DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - $ / shares | 3 Months Ended | |
Jan. 31, 2019 | Feb. 26, 2019 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jan. 31, 2019 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,019 | |
Entity Current Reporting Status | Yes | |
Entity Information [Line Items] | ||
Entity Registrant Name | HEICO CORPORATION | |
Address | 3000 Taft Street, Hollywood, Florida | |
State | Florida | |
Zip Code | 33,021 | |
Entity Central Index Key | 46,619 | |
Entity Tax Identification Number | 650,341,002 | |
Current Fiscal Year End Date | --10-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Heico Common Stock [Member] | ||
Entity Information [Line Items] | ||
Trading Symbol | hei | |
Entity Common Stock, Shares Outstanding | 53,362,618 | |
Entity Common Stock Par Value | $ 0.01 | |
Common Class A [Member] | ||
Entity Information [Line Items] | ||
Trading Symbol | hei.a | |
Entity Common Stock, Shares Outstanding | 79,604,916 | |
Entity Common Stock Par Value | $ 0.01 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 57,856 | $ 59,599 |
Accounts receivable, net | 237,800 | 237,286 |
Contract assets | 47,093 | 14,183 |
Inventories, net | 406,348 | 401,553 |
Prepaid expenses and other current assets | 30,328 | 21,187 |
Total current assets | 779,425 | 733,808 |
Property, plant and equipment, net | 169,279 | 154,739 |
Goodwill | 1,170,401 | 1,114,832 |
Intangible assets, net | 529,191 | 506,360 |
Other assets | 148,718 | 143,657 |
Total assets | 2,797,014 | 2,653,396 |
Current liabilities: | ||
Current maturities of long-term debt | 865 | 859 |
Trade accounts payable | 89,545 | 107,219 |
Accrued expenses and other current liabilities | 133,705 | 171,514 |
Income taxes payable | 0 | 2,837 |
Total current liabilities | 224,115 | 282,429 |
Long-term debt, net of current maturities | 607,656 | 531,611 |
Deferred income taxes | 59,133 | 46,644 |
Other long-term liabilities | 165,360 | 157,658 |
Total liabilities | 1,056,264 | 1,018,342 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 138,995 | 132,046 |
Shareholders' equity: | ||
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued | 0 | 0 |
Common Stock | 534 | 534 |
Capital in excess of par value | 324,395 | 320,994 |
Deferred compensation obligation | 4,043 | 3,928 |
HEICO stock held by irrevocable trust | (4,043) | (3,928) |
Accumulated other comprehensive loss | (11,069) | (15,256) |
Retained earnings | 1,174,811 | 1,091,183 |
Total HEICO shareholders' equity | 1,489,467 | 1,398,251 |
Noncontrolling interests | 112,288 | 104,757 |
Total shareholders' equity | 1,601,755 | 1,503,008 |
Total liabilities and equity | 2,797,014 | 2,653,396 |
Class A Common Stock [Member] | ||
Shareholders' equity: | ||
Common Stock | $ 796 | $ 796 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED [PARENTHETICAL] - $ / shares shares in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000 | 10,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000 | 150,000 |
Common stock, shares issued | 53,363 | 53,355 |
Common stock, shares outstanding | 53,363 | 53,355 |
Class A Common Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000 | 150,000 |
Common stock, shares issued | 79,593 | 79,576 |
Common stock, shares outstanding | 79,593 | 79,576 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Net sales | $ 466,146 | $ 404,410 |
Operating costs and expenses: | ||
Cost of sales | 283,909 | 249,619 |
Selling, general and administrative expenses | 84,290 | 75,231 |
Total operating costs and expenses | 368,199 | 324,850 |
Operating income | 97,947 | 79,560 |
Interest expense | (5,489) | (4,725) |
Other (expense) income | (332) | 360 |
Income before income taxes and noncontrolling interests | 92,126 | 75,195 |
Income tax expense | 4,100 | 3,500 |
Net income from consolidated operations | 88,026 | 71,695 |
Less: Net income attributable to noncontrolling interests | 8,694 | 6,543 |
Net income attributable to HEICO | $ 79,332 | $ 65,152 |
Net income per share attributable to HEICO shareholders: | ||
Basic (in dollars per share) | $ 0.60 | $ 0.49 |
Diluted (in dollars per share) | $ 0.58 | $ 0.48 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 132,933 | 132,048 |
Diluted (in shares) | 136,978 | 136,390 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Net income from consolidated operations | $ 88,026 | $ 71,695 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 4,374 | 15,963 |
Amortization of unrealized loss on defined benefit pension plan, net of tax | 6 | 4 |
Total other comprehensive income (loss) | 4,380 | 15,967 |
Comprehensive income from consolidated operations | 92,406 | 87,662 |
Less: Comprehensive income attributable to noncontrolling interests | 8,694 | 6,543 |
Less: Foreign currency translation adjustments attributable to noncontrolling interests | 193 | 994 |
Comprehensive income attributable to noncontrolling interests | 8,887 | 7,537 |
Comprehensive income attributable to HEICO | $ 83,519 | $ 80,125 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands | Total | Redeemable Noncontrolling Interests [Member] | Common Stock [Member] | Common Stock [Member]Class A Common Stock [Member] | Capital In Excess Of Par Value [Member] | Deferred Compensation Obligation [Member] | HEICO Stock Held By Irrevocable Trust [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Noncontrolling Interest [Member] | Total Shareholders Equity [Member] |
Starting Balance at Oct. 31, 2017 | $ 338 | $ 507 | $ 326,544 | $ 3,118 | $ (3,118) | $ (10,556) | $ 844,247 | $ 87,212 | $ 1,248,292 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | $ 80,125 | 14,973 | 65,152 | ||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 7,537 | $ 3,952 | 3,585 | ||||||||
Comprehensive income | 87,662 | 83,710 | |||||||||
Cash dividends | (7,395) | (7,395) | |||||||||
Stock Issued During Period, Value, Stock Dividend | 84 | 127 | |||||||||
Adjustments to Additional Paid in Capital, Stock Split | (211) | ||||||||||
Issuance of common stock to Savings and Investment Plan | 980 | 980 | |||||||||
Share-based compensation expense | 2,165 | 2,165 | |||||||||
Proceeds from stock option exercises | 1 | 1,425 | |||||||||
Proceeds from stock option exercises, Adjustment to Additional Paid in Capital | 1,424 | ||||||||||
Distributions to noncontrolling interests | (1,688) | (194) | (194) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | (2,026) | 2,026 | 2,026 | ||||||||
Other | (1) | (995) | |||||||||
Adjustments to Additional Paid in Capital, Other | (994) | ||||||||||
Ending Balance at Jan. 31, 2018 | 422 | 635 | 329,908 | 3,118 | (3,118) | 4,417 | 904,030 | 90,602 | 1,330,014 | ||
Starting Balance, Redeemable Noncontrolling Interests at Oct. 31, 2017 | 131,123 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 7,537 | 3,952 | 3,585 | ||||||||
Distributions to noncontrolling interests | (1,688) | (194) | (194) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | (2,026) | 2,026 | 2,026 | ||||||||
Temporary Equity, Other Changes | 994 | ||||||||||
