HEICO Corporation (HEI): history, ownership, mission, how it works & makes money

A Brief History of HEICO Corporation

Company Overview

HEICO Corporation, a leading aerospace and electronics manufacturer, operates through two primary segments: Flight Support Group (FSG) and Electronic Technologies Group (ETG). As of 2024, the company continues to expand its operations and enhance its market presence through strategic acquisitions and innovative product development.

Financial Performance

For the first nine months of fiscal 2024, HEICO reported a record net income attributable to HEICO of $374.4 million, representing a 25% increase compared to $300.2 million in the same period of fiscal 2023. The diluted earnings per share rose to $2.67 from $2.17 year-over-year.

Segment Performance

In the third quarter of fiscal 2024, HEICO's consolidated net sales surged by 37% to $992.2 million, up from $722.9 million in the same quarter of fiscal 2023. This growth was driven largely by the FSG, which saw a 68% increase in net sales, reaching $681.6 million.

Debt and Equity

As of July 31, 2024, HEICO's long-term debt stood at $2.25 billion, a decrease from $2.46 billion at the end of fiscal 2023. The company reported a total debt to shareholders' equity ratio of 62.8%.

Recent Developments

HEICO has been actively pursuing growth through acquisitions, investing approximately $55.2 million in acquisitions during the first nine months of fiscal 2024. The company continues to focus on expanding its capabilities in the aerospace and electronics sectors, enhancing its product portfolio, and increasing operational efficiency.

Market Outlook

Looking ahead, HEICO anticipates continued growth driven by strong demand across its product lines and the successful integration of recent acquisitions. The company is committed to maintaining its financial strength and flexibility while pursuing further market penetration and innovation.

A Who Owns HEICO Corporation (HEI)

Major Shareholders

As of 2024, HEICO Corporation (HEI) has a diverse ownership structure, comprising institutional investors, individual shareholders, and noncontrolling interests. The following table outlines the major shareholders and their respective ownership percentages:

Institutional Ownership

Institutional investors play a significant role in the ownership of HEICO Corporation. As of the latest data, approximately 60% of HEICO's shares are held by institutional investors. The following table provides further details:

Insider Ownership

Insider ownership, which includes shares held by executives and board members, represents about 15.2% of the total shares. This ownership is significant as it aligns the interests of management with those of shareholders. The following table summarizes key insiders and their holdings:

Noncontrolling Interests

HEICO has a significant noncontrolling interest held by Lufthansa Technik AG, which owns 20% of HEICO Aerospace Holdings Corp. This partnership enhances HEICO's capabilities in aerospace maintenance and repair services.

Recent Changes in Ownership

In recent fiscal periods, HEICO has seen changes in its noncontrolling interests. The company acquired an additional 9.95% equity interest from a subsidiary in May 2024, increasing its stake to 90.05%. Additionally, the holders of a 15% noncontrolling interest in another subsidiary have begun a phased buyout, which will continue until fiscal 2027.

Summary of Financial Performance

For the first nine months of fiscal 2024, HEICO reported a net income attributable to HEICO shareholders of $374.4 million, representing a 25% increase year-over-year. The earnings per diluted share increased to $2.67. This robust financial performance supports the company's growth strategy and shareholder value creation efforts.

HEICO Corporation (HEI) Mission Statement

Overview of Mission Statement

HEICO Corporation aims to be a leader in providing high-quality, innovative aerospace and electronic products and services. The company's mission emphasizes the importance of customer satisfaction, operational excellence, and continuous improvement.

Core Values

• Customer Focus: HEICO is dedicated to meeting customer needs through exceptional service and product quality.
• Innovation: The company fosters a culture of innovation to develop advanced technologies and products.
• Integrity: HEICO conducts its business with the highest ethical standards.
• Teamwork: Collaboration is essential for achieving success and driving improvements.
• Continuous Improvement: HEICO is committed to enhancing processes and products to ensure competitiveness.

Financial Performance Indicators

As of the third quarter of fiscal 2024, HEICO Corporation reported significant financial growth, reflecting the effectiveness of its mission-driven approach.

Market Position and Strategy

HEICO operates primarily through two segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). The company's strategic focus on acquisitions and organic growth has led to a robust market position.

Key Acquisitions and Growth

Fiscal years 2023 and 2024 have seen HEICO make several acquisitions that contributed significantly to its revenue growth. The FSG net sales increased by 68% due to acquisitions, showcasing the effectiveness of its growth strategy.

Research and Development Investment

In line with its mission to drive innovation, HEICO has increased its investment in research and development (R&D). The R&D expenses for Q3 2024 reached $29.8 million, compared to $25.4 million in Q3 2023, indicating a commitment to developing new products and services.

