01—Abstract
Summary
Summary of the 10-Q filed February 28, 2024. Cited figures are marked; the original filing is the authoritative source.
HEICO Corporation reported higher first-quarter fiscal 2024 results for the three months ended January 31, 2024.
Net sales rose 44% to $896.4 milliona from $620.9 million, driven by the Flight Support Group (FSG), where net sales increased to a record $618.7 million. The filing attributes $202.0 million of FSG growth to a fiscal 2023 acquisition and cites strong organic growth of 12%. Electronic Technologies Group (ETG) net sales rose 12% to $285.9 million, but the ETG had a 5% organic net sales decline.
Operating income increased 39% to $180.2 millionb, with the FSG reaching a record $136.1 million. Net income attributable to HEICO grew 23% to $114.7 million, or $.82 per diluted share. Gross profit margin was 38.7%, compared with 39.3% a year earlier, and operating income as a percentage of net sales was 20.1%, compared with 20.8%.
Interest expense increased to $38.6 millionc from $6.1 million, mainly due to higher debt from fiscal 2023 acquisitions. Net cash provided by operating activities was $111.7 million, and the company borrowed $50.0 million under its revolving credit facility. Total debt to shareholders' equity was 75.4% as of January 31, 2024.
The company remained in compliance with its covenants. Backlog (remaining performance obligations) was $1,444.3 milliond, of which $952.6 million is expected to be recognized during the remainder of fiscal 2024. Management continues to anticipate net sales growth in both segments for fiscal 2024, principally from fiscal 2023 acquisitions and product demand.
02—Key points
Key Highlights
- Net sales increased 44% to $896.4 million, led by a record $618.7 million in FSG net sales, which included $202.0 million from a fiscal 2023 acquisition and 12% organic growth.
- Operating income rose 39% to $180.2 million; FSG operating income increased 63% to a record $136.1 million, while ETG operating income declined 2% to $55.3 million.
- Net income attributable to HEICO increased 23% to $114.7 million, or $.82 per diluted share, versus $.67 a year earlier, aided by a lower effective tax rate of 11.8%.
- Interest expense rose to $38.6 million from $6.1 million, reflecting higher outstanding debt related to fiscal 2023 acquisitions.
- Net cash provided by operating activities was $111.7 million, while net cash used in investing activities was $71.1 million, including $46.2 million for acquisitions.
- Backlog stood at $1,444.3 million of remaining performance obligations, with $952.6 million expected to be recognized during the remainder of fiscal 2024.
- Total debt to shareholders' equity was 75.4% as of January 31, 2024, and the company was in compliance with all covenants.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Heico kept $0.13.
- Revenue$896.4M100.0%
- Cost of revenue−$549.6M61.3%
- Gross profit$346.8M38.7%
- Operating costs−$166.6M18.6%
- Operating income$180.2M20.1%
- Interest, other & tax−$65.5M7.3%
- Net income$114.7M12.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed February 28, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $896.36M$620.91M | +44.4% |
| Cost of Revenue | $549.59M$377.12M | +45.7% |
| Gross Profit | $346.77M$243.80M | +42.2% |
| R&D Expenses | $25.10M$25.10M | 0.0% |
| SG&A Expenses | $166.56M$114.36M | +45.6% |
| Operating Expenses | $716.15M$491.48M | +45.7% |
| Operating Income | $180.21M$129.43M | +39.2% |
| Interest Expense | $38.61M$6.07M | +536.2% |
| Net Income | $114.70M$93.03M | +23.3% |
| EPS (Basic) | $0.83$0.68 | +22.1% |
| EPS (Diluted) | $0.82$0.67 | +22.4% |
| Shares Outstanding (Basic) | 138.26M136.66M | +1.2% |
| Shares Outstanding (Diluted) | 139.89M138.58M | +0.9% |
05—Questions
Frequently Asked Questions
What drove the increase in HEICO's net sales this quarter?
Consolidated net sales rose 44% to $896.4 million. The FSG contributed an increase of $247.4 million to a record $618.7 million, including $202.0 million from a fiscal 2023 acquisition and strong organic growth of 12%. ETG net sales increased $30.9 million to $285.9 million, including $39.4 million from an acquisition, partially offset by a 5% organic decline.
How did profitability change compared with the prior-year quarter?
Operating income increased 39% to $180.2 million, and net income attributable to HEICO rose 23% to $114.7 million, or $.82 per diluted share. Gross profit margin declined to 38.7% from 39.3%, and operating income as a percentage of net sales declined to 20.1% from 20.8%. Higher intangible asset amortization, inventory obsolescence expense and interest expense were notable factors.
What is HEICO's debt position and how did interest expense change?
Long-term debt, net of current maturities, was $2.50 billion as of January 31, 2024, including $1,285.0 million of revolving credit facility borrowings and $1.2 billion of 5.25% and 5.35% senior unsecured notes due 2028 and 2033. Interest expense increased to $38.6 million from $6.1 million, principally due to debt tied to fiscal 2023 acquisitions. The weighted average interest rate on revolver borrowings was 6.9%. Total debt to shareholders' equity was 75.4%.
What are the company's cash flow and capital spending trends?
Net cash provided by operating activities was $111.7 million, up $35.0 million from $76.7 million a year earlier. Investing activities used $71.1 million, including $46.2 million for acquisitions and $13.4 million in capital expenditures. Financing activities used $16.7 million, and management continues to anticipate fiscal 2024 capital expenditures of approximately $65 million.
06—Continue