HEICO CORP

HEICO Corporation operates in the aerospace, defense, space, medical, telecommunications, and electronics industries. The company believes it is the world's largest manufacturer of Federal Aviation Administration-approved jet engine and aircraft component replacement parts, other than original equipment manufacturers and their subcontractors. HEICO also believes it is a leading manufacturer of various types of electronic equipment for the aviation, defense, space, medical, telecommunications and electronics industries. The company has continuously operated in the aerospace industry for over 65 years.

The Flight Support Group competes with the leading industry OEMs such as General Electric (including CFM International), Pratt & Whitney and Rolls Royce, and to a lesser extent with a number of smaller, independent parts distributors. The Electronic Technologies Group competes with several large and small domestic and foreign competitors. The company believes it is the largest independent supplier of non-OEM jet engine and aircraft component replacement parts. Net sales to the five largest customers accounted for approximately 20% ¹ of total net sales in fiscal 2025, 19% ² in fiscal 2024, and 18% ³ in fiscal 2023. No one customer accounted for sales of 10% or more of total consolidated sales from continuing operations during any of the last three fiscal years.

The company generates revenue through two operating segments: the Flight Support Group and the Electronic Technologies Group. The FSG uses proprietary technology to design and manufacture jet engine and aircraft component replacement parts for sale at lower prices than those manufactured by OEMs, and also repairs, overhauls and distributes jet engine and aircraft components. The ETG designs, manufactures and sells various types of electronic, data and microwave, and electro-optical products. The FSG accounted for 70% ⁴ of net sales in fiscal 2025, 68% ⁵ in fiscal 2024, and 60% ⁶ in fiscal 2023. The ETG accounted for 30% ⁷ of net sales in fiscal 2025, 32% ⁸ in fiscal 2024, and 40% ⁹ in fiscal 2023.

The Flight Support Group serves a broad spectrum of the aviation industry including commercial airlines and air cargo carriers, repair and overhaul facilities, OEMs, and U.S. and foreign governments. The FSG designs and manufactures FAA-approved replacement parts, provides repair and overhaul services on selected jet engine and aircraft component parts, distributes FAA-approved parts, and manufactures specialty aircraft/defense related parts. The FSG has developed for its customers approximately 20,000 ¹⁰ parts for which PMAs have been received from the FAA, and in recent years and inclusive of acquisitions, is adding new products at a rate of approximately 400 to 550 ¹¹ PMAs per year. Research and development expenditures by the FSG were $43.7 million ¹² in fiscal 2025, $36.7 million ¹³ in fiscal 2024, and $26.4 million ¹⁴ in fiscal 2023.

The Electronic Technologies Group designs and manufactures highly-engineered, mission-critical subcomponents for smaller, niche markets utilized in larger systems. The ETG derived approximately 51% ¹⁵ of its net sales in fiscal 2025, 51% ¹⁶ in fiscal 2024, and 49% ¹⁷ in fiscal 2023 from the sale of products and services to U.S. and foreign military agencies, prime defense contractors and both commercial and defense satellite and spacecraft manufacturers. The ETG's products include electro-optical infrared simulation and test equipment, laser rangefinder receivers, power supplies, memory products, and various other electronic components. Research and development expenditures by the ETG were $77.2 million ¹⁸ in fiscal 2025, $74.5 million ¹⁹ in fiscal 2024, and $69.4 million ²⁰ in fiscal 2023.

Since 1990, HEICO has completed approximately 107 ²¹ acquisitions. In fiscal 2025, the company acquired Gables Engineering, Inc., Rosen Aviation, LLC, 90% of Millennium International, LLC, certain assets from Honeywell International for the Boeing 777 AIMS and Boeing 737NG/P-8/E-7 VIA product lines, 70% of SVM Private Limited, 87.9% of Mid Continent Controls, Inc., and 92.5% of Marway Power Solutions, Inc. In fiscal 2024, the company acquired the Aerial Delivery and Descent Devices divisions of Capewell Aerial Systems and certain assets from Honeywell International for the Boeing 737NG/777 Cockpit Display and Legacy Displays product lines. In fiscal 2023, the company acquired Wencor Group and 93.69% of Exxelia International SAS. The company paid $629.8 million ²² for acquisitions in fiscal 2025, net of cash acquired. In July 2025, the company paid its 94th ²³ consecutive semi-annual cash dividend since 1979 of $.12 ²⁴ per share, which represented a 9% ²⁵ increase over the semiannual cash dividend of $.11 ²⁶ per share paid in January 2025.

