** from debt repayment, and equity increased to **$2.22 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 31, 2021 | October 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $269,816 | $406,852 | | Total current assets | $1,031,015 | $1,165,625 | | Goodwill | $1,402,876 | $1,383,167 | | Total assets | $3,461,635 | $3,547,711 | | **Liabilities & Equity** | | | | Long-term debt, net | $385,380 | $738,786 | | Total liabilities | $1,016,865 | $1,315,896 | | Total shareholders' equity | $2,220,086 | $2,010,607 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2021 net sales increased **22%** to **$471.7 million**, net income rose **42%** to **$76.9 million**, though nine-month net income declined due to a higher tax rate Key Operating Results (in thousands, except per share data) | Metric | Nine Months Ended July 31, 2021 | Nine Months Ended July 31, 2020 | Three Months Ended July 31, 2021 | Three Months Ended July 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,356,260 | $1,360,831 | $471,707 | $386,410 | | Operating income | $277,871 | $287,585 | $100,838 | $68,434 | | Net income attributable to HEICO | $218,158 | $251,657 | $76,889 | $54,316 | | Diluted EPS | $1.58 | $1.83 | $0.56 | $0.40 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$334.1 million**, but **$355.0 million** in debt payments resulted in a **$137.0 million** net decrease in cash Cash Flow Summary (in thousands) | Activity | Nine months ended July 31, 2021 | Nine months ended July 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $334,103 | $298,971 | | Net cash used in investing activities | ($68,890) | ($98,007) | | Net cash (used in) provided by financing activities | ($403,223) | $134,625 | | Net (decrease) increase in cash | ($137,036) | $338,277 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail recent acquisitions, revenue by segment, goodwill changes, tax rate variance, and a grand jury subpoena - In June 2021, the Flight Support Group acquired an **80.1% interest** in **Camtronics, LLC**, an FAA-certified repair station In March 2021, the Electronic Technologies Group acquired **Pyramid Semiconductor LLC**, a specialty semiconductor designer[24](index=24&type=chunk)[25](index=25&type=chunk) Net Sales by Operating Segment (Nine Months Ended July 31, in thousands) | Segment | 2021 | 2020 | | :--- | :--- | :--- | | Flight Support Group | $666,732 | $731,189 | | Electronic Technologies Group | $706,182 | $638,285 | - The effective tax rate for the first nine months of fiscal 2021 was **13.3%**, compared to **3.5%** in the same period of 2020 The lower rate in 2020 was due to a significantly larger discrete tax benefit from stock option exercises (**$47.6 million** in 2020 vs **$13.5 million** in 2021)[50](index=50&type=chunk) - An indirect subsidiary received a **grand jury subpoena** in **April 2021** related to its employment of an individual and work on Navy vessels from Dec 2017 to Feb 2019 The company is cooperating with the investigation and cannot predict the outcome or potential loss[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting Q3 2021 improvements, strong balance sheet, and no FY2021 guidance due to ongoing pandemic uncertainties [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q3 2021 consolidated net sales grew **22%** and operating income surged **47%** to **$100.8 million**, driven by strong performance in both FSG and ETG Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Consolidated Net Sales | $471.7M | $386.4M | +22% | | FSG Net Sales | $237.1M | $178.2M | +33% | | ETG Net Sales | $239.5M | $210.9M | +14% | | Consolidated Operating Income | $100.8M | $68.4M | +47% | | Consolidated Operating Margin | 21.4% | 17.7% | +370 bps | - For the first nine months of FY2021, FSG net sales decreased **9% organically** due to the pandemic's impact on commercial air travel In contrast, ETG net sales grew **11%**, reflecting contributions from acquisitions (**$45.0M**) and **2% organic growth** driven by defense and other electronic products[80](index=80&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Strong operating cash flow of **$334.1 million** and **$355.0 million** in debt reduction highlight robust liquidity and capital resources - Net cash from operating activities increased to **$334.1 million** in the first nine months of FY2021, up from **$299.0 million** in the prior year period, mainly due to favorable changes in working capital[110](index=110&type=chunk)[111](index=111&type=chunk) - The company made net payments of **$355.0 million** on its revolving credit facility during the first nine months of fiscal 2021[114](index=114&type=chunk) - Fiscal 2021 capital expenditures are anticipated to be approximately **$35-$38 million**[108](index=108&type=chunk) [Outlook](index=33&type=section&id=Outlook) Management is cautiously optimistic about market recovery but withholds FY2021 guidance due to pandemic uncertainties, emphasizing a strong balance sheet - The company is **cautiously optimistic** about the recovery of commercial air travel but feels it would **not be responsible to provide fiscal 2021 net sales and earnings guidance** due to ongoing pandemic-related uncertainties[106](index=106&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk sensitivity have occurred since the October 31, 2020, Annual Report on Form 10-K - There have been **no material changes** in the company's market risk profile since its last annual report[121](index=121&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of July 31, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that HEICO's disclosure controls and procedures are **effective** as of the end of the reporting period[122](index=122&type=chunk) - **No material changes** to internal control over financial reporting were identified during the third quarter of fiscal 2021[123](index=123&type=chunk) Part II. Other Information [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL data files - The report includes **standard exhibits**, such as **CEO/CFO certifications** and **XBRL data files**[126](index=126&type=chunk) Signatures - The report was duly signed on **August 26, 2021**, by **Carlos L. Macau, Jr. (CFO)** and **Steven M. Walker (Chief Accounting Officer)**[132](index=132&type=chunk)

HEICO Corporation (NYSE:HEI) Q2 2021 Earnings Conference Call May 26, 2021 9:00 AM ET Company Participants Larry Mendelson - Chairman and Chief Executive Officer Eric Mendelson - Co-President and President, Flight Support Group Victor Mendelson - Co-President and President, Electronic Technologies Group Carlos Macau - Executive Vice President and Chief Financial Officer Conference Call Participants Robert Spingarn - Credit Suisse Eric Ruden - Baird Larry Solow - CJS Securities Josh Sullivan - The Benchmark ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q For the transition period from ______ to _______ Commission File Number: 001-04604 HEICO CORPORATION (Exact name of registrant as specified in its charter) Florida 65-0341002 (State or other jurisdict ...