Ending Balance, Redeemable Noncontrolling Interests at Jan. 31, 2018 | 132,355 | ||||||||||
Starting Balance at Oct. 31, 2018 | 1,503,008 | 534 | 796 | 320,994 | 3,928 | (3,928) | (15,256) | 1,091,183 | 104,757 | 1,503,008 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Parent | 83,519 | 4,187 | 79,332 | ||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 8,887 | 3,639 | 5,248 | ||||||||
Comprehensive income | 92,406 | 88,767 | |||||||||
Cash dividends | (9,305) | (9,305) | |||||||||
Issuance of common stock to Savings and Investment Plan | 1,046 | 1,046 | |||||||||
Share-based compensation expense | 2,439 | 2,439 | |||||||||
Proceeds from stock option exercises | 66 | ||||||||||
Proceeds from stock option exercises, Adjustment to Additional Paid in Capital | 66 | ||||||||||
Stock Redeemed or Called During Period, Value | (150) | (150) | |||||||||
Noncontrolling Interest, Increase from Business Combination | 5,116 | 2,355 | 2,355 | ||||||||
Distributions to noncontrolling interests | (2,397) | (398) | (398) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | (228) | 228 | 228 | ||||||||
Deferred compensation obligation | (115) | ||||||||||
Stock Issued During Period Value Deferred Compensation Obligation | 115 | ||||||||||
Ending Balance at Jan. 31, 2019 | 1,601,755 | $ 534 | $ 796 | $ 324,395 | $ 4,043 | $ (4,043) | $ (11,069) | 1,174,811 | 112,288 | 1,601,755 | |
Starting Balance, Redeemable Noncontrolling Interests at Oct. 31, 2018 | 132,046 | 132,046 | |||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest | 8,887 | 3,639 | 5,248 | ||||||||
Noncontrolling Interest, Increase from Business Combination | 5,116 | 2,355 | 2,355 | ||||||||
Distributions to noncontrolling interests | (2,397) | (398) | (398) | ||||||||
Adjustments to redemption amount of redeemable noncontrolling interests | (228) | 228 | 228 | ||||||||
Ending Balance, Redeemable Noncontrolling Interests at Jan. 31, 2019 | $ 138,995 | 138,995 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2014-09 [Member] | 819 | 13,373 | 326 | 13,699 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2014-09 [Member] | $ 819 | $ 13,373 | $ 326 | $ 13,699 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME - UNAUDITED [PARENTHETICAL] - $ / shares | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Cash dividends per share (in dollars per share) | $ 0.070 | $ 0.056 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Operating Activities: | ||
Net income from consolidated operations | $ 88,026 | $ 71,695 |
Adjustments to reconcile net income from consolidated operations to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 20,037 | 19,024 |
Share-based compensation expense | 2,439 | 2,168 |
Employer contributions to HEICO Savings and Investment Plan | 2,153 | 1,860 |
Change in value of contingent consideration | 1,862 | (3,195) |
Deferred income tax provision (benefit) | 3,798 | (17,292) |
Payment of Contingent Consideration in Excess of Acquisition Date Value | (67) | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Change in accounts receivable | 4,982 | 18,272 |
Increase (Decrease) in Contract with Customer, Asset | 7,270 | (3,809) |
Change in inventories | (24,284) | (18,301) |
Change in prepaid expenses and other current assets | (7,921) | (5,403) |
Change in trade accounts payable | (19,832) | (9,734) |
Change in accrued expenses and other current liabilities | (34,537) | (18,477) |
Change in income taxes payable | (3,636) | 7,630 |
Increase (Decrease) in Obligation, Other Postretirement Benefits | 9,143 | 6,696 |
Other | 133 | 771 |
Net cash provided by operating activities | 49,566 | 51,905 |
Investing Activities: | ||
Acquisitions, net of cash acquired | (101,039) | (6,126) |
Net Investment Related to Deferred Compensation Plan | (8,700) | (6,900) |
Capital expenditures | (5,907) | (7,577) |
Other | 72 | (2,790) |
Net cash used in investing activities | (115,574) | (23,393) |
Financing Activities: | ||
Proceeds from Long-term Lines of Credit | 93,000 | |
Payments on revolving credit facility | (17,000) | (5,000) |
Cash dividends paid | (9,305) | (7,395) |
Payments of Loan Costs | (4,067) | |
Distributions to noncontrolling interests | (2,795) | (1,882) |
Payment of Contingent Consideration | (283) | (300) |
Common Stock Issued Repurchased and Retired Related To Stock Option Exercises | (150) | |
Proceeds from stock option exercises | 66 | 1,425 |
Other | 29 | (114) |
Net cash (used in) provided by financing activities | 63,562 | (17,333) |
Effect of exchange rate changes on cash | 703 | 2,443 |
Net (decrease) increase in cash and cash equivalents | (1,743) | 13,622 |
Cash and cash equivalents at beginning of year | 59,599 | 52,066 |
Cash and cash equivalents at end of period | $ 57,856 | $ 65,688 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jan. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies [Text Block] | 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, 2018. The October 31, 2018 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 three months ended January 31, 2019 are not necessarily indicative of the results which may be expected for the entire fiscal year. The Company has 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. (“HEICO Electronic”) and its subsidiaries. Certain prior year amounts have been reclassified to conform to the current year presentation principally to reflect the adoption of Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," in the first quarter of fiscal 2019 and the adoption of ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments," in the fourth quarter of fiscal 2018. Stock Split All applicable fiscal 2018 share and per share information has been adjusted retrospectively to reflect a 5-for-4 stock split effected in June 2018. New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, which, as amended, was codified as Accounting Standards Codification (“ASC”) Topic 606, "Revenue from Contracts with Customers" (“ASC 606”). ASC 606 provides a comprehensive new revenue recognition model that supersedes nearly all existing revenue recognition guidance. Under ASC 606, an entity recognizes revenue when it transfers promised goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company adopted ASC 606 as of November 1, 2018 using the modified retrospective method and recognized the cumulative effect of initially applying ASC 606 to all uncompleted contracts on the date of adoption as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and remains as previously reported in accordance with ASC Topic 605, "Revenue Recognition." ASC 606 impacts the timing of revenue recognition for certain contracts under which the Company produces products with no alternative use and for which it has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. ASC 606 also impacts the timing of revenue recognition for certain other contracts under which the Company creates or enhances customer-owned assets while performing repair and overhaul services. For these two types of contracts, the Company now recognizes revenue using an over-time recognition