HEICO Corporation Reports Record Sales, Operating Income and Net Income for the Third Quarter of Fiscal 2011; Fiscal 2011 Full Year Sales and Net Income Estimates Raised

HOLLYWOOD, Fla. and MIAMI, Aug. 24, 2011 (GLOBE NEWSWIRE) — HEICO CORPORATION (NYSE:HEI.A) (NYSE:HEI) today reported that net income increased 37% to a record $20,402,000, or 48 cents per diluted share, for the third quarter of fiscal 2011, up from $14,930,000, or 35 cents per diluted share, for the third quarter of fiscal 2010. For the first nine months of fiscal 2011, net income increased 38% to a record $54,306,000, or $1.28 per diluted share, up from $39,296,000, or 93 cents per diluted share, for the first nine months of fiscal 2010.

Operating income increased 23% to a record $35,706,000 in the third quarter of fiscal 2011, up from $28,993,000 in the third quarter of fiscal 2010. For the first nine months of fiscal 2011, operating income increased 27% to a record $100,991,000, up from $79,494,000 in the first nine months of fiscal 2010. Our consolidated operating margin was 18.1% for the third quarter of fiscal 2011, compared to 18.3% for the third quarter of fiscal 2010. For the first nine months of fiscal 2011, our consolidated operating margin improved to 18.2%, up from 17.8% for the first nine months of fiscal 2010.

Net sales increased 25% to a record $197,267,000 in the third quarter of fiscal 2011, up from $158,270,000 in the third quarter of fiscal 2010. For the first nine months of fiscal 2011, net sales increased 24% to a record $555,972,000, up from $447,650,000 in the first nine months of fiscal 2010.

Net income per diluted share for the third quarter of fiscal 2011 includes a 5 cent tax related benefit from lower income tax expense attributable principally to lower state income taxes and higher R&D tax credits based on tax returns filed during the quarter. Net income per diluted share for the first nine months of fiscal 2011 includes an aggregate 7 cent tax related benefit including the 2 cent benefit from the retroactive extension of the R&D income tax credit previously reported in the first quarter of fiscal 2011.

(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) receives 1/10 vote per share and the Common Stock (HEI) receives one vote per share.)

Laurans A. Mendelson, HEICO’s Chairman and CEO, commenting on the Company’s third quarter results stated, "We are pleased to report all-time record quarterly sales, operating income and net income on the strength of record results in our Flight Support Group and continued strong results in our Electronic Technologies Group. Sales and operating income within both of our business segments reflect strong organic growth as well as growth through acquiring profitable, well managed businesses. This marks the fifth consecutive quarter that we’ve reported record highs in consolidated net sales and operating income.

Net sales of our Flight Support Group increased 35% in the third quarter of fiscal 2011 to a record $140.7 million, up from $104.3 million in the third quarter of fiscal 2010. Net sales for the first nine months of fiscal 2011 increased 31% to a record $395.2 million, up from $301.1 million in the first nine months of fiscal 2010. The increases in net sales in the third quarter and first nine months of fiscal 2011 principally reflect strong organic growth of approximately 23% and 22%, respectively, as well as additional net sales contributed by the acquisition of Blue Aerospace in the first quarter of fiscal 2011. Net sales of our Flight Support Group have now increased over each of the past six quarters reflecting higher sales of new products and services as well as improved demand for our aftermarket replacement parts and repair and overhaul services as a result of increased airline capacity.

Operating income of the Flight Support Group increased 40% to a record $24.6 million for the third quarter of fiscal 2011, up from $17.6 million for the third quarter of fiscal 2010. Operating income of the Flight Support Group increased 36% to a record $68.4 million for the first nine months of fiscal 2011, up from $50.3 million for the first nine months of fiscal 2010. The increases in operating income in the third quarter and first nine months of fiscal 2011 reflect both higher sales volumes and improved operating margins.

Operating margins of the Flight Support Group improved to 17.4% for the third quarter of fiscal 2011, up from 16.8% reported for the third quarter of 2010. Operating margins of the Flight Support Group improved to 17.3% for the first nine months of fiscal 2011, up from 16.7% for the first nine months of fiscal 2010. The improved operating margins in the third quarter and first nine months of fiscal 2011 principally reflect the efficiencies realized through higher sales volumes.

