HOLLYWOOD, Fla. and MIAMI, Aug. 27, 2008 (GLOBE NEWSWIRE) -- HEICO Corporation (NYSE:HEI-A) (NYSE:HEI) today reported that net income increased 18% to a record $12,827,000, or 47 cents per diluted share, for the third quarter of fiscal 2008 from $10,914,000, or 40 cents per diluted share, for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, net income increased 23% to a record $34,861,000, or $1.28 per diluted share, from $28,242,000, or $1.05 per diluted share, in the first nine months of fiscal 2007.
Operating income increased 15% to a record $27,489,000 for the third quarter of fiscal 2008 from $23,944,000 for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, operating income increased 24% to a record $77,078,000 from $62,167,000 in the first nine months of fiscal 2007.
Net sales increased 11% to a record $147,305,000 for the third quarter of fiscal 2008 from $133,155,000 for the third quarter of fiscal 2007. For the first nine months of fiscal 2008, net sales increased 16% to a record $425,631,000 from $368,054,000 in the first nine months 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 extremely pleased to report new all-time record quarterly consolidated net sales, operating income and net income in our fiscal 2008 third quarter results. Both our Flight Support and our Electronic Technologies Groups reported record quarterly net sales for the third quarter of fiscal 2008, with increases of 9% and 15%, respectively, over the third quarter of fiscal 2007 and year-to-date increases of 14% and 21%, respectively, over the first nine months of fiscal 2007. The sales increases within the Flight Support Group and the Electronic Technologies Group reflect organic growth as well as growth through acquiring profitable, well-managed businesses. Fiscal 2008 year-to-date organic revenue growth within each business segment approximated 10% when compared to net sales for the same period of fiscal 2007.
Operating income of our Flight Support Group increased 15% to a record $20.4 million for the third quarter of fiscal 2008, up from $17.8 million for the third quarter of fiscal 2007, and increased 19% to a record $59.7 million for the first nine months of fiscal 2008, up from $50.1 million for the first nine months of fiscal 2007. Operating margins of the Flight Support Group reflected a favorable product mix as margins improved to 18.5% in the third quarter of fiscal 2008, up from 17.7% for the third quarter of fiscal 2007, and to 18.6% for the first nine months of fiscal 2008, up from 17.8% for the first nine months of fiscal 2007.
Operating income of our Electronic Technologies Group increased 5% to a record $10.8 million for the third quarter of fiscal 2008, up from $10.2 million for the third quarter of fiscal 2007, and increased 19% to a record $27.7 million for the first nine months of fiscal 2008, up from $23.4 million for the first nine months of fiscal 2007. As expected, operating margins of the Electronic Technologies Group were 28.6% for the third quarter of fiscal 2008 and 26.2% in the first nine months of fiscal 2008 versus 31.3% in the third quarter of fiscal 2007 and 26.8% in the first nine months of fiscal 2007, reflecting a less favorable product mix.
Our consolidated operating margin improved to 18.7% for the third quarter of fiscal 2008, up from 18.0% for the third quarter of fiscal 2007, and improved to 18.1% for the first nine months of fiscal 2008, up from 16.9% for the first nine months of fiscal 2007, principally reflecting increased gross profit margins. We expect consolidated operating margins for the full fiscal 2008 year to approximate those experienced in the first nine months of fiscal 2008.
Cash flow from operating activities for the first nine months of fiscal 2008 totaled $56.6 million, including $21.4 million generated in the third quarter of fiscal 2008, up from $37.3 million for the first nine months of fiscal 2007. We are increasing our target for fiscal 2008 cash flow from operating activities to approximately $73 to $75 million, an increase from our previous estimate of $70 million. Our capital expenditures for fiscal 2008 should approximate $14 to $16 million.
Based on current market conditions, we continue to target fiscal 2008 net sales and operating income growth over fiscal 2007 to approximate 13% and 21%, respectively, and diluted net income per share within a range of $1.75 to $1.78. These targets reflect the expected impact of capacity reductions announced by certain of our airline customers, but exclude the impact of additional acquisitions, if any.
As we look to the balance of fiscal 2008 and beyond, we believe our commitment to develop new products and services, our strong financial position and our ability to identify select acquisition opportunities provide the foundation for continued growth in sales and earnings. We continue to significantly increase development of FAA-approved PMA parts and continue to witness excellent market penetration by our comprehensive line of FAA-approved parts. HEICO is the largest independent supplier of both FAA-approved engine and non-engine PMA parts.
Although it appears possible that 2009 global air traffic growth may soften, our focus on expanding the number of products and services offered to our customers will provide opportunity to grow sales and earnings in fiscal 2009. The Company expects to provide our fiscal 2009 guidance at the time of our fourth quarter earnings release."
As previously announced, HEICO will hold a conference call on Thursday, August 28, 2008 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. (888) 299-4099, Canada (866) 682-1172 or International (302) 709-8337, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID VM55775 (or "8655775"). 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 55775#.