model as opposed to generally recognizing revenue at the time of shipment under previous guidance. See Note 6, Revenue, for additional information regarding the Company's revenue recognition policies and disclosures required by ASC 606. The following table presents the cumulative effect of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of November 1, 2018 (in thousands): As Reported Impact of As Adjusted Under ASC 605 ASC 606 Under ASC 606 October 31, 2018 Adoption November 1, 2018 Assets Contract assets $14,183 $40,089 $54,272 Inventories, net 401,553 (29,412 ) 372,141 Prepaid expenses and other current assets 21,187 (489 ) 20,698 Liabilities Accrued expenses and other current liabilities $171,514 ($8,588 ) $162,926 Deferred income taxes 46,644 4,258 50,902 Redeemable noncontrolling interests $132,046 $819 $132,865 Shareholders' equity Retained earnings $1,091,183 $13,373 $1,104,556 Noncontrolling interests 104,757 326 105,083 The following table presents the impact of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of January 31, 2019 (in thousands): As of January 31, 2019 As Reported Effect of As Adjusted Under ASC 606 ASC 606 Under ASC 605 Assets Contract assets $47,093 ($39,757 ) $7,336 Inventories, net 406,348 30,292 436,640 Prepaid expenses and other current assets 30,328 323 30,651 Liabilities Accrued expenses and other current liabilities $133,705 $8,263 $141,968 Deferred income taxes 59,133 (3,988 ) 55,145 Redeemable noncontrolling interests $138,995 ($797 ) $138,198 Shareholders' equity Retained earnings $1,174,811 ($12,203 ) $1,162,608 Noncontrolling interests 112,288 (417 ) 111,871 The impact of adopting ASC 606 on the Company's Condensed Consolidated Statement of Operations was not material for the three months ended January 31, 2019. In February 2016, the FASB issued ASU 2016-02, “Leases," which requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02, as amended, provides certain optional transition relief and shall be applied either at the beginning of the earliest comparative period presented in the year of adoption using a modified retrospective transition approach or by recognizing a cumulative effect adjustment at the date of adoption. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which is intended to simplify the current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be applied prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019, or in fiscal 2021 for HEICO. Early adoption is |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Jan. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions [Text Block] | ACQUISITIONS In November 2018, the Company, through a subsidiary of HEICO Electronic, acquired an additional equity interest in Freebird Semiconductor Corporation ("Freebird") , which increased the Company's aggregate equity interest in Freebird to greater than 50% . Accordingly, the Company began consolidating the operating results of Freebird as of the acquisition date. Prior to this transaction, the Company accounted for its investment in Freebird under the equity method. Freebird is a fabless design and manufacturing company that offers advanced high-reliability wide-band gap power switching technology. The purchase price of this acquisition was paid in cash using cash provided by operating activities. In November 2018, the Company, through HEICO Electronic, acquired 92.7% of the stock of Apex Microtechnology, Inc. ("Apex") . Apex designs and manufactures precision power analog monolithic, hybrid and open frame components for a certain wide range of aerospace, defense, industrial, measurement, medical and test applications. The remaining 7.3% interest continues to be owned by certain members of Apex's management team (see Note 3, Redeemable Noncontrolling Interests, for additional information). The purchase price of this acquisition was paid in cash using proceeds from the Company's revolving credit facility. In November 2018, the Company, through HEICO Electronic, acquired all of the stock of Specialty Silicone Products, Inc. ("SSP") . SSP designs and manufactures silicone material for a variety of demanding applications used in aerospace, defense, research, oil and gas, testing, pharmaceuticals and other markets. The purchase price of this acquisition was paid in cash principally using proceeds from the Company's revolving credit facility. The following table summarizes the aggregate total consideration for the Company's fiscal 2019 acquisitions (in thousands): Cash paid $102,491 Less: cash acquired (1,452 ) Cash paid, net 101,039 Fair value of existing equity interest 1,443 Additional purchase consideration (134 ) Total consideration $102,348 The following table summarizes the allocation of the aggregate total consideration for the Company's fiscal 2019 acquisitions to the estimated fair values of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed (in thousands): Assets acquired: Goodwill $55,020 Customer relationships 15,710 Property, plant and equipment 14,905 Intellectual property 11,923 Inventories 8,403 Trade names 7,190 Accounts receivable 5,176 Other assets 296 Total assets acquired, excluding cash 118,623 Liabilities assumed: Deferred income taxes 4,284 Accrued expenses 2,173 Accounts payable 1,840 Other liabilities 506 Total liabilities assumed 8,803 Noncontrolling interests in consolidated subsidiaries 7,472 Net assets acquired, excluding cash $102,348 The following table summarizes the weighted average amortization period of the definite-lived intangible assets acquired in connection with the Company's fiscal 2019 acquisitions (in years): Customer relationships 11 Intellectual property 17 The allocation of the total consideration for the Company's fiscal 2019 acquisitions 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. However, the Company does not expect any adjustments to such allocations to be material to the Company's consolidated financial statements. The primary items that generated the goodwill recognized were the premiums paid by the Company for the future earnings potential of the businesses acquired and the value of their assembled workforces that do not qualify for separate recognition, which, in the case of Apex and Freebird benefit both the Company and the noncontrolling interest holders. The fair value of the noncontrolling interest in Apex and Freebird was 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. |
SELECTED FINANCIAL STATEMENT IN
SELECTED FINANCIAL STATEMENT INFORMATION | 3 Months Ended |
Jan. 31, 2019 | |
Selected Financial Statement Information [Abstract] | |
