1st Quarter Adjusted Net Income up 20% on Net Sales Increase of 14% and Adjusted Operating Income Increase of 20%

HOLLYWOOD, Fla. and MIAMI, Feb. 25, 2016 (GLOBE NEWSWIRE) -- HEICO CORPORATION (NYSE:HEI.A) (NYSE:HEI) today reported that adjusted net income increased 20% to $33.2 million, or 49 cents per diluted share, in the first quarter of fiscal 2016, up from $27.6 million, or 41 cents per diluted share, in the first quarter of fiscal 2015.

Adjusted operating income increased 20% to $55.8 million in the first quarter of fiscal 2016, up from $46.4 million in the first quarter of fiscal 2015.  The Company's adjusted operating margin increased to 18.2% in the first quarter of fiscal 2016, up from 17.3% in the first quarter of fiscal 2015.

The adjusted results above exclude the impact of $3.2 million of pre-tax acquisition costs which the Company incurred in connection with a fiscal 2016 acquisition.  These are one-time nonrecurring costs.  A reconciliation between GAAP and Non-GAAP financial measures is provided at the end of this press release.

Net sales increased by 14% to $306.2 million in the first quarter of fiscal 2016, up from $268.2 million in the first quarter of fiscal 2015.

Consolidated Results

Laurans A. Mendelson, HEICO’s Chairman and CEO, commented on the Company's first quarter results stating, "Our first quarter year-over-year growth principally reflects the impact of our profitable fiscal 2015 and 2016 acquisitions, overall moderate organic growth within the Electronic Technologies Group and increased demand for certain products within the Flight Support Group's specialty products and aftermarket replacement parts product lines.

Cash flow provided by operating activities was very strong, increasing 53% to $45.2 million in the first quarter of fiscal 2016, representing 144% of net income, as compared to $29.5 million in the first quarter of fiscal 2015.

Our net debt to shareholders' equity ratio was a low 61.3% as of January 31, 2016, with net debt (total debt less cash and cash equivalents) of $565.0 million principally incurred to fund acquisitions in fiscal 2016 and 2015.  We have no significant debt maturities until fiscal 2019 and plan to utilize our financial flexibility to aggressively pursue high quality acquisition opportunities, such as our recently completed acquisition of Robertson Fuel Systems, to accelerate growth and maximize shareholder returns.

As we look ahead to the remainder of fiscal 2016, we anticipate overall moderate organic growth within the Flight Support Group resulting from increased demand across all product lines.  Additionally, we expect overall moderate organic growth within the Electronic Technologies Group resulting from increased net sales for the majority of our products.  During the remainder of fiscal 2016, we plan to continue our focus on new product development, further market penetration, executing our disciplined acquisition strategies and maintaining our financial strength.

Based on our current economic visibility, we are increasing our estimated consolidated fiscal 2016 year-over-year growth in net sales to 14% - 16% and GAAP net income to 10% - 13%, up from prior growth estimates in both net sales and net income of 8% - 10%, with our consolidated operating margin approximating 18.5% - 19.0%.  Additionally, we anticipate depreciation and amortization expense of approximately $63 million, capital expenditures to approximate $32 million and cash flow from operations to approximate $220 million representing a 10% increase over our prior estimate of $200 million."

Flight Support Group

Eric A. Mendelson, HEICO's Co-President and President of HEICO's Flight Support Group, commented on the Flight Support Group's first quarter results stating, "We are pleased to report strong contributions from our fiscal 2015 acquisitions in addition to moderate organic growth within the Flight Support Group's specialty products and aftermarket replacement parts product lines.

The Flight Support Group's net sales increased 12% to $204.6 million in the first quarter of fiscal 2016, up from $182.1 million in the first quarter of fiscal 2015.  The increase mostly reflects net sales contributed by our fiscal 2015 acquisitions as well as additional net sales from our specialty products and aftermarket replacement parts product lines principally from increased demand and new product offerings.  These increases were partially offset by lower organic net sales from our repair and overhaul services product line.  Our repair and overhaul services product line was adversely impacted by the mix of products repaired during the first quarter of fiscal 2016, which required less extensive repair and overhaul services, in addition to softer demand from our South American market.  The Flight Support Group experienced overall organic growth of 1% in the first quarter of fiscal 2016.  Excluding the net sales decrease in our repair and overhaul services product line, the Flight Support Group experienced organic revenue growth of 6% in the first quarter of fiscal 2016.

