Fourth Quarter and Fiscal Year 2019 Net
Income up 27% and 26% on Operating Income Increases of 16%
and 21% and Net Sales Increases of 14% and 16%
HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today reported that
net income increased 27% to a record $85.7 million, or 62 cents per
diluted share, in the fourth quarter of fiscal 2019, up from $67.4
million, or 49 cents per diluted share, in the fourth quarter of
fiscal 2018. In the fiscal year ended October 31, 2019, net income
increased 26% to a record $327.9 million, or $2.39 per diluted
share, up from $259.2 million, or $1.90 per diluted share, in the
fiscal year ended October 31, 2018.
Operating income increased 16% to a record $120.6 million in the
fourth quarter of fiscal 2019, up from $103.7 million in the fourth
quarter of fiscal 2018. In the fiscal year ended October 31, 2019,
operating income increased 21% to a record $457.1 million, up from
$376.2 million in the fiscal year ended October 31, 2018.
The Company's consolidated operating margin improved to 22.3% in
the fourth quarter of fiscal 2019, up from 21.7% in the fourth
quarter of fiscal 2018. The Company's consolidated operating margin
improved to 22.2% in the fiscal year ended October 31, 2019, up
from 21.2% in the fiscal year ended October 31, 2018.
Net sales increased 14% to a record $541.5 million in the fourth
quarter of fiscal 2019, up from $476.9 million in the fourth
quarter of fiscal 2018. Net sales increased 16% to a record
$2,055.6 million in the fiscal year ended October 31, 2019, up from
$1,777.7 million in the fiscal year ended October 31, 2018.
EBITDA increased 15% to $142.4 million in the fourth quarter of
fiscal 2019, up from $123.3 million in the fourth quarter of fiscal
2018. EBITDA increased 20% to $543.0 million in the fiscal year
ended October 31, 2019, up from $453.4 million in the fiscal year
ended October 31, 2018. See our reconciliation of net income
attributable to HEICO to EBITDA at the end of this press
release.
Consolidated Results
Laurans A. Mendelson, HEICO’s Chairman and CEO, commented on the
Company's fourth quarter results stating, "We are very pleased to
report record quarterly results in consolidated net sales and
operating income driven by record net sales at both of our
operating segments. These record results principally reflect
double-digit organic net sales growth within our Flight Support
Group as well as mid-single digit organic net sales growth within
the Electronic Technologies Group and the excellent operating
performance of our fiscal 2019 acquisitions.
Cash flow provided by operating activities increased 33% to
$437.4 million in fiscal 2019, up from $328.5 million in fiscal
2018. Cash flow provided by operating activities increased 9% to
$124.0 million in the fourth quarter of fiscal 2019, up from $113.7
million in the fourth quarter of fiscal 2018.
Our total debt to shareholders' equity ratio decreased to 33.2%
as of October 31, 2019, down from 35.4% as of October 31, 2018. Our
net debt (total debt less cash and cash equivalents) of $505.0
million to shareholders’ equity ratio decreased to 29.8% as of
October 31, 2019, down from 31.5% as of October 31, 2018. Our net
debt to EBITDA ratio improved to .93x as of October 31, 2019
compared to 1.04x as of October 31, 2018. During fiscal 2019, we
successfully completed seven acquisitions. We have no significant
debt maturities until fiscal 2023 and plan to utilize our financial
flexibility to aggressively pursue high quality acquisitions to
accelerate growth and maximize shareholder returns.
Based on our continued strong cash flows from operations,
HEICO's Board of Directors declared an $.08 per share regular
semi-annual cash dividend on both classes of common stock, payable
on January 23, 2020 to shareholders of record as of January 9,
2020. The cash dividend represents a 14% increase over the prior
semi-annual per share amount of $.07. This cash dividend is HEICO’s
83rd consecutive semi-annual cash dividend since 1979. The
increased semi-annual cash dividend confirms our confidence in
HEICO's consistent growth strategies and our desire to continue
rewarding our shareholders, while retaining sufficient capital to
fund our internal growth and our acquisitions.
