SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the quarterly period ended ~~April 30, 2023~~January 31, 2024

						OR

☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

						For the transition period from ______ to _______

Commission File Number: 001-04604


Florida						65-0341002
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3000 Taft Street, Hollywood, Florida						33021
(Address of principal executive offices)						(Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common stock as of ~~May 22, 2023~~February 27, 2024 is as follows:


Common Stock, $.01 par value	~~54,705,934~~54,772,494	shares
Class A Common Stock, $.01 par value	~~82,298,200~~83,591,871	shares

INDEX TO QUARTERLY REPORT ON FORM 10-Q

PART I. FINANCIAL INFORMATION; Item 1. FINANCIAL STATEMENTS

HEICO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands, except per share data)

April 30, 2023 October 31, 2022
ASSETS
Current assets:
Cash and cash equivalents $127,161 $139,504
Accounts receivable, net 361,057 294,848
Contract assets 103,448 93,978
Inventories, net 721,569 582,471
Prepaid expenses and other current assets 53,404 41,929
Total current assets 1,366,639 1,152,730
Property, plant and equipment, net 273,856 225,879
Goodwill 2,031,235 1,672,425
Intangible assets, net 844,319 733,327
Other assets 354,150 311,135
Total assets $4,870,199 $4,095,496
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt $18,860 $1,654
Trade accounts payable 147,708 116,551
Accrued expenses and other current liabilities 296,159 290,199
Income taxes payable 4,101 12,455
Total current liabilities 466,828 420,859
Long-term debt, net of current maturities 735,779 288,620
Deferred income taxes 94,468 71,162
Other long-term liabilities 367,624 338,948
Total liabilities 1,664,699 1,119,589
Commitments and contingencies (Note 11)
Redeemable noncontrolling interests (Note 3) 345,833 327,601
Shareholders’ equity:
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued — —
Common Stock, $.01 par value per share; 150,000 shares authorized; 54,701 and 54,519 shares issued and outstanding 547 545
Class A Common Stock, $.01 par value per share; 150,000 shares authorized; 82,278 and 82,093 shares issued and outstanding 823 821
Capital in excess of par value 398,991 397,337
Deferred compensation obligation 6,171 5,297
HEICO stock held by irrevocable trust (6,171) (5,297)
Accumulated other comprehensive loss (17,626) (46,499)
Retained earnings 2,435,155 2,253,932
Total HEICO shareholders’ equity 2,817,890 2,606,136
Noncontrolling interests 41,777 42,170
Total shareholders’ equity 2,859,667 2,648,306
Total liabilities and equity $4,870,199 $4,095,496


	January 31, 2024	October 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$196,323	$171,048
Accounts receivable, net	471,697	509,075
Contract assets	108,888	111,702
Inventories, net	1,068,735	1,013,680
Prepaid expenses and other current assets	66,716	49,837
Total current assets	1,912,359	1,855,342

Property, plant and equipment, net	327,661	321,848
Goodwill	3,290,494	3,274,327
Intangible assets, net	1,365,682	1,357,281
Other assets	439,873	386,265
Total assets	$7,336,069	$7,195,063

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt	$4,739	$17,801
Trade accounts payable	194,894	205,893
Accrued expenses and other current liabilities	381,837	433,101
Income taxes payable	22,625	8,547
Total current liabilities	604,095	665,342

Long-term debt, net of current maturities	2,495,726	2,460,277
Deferred income taxes	128,203	131,846
Other long-term liabilities	425,541	379,640
Total liabilities	3,653,565	3,637,105

Commitments and contingencies (Note 11)

Redeemable noncontrolling interests (Note 3)	365,865	364,807

Shareholders’ equity:
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued	—	—
Common Stock, $.01 par value per share; 150,000 shares authorized; 54,772 and 54,721 shares issued and outstanding	548	547
Class A Common Stock, $.01 par value per share; 150,000 shares authorized; 83,566 and 83,507 shares issued and outstanding	836	835
Capital in excess of par value	585,888	578,809
Deferred compensation obligation	6,318	6,318
HEICO stock held by irrevocable trust	(6,318)	(6,318)
Accumulated other comprehensive loss	(25,962)	(40,180)
Retained earnings	2,705,128	2,605,984
Total HEICO shareholders’ equity	3,266,438	3,145,995
Noncontrolling interests	50,201	47,156
Total shareholders’ equity	3,316,639	3,193,151
Total liabilities and equity	$7,336,069	$7,195,063

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEICO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED

(in thousands, except per share data)

Six months ended April 30, Three months ended April 30,
2023 2022 2023 2022
Net sales $1,308,756 $1,029,156 $687,841 $538,813
Operating costs and expenses:
Cost of sales 798,445 627,717 421,329 327,584
Selling, general and administrative expenses 223,787 179,840 109,422 88,452
Total operating costs and expenses 1,022,232 807,557 530,751 416,036
Operating income 286,524 221,599 157,090 122,777
Interest expense (17,441) (1,775) (11,373) (979)
Other income 982 540 343 314
Income before income taxes and noncontrolling interests 270,065 220,364 146,060 122,112
Income tax expense 52,000 33,000 31,000 29,000
Net income from consolidated operations 218,065 187,364 115,060 93,112
Less: Net income attributable to noncontrolling interests 19,918 15,433 9,940 8,102
Net income attributable to HEICO $198,147 $171,931 $105,120 $85,010
Net income per share attributable to HEICO shareholders:
Basic $1.45 $1.27 $.77 $.63
Diluted $1.43 $1.25 $.76 $.62
Weighted average number of common shares outstanding:
Basic 136,786 135,763 136,916 135,891
Diluted 138,590 137,916 138,600 137,867


	Three months ended January 31,
	2024	2023

Net sales	$896,363	$620,915

Operating costs and expenses:
Cost of sales	549,594	377,116
Selling, general and administrative expenses	166,559	114,365

Total operating costs and expenses	716,153	491,481

Operating income	180,210	129,434

Interest expense	(38,607)	(6,068)
Other income	679	639

Income before income taxes and noncontrolling interests	142,282	124,005

Income tax expense	16,800	21,000

Net income from consolidated operations	125,482	103,005

Less: Net income attributable to noncontrolling interests	10,784	9,978

Net income attributable to HEICO	$114,698	$93,027

Net income per share attributable to HEICO shareholders:
Basic	$.83	$.68
Diluted	$.82	$.67

Weighted average number of common shares outstanding:
Basic	138,265	136,655
Diluted	139,893	138,579

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEICO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME – UNAUDITED

Six months ended April 30, Three months ended April 30,
2023 2022 2023 2022
Net income from consolidated operations $218,065 $187,364 $115,060 $93,112
Other comprehensive income (loss):
Foreign currency translation adjustments 30,379 (23,028) 1,994 (14,277)
Amortization of unrealized loss on defined benefit pension plan, net of tax 28 33 13 22
Total other comprehensive income (loss) 30,407 (22,995) 2,007 (14,255)
Comprehensive income from consolidated operations 248,472 164,369 117,067 78,857
Net income attributable to noncontrolling interests 19,918 15,433 9,940 8,102
Foreign currency translation adjustments attributable to noncontrolling interests 1,534 (993) 275 (663)
Comprehensive income attributable to noncontrolling interests 21,452 14,440 10,215 7,439
Comprehensive income attributable to HEICO $227,020 $149,929 $106,852 $71,418


	Three months ended January 31,
	2024	2023

Net income from consolidated operations	$125,482	$103,005
Other comprehensive income:
Foreign currency translation adjustments	14,761	28,385
Amortization of unrealized loss on defined benefit pension plan, net of tax	13	15
Total other comprehensive income	14,774	28,400
Comprehensive income from consolidated operations	140,256	131,405
Net income attributable to noncontrolling interests	10,784	9,978
Foreign currency translation adjustments attributable to noncontrolling interests	556	1,259
Comprehensive income attributable to noncontrolling interests	11,340	11,237
Comprehensive income attributable to HEICO	$128,916	$120,168

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEICO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - UNAUDITED

~~For the Six Months Ended April 30, 2023 and 2022~~

(in thousands, except per share data)

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~HEICO CORPORATION AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - UNAUDITED~~

~~For the Three Months Ended April 30, 2023 and 2022~~

~~(in thousands, except per share data)~~

HEICO Shareholders' Equity
Redeemable Noncontrolling Interests Common Stock Class A Common Stock Capital in Excess of Par Value Deferred Compensation Obligation HEICO Stock Held by Irrevocable Trust Accumulated Other Comprehensive Loss Retained Earnings Noncontrolling Interests Total Shareholders' Equity
Balances as of January 31, 2023 $340,287 $547 $822 $388,603 $6,171 ($6,171) ($19,358) $2,328,523 $45,037 $2,744,174
Comprehensive income 7,376 — — — — — 1,732 105,120 2,839 109,691
Issuance of common stock to HEICO Savings and Investment Plan — — — 5,796 — — — — — 5,796
Share-based compensation expense — — — 3,243 — — — — — 3,243
Proceeds from stock option exercises — — 1 1,228 — — — — — 1,229
Redemptions of common stock related to stock option exercises — — — (6) — — — — — (6)
Noncontrolling interests assumed related to acquisitions 2,592 — — — — — — — — —
Distributions to noncontrolling interests (5,260) — — — — — — — (6,099) (6,099)
Adjustments to redemption amount of redeemable noncontrolling interests (1,513) — — — — — — 1,513 — 1,513
Other 2,351 — — 127 — — — (1) — 126
Balances as of April 30, 2023 $345,833 $547 $823 $398,991 $6,171 ($6,171) ($17,626) $2,435,155 $41,777 $2,859,667

HEICO Shareholders' Equity
Redeemable Noncontrolling Interests Common Stock Class A Common Stock Capital in Excess of Par Value Deferred Compensation Obligation HEICO Stock Held by Irrevocable Trust Accumulated Other Comprehensive Loss Retained Earnings Noncontrolling Interests Total Shareholders' Equity
Balances as of January 31, 2022 $258,289 $545 $814 $302,104 $5,297 ($5,297) ($16,962) $2,018,990 $36,565 $2,342,056
Comprehensive income (loss) 5,121 — — — — — (13,592) 85,010 2,318 73,736
Issuance of common stock to HEICO Savings and Investment Plan — — — 6,069 — — — — — 6,069
Share-based compensation expense — — — 3,241 — — — — — 3,241
Proceeds from stock option exercises — — — 841 — — — — — 841
Redemptions of common stock related to stock option exercises — — — (69) — — — — — (69)
Noncontrolling interests assumed related to acquisitions 39,063 — — — — — — — — —
Distributions to noncontrolling interests (4,085) — — — — — — — (445) (445)
Adjustments to redemption amount of redeemable noncontrolling interests 3,822 — — — — — — (3,822) — (3,822)
Other 1,717 — — (1,133) — — — — — (1,133)
Balances as of April 30, 2022 $303,927 $545 $814 $311,053 $5,297 ($5,297) ($30,554) $2,100,178 $38,438 $2,420,474

HEICO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEICO CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of HEICO Corporation and its subsidiaries (collectively, “HEICO,” or the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. Therefore, the condensed consolidated financial statements do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, ~~2022.~~2023. The October 31, ~~2022~~2023 Condensed Consolidated Balance Sheet has been derived from the Company’s audited consolidated financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, statements of comprehensive income, statements of shareholders' equity and statements of cash flows for such interim periods presented. The results of operations for the ~~six~~three months ended

~~April 30, 2023~~ January 31, 2024 are not necessarily indicative of the results which may be expected for the entire

The Company has two operating segments: the Flight Support Group (“FSG”), consisting of HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp. ("HFSC") and their respective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic Technologies Corp. and its subsidiaries.

Although the Company has largely emerged from the COVID-19 pandemic, HEICO’s results of operations in fiscal 2023 continue to reflect some of the pandemic’s lingering effects, including its impact on the Company's supply chain. Despite the aforementioned, the Company experienced continued improvement in operating results in the first six months and second quarter of fiscal 2023 as compared to the first six months and second quarter of fiscal 2022 principally reflecting improved demand for its commercial aerospace products and services. The FSG has reported eleven consecutive quarters of sequential growth in net sales and operating income resulting from commercial air travel recovery in certain domestic travel markets, moderated by a slower recovery in international travel markets.

New Accounting ~~Pronouncement~~Pronouncements

In ~~October 2021,~~November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2021-08, "Business Combinations~~2023-07, “Segment Reporting (Topic ~~805)~~280): ~~Accounting for Contract Assets~~Improvements to Reportable Segment Disclosures,” which expands reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and ~~Contract Liabilities from Contracts with Customers," which~~included within each reported measure of a segment's profit or loss. The ASU also requires ~~contract~~disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment's profit or loss in assessing segment performance and deciding how to allocate resources. Additionally, ASU 2023-07 requires all segment profit or loss and assets ~~and contract liabilities acquired in a business combination~~disclosures to be ~~recognized~~provided on an annual and ~~measured by~~interim basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, or in fiscal 2025 for HEICO, and interim periods within fiscal years beginning one year later. Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented. The adoption of this guidance will not affect the Company's consolidated results of operations, financial position or

cash flows and the Company is currently evaluating the effect the guidance will have on its disclosures.

