HOLLYWOOD, Fla. and MIAMI, Aug. 30, 2006 (PRIMEZONE) -- HEICO Corporation (NYSE:HEI.A) (NYSE:HEI) today reported that net income for the third quarter of fiscal 2006 increased 37% to $8,276,000, or 31 cents per diluted share, from $6,046,000 or 23 cents per diluted share, in the third quarter of fiscal 2005. For the first nine months of fiscal 2006, net income increased 39% to $22,567,000, or 85 cents per diluted share, from $16,187,000, or 62 cents per diluted share, in the first nine months of fiscal 2005.
Operating income increased 48% to a record $17,388,000 for the third quarter of fiscal 2006 from $11,749,000 for the third quarter of fiscal 2005. Operating income increased 55% to a record $49,294,000 for the first nine months of fiscal 2006 from $31,843,000 for the first nine months of fiscal 2005.
Net sales for the third quarter of fiscal 2006 increased 48% to a record $102,172,000 from $69,169,000 in the third quarter of fiscal 2005. Net sales increased 46% to a record $282,365,000 in the first nine months of fiscal 2006 from $193,123,000 in the first nine months of fiscal 2005.
(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, President & Chief Executive Officer, remarked, "We are extremely pleased to report record quarterly net sales and operating income in our fiscal 2006 third quarter results for the sixth consecutive quarter. Our Flight Support Group and our Electronic Technologies Group reported increased net sales of 38% and 75%, respectively, over the third quarter of fiscal 2005. This follows strong fiscal 2006 second quarter results when our Flight Support Group and our Electronic Technologies Group reported increased net sales of 33% and 48%, respectively, over the second quarter of fiscal 2005. The sales increase within both Groups reflects recent strategic acquisitions as well as strong organic growth. Organic revenue growth within the Electronic Technologies Group and Flight Support Group approximated 15% and 12%, respectively, in the first nine months of fiscal 2006 when compared to net sales in the first nine months of fiscal 2005.
Our consolidated operating margin in both the third quarter of fiscal 2006 and 2005 equaled 17.0% and improved to 17.5% for the first nine months of fiscal 2006 from 16.5% for the first nine months of fiscal 2005. Consolidated operating margins experienced in the first nine months of fiscal 2006 approximate those currently expected for the full fiscal 2006 year.
Operating income of our Flight Support Group increased 17% to $11.5 million for the third quarter of fiscal 2006 up from $9.8 million for the third quarter of fiscal 2005 and increased 33% to $33.8 million for the first nine months of fiscal 2006 up from $25.3 million for the first nine months of fiscal 2005. Operating margins of the Flight Support Group were 17.0% in the first nine months of fiscal 2006 versus 17.7% for the first nine months of fiscal 2005 and 16.1% in the third quarter of fiscal 2006 versus 19.0% in the third quarter of fiscal 2005. These operating margins reflect a less favorable product mix, including the expected impact of lower margins realized on products distributed by Seal Dynamics, which was acquired in November 2005.
Operating income of our Electronic Technologies Group increased 116% to $9.7 million for the third quarter of fiscal 2006 up from $4.5 million for the third quarter of fiscal 2005 and increased 107% to $25.0 million for the first nine months of fiscal 2006 up from $12.1 million for the first nine months of fiscal 2005. The increase in operating income of the Electronic Technologies Group for the third quarter and the first nine months of fiscal 2006 over the respective periods of fiscal 2005 reflects both the increase in net sales and higher operating margins resulting principally from a favorable product mix, including a higher margin product mix contributed by some of our recent acquisitions. Operating margins of the Electronic Technologies Group rose to 31.1% in the third quarter of fiscal 2006 from 25.2% in the third quarter of fiscal 2005 and rose to 29.9% in the first nine months of fiscal 2006 from 23.9% for the first nine months of fiscal 2005.
The 48% and 55% increases in consolidated operating income for the third quarter and first nine months of fiscal 2006 were greater than the 37% and 39% increases in consolidated net income for the respective periods in fiscal 2005 due principally to the increased minority interests' share of income of certain consolidated subsidiaries.
Cash flow from operating activities for the first nine months of fiscal 2006 totaled $27.2 million versus $21.0 million in the first nine months of fiscal 2005 and increased $10.2 million to $19.7 million in the third quarter of fiscal 2006 from $9.5 million in the third quarter of fiscal 2005. Cash flow from operating activities in the third quarter of fiscal 2006 was principally used to make payments of $14.5 million on our revolving credit facility and short-term line of credit, fund capital expenditures and make our 56th consecutive semi-annual cash dividend. For the full fiscal 2006 year, we are raising our targeted cash flow from operating activities from approximately $40 million to approximately $42 million with a capital expenditures budget of approximately $10 to $12 million.
