01—Abstract
Summary
Summary of the 10-Q filed February 28, 2025. Cited figures are marked; the original filing is the authoritative source.
HEICO Corporation's first-quarter fiscal 2025 Form 10-Q (quarter ended January 31, 2025) reports record net sales of $1,030.2 milliona, up from $896.4 million in the first quarter of fiscal 2024, with growth across both segments.
The Flight Support Group reported net sales of $713.2 millionb and operating income of $166.1 million, while the Electronic Technologies Group reported net sales of $330.3 million and operating income of $76.5 million. Consolidated operating income rose to a record $226.8 million, and net income attributable to HEICO increased to a record $168.0 million, or $1.20 per diluted share, from $114.7 million, or $.82 per diluted share. The filing attributes the Flight Support Group's organic growth of 13% and the Electronic Technologies Group's organic growth of 11% to increased demand, with defense products cited as a particular strength.
The company's effective tax rate fell to 7.0% from 11.8%, principally reflecting a larger discrete tax benefit from stock option exercises of $27.2 millionc, compared with $13.6 million a year earlier. Interest expense declined to $32.5 million from $38.6 million, mainly due to lower outstanding debt. Net cash provided by operating activities was $203.0 million, compared with $111.7 million in the prior-year quarter.
During the quarter, HEICO spent $254.8 milliond on acquisitions, including the 90% acquisition of Millennium International, LLC, which was paid in part with 53,186 shares of Class A Common Stock. Total debt increased, with borrowings under the revolving credit facility rising to $1,140.0 million from $1,015.0 million, and the total debt to shareholders' equity ratio stood at 61.8%. Management stated it remains confident in net sales growth across both segments for the remainder of fiscal 2025 and believes operating cash flow and revolver availability will fund requirements for at least the next twelve months.
02—Key points
Key Highlights
- Record net sales of $1,030.2 million, up from $896.4 million, with the Flight Support Group at $713.2 million and the Electronic Technologies Group at $330.3 million.
- Record operating income of $226.8 million, up from $180.2 million; operating margin of 22.0% versus 20.1% a year earlier.
- Net income attributable to HEICO of $168.0 million, or $1.20 per diluted share, compared with $114.7 million, or $.82 per diluted share.
- Effective tax rate decreased to 7.0% from 11.8%, mainly due to a $27.2 million discrete tax benefit from stock option exercises.
- Net cash provided by operating activities of $203.0 million, up from $111.7 million, while $254.8 million was spent on acquisitions, including Millennium International, LLC.
- Backlog of $1,945.3 million in remaining performance obligations on firm contracts, with $1,076.1 million expected to be recognized during the remainder of fiscal 2025.
- Total debt to shareholders' equity ratio of 61.8%, with revolving credit facility borrowings of $1,140.0 million and senior unsecured notes totaling $1,200.0 million in principal.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Heico kept $0.16.
- Revenue$1.03B100.0%
- Cost of revenue−$624.6M60.6%
- Gross profit$405.7M39.4%
- Operating costs−$178.9M17.4%
- Operating income$226.8M22.0%
- Interest, other & tax−$58.9M5.7%
- Net income$168.0M16.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed February 28, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $1.03B$896.36M | +14.9% |
| Cost of Revenue | $624.56M$549.59M | +13.6% |
| Gross Profit | $405.66M$346.77M | +17.0% |
| R&D Expenses | $27.61M$25.10M | +10.0% |
| SG&A Expenses | $178.86M$166.56M | +7.4% |
| Operating Expenses | $803.42M$716.15M | +12.2% |
| Operating Income | $226.81M$180.21M | +25.9% |
| Interest Expense | $32.46M$38.61M | −15.9% |
| Net Income | $167.96M$114.70M | +46.4% |
| EPS (Basic) | $1.21$0.83 | +45.8% |
| EPS (Diluted) | $1.20$0.82 | +46.3% |
| Shares Outstanding (Basic) | 138.84M138.26M | +0.4% |
| Shares Outstanding (Diluted) | 140.48M139.89M | +0.4% |
05—Questions
Frequently Asked Questions
What drove the increase in HEICO's net sales this quarter?
The Flight Support Group's net sales rose $94.5 million, reflecting strong organic growth of 13% and $13.5 million from fiscal 2024 and 2025 acquisitions. Growth was led by aftermarket replacement parts, which increased $60.9 million. The Electronic Technologies Group's net sales rose $44.4 million, with organic growth of 11% driven mainly by defense, space and aerospace products.
Why did the effective tax rate decline so significantly?
The filing states the decrease principally reflects a larger tax benefit from stock option exercises. The discrete tax benefit was $27.2 million in the first quarter of fiscal 2025, compared with $13.6 million in the first quarter of fiscal 2024.
What acquisitions did HEICO complete during the quarter and how were they paid for?
HEICO acquired 70% of SVM Private Limited in November 2024, paid in cash from operating cash flow. In December 2024 it acquired certain assets to support Boeing 777 AIMS and Boeing 737NG/P-8/E-7 VIA product lines from Honeywell, paid with revolver proceeds and operating cash flow. In January 2025 it acquired 90% of Millennium International, LLC, paid principally in cash from the revolver and operating cash flow plus 53,186 Class A shares. The filing states none of the fiscal 2025 acquisitions were material to the consolidated financial statements.
How much debt does HEICO carry and how has it changed?
Long-term debt, net of current maturities, was $2,349.7 million as of January 31, 2025, up from $2,225.3 million at October 31, 2024. Revolving credit facility borrowings rose to $1,140.0 million from $1,015.0 million, with a weighted average interest rate of 6.1%. The company also has $600 million of 5.25% notes due 2028 and $600 million of 5.35% notes due 2033, and the filing states it was in compliance with all covenants.
What does management expect for the rest of fiscal 2025?
Management said it remains confident in achieving net sales growth in both the Flight Support Group and Electronic Technologies Group, driven mainly by strong organic demand, with optimism about defense products. It also expects to accelerate growth through recent acquisitions and anticipates fiscal 2025 capital expenditures of approximately $65 to $70 million.
06—Continue