The Flight Support Group's operating income increased 16% to $35.5 million in the first quarter of fiscal 2016, up from $30.7 million in the first quarter of fiscal 2015.  The increase is mainly attributed to the previously mentioned net sales growth and a more favorable product mix within our specialty products and aftermarket replacement parts product lines.  These increases were  partially offset by the previously mentioned decrease in net sales and a less favorable product mix within our repair and overhaul services product line, an increase in amortization expense of intangible assets recognized in connection with the fiscal 2015 acquired businesses and higher performance-based compensation expense.

The Flight Support Group's operating margin increased to 17.3% in the first quarter of fiscal 2016, up from 16.9% in the first quarter of fiscal 2015.  The increase principally reflects the previously mentioned more favorable product mix in our specialty products and aftermarket replacement parts products lines, partially offset by the increase in amortization expense of intangible assets and higher performance-based compensation expense.

With respect to the remainder of fiscal 2016, we continue to estimate the Flight Support Group’s full year net sales growth to be between 8% - 10% and the full year Flight Support Group operating margin to approximate that of fiscal year 2015.”

Electronic Technologies Group

Victor H. Mendelson, HEICO's Co-President and President of HEICO’s Electronic Technologies Group, commented on the Electronic Technologies Group's first quarter results stating, "We are pleased to report another quarter with year-over-year growth in net sales and operating income driven principally by overall moderate organic growth stemming from improved demand for certain of our space and defense products and the favorable impact from our fiscal 2016 acquisitions.

The Electronic Technologies Group's net sales increased 17% to $104.2 million in the first quarter of fiscal 2016, up from $89.2 million in the first quarter of fiscal 2015.  The increase mostly reflects net sales contributed by our fiscal 2016 and 2015 acquisitions as well as organic growth of 4% principally resulting from increased demand for certain space and defense products.

The Electronic Technologies Group's operating income increased 15% to $22.3 million in the first quarter of fiscal 2016, up from $19.4 million in the first quarter of fiscal 2015.  The increase is mainly attributed to the previously mentioned net sales growth and a more favorable product mix for certain space and defense products, partially offset by an increase in acquisition costs associated with a fiscal 2016 acquisition and an increase in amortization expense of intangible assets recognized in connection with the fiscal 2016 and 2015 acquired businesses.

The Electronic Technologies Group's operating margin was 21.4% and 21.8% in the first quarter of fiscal 2016 and 2015, respectively.  The slight decrease principally reflects the previously mentioned increase in acquisition costs and amortization expense of intangible assets, partially offset by the previously mentioned higher net sales and more favorable product mix for certain space and defense products.

With respect to the remainder of fiscal 2016, we are increasing estimates for the Electronic Technologies Group’s full year net sales growth to between 27% - 30% and the full year operating margin to approximate 24%.”

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

There are currently approximately 40.0 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 26.9 million shares of HEICO's Common Stock (HEI) outstanding.  The stock symbols for HEICO’s two classes of common stock on most websites are HEI.A and HEI.  However, some websites change HEICO's Class A Common Stock trading symbol (HEI.A) to HEI/A or HEIa.

As previously announced, HEICO will hold a conference call on Friday, February 26, 2016 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. and Canada (877) 586-4323, International (706) 679-0934, wait for the conference operator and provide the operator with the Conference ID 49115159.  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 49115159.

HEICO Corporation is engaged primarily in the design, production, servicing and distribution of products and services to certain niche segments of the aviation, defense, space, medical, telecommunications and electronics 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 overhaul shops 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 website 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 or airline purchasing decisions, 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; our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; product development or manufacturing difficulties, which could increase our product development costs and delay sales; our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and defense budget cuts, which could reduce our defense-related revenue.  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, except to the extent required by applicable law.


HEICO CORPORATION

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)Three Months Ended January 31, 
 2016 2015 
Net sales$306,227  $268,185  
Cost of sales 194,031   174,388  
Selling, general and administrative expenses 59,575   47,391  
Operating income 52,621 (a) 46,406  
Interest expense (1,567)  (1,112) 
Other (expense) income (430)  197  
Income before income taxes and noncontrolling interests 50,624   45,491  
Income tax expense 14,700   13,400  
Net income from consolidated operations 35,924   32,091  
Less: Net income attributable to noncontrolling interests 4,653   4,451  
Net income attributable to HEICO$31,271 (a)$27,640  
     
Net income per share attributable to HEICO shareholders:    
Basic$                .47  (a)$           .42   
Diluted$                .46  (a)$           .41   
     
Weighted average number of common shares outstanding:    
Basic 66,875   66,595  
Diluted 67,940   67,669  
     
 Three Months Ended January 31, 
 2016 2015 
Operating segment information:    
Net sales:    
Flight Support Group$204,576  $182,057  
Electronic Technologies Group 104,152   89,221  
Intersegment sales (2,501)  (3,093) 
 $306,227  $268,185  
     
Operating income:    
Flight Support Group$35,480  $30,703  
Electronic Technologies Group 22,269   19,418  
Other, primarily corporate (5,128)  (3,715) 
 $52,621  $46,406  


HEICO CORPORATION

Footnotes to Condensed Consolidated Statements of Operations (Unaudited)

                                   

(a)  During the first quarter of fiscal 2016, the Company incurred $3.2 million of acquisition costs in connection with a fiscal 2016 acquisition.  These are one-time nonrecurring costs. These expenses, net of tax, decreased net income attributable to HEICO by $2.0 million, or $.03 per basic and diluted share.


