01—Abstract
Summary
Summary of the 10-K filed December 21, 2022. Cited figures are marked; the original filing is the authoritative source.
HEICO Corporation (HEI) reported record fiscal 2022 results for the year ended October 31, 2022.
Net sales rose 18% to a record $2,208.3 milliona from $1,865.7 million in fiscal 2021, and operating income increased 26% to a record $496.8 million. Net income attributable to HEICO increased 16% to a record $351.7 million, or $2.55 per diluted share. The Flight Support Group drove the growth, with net sales of $1,255.2 million (up 35%) and operating income of $267.2 million, while the Electronic Technologies Group's net sales rose 1% to $972.5 million and its operating income fell 3% to $269.5 million.
The company noted that the Pandemic continued to affect results and supply chains, and it anticipates net sales growth in both segments for fiscal 2023 alongside inflationary pressures. Cash flow and balance sheet metrics were solid. Net cash provided by operating activities was $467.9 millionb, and capital expenditures were $32.0 million.
Acquisitions totaled $347.3 millionc in investing outflows during the year, and total debt rose to $290.3 million, leaving total debt at 10% of total capitalization. As of December 20, 2022, approximately $1,202 million of unused committed availability remained under the revolving credit facility. Total backlog increased 42% to $1,383 million as of October 31, 2022.
Management also disclosed a pending agreement to acquire approximately 95%d of Exxelia International for €453 million, with closing expected in the first quarter of fiscal 2023. The filing also details risk factors and governance matters. Goodwill and intangible assets represented 59% of total assets as of October 31, 2022.
The company disclosed a grand jury subpoena received in April 2021 by an indirect subsidiary, and management stated it cannot predict the outcome. Redeemable noncontrolling interests totaled $327.6 million, and the company declared an 11% increase in its semi-annual cash dividend to $.10 per share in December 2022.
02—Key points
Key Highlights
- Record fiscal 2022 net sales of $2,208.3 million, up 18% from $1,865.7 million in fiscal 2021.
- Record operating income of $496.8 million, up 26%, with the Flight Support Group's operating income rising 76% to $267.2 million.
- Net income attributable to HEICO increased 16% to a record $351.7 million, or $2.55 per diluted share.
- Total backlog grew 42% to $1,383 million as of October 31, 2022, with the majority expected to be filled in fiscal 2023.
- Net cash provided by operating activities was $467.9 million; acquisitions used $347.3 million in investing cash flow.
- Pending acquisition of approximately 95% of Exxelia International for €453 million, expected to close in the first quarter of fiscal 2023.
- Semi-annual cash dividend declared in December 2022 is $.10 per share, an 11% increase over the prior $.09 payment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Heico kept $0.16.
- Revenue$2.21B100.0%
- Cost of revenue−$1.35B60.9%
- Gross profit$862.8M39.1%
- Operating costs−$365.9M16.6%
- Operating income$496.8M22.5%
- Interest, other & tax−$145.2M6.6%
- Net income$351.7M15.9%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed December 21, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $2.21B$1.87B | +18.4% |
| Cost of Revenue | $1.35B$1.14B | +18.2% |
| Gross Profit | $862.76M$727.42M | +18.6% |
| R&D Expenses | $76.06M$68.88M | +10.4% |
| SG&A Expenses | $365.92M$334.52M | +9.4% |
| Operating Expenses | $1.71B$1.47B | +16.2% |
| Operating Income | $496.84M$392.90M | +26.5% |
| Interest Expense | $6.39M$7.29M | −12.3% |
| Net Income | $351.68M$304.22M | +15.6% |
| EPS (Basic) | $2.59$2.25 | +15.1% |
| EPS (Diluted) | $2.55$2.21 | +15.4% |
| Shares Outstanding (Basic) | 136.01M135.33M | +0.5% |
| Shares Outstanding (Diluted) | 138.04M137.85M | +0.1% |
05—Questions
Frequently Asked Questions
How did HEICO's segments perform in fiscal 2022?
The Flight Support Group's net sales increased 35% to $1,255.2 million and its operating income rose to $267.2 million from $151.9 million, driven by commercial aerospace recovery. The Electronic Technologies Group's net sales increased 1% to $972.5 million, while its operating income declined 3% to $269.5 million, reflecting lower defense product demand.
What is the company's debt and liquidity position?
Total debt was $290.3 million as of October 31, 2022, or 10% of total capitalization. Cash and cash equivalents were $139.5 million. As of December 20, 2022, approximately $1,202 million of unused committed availability remained under the revolving credit facility, which the company believes is sufficient to fund requirements for at least the next twelve months.
What does the company expect for fiscal 2023?
HEICO anticipates net sales growth in both the Flight Support Group and the Electronic Technologies Group, principally driven by demand for most of its products. It also expects continued inflationary pressures and supply chain disruptions stemming from the Pandemic may lead to higher material and labor costs, and plans to pursue an aggressive acquisition strategy.
What legal matter is disclosed in the filing?
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 relating to its employment of an individual and work performed on certain Navy vessels from December 1, 2017 through February 4, 2019. The company is cooperating, and it cannot predict the outcome or reasonably estimate a possible range of loss at this early stage.
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