Selected Financial Statement Information [Text Block] | SELECTED FINANCIAL STATEMENT INFORMATION Accounts Receivable (in thousands) January 31, 2019 October 31, 2018 Accounts receivable $241,739 $240,544 Less: Allowance for doubtful accounts (3,939 ) (3,258 ) Accounts receivable, net $237,800 $237,286 Inventories (in thousands) January 31, 2019 October 31, 2018 Finished products $196,224 $192,758 Work in process 35,692 49,315 Materials, parts, assemblies and supplies 174,432 158,039 Contracts in process — 1,649 Less: Billings to date — (208 ) Inventories, net of valuation reserves $406,348 $401,553 Prior to the adoption of ASC 606, contracts in process represented accumulated capitalized costs associated with fixed price contracts. Additionally, related progress billings and customer advances (“billings to date”) were classified as a reduction to contracts in process, if any, and any excess was included in accrued expenses and other liabilities. See Note 1, Summary of Significant Accounting Policies - New Accounting Pronouncements, and Note 6, Revenue, for additional information pertaining to the adoption of ASC 606. Property, Plant and Equipment (in thousands) January 31, 2019 October 31, 2018 Land $7,297 $5,864 Buildings and improvements 110,860 101,424 Machinery, equipment and tooling 236,337 230,108 Construction in progress 6,821 5,044 361,315 342,440 Less: Accumulated depreciation and amortization (192,036 ) (187,701 ) Property, plant and equipment, net $169,279 $154,739 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 $14.2 million as of January 31, 2019 and $16.9 million as of October 31, 2018. The total customer rebates and credits deducted within net sales for the three months ended January 31, 2019 and 2018 was $1.4 million and $2.5 million , respectively. Research and Development Expenses The amount of new product research and development ("R&D") expenses included in cost of sales for the three months ended January 31, 2019 and 2018 is as follows (in thousands): Three months ended January 31, 2019 2018 R&D expenses $15,200 $12,707 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 2026. 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): January 31, 2019 October 31, 2018 Redeemable at fair value $90,473 $83,524 Redeemable based on a multiple of future earnings 48,522 48,522 Redeemable noncontrolling interests $138,995 $132,046 As discussed in Note 2, Acquisitions, the Company, through a subsidiary of HEICO Electronic, acquired 92.7% of the stock of Apex in November 2018. As part of the shareholders' agreement, the noncontrolling interest holders have the right to cause the Company to purchase their equity interests over a four-year period beginning in fiscal 2023, or sooner under certain conditions, and the Company has the right to purchase the same equity interests over the same period. Accumulated Other Comprehensive Loss Changes in the components of accumulated other comprehensive loss for the three months ended January 31, 2019 are as follows (in thousands): Foreign Currency Translation Pension Benefit Obligation Accumulated Other Comprehensive Loss Balances as of October 31, 2018 ($14,370 ) ($886 ) ($15,256 ) Unrealized gain 4,181 — 4,181 Amortization of unrealized loss — 6 6 Balances as of January 31, 2019 ($10,189 ) ($880 ) ($11,069 ) |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Jan. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | GOODWILL AND OTHER INTANGIBLE ASSETS Changes in the carrying amount of goodwill by operating segment for the three months ended January 31, 2019 are as follows (in thousands): Segment Consolidated Totals FSG ETG Balances as of October 31, 2018 $398,694 $716,138 $1,114,832 Goodwill acquired — 55,020 55,020 Foreign currency translation adjustments 186 488 674 Adjustments to goodwill (125 ) — (125 ) Balances as of January 31, 2019 $398,755 $771,646 $1,170,401 The goodwill acquired pertains to the fiscal 2019 acquisitions described in Note 2, Acquisitions, 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. 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 purchase price allocation of certain fiscal 2018 acquisitions. The Company estimates that $17 million of the goodwill acquired in fiscal 2019 will be deductible for income tax purposes. Identifiable intangible assets consist of the following (in thousands): As of January 31, 2019 As of October 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizing Assets: Customer relationships $390,027 ($144,444 ) $245,583 $373,946 ($135,359 ) $238,587 Intellectual property 198,400 (59,982 ) 138,418 185,983 (56,055 ) 129,928 Licenses 6,559 (3,669 ) 2,890 6,559 (3,522 ) 3,037 Patents 1,027 (628 ) 399 927 (609 ) 318 Non-compete agreements 814 (814 ) — 814 (814 ) — Trade names 466 (167 ) 299 466 (157 ) 309 597,293 (209,704 ) 387,589 568,695 (196,516 ) 372,179 Non-Amortizing Assets: Trade names 141,602 — 141,602 134,181 — 134,181 $738,895 ($209,704 ) $529,191 $702,876 ($196,516 ) $506,360 The increase in the gross carrying amount of customer relationships, intellectual property and trade names as of January 31, 2019 compared to October 31, 2018 principally relates to such intangible assets recognized in connection with the fiscal 2019 acquisitions (see Note 2, Acquisitions). Amortization expense related to intangible assets for the three months ended January 31, 2019 and 2018 was $12.8 million and $12.4 million , respectively. Amortization expense related to intangible assets for the remainder of fiscal 2019 is estimated to be $38.6 million . Amortization expense for each of the next five fiscal years and thereafter is estimated to be $48.7 million in fiscal 2020, $45.9 million in fiscal 2021, $39.5 million in fiscal 2022, $34.4 million in fiscal 2023, $30.2 million in fiscal 2024, and $150.3 million |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Jan. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt [Text Block] | LONG-TERM DEBT Long-term debt consists of the following (in thousands): January 31, 2019 October 31, 2018 Borrowings under revolving credit facility $599,000 $523,000 Capital leases and note payable 9,521 9,470 608,521 532,470 Less: Current maturities of long-term debt (865 ) (859 ) $607,656 $531,611 The Company's borrowings under its revolving credit facility mature in fiscal 2023. As of January 31, 2019 and October 31 2018, the weighted average interest rate on borrowings under the Company's revolving credit facility was 3.6% and 3.4% |
REVENUE
REVENUE | 3 Months Ended |