Consolidated net sales in fiscal 2025 increased by 16% ²⁷ to a record $4,485.0 million ²⁸, up from $3,857.7 million ²⁹ in fiscal 2024. Net income attributable to HEICO increased by 34% ³⁰ to a record $690.4 million ³¹, or $4.90 ³² per diluted share, in fiscal 2025, up from $514.1 million ³³, or $3.67 ³⁴ per diluted share, in fiscal 2024. Consolidated operating income increased by 24% ³⁵ to a record $1,019.0 million ³⁶ in fiscal 2025, up from $824.5 million ³⁷ in fiscal 2024. Consolidated gross profit margin improved to 39.8% ³⁸ in fiscal 2025, up from 38.9% ³⁹ in fiscal 2024. Net cash provided by operating activities was $934.3 million ⁴⁰ in fiscal 2025, compared to $672.4 million ⁴¹ in fiscal 2024.

Looking ahead to fiscal 2026, management anticipates net sales growth in both the FSG and ETG, driven by organic growth from increased demand for the majority of its products as well as growth through its recent acquisitions. The company will continue to pursue selective acquisition opportunities to complement this growth. Disciplined financial management remains dedicated to creating long-term shareholder value through a balanced combination of making strategic acquisitions and organic expansion, while maintaining financial resilience and flexibility.

The company's growth strategy includes continued design and development of an increasing number of PMA replacement parts to further penetrate its existing customer base and obtain new customers. The FSG selects jet engine and aircraft component replacement parts to design and manufacture through a selection process which analyzes industry information to determine which replacement parts are suitable candidates. The ETG's strategy is to design and manufacture highly-engineered, mission-critical subcomponents for smaller, niche markets. The company has completed approximately 107 ⁴² acquisitions since 1990, targeting opportunities that allow it to broaden product offerings, services and technologies while expanding its customer base and geographic presence.

The company's growth is also supported by acquisitions. In fiscal 2025, the company acquired several businesses including Gables Engineering, Inc., Rosen Aviation, LLC, 90% of Millennium International, LLC, 70% of SVM Private Limited, 87.9% of Mid Continent Controls, Inc., and 92.5% of Marway Power Solutions, Inc. The company also entered into an exclusive license agreement and acquired certain assets from Honeywell International for the Boeing 777 AIMS and Boeing 737NG/P-8/E-7 VIA product lines. In fiscal 2024, the company acquired the Aerial Delivery and Descent Devices divisions of Capewell Aerial Systems and certain assets from Honeywell International for the Boeing 737NG/777 Cockpit Display and Legacy Displays product lines.

The consolidated gross profit margin improved to 39.8% ⁴³ in fiscal 2025, up from 38.9% ⁴⁴ in fiscal 2024, principally reflecting a 1.5% ⁴⁵ increase in the FSG's gross profit margin. Consolidated SG&A expenses as a percentage of net sales improved to 17.1% ⁴⁶ in fiscal 2025, down from 17.6% ⁴⁷ in fiscal 2024. The decrease in consolidated SG&A expenses as a percentage of net sales principally reflects efficiencies realized from net sales growth, partially offset by a .5% ⁴⁸ impact from changes in the estimated fair value of accrued contingent consideration. The effective tax rate decreased to 16.6% ⁴⁹ in fiscal 2025, down from 17.5% ⁵⁰ in fiscal 2024.