Commitment to Sustainability

HEICO is also focused on sustainability and environmental responsibility, aligning its mission with global initiatives for reducing carbon footprints and promoting green technologies.

Recent Performance Metrics

For the first nine months of fiscal 2024, HEICO reported the following performance metrics:

How HEICO Corporation (HEI) Works

Overview of Operations

HEICO Corporation operates primarily through two segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). The FSG is involved in aftermarket replacement parts and repair services for aerospace and defense, while the ETG focuses on electronic components for various industries, including defense and medical sectors.

Financial Performance

For the third quarter of fiscal 2024, HEICO reported consolidated net sales of $992.2 million, a 37% increase from $722.9 million in the same quarter of fiscal 2023. Operating income rose by 45% to $216.4 million, compared to $149.4 million in the previous year.

Segment Performance

The following table summarizes the net sales and operating income by segment:

Gross Profit and Expenses

HEICO's consolidated gross profit margin improved to 39.2% in Q3 2024, up from 38.6% in Q3 2023. Selling, general and administrative (SG&A) expenses were $172.8 million in Q3 2024, compared to $129.4 million in Q3 2023. However, SG&A expenses as a percentage of net sales decreased to 17.4%.

Research and Development

New product research and development expenses amounted to $29.8 million in Q3 2024, up from $25.4 million in Q3 2023.

Cash Flow and Capital Expenditures

Net cash provided by operating activities was $466.7 million in the first nine months of fiscal 2024, compared to $300.4 million in the same period of fiscal 2023. Capital expenditures for fiscal 2024 are estimated to be approximately $60 to $65 million.

Debt and Equity Position

As of July 31, 2024, HEICO's total debt to shareholders' equity ratio stood at 62.8%, with total shareholders' equity of $3.6 billion.

Net Income

Net income attributable to HEICO increased by 34% to a record $136.6 million, or $0.97 per diluted share, in Q3 2024, compared to $102.0 million, or $0.74 per diluted share, in Q3 2023.

Outlook

HEICO anticipates continued net sales growth in both segments, fueled by acquisitions and sustained demand across its product lines.

Backlog

As of July 31, 2024, HEICO reported a backlog of $1.86 billion in remaining performance obligations.

Summary of Key Financial Metrics

How HEICO Corporation (HEI) Makes Money

Overview of Business Segments

HEICO Corporation operates through two primary segments: the Flight Support Group (FSG) and the Electronic Technologies Group (ETG). These segments focus on different product offerings, catering to various markets within aerospace and electronics.

Flight Support Group (FSG)

The FSG generates revenue primarily through:

• Aftermarket replacement parts
• Repair and overhaul services
• Specialty products

In the first nine months of fiscal 2024, the FSG reported net sales of $1,947.6 million, an increase of 67% from $1,168.5 million in the same period of fiscal 2023. The growth was attributed to:

• Acquisitions contributing $625.5 million
• Organic growth of 13%

Electronic Technologies Group (ETG)

The ETG focuses on electronic component parts, primarily for defense, aerospace, and various other industries. In the first nine months of fiscal 2024, the ETG achieved net sales of $927.4 million, a 5% increase from $882.7 million in the previous year. Key drivers included:

• Increased demand for defense and aerospace products
• Acquisitions contributing $39.4 million

Revenue Sources

HEICO's revenue streams are primarily generated from:

• Sales of replacement parts
• Repair and overhaul services
• Specialty products
• Electronic components for various industries

In fiscal 2024, HEICO's consolidated net sales reached $2.84 billion, a 40% increase from $2.03 billion in fiscal 2023.

Cost Structure and Profitability

HEICO's consolidated gross profit margin improved to 39.0% in the first nine months of fiscal 2024, up from 38.8% in the same period of fiscal 2023. The cost of sales amounted to $1.74 billion, resulting in operating income of $605.8 million, a 39% increase from $435.9 million in the prior year.

Acquisitions and Growth Strategy

HEICO has made significant acquisitions in fiscal 2023 and 2024, which have contributed substantially to revenue growth. Acquisitions accounted for approximately $216.9 million in the FSG's net sales during the third quarter of fiscal 2024 alone.

Liquidity and Capital Resources

As of July 31, 2024, HEICO's total debt to shareholders' equity ratio stood at 62.8%. The company reported cash provided by operating activities of $466.7 million in the first nine months of fiscal 2024, indicating a healthy liquidity position to support ongoing operations and acquisitions.

Conclusion

HEICO Corporation continues to leverage its strong market position in aerospace and electronics. The company’s focus on acquisitions, coupled with organic growth in key product lines, positions it well for sustained profitability and revenue growth in the coming years.