Considering the impact of cash dividends, prior stock splits and
stock dividends, one share of HEI worth $8.38 in 1990 has become
worth on a combined basis approximately $4,213, representing an
increase of approximately 503 times the 1990 value and a compound
annual growth rate of approximately 24% as of December 13,
2019.
As we look ahead to fiscal 2020, we anticipate net sales growth
within the Flight Support Group and the Electronic Technologies
Group resulting from increased demand across the majority of our
product lines. Also, we will continue our commitments to developing
new products and services, further market penetration, and pursuing
an aggressive acquisition strategy while maintaining our financial
strength and flexibility.
Based on our current economic visibility, we believe fiscal 2020
will be another record year. We are currently estimating
approximately 13% - 14% growth in full year net income and 6% - 8%
growth in full year net sales over fiscal 2019 levels. We
anticipate our fiscal year 2020 consolidated operating margin to
approximate 21.5% - 22.0%, depreciation and amortization expense of
approximately $89 million, capital expenditures to approximate $42
million and cash flow from operations to approximate $475 million.
These estimates exclude additional acquired businesses, if
any."
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
fourth quarter results stating, "Our record quarterly results in
net sales principally reflect strong double-digit organic growth
within our aftermarket repair and overhaul services and replacement
parts product lines.
The Flight Support Group's net sales increased 12% to a record
$324.7 million in the fourth quarter of fiscal 2019, up from $290.3
million in the fourth quarter of fiscal 2018. The Flight Support
Group's net sales increased 13% to a record $1,240.2 million in the
fiscal year ended October 31, 2019, up from $1,097.9 million in the
fiscal year ended October 31, 2018. The increase in the fourth
quarter and fiscal year ended October 31, 2019 is attributable to
continued strong organic growth of 12% and 13%, respectively,
mainly due to increased demand and new product offerings across all
of our product lines.
The Flight Support Group's operating income increased 14% to
$62.2 million in the fourth quarter of fiscal 2019, up from $54.6
million in the fourth quarter of fiscal 2018. The increase
principally reflects the previously mentioned net sales growth and
the favorable impact from changes in the estimated fair value of
accrued contingent consideration, partially offset by a decrease in
gross profit margin mainly reflecting a less favorable product mix
within our specialty products product line.
The Flight Support Group's operating income increased 17% to a
record $242.0 million in the fiscal year ended October 31, 2019, up
from $206.6 million in the fiscal year ended October 31, 2018. The
increase mainly results from the previously mentioned net sales
growth as well as an improved gross profit margin mainly
attributable to higher net sales within our aftermarket replacement
parts product line as well as efficiencies realized from the net
sales growth.
The Flight Support Group's operating margin increased to 19.2%
in the fourth quarter of fiscal 2019, up from 18.8% in the fourth
quarter of fiscal 2018. The increase in the fourth quarter of
fiscal 2019 principally reflects the previously mentioned changes
in the estimated fair value of accrued contingent consideration
partially offset by the less favorable gross profit margin.
The Flight Support Group's operating margin increased to 19.5%
in the fiscal year ended October 31, 2019, up from 18.8% in the
fiscal year ended October 31, 2018. The increase in the fiscal year
ended October 31, 2019 principally reflects the previously
mentioned improved gross profit margin.
With respect to fiscal 2020, we are estimating net sales growth
of approximately 7% - 8% over the prior year and the full year
Flight Support Group operating margin to approximate 19.5% - 20.0%.
Further, we estimate mid to high single-digit organic growth in
fiscal 2020. These estimates exclude additional acquired
businesses, if any.”
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 fourth quarter results stating, "Our record
quarterly results in net sales reflects strong demand for our
defense-related products and the impact of our well-managed and
profitable fiscal 2019 acquisitions.
The Electronic Technologies Group's net sales increased 15% to a
record $219.5 million in the fourth quarter of fiscal 2019, up from
$191.1 million in the fourth quarter of fiscal 2018. The increase
in the fourth quarter of fiscal 2019 is attributable to the
favorable impact from our fiscal 2019 acquisitions as well as
organic growth of 4% mainly due to increased demand for our defense
products.
