01—Abstract
Summary
Summary of the 10-Q filed May 30, 2024. Cited figures are marked; the original filing is the authoritative source.
HEICO Corporation's Form 10-Q for the second quarter of fiscal 2024 (six months and three months ended April 30, 2024) reports record results.
Net sales for the six months rose to $1,851.8 milliona from $1,308.8 million, and operating income increased to a record $389.4 million from $286.5 million. Net income attributable to HEICO increased to a record $237.8 million, or $1.70 per diluted share, from $198.1 million, or $1.43 per diluted share. For the second quarter alone, net sales were $955.4 million and net income attributable to HEICO was $123.1 million, or $.88 per diluted share.
The Flight Support Group drove much of the growth, with net sales of $1,265.9 millionb for the six months, including $408.7 million contributed by fiscal 2023 and 2024 acquisitions, and the Electronic Technologies Group reported net sales of $605.3 million. Profitability was pressured by higher interest expense, which rose to $77.1 million for the six months from $17.4 million, reflecting debt taken on for fiscal 2023 acquisitions. Gross margin held roughly steady at 38.8% and operating margin declined to 21.0% from 21.9%, partly due to higher intangible asset amortization and a prior-year contingent consideration impact.
Total debt to shareholders' equity was 69.4% at April 30, 2024, and the company stated it was in compliance with its covenants. Net cash provided by operating activities was $252.8 millionc for the six months, compared with $154.4 million a year earlier.
Management continues to anticipate net sales growth in both segments for the remainder of fiscal 2024, driven mainly by fiscal 2023 acquisitions and product demand, and now expects fiscal 2024 capital expenditures of approximately $60 to $65 milliond. The company stated that its operating cash flow and revolving credit availability should be sufficient to fund requirements for at least the next twelve months.
02—Key points
Key Highlights
- Record six-month net sales of $1,851.8 million, up from $1,308.8 million, with Flight Support Group sales of $1,265.9 million and Electronic Technologies Group sales of $605.3 million.
- Record six-month operating income of $389.4 million, compared with $286.5 million, with the Flight Support Group contributing $285.0 million.
- Net income attributable to HEICO of $237.8 million, or $1.70 per diluted share, for the six months, versus $1.43 per diluted share a year earlier.
- Interest expense increased to $77.1 million for the six months from $17.4 million, principally due to debt related to fiscal 2023 acquisitions.
- Net cash provided by operating activities was $252.8 million for the six months, up from $154.4 million, while capital expenditures were $26.3 million.
- Total debt to shareholders' equity was 69.4%, and the company reported compliance with all covenants under its revolving credit facility and senior unsecured notes.
- Revolving credit facility borrowings totaled $1,175.0 million at April 30, 2024, with a weighted average interest rate of 6.9%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Heico kept $0.13.
- Revenue$955.4M100.0%
- Cost of revenue−$583.6M61.1%
- Gross profit$371.8M38.9%
- Operating costs−$162.6M17.0%
- Operating income$209.2M21.9%
- Interest, other & tax−$86.0M9.0%
- Net income$123.1M12.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed May 30, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $955.39M$687.84M | +38.9% |
| Cost of Revenue | $583.60M$421.33M | +38.5% |
| Gross Profit | $371.80M$266.51M | +39.5% |
| R&D Expenses | $27.93M$22.90M | +22.0% |
| SG&A Expenses | $162.64M$109.42M | +48.6% |
| Operating Expenses | $746.24M$530.75M | +40.6% |
| Operating Income | $209.15M$157.09M | +33.1% |
| Interest Expense | $38.51M$11.37M | +238.6% |
| Net Income | $123.15M$105.12M | +17.1% |
| EPS (Basic) | $0.89$0.77 | +15.6% |
| EPS (Diluted) | $0.88$0.76 | +15.8% |
| Shares Outstanding (Basic) | 138.39M136.92M | +1.1% |
| Shares Outstanding (Diluted) | 140.06M138.60M | +1.1% |
05—Questions
Frequently Asked Questions
How did HEICO perform in the second quarter of fiscal 2024?
Second-quarter net sales were a record $955.4 million, up from $687.8 million, and operating income was a record $209.2 million, up from $157.1 million. Net income attributable to HEICO was $123.1 million, or $.88 per diluted share, compared with $105.1 million, or $.76 per diluted share, a year earlier.
What drove the growth in net sales?
The filing attributes the Flight Support Group's increase principally to $408.7 million in sales contributed by fiscal 2023 and 2024 acquisitions, along with organic growth of 12%, driven by aftermarket replacement parts and repair and overhaul products. The Electronic Technologies Group's increase included $39.4 million from a fiscal 2023 acquisition and organic growth in defense and aerospace products, partly offset by lower sales of other electronics and medical products.
Why did operating margin decline even though profits rose?
Operating income as a percentage of net sales fell to 21.0% for the six months from 21.9%. The filing cites a 1.2% impact from a prior-year amendment and termination of a contingent consideration agreement, and a 1.2% impact from higher intangible asset amortization in the Flight Support Group, along with higher SG&A as a percentage of net sales in the Electronic Technologies Group.
How much debt does HEICO carry and what are its financing obligations?
Long-term debt totaled $2,385.3 million net of current maturities at April 30, 2024. It consisted of $1,175.0 million of revolving credit facility borrowings maturing in fiscal 2028, $600 million of 5.25% senior notes due 2028, and $600 million of 5.35% senior notes due 2033. During the six months, the company repaid $125.0 million and borrowed $50.0 million under the revolving credit facility.
What are management's expectations for the rest of fiscal 2024?
Management anticipates net sales growth in both the Flight Support Group and the Electronic Technologies Group for the remainder of fiscal 2024, principally driven by fiscal 2023 acquisitions and product demand. It now expects fiscal 2024 capital expenditures of approximately $60 to $65 million and believes operating cash flow and revolving credit availability will fund its cash requirements for at least the next twelve months.
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