Capital expenditures in fiscal 2026 are anticipated to be approximately $80 to $90 million ⁵¹. The company finances its activities primarily from its operating and financing activities, including borrowings under its revolving credit facility. As of December 19, 2025, the company had approximately $1,078 million ⁵² of unused committed availability under the terms of its revolving credit facility. Based on its current outlook, management believes that net cash provided by operating activities and available borrowings under its revolving credit facility will be sufficient to fund its cash requirements for at least the next twelve months.

Total new product research and development expenses included within consolidated cost of sales were $120.9 million ⁵³ in fiscal 2025, up from $111.3 million ⁵⁴ in fiscal 2024. Capital expenditures were $72.9 million ⁵⁵ in fiscal 2025, compared to $58.3 million ⁵⁶ in fiscal 2024. In July 2025, the company paid its 94th ⁵⁷ consecutive semi-annual cash dividend since 1979 of $.12 ⁵⁸ per share, which represented a 9% ⁵⁹ increase over the semiannual cash dividend of $.11 ⁶⁰ per share paid in January 2025. In December 2025, the Board of Directors declared a semi-annual cash dividend of $.12 ⁶¹ per share payable in January 2026.

The company faces headwinds from the cyclical nature of the aviation industry, which has been subject to downward cycles from time to time that reduce the overall demand for jet engine and aircraft component replacement parts and repair and overhaul services. Lower commercial air travel caused by risks arising from public health threats, airline fleet changes or airline purchasing decisions could cause lower demand for goods and services. The retirement or prolonged grounding of commercial aircraft could reduce revenues and the value of any related inventory. Reductions in defense, space or homeland security spending by U.S. and/or foreign customers could reduce revenues, as approximately 31% ⁶² of net sales in fiscal 2025 were derived from the sale of defense, commercial and defense satellite and spacecraft components, and homeland security products.

The company is subject to risks associated with sales to foreign customers, with approximately 38% ⁶³ of consolidated net sales in fiscal 2025 derived from sales to foreign customers. These risks include fluctuations in currency exchange rates, geopolitical unrest, volatility in foreign political and economic environments, ability to obtain required export licenses, and imposition of taxes, export controls, tariffs, embargoes and other trade restrictions. The company markets its products and services to approximately 130 ⁶⁴ countries.

The company's success is highly dependent on the performance of the aviation industry, which is subject to downward cycles that reduce demand for replacement parts and repair services. Lower commercial air travel, airline fleet changes, or the retirement or grounding of commercial aircraft could reduce revenues and the value of related inventory. Approximately 31% ⁶⁵ of net sales in fiscal 2025 were derived from defense, space, and homeland security products, making the company vulnerable to reductions in defense spending by U.S. and foreign customers. The company faces intense competition from OEMs with greater name recognition and financial resources, and from smaller competitors with lower labor costs. Goodwill and intangible assets accounted for 60% ⁶⁶ of total assets as of October 31, 2025, and the company may never realize the full value of these assets, with impairment charges potentially having a material adverse effect. The company is subject to risks from sales to foreign customers, which accounted for approximately 38% ⁶⁷ of consolidated net sales in fiscal 2025, including currency fluctuations, geopolitical unrest, and trade restrictions.

Management's message emphasizes a disciplined financial management approach dedicated to creating long-term shareholder value through a balanced combination of making strategic acquisitions and organic expansion, while maintaining financial resilience and flexibility. Looking ahead to fiscal 2026, management anticipates net sales growth in both the FSG and ETG, driven by organic growth from increased demand for the majority of its products as well as growth through its recent acquisitions. The company will continue to pursue selective acquisition opportunities to complement this growth. Management highlights that since assuming control in 1990, net sales from continuing operations have grown from $26.2 million ⁶⁸ in fiscal 1990 to $4,485.0 million ⁶⁹ in fiscal 2025, representing a compound annual growth rate of approximately 16% ⁷⁰, and net income improved from $2.0 million ⁷¹ to $690.4 million ⁷², representing a compound annual growth rate of approximately 18% ⁷³.