HEICO (HEI) - 2025 Q3 - Quarterly Results

Executive Summary HEICO Corporation achieved record financial results for Q3 and the first nine months of fiscal 2025, marked by significant growth in net income, sales, and operating income across both segments Overall Financial Highlights HEICO Corporation reported record financial results for the third quarter and first nine months of fiscal 2025, with significant double-digit increases in net income, operating income, and net sales, alongside improved operating margins and strong EBITDA growth Third Quarter Fiscal 2025 Financial Highlights (YoY): | Metric | FY2025 Q3 | FY2024 Q3 | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Income attributable to HEICO | $177.3M | $136.6M | +30% | | Diluted EPS | $1.26 | $0.97 | +30% | | Net Sales | $1,147.6M | $992.2M | +16% | | Operating Income | $265.0M | $216.4M | +22% | | Consolidated Operating Margin | 23.1% | 21.8% | +1.3 pp | | EBITDA | $316.4M | $261.4M | +21% | First Nine Months Fiscal 2025 Financial Highlights (YoY): | Metric | FY2025 9M | FY2024 9M | Change (%) | | :-------------------------------- | :---------- | :---------- | :--------- | | Net Income attributable to HEICO | $502.1M | $374.4M | +34% | | Diluted EPS | $3.57 | $2.67 | +34% | | Net Sales | $3,275.6M | $2,844.0M | +15% | | Operating Income | $740.0M | $605.8M | +22% | | Consolidated Operating Margin | 22.6% | 21.3% | +1.3 pp | | EBITDA | $888.1M | $738.3M | +20% | - The Flight Support Group achieved twenty consecutive quarters of sequential growth in net sales, driven by continued commercial aerospace product sales increases[4] Management Commentary & Outlook Management highlighted robust double-digit consolidated organic net sales growth across both segments, particularly in aerospace aftermarket, other electronics, and space products, maintaining a strong financial position with improved debt ratios and plans for continued growth through organic demand and strategic acquisitions - Record quarterly net income, operating income, and net sales mainly reflect robust double-digit consolidated organic net sales growth[6] - Cash flow provided by operating activities increased 8% to $231.2 million in Q3 fiscal 2025, with strong cash flow from operations forecasted for fiscal 2025[7] Debt Ratios (as of July 31, 2025 vs. October 31, 2024): | Metric | July 31, 2025 | October 31, 2024 | Change | | :-------------------------------- | :-------------- | :--------------- | :----- | | Total debt to net income attributable to HEICO ratio | 3.81x | 4.34x | Down | | Net debt to EBITDA ratio | 1.90x | 2.06x | Down | - The company remains confident in achieving net sales growth across both segments, driven by continued organic demand and accelerated growth through recent acquisitions, while actively pursuing new acquisition opportunities[9] Segment Performance HEICO's Flight Support and Electronic Technologies Groups both achieved record sales and strong organic growth, with improved operating margins reflecting robust demand and strategic efficiencies Flight Support Group The Flight Support Group achieved record-setting results in Q3 and the first nine months of fiscal 2025, driven by strong demand across all product lines, particularly in aerospace aftermarket, repair and overhaul parts, and specialty products, demonstrating significant organic net sales growth and improved operating margins Flight Support Group Financial Performance (YoY): | Metric | FY2025 Q3 | FY2024 Q3 | Change (%) | FY2025 9M | FY2024 9M | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | :---------- | :---------- | :--------- | | Net Sales | $802.7M | $681.6M | +18% | $2,282.9M | $1,947.6M | +17% | | Organic Net Sales Growth | 13% | N/A | N/A | 13% | N/A | N/A | | Operating Income | $198.3M | $153.6M | +29% | $549.4M | $438.6M | +25% | | Operating Margin | 24.7% | 22.5% | +2.2 pp | 24.1% | 22.5% | +1.6 pp | - The increase in operating income was primarily due to net sales growth, an improved gross profit margin, and SG&A expense efficiencies, particularly within repair and overhaul parts and services and specialty products[13][14][15] - The Flight Support Group has achieved twenty consecutive quarters of growth in net sales[10] Electronic Technologies Group The Electronic Technologies Group reported record net sales for Q3 and the first nine months of fiscal 2025, driven by strong organic growth in other electronics, defense, and space products, with Q3 operating margin seeing a slight decrease due to higher performance-based compensation expenses, offset by nine-month efficiencies Electronic Technologies Group Financial