HEICO Corporation Reports Record Net Sales, Operating Income and Net Income for the Six Months Ended April 30, 2014; Full Year Fiscal 2014 Net Income Growth Estimates Raised

HOLLYWOOD, Fla. and MIAMI, May 20, 2014 (GLOBE NEWSWIRE) — HEICO CORPORATION (NYSE:HEI.A) (NYSE:HEI) today reported that net income increased 20% to $28.4 million, or 42 cents per diluted share, in the second quarter of fiscal 2014, up from $23.7 million, or 35 cents per diluted share, in the second quarter of fiscal 2013. In the first six months of fiscal 2014, net income increased 28% to a record $55.8 million, or 83 cents per diluted share, up from $43.7 million, or 65 cents per diluted share, in the first six months of fiscal 2013.

Operating income increased 10% to $49.2 million in the second quarter of fiscal 2014, up from $44.7 million in the second quarter of fiscal 2013. In the first six months of fiscal 2014, operating income increased 25% to a record $99.6 million, up from $79.6 million in the first six months of fiscal 2013.

The Company’s consolidated operating margin was 17.4% and 18.8% in the second quarter of fiscal 2014 and 2013, respectively. The Company’s consolidated operating margin improved to 18.1% in the first six months of fiscal 2014, up from 17.5% in the first six months of fiscal 2013.

Net sales increased 19% to $282.2 million in the second quarter of fiscal 2014, up from $237.7 million in the second quarter of fiscal 2013. In the first six months of fiscal 2014, net sales increased 21% to a record $549.1 million, up from $454.2 million in the first six months of fiscal 2013.

Consolidated Results

Laurans A. Mendelson, HEICO’s Chairman and CEO, commented on the Company’s second quarter results stating, "We are pleased to report another outstanding quarter resulting from record net sales and operating income within the Flight Support Group and continued year-over- year growth in net sales within the Electronic Technologies Group.

Cash flow provided by operating activities increased to $55.0 million in the first six months of fiscal 2014 as compared to $44.5 million in the first six months of fiscal 2013.

Our net debt to shareholders’ equity ratio was 57.9% as of April 30, 2014, with net debt (total debt less cash and cash equivalents) of $415.2 million principally incurred to fund acquisitions and the payment of special cash dividends in fiscal 2014 and 2013. We have no significant debt maturities until fiscal 2019 and plan to utilize our financial flexibility to aggressively pursue high quality acquisition opportunities.

As we look ahead to the remainder of fiscal 2014, we continue to anticipate organic growth within our product lines that serve the commercial aviation markets. We expect organic growth within the Electronic Technologies Group consistent with the prior year, reflecting higher demand for the majority of our products, moderated by lower demand for certain of our defense-related products. During the remainder of fiscal 2014, we plan to remain focused on new product development, further market penetration, executing our acquisition strategies and maintaining our financial strength.

Based on our current economic visibility, we are increasing our estimate of fiscal 2014 year-over-year growth in net income to 12% – 14%, up from our prior growth estimate of 10% – 12%. We continue to estimate fiscal 2014 year-over-year growth in net sales of 12% – 14%, our full year fiscal 2014 consolidated operating margin to approximate 18%, capital expenditures to approximate $25 million, depreciation and amortization expense to approximate $49 million and cash flow from operations to approximate $160 million."

Flight Support Group

Eric A. Mendelson, HEICO’s Co-President and President of HEICO’s Flight Support Group, commented on the Flight Support Group’s record second quarter results stating, "We are very pleased to report another strong quarter for the Flight Support Group, with record net sales and operating income principally driven by strong organic growth and the successful integration of our fiscal 2013 acquisition.

The Flight Support Group’s net sales increased 26% to a record $194.9 million and increased 28% to a record $376.5 million in the second quarter and first six months of fiscal 2014, respectively, up from $155.2 million and $294.2 million in the second quarter and first six months of fiscal 2013, respectively. The increase in the second quarter and first six months of fiscal 2014 reflects organic growth of approximately 15% and 17%, respectively, as well as additional net sales of $15.7 million and $31.3 million, respectively, from a fiscal 2013 acquisition. The organic growth in the second quarter and first six months of fiscal 2014 principally reflects an increase in net sales from new product offerings and improving market conditions within our aftermarket replacement parts and repair and overhaul services product lines.

The Flight Support Group’s operating income in the second quarter of fiscal 2014 increased 22% to a record $36.9 million, up from $30.3 million in the second quarter of fiscal 2013, and increased 27% to a record $69.1 million in the first six months of fiscal 2014, up from $54.5 million in the first six months of fiscal 2013. The increase in the second quarter and first six months of fiscal 2014 principally reflects the previously mentioned net sales growth.

The Flight Support Group’s operating margin was 18.9% and 18.4% in the second quarter and first six months of fiscal 2014, respectively, as compared to 19.5% and 18.5% in the second quarter and first six months of fiscal 2013. The decrease in the second quarter of fiscal 2014 principally reflects the impact of additional amortization expense from our fiscal 2013 acquisition."

Electronic Technologies Group

Victor H. Mendelson, HEICO’s Co-President and President of HEICO’s Electronic Technologies Group, commented on the Electronic Technologies Group’s second quarter results stating, "The Electronic Technologies Group reported year-over-year net sales growth despite continued soft demand for certain of our defense products.

The Electronic Technologies Group’s net sales increased 7% to $89.7 million in the second quarter of fiscal 2014, up from $83.9 million in the second quarter of fiscal 2013, and increased 9% to a record $177.2 million in the first six months of fiscal 2014, up from $162.8 million in the first six months of fiscal 2013. The increase in the second quarter and first six months of fiscal 2014 resulted from additional net sales of $4.1 million and $12.2 million from a fiscal 2013 acquisition, as well as organic growth of approximately 2% and 1%, respectively.

The Electronic Technologies Group’s operating income decreased 10% to $18.1 million in the second quarter of fiscal 2014, down from $20.2 million in the second quarter of fiscal 2013. The decrease in the second quarter of fiscal 2014 principally reflects a less favorable product mix for certain of our space and defense products, partially offset by a $2.3 million reduction in the fair value of the contingent consideration related to a fiscal 2013 acquisition principally due to less favorable projected market conditions attributable to the future earnout period. The Electronic Technologies Group’s operating income increased 15% to a record $41.0 million in the first six months of fiscal 2014, up from $35.8 million in the first six months of fiscal 2013. The increase in the first six months of fiscal 2014 is principally attributed to the overall impact of the acquired business.

The Electronic Technologies Group’s operating margin was 20.2% and 24.1% in the second quarter of fiscal 2014 and fiscal 2013, respectively. The decrease in the second quarter of fiscal 2014 principally reflects the aforementioned less favorable product mix. The Electronic Technologies Group’s operating margin increased to 23.2% in the first six months of fiscal 2014, up from 22.0% in the first six months of fiscal 2013. The increase in the first six months of fiscal 2014 principally reflects the overall impact of the acquired business, partially offset by the aforementioned less favorable product mix."

(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes, the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually identical in all economic respects. The only difference between the share classes is the voting rights. The Class A Common Stock (HEI.A) has 1/10 vote per share and the Common Stock (HEI) has one vote per share.)

There are currently approximately 39.7 million shares of HEICO’s Class A Common Stock (HEI.A) outstanding and 26.8 million shares of HEICO’s Common Stock (HEI) outstanding. The stock symbols for HEICO’s two classes of common stock on most websites are HEI.A and HEI. However, some websites change HEICO’s Class A Common Stock trading symbol (HEI.A) to HEI/A or HEIa.