HEICO CORPORATION

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 January 31, 2016 October 31, 2015
Cash and cash equivalents$29,886  $33,603 
Accounts receivable, net 173,915   181,593 
Inventories, net 273,494   243,517 
Prepaid expenses and other current assets 46,134   44,899 
Total current assets 523,429   503,612 
Property, plant and equipment, net 112,686   105,670 
Goodwill 863,916   766,639 
Intangible assets, net 391,907   272,593 
Other assets 89,562   87,873 
Total assets$1,981,500  $1,736,387 
    
Current maturities of long-term debt$346  $357 
Other current liabilities 155,104   168,030 
Total current liabilities 155,450   168,387 
Long-term debt, net of current maturities 594,575   367,241 
Deferred income taxes 110,469   110,588 
Other long-term liabilities 107,652   105,618 
Total liabilities 968,146   751,834 
Redeemable noncontrolling interests 91,136   91,282 
Shareholders’ equity 922,218   893,271 
Total liabilities and equity$1,981,500  $1,736,387 


HEICO CORPORATION

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 Three Months Ended January 31,
 2016 2015
Operating Activities:   
Net income from consolidated operations$35,924  $32,091 
Depreciation and amortization 13,921   10,904 
Deferred income tax provision 2,276   1,557 
Share-based compensation expense 1,680   1,422 
Employer contributions to HEICO Savings and Investment Plan 1,417   1,393 
Tax benefit from stock option exercises 871   1,407 
Excess tax benefit from stock option exercises (871)  (1,407)
Increase in accrued contingent consideration 847   20 
Foreign currency transaction adjustments, net (839)  (1,374)
Decrease in accounts receivable 12,348   2,082 
Increase in inventories (2,326)  (2,851)
Decrease in current liabilities (16,632)  (13,148)
Other (3,449)  (2,641)
Net cash provided by operating activities 45,167   29,455 
    
Investing Activities:   
Acquisitions, net of cash acquired (264,324)  (49,312)
Capital expenditures (5,690)  (4,254)
Other 474   76 
Net cash used in investing activities (269,540)  (53,490)
    
Financing Activities:   
Borrowings on revolving credit facility, net 228,000   27,696 
Cash dividends paid (5,350)  (4,666)
Distributions to noncontrolling interests (2,696)  (2,557)
Proceeds from stock option exercises 94   1,516 
Excess tax benefit from stock option exercises 871   1,407 
Other (86)  (112)
Net cash provided by financing activities 220,833   23,284 
    
Effect of exchange rate changes on cash (177)  (1,106)
    
Net decrease in cash and cash equivalents (3,717)  (1,857)
Cash and cash equivalents at beginning of year 33,603   20,229 
Cash and cash equivalents at end of period$29,886  $18,372 


HEICO CORPORATION

Reconciliation of Non-GAAP Measures (Unaudited)

(in thousands, except per share data)

 Three Months Ended January 31, 
 2016      2015 
Operating income, as reported   $52,621       $46,406  
Acquisition costs    3,151         
Operating income, as adjusted    $55,772       $46,406  
          
Operating margin, as reported    17.2%       17.3% 
Acquisition costs - operating margin adjustment    1.0%      % 
Operating margin, as adjusted    18.2%       17.3% 
          
Net income attributable to HEICO, as reported    $31,271       $27,640  
Acquisition costs, net of tax    1,976         
Net income attributable to HEICO, as adjusted   $33,247       $27,640  
          
Net income per share attributable to HEICO shareholders:         
Basic, as reported$     .47          $           .42       
Diluted, as reported$     .46          $           .41       
          
Basic, as adjusted$     .50          $           .42       
Diluted, as adjusted$     .49          $           .41       
          
Weighted average number of common shares outstanding:         
Basic    66,875        66,595  
Diluted    67,940        67,669  


Victor H. Mendelson
(305) 374-1745 ext. 7590

Carlos L. Macau, Jr.
(954) 987- 4000 ext.7570