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Heico Annual Report, Year Ended Oct 31, 2003

Filing Date
Filed January 12, 2004
Period End
October 31, 2003
Securities
HEIHEI-A
In the record · 2016–202610-K1010-Q338-K83

HEI filed 10 annual reports (10-K), 33 quarterly reports (10-Q) and 83 current reports (8-K) between 2016 and 2026.

  1. FY2018 annual report10-K · Dec ’18Dec ’18
  2. Leadership change8-K · Mar ’21Mar ’21
  3. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed January 12, 2004. Cited figures are marked; the original filing is the authoritative source.

HEICO Corporation (NYSE: HEI, HEI.A) reported fiscal 2003 results for the year ended October 31, 2003, with net sales of $176.5 milliona, up from $172.1 million in fiscal 2002, and net income of $12.2 million, or $.50 per diluted share, compared with $15.2 million, or $.62 per diluted share, in fiscal 2002.

The Flight Support Group (FSG) accounted for 73% of revenues and the Electronic Technologies Group (ETG) for 27%. Sales growth came from the FSG, which rose to $128.3 million, while the ETG declined to $48.6 millionb on lower foreign military demand. Operating income rose slightly to $23.2 million, but the fiscal 2002 net income benefited from a $2.1 million tax recovery and a $1.2 million gain on sale of a product line, and the effective tax rate increased to 35.6% from 23.0%.

Cash flow from operations was $27.9 million, and total debt fell to $32.0 millionc from $56.0 million, reflecting $24.0 million of net revolver repayments. Total shareholders' equity was $221.5 million at October 31, 2003. Total backlog was $34.6 million, compared with $36.3 million a year earlier.

The company also announced a 10% stock dividend, payable in Class A shares on January 16, 2004, and a December 2003 acquisition of 80% of Sierra Microwave Technology, Inc. Management stated that it is targeting growth in fiscal 2004 sales and earnings over fiscal 2003 results, citing an expected economic strengthening, new product introductions, and the Sierra acquisition. Investors should note that FSG sales remain exposed to commercial aerospace conditions, particularly JT8D parts, and that goodwill of $188.7 milliond is a large share of total assets of $333.2 million.

02—Key points

Key Highlights

  1. Net sales rose to $176.5 million in fiscal 2003 from $172.1 million in fiscal 2002, driven by the Flight Support Group, which grew to $128.3 million.
  2. Net income was $12.2 million, or $.50 per diluted share, versus $15.2 million, or $.62 per diluted share, in fiscal 2002, which included a $2.1 million tax recovery and a $1.2 million pretax gain on sale of a product line.
  3. Electronic Technologies Group sales fell to $48.6 million from $52.5 million, mainly due to lower demand from certain foreign military customers.
  4. Gross profit margin averaged 32.9% in fiscal 2003, down from 35.7% in fiscal 2002, and the effective tax rate rose to 35.6% from 23.0%.
  5. Total debt declined to $32.0 million from $56.0 million, and cash flow from operations was $27.9 million.
  6. Shareholders' equity reached $221.5 million, and the company declared a 10% stock dividend payable in Class A shares on January 16, 2004.
  7. Backlog was $34.6 million at October 31, 2003, versus $36.3 million a year earlier, and management targets fiscal 2004 sales and earnings growth.

03—Questions

Frequently Asked Questions

  1. How did HEICO perform financially in fiscal 2003?

    Net sales increased 3% to $176.5 million and operating income rose to $23.2 million from $22.4 million. Net income declined to $12.2 million, or $.50 per diluted share, from $15.2 million, or $.62 per diluted share, because fiscal 2002 included a tax recovery and a product line gain.

  2. Which business segments drive HEICO's revenue?

    The Flight Support Group accounted for 73% of fiscal 2003 revenues and makes jet engine and aircraft replacement parts, plus repair and overhaul services. The Electronic Technologies Group accounted for 27% and makes electronic and electro-optical products and repairs avionics.

  3. What is HEICO's debt and liquidity position?

    Total debt was $32.0 million at October 31, 2003, down from $56.0 million a year earlier, after $24.0 million of net revolver payments. The company had a $120 million revolving credit facility, and management believes operating cash flow and available borrowings will fund requirements for the foreseeable future.

  4. What did management say about the outlook for fiscal 2004?

    Management is targeting growth in fiscal 2004 sales and earnings over fiscal 2003, based on an anticipated strengthening of the economy, new product introductions, and the December 2003 acquisition of 80% of Sierra Microwave Technology, Inc.

  5. Are there any notable risks in HEICO's business?

    Sales in the Flight Support Group were hurt by reduced commercial air travel after September 11, 2001, particularly for JT8D PMA parts, and ETG sales depend on defense and foreign military demand. The filing also notes that goodwill of $188.7 million is tested for impairment, and a reporting unit's goodwill of $17.0 million could be impaired if expanded capabilities are delayed.

04—Continue

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