The Electronic Technologies Group's net sales increased 19% to a
record $834.5 million in the fiscal year ended October 31, 2019, up
from $701.8 million in the fiscal year ended October 31, 2018. The
increase in the fiscal year ended October 31, 2019 is attributable
to organic growth of 10% mainly due to increased demand for certain
of our aerospace and defense products and the impact from our
fiscal 2019 acquisitions.
The Electronic Technologies Group's operating income increased
13% to $64.6 million in the fourth quarter of fiscal 2019, up from
$57.1 million in the fourth quarter of fiscal 2018. The increase in
the fourth quarter of fiscal 2019 principally reflects the
previously mentioned net sales growth partially offset by higher
acquisition-related costs.
The Electronic Technologies Group's operating income increased
20% to a record $245.7 million in the fiscal year ended October 31,
2019, up from $204.5 million in the fiscal year ended October 31,
2018. The increase in the fiscal year ended October 31, 2019
principally reflects the previously mentioned net sales growth and
an improved gross profit margin mainly driven by increased net
sales and a more favorable product mix for certain defense products
and efficiencies realized from the net sales growth, partially
offset by higher performance-based compensation expense and
acquisition-related costs.
The Electronic Technologies Group's operating margin remained
strong at 29.4% in the fourth quarter of fiscal 2019 compared to
29.9% as reported in the fourth quarter of fiscal 2018. The
operating margin in the fourth quarter of fiscal 2019 is inclusive
of the higher acquisition-related costs associated with a recent
acquisition.
The Electronic Technologies Group's operating margin improved to
29.4% in the fiscal year ended October 31, 2019, up from 29.1% in
the fiscal year ended October 31, 2018. The increase in the fiscal
year ended October 31, 2019 resulted mainly from an improved gross
profit margin partially offset by increased SG&A expenses as a
percentage of net sales, inclusive of higher acquisition-related
costs and higher performance-based compensation expense.
With respect to fiscal 2020, we are estimating net sales growth
of approximately 5% - 6% over the prior year and anticipate the
full year Electronic Technologies Group's operating margin to
approximate 28.0% - 29.0%. Further, we estimate low to mid
single-digit organic growth in fiscal 2020. These estimates exclude
additional acquired businesses, if any.”
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 net income
attributable to noncontrolling interests, income tax expense,
interest expense and depreciation and amortization expense), its
net debt (calculated as total debt less cash and cash equivalents),
its net debt to shareholders' equity ratio (calculated as net debt
divided by shareholders' equity) 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
investors’ 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) has 1/10 vote per share and the Common
Stock (HEI) has one vote per share.)
There are currently approximately 80.4 million shares of HEICO's
Class A Common Stock (HEI.A) outstanding and 54.1 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
Tuesday, December 17, 2019 at 9:00 a.m. Eastern Standard Time to
discuss its fourth quarter and fiscal year results. Individuals
wishing to participate in the conference call should dial: U.S. and
Canada (877) 586-4323, International (706) 679-0934, wait for the
conference operator and provide the operator with the Conference ID
6379327. A digital replay will be available two hours after the
completion of the conference for 14 days. To access, dial: (404)
537-3406, and enter the Conference ID 6379327.
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 http://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 as a result of factors including: lower
demand for commercial air travel or 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 costs and delay sales; our ability
to make acquisitions and achieve operating synergies from acquired
businesses; customer credit risk; interest, foreign currency
exchange and income tax rates; economic conditions within and
outside of the aviation, defense, space, medical,
telecommunications and electronics industries, which could
negatively impact our costs and revenues; and defense spending or
budget cuts, which could reduce our defense-related revenue.