~~acquirer on~~In December 2023, the ~~acquisition date in accordance with ASC 606, "Revenue from Contracts with Customers," as if the acquirer had originated the contracts. The Company adopted~~FASB issued ASU ~~2021-08~~2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disclosure of specific categories in the ~~first quarter~~annual effective tax rate reconciliation table and further disaggregation for reconciling items that meet a quantitative threshold. The ASU also requires the disaggregation of income taxes paid by jurisdiction. ASU 2023-09 may be applied either prospectively or retrospectively and is effective for fiscal ~~2023, resulting~~years beginning after December 15, 2024, or in ~~no material effect on~~fiscal 2026 for HEICO. Early adoption is permitted. The adoption of this guidance will not affect the Company's consolidated results of operations, financial position or cash ~~flows.~~flows and the Company is currently evaluating the effect the guidance will have on its disclosures.

2. ~~ACQUISITIONS~~ACQUISITION

In ~~March~~December 2023, the Company, through a subsidiary of ~~HEICO Electronic,~~HFSC, entered into an exclusive license and acquired certain assets for the ~~Aircraft Emergency Locator Transmitter (“ELT”)~~capability to support the Boeing 737NG/777 Cockpit Display and Legacy Displays product ~~line~~lines from Honeywell International. ~~ELTs provide critical emergency transmission signals in the event of aircraft impact on land or water to enable first responders to locate the aircraft.~~ The transaction provides the ~~HEICO Electronic~~HFSC subsidiary with ~~all rights~~the exclusive capability to produce, sell, and repair ~~both fixed and portable Honeywell ELTs,~~Boeing 737NG/777 Cockpit Displays as well as ~~various support equipment. The purchase price of this acquisition was paid in cash using cash provided by operating activities~~other Legacy Displays for Boeing 717, ATR, and ~~is not material or significant to the Company's condensed consolidated financial statements.~~

~~On January 5, 2023, the Company, through HEICO Electronic, acquired 93.69% of the outstanding common stock~~select business and all of the preferred stock of Exxelia International SAS (“Exxelia”). Exxelia designs, manufactures and sells high reliability (“Hi-Rel”), complex, passive electronic components and rotary joint assemblies for mostly aerospace and defense applications, in addition to other high-end applications, such as medical and energy uses, including emerging “clean energy” and electrification applications. The Company believes that this acquisition will further HEICO's strategy of expanding its already wide range of mission-critical and Hi-Rel components for the most demanding applications, as well as provide HEICO with added broad geographic and product diversity, including in the important European market. The remaining 6.31% interest is owned by certain members of Exxelia's management team (see Note 3, Selected Financial Statement Information - Redeemable Noncontrolling Interests, for additional information). Additionally, as a result of this acquisition, the Company also obtained a 90% ownership interest in Alcon Electronics Pvt. Ltd. (“Alcon”), which is an existing subsidiary of Exxelia. The remaining 10% interest continues to be owned by a certain member of Alcon’s management team (See Note 3, Selected Financial Statement Information – Redeemable Noncontrolling Interests, for additional information).general aviation aircraft. The purchase price of this acquisition was paid in cash using proceeds from the Company's revolving credit ~~facility.~~

~~The following table summarizes the total consideration for the acquisition of Exxelia (in thousands):~~


~~Cash paid~~						~~$515,785~~
~~Less: cash acquired~~						~~(14,234)~~
~~Total consideration paid, net~~						~~$501,551~~

~~As noted above, the Company acquired all of the preferred stock of Exxelia. Pursuant~~facility, and is not material or significant to the terms of the acquisition, Exxelia’s preferred stock accrues dividends at 5.18% per annum. Additionally, in connection with the acquisition, HEICO issued Exxelia a ten-year, €150 million note, which accrues interest at 4.7% per annum on the principal outstanding. The Company records foreign currency transaction adjustments on the note receivable within selling, general and administrative ("SG&A") expenses in its Condensed Consolidated Statements of Operations.

The following table summarizes the allocation of the total consideration for the acquisition of Exxelia to the estimated fair values of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed (in thousands):


~~Assets acquired:~~
~~Goodwill~~						~~$332,033~~
~~Customer relationships~~						~~64,935~~
~~Intellectual property~~						~~44,044~~
~~Trade name~~						~~21,703~~
~~Inventories~~						~~55,922~~
~~Property, plant and equipment~~						~~42,165~~
~~Accounts receivable~~						~~41,113~~
~~Other assets~~						~~11,254~~
~~Total assets acquired, excluding cash~~						~~613,169~~

~~Liabilities assumed:~~
~~Deferred income taxes~~						~~31,975~~
~~Accounts payable~~						~~22,369~~
~~Accrued expenses~~						~~18,383~~
~~Other liabilities~~						~~24,231~~
~~Total liabilities assumed~~						~~96,958~~

~~Noncontrolling interests in consolidated subsidiaries~~						~~14,660~~

~~Net assets acquired, excluding cash~~						~~$501,551~~

Company's condensed consolidated financial statements.

The allocation of the total consideration for this acquisition to the tangible and identifiable intangible assets acquired ~~and liabilities and noncontrolling interests assumed~~ is preliminary until the Company obtains final information regarding their fair values. ~~The primary items that generated the goodwill recognized were the premiums paid by~~However, the Company ~~for the future earnings potential of Exxelia and the value of its assembled workforce that do~~does not qualify for separate recognition, however, benefit both the Company and the noncontrolling interest holders. The fair value of the noncontrolling interests were determined based on the consideration paid by the Company for its controlling ownership interest adjusted for a lack of control that a market participant would consider when estimating the fair value of the noncontrolling interest. The weighted-average amortization periods of the customer relationships, intellectual property and trade names

acquired are 15 years, 15 years and indefinite, respectively. Acquisition costs associated with the purchase of Exxelia totaled $5.2 million for the six months ended April 30, 2023 and were recorded as a component of SG&A expenses inexpect any adjustment to such allocation to be material to the Company's ~~Condensed Consolidated Statement of Operations. The~~consolidated financial statements. This acquisition’s operating results ~~of Exxelia~~ were included in the Company’s results of operations from the effective acquisition date. The ~~Company's consolidated~~amount of net sales and earnings of this acquisition included in the Condensed Consolidated Statement of Operations for the ~~six and~~ three months ended ~~April 30, 2023, includes approximately $69.6 million and $54.6 million, respectively, from the~~January 31, 2024 is not material. Had this acquisition ~~of Exxelia. Net income attributable to HEICO for the six and three months ended April 30, 2023, was not materially impacted by the acquisition of Exxelia.~~

~~The following table presents unaudited pro forma financial information for the six and three months ended April 30, 2023 and April 30, 2022 as if the acquisition of Exxelia had~~ occurred as of November 1, ~~2021 (in thousands, except~~2022, net sales, net income from consolidated operations, net income attributable to HEICO, and basic and diluted net income per share ~~data):~~

Six months ended April 30, Three months ended April 30,
2023 2022 2023 2022
Net sales $1,348,159 $1,125,052 $687,841 $586,039
Net income from consolidated operations $234,185 $173,002 $115,568 $85,883
Net income attributable to HEICO $213,969 $157,855 $105,544 $77,901
Net income per share attributable to HEICO shareholders:
Basic $1.56 $1.16 $.77 $.57
Diluted $1.54 $1.14 $.76 $.57

~~The~~attributable to HEICO shareholders on a pro forma ~~financial information is presented~~basis for ~~comparative purposes only~~the three months ended January 31, 2024 and is2023 would not ~~necessarily indicative of the results of operations that actually would~~ have been ~~achieved if~~materially different than the acquisition had taken place as of November 1, 2021. The unaudited pro forma financial information includes adjustments to historical amounts such as increased interest expense associated with borrowings to finance the acquisition, foreign currency transaction adjustments on the note receivable from Exxelia, the reclassification of acquisition costs associated with the purchase of Exxelia from fiscal 2023 to fiscal 2022, additional amortization expense related to the intangible assets acquired, and inventory purchase accounting adjustments charged to cost of sales as the inventory is sold. Additionally, the pro forma information presented above reflects HEICO's initial ownership interest of 93.69% of Exxelia's common stock as of the date of acquisition. During the second quarter of fiscal 2023, the Company sold an additional 2.72% of the common stock of Exxelia to its existing noncontrolling interest holders and certain members of Exxelia's management team, which decreased the Company's ownership interest in the subsidiary to 90.97% (see Note 3, Selected Financial Statement Information - Redeemable Noncontrolling Interests, for additional information).

3. SELECTED FINANCIAL STATEMENT INFORMATION

Property, Plant and Equipment

Accrued Customer Rebates and Credits

The aggregate amount of accrued customer rebates and credits included within accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets was ~~$19.5~~$27.5 million as of ~~April 30, 2023~~January 31, 2024 and ~~$17.9~~$24.5 million as of October 31, ~~2022. The total customer rebates and credits deducted within net sales for the six months ended April 30, 2023 and 2022 was $4.2 million and $3.7 million, respectively.~~2023. The total customer rebates and credits deducted within net sales for the three months ended ~~April 30,~~January 31, 2024 and 2023 ~~and 2022~~ was ~~$2.0~~$3.5 million and ~~$2.0~~$2.2 million, respectively.

Research and Development Expenses

The amount of new product research and development ("R&D") expenses included in cost of sales for the ~~six and~~ three months ended ~~April 30,~~January 31, 2024 and 2023 ~~and 2022~~ is as follows (in thousands):

Six months ended April 30, Three months ended April 30,
2023 2022 2023 2022
R&D expenses $43,134 $37,147 $22,896 $18,751


	Three months ended January 31,
	2024	2023
R&D expenses	$25,096	$20,238

Redeemable Noncontrolling Interests

The holders of equity interests in certain of the Company's subsidiaries have rights ("Put Rights") that may be exercised on varying dates causing the Company to purchase their equity interests through fiscal 2032. The Put Rights, all of which relate either to common shares or membership interests in limited liability companies, provide that the cash consideration to be paid for their equity interests (the "Redemption Amount") be at fair value or a formula that management intended to reasonably approximate fair value based solely on a multiple of future earnings over a measurement period. Management's estimate of the aggregate Redemption Amount of all Put Rights that the Company could be required to pay is as follows (in thousands):

~~As discussed in Note 2, Acquisitions, the Company, through HEICO Electronic,~~

acquired 93.69% of the common stock of Exxelia in January 2023. During the second quarter of fiscal 2023, the Company sold an additional 2.72% of the common stock of Exxelia to its existing noncontrolling interest holders and certain members of Exxelia's management team, which decreased the Company's ownership interest in the common stock of the subsidiary to 90.97%. As part of the liquidity agreement, the noncontrolling interest holders have the right to cause the Company to purchase their equity interest beginning in fiscal 2028, or sooner under certain conditions, and the Company has the right to purchase the same equity interest beginning in the same period.

As discussed in Note 2, Acquisitions, the Company, as a result of its acquisition of Exxelia, acquired 90% of the stock of Alcon in January 2023. As part of the shareholders' agreement, the noncontrolling interest holder has the right to cause the Company to purchase their equity interest beginning in fiscal 2025, or sooner under certain conditions, and the Company has the right to purchase the same equity interest beginning in the same period.

During fiscal 2022, the holder of a 19.9% noncontrolling equity interest in a subsidiary of the FSG that was acquired in fiscal 2015 exercised their option to cause the Company to purchase their noncontrolling interest over a four-year period ending in fiscal 2026. ~~Accordingly,~~In December 2023, the Company acquired an additional one-fourth of such interest, ~~in December 2022,~~ which increased the Company's ownership interest in the subsidiary to ~~85.1%~~90.1%.

Accumulated Other Comprehensive Loss

Changes in the components of accumulated other comprehensive loss for the ~~six~~three months ended ~~April 30, 2023~~January 31, 2024 are as follows (in thousands):

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill by operating segment for the ~~six~~three months ended ~~April 30, 2023~~January 31, 2024 are as follows (in thousands):

The goodwill acquired pertains to the fiscal ~~2023 acquisitions~~2024 acquisition described in Note 2, ~~Acquisitions,~~Acquisition, and represents the residual value after the allocation of the total consideration to the tangible and identifiable intangible assets ~~acquired and liabilities and noncontrolling interests assumed.~~acquired. The Company estimates that ~~$21~~$7 million of the goodwill acquired in fiscal ~~2023~~2024 will be deductible for income tax purposes. Foreign currency translation adjustments are included in other comprehensive income (loss) in the Company's Condensed Consolidated Statements of Comprehensive Income. The adjustments to goodwill represent immaterial measurement period adjustments to the allocation of the purchase consideration ~~allocation~~ of certain fiscal ~~2022~~2023 acquisitions.