Performance (YoY): | Metric | FY2025 Q3 | FY2024 Q3 | Change (%) | FY2025 9M | FY2024 9M | Change (%) | | :-------------------- | :---------- | :---------- | :--------- | :---------- | :---------- | :--------- | | Net Sales | $355.9M | $322.1M | +10% | $1,028.3M | $927.4M | +11% | | Organic Net Sales Growth | 7% | N/A | N/A | 7% | N/A | N/A | | Operating Income | $81.0M | $75.8M | +7% | $235.3M | $206.4M | +14% | | Operating Margin | 22.8% | 23.5% | -0.7 pp | 22.9% | 22.3% | +0.6 pp | - Organic net sales growth was mainly attributable to increased demand for other electronics, defense, and space products, partially offset by decreased demand for medical products over the nine-month period[19][20] - The Q3 operating margin decrease was principally due to an increase in SG&A expenses as a percentage of net sales, mainly from higher performance-based compensation expense, however, the nine-month operating margin improved due to SG&A expense efficiencies[21][23][24] Financial Statements HEICO's financial statements detail its consolidated operations, balance sheet, and cash flows, reflecting strong performance, asset growth, and strategic investment activities for fiscal 2025 Condensed Consolidated Statements of Operations The condensed consolidated statements of operations provide a detailed breakdown of HEICO's revenues, costs, and profitability for the three and nine months ended July 31, 2025, compared to the same periods in 2024, including segment-specific performance and footnotes on depreciation, amortization, and discrete tax benefits Condensed Consolidated Statements of Operations (Three Months Ended July 31): | Metric (in thousands) | 2025 | 2024 | | :-------------------------------------- | :--------- | :--------- | | Net sales | $1,147,591 | $992,246 | | Cost of sales | 690,434 | 602,976 | | Selling, general and administrative expenses | 192,138 | 172,824 | | Operating income | 265,019 | 216,446 | | Interest expense | (31,701) | (36,788) | | Other income | 1,662 | 659 | | Income before income taxes and noncontrolling interests | 234,980 | 180,317 | | Income tax expense | 44,300 | 32,500 | | Net income from consolidated operations | 190,680 | 147,817 | | Less: Net income attributable to noncontrolling interests | 13,339 | 11,240 | | Net income attributable to HEICO | $177,341 | $136,577 | | Diluted Net income per share attributable to HEICO shareholders | $1.26 | $0.97 | | Weighted average number of common shares outstanding (Diluted) | 140,950 | 140,305 | Operating Segment Information (Net Sales - Three Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $802,661 | $681,626 | | Electronic Technologies Group | 355,863 | 322,129 | | Intersegment sales | (10,933) | (11,509) | | Total Net Sales | $1,147,591 | $992,246 | Operating Segment Information (Operating Income - Three Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $198,326 | $153,594 | | Electronic Technologies Group | 80,998 | 75,788 | | Other, primarily corporate | (14,305) | (12,936) | | Total Operating Income | $265,019 | $216,446 | Depreciation and Amortization (Three Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $28,581 | $25,305 | | Electronic Technologies Group | 20,297 | 18,300 | | Other, primarily corporate | 889 | 705 | | Total D&A | $49,767 | $44,310 | Condensed Consolidated Statements of Operations (Nine Months Ended July 31): | Metric (in thousands) | 2025 | 2024 | | :-------------------------------------- | :--------- | :--------- | | Net sales | $3,275,633 | $2,844,004 | | Cost of sales | 1,975,010 | 1,736,170 | | Selling, general and administrative expenses | 560,647 | 502,025 | | Operating income | 739,976 | 605,809 | | Interest expense | (97,024) | (113,907) | | Other income | 3,217 | 1,798 | | Income before income taxes and noncontrolling interests | 646,169 | 493,700 | | Income tax expense | 103,400 | 85,500 | | Net income from consolidated operations | 542,769 | 408,200 | | Less: Net income attributable to noncontrolling interests | 40,680 | 33,779 | | Net income attributable to HEICO | $502,089 | $374,421 | | Diluted Net income per share attributable to HEICO shareholders | $3.57 | $2.67 | | Weighted average number of common shares outstanding (Diluted) | 140,678 | 140,086 | Operating Segment Information (Net Sales - Nine Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $2,282,905 | $1,947,574 | | Electronic Technologies Group | 1,028,345 | 927,393 | | Intersegment sales | (35,617) | (30,963) | | Total Net Sales | $3,275,633 | $2,844,004 | Operating Segment Information (Operating Income - Nine Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $549,422 | $438,561 | | Electronic Technologies Group | 235,334 | $206,379 | | Other, primarily corporate | (44,780) | (39,131) | | Total Operating Income | $739,976 | $605,809 | Depreciation and Amortization (Nine Months Ended July 31): | Segment (in thousands) | 2025 | 2024 | | :--------------------- | :--------- | :--------- | | Flight Support Group | $82,862 | $73,538 | | Electronic Technologies Group | 59,334 | 55,010 | | Other, primarily corporate | 2,673 | 2,098 | | Total D&A | $144,869 | $130,646 | - The company recognized discrete tax benefits from stock option exercises: $27.2 million in Q1 fiscal 2025 (increasing net income by $26.5 million, or $0.19 per share) and $13.6 million in Q1 fiscal 2024 (increasing net income by $13.3 million, or $0.10 per share)[40] Condensed Consolidated Balance Sheets The condensed consolidated balance sheets show the company's financial position as of July 31, 2025, compared to October 31, 2024, indicating growth in total assets, liabilities, and shareholders' equity, alongside an increase in cash and cash equivalents Condensed Consolidated Balance Sheets (in thousands): | Asset/Liability/Equity | July 31, 2025 | October 31, 2024 | | :-------------------------------- | :-------------- | :--------------- | | Cash and cash equivalents | $261,888 | $162,103 | | Total current assets | $2,386,027 | $2,062,292 | | Property, plant and equipment, net | $437,635 | $339,034 | | Goodwill | $3,646,106 | $3,380,295 | | Intangible assets, net | $1,513,525 | $1,334,774 | | Total assets | $8,531,623 | $7,592,822 | | Total current liabilities | $711,316 | $663,851 | | Long-term debt, net of current maturities | $2,443,898 | $2,225,267 | | Total liabilities | $3,881,583 | $3,529,260 | | Shareholders' equity | $4,212,453 | $3,697,406 | | Total liabilities and equity | $8,531,623 | $7,592,822 | Condensed Consolidated Statements of Cash Flows The condensed consolidated statements of cash flows for the nine months ended July 31, 2025, show a significant increase in net cash provided by operating activities and a substantial increase in cash used in investing activities, primarily due to acquisitions, with financing activities shifting from a net use of cash to a net provision of cash Condensed Consolidated Statements of Cash Flows (Nine Months Ended July 31, in thousands): | Activity | 2025 | 2024 | | :-------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | $638,940 | $466,747 | | Net cash used in investing activities | $(697,694) | $(112,150) | | Net cash provided by (used in) financing activities | $155,249 | $(324,047) | | Net increase in cash and cash equivalents | $99,785 | $31,892 | | Cash and cash equivalents at end of period | $261,888 | $202,940 | - Acquisitions, net of cash acquired, were a major use of cash in investing activities, totaling $629.9 million in the first nine months of fiscal 2025, significantly higher than $55.2 million in the prior year[42] - Financing activities shifted from a net use of $324.0 million in 2024 to a net provision of $155.2 million in 2025, largely due to $220.0 million in net borrowings on the revolving credit facility[42] Non-GAAP Financial Measures HEICO provides non-GAAP measures like EBITDA and net debt ratios to offer supplemental insights into its operational performance and financial leverage beyond GAAP standards EBITDA Reconciliation HEICO provides EBITDA as a non-GAAP measure to supplement GAAP financial information, believing it enhances investors' ability to analyze business trends and evaluate performance, calculated by adjusting net income attributable to HEICO for depreciation and amortization, noncontrolling interests, interest expense, and income tax expense EBITDA Calculation (in thousands): | Metric | FY2025 Q3 | FY2024 Q3 | FY2025 9M | FY2024 9M | Trailing Twelve Months Ended July 31, 2025 | Trailing Twelve Months Ended October 31, 2024 | | :-------------------------------------- | :---------- | :---------- | :---------- | :---------- | :----------------------------------------- | :------------------------------------------ | | Net income attributable to HEICO | $177,341 | $136,577 | $502,089 | $374,421 | $641,777 | $514,109 | | Plus: Depreciation and amortization | 49,767 | 44,310 | 144,869 | 130,646 | 189,554 | 175,331 | | Plus: Net income attributable to noncontrolling interests | 13,339 | 11,240 | 40,680 | 33,779 | 51,878 | 44,977 | | Plus: Interest expense | 31,701 | 36,788 | 97,024 | 113,907 | 132,430 | 149,313 | | Plus: Income tax expense | 44,300 | 32,500 | 103,400 | 85,500 | 136,400 | 118,500 | | EBITDA | $316,448 | $261,415 | $888,062 | $738,253 | $1,152,039 | $1,002,230 | - EBITDA is a non-GAAP measure used by the Company to monitor and evaluate business performance and enhance investors' ability to analyze trends, but it has limitations and should not be considered in isolation from GAAP measures[25][26][27][28] Net Debt and Ratios HEICO also presents net debt and net debt to EBITDA ratios as non-GAAP measures to provide further insight into its financial leverage, with net debt calculated as total debt less cash and cash equivalents, and the ratios showing an improvement in the company's leverage position Net Debt Calculation (in thousands): | Metric | July 31, 2025 | October 31, 2024 | | :-------------------------- | :-------------- | :--------------- | | Total debt | $2,447,623 | $2,229,374 | | Less: Cash and cash equivalents | (261,888) | (162,103) | | Net debt | $2,185,735 | $2,067,271 | Debt Ratios: | Metric | July 31, 2025 | October 31, 2024 | | :-------------------------------------- | :-------------- | :--------------- | | Total debt to net income attributable to HEICO ratio | 3.81 | 4.34 | | Net debt to EBITDA ratio | 1.90 | 2.06 | - Net debt is defined as total debt less cash and cash equivalents, and the net debt to EBITDA ratio is calculated as net debt divided by EBITDA, with these non-GAAP measures provided for supplemental analysis[25][26][27][28] Additional Information This section provides an overview of HEICO's business, stock details, forward-looking statement disclaimers, and conference call information Company Overview HEICO Corporation specializes in the design, production, servicing, and distribution of products and services for niche segments within the aviation, defense, space, medical, telecommunications, and electronics industries, operating through its Flight Support Group and Electronic Technologies Group - HEICO operates through two main groups: the Hollywood, Florida-based Flight Support Group and the Miami, Florida-based Electronic Technologies Group[31] - The company serves a diverse customer base including airlines, overhaul shops, defense and space contractors, military agencies, and manufacturers in medical, telecommunications, and electronics[31] Stock Information HEICO Corporation has two classes of common stock traded on the NYSE: Class A Common Stock (HEI.A) and Common Stock (HEI), both economically identical, differing only in voting rights, with Class A carrying 1/10 vote per share and Common Stock carrying one vote per share - HEICO has two classes of common stock (HEI.A and HEI) that are virtually identical economically, with the only difference being voting rights (HEI.A has 1/10 vote per share, HEI has one vote per share)[29] - As of the report, there are approximately 84.2 million shares of Class A Common Stock (HEI.A) and 55.1 million shares of Common Stock (HEI) outstanding[29] Forward-Looking Statements The report contains forward-looking statements subject to various risks, uncertainties, and contingencies that could cause actual results to differ materially, including public health threats, liquidity, market demand fluctuations, product costs, regulatory demands, competition, new product introduction, manufacturing difficulties, cybersecurity, acquisition capabilities, customer credit risk, economic conditions, and interest/tax rates, with the company disclaiming any obligation to publicly update or revise these statements - Forward-looking statements are subject to risks and uncertainties, including public health threats, liquidity, commercial air travel demand, product costs, governmental demands, competition, ability to introduce new products, manufacturing difficulties, cybersecurity, and acquisition success[32] - Other factors include customer credit risk, interest, foreign currency exchange and income tax rates, and economic conditions within and outside the aviation, defense, space, medical, telecommunications, and electronics industries[32] - The company undertakes no obligation to publicly update or revise any forward-looking statement, except as required by applicable law[32] Conference Call Details HEICO announced a conference call to discuss its third-quarter results on Tuesday, August 26, 2025, at 9:00 a.m. Eastern Daylight Time, with dial-in information provided for participants and a digital replay available on the company's website - A conference call to discuss third-quarter results will be held on Tuesday, August 26, 2025, at 9:00 a.m. Eastern Daylight Time[30] - Dial-in details: US and Canada (888) 394-8218, International (646) 828-8193, Conference ID 8001925, with a digital replay available for 14 days on the company's website[30]