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 October
31,
2019
2018
Net sales
$541,529
$476,884
Cost of sales
332,144
290,426
Selling, general and administrative
expenses
88,832
82,761
Operating income
120,553
103,697
Interest expense
(5,199
)
(5,060
)
Other income (expense)
19
(56
)
Income before income taxes and
noncontrolling interests
115,373
98,581
Income tax expense
22,800
24,500
Net income from consolidated
operations
92,573
74,081
Less: Net income attributable to
noncontrolling interests
6,889
6,704
Net income attributable to HEICO
$85,684
$67,377
Net income per share attributable to HEICO
shareholders:
Basic
$.64
$.51
Diluted
$.62
$.49
Weighted average number of common shares
outstanding:
Basic
134,343
132,903
Diluted
137,579
137,071
Three Months Ended October
31,
2019
2018
Operating segment information:
Net sales:
Flight Support Group
$324,703
$290,254
Electronic Technologies Group
219,513
191,077
Intersegment sales
(2,687
)
(4,447
)
$541,529
$476,884
Operating income:
Flight Support Group
$62,186
$54,554
Electronic Technologies Group
64,583
57,137
Other, primarily corporate
(6,216
)
(7,994
)
$120,553
$103,697
HEICO CORPORATION
Condensed Consolidated Statements of
Operations (Unaudited)
(in thousands, except per share data)
Fiscal Year Ended October
31,
2019
2018
Net sales
$2,055,647
$1,777,721
Cost of sales
1,241,807
1,087,006
Selling, general and administrative
expenses
356,743
314,470
Operating income
457,097
376,245
Interest expense
(21,695
)
(19,901
)
Other income (expense)
2,439
(58
)
Income before income taxes and
noncontrolling interests
437,841
356,286
Income tax expense
78,100
(a)
70,600
(b)
Net income from consolidated
operations
359,741
285,686
Less: Net income attributable to
noncontrolling interests
31,845
26,453
Net income attributable to HEICO
$327,896
(a)
$259,233
(b)
Net income per share attributable to HEICO
shareholders:
Basic
$2.45
(a)
$1.96
(b)
Diluted
$2.39
(a)
$1.90
(b)
Weighted average number of common shares
outstanding:
Basic
133,640
132,543
Diluted
137,350
136,696
Fiscal Year Ended October
31,
2019
2018
Operating segment information:
Net sales:
Flight Support Group
$1,240,183
$1,097,937
Electronic Technologies Group
834,522
701,827
Intersegment sales
(19,058
)
(22,043
)
$2,055,647
$1,777,721
Operating income:
Flight Support Group
$242,029
$206,623
Electronic Technologies Group
245,743
204,508
Other, primarily corporate
(30,675
)
(34,886
)
$457,097
$376,245
HEICO CORPORATION Footnotes to Condensed Consolidated
Statements of Operations (Unaudited)
________________________
a.
During the first quarter of fiscal 2019, the Company recognized
a $16.6 million discrete tax benefit from stock option exercises,
which, net of noncontrolling interests, increased net income
attributable to HEICO by $15.1 million, or $.11 per basic and
diluted share. During the first quarter of fiscal 2018, the Company
recognized a net benefit from stock option exercises that increased
net income attributable to HEICO by $2.1 million, or $.02 per basic
and diluted share.
b.
During the first quarter of fiscal 2018, the United States
(U.S.) government enacted significant changes to existing tax law
resulting in the Company recording a provisional discrete tax
benefit from remeasuring its U.S. federal net deferred tax
liabilities that was partially offset by a provisional discrete tax
expense related to a one-time transition tax on the unremitted
earnings of the Company's foreign subsidiaries. The net impact of
these amounts increased net income attributable to HEICO by $11.9
million, or $.09 per basic and diluted share.
HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
October 31, 2019
October 31, 2018
Cash and cash equivalents
$57,001
$59,599
Accounts receivable, net
274,326
237,286
Contract assets
43,132
14,183
Inventories, net
420,319
401,553
Prepaid expenses and other current
assets
18,953
21,187
Total current assets
813,731
733,808
Property, plant and equipment, net
173,345
154,739
Goodwill
1,268,703
1,114,832
Intangible assets, net
550,693
506,360
Other assets
162,739
143,657
Total assets
$2,969,211
$2,653,396
Current maturities of long-term debt
$906
$859
Other current liabilities
288,232
281,570
Total current liabilities
289,138
282,429
Long-term debt, net of current
maturities
561,049
531,611
Deferred income taxes
51,496
46,644
Other long-term liabilities
184,604
157,658
Total liabilities
1,086,287
1,018,342
Redeemable noncontrolling interests
188,264
132,046
Shareholders’ equity
1,694,660
1,503,008
Total liabilities and equity
$2,969,211
$2,653,396
HEICO CORPORATION
Condensed Consolidated Statements of
Cash Flows (Unaudited)
(in thousands)
Fiscal Year Ended October
31,
2019
2018
Operating Activities:
Net income from consolidated
operations
$359,741
$285,686
Depreciation and amortization
83,497
77,191
Share-based compensation expense
10,334
9,283
Employer contributions to HEICO Savings
and Investment Plan
9,528
8,019
Increase (decrease) in accrued contingent
consideration, net
2,630
(1,365
)
Deferred income tax benefit
(6,392
)
(12,977
)
Payment of contingent consideration
(3,105
)
—
Increase in accounts receivable
(28,976
)
(23,763
)
Decrease (increase) in contract assets
11,583
(4,806
)
Increase in inventories
(30,077
)
(49,455
)
Increase in current liabilities, net
14,596
26,994
Other
14,019
13,680
Net cash provided by operating
activities
437,378
328,487
Investing Activities:
Acquisitions, net of cash acquired
(240,841
)
(59,775
)
Capital expenditures
(28,938
)
(41,871
)
Investments related to HEICO Leadership
Compensation Plan, net
(13,701
)
(11,500
)
Other
2,834
(365
)
Net cash used in investing activities
(280,646
)
(113,511
)
Financing Activities:
Borrowings (payments) on revolving credit
facility, net
30,000
(148,000
)
Distributions to noncontrolling
interests
(110,869
)
(13,059
)
Redemptions of common stock related to
stock option exercises
(64,014
)
(24,983
)
Cash dividends paid
(18,691
)
(15,363
)
Payments of contingent consideration
(4,073
)
(5,425
)
Revolving credit facility issuance
costs
—
(4,067
)
Proceeds from stock option exercises
8,547
4,031
Other
(620
)
(669
)
Net cash used in financing activities
(159,720
)
(207,535
)
Effect of exchange rate changes on
cash
390
92
Net (decrease) increase in cash and cash
equivalents
(2,598
)
7,533
Cash and cash equivalents at beginning of
year
59,599
52,066
Cash and cash equivalents at end of
year
$57,001
$59,599
HEICO CORPORATION
Non-GAAP Financial Measures
(Unaudited)
(in thousands, except ratios)
Three Months Ended October
31,
EBITDA Calculation
2019
2018
Net income attributable to HEICO
$85,684
$67,377
Plus: Depreciation and amortization
21,811
19,668
Plus: Net income attributable to
noncontrolling interests
6,889
6,704
Plus: Interest expense
5,199
5,060
Plus: Income tax expense
22,800
24,500
EBITDA (a)
$142,383
$123,309
Fiscal Year Ended October
31,
EBITDA Calculation
2019
2018
Net income attributable to HEICO
$327,896
$259,233
Plus: Depreciation and amortization
83,497
77,191
Plus: Net income attributable to
noncontrolling interests
31,845
26,453
Plus: Interest expense
21,695
19,901
Plus: Income tax expense
78,100
70,600
EBITDA (a)
$543,033
$453,378
Net Debt Calculation
October 31, 2019
October 31, 2018
Total debt
$561,955
$532,470
Less: Cash and cash equivalents
(57,001
)
(59,599
)
Net debt (a)
$504,954
$472,871
Net debt
$504,954
$472,871
Shareholders' equity
$1,694,660
$1,503,008
Net debt to shareholders' equity ratio
(a)
29.8%
31.5%
Net debt
$504,954
$472,871
EBITDA
$543,033
$453,378
Net debt to EBITDA ratio (a)
.93
1.04
(a) See the "Non-GAAP Financial Measures"
section of this press release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191216005779/en/
Victor H. Mendelson, (305) 374-1745 ext. 7590 Carlos
L. Macau, Jr., (954) 987-4000 ext. 7570
Grafico Azioni Heineken (EU:HEIA)
Storico
Da Feb 2024 a Mar 2024
Grafico Azioni Heineken (EU:HEIA)
Storico
Da Mar 2023 a Mar 2024