Jan. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | REVENUE The Company recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects the consideration it expects to receive in exchange for the good or service. The Company’s performance obligations are satisfied and control is transferred either at a point-in-time or over-time. The majority of the Company’s revenue is recognized at a point-in-time when control is transferred, which is generally evidenced by the shipment or delivery of the product to the customer, a transfer of title, a transfer of the significant risks and rewards of ownership, and customer acceptance. For certain contracts under which the Company produces products with no alternative use and for which it has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date and for certain other contracts under which the Company creates or enhances a customer-owned asset while performing repair and overhaul services, control is transferred to the customer over-time. The Company recognizes revenue using an over-time recognition model for these types of contracts. Details of the products and services provided by the Company can be found within Disaggregation of Revenue which follows within this Note 6. Contracts with Customers and Performance Obligations The Company accounts for a contract with a customer when it has approval and commitment from both parties, the rights of the parties are identified, the payment terms are identified, the contract has commercial substance, and it is probable that the Company will collect the consideration to which it is entitled to receive. Customer payment terms related to the sale of products and the rendering of services vary by Company subsidiary and product line. The time between receipt of payment and recognition of revenue for satisfaction of the related performance obligation is not significant. A performance obligation is a promise within a contract to transfer a distinct good or service to the customer in exchange for payment and is the unit of account for recognizing revenue. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. The majority of the Company’s contracts have a single performance obligation to transfer goods or services. For contracts with more than one performance obligation, the Company allocates the transaction price to each performance obligation based on its estimated standalone selling price. When standalone selling prices are not available, the transaction price is allocated using an expected cost plus margin approach as pricing for such contracts is typically negotiated on the basis of cost. The Company accounts for contract modifications prospectively when the remaining goods or services are distinct and on a cumulative catch-up basis when the remaining goods or services are not distinct. The Company provides assurance type warranties on many of its products and services. Since customers cannot purchase such warranties independently of the products or services under contract and they are not priced separately, warranties are not separate performance obligations. Contract Estimates The Company utilizes the cost-to-cost method as a measure of progress for performance obligations that are satisfied over-time as it believes this input method best represents the transfer of control to the customer. Under this method, revenue for the current period is recorded at an amount equal to the ratio of costs incurred to date divided by total estimated contract costs multiplied by (i) the transaction price, less (ii) cumulative revenue recognized in prior periods. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation. Certain of the Company’s contracts give rise to variable consideration when they contain items such as customer rebates, credits, volume purchase discounts, penalties and other provisions that may impact the total consideration the Company will receive. The Company includes variable consideration in the transaction price generally by applying the most likely amount method of the consideration that it expects to be entitled to receive based on an assessment of all available information (i.e., historical experience, current and forecasted performance) and only to the extent it is probable that a significant reversal of revenue recognized will not occur when the uncertainty is resolved. The Company estimates variable consideration by applying the most likely amount method when there are a limited number of outcomes related to the resolution of the variable consideration. Changes in estimates that result in adjustments to net sales and cost of sales are recognized as necessary in the period they become known on a cumulative catch-up basis. Changes in estimates did not have a material effect on net income from consolidated operations for the three months ended January 31, 2019. Practical Expedients and Optional Exemptions The Company has elected the following practical expedients and optional exemptions allowed under ASC 606: • The majority of the Company’s performance obligations related to customer contracts are satisfied within one year. As such, the Company has elected to disclose remaining performance obligations only for contracts with an original duration of greater than one year. • The Company has elected to record all shipping and handling activities as fulfillment activities. When revenue is recognized in advance of incurring shipping and handling costs, the costs related to the shipping and handling activities are accrued. • For certain contracts with similar characteristics and for which revenue is recognized using an over-time model, the Company uses a portfolio approach to estimate the amount of revenue to recognize. For each portfolio of contracts, the respective work in process and/or finished goods inventory balances are identified and the portfolio-specific margin is applied to estimate the pro rata portion of the transaction price to recognize in relation to the costs incurred. This approach is utilized only when the resulting revenue recognition is not expected to be materially different than if the accounting was applied to the individual contracts. • The Company does not adjust the amount of revenue to be recognized under a customer contract for the effects of the time value of money when the timing difference between receipt of payment and recognition of revenue for satisfaction of the related performance obligation is less than one year. • Sales commissions and any other costs of obtaining a customer contract with a duration of one year or less are expensed as incurred. Contract Balances 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 Sheet. The Company’s contract assets and liabilities consisted of the following: January 31, 2019 November 1, 2018 Change Contract assets $47,093 $54,272 ($7,179 ) Contract liabilities 26,715 19,674 7,041 Net contract assets $20,378 $34,598 ($14,220 ) The decrease in the Company's contract assets during the first quarter of fiscal 2019 mainly occurred within the ETG and principally reflects billings on certain customer contracts made during the quarter in excess of the amounts recorded as additional unbilled receivables for contracts using an over-time recognition model. The increase in the Company's contract liabilities during the first quarter of fiscal 2019 mainly occurred within the ETG and principally reflects the receipt during the quarter of new customer deposits on certain customer contracts in excess of reductions to contract liabilities from customer deposits recognized as revenue. The amount of revenue that the Company recognized during the first quarter of fiscal 2019 that was included in contract liabilities as of the beginning of fiscal 2019 was not material. Remaining Performance Obligations As of January 31, 2019, the Company had $308.2 million of remaining performance obligations pertaining to contracts with an original duration of greater than one year. The Company will recognize net sales as these obligations are satisfied. The Company expects to recognize $183.7 million of this amount during the