Identifiable intangible assets consist of the following (in thousands):

The increase in the gross carrying amount of customer relationships, intellectual property and trade names as of April 30, 2023 compared to October 31, 2022 principally relates to such intangible assets recognized in connection with the fiscal 2023 acquisitions (see Note 2, Acquisitions).

Amortization expense related to intangible assets for the ~~six~~three months ended ~~April 30,~~January 31, 2024 and 2023 ~~and 2022~~ was ~~$36.9~~$30.2 million and ~~$30.2~~$17.8 million, respectively. Amortization expense ~~for the three months ended April 30, 2023 and 2022 was $19.1 million and $15.2 million, respectively. Amortization expense~~related to intangible assets for the remainder of fiscal ~~2023~~2024 is estimated to be ~~$37.5~~$91.1 million. Amortization expense for each of the next five fiscal years and thereafter is estimated to be ~~$71.5 million in fiscal 2024, $66.7~~$116.4 million in fiscal 2025, ~~$61.8~~$110.6 million in fiscal 2026, ~~$58.5~~$106.2 million in fiscal 2027, ~~$54.1~~$100.7 million in fiscal 2028, $95.2 million in fiscal 2029, and ~~$255.1~~$455.6 million thereafter.

5. SHORT-TERM AND LONG-TERM DEBT

A subsidiary of the Company acquired in the first quarter of fiscal 2023 ~~has a~~ended its short-term borrowing arrangement ~~with a balance~~in the first quarter of ~~$15.1 million as~~fiscal 2024 during which it made net payments of ~~the acquisition date and $17.2 million as of April 30, 2023.~~$13.9 million.

Long-term debt consists of the following (in thousands):

~~Index~~

Revolving Credit Facility

The Company's borrowings under its revolving credit facility mature in fiscal ~~2025.~~2028. As of ~~April 30, 2023~~January 31, 2024 and October 31 ~~2022,~~2023, the weighted average interest rate on borrowings under the Company's revolving credit facility ("Credit Facility") was ~~6.1%~~6.9% and ~~4.6%~~6.7%, respectively. The revolving credit facility contains both financial and non-financial covenants. As of ~~April 30, 2023,~~January 31, 2024, the Company was in compliance with all such covenants.

Senior Unsecured Notes

The Company's senior unsecured notes consist of $600 million principal amount of 5.25% Senior Notes due August 1, 2028 (the "2028 Notes") and $600 million principal amount of 5.35% Senior Notes due August 1, 2033 (the "2033 Notes" and, collectively with the 2028 Notes, the "Notes"). Interest on the Notes is payable semi-annually in arrears on February 1 and August 1 of each year, and commenced on February 1, 2024. The 2028 Notes and 2033 Notes each have an effective interest rate of 5.5%. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company's existing and future subsidiaries that guarantee the Company's obligations under the Credit Facility (the "Guarantor Group"). As of January 31, 2024 the Company was in compliance with all covenants related to the Notes.

The following table sets forth the carrying value and estimated fair value of the Company’s Notes, which are classified as Level 1 financial instruments in the fair value hierarchy (in thousands). The Company estimated the fair value of the Notes by taking the weighted average of market quotes for the exact security that was actively traded on January 31, 2024 and October 31, 2023.


	January 31, 2024		October 31, 2023
	Carrying Value	Fair Value	Carrying Value	Fair Value
2028 Notes	$594,428	$611,262	$594,158	$579,762
2033 Notes	592,512	610,080	592,364	552,594
Total	$1,186,940	$1,221,342	$1,186,522	$1,132,356

Contract assets (unbilled receivables) represent revenue recognized on contracts using an over-time recognition model in excess of amounts invoiced to the customer. Contract liabilities (deferred revenue) represent customer advances and billings in excess of revenue recognized and are included within accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets.

Changes in the Company’s contract assets and liabilities for the ~~six~~three months ended ~~April 30, 2023~~January 31, 2024 are as follows (in thousands):

The increase in the Company's contract assets during the first six months of fiscal 2023 mainly reflects additional unbilled receivables on certain customer contracts using an over-time recognition model in excess of billings on certain customer contracts at both the FSG and ETG.

The increase in the Company's contract liabilities during the first ~~six months~~quarter of ~~fiscal 2023~~2024 principally reflects the receipt of advance deposits on certain customer contracts, mainly at the FSG.

The amount of revenue that the Company recognized during the ~~six and three months ended April 30, 2023~~first quarter of fiscal 2024 that was included in contract liabilities as of the beginning of fiscal ~~2023~~2024 was ~~$30.1 million and $9.8 million, respectively.~~$26.7 million.

Remaining Performance Obligations

Backlog, which the Company believes to be the equivalent of its remaining performance obligations, represents contractually committed or firm customer orders. As of ~~April 30, 2023,~~January 31, 2024, the Company had ~~$606.7~~$1,444.3 million of remaining performance obligations associated with firm contracts ~~with an original duration of greater than one year~~ pertaining to the majority of the products offered by the ETG ~~as well as certain products of the FSG's specialty products~~ and ~~aftermarket replacement parts product lines.~~FSG. The Company

will recognize net sales as these obligations are satisfied. The Company expects to recognize ~~$217.4~~$952.6 million of

this amount during the remainder of fiscal ~~2023~~2024 and ~~$389.3~~$491.7 million thereafter, of which ~~more than half~~the majority is expected to occur in fiscal ~~2024.~~ 2025.

Disaggregation of Revenue

The following table summarizes the Company’s net sales by product line for each operating segment (in thousands):

Aftermarket replacement parts (1)

Repair and overhaul parts and services (2)

Specialty products ~~(2)~~(3)

Repair and overhaul parts and services (3)

Electronic component parts primarily for defense,

space and aerospace equipment (4)

Electronic component parts primarily for defense,

space and aerospace equipment (4)

Electronic component parts primarily for

defense, space and aerospace equipment (4)

Electronic component parts primarily for

defense, space and aerospace equipment (4)

Electronic component parts for equipment

in various other industries (5)

Electronic component parts for equipment

in various other industries (5)

(1) Includes various jet engine and aircraft component replacement parts.

(2)Includes primarily the sale of parts consumed in various repair and overhaul services on selected jet engine and aircraft components, avionics, instruments, composites and flight surfaces of commercial and military aircraft.

(3) Includes primarily the sale of specialty components such as thermal insulation blankets, renewable/reusable insulation systems, advanced niche components, complex composite assemblies, and expanded foil mesh as well as machining, brazing, fabricating and welding services generally to original equipment manufacturers.

~~(3)~~ Includes primarily the sale of parts consumed in various repair and overhaul services on selected jet engine and aircraft components, avionics, instruments, composites and flight surfaces of commercial and military aircraft.

(4) Includes various component parts such as electro-optical infrared simulation and test equipment, electro-optical laser products, electro-optical, microwave and other power equipment, high-speed interface products, power conversion products, underwater locator beacons, emergency locator transmission beacons, traveling wave tube amplifiers, microwave power modules, a wide variety of memory products and radio frequency (RF) and microwave products, crashworthy and ballistically self-sealing auxiliary fuel systems, high performance communications and electronic intercept receivers and tuners, high performance active antenna systems and airborne antennas, technical surveillance countermeasures (TSCM) equipment, custom high power filters and filter assemblies,

radiation assurance services and products, and high-reliability, complex, passive electronic components and rotary joint assemblies.

(5) Includes various component parts such as electromagnetic and radio frequency interference shielding, high voltage interconnection devices, high voltage advanced power electronics, harsh environment connectivity products, custom molded cable assemblies, silicone material for a variety of demanding applications, and rugged small form-factor embedded computing solutions, and high performance test sockets and adaptors.

The following table summarizes the Company’s net sales by industry for each operating segment (in thousands):

(1) Principally industrial products.

(2) Principally other electronics and medical products.

The Company's effective tax rate ~~was 19.3%~~decreased to 11.8% in the first ~~six months~~quarter of fiscal ~~2023, as compared to 15.0%~~2024, down from 16.9% in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The ~~increase~~decrease in the Company's effective tax rate principally reflects a larger tax benefit from stock option exercises recognized in the first quarter of fiscal ~~2022.~~2024. The Company recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal 2024 and 2023 of $13.6 million and ~~2022 of~~ $6.2 million, ~~and $17.8 million,~~ respectively. This was partially offset by a favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan, net of the non-deductible portion related to executive

~~compensation, in the first six months of fiscal 2023 as compared tax-exempt unrealized losses recognized in the first six months of fiscal 2022.~~

The Company's effective tax rate decreased to 21.2% in the second quarter of fiscal 2023, as compared to 23.7% in the second quarter of fiscal 2022. The decrease in the Company's effective tax rate principally reflects a favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan, net of the non-deductible portion related to executive compensation, in the second quarter of fiscal 2023 as compared to tax-exempt unrealized losses recognized in the second quarter of fiscal 2022.

8. FAIR VALUE MEASUREMENTS

The Company's assets and liabilities that were measured at fair value on a recurring basis are set forth by level within the fair value hierarchy in the following tables (in thousands):


	As of January 31, 2024
	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Assets:
Deferred compensation plan:
Corporate-owned life insurance	$—	$258,100	$—	$258,100
Money market fund	18,637	—	—	18,637
Total assets	$18,637	$258,100	$—	$276,737

Liabilities:
Contingent consideration	$—	$—	$52,514	$52,514

As of April 30, 2023
Quoted Prices
in Active Markets for Identical Assets (Level 1) Significant
Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total
Assets:
Deferred compensation plan:
Corporate-owned life insurance $— $229,241 $— $229,241
Money market fund 7,677 — — 7,677
Total assets $7,677 $229,241 $— $236,918
Liabilities:
Contingent consideration $— $— $56,831 $56,831

The Company maintains the HEICO Corporation Leadership Compensation Plan (the "LCP"), which is a non-qualified deferred compensation plan. The assets of the LCP principally represent cash surrender values of life insurance policies, which derive their fair values from investments in mutual funds that are managed by an insurance company, and are classified within Level 2 and valued using a market approach. Certain other assets of the LCP represent ~~investments~~an investment in a money market ~~funds~~fund that ~~are~~is classified within Level 1. The assets of the LCP are held within an irrevocable trust and classified within other assets in the Company’s Condensed Consolidated Balance Sheets. The related liabilities of the LCP are included within other long-term liabilities and accrued expenses and other current liabilities in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of ~~$235.0~~$274.1 million as of ~~April 30, 2023~~January 31, 2024 and ~~$203.0~~$226.2 million as of October 31, ~~2022.~~2023.

In connection with a fiscal 2023 acquisition that is part of the FSG, the Company assumed an agreement which now obligates it to pay contingent consideration of $17.5 million as certain operating entities of the acquired company met a calendar year 2023 earnings objective and obtained a certain level of new orders with deliveries scheduled in calendar year 2024, of which both targets were tied to a specific customer contract. The $17.5 million of contingent consideration accrued as of January 31, 2024 is expected to be paid in the second quarter of fiscal 2024.

As part of the agreement to acquire 80.36% of the stock of a subsidiary by the ETG in fiscal 2022, the Company may be obligated to pay contingent consideration of up to $12.1 million in fiscal 2027 based on the earnings of the acquired entity during fiscal years 2025 and 2026 provided the entity meets a certain earnings objective during each of fiscal years 2024 to 2026. As of ~~April 30, 2023,~~January 31, 2024, the estimated fair value of the contingent consideration was ~~$6.3~~$5.6 million.

As part of the agreement to acquire 96% of the stock of a subsidiary by the FSG in fiscal 2022, the Company may be obligated to pay contingent consideration of up to $27.4 million in fiscal 2027 based on the earnings of the acquired entity during fiscal years 2025 and 2026 provided the entity meets certain earnings objectives during each of fiscal years 2022 to 2024. As of ~~April 30, 2023,~~January 31, 2024, the estimated fair value of the contingent consideration was ~~$16.1~~$20.3 million.

As part of the agreement to acquire 74% of the membership interests of a subsidiary by the FSG in fiscal 2022, the Company ~~may~~would be obligated to pay contingent consideration of $14.1 million in fiscal 2027 ~~should~~only if the acquired entity ~~meet~~met a certain earnings objective during the five-year period following the acquisition. AsBased on the actual earnings of ~~April 30,~~the acquired entity subsequent to the acquisition and forecasted earnings over the remainder of the earnout period, the Company does not expect that the required earnings objective will be met. Accordingly, as of January 31, 2024 and October 31, 2023, the estimated fair value of the contingent consideration was ~~$6.5~~$0.0 million.