Based on current market conditions, we are raising our targeted fiscal 2006 net sales to a range of $378 to $380 million, operating income to a range of $66 to $67 million and diluted net income per share to a range of $1.14 to $1.16 as we continue to focus on new products, market penetration and additional strategic acquisitions."
As previously announced, HEICO will hold a conference call on Thursday, August 31, 2006 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./Canada/International/Local (641) 297-7768, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID 7HEICO (or "743426"). A digital replay will be available one hour after the completion of the conference for 14 days. To access, dial: U.S./Canada/International/Local (973) 474-9586 and enter the Passcode/Conference ID 7HEICO (or "743426").
There are currently approximately 15.0 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 10.3 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 stock symbol (HEI.A) to HEI/A or HEIa.
HEICO Corporation is engaged primarily in certain niche segments of the aviation, defense, space and electronics industries through its Hollywood, FL-based HEICO Aerospace Holdings Corp. subsidiary and its Miami, FL-based HEICO Electronic Technologies Corp. subsidiary. 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 telecommunications, electronics and medical equipment manufacturers. For more information about HEICO, please visit our web site at http://www.heico.com.
Certain statements in this press release constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of factors including, but not limited to: lower demand for commercial air travel or airline fleet changes, which could cause lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense or space spending by U.S. and/or foreign customers, or competition from existing and new competitors, which could reduce our sales; HEICO's ability to introduce new products and product pricing levels, which could reduce our sales or sales growth; HEICO's ability to make acquisitions and achieve operating synergies from acquired businesses, customer credit risk, interest rates and economic conditions within and outside of the aviation, defense, space and electronics industries, which could negatively impact our costs and revenues; and HEICO's ability to maintain effective internal controls, which could adversely affect our business and the market price of our common stock. Parties receiving this material are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended July 31,
---------------------------------
2006 2005
------------- -------------
Net sales $ 102,172,000 $ 69,169,000
Cost of sales 64,587,000 43,170,000
Selling, general and
administrative expenses 20,197,000 14,250,000
------------- -------------
Operating income 17,388,000 11,749,000
Interest expense (958,000) (252,000)
Interest and other income 111,000 341,000
------------- -------------
Income before income taxes
and minority interests 16,541,000 11,838,000
Income tax expense 5,462,000 4,294,000
------------- -------------
Income before minority interests 11,079,000 7,544,000
Minority interests' share of income 2,803,000 1,498,000
------------- -------------
Net income $ 8,276,000(a) $ 6,046,000
============= =============
Net income per share:
Basic $ .33 $ .25
Diluted $ .31 $ .23
Weighted average number of
common shares outstanding:
Basic 25,291,566 24,500,372
Diluted 26,710,192 26,368,520
Three Months Ended July 31,
---------------------------------
2006 2005
------------- -------------
Operating segment information:(b)
Net sales:
Flight Support Group $ 71,069,000 $ 51,445,000
Electronic Technologies Group 31,113,000 17,748,000
Intersegment sales (10,000) (24,000)
------------- -------------
$ 102,172,000 $ 69,169,000
============= =============
Operating income:
Flight Support Group $ 11,471,000 $ 9,795,000
Electronic Technologies Group 9,688,000 4,479,000
Other, primarily corporate (3,771,000)(c) (2,525,000)
------------- -------------
$ 17,388,000 $ 11,749,000
============= =============
HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Nine Months Ended July 31,
---------------------------------
2006 2005
------------- -------------
Net sales $ 282,365,000 $ 193,123,000
Cost of sales 179,192,000 121,799,000
Selling, general and
administrative expenses 53,879,000 39,481,000
------------- -------------
Operating income 49,294,000 31,843,000
Interest expense (2,627,000) (785,000)
Interest and other income 365,000 421,000
------------- -------------
Income before income taxes and
minority interests 47,032,000 31,479,000
Income tax expense 16,193,000 11,430,000
------------- -------------
Income before minority interests 30,839,000 20,049,000
Minority interests' share of income 8,272,000 3,862,000
------------- -------------
Net income $ 22,567,000(a) $ 16,187,000
============= =============
Net income per share:
Basic $ .90 $ .66
Diluted $ .85 $ .62
Weighted average number of
common shares outstanding:
Basic 24,997,560 24,425,235
Diluted 26,521,065 26,280,695
Nine Months Ended July 31,
---------------------------------
2006 2005
------------- -------------
Operating segment information:(b)
Net sales:
Flight Support Group $ 198,586,000 $ 142,849,000
Electronic Technologies Group 83,858,000 50,421,000
Intersegment sales (79,000) (147,000)
------------- -------------
$ 282,365,000 $ 193,123,000
============= =============
Operating income:
Flight Support Group $ 33,832,000 $ 25,347,000
Electronic Technologies Group 25,036,000 12,075,000
Other, primarily corporate (9,574,000)(c) (5,579,000)
------------- -------------
$ 49,294,000 $ 31,843,000
============= =============
HEICO CORPORATION
Footnotes to Condensed Consolidated Statements of Operations
(Unaudited)
(a) Fiscal 2006 income tax expense reflects the benefit of a
credit for qualified research and development activities claimed
for certain prior years, which increased net income by $235,000,
or $.01 per diluted share.