remainder of fiscal 2019 and $124.5 million thereafter, of which the majority is expected to occur in fiscal 2020. As of January 31, 2019, the remaining performance obligations under contracts with an original duration of one year or less pertain to the majority of the products offered by the Electronic Technologies Group and the Flight Support Group's specialty products product line and repair and overhaul parts and services product line. Disaggregation of Revenue The following table summarizes the Company’s net sales by product line for each operating segment (in thousands): Three months ended January 31, 2019 2018 Flight Support Group: Aftermarket replacement parts (1) $159,497 $134,288 Repair and overhaul parts and services (2) 67,163 68,324 Specialty products (3) 60,553 52,109 Total net sales 287,213 254,721 Electronic Technologies Group: Electronic component parts for defense, space and aerospace equipment (4) 137,750 117,341 Electronic component parts for equipment in various other industries (5) 46,679 38,317 Total net sales 184,429 155,658 Other, primarily corporate and intersegment (5,496 ) (5,969 ) Total consolidated net sales $466,146 $404,410 (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. (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, three-dimensional microelectronic and stacked memory products, crashworthy and ballistically self-sealing auxiliary fuel systems, radio frequency (RF) and microwave amplifiers, transmitters and receivers, high performance communications and electronic intercept receivers and tuners and high performance active antenna systems. (5) Includes various component parts such as electromagnetic and radio interference shielding, high voltage interconnection devices, high voltage advanced power electronics, harsh environment connectivity products, custom molded cable assemblies and silicone material for a variety of demanding applications. The following table summarizes the Company’s net sales by industry for each operating segment (in thousands): Three months ended January 31, 2019 2018 Flight Support Group: Aerospace $235,173 $209,591 Defense and Space 41,534 34,782 Other (1) 10,506 10,348 Total net sales 287,213 254,721 Electronic Technologies Group: Defense and Space 115,219 97,082 Other (2) 49,915 43,053 Aerospace 19,295 15,523 Total net sales 184,429 155,658 Other, primarily corporate and intersegment (5,496 ) (5,969 ) Total consolidated net sales $466,146 $404,410 (1) Principally industrial products. (2) |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jan. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | INCOME TAXES In December 2017, the United States ("U.S.") government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act contains significant changes to previous tax law, some of which became immediately effective in fiscal 2018 including, among other things, a reduction in the U.S. federal statutory tax rate from 35% to 21% and the implementation of a territorial tax system resulting in a one-time transition tax on the unremitted earnings of the Company’s foreign subsidiaries. Certain other provisions of the Tax Act became effective for HEICO in fiscal 2019 including a new tax on Global Intangible Low-Taxed Income (“GILTI”), a new deduction for Foreign-Derived Intangible Income (“FDII”), the repeal of the domestic production activity deduction and increased limitations on the deductibility of certain executive compensation. The provisions of the Tax Act that became effective for HEICO in fiscal 2019 did not have a material effect on the Company's income tax expense for the first quarter of fiscal 2019. The Company’s effective tax rate in the first quarter of fiscal 2019 was 4.5% as compared to 4.7% in the first quarter of fiscal 2018. Income tax expense in both the first quarter of fiscal 2019 and fiscal 2018 was favorably impacted as a result of discrete tax benefits. The tax benefit from stock option exercises recognized in the first quarter of fiscal 2019 increased by $14.4 million compared to the first quarter of fiscal 2018. During the first quarter of fiscal 2018, the Company recognized a discrete tax benefit from the remeasurement of its U.S. federal net deferred tax liabilities that was partially offset by a discrete tax expense related to a one-time transition tax on the unremitted earnings of its foreign subsidiaries that resulted in an $11.9 million |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | 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, 2019 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 plans: Corporate-owned life insurance $— $125,750 $— $125,750 Money market funds 12,287 — — 12,287 Equity securities 736 — — 736 Mutual funds 92 — — 92 Other 443 — — 443 Total assets $13,558 $125,750 $— $139,308 Liabilities: Contingent consideration $— $— $22,462 $22,462 As of October 31, 2018 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 plans: Corporate-owned life insurance $— $123,255 $— $123,255 Money market funds 3,560 — — 3,560 Equity securities 3,179 — — 3,179 Mutual funds 1,437 — — 1,437 Other 1,306 — — 1,306 Total assets $9,482 $123,255 $— $132,737 Liabilities: Contingent consideration $— $— $20,875 $20,875 The Company maintains two non-qualified deferred compensation plans. The assets of the HEICO Corporation Leadership Compensation Plan ("HEICO 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 HEICO LCP represent investments in money market funds that are classified within Level 1. The assets of the Company’s other deferred compensation plan are principally invested in equity securities and mutual funds that are classified within Level 1. The assets of both plans are held within irrevocable trusts and classified within other assets in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $139.3 million as of January 31, 2019 and $132.7 million as of October 31, 2018, of which the LCP related assets were $138.0 million and $126.8 million as of January 31, 2019 and October 31, 2018, respectively. The related liabilities of the two deferred compensation plans are included within other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets and have an aggregate value of $138.7 million as of January 31, 2019 and $131.7 million as of October 31, 2018, of which the LCP related liability was $137.4 million and $125.8 million as of January 31, 2019 and October 31, 2018, respectively. As part of the agreement to acquire a subsidiary by the ETG in fiscal 2017, the Company may be obligated to pay contingent consideration of $20.0 million in fiscal 2023 should the acquired entity meet certain earnings objectives during the first six years following the acquisition. As of January 31, 2019, the estimated fair value of the contingent consideration was $14.5 million . As part of the agreement to acquire certain assets of a company by the ETG in fiscal 2016, the Company may be obligated to pay contingent consideration of up to $1.4 million in aggregate during the first three years following the second anniversary of the acquisition should the