HOLLYWOOD, Fla. and MIAMI, March 1, 2006 (PRIMEZONE) -- HEICO Corporation (NYSE:HEI.A) (NYSE:HEI) today reported that net income for the first quarter of fiscal 2006 increased 52% to $6,749,000, or 26 cents per diluted share, from $4,428,000, or 17 cents per diluted share, in the first quarter of fiscal 2005.
Operating income increased 76% to $15,286,000 for the first quarter of fiscal 2006 from $8,661,000 for the first quarter of fiscal 2005.
Net sales for the first quarter of fiscal 2006 were up 55% to $88,101,000 from $56,981,000 in the first quarter 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 with the continued progress reflected in our fiscal 2006 first quarter results. Our net sales and operating income represent new records for the fourth consecutive quarter. Our Flight Support Group and our Electronic Technologies Group reported increased sales of 46% and 79%, respectively, over the first quarter of fiscal 2005. The sales increase within both Groups reflects recent strategic acquisitions as well as strong organic growth. Organic growth within the Flight Support Group and the Electronic Technologies Group approximated 19% and 13%, respectively, in the first quarter of fiscal 2006 when compared to net sales in the first quarter of fiscal 2005.
"Operating income of our Flight Support Group increased 62% to $12.3 million for the first quarter of fiscal 2006 from $7.6 million for the first quarter of fiscal 2005. The increase in operating income of the Flight Support Group for the first quarter of fiscal 2006 over the first quarter of fiscal 2005 reflects both the increase in net sales and higher operating margins reflecting improved operating efficiencies. Operating margins of the Flight Support Group improved to 20.0% in the first quarter of fiscal 2006 from 18.0% in the first quarter of fiscal 2005.
"Operating income of our Electronic Technologies Group increased 132% to $5.7 million for the first quarter of fiscal 2006 from $2.5 million for the first quarter of fiscal 2005. The increase in operating income of the Electronic Technologies Group for the first quarter of fiscal 2006 over the first quarter of fiscal 2005 reflects both the increase in net sales and higher operating margins resulting principally from improved product mix, including a higher margin product mix contributed by recent acquisitions. Operating margins of the Electronic Technologies Group improved to 21.6% in the first quarter of fiscal 2006 from 16.7% in the first quarter of fiscal 2005.
"Our consolidated operating margins improved to 17.4% in the first quarter of fiscal 2006 from 15.2% in the first quarter of fiscal 2005 and are in line with the consolidated operating margin we have targeted for fiscal 2006.
"The 76% quarter-over-quarter increase in operating income was greater than the 52% increase in net income principally due to the increased minority interests' share of income of certain consolidated subsidiaries.
"Cash flow from operating activities for the first quarter of fiscal 2006 totaled $6.3 million, up from $4.0 million in the first quarter of fiscal 2005. Fiscal 2006 cash flow from operating activities excludes $1.1 million of excess tax benefit from stock option exercises now classified as a financing activity in compliance with new accounting rules. After giving effect to this classification change, we are now targeting fiscal 2006 cash flow from operating activities in the range of $41 to $44 million with a net capital expenditure budget of approximately $12 to $14 million.
"As we look to the balance of fiscal 2006, we expect to continue to focus on new products, market penetration and additional strategic acquisitions while maintaining our strong operating margins and financial strength. Based on current market conditions, we are raising our targeted fiscal 2006 sales to a range of $355 to $365 million, operating income to a range of $61 to $63 million and diluted net income per share to a range of $1.07 to $1.11. These targets exclude the impact of additional acquisitions, if any."
As previously announced, HEICO will hold a conference call on Thursday, March 2, 2006 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./Canada/International/Local 785-832-2041, 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 402-220-1141 and enter Passcode/Conference ID 7HEICO (or "743426").