(b) During the third quarter of fiscal 2006, one of the Company's
subsidiaries formerly included in the Electronic Technologies
Group was reclassified to the Flight Support Group. Prior period
amounts have been retroactively restated to reflect the revised
segment classification.
(c) Fiscal 2006 results reflect increased costs to comply with the
Sarbanes-Oxley Act of 2002 and higher accrued performance awards.
The majority of such costs incurred in fiscal 2005 were not
incurred until the second half of fiscal 2005. In addition,
fiscal 2006 third quarter results include aggregate stock option
expense (pretax) of $300,000, including $113,000 allocated to
corporate expense and fiscal 2006 year-to-date results include
aggregate stock option expense (pretax) of $1,187,000, including
$470,000 allocated to corporate expense.
HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
July 31, 2006 October 31, 2005
------------- ----------------
Cash and cash equivalents $ 6,371,000 $ 5,330,000
Accounts receivable, net 61,831,000 47,668,000
Inventories, net 90,668,000 62,758,000
Prepaid expenses and other
current assets 13,020,000 10,377,000
------------ ------------
Total current assets 171,890,000 126,133,000
Property, plant and equipment, net 48,894,000 46,663,000
Goodwill 272,037,000 248,229,000
Other assets 21,517,000 14,599,000
------------ ------------
Total assets $514,338,000 $435,624,000
============ ============
Short-term debt and current
maturities of long-term debt $ 56,000 $ 63,000
Other current liabilities 52,781,000 49,887,000
------------ ------------
Total current liabilities 52,837,000 49,950,000
Long-term debt, net of
current maturities 60,030,000 34,061,000
Deferred income taxes 27,762,000 22,431,000
Other non-current liabilities 5,537,000 6,644,000
------------ ------------
Total liabilities 146,166,000 113,086,000
Minority interests in
consolidated subsidiaries 61,097,000 49,035,000
Shareholders' equity 307,075,000 273,503,000
------------ ------------
Total liabilities and
shareholders' equity $514,338,000 $435,624,000
============ ============
HEICO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended July 31,
----------------------------
2006 2005
------------ ------------
Operating Activities:
Net income $ 22,567,000 $ 16,187,000
Depreciation and amortization 6,636,000 5,267,000
Deferred income tax provision 2,839,000 2,914,000
Minority interests' share of income 8,272,000 3,862,000
Tax benefit from stock option exercises 7,252,000 2,826,000
Excess tax benefit from stock option
exercises (1,139,000) --
Stock option compensation expense 1,187,000 1,000
Increase in accounts receivable (6,690,000) (2,760,000)
Increase in inventories (11,038,000) (8,833,000)
(Decrease) increase in other current
liabilities (2,594,000) 1,879,000
Other (132,000) (379,000)
------------ ------------
Net cash provided by operating
activities 27,160,000 20,964,000
------------ ------------
Investing Activities:
Acquisitions and related costs,
net of cash acquired (45,618,000) (19,043,000)
Capital expenditures (7,055,000) (6,804,000)
Other 539,000 3,744,000
------------ ------------
Net cash used in investing activities (52,134,000) (22,103,000)
------------ ------------
Financing Activities:
Borrowings on revolving credit
facility, net 26,000,000 4,000,000
Payments on short-term line of
credit, net (2,000,000) --
Cash dividends paid (2,004,000) (1,224,000)
Proceeds from stock option exercises 4,471,000 1,338,000
Excess tax benefit from stock
option exercises 1,139,000 --
Other (1,638,000) (554,000)
------------ ------------
Net cash provided by financing
activities 25,968,000 3,560,000
------------ ------------
Effect of exchange rate changes on cash 47,000 --
------------ ------------
Net increase in cash and
cash equivalents 1,041,000 2,421,000
Cash and cash equivalents at
beginning of year 5,330,000 214,000
------------ ------------
Cash and cash equivalents at end
of period $ 6,371,000 $ 2,635,000
============ ============