acquired entity meet certain earnings objectives during this same time period. During fiscal 2019, the Company paid $.3 million of contingent consideration based on the actual financial performance of the acquired entity during the third year following the acquisition. As of January 31, 2019, the estimated fair value of the remaining contingent consideration was $.9 million . As part of the agreement to acquire a subsidiary by the FSG in fiscal 2015, the Company is obligated to pay contingent consideration of €6.1 million , or $7.0 million , based on the actual operating results of the acquired entity during the fourth year following the acquisition, which it expects to pay in the second quarter of fiscal 2019. The increase in the fair value of the contingent consideration as of January 31, 2019 as compared to the €5.1 million , or $5.8 million , accrued as of October 31, 2018 is based on the higher actual than anticipated earnings of the acquired entity. The estimated fair value of the contingent consideration arrangements described above are classified within Level 3 and were determined using a probability-based scenario analysis approach. Under this method, a set of discrete potential future subsidiary earnings was determined using internal estimates based on various revenue growth rate assumptions for each scenario. A probability of likelihood was assigned to each discrete potential future earnings estimate and the resultant contingent consideration was calculated. The resulting probability-weighted contingent consideration amounts were discounted using a weighted average discount rate reflecting the credit risk of HEICO. Changes in either the revenue growth rates, related earnings or the discount rate could result in a material change to the amount of contingent consideration accrued and such changes will be recorded in the Company's condensed consolidated statements of operations. The Level 3 inputs used to derive the estimated fair value of the Company's contingent consideration liability as of January 31, 2019 were as follows: Fiscal 2017 Acquisition Fiscal 2016 Acquisition Compound annual revenue growth rate range (4 %) - 7% 4 % - 13% Weighted average discount rate 5.7% 4.9% Changes in the Company’s contingent consideration liability measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three months ended January 31, 2019 are as follows (in thousands): Liabilities Balance as of October 31, 2018 $20,875 Increase in accrued contingent consideration 1,862 Payment of contingent consideration (350 ) Foreign currency transaction adjustments 75 Balance as of January 31, 2019 $22,462 Included in the accompanying Condensed Consolidated Balance Sheet under the following captions: Accrued expenses and other current liabilities $7,489 Other long-term liabilities 14,973 $22,462 The Company recorded the increase in accrued contingent consideration and foreign currency transaction adjustments set forth in the table above within selling, general and administrative expenses in the Company's Condensed Consolidated Statement of Operations. The Company did not have any transfers between Level 1 and Level 2 fair value measurements during the three months ended January 31, 2019. |
NET INCOME PER SHARE ATTRIBUTAB
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS | 3 Months Ended |
Jan. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | 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): Three months ended January 31, 2019 2018 Numerator: Net income attributable to HEICO $79,332 $65,152 Denominator: Weighted average common shares outstanding - basic 132,933 132,048 Effect of dilutive stock options 4,045 4,342 Weighted average common shares outstanding - diluted 136,978 136,390 Net income per share attributable to HEICO shareholders: Basic $.60 $.49 Diluted $.58 $.48 Anti-dilutive stock options excluded 760 770 |
OPERATING SEGMENTS
OPERATING SEGMENTS | 3 Months Ended |
Jan. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | OPERATING SEGMENTS Information on the Company’s two operating segments, the FSG and the ETG, for the three months ended January 31, 2019 and 2018, respectively, is as follows (in thousands): Other, (1) Consolidated Segment FSG ETG Three months ended January 31, 2019: Net sales $287,213 $184,429 ($5,496 ) $466,146 Depreciation 3,355 2,606 251 6,212 Amortization 4,803 8,776 246 13,825 Operating income 52,880 51,602 (6,535 ) 97,947 Capital expenditures 2,849 3,058 — 5,907 Three months ended January 31, 2018: Net sales $254,721 $155,658 ($5,969 ) $404,410 Depreciation 3,292 2,274 62 5,628 Amortization 4,947 8,104 345 13,396 Operating income 45,869 43,220 (9,529 ) 79,560 Capital expenditures 2,297 1,743 3,537 7,577 (1) Intersegment activity principally consists of net sales from the ETG to the FSG. Total assets by operating segment as of January 31, 2019 and October 31, 2018 are as follows (in thousands): Other, Consolidated Segment FSG ETG Total assets as of January 31, 2019 $1,098,267 $1,522,291 $176,456 $2,797,014 Total assets as of October 31, 2018 1,093,858 1,391,997 167,541 2,653,396 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jan. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | COMMITMENTS AND CONTINGENCIES Guarantees As of January 31, 2019, the Company has arranged for standby letters of credit aggregating $4.3 million , which are supported by its revolving credit facility and pertain to payment guarantees related to potential workers' compensation claims and a facility lease as well as performance guarantees related to customer contracts entered into by certain of the Company's subsidiaries. Product Warranty Changes in the Company’s product warranty liability for the three months ended January 31, 2019 and 2018, respectively, are as follows (in thousands): Three months ended January 31, 2019 2018 Balances as of beginning of fiscal year $3,306 $2,921 Accruals for warranties 694 798 Acquired warranty liabilities — 280 Warranty claims settled (829 ) (832 ) Balances as of January 31 $3,171 $3,167 Litigation |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 3 Months Ended |
Jan. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS In February 2019, the Company, through HEICO Electronic, acquired 85% of the stock of Solid Sealing Technology, Inc. ("SST"). SST designs and manufactures high-reliability ceramic-to-metal feedthroughs and connectors for demanding environments within the defense, industrial, life science, medical, research, semiconductor, and other markets. The purchase price of this acquisition was paid in cash principally using proceeds from the Company's revolving credit facility and the total consideration for the acquisition is not material or significant to the Company’s condensed consolidated financial statements. In February 2019, the Company through the Flight Support Group, acquired 80.1% of the stock of Decavo, LLC ("Decavo"). Decavo designs and produces complex composite parts and assemblies incorporated into camera and related sensor assemblies and UAV airframes used in demanding defense and civilian applications. The purchase price of this acquisition was paid in cash principally using cash provided by operating activities and the total consideration for the acquisition is not material or significant to the Company’s condensed consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jan. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Basis of Presentation [Text Block] | 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, 2018. The October 31, 2018 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 three months ended January 31, 2019 are not necessarily indicative of the results which may be expected for the entire fiscal year. The Company has 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. (“HEICO Electronic”) and its subsidiaries. |
