Financial Performance - Consolidated net sales increased by 16% to a record $4,485.0 million in fiscal 2025, up from $3,857.7 million in fiscal 2024, driven by an 18% increase in the Flight Support Group (FSG) and a 12% increase in the Electronic Technologies Group (ETG) [170] - Consolidated gross profit margin improved to 39.8% in fiscal 2025, up from 38.9% in fiscal 2024, reflecting a 1.5% increase in the FSG's gross profit margin [172] - Consolidated operating income increased by 24% to a record $1,019.0 million in fiscal 2025, with the FSG's operating income rising by 27% to $750.4 million and the ETG's operating income increasing by 13% to $325.0 million [176] - Net income attributable to HEICO increased by 34% to a record $690.4 million, or $4.90 per diluted share, in fiscal 2025, compared to $514.1 million, or $3.67 per diluted share, in fiscal 2024 [182] - Net income from consolidated operations for fiscal 2025 was $745.6 million, compared to $559.1 million in fiscal 2024, reflecting a $186.5 million increase [188] Cash Flow and Debt Management - Cash and cash equivalents increased to $217.8 million in fiscal 2025, up from $162.1 million in fiscal 2024 [185] - Total debt decreased to $2,167.9 million in fiscal 2025 from $2,229.4 million in fiscal 2024, while total debt to total capitalization improved to 33% from 38% [185] - Net cash provided by operating activities increased by $261.9 million, a 39% increase, reaching $934.3 million in fiscal 2025, up from $672.4 million in fiscal 2024 [189] - Net cash used in investing activities totaled $731.7 million in fiscal 2025, primarily for acquisitions amounting to $629.8 million [192] - Net cash used in financing activities in fiscal 2025 was $150.7 million, including $550.0 million in payments on the revolving credit facility [194] Capital Expenditures and Acquisitions - Anticipated capital expenditures for fiscal 2026 are approximately $80 to $90 million, with sufficient cash flow expected to fund cash requirements for at least the next twelve months [186] - The company plans to pursue selective acquisition opportunities to complement growth and maintain financial resilience and flexibility [183] Working Capital and Contingent Consideration - The increase in net working capital in fiscal 2025 was $58.7 million, driven by a $75.6 million increase in accounts receivable and a $44.9 million increase in inventories [188] - As of October 31, 2025, the company accrued $46.2 million in contingent consideration, up from $30.2 million in 2024 [219] Financial Instruments and Risk Management - The company entered into a $2.0 billion Revolving Credit Facility in July 2023, with the capacity to increase to $2.75 billion [196][197] - The company issued $600 million principal amount of 5.25% Senior Notes due August 1, 2028, and $600 million principal amount of 5.35% Senior Notes due August 1, 2033 [199] - The company has $960 million in aggregate outstanding variable rate debt as of October 31, 2025, with a hypothetical 10% increase in interest rates not materially affecting financial results [227] - A hypothetical 10% weakening in the Euro exchange rate as of October 31, 2025, would not have a material effect on the company's financial position or cash flows [228] - The company maintains a portion of cash and cash equivalents in financial instruments with original maturities of three months or less, which are also subject to interest rate risk [227] Goodwill and Intangible Assets - The fair value of each reporting unit significantly exceeded its carrying value as of October 31, 2025, indicating no impairment of goodwill [222] - The company recognized no impairment loss for intangible assets in fiscal 2025, while an aggregate impairment loss of $7.5 million was recorded in fiscal 2024 [223] - The company tests goodwill for impairment annually, with the last assessment indicating no impairment for the years 2023, 2024, and 2025 [220] - The company assesses non-amortizing intangible assets for impairment annually, using an income approach based on management's assumptions [223] - The company utilizes a probability-based scenario analysis for determining contingent consideration, which is subject to changes in revenue growth rates and discount rates [219] Forward-Looking Statements and Risks - The company’s forward-looking statements are subject to various risks, including public health threats and changes in demand for goods and services [225]
HEICO (HEI_A) - 2025 Q4 - Annual Report