There are currently approximately 15.8 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, telecommunication and electronic 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 July 31,
--------------------------
2008 2007
------------ ------------
Net sales $147,305,000 $133,155,000
Cost of sales 93,454,000 85,450,000
Selling, general and
administrative expenses 26,362,000 23,761,000
------------ ------------
Operating income 27,489,000 23,944,000
Interest expense (444,000) (729,000)
Interest and other expense (144,000) (80,000)
------------ ------------
Income before income taxes and
minority interests 26,901,000 23,135,000
Income tax expense 9,500,000 7,830,000
------------ ------------
Income before minority interests 17,401,000 15,305,000
Minority interests' share of income 4,574,000 4,391,000
------------ ------------
Net income $12,827,000 $10,914,000
============ ============
Net income per share:
Basic $.49 $.42
Diluted $.47 $.40
Weighted average number of common
shares outstanding:
Basic 26,379,608 25,804,417
Diluted 27,271,841 26,959,815
Three Months Ended July 31,
--------------------------
2008 2007
------------ ------------
Operating segment information: -
Net sales:
Flight Support Group $109,969,000 $100,488,000
Electronic Technologies Group 37,676,000 32,677,000
Intersegment sales (340,000) (10,000)
------------ ------------
$147,305,000 $133,155,000
============ ============
Operating income:
Flight Support Group $20,392,000 $17,802,000
Electronic Technologies Group 10,783,000 10,243,000
Other, primarily corporate (3,686,000) (4,101,000)
------------ ------------
$27,489,000 $23,944,000
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HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Nine Months Ended July 31,
--------------------------
2008 2007
------------ ------------
Net sales $425,631,000 $368,054,000
Cost of sales 272,595,000 239,194,000
Selling, general and
administrative expenses 75,958,000 66,693,000
------------ ------------
Operating income 77,078,000 62,167,000
Interest expense (1,951,000) (2,438,000)
Interest and other (expense) income (218,000) 228,000
------------ ------------
Income before income taxes
and minority interests 74,909,000 59,957,000
Income tax expense 26,040,000 19,726,000
------------ ------------
Income before minority interests 48,869,000 40,231,000
Minority interests' share of income 14,008,000 11,989,000
------------ ------------
Net income $34,861,000 $28,242,000(a)
============ ============
Net income per share:
Basic $1.33 $1.10
Diluted $1.28 $1.05
Weighted average number of common
shares outstanding:
Basic 26,280,211 25,620,418
Diluted 27,242,251 26,871,310
Nine Months Ended July 31,
--------------------------
2008 2007
------------ ------------
Operating segment information: -
Net sales:
Flight Support Group $320,286,000 $280,959,000
Electronic Technologies Group 105,697,000 87,111,000
Intersegment sales (352,000) (16,000)
------------ ------------
$425,631,000 $368,054,000
============ ============
Operating income:
Flight Support Group $59,723,000 $50,094,000
Electronic Technologies Group 27,731,000 23,383,000
Other, primarily corporate (10,376,000) (11,310,000)
------------ ------------
$77,078,000 $62,167,000
============ ============
HEICO CORPORATION
Footnotes 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
nine months of fiscal 2007 by $535,000, or $.02 per diluted
share.
HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
July 31, October 31,
2008 2007
------------ ------------
Cash and cash equivalents $6,565,000 $4,947,000
Accounts receivable, net 76,390,000 82,399,000
Inventories, net 129,952,000 115,770,000
Prepaid expenses and other current assets 21,186,000 14,692,000
------------ ------------
Total current assets 234,093,000 217,808,000
Property, plant and equipment, net 59,548,000 55,554,000
Goodwill 318,380,000 310,502,000
Other assets 53,648,000 47,438,000
------------ ------------
Total assets $665,669,000 $631,302,000
============ ============
Current maturities of long-term debt $250,000 $2,187,000
Other current liabilities 72,173,000 85,151,000
------------ ------------
Total current liabilities 72,423,000 87,338,000
Long-term debt, net of current maturities 42,512,000 53,765,000
Deferred income taxes 39,395,000 35,296,000
Other non-current liabilities 21,293,000 10,364,000
------------ ------------
Total liabilities 175,623,000 186,763,000
Minority interests in
consolidated subsidiaries 80,661,000 72,938,000
Shareholders' equity 409,385,000 371,601,000
------------ ------------
Total liabilities and
shareholders' equity $665,669,000 $631,302,000
============ ============
HEICO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended July 31,
--------------------------
2008 2007
------------ ------------
Operating Activities:
Net income $34,861,000 $28,242,000
Depreciation and amortization 11,339,000 8,959,000
Deferred income tax provision 2,179,000 3,188,000
Minority interests' share of income 14,008,000 11,989,000
Tax benefit from stock option exercises 6,281,000 6,880,000
Excess tax benefit from stock
option exercises (4,347,000) (5,267,000)
Stock option compensation expense 138,000 542,000
Decrease (increase) in accounts receivable 7,867,000 (9,472,000)
Increase in inventories (13,062,000) (13,132,000)
(Decrease) increase in current liabilities (2,124,000) 5,866,000
Other (514,000) (531,000)
------------ ------------
Net cash provided by operating activities 56,626,000 37,264,000
------------ ------------
Investing Activities:
Acquisitions and related costs,
net of cash acquired (28,747,000) (14,875,000)
Capital expenditures (10,121,000) (9,465,000)
Other 133,000 135,000
------------ ------------
Net cash used in investing activities (38,735,000) (24,205,000)
------------ ------------
Financing Activities:
Payments on revolving credit facility, net (11,000,000) (14,000,000)
Payment of industrial development
revenue bonds (1,980,000) --
Distributions to minority interest owners (5,902,000) (4,165,000)
Cash dividends paid (2,631,000) (2,056,000)
Excess tax benefit from stock
option exercises 4,347,000 5,267,000
Proceeds from stock option exercises 2,157,000 2,615,000
Other (1,087,000) (39,000)
------------ ------------
Net cash used in financing activities (16,096,000) (12,378,000)
------------ ------------
Effect of exchange rate changes on cash (177,000) 28,000
------------ ------------
Net increase in cash and cash equivalents 1,618,000 709,000
Cash and cash equivalents
at beginning of year 4,947,000 4,999,000
------------ ------------
Cash and cash equivalents at end of period $6,565,000 $5,708,000
============ ============