01—Abstract
Summary
Summary of the 10-K filed December 21, 2021. Cited figures are marked; the original filing is the authoritative source.
HEICO Corporation, through its subsidiaries, reported fiscal 2021 (year ended October 31, 2021) net sales of $1,865.7 milliona, up from $1,787.0 million in fiscal 2020, and net income attributable to HEICO of $304.2 million, or $2.21 per diluted share, compared with $314.0 million, or $2.29 per diluted share, in fiscal 2020.
Operating income rose to $392.9 millionb from $376.6 million, with the Electronic Technologies Group reaching a record $959.2 million in net sales and $277.3 million in operating income. The Flight Support Group's net sales were essentially flat at $927.1 million, but its operating income increased to $151.9 million, and the company describes a recovery in commercial air travel that is stronger in domestic than international markets while the Pandemic continues to weigh on commercial aerospace. The balance sheet strengthened considerably, with total debt falling to $236.5 million from $739.8 million, cash and cash equivalents of $108.3 million, and total debt to total capitalization of 9% versus 27% a year earlier.
Net cash provided by operating activities was $444.1 millionc, and the company made $136.5 million of acquisitions, net of cash acquired, during the year. Management declined to provide fiscal 2022 net sales and earnings guidance, citing the difficulty of predicting the Pandemic's path, while noting that cost inflation and supply chain disruptions may raise material and labor costs.
Investors should note the company's reliance on acquisitions, with goodwill and intangible assets representing 58% of total assets, and redeemable noncontrolling interests with an estimated Redemption Amount of approximately $252.6 milliond. The company also disclosed a grand jury subpoena received in April 2021 by an indirect subsidiary, related to work on certain Navy vessels; HEICO states it cannot predict the outcome or reasonably estimate a possible range of loss.
02—Key points
Key Highlights
- Net sales rose 4% to $1,865.7 million, with the Electronic Technologies Group reaching a record $959.2 million, up 10%.
- Net income attributable to HEICO was $304.2 million, or $2.21 per diluted share, versus $314.0 million, or $2.29 per diluted share, in fiscal 2020.
- Operating income increased 4% to $392.9 million; the Electronic Technologies Group reported a record $277.3 million in operating income.
- Total debt declined to $236.5 million from $739.8 million, and total debt to total capitalization fell to 9% from 27%.
- Net cash provided by operating activities was $444.1 million, versus $409.1 million in fiscal 2020.
- Backlog was $977 million as of October 31, 2021, compared with $844 million a year earlier.
- Management did not provide fiscal 2022 net sales and earnings guidance, citing the difficulty of predicting the Pandemic's path.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Heico kept $0.16.
- Revenue$1.87B100.0%
- Cost of revenue−$1.14B61.0%
- Gross profit$727.4M39.0%
- Operating costs−$334.5M17.9%
- Operating income$392.9M21.1%
- Interest, other & tax−$88.7M4.8%
- Net income$304.2M16.3%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed December 21, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.87B$1.79B | +4.4% |
| Cost of Revenue | $1.14B$1.10B | +3.0% |
| Gross Profit | $727.42M$682.13M | +6.6% |
| R&D Expenses | $68.88M$65.56M | +5.1% |
| SG&A Expenses | $334.52M$305.48M | +9.5% |
| Operating Expenses | $1.47B$1.41B | +4.4% |
| Operating Income | $392.90M$376.65M | +4.3% |
| Interest Expense | $7.29M$13.16M | −44.6% |
| Net Income | $304.22M$313.98M | −3.1% |
| EPS (Basic) | $2.25$2.33 | −3.4% |
| EPS (Diluted) | $2.21$2.29 | −3.5% |
| Shares Outstanding (Basic) | 135.33M134.75M | +0.4% |
| Shares Outstanding (Diluted) | 137.85M137.30M | +0.4% |
05—Questions
Frequently Asked Questions
How did HEICO's profitability change in fiscal 2021?
Net income attributable to HEICO was $304.2 million, or $2.21 per diluted share, compared with $314.0 million, or $2.29 per diluted share, in fiscal 2020. The filing attributes the decline mainly to higher income tax expense, partially offset by higher operating income at both segments and lower interest expense. The effective tax rate was 14.8% versus 7.9% in fiscal 2020, which reflected a smaller discrete tax benefit from stock option exercises ($14.2 million versus $48.3 million).
Which segment drove growth in fiscal 2021?
The Electronic Technologies Group drove most of the growth, with net sales up $84.2 million to a record $959.2 million and operating income up $18.5 million to a record $277.3 million. The Flight Support Group's net sales were $927.1 million, up $2.3 million, while its operating income rose $8.9 million to $151.9 million.
What did management say about the outlook for fiscal 2022?
Management expects the commercial air travel recovery to continue, particularly in certain domestic markets, while international markets recover less and the timing is uncertain. It noted that cost inflation and supply chain disruptions may lead to higher material and labor costs. Management did not provide fiscal 2022 net sales and earnings guidance, stating that it would not be responsible to do so given the difficulty of predicting the Pandemic's path.
What legal matter does the company disclose?
On April 20, 2021, an indirect subsidiary of HEICO Flight Support Corp. received a grand jury subpoena from the U.S. District Court for the Southern District of California concerning documents for December 1, 2017 through February 4, 2019 related to the subsidiary's employment of a certain individual and its work on certain Navy vessels. The company is cooperating, has completed its document production, and states it cannot predict the outcome or reasonably estimate a possible range of loss.
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