As part of the agreement to acquire 89% of the membership interests of a subsidiary by the FSG in fiscal 2021, the Company may have been obligated to pay contingent consideration of up to $26.7 million should the acquired entity have met certain earnings objectives following the acquisition. In March 2023, at the request of the noncontrolling interest holders, the agreement was amended and the Company paid $8.9 million to the noncontrolling interest holders in consideration for the termination of the contingent consideration arrangement. Accordingly, of the $18.0 million estimated fair value of contingent consideration as of October 31, 2022, the remaining $9.1 million (after the $8.9 million payment) was reversed in the second quarter of fiscal 2023.

As part of the agreement to acquire 89.99% of the equity interests of a subsidiary by the ETG in fiscal 2020, the Company may be obligated to pay contingent consideration of up to CAD $13.5 million, or ~~$10.0~~$10.1 million, in fiscal 2025 should the acquired entity meet certain earnings objectives during fiscal 2023 and 2024. As of ~~April 30, 2023,~~January 31, 2024, the estimated fair value

of the contingent consideration was CAD ~~$11.5~~$12.3 million, or ~~$8.5~~$9.1 million. Additionally, the acquired entity achieved a required earnings objective during fiscal years 2021 and 2022 that obligated the Company to pay additional contingent consideration of CAD $13.5 million, or $10.0 million, which was paid in the first quarter of fiscal 2023.

As part of the agreement to acquire a subsidiary by the ETG in fiscal 2017, the Company ~~may be obligated to pay~~paid contingent consideration of $20.0 million in ~~fiscal~~December 2023 ~~should~~as the acquired entity ~~meet~~met a certain earnings objective during the first six years following the acquisition. ~~As of April 30, 2023, the estimated fair value of the contingent consideration was $19.5 million.~~

The following unobservable inputs were used to derive the estimated fair value of the Company's Level 3 contingent consideration liabilities as of ~~April 30, 2023~~January 31, 2024 ($ in thousands):

(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

Changes in the Company’s contingent consideration liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the ~~six~~three months ended ~~April 30, 2023~~January 31, 2024 are as follows (in thousands):


						Liabilities
Balance as of October 31, ~~2022~~2023						$~~82,803~~71,136
Payment of contingent consideration						~~(18,909)~~(20,000)
~~Amendment and termination of contingent consideration agreement~~						~~(9,057)~~
Increase in accrued contingent consideration ~~net~~						~~1,843~~1,095
Foreign currency transaction adjustments						~~151~~283
~~Balance as of April 30, 2023~~						$~~56,831~~52,514

Included in the accompanying Condensed Consolidated Balance Sheet under the following captions:
Accrued expenses and other current liabilities						$~~19,479~~26,642
Other long-term liabilities						~~37,352~~25,872
						$~~56,831~~52,514

The Company records changes in accrued contingent consideration and foreign currency transaction adjustments within SG&A expenses in its Condensed Consolidated Statements of Operations.

The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, trade accounts payable and accrued expenses and other current liabilities approximate fair value as of ~~April 30, 2023~~January 31, 2024 due to the relatively short maturity of the respective instruments. The carrying amount of ~~long-term debt~~borrowings under the Company's credit facility approximates fair value due to its variable interest ~~rates.~~rate. See Note 5, Short-Term and Long-Term Debt, for the estimated fair value of the Company’s senior unsecured notes.

9. NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS

The computation of basic and diluted net income per share attributable to HEICO shareholders is as follows (in thousands, except per share data):

10. OPERATING SEGMENTS

Information on the Company’s two operating segments, the FSG and the ETG, for the ~~six and~~ three months ended ~~April 30,~~January 31, 2024 and 2023 ~~and 2022, respectively,~~ is as follows (in thousands):

Other,
Primarily Corporate and
Intersegment (1)

(1) Intersegment activity principally consists of net sales from the ETG to the FSG.

Total assets by operating segment are as follows (in thousands):

Other,
Primarily Corporate Consolidated
Totals
Segment
FSG ETG
Total assets as of April 30, 2023 $1,685,580 $2,914,082 $270,537 $4,870,199
Total assets as of October 31, 2022 1,635,229 2,230,744 229,523 4,095,496


			Other, Primarily Corporate	Consolidated Totals
	Segment
	FSG	ETG
Total assets as of January 31, 2024	$4,093,956	$2,889,878	$352,235	$7,336,069
Total assets as of October 31, 2023	4,006,748	2,915,300	273,015	7,195,063

11. COMMITMENTS AND CONTINGENCIES

As of ~~April 30, 2023,~~January 31, 2024, the Company has arranged for standby letters of credit aggregating ~~$22.5~~$10.8 million, which are supported by its revolving credit facility and principally pertain to performance guarantees related to customer contracts entered into by certain of the Company's subsidiaries as well as payment guarantees related to potential workers' compensation ~~claims and a facility lease.~~claims.

Changes in the Company’s product warranty liability for the ~~six~~three months ended ~~April 30,~~January 31, 2024 and 2023 ~~and 2022, respectively,~~ are as follows (in thousands):

On April 20, 2021, an indirect subsidiary of HFSC, which was acquired in June 2020, received a grand jury subpoena from the United States District Court for the Southern District of California requiring the production of documents for the pre-acquisition time period of December 1, 2017 through February 4, 2019 related to the subsidiary's employment of a certain individual and its performance of work on certain Navy vessels during that time period. In connection with this investigation, the individual pled guilty to a charge of a misdemeanor conflict of interest, and has been suspended by the Company pending determination by the Navy whether the suspended employee should be debarred from government contracting. The Company is cooperating with the ~~investigation.~~investigation, and is cooperating with the Navy. The Company has completed its production of documents responsive to the subpoena, although the Company has a continuing obligation to produce such documents should any be located. ~~At this early stage in the investigation, the~~The Company cannot predict the outcome of the investigation or when the investigation will ultimately be resolved; nor can the Company reasonably estimate the possible range of loss or impact to its business, if any, that may result from this matter.

With the exception of the matter noted above, the Company is involved in various legal actions arising in the normal course of business. Based upon the Company’s and its legal counsel’s evaluations of any claims or assessments, management is of the opinion that the outcome of these matters will not have a material adverse effect on the Company’s results of operations, financial position or cash flows.

~~12. SUBSEQUENT EVENT~~

~~Wencor Acquisition~~

On May 15, 2023, the Company and its newly formed wholly owned subsidiary, Magnolia Merge Inc., a Delaware corporation (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire Jazz Parent, Inc., a Delaware corporation, the owner of Wencor Group (the “Target” or "Wencor"), with the Target and Jazz Topco GP LLC, a Delaware limited liability company, solely in its capacity as representative for purposes of certain provisions of the Merger Agreement. Merger Sub will merge with and into the Target, with the Target continuing as the surviving entity and a wholly owned subsidiary of the Company (the “Merger”), for an aggregate purchase price of $1.9 billion in cash (the “Cash Consideration”), subject to certain working capital, debt and other customary adjustments set forth in the Merger Agreement, and 1,137,656 shares of HEICO Class A Common Stock. Wencor is a large commercial and military aircraft aftermarket company offering factory-new FAA-approved aircraft replacement parts, value-added distribution of high-use commercial & military aftermarket parts and aircraft & engine accessory component repair and overhaul services. Subject to the satisfaction of the closing conditions, the Merger is expected to close by the end of calendar 2023.

The completion of the Merger is subject to customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other regulatory approvals. The Merger Agreement contains customary termination rights for the parties thereto, including by mutual consent of the Company and the representative and under certain other circumstances, including by the Company or the representative if the Merger has not occurred on or before the nine-month anniversary of the signing of the Merger Agreement subject to up to two 90-day extensions if on such date a closing condition related to regulatory approvals has not been satisfied or waived. The Company is required to pay Target a termination fee of $143.5 million in cash upon termination of the Merger Agreement under specified circumstances, including the failure to obtain regulatory approvals or, among others, if the Company materially breaches its regulatory covenants such that there is a failure of certain conditions to the Merger.

~~Wencor Acquisition Financing~~

In connection with the Merger, on May 14, 2023, the Company entered into an engagement letter with Truist Securities, Inc. to, among other things, increase the commitments under its existing credit facility from $1.5 billion to $2.0 billion and to extend the maturity date

~~Index~~

thereunder to a date that is five years from the closing date, and has also entered into a commitment letter (the “Commitment Letter”) with Truist Bank (the “Bridge Lender”) and Truist Securities, Inc., pursuant to which the Bridge Lender has committed to provide a senior unsecured credit facility to the Company, as the borrower, in an aggregate amount of up to $1.5 billion (the “Bridge Facility”), with a maturity date of 364 days following the closing date. The obligation to fund the Bridge Facility is subject to the satisfaction of certain conditions set forth in the Commitment Letter. The Company's currently committed credit facilities, together with cash on hand, are sufficient to fund the purchase price for the Merger.

Index

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

This discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included herein. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates if different assumptions were used or different events ultimately transpire.

Our critical accounting policies, which require management to make judgments about matters that are inherently uncertain, are described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting ~~Policies”~~Estimates” in our Annual Report on Form 10-K for the year ended October 31, ~~2022.~~2023. There have been no material changes to our critical accounting policies during the ~~six~~three months ended ~~April 30, 2023.~~January 31, 2024.

Our business is comprised of two operating segments: the Flight Support Group (“FSG”), consisting of HEICO Aerospace Holdings Corp. and HEICO Flight Support Corp. and their respective subsidiaries; and the Electronic Technologies Group (“ETG”), consisting of HEICO Electronic Technologies Corp. and its subsidiaries.

Although we have largely emerged from the COVID-19 pandemic, our results of operations in fiscal 2023 continue to reflect the pandemic's lingering impact, including its impact on our supply chain. Despite the aforementioned, we experienced continued improvement in operating results in the first six months and second quarter of fiscal 2023 as compared to the first six months and second quarter of fiscal 2022 principally reflecting improved demand for its commercial aerospace products and services. The FSG has reported eleven consecutive quarters of sequential growth in net sales and operating income resulting from commercial air travel recovery in certain domestic travel markets, moderated by a slower recovery in international travel markets. Additionally, the ETG’s operating results in the first six months of fiscal 2023 reflect consistent organic growth from increased demand for most of their other product offerings and the impact from the Company's January 2023 acquisition, offset by decreased demand for its defense products and the impact of acquisition costs related to our January 2023 acquisition. Further, the ETG’s overall backlog as of April 30, 2023, supports an expected increase in demand for its defense products at some point over the next twelve months.

~~Additionally, our~~Our results of operations for the ~~six and~~ three months ended ~~April 30, 2023~~January 31, 2024 have been affected by the fiscal ~~2022~~2023 acquisitions as further detailed in Note 2, Acquisitions, of the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended October 31, 2023.

2822

Index

~~ended October 31, 2022 and the fiscal 2023 acquisitions as further detailed in Note 2, Acquisitions, of the Notes to the Condensed Consolidated Financial Statements of this quarterly report.~~

~~Recent Developments~~

On May 15, 2023, the Company entered into an agreement to acquire Wencor Group (“Wencor”) from affiliates of Warburg Pincus LLC and Wencor’s management for $1.9 billion in cash and 1,137,656 shares of HEICO Class A Common Stock (the “Wencor Acquisition”). Wencor is a large commercial and military aircraft aftermarket company offering factory-new FAA-approved aircraft replacement parts, value-added distribution of high-use commercial & military aftermarket parts and aircraft & engine accessory component repair and overhaul services. See Note 12, Subsequent Event, of the Notes to Condensed Consolidated Financial Statements for additional information.

