HOLLYWOOD, Fla. and MIAMI, Feb. 28, 2008 (PRIME NEWSWIRE) -- HEICO Corporation (NYSE:HEI-A) (NYSE:HEI) today reported that net income increased 27% to $10,086,000, or 37 cents per diluted share, for the first quarter of fiscal 2008 from $7,921,000, or 30 cents per diluted share, for the first quarter of fiscal 2007.
Operating income increased 36% to $23,230,000 for the first quarter of fiscal 2008 from $17,140,000 for the first quarter of fiscal 2007.
Net sales increased 18% to $134,287,000 for the first quarter of fiscal 2008 from $113,684,000 for the first quarter of fiscal 2007.
(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 pleased to report increased sales in each of our two business segments reflecting both organic growth and growth through acquiring profitable, well-managed businesses. Our Flight Support Group reported strong net sales of $102.3 million, up 16% over the first quarter of fiscal 2007. The sales growth within the Flight Support Group reflects organic growth approximating 12%, as well as recent strategic acquisitions. Our Electronic Technologies Group also reported strong net sales of $31.9 million, up 25% over the first quarter of fiscal 2007, reflecting organic growth approximating 14%, as well as strategic acquisitions completed in the second half of fiscal 2007.
Operating income of our Flight Support Group increased 31% to a record $18.9 million for the first quarter of fiscal 2008, up from $14.4 million for the first quarter of fiscal 2007. Operating margins of the Flight Support Group were 18.5% in the first quarter of fiscal 2008 versus 16.4% for the first quarter of fiscal 2007, reflecting a favorable product mix.
Operating income of our Electronic Technologies Group totaled $7.2 million for the first quarter of fiscal 2008, up from $5.8 million for the first quarter of fiscal 2007. Operating margins of the Electronic Technologies Group were 22.5% for the first quarter of fiscal 2008 and the first quarter of fiscal 2007. We continue to target Electronic Technologies Group operating margins in the 25% to 27% range for the full fiscal 2008 year.
Our consolidated operating margin improved to 17.3% for the first quarter of fiscal 2008 from 15.1% for the first quarter of fiscal 2007, principally as a result of increased gross profit margins reflecting the favorable product mix within the Flight Support Group.
Cash flow from operating activities for the first three months of fiscal 2008 totaled $9.8 million, up from $3.1 million for the first three months of 2007. We continue to target fiscal 2008 cash flow from operating activities to approximate $70 million and our capital expenditures for fiscal 2008 should approximate $16 to $18 million.
Based on current market conditions, we are raising our targeted fiscal 2008 net sales to a range of $577 to $581 million, operating income to a range of $102 to $104 million and diluted net income per share to a range of $1.74 to $1.77. These targets exclude the impact of additional acquisitions, if any.
As we look to the balance of fiscal 2008 and beyond, we continue to believe our commitment to develop new products and services, increasing product demand from our customers, our strong financial position and our ability to identify select acquisition opportunities provide the foundation for continued growth in sales and earnings. We further believe the long-term prospects of the commercial airline industry remain strong.
As previously announced, HEICO will hold a conference call on Friday, February 29, 2008 at 9:00 a.m. Eastern Standard Time to discuss its first quarter results. Individuals wishing to participate in the conference call should dial: U.S. (877) 366-0713, Canada (866) 627-1653 or International (302) 607-2000, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID VM66034 (or "8666034"). A digital replay will be available two hours after the completion of the conference for 14 days. To access, dial: U.S. (800) 355-2355 or Canada/International (402) 220-2946 and enter the Playback Passcode/Conference ID 66034#.
There are currently approximately 15.7 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 10.6 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 medical, telecommunications and electronics 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, space or homeland security 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
January 31,
---------------------------
2008 2007
------------ ------------
Net sales $134,287,000 $113,684,000
Cost of sales 87,458,000 76,196,000
Selling, general and administrative
expenses 23,599,000 20,348,000
------------ ------------
Operating income 23,230,000 17,140,000
Interest expense (862,000) (849,000)
Interest and other (expense) income (116,000) 184,000
------------ ------------
Income before income taxes and minority
interests 22,252,000 16,475,000
Income tax expense 7,580,000 4,988,000
------------ ------------
Income before minority interests 14,672,000 11,487,000
Minority interests' share of income 4,586,000 3,566,000
------------ ------------
Net income $ 10,086,000 $ 7,921,000(a)
============ ============
Net income per share:
Basic $.39 $.31
Diluted $.37 $.30
Weighted average number of common shares
outstanding:
Basic 26,184,631 25,482,633
Diluted 27,209,157 26,811,861
Three Months Ended
January 31,
---------------------------
2008 2007
------------ ------------
Operating segment information:
Net sales:
Flight Support Group $102,349,000 $ 88,075,000
Electronic Technologies Group 31,938,000 25,609,000
Intersegment sales -- --
------------ ------------
$134,287,000 $113,684,000
============ ============
Operating income:
Flight Support Group $ 18,946,000 $ 14,425,000
Electronic Technologies Group 7,177,000 5,764,000
Other, primarily corporate (2,893,000) (3,049,000)
------------ ------------
$ 23,230,000 $ 17,140,000
============ ============
HEICO CORPORATION
Footnote to Condensed Consolidated Statements of Operations (Unaudited)
------------------
(a) Fiscal 2007 net income reflects the benefit of a tax credit
(net of related expenses) for qualified research and development
activities recognized for the full fiscal 2006 year pursuant to
the retroactive extension in December 2006 of Section 41, "Credit
for Increasing Research Activities," of the Internal Revenue Code,
which increased net income for the first quarter ended of
fiscal 2007 by $332,000, or $.01 per diluted share.
HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
January 31, October 31,
2008 2007
------------ ------------
Cash and cash equivalents $ 12,595,000 $ 4,947,000
Accounts receivable, net 74,518,000 82,399,000
Inventories, net 117,866,000 115,770,000
Prepaid expenses and other current
assets 21,121,000 14,692,000
------------ ------------
Total current assets 226,100,000 217,808,000
Property, plant and equipment, net 56,512,000 55,554,000
Goodwill 313,146,000 310,502,000
Other assets 52,589,000 47,438,000
------------ ------------
Total assets $648,347,000 $631,302,000
============ ============
Current maturities of long-term debt $ 2,193,000 $ 2,187,000
Other current liabilities 62,752,000 85,151,000
------------ ------------
Total current liabilities 64,945,000 87,338,000
Long-term debt, net of current
maturities 64,666,000 53,765,000
Deferred income taxes 36,184,000 35,296,000
Other non-current liabilities 21,270,000 10,364,000
------------ ------------
Total liabilities 187,065,000 186,763,000
Minority interests in consolidated
subsidiaries 76,029,000 72,938,000
Shareholders' equity 385,253,000(a) 371,601,000
------------ ------------
Total liabilities and shareholders'
equity $648,347,000 $631,302,000
============ ============
Footnote to Condensed Consolidated Balance Sheets (Unaudited)
------------------
(a) Effective November 1, 2007, the Company adopted Financial
Accounting Standards Board ("FASB") Interpretation No. 48
("FIN 48"), "Accounting for Uncertainty in Income Taxes -
an interpretation of FASB Statement No. 109." As a result of
adopting the provisions of FIN 48, the Company recognized a
cumulative effect adjustment that decreased retained earnings as
of the beginning of fiscal 2008 by $639,000.
HEICO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended
January 31,
------------------------------
2008 2007
------------- -------------
Operating Activities:
Net income $ 10,086,000 $ 7,921,000
Depreciation and amortization 3,539,000 2,945,000
Deferred income tax provision 856,000 (1,502,000)
Minority interests' share of income 4,586,000 3,566,000
Tax benefit from stock option
exercises 6,285,000 6,885,000
Excess tax benefit from stock option
exercises (4,350,000) (5,271,000)
Stock option compensation expense 85,000 258,000
Decrease (increase) in accounts
receivable 9,436,000 (1,329,000)
Increase in inventories (777,000) (2,131,000)
Decrease in current liabilities (18,789,000) (6,052,000)
Other (1,113,000) (2,189,000)
------------- -------------
Net cash provided by operating
activities 9,844,000 3,101,000
------------- -------------
Investing Activities:
Acquisitions and related costs, net
of cash acquired (12,190,000) (8,385,000)
Capital expenditures (2,812,000) (2,666,000)
Other 78,000 72,000
------------- -------------
Net cash used in investing
activities (14,924,000) (10,979,000)
------------- -------------
Financing Activities:
Borrowings on revolving credit
facility, net 11,000,000 5,000,000
Cash dividends paid (1,312,000) (1,022,000)
Proceeds from stock option exercises 824,000 664,000
Excess tax benefit from stock option
exercises 4,350,000 5,271,000
Distributions to minority interest
owners (2,000,000) (1,164,000)
Other (20,000) (39,000)
------------- -------------
Net cash provided by financing
activities 12,842,000 8,710,000
------------- -------------
Effect of exchange rate changes on cash (114,000) 12,000
------------- -------------
Net increase in cash and cash
equivalents 7,648,000 844,000
Cash and cash equivalents at beginning
of year 4,947,000 4,999,000
------------- -------------
Cash and cash equivalents at end of
period $ 12,595,000 $ 5,843,000
============= =============