Net sales of our Electronic Technologies Group increased 6% in the third quarter of fiscal 2011 to $57.2 million, up from $54.1 million in the third quarter of fiscal 2010. The net sales increase for the third quarter of fiscal 2011 is entirely driven by organic growth principally due to continued strength in demand for certain of our aerospace, defense and medical products. Net sales for the first nine months of fiscal 2011 increased 10% to a record $162.5 million, up from $147.2 million for the first nine months of fiscal 2010. The increase in net sales for the first nine months of fiscal 2011 principally reflects organic growth of approximately 6% and additional net sales contributed by a fiscal 2010 acquisition. The organic growth for the first nine months of fiscal 2011 principally reflects strength in demand for certain of our aerospace, defense, medical and electronics products.

Operating income of the Electronic Technologies Group increased to $15.4 million, up from $15.2 million in the third quarter of fiscal 2010. The operating income increase for the third quarter of fiscal 2011 principally reflects higher sales volumes. Operating income of the ETG increased 11% to a record $44.6 million for the first nine months of fiscal 2011, up from $40.0 million for the first nine months of fiscal 2010, principally due to both higher sales volumes and improved operating margins.

Operating margins of the Electronic Technologies Group were 26.9% for the third quarter of fiscal 2011 compared to 28.1% reported for the third quarter of 2010. The decrease in operating margins in the third quarter of fiscal 2011 is primarily a result of product mix. As we’ve previously pointed out, the revenues and profits of the ETG can fluctuate from quarter to quarter based on the timing of customer orders or delivery requirements as well as variations in product mix. Historically, these quarterly fluctuations have leveled out over a full fiscal year. Operating margins of the Electronic Technologies Group improved to 27.4% for the first nine months of fiscal 2011, up from the 27.1% reported in the first nine months of fiscal 2010, principally reflecting efficiencies gained through higher sales volumes.

Our cash flow and balance sheet remain extremely strong. Cash flow from operating activities for the first nine months of fiscal 2011 totaled $85.0 million, including $33.9 million generated in the third quarter of fiscal 2011, and represented 157% of net income, compared to $67.9 million for the first nine months of fiscal 2010. Capital expenditures were $5.7 million in the first nine months of 2011 compared to $6.7 million in the first nine months of 2010.

We expect fiscal 2011 cash flow provided by operating activities to remain at a high level and to approximate $100 million. Capital expenditures in fiscal 2011 are anticipated to approximate $10 – $12 million.

As of July 31, 2011, we have no debt under our current revolving credit facility and a cash position over $27 million. We believe our strong balance sheet and debt capacity offer excellent opportunities to continue to acquire well managed, profitable businesses.

Improved economic conditions and increased capacity within the airline industry has resulted in higher demand for our Flight Support Group’s products and services and consistent sales growth for each of our reporting periods. Based on current market conditions, the consensus outlook for the commercial airline industry expects year-over-year capacity increases for the second half of calendar 2011, but at a slower growth rate than experienced in the first half of the year. In our Electronic Technologies Group’s markets, we generally anticipate stable demand for our products.

Considering the current market conditions, we are increasing our estimates of full year fiscal 2011 growth over fiscal 2010 in net income to approximately 29% and in net sales to approximately 20%, up from our prior growth estimates of 20% in net income and 18% in net sales. Based on the aforementioned, our fiscal 2011 net sales and net income estimates are now above our 20 year compound annual growth rate of 17% and 18%, respectively. The estimates exclude the impact of our previously announced pending acquisition of 3D Plus S.A., which is subject to governmental approvals and standard closing conditions, and any other potential acquisition opportunities."

As previously announced, HEICO will hold a conference call on Thursday, August 25, 2011 at 9:00 a.m. Eastern Daylight Time to discuss its third quarter results. Individuals wishing to participate in the conference call should dial: U.S. and Canada (877) 586-4323, International (706) 679-0934, wait for the conference operator and provide the operator with the Conference ID 90058541. A digital replay will be available two hours after the completion of the conference for 14 days. To access, dial: (404) 537-3406, and enter the Conference ID 90058541.

There are currently approximately 25.0 million shares of HEICO’s Class A Common Stock (HEI.A) outstanding and 16.7 million shares of HEICO’s Common Stock (HEI) outstanding. The stock symbols for HEICO’s two classes of common stock on most web sites are HEI.A and HEI. However, some web sites change HEICO’s Class A Common Stock trading symbol (HEI.A) to HEI/A or HEIa.

HEICO Corporation is engaged primarily in certain niche segments of the aviation, defense, space, medical, telecommunication and electronic industries through its Hollywood, Florida-based Flight Support Group and its Miami, Florida-based Electronic Technologies Group. HEICO’s customers include a majority of the world’s airlines and airmotives as well as numerous defense and space contractors and military agencies worldwide in addition to medical, telecommunication and electronic equipment manufacturers. For more information about HEICO, please visit our web site at http://www.heico.com.