~~Index~~

Results of Operations

The following table sets forth the results of our operations, net sales and operating income by segment and the percentage of net sales represented by the respective items in our Condensed Consolidated Statements of Operations (in thousands):


	Three months ended January 31,
	2024		2023
Net sales	$896,363		$620,915
Cost of sales	549,594		377,116
Selling, general and administrative expenses	166,559		114,365
Total operating costs and expenses	716,153		491,481
Operating income	$180,210		$129,434

Net sales by segment:
Flight Support Group	$618,716		$371,278
Electronic Technologies Group	285,942		255,059
Intersegment sales	(8,295)		(5,422)
	$896,363		$620,915

Operating income by segment:
Flight Support Group	$136,091		$83,609
Electronic Technologies Group	55,328		56,537
Other, primarily corporate	(11,209)		(10,712)
	$180,210		$129,434

Net sales	100.0	%	100.0	%
Gross profit	38.7	%	39.3	%
Selling, general and administrative expenses	18.6	%	18.4	%
Operating income	20.1	%	20.8	%
Interest expense	(4.3	%)	(1.0	%)
Other income	.1	%	.1	%
Income tax expense	1.9	%	3.4	%
Net income attributable to noncontrolling interests	1.2	%	1.6	%
Net income attributable to HEICO	12.8	%	15.0	%

Six months ended April 30, Three months ended April 30,
2023 2022 2023 2022
Net sales $1,308,756 $1,029,156 $687,841 $538,813
Cost of sales 798,445 627,717 421,329 327,584
Selling, general and administrative expenses 223,787 179,840 109,422 88,452
Total operating costs and expenses 1,022,232 807,557 530,751 416,036
Operating income $286,524 $221,599 $157,090 $122,777
Net sales by segment:
Flight Support Group $763,480 $578,994 $392,202 $306,313
Electronic Technologies Group 556,818 459,729 301,759 237,393
Intersegment sales (11,542) (9,567) (6,120) (4,893)
$1,308,756 $1,029,156 $687,841 $538,813
Operating income by segment:
Flight Support Group $183,521 $118,573 $99,912 $66,197
Electronic Technologies Group 124,516 121,576 67,979 65,988
Other, primarily corporate (21,513) (18,550) (10,801) (9,408)
$286,524 $221,599 $157,090 $122,777
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Gross profit 39.0 % 39.0 % 38.7 % 39.2 %
Selling, general and administrative expenses 17.1 % 17.5 % 15.9 % 16.4 %
Operating income 21.9 % 21.5 % 22.8 % 22.8 %
Interest expense (1.3 %) (.2 %) (1.7 %) (.2 %)
Other income .1 % .1 % — % .1 %
Income tax expense 4.0 % 3.2 % 4.5 % 5.4 %
Net income attributable to noncontrolling interests 1.5 % 1.5 % 1.4 % 1.5 %
Net income attributable to HEICO 15.1 % 16.7 % 15.3 % 15.8 %

3023

Index

Comparison of First ~~Six Months~~Quarter of Fiscal ~~2023~~2024 to First ~~Six Months~~Quarter of Fiscal ~~2022~~2023

Net Sales

Our consolidated net sales in the first ~~six months~~quarter of fiscal ~~2023~~2024 increased by ~~27%~~44% to ~~a record $1,308.8~~$896.4 million, up from net sales of ~~$1,029.2~~$620.9 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The increase in consolidated net sales principally reflects an increase of ~~$184.5~~$247.4 million (a ~~32%~~67% increase) to a record ~~$763.5~~$618.7 million ~~in net sales~~ within the FSG and an increase of ~~$97.1~~$30.9 million (a ~~21%~~12% increase) to ~~a record $556.8~~$285.9 million within the ETG. The net sales increase in the FSG reflects $202.0 million contributed by a fiscal 2023 acquisition as well as strong organic growth of ~~22% as well as net sales of $54.6 million contributed by our fiscal 2022 acquisitions.~~12%. The FSG's organic net sales growth reflects increased demand for the majority of our commercial aerospace products and services resulting from continued recovery in global commercial air travel as compared to the prior year. As such, organic net sales increased by $78.4 million, $30.0 million and $21.5 million within ~~our~~its aftermarket replacement parts ~~specialty products,~~ and repair and overhaul parts and services product lines resulting in net sales increases of $37.9 million and $11.0 million, respectively. The net sales increase in the ETG ~~principally~~ reflects ~~$103.0~~net sales of $39.4 million contributed by ~~our~~a fiscal 2023 ~~and 2022 acquisitions,~~acquisition, partially offset by a ~~2% decrease in~~5% organic net ~~sales.~~sales decline. The ETG's organic net sales decline is mainly attributable to decreased demand for ~~our defense~~its other electronics, medical and space products resulting in net sales decreases of $7.3 million, $4.7 million and $2.8 million, respectively, partially offset by increased demand for its aerospace products resulting in a net sales ~~decrease~~increase of $33.2 million, partially offset by increased demand for our other electronics, aerospace, space, and medical products resulting in net sales increases of $15.5 million, $8.4 million, $1.6 million, and $1.5 million respectively.$3.3 million. Although sales price changes were not a significant contributing factor to the change in net sales of the FSG and ETG in the first ~~six months~~quarter of fiscal ~~2023, recent~~2024, continued cost inflation ~~and potential supply chain disruptions~~ may lead to higher sales prices during the remainder of fiscal ~~2023.~~2024.

Gross Profit and Operating Expenses

Our consolidated gross profit margin was ~~39.0% in both the first six months of fiscal 2023 and 2022. The gross profit margin~~38.7% in the first ~~six months~~quarter of fiscal 2024, as compared to 39.3% in the first quarter of fiscal 2023 principally ~~reflects a 2.4% increase~~reflecting decreases of .3% and .2% in the FSG's and ETG's gross profit margin, ~~offset by a 2.6%~~respectively. The decrease ~~in the ETG's gross profit margin. The increase~~ in the FSG's gross profit margin principally reflects a .9% impact from higher inventory obsolescence expense, partially offset by the previously mentioned higher net sales within our aftermarket replacement parts and specialty products product lines, and lower inventory obsolescence expenses in the first six months of fiscal 2023 mainly due to increased demand within our aftermarket replacement parts product line.sales. The reduction in the ETG's gross profit margin principally reflects a .5% impact from an increase in new product research and development expenses as well as the previously mentioned ~~decrease~~decreases in net sales ~~of our defense~~for its other electronics, space and medical products, partially offset by ~~the previously mentioned increase in net sales of our other electronics and~~increased demand for its aerospace products. Total new product research and development expenses included within our consolidated cost of sales were ~~$43.1~~$25.1 million in the first ~~six months~~quarter of fiscal ~~2023,~~2024, up from ~~$37.1~~$20.2 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023.

Our consolidated selling, general and administrative ("SG&A") expenses were ~~$223.8~~$166.6 million in the first ~~six months~~quarter of fiscal ~~2023,~~2024, as compared to ~~$179.8~~$114.4 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The increase in consolidated SG&A expenses principally reflects ~~$28.1~~$49.1 million attributable to our fiscal 2023 ~~and 2022~~ acquisitions ~~an $8.1 million increase in performance-based compensation expense,~~and costs incurred to support the previously mentioned

~~Index~~

net sales growth resulting in increases of ~~$7.3~~$5.5 million and ~~$4.6~~$2.6 million in other general and administrative expenses and other selling expenses, respectively, ~~and a $4.9 million increase in acquisition costs mainly related to a fiscal 2023 acquisition,~~ partially offset by a ~~$9.1~~$5.0 million ~~impact from the amendment and termination of a contingent consideration agreement pertaining to a fiscal 2021 acquisition.~~reduction in acquisition costs.

Index

Our consolidated SG&A expenses as a percentage of net sales ~~decreased to 17.1%~~were 18.6% in the first ~~six months~~quarter of fiscal ~~2023, down from 17.5%~~2024, as compared to 18.4% in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The ~~decrease~~increase in consolidated SG&A expenses as a percentage of net sales principally reflects a ~~.7%~~.6% impact from higher intangible asset amortization expense and depreciation expense, partially offset by an .8% impact from the previously mentioned ~~amendment and termination of a contingent consideration agreement, partially offset by a .4% impact from the previously mentioned increase in~~lower acquisition costs.

Operating Income

Our consolidated operating income increased by ~~29%~~39% to ~~a record $286.5~~$180.2 million in the first ~~six months~~quarter of fiscal ~~2023,~~2024, up from ~~$221.6~~$129.4 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The increase in consolidated operating income principally reflects a ~~$64.9~~$52.5 million increase (a ~~55%~~63% increase) to a record ~~$183.5~~$136.1 million in operating income of the FSG, ~~and~~partially offset by a ~~$2.9~~$1.2 million ~~increase~~decrease (a 2% ~~increase)~~decrease) to ~~$124.5~~$55.3 million in operating income of the ETG. The increase in operating income of the FSG principally reflects the previously mentioned net sales growth, ~~improved gross profit margin~~partially offset by an $11.1 million increase in intangible asset amortization expense and ~~efficiencies realized from the higher net sales volume.~~a $5.0 million increase in inventory obsolescence expense. The ~~increase~~decrease in operating income of the ETG principally reflects a lower level of SG&A efficiencies, partially offset by the previously mentioned net sales increase ~~partially offset by the previously mentioned lower gross profit margin~~ and a ~~$5.1~~$5.0 million ~~increase~~decrease in acquisition ~~costs related to a fiscal 2023 acquisition.~~costs.

Our consolidated operating income as a percentage of net sales ~~increased to 21.9%~~was 20.1% in the first ~~six months~~quarter of fiscal ~~2023, up from 21.5%~~2024, as compared to 20.8% in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The ~~increase~~decrease principally reflects ~~an increase in the FSG’s operating income as a percentage of net sales to 24.0% in the first six months of fiscal 2023, up from 20.5% in the first six months of fiscal 2022, partially offset by~~ a decrease in the ETG's operating income as a percentage of net sales to ~~22.4%~~19.3% in the first ~~six months~~quarter of fiscal 2024, as compared to 22.2% in the first quarter of fiscal 2023 ~~as compared to 26.4% in the first six months of fiscal 2022. The increase~~and a decrease in the FSG’s operating income as a percentage of net sales to 22.0% in the first quarter of fiscal 2024, as compared to 22.5% in the first quarter of fiscal 2023. The decrease in the ETG's operating income as a percentage of net sales principally reflects ~~the previously mentioned improved gross profit margin and~~ a ~~1.2%~~2.7% impact from ~~a decrease~~an increase in SG&A expenses as a percentage of net sales ~~mainly reflecting~~as well as the previously mentioned ~~efficiencies.~~decrease in gross profit margin. The increase in the ETG's SG&A expenses as a percentage of net sales mainly reflects the previously mentioned lower level of efficiencies, partially offset by a 2.0% impact from the previously mentioned lower acquisition costs. The decrease in the ~~ETG's~~FSG’s operating income as a percentage of net sales principally reflects the previously mentioned lower gross profit margin and a ~~1.5% impact from an increase in SG&A expenses as a percentage of net sales mainly from a~~ .9% impact from the previously mentioned higher ~~acquisition costs.~~intangible asset amortization expense, partially offset by a .9% impact from lower performance-based compensation expense.

Interest Expense

Interest expense increased to ~~$17.4~~$38.6 million in the first ~~six months~~quarter of fiscal ~~2023, as compared to $1.8~~2024, up from $6.1 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The increase in interest expense was principally due to ~~higher interest rates.~~

~~Index~~an increase in the amount of outstanding debt related to fiscal 2023 acquisitions.

Other Income

Other income in the first ~~six months~~quarter of fiscal ~~2023~~2024 and ~~2022~~2023 was not material.

Index

Income Tax Expense

Our effective tax rate ~~was 19.3%~~decreased to 11.8% in the first ~~six months~~quarter of fiscal ~~2023, as compared to 15.0%~~2024, down from 16.9% in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The ~~increase~~decrease in our effective tax rate principally reflects a larger tax benefit from stock option exercises recognized in the first quarter of fiscal ~~2022.~~2024. We recognized a discrete tax benefit from stock option exercises in both the first quarter of fiscal 2024 and 2023 of $13.6 million and ~~2022 of~~ $6.2 million, ~~and $17.8 million,~~ respectively. This was partially offset by a favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan, net of the non-deductible portion related to executive compensation, in the first six months of fiscal 2023 as compared tax-exempt unrealized losses recognized in the first six months of fiscal 2022.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests relates to the 20% noncontrolling interest held by Lufthansa Technik AG in HEICO Aerospace Holdings Corp. and the noncontrolling interests held by others in certain subsidiaries of the FSG and ETG. Net income attributable to noncontrolling interests was ~~$19.9~~$10.8 million in the first ~~six months~~quarter of fiscal ~~2023,~~2024, as compared to ~~$15.4~~$10.0 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The increase in net income attributable to noncontrolling interests principally reflects improved operating results of certain subsidiaries of the FSG and ETG in which noncontrolling interests are ~~held, inclusive of fiscal 2022 and 2023 acquisitions.~~held.

Net Income Attributable to HEICO

Net income attributable to HEICO increased by ~~15%~~23% to ~~a record $198.1~~$114.7 million, or ~~$1.43~~$.82 per diluted share, in the first ~~six months~~quarter of fiscal ~~2023,~~2024, up from ~~$171.9~~$93.0 million, or ~~$1.25~~$.67 per diluted share, in the first ~~six months~~quarter of fiscal ~~2022~~2023 principally reflecting the previously mentioned higher consolidated operating income and lower effective tax rate, partially offset by the ~~increases~~previously mentioned higher interest expense.

Outlook

As we look ahead to the remainder of fiscal 2024, we continue to anticipate net sales growth in ~~interest expense~~both the FSG and ETG, principally driven by contributions from our fiscal 2023 acquisitions and demand for the ~~effective tax rate.~~majority of our products. Additionally, we plan to continue our commitment to developing new products and services and further market penetration, while maintaining our financial strength and flexibility.