There are currently approximately 14.7 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 10.2 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 January 31,
------------------------------
2006 2005
----------- -----------
Net sales $88,101,000 $56,981,000
Cost of sales 56,049,000 36,701,000
Selling, general and
administrative expenses 16,766,000 11,619,000
----------- -----------
Operating income 15,286,000 8,661,000
Interest expense (808,000) (233,000)
Interest income and
other (expense) income (53,000) 36,000
----------- -----------
Income before income taxes
and minority interests 14,425,000 8,464,000
Income tax expense 4,916,000 2,923,000
----------- -----------
Income before minority interests 9,509,000 5,541,000
Minority interests' share of income 2,760,000 1,113,000
----------- -----------
Net income $ 6,749,000 $ 4,428,000
=========== ===========
Net income per share:
Basic $ .27 $ .18
Diluted $ .26 $ .17
Weighted average number of
common shares outstanding:
Basic 24,673,957 24,328,337
Diluted 26,231,848 26,213,577
Three Months Ended January 31,
------------------------------
2006 2005
----------- -----------
Operating segment information: -
Net sales:
Flight Support Group $61,689,000 $42,263,000
Electronic Technologies Group 26,471,000 14,774,000
Intersegment sales (59,000) (56,000)
----------- -----------
$88,101,000 $56,981,000
=========== ===========
Operating income:
Flight Support Group $12,308,000 $ 7,598,000
Electronic Technologies Group 5,710,000 2,462,000
Other, primarily corporate (2,732,000)(a) (1,399,000)
----------- -----------
$15,286,000 $ 8,661,000
=========== ===========
(a) 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
results include aggregate stock option expense (pretax) of $428,000,
including $213,000 allocated to corporate expense.
HEICO CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
January 31, 2006 October 31, 2005
------------ ------------
Cash and cash equivalents $ 9,226,000 $ 5,330,000
Accounts receivable, net 51,045,000 47,668,000
Inventories, net 78,008,000 62,758,000
Prepaid expenses and other
current assets 11,892,000 10,377,000
------------ ------------
Total current assets 150,171,000 126,133,000
Property, plant and equipment, net 46,010,000 46,663,000
Goodwill 263,555,000 248,229,000
Other assets 21,755,000 14,599,000
------------ ------------
Total assets $481,491,000 $435,624,000
============ ============
Short-term debt and current
maturities of long-term debt $ 3,064,000 $ 63,000
Other current liabilities 47,842,000 49,887,000
------------ ------------
Total current liabilities 50,906,000 49,950,000
Long-term debt, net of
current maturities 61,040,000 34,061,000
Deferred income taxes 23,991,000 22,431,000
Other non-current liabilities 6,640,000 6,644,000
------------ ------------
Total liabilities 142,577,000 113,086,000
Minority interests in
consolidated subsidiaries 56,269,000 49,035,000
Shareholders' equity 282,645,000 273,503,000
------------ ------------
Total liabilities and
shareholders' equity $481,491,000 $435,624,000
============ ============
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended January 31,
--------------------------------
2006 2005
------------ ------------
Operating Activities:
Net income $ 6,749,000 $ 4,428,000
Depreciation and amortization 2,149,000 1,724,000
Deferred income tax provision 1,061,000 1,102,000
Minority interests' share
of income 2,760,000 1,113,000
Tax benefit from stock
option exercises 2,365,000 2,538,000
Excess tax benefit from stock
option exercises (1,130,000) --
Decrease in accounts receivable 1,444,000 2,893,000
Increase in inventories (4,157,000) (2,806,000)
Decrease in other current
liabilities (5,172,000) (6,607,000)
Other 279,000 (428,000)
------------ ------------
Net cash provided by
operating activities 6,348,000 3,957,000
------------ ------------
Investing Activities:
Acquisitions and related costs,
net of cash acquired (30,062,000) (14,679,000)
Capital expenditures (1,207,000) (944,000)
Other 360,000 3,285,000
------------ ------------
Net cash used in investing
activities (30,909,000) (12,338,000)
------------ ------------
Financing Activities:
Borrowings on revolving credit
facility, net 27,000,000 13,000,000
Cash dividends paid (991,000) (610,000)
Excess tax benefit from stock
option exercises 1,130,000 --
Other 1,313,000 294,000
------------ ------------
Net cash provided by
financing activities 28,452,000 12,684,000
------------ ------------
Effect of exchange rate
changes on cash 5,000 --
------------ ------------
Net increase in cash and
cash equivalents 3,896,000 4,303,000
Cash and cash equivalents
at beginning of year 5,330,000 214,000
------------ ------------
Cash and cash equivalents
at end of period $ 9,226,000 $ 4,517,000
============ ============