3326

Index

~~Comparison of Second Quarter of Fiscal 2023 to Second Quarter of Fiscal 2022~~

~~Net Sales~~

Our consolidated net sales in the second quarter of fiscal 2023 increased by 28% to a record $687.8 million, up from net sales of $538.8 million in the second quarter of fiscal 2022. The increase in consolidated net sales principally reflects an increase of $85.9 million (a 28% increase) to a record $392.2 million in net sales within the FSG and an increase of $64.4 million (a 27% increase) to a record $301.8 million within the ETG. The net sales increase in the FSG reflects strong organic growth of 20% as well as net sales of $23.1 million contributed by our fiscal 2022 acquisitions. The FSG's organic growth reflects increased demand for the majority of our commercial aerospace products and services resulting from continued recovery in global commercial air travel as compared to the prior year. As such, organic net sales increased by $36.9 million, $13.1 million and $12.8 million within our aftermarket replacement parts, specialty products, and repair and overhaul parts and services product lines, respectively. The net sales increase in the ETG principally reflects $70.2 million contributed by our fiscal 2023 and 2022 acquisitions, partially offset by a 3% decrease in organic net sales. The ETG's organic net sales decline is mainly attributable to decreased demand for our defense products resulting in a net sales decrease of $15.0 million, partially offset by increased demand for our other electronics, aerospace, and space products resulting in net sales increases of $4.2 million, $3.9 million, and $1.2 million respectively. Although sales price changes were not a significant contributing factor to the change in net sales of the FSG and ETG in the second quarter of fiscal 2023, recent cost inflation and potential supply chain disruptions may lead to higher sales prices during the remainder of fiscal 2023.

~~Gross Profit and Operating Expenses~~

Our consolidated gross profit margin was 38.7% in the second quarter of fiscal 2023, as compared to 39.2% in the second quarter of fiscal 2022, principally reflecting a 2.0% improvement in the FSG's gross profit margin, offset by a 3.5% decrease in the ETG's gross profit margin. The increase in the FSG's gross profit margin principally reflects the previously mentioned higher net sales within our aftermarket replacement parts and specialty products product lines. The reduction in the ETG's gross profit margin principally reflects the previously mentioned decrease in net sales of our defense products, partially offset by the previously mentioned increase in net sales of our other electronics and aerospace products. Total new product research and development expenses included within our consolidated cost of sales were $22.9 million in the second quarter of fiscal 2023, up from $18.8 million in the second quarter of fiscal 2022.

Our consolidated SG&A expenses were $109.4 million in the second quarter of fiscal 2023, as compared to $88.5 million in the second quarter of fiscal 2022. The increase in consolidated SG&A expenses principally reflects $18.2 million attributable to our fiscal 2022 and 2023 acquisitions, costs incurred to support the previously mentioned net sales growth resulting in increases of $5.1 million and $2.6 million in other general and administrative expenses and other selling expenses, respectively, and a $4.2 million increase in performance-

~~Index~~

~~based compensation expense, partially offset by a $9.1 million impact from the amendment and termination of a contingent consideration agreement pertaining to a fiscal 2021 acquisition.~~

Our consolidated SG&A expenses as a percentage of net sales decreased to 15.9% in the second quarter of fiscal 2022, down from 16.4% in the second quarter of fiscal 2022. The decrease in consolidated SG&A expenses as a percentage of net sales principally reflects a 1.3% impact from the previously mentioned amendment and termination of a contingent consideration agreement, partially offset by a .4% impact from changes in the estimated fair value of contingent consideration.

~~Operating Income~~

Our consolidated operating income increased by 28% to a record $157.1 million in the second quarter of fiscal 2023, up from $122.8 million in the second quarter of fiscal 2022. The increase in consolidated operating income principally reflects a $33.7 million increase (a 51% increase) to a record $99.9 million in operating income of the FSG and a $2.0 million increase (a 3% increase) to $68.0 million in operating income of the ETG. The increase in operating income of the FSG principally reflects the previously mentioned net sales growth, the impact from the amendment and termination of a contingent consideration agreement and the improved gross profit margin, partially offset by an increase in performance-based compensation expense. The increase in operating income of the ETG principally reflects the previously mentioned net sales increase, partially offset by the previously mentioned lower gross profit margin and a lower level of efficiencies mainly resulting from the impact of our January 2023 acquisition.

Our consolidated operating income as a percentage of net sales was 22.8% in both the second quarter of fiscal 2023 and 2022. Our consolidated operating income as a percentage of net sales in the second quarter of fiscal 2023, principally reflects an increase in the FSG's operating income as a percentage of net sales to 25.5%, up from 21.6% in the second quarter of fiscal 2022, partially offset by a decrease in the ETG's operating income as a percentage of net sales to 22.5%, as compared to 27.8% in the second quarter of fiscal 2022. The increase in the FSG's operating income as a percentage of net sales principally reflects the previously mentioned improved gross profit margin and a 1.8% impact from a decrease in SG&A expenses as a percentage of net sales mainly reflecting a 2.3% impact from the previously mentioned amendment and termination of a contingent consideration agreement, partially offset by a .9% impact from higher performance-based compensation expense. The decrease in the ETG's operating income as a percentage of net sales principally reflects the previously mentioned lower gross profit margin and a 1.7% impact from an increase in SG&A expenses as a percentage of net sales mainly from the previously mentioned lower efficiencies.

~~Index~~

~~Interest Expense~~

Interest expense increased to $11.4 million in the second quarter of fiscal 2023, as compared to $1.0 million in the second quarter of fiscal 2022. The increase was principally due to higher interest rates.

~~Other Income~~

~~Other income in the second quarter of fiscal 2023 and 2022 was not material.~~

~~Income Tax Expense~~

Our effective tax rate decreased to 21.2% in the second quarter of fiscal 2023, as compared to 23.7% in the second quarter of fiscal 2022. The decrease in our effective tax rate principally reflects a favorable impact from tax-exempt unrealized gains in the cash surrender values of life insurance policies related to the HEICO Leadership Compensation Plan, net of the non-deductible portion related to executive compensation, in the second quarter of fiscal 2023 as compared to tax-exempt unrealized losses recognized in the second quarter of fiscal 2022.

~~Net Income Attributable to Noncontrolling Interests~~

Net income attributable to noncontrolling interests relates to the 20% noncontrolling interest held by Lufthansa Technik AG in HEICO Aerospace Holdings Corp. and the noncontrolling interests held by others in certain subsidiaries of the FSG and ETG. Net income attributable to noncontrolling interests was $9.9 million in the second quarter of fiscal 2023, as compared to $8.1 million in the second quarter of fiscal 2022. The increase in net income attributable to noncontrolling interests principally reflects improved operating results of certain subsidiaries of the FSG and ETG in which noncontrolling interests are held, inclusive of fiscal 2022 and 2023 acquisitions.

~~Net Income Attributable to HEICO~~

Net income attributable to HEICO increased by 24% to $105.1 million, or $.76 per diluted share, in the second quarter of fiscal 2023, up from $85.0 million, or $.62 per diluted share, in the second quarter of fiscal 2022 principally reflecting the previously mentioned higher consolidated operating income, partially offset by the increase in interest expense.

~~Outlook~~

As we look ahead to the remainder of fiscal 2023, we continue to anticipate net sales growth in both the FSG and ETG, principally driven by demand for the majority of our products. Additionally, continued inflationary pressures and lingering supply chain disruptions stemming from the COVID-19 pandemic may lead to higher material and labor costs. During fiscal 2023, we plan to continue our commitments to developing new products and services, further market

~~Index~~

~~penetration, and an aggressive acquisition strategy while maintaining our financial strength and flexibility.~~

Liquidity and Capital Resources

Our principal uses of cash include acquisitions, capital expenditures, interest payments, cash dividends, distributions to noncontrolling interests and working capital needs. We continue to anticipate fiscal ~~2023~~2024 capital expenditures to be approximately ~~$45 to $50~~$65 million. We finance our activities primarily from our operating and financing activities, including borrowings under our revolving credit facility. The revolving credit facility ~~contains~~and senior unsecured notes contain both financial and non-financial covenants. As of ~~April 30, 2023,~~January 31, 2024, we were in compliance with all such covenants and our total debt to shareholders’ equity ratio was ~~26.4%~~75.4%.

Based on our current outlook, we believe that net cash provided by operating activities and available borrowings under our revolving credit facility will be sufficient to fund our cash requirements for at least the next twelve ~~months, except for the pending Wencor Acquisition. Our currently committed credit facilities, together with cash on hand, are sufficient to fund the purchase price for the Wencor Acquisition.~~months.

Operating Activities

Net cash provided by operating activities was ~~$154.4~~$111.7 million in the first ~~six months~~quarter of fiscal ~~2023~~2024 and consisted primarily of net income from consolidated operations of ~~$218.1~~$125.5 million, depreciation and amortization expense of ~~$56.8~~$43.5 million (a non-cash item), and net changes in other long-term liabilities and assets related to the ~~HEICO~~ LCP of ~~$10.6~~$14.8 million (principally participant deferrals and employer contributions), ~~$6.5 million in employer contributions to the HEICO Savings and Investment Plan (a non-cash item), and $6.1 million in share-based compensation expense (a non-cash item),~~ partially offset by a ~~$113.7~~$71.8 million increase in net working capital, a $9.6 million deferred income tax benefit, a $9.1 million impact from the amendment and termination of a contingent consideration agreement and $6.3 million of contingent consideration payments.capital. The increase in net working capital is inclusive of a ~~$75.3~~$50.5 million decrease in accrued expenses and other current liabilities mainly reflecting the payment of fiscal 2023 accrued performance-based compensation, a $49.8 million increase in inventories to support an increase in consolidated backlog, and a ~~$13.8~~$15.8 million increase in prepaid expenses and other current assets, partially offset by a $38.9 million decrease ~~in income taxes payable, and a $21.2 million increase~~ in accounts receivable resulting from ~~the previously mentioned higher net sales and~~ the timing of collections.

Net cash provided by operating activities ~~decreased~~increased by ~~$20.3~~$35.0 million in the first ~~six months~~quarter of fiscal ~~2023~~2024, up from ~~$174.8~~$76.7 million in the first ~~six months~~quarter of fiscal ~~2022.~~2023. The ~~decrease~~increase is principally attributable to a $26.3 million increase in net working capital, an $11.7 million increase in deferred income tax benefits, a $9.1 million impact from the amendment and termination of a contingent consideration agreement and $6.3 million of contingent consideration payments, partially offset by a $30.7$22.5 million increase in net income from consolidated ~~operations. The~~operations and a $16.4 million increase in ~~net working capital primarily resulted from the previously mentioned increase in inventories.~~depreciation and amortization expense.

~~Index~~

Investing Activities

Net cash used in investing activities totaled ~~$559.8~~$71.1 million in the first ~~six months~~quarter of fiscal ~~2023~~2024 and related primarily to acquisitions of ~~$524.2~~$46.2 million, capital expenditures of ~~$21.9~~$13.4 million and investments related to the LCP of ~~$14.0~~$12.7 million. Further details regarding our fiscal ~~2023 acquisitions~~2024 acquisition may be found in Note 2, ~~Acquisitions,~~Acquisition, of the Notes to Condensed Consolidated Financial Statements.

Index

Financing Activities

Net cash ~~provided by~~used in financing activities in the first ~~six months~~quarter of fiscal ~~2023~~2024 totaled ~~$388.8~~$16.7 million. During the first ~~six months~~quarter of fiscal ~~2023,~~2024, we borrowed ~~$556.0~~$50.0 million under our revolving credit facility, ~~and received $4.1 million in proceeds from stock option exercises,~~ which ~~were~~was partially offset by ~~$108.0~~$15.0 million in payments made on our revolving credit facility, ~~$22.7~~$13.9 million of ~~distributions to noncontrolling interests, redemptions of common stock related to stock option exercises aggregating $14.8 million, $13.7~~net payments on short-term debt, $13.8 million of cash dividends paid on our common stock, ~~$12.6~~$13.8 million of contingent consideration payments and ~~$2.7~~$8.8 million ~~paid~~of distributions to ~~acquire certain~~ noncontrolling interests.

Other Obligations and Commitments

~~Except for the pending acquisition discussed below, there~~There have not been any material changes to our other obligations and commitments that were included in our Annual Report on Form 10-K for the year ended October 31, ~~2022.~~2023.

On May 15, 2023, the Company entered into an agreement to acquire Wencor from affiliates of Warburg Pincus LLC and Wencor’s management for $1.9 billion in cash and 1,137,656 shares of HEICO Class A Common Stock. The Company’s currently committed credit facilities, together with cash on hand, are sufficient to fund the purchase price for the acquisition. Subject to the satisfaction of the closing conditions, the Wencor Acquisition is expected to close by the end of calendar 2023.

New Accounting Pronouncements

See Note ~~12, Subsequent Event,~~1, Summary of Significant Accounting Policies - New Accounting Pronouncements, of the Notes to Condensed Consolidated Financial Statements for additional information.

~~New Accounting Pronouncement~~Guarantor Group Summarized Financial Information

~~See Note~~On July 27, 2023, we completed the public offer and sale of senior unsecured notes, which consisted of $600 million principal amount of 5.25% Senior Notes due August 1, ~~Summary~~2028 (the "2028 Notes") and $600 million principal amount of ~~Significant Accounting Policies - New Accounting Pronouncement,~~5.35% Senior Notes due August 1, 2033 (the "2033 Notes" and, collectively with the 2028 Notes, the "Notes"). The Notes are fully and unconditionally guaranteed on a senior unsecured basis by all of ~~the Notes to Condensed Consolidated Financial Statements for additional information.~~our existing and future subsidiaries that guarantee our obligations under our revolving credit facility ("Credit Facility") (the “Guarantor Group”).

The Notes were issued pursuant to an Indenture, dated as of July 27, 2023 (the “Base Indenture”), between HEICO and certain of its subsidiaries (collectively, the "Subsidiary Guarantors") and Truist Bank, as trustee (the “Trustee”), as supplemented by a First Supplemental Indenture, dated as of July 27, 2023 (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), between us, the Subsidiary Guarantors and the Trustee. The Notes are direct, unsecured senior obligations of HEICO and rank equally in right of payment with all of our existing and future senior unsecured indebtedness. Each Subsidiary Guarantor is owned either directly or indirectly by the Company and jointly and severally guarantee our obligations under the Notes. None of the Subsidiary Guarantors are organized outside of the U.S.

3828

Index

Under the Indenture, holders of the Notes will be deemed to have consented to the release of a subsidiary guarantee provided by a subsidiary guarantor, without any action required on the part of the Trustee or any holder of the Notes, upon such subsidiary guarantor ceasing to guarantee or to be an obligor with respect to the Credit Facility. Accordingly, if the lenders under the Credit Facility release a subsidiary guarantor from its guarantee of, or obligations as a borrower under, the Credit Facility, the obligations of the subsidiary guarantors to guarantee the Notes will immediately terminate. If any of our future subsidiaries incur obligations under the Credit Facility while the Notes are outstanding, then such subsidiary will be required to guarantee the Notes.

In addition, a subsidiary guarantor will be released and relieved from all its obligations under its subsidiary guarantee in the following circumstances, each of which is permitted by the indenture:

•upon the sale or other disposition (including by way of consolidation or merger), in one transaction or a series of related transactions, of a majority of the total voting stock of such subsidiary guarantor (other than to us or any of our affiliates); or

•upon the sale or disposition of all or substantially all the property of such subsidiary guarantor (other than to any of our affiliates or another subsidiary guarantor);

provided, however, that, in each case, such transaction is permitted by the Credit Facility and after giving effect to such transaction, such subsidiary guarantor is no longer liable for any subsidiary guarantee or other obligations in respect of the Credit Facility. The subsidiary guarantee of a subsidiary guarantor also will be released if we exercise our legal defeasance, covenant defeasance option or discharge the Indenture.

We conduct our operations almost entirely through our subsidiaries. Accordingly, the Guarantor Group’s cash flow and ability to service any guaranteed registered debt securities will depend on the earnings of our subsidiaries and the distribution of those earnings to the Guarantor Group, including the earnings of the non-guarantor subsidiaries, whether by dividends, loans or otherwise. Holders of the guaranteed registered debt securities will have a direct claim only against the Guarantor Group.

The following tables include summarized financial information for the Guarantor Group (in thousands). The information for the Guarantor Group is presented on a combined basis, excluding intercompany balances and transactions between us and the Guarantor Group and excluding investments in and equity in the earnings of non-guarantor subsidiaries. The Guarantor Group’s amounts due from, amounts due to, and transactions with non-guarantor subsidiaries have been presented in separate line items. The consolidating schedules are provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries.

~~Forward-Looking Statements~~

Index


	As of	As of
	January 31, 2024	October 31, 2023
Current assets (excluding net intercompany receivable from non-guarantor subsidiaries)	$1,500,432	$1,440,062
Noncurrent assets	4,557,886	4,490,490
Net intercompany receivable from/ (payable to) non-guarantor subsidiaries	203,923	182,795
Current liabilities (excluding net intercompany payable to non-guarantor subsidiaries)	491,650	531,466
Noncurrent liabilities	2,978,330	2,895,592
Redeemable noncontrolling interests	250,046	252,013
Noncontrolling interests	40,663	37,786


			Three months ended
			January 31, 2024
Net sales			$734,097
Gross profit			275,205
Operating income			150,301
Net income from consolidated operations			111,617
Net income attributable to HEICO			103,945


			Three months ended
			January 31, 2024
Intercompany net sales			$557
Intercompany management fee			616
Intercompany interest income			2,156
Intercompany dividends			8,239

Forward-Looking Statements

Certain statements in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained herein that are not clearly historical in nature may be forward-looking and the words “anticipate,” “believe,” “expect,” “estimate” and similar expressions are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in press releases, written statements or other documents filed with the Securities and Exchange Commission or in communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, concerning our operations, economic performance and financial condition are subject to risks, uncertainties and contingencies. We have based these forward-looking statements on our current expectations and projections about future events. All forward-looking statements involve risks and uncertainties, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Also,

Index

forward-looking statements are based upon management’s estimates of fair values and of future costs, using currently available information. Therefore, 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: the~~statements. Factors that could cause such differences include:

•The severity, magnitude and duration of public health threats, such as the COVID-19 ~~pandemic ("Health Emergencies"); HEICO's~~pandemic;

•Our liquidity and the amount and timing of cash generation; ~~lower~~

•Lower commercial air travel, ~~caused by Health Emergencies and their aftermath,~~ airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services; ~~product~~

•Product specification costs and requirements, which could cause an increase to our costs to complete contracts; ~~governmental~~

•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~~

•Our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; ~~product~~

•Product development or manufacturing difficulties, which could increase our product development and manufacturing costs and delay sales; ~~our~~and

•Our ability to make acquisitions, including obtaining any applicable domestic and/or foreign governmental approvals, and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; and economic conditions, including the effects of inflation, within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and defense spending or budget cuts, which could reduce our defense-related revenue. With regard to the pending acquisition of Wencor, capital markets and economic conditions could adversely affect HEICO's ability to obtain debt financing on the terms and timing contemplated, regulatory approvals may delay or otherwise impact the acquisition, and Wencor's business may not perform as expected due to the same factors listed above that may affect HEICO's business. revenues.

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.

Index

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

There have not been any material changes in our assessment of HEICO’s sensitivity to market risk that was disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended October 31, ~~2022, except as discussed below:~~

In connection with our acquisition of Exxelia, we issued Exxelia a ten-year, €150 million note, which accrues interest at 4.7% per annum on the principal outstanding. A hypothetical 10% strengthening of the United States ("U.S.") dollar in comparison to the Euro as of April 30, 2023 would decrease the U.S. dollar equivalent of our Euro note receivable by approximately $16.8 million and decrease operating income by the same amount.2023.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that HEICO’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the ~~second~~first quarter ended ~~April 30, 2023~~January 31, 2024 that have materially affected, or are reasonably likely to materially affect, HEICO's internal control over financial reporting.

Index

PART II. OTHER INFORMATION

Item ~~1A. Risk Factors.~~5. Other Events.

~~Our business, financial condition, operating results and cash flows may be impacted by~~None of our directors or officers adopted, modified or terminated a ~~number~~“Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of ~~factors, many of which are beyond our control, including those set forth in our Annual Report on Form 10-K for~~Regulation S-K, during the ~~year~~first quarter ended ~~October~~January 31, 2022, any one of which may cause our actual results to differ materially from anticipated results. There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended October 31, 2022, except as set forth below.2024.

~~Risks Related to the Wencor Acquisition~~

~~Completion of the Wencor Acquisition is subject to the conditions contained in the Merger Agreement and if these conditions are not satisfied, the Wencor Acquisition will not be completed.~~

The completion of the Wencor Acquisition is subject to various closing conditions, including, among others: (a) the absence of certain legal impediments to the consummation of the acquisition; (b) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other regulatory approvals; (c) in the case of the Company’s and Wencor’s obligations to complete the acquisition, the accuracy of Wencor’s and the Company’s, respectively, representations and warranties contained in the Merger Agreement subject to customary materiality standards; (d) material compliance by the Company, Wencor and Jazz Topco GP LLC, solely in its capacity as representative for purposes of certain provisions of the Merger Agreement, with certain pre-closing covenants; and (e) no material adverse change in Wencor’s business since the date of the Merger Agreement.

Many of the conditions to the closing of the Wencor Acquisition are not within our control, and we cannot predict with certainty when or if these conditions will be satisfied. The failure to satisfy any of the required conditions could delay the completion of the Wencor Acquisition or prevent it from occurring. Any delay in completing the Wencor Acquisition could cause us not to realize some or all of the benefits that we expect to achieve if the Wencor Acquisition is successfully completed within the expected timeframe. There can be no assurance that the conditions to the closing of the Wencor Acquisition will be satisfied or that the Wencor Acquisition will be completed or that if completed we will realize the anticipated benefits.

~~Failure to complete the Wencor Acquisition could negatively impact our stock price and our future business and financial results.~~

If the Wencor Acquisition is not completed for any reason, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Wencor Acquisition, we could be subject to a number of negative consequences, including, among others: (i) we may experience negative reactions from the financial markets, including negative impacts on our stock price; (ii) we will still be required to pay certain significant costs relating to

~~Index~~

the Wencor Acquisition, including legal, accounting, and financial advisor costs; and (iii) matters related to the Wencor Acquisition (including integration planning) require substantial commitments of our time and resources, which could result in our inability to pursue other opportunities that could be beneficial to us. Also, the Company is required to pay Target a termination fee of $143.5 million in cash upon termination of the Merger Agreement under specified circumstances, including the failure to obtain regulatory approvals or, among others, if the Company materially breaches its regulatory covenants such that there is a failure of certain conditions to the Merger. If the Wencor Acquisition is not completed or if completion of the Wencor Acquisition is delayed, any of these risks could occur and may adversely affect our business, financial condition, financial results, and stock price.

~~The Wencor Acquisition will involve substantial costs.~~

We have incurred, and expect to continue to incur, a number of costs associated with the Wencor Acquisition. The substantial majority of these costs will consist of transaction and regulatory costs related to the Wencor Acquisition. We will also incur transaction fees and costs related to formulating and implementing integration plans, including system consolidation costs and employment-related costs. We continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred from the Wencor Acquisition and integration. Although we anticipate that the elimination of duplicative costs and the realization of other efficiencies and synergies related to the integration should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

~~In connection with the Wencor Acquisition, we will incur additional indebtedness, which could adversely affect us, including our business flexibility and will increase our interest expense.~~

We will have increased indebtedness following completion of the Wencor Acquisition, which could have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions and increasing our interest expense. We will also incur various costs and expenses related to the financing of the Wencor Acquisition. The amount of cash required to pay interest on our increased indebtedness following completion of the Wencor Acquisition and thereby the demands on our cash resources will be greater than the amount of cash flow required to service our indebtedness prior to the Wencor Acquisition. The increased levels of indebtedness following completion of the Wencor Acquisition could also reduce funds available for working capital, capital expenditures, and other general corporate purposes, and may create competitive disadvantages for us relative to other companies with lower debt levels. If we do not achieve the expected synergies and cost savings from the Wencor Acquisition, or if our financial performance after the Wencor Acquisition does not meet our current expectations, then our ability to service the indebtedness may be adversely impacted.

~~Index~~

Item 6. EXHIBITS


Exhibit						Description

~~2.1~~22.1						~~Agreement~~Subsidiary Guarantors and ~~Plan~~Issuers of ~~Merger by and among HEICO Corporation, Magnolia MergeCo Inc., Jazz Parent, Inc. and Jazz Topco GP LLC,~~Guaranteed Securities, is incorporated by reference to Exhibit ~~2.1~~22.1 to the Form ~~8-K filed on May 18,~~10-K for the year ended October 31, 2023.* *#

~~10.1~~						~~Commitment letter, dated May 14, 2023, by and among Truist Securities, Inc., Truist Bank and HEICO Corporation, is incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 18, 2023.~~ ~~***~~

31.1						Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. *

31.2						Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. *

32.1						Section 1350 Certification of Chief Executive Officer. **

32.2						Section 1350 Certification of Chief Financial Officer. **

101.INS						Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. *

101.SCH						Inline XBRL Taxonomy Extension Schema Document. *

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document. *

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document. *

101.LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document. *

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document. *

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). *

* Filed herewith.

** Furnished herewith.

*** Previously filed.

~~# Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The~~

~~registrant hereby undertakes to furnish copies of any of the omitted schedules upon~~

~~request by the Securities and Exchange Commission.~~

Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HEICO CORPORATION

Date:	~~May 24, 2023~~February 28, 2024	By:	/s/ CARLOS L. MACAU, JR.
			Carlos L. Macau, Jr. Executive Vice President - Chief Financial Officer and Treasurer (Principal Financial Officer)

		By:	/s/ STEVEN M. WALKER
			Steven M. Walker Chief Accounting Officer and Assistant Treasurer (Principal Accounting Officer)


		Six months ended April 30,
		2023	2022
	Three months ended January 31,				Three months ended January 31,
	2024			2024		2023
Operating Activities:	Operating Activities:
Net income from consolidated operations
Net income from consolidated operations
Net income from consolidated operations	Net income from consolidated operations	$218,065	$187,364
Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:	Adjustments to reconcile net income from consolidated operations to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	56,784	46,707
Depreciation and amortization
Depreciation and amortization
Employer contributions to HEICO Savings and Investment Plan	Employer contributions to HEICO Savings and Investment Plan	6,533	5,364
Share-based compensation expense	Share-based compensation expense	6,055	6,855
Increase (decrease) in accrued contingent consideration, net		1,842	(1,773)
Amendment and termination of contingent consideration agreement		(9,057)	—
Increase in accrued contingent consideration, net
Deferred income tax (benefit) provision
Payment of contingent consideration	Payment of contingent consideration	(6,299)	—
Deferred income tax (benefit) provision		(9,596)	2,080
Changes in operating assets and liabilities, net of acquisitions:	Changes in operating assets and liabilities, net of acquisitions:
Increase in accounts receivable		(21,222)	(20,263)
(Increase) decrease in contract assets		(9,267)	1,778
Decrease (increase) in accounts receivable
Decrease (increase) in accounts receivable
Decrease (increase) in accounts receivable
Decrease (increase) in contract assets
Increase in inventories	Increase in inventories	(75,251)	(42,766)
Decrease (increase) in prepaid expenses and other current assets		1,738	(8,974)
Increase in trade accounts payable		6,797	8,137
Increase in prepaid expenses and other current assets
Decrease in trade accounts payable
Decrease in accrued expenses and other current liabilities	Decrease in accrued expenses and other current liabilities	(2,671)	(15,946)
Decrease in income taxes payable		(13,824)	(9,343)
Increase in income taxes payable
Net changes in other long-term liabilities and assets related to HEICO Leadership Compensation Plan	Net changes in other long-term liabilities and assets related to HEICO Leadership Compensation Plan	10,563	13,356
Other	Other	(6,754)	2,177
Net cash provided by operating activities	Net cash provided by operating activities	154,436	174,753

Investing Activities:	Investing Activities:
Investing Activities:
Investing Activities:
Acquisitions, net of cash acquired
Acquisitions, net of cash acquired
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(524,231)	(105,533)
Capital expenditures	Capital expenditures	(21,921)	(16,211)
Investments related to HEICO Leadership Compensation Plan	Investments related to HEICO Leadership Compensation Plan	(14,000)	(11,700)
Other	Other	362	(10,511)
Net cash used in investing activities	Net cash used in investing activities	(559,790)	(143,955)

Financing Activities:	Financing Activities:
Financing Activities:
Financing Activities:
Borrowings on revolving credit facility
Borrowings on revolving credit facility
Borrowings on revolving credit facility	Borrowings on revolving credit facility	556,000	93,000
Payments on revolving credit facility	Payments on revolving credit facility	(108,000)	(65,000)
Distributions to noncontrolling interests		(22,650)	(10,576)
Redemptions of common stock related to stock option exercises		(14,811)	(23,692)
Payments on short-term debt, net
Cash dividends paid	Cash dividends paid	(13,668)	(12,227)
Payment of contingent consideration	Payment of contingent consideration	(12,610)	—
Distributions to noncontrolling interests
Acquisitions of noncontrolling interests	Acquisitions of noncontrolling interests	(2,733)	—
Redemptions of common stock related to stock option exercises
Proceeds from stock option exercises	Proceeds from stock option exercises	4,074	1,610
Other	Other	3,163	(1,220)
Net cash provided by (used in) financing activities		388,765	(18,105)
Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	4,246	(3,673)
Effect of exchange rate changes on cash
Effect of exchange rate changes on cash

Net (decrease) increase in cash and cash equivalents		(12,343)	9,020
Net increase in cash and cash equivalents
Net increase in cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	139,504	108,298
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$127,161	$117,318


(in thousands)	(in thousands)		April 30, 2023	October 31, 2022	(in thousands)	January 31, 2024	October 31, 2023
Land	Land		$19,232	$17,579
Buildings and improvements	Buildings and improvements		168,689	148,598
Machinery, equipment and tooling	Machinery, equipment and tooling		360,894	322,252
Construction in progress	Construction in progress		23,578	14,533
			572,393	502,962
		653,948
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization		(298,537)	(277,083)
Property, plant and equipment, net	Property, plant and equipment, net		$273,856	$225,879


		Foreign Currency Translation		Defined Benefit Pension Plan	Accumulated Other Comprehensive Loss
Balances as of October 31, 2022		($45,369)		($1,130)	($46,499)
			Foreign Currency Translation			Foreign Currency Translation	Defined Benefit Pension Plan	Accumulated Other Comprehensive Loss
Balances as of October 31, 2023
Unrealized gain	Unrealized gain	28,845		—	28,845
Amortization of unrealized loss	Amortization of unrealized loss	—		28	28
Balances as of April 30, 2023		($16,524)		($1,102)	($17,626)
Balances as of January 31, 2024


		Segment			Consolidated Totals
		FSG		ETG
Balances as of October 31, 2022		$561,961		$1,110,464	$1,672,425
			Segment			Segment	Consolidated Totals
			FSG
Balances as of October 31, 2023
Balances as of October 31, 2023
Balances as of October 31, 2023
Goodwill acquired	Goodwill acquired	—		340,173	340,173
Foreign currency translation adjustments	Foreign currency translation adjustments	4,242		12,559	16,801
Adjustments to goodwill	Adjustments to goodwill	(955)		2,791	1,836
Balances as of April 30, 2023		$565,248		$1,465,987	$2,031,235
Balances as of January 31, 2024


			As of April 30, 2023			As of October 31, 2022
			Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
		As of January 31, 2024									As of January 31, 2024			As of October 31, 2023
		Gross Carrying Amount							Gross Carrying Amount	Accumulated Amortization		Net Carrying Amount	Gross Carrying Amount		Accumulated Amortization	Net Carrying Amount
Amortizing Assets:	Amortizing Assets:
Customer relationships
Customer relationships
Customer relationships	Customer relationships		$611,547	($229,884)	$381,663	$539,529	($208,127)	$331,402
Intellectual property	Intellectual property		333,249	(111,233)	222,016	284,171	(98,983)	185,188
Other	Other		8,681	(7,191)	1,490	8,700	(7,017)	1,683
			953,477	(348,308)	605,169	832,400	(314,127)	518,273
		1,445,102
Non-Amortizing Assets:	Non-Amortizing Assets:
Trade names	Trade names		239,150	—	239,150	215,054	—	215,054
			$1,192,627	($348,308)	$844,319	$1,047,454	($314,127)	$733,327
Trade names
Trade names
		$1,735,028


	Six months ended April 30,		Three months ended April 30,
	2023	2022	2023	2022

Net sales	$1,308,756	$1,029,156	$687,841	$538,813

Operating costs and expenses:
Cost of sales	798,445	627,717	421,329	327,584
Selling, general and administrative expenses	223,787	179,840	109,422	88,452

Total operating costs and expenses	1,022,232	807,557	530,751	416,036

Operating income	286,524	221,599	157,090	122,777

Interest expense	(17,441)	(1,775)	(11,373)	(979)
Other income	982	540	343	314

Income before income taxes and noncontrolling interests	270,065	220,364	146,060	122,112

Income tax expense	52,000	33,000	31,000	29,000

Net income from consolidated operations	218,065	187,364	115,060	93,112

Less: Net income attributable to noncontrolling interests	19,918	15,433	9,940	8,102

Net income attributable to HEICO	$198,147	$171,931	$105,120	$85,010

Net income per share attributable to HEICO shareholders:
Basic	$1.45	$1.27	$.77	$.63
Diluted	$1.43	$1.25	$.76	$.62

Weighted average number of common shares outstanding:
Basic	136,786	135,763	136,916	135,891
Diluted	138,590	137,916	138,600	137,867


				HEICO Shareholders' Equity
		Redeemable Noncontrolling Interests		Common Stock	Class A Common Stock	Capital in Excess of Par Value	Deferred Compensation Obligation	HEICO Stock Held by Irrevocable Trust	Accumulated Other Comprehensive Loss	Retained Earnings	Noncontrolling Interests	Total Shareholders' Equity
Balances as of October 31, 2022		$327,601		$545	$821	$397,337	$5,297	($5,297)	($46,499)	$2,253,932	$42,170	$2,648,306
			HEICO Shareholders' Equity
		Redeemable Noncontrolling Interests
		Redeemable Noncontrolling Interests
		Redeemable Noncontrolling Interests											Common Stock	Class A Common Stock	Capital in Excess of Par Value	Deferred Compensation Obligation	HEICO Stock Held by Irrevocable Trust	Accumulated Other Comprehensive Loss	Retained Earnings	Noncontrolling Interests	Total Shareholders' Equity
Balances as of October 31, 2023
Comprehensive income	Comprehensive income	15,356		—	—	—	—	—	28,873	198,147	6,096	233,116
Cash dividends ($.10 per share)	Cash dividends ($.10 per share)	—		—	—	—	—	—	—	(13,668)	—	(13,668)
Issuance of common stock to HEICO Savings and Investment Plan	Issuance of common stock to HEICO Savings and Investment Plan	—		—	—	7,760	—	—	—	—	—	7,760
Share-based compensation expense	Share-based compensation expense	—		—	—	6,055	—	—	—	—	—	6,055
Proceeds from stock option exercises	Proceeds from stock option exercises	—		2	2	4,070	—	—	—	—	—	4,074
Redemptions of common stock related to stock option exercises	Redemptions of common stock related to stock option exercises	—		—	—	(14,811)	—	—	—	—	—	(14,811)
Noncontrolling interests assumed related to acquisitions		14,642		—	—	—	—��	—	—	—	—	—
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(16,161)		—	—	—	—	—	—	—	(6,489)	(6,489)
Acquisitions of noncontrolling interests	Acquisitions of noncontrolling interests	(1,059)		—	—	(1,674)	—	—	—	—	—	(1,674)
Adjustments to redemption amount of redeemable noncontrolling interests	Adjustments to redemption amount of redeemable noncontrolling interests	3,103		—	—	—	—	—	—	(3,103)	—	(3,103)

Deferred compensation obligation		—		—	—	—	874	(874)	—	—	—	—
Other	Other	2,351		—	—	254	—	—	—	(153)	—	101
Balances as of April 30, 2023		$345,833		$547	$823	$398,991	$6,171	($6,171)	($17,626)	$2,435,155	$41,777	$2,859,667
Balances as of January 31, 2024


		April 30, 2023	October 31, 2022	Change
	January 31, 2024				January 31, 2024	October 31, 2023	Change
Contract assets	Contract assets	$103,448	$93,978	$9,470
Contract liabilities	Contract liabilities	85,381	58,757	26,624
Net contract assets	Net contract assets	$18,067	$35,221	($17,154)


			Unobservable								Unobservable				Weighted
Acquisition Date							Acquisition Date	Fair Value	Input	Range		Average (1)
8-4-2023							8-4-2023	$17,500	Discount rate	0.0% - 0.0%		0.0%
				Unobservable		Weighted
Acquisition Date		Fair Value		Input	Range	Average (1)
9-1-2022	9-1-2022	$6,296		Compound annual revenue growth rate	0% - 17%	13%
				Discount rate	7.6% - 7.6%	7.6%
9-1-2022
9-1-2022								5,577	Compound annual revenue growth rate	9% - 22%		17%
			Discount rate								Discount rate		8.6% - 8.6%	8.6%

7-18-2022	7-18-2022	16,068		Compound annual revenue growth rate	2% - 9%	5%
				Discount rate	7.6% - 7.6%	7.6%

3-17-2022		6,513		Compound annual revenue growth rate	(3%) - 5%	0%
				Discount rate	6.6% - 6.6%	6.6%
7-18-2022
7-18-2022								20,295	Compound annual revenue growth rate	1% - 11%		6%
			Discount rate								Discount rate		8.6% - 8.6%	8.6%

8-18-2020	8-18-2020	8,475		Compound annual revenue growth rate	15% - 24%	22%
8-18-2020
8-18-2020								9,142	Compound annual revenue growth rate	11% - 20%		17%
			Discount rate								Discount rate		9.5% - 9.5%	9.5%
				Discount rate	8.2% - 8.2%	8.2%

9-15-2017		19,479		Compound annual revenue growth rate	4% - 5%	5%
				Discount rate	6.3% - 6.3%	6.3%