Stock Split [Policy Text Block] | Stock Split |
Accounting Standards Update 2014-09 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, which, as amended, was codified as Accounting Standards Codification (“ASC”) Topic 606, "Revenue from Contracts with Customers" (“ASC 606”). ASC 606 provides a comprehensive new revenue recognition model that supersedes nearly all existing revenue recognition guidance. Under ASC 606, an entity recognizes revenue when it transfers promised goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The guidance also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The Company adopted ASC 606 as of November 1, 2018 using the modified retrospective method and recognized the cumulative effect of initially applying ASC 606 to all uncompleted contracts on the date of adoption as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and remains as previously reported in accordance with ASC Topic 605, "Revenue Recognition." ASC 606 impacts the timing of revenue recognition for certain contracts under which the Company produces products with no alternative use and for which it has an enforceable right to recover costs incurred plus a reasonable profit margin for work completed to date. ASC 606 also impacts the timing of revenue recognition for certain other contracts under which the Company creates or enhances customer-owned assets while performing repair and overhaul services. For these two types of contracts, the Company now recognizes revenue using an over-time recognition model as opposed to generally recognizing revenue at the time of shipment under previous guidance. See Note 6, Revenue, for additional information regarding the Company's revenue recognition policies and disclosures required by ASC 606. The following table presents the cumulative effect of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of November 1, 2018 (in thousands): As Reported Impact of As Adjusted Under ASC 605 ASC 606 Under ASC 606 October 31, 2018 Adoption November 1, 2018 Assets Contract assets $14,183 $40,089 $54,272 Inventories, net 401,553 (29,412 ) 372,141 Prepaid expenses and other current assets 21,187 (489 ) 20,698 Liabilities Accrued expenses and other current liabilities $171,514 ($8,588 ) $162,926 Deferred income taxes 46,644 4,258 50,902 Redeemable noncontrolling interests $132,046 $819 $132,865 Shareholders' equity Retained earnings $1,091,183 $13,373 $1,104,556 Noncontrolling interests 104,757 326 105,083 The following table presents the impact of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of January 31, 2019 (in thousands): As of January 31, 2019 As Reported Effect of As Adjusted Under ASC 606 ASC 606 Under ASC 605 Assets Contract assets $47,093 ($39,757 ) $7,336 Inventories, net 406,348 30,292 436,640 Prepaid expenses and other current assets 30,328 323 30,651 Liabilities Accrued expenses and other current liabilities $133,705 $8,263 $141,968 Deferred income taxes 59,133 (3,988 ) 55,145 Redeemable noncontrolling interests $138,995 ($797 ) $138,198 Shareholders' equity Retained earnings $1,174,811 ($12,203 ) $1,162,608 Noncontrolling interests 112,288 (417 ) 111,871 |
Accounting Standards Update 2016-02 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | In February 2016, the FASB issued ASU 2016-02, “Leases," which requires recognition of lease assets and lease liabilities on the balance sheet of lessees. ASU 2016-02 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2018, or in fiscal 2020 for HEICO. Early adoption is permitted. ASU 2016-02, as amended, provides certain optional transition relief and shall be applied either at the beginning of the earliest comparative period presented in the year of adoption using a modified retrospective transition approach or by recognizing a cumulative effect adjustment at the date of adoption. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. |
Accounting Standards Update 2017-04 [Member] | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Description of New Accounting Pronouncements Not yet Adopted [Text Block] | In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which is intended to simplify the current test for goodwill impairment by eliminating the second step in which the implied value of a reporting unit is calculated when the carrying value of the reporting unit exceeds its fair value. Under ASU 2017-04, goodwill impairment should be recognized for the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 must be applied prospectively and is effective for any annual or interim goodwill impairment test in fiscal years beginning after December 15, 2019, or in fiscal 2021 for HEICO. Early adoption is permitted. The Company is currently evaluating the effect the adoption of this guidance will have on its consolidated results of operations, financial position and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following table presents the cumulative effect of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of November 1, 2018 (in thousands): As Reported Impact of As Adjusted Under ASC 605 ASC 606 Under ASC 606 October 31, 2018 Adoption November 1, 2018 Assets Contract assets $14,183 $40,089 $54,272 Inventories, net 401,553 (29,412 ) 372,141 Prepaid expenses and other current assets 21,187 (489 ) 20,698 Liabilities Accrued expenses and other current liabilities $171,514 ($8,588 ) $162,926 Deferred income taxes 46,644 4,258 50,902 Redeemable noncontrolling interests $132,046 $819 $132,865 Shareholders' equity Retained earnings $1,091,183 $13,373 $1,104,556 Noncontrolling interests 104,757 326 105,083 |
Schedule of Prospective Adoption of New Accounting Pronouncements [Table Text Block] | The following table presents the impact of adopting ASC 606 on the Company's Condensed Consolidated Balance Sheet as of January 31, 2019 (in thousands): As of January 31, 2019 As Reported Effect of As Adjusted Under ASC 606 ASC 606 Under ASC 605 Assets Contract assets $47,093 ($39,757 ) $7,336 Inventories, net 406,348 30,292 436,640 Prepaid expenses and other current assets 30,328 323 30,651 Liabilities Accrued expenses and other current liabilities $133,705 $8,263 $141,968 Deferred income taxes 59,133 (3,988 ) 55,145 Redeemable noncontrolling interests $138,995 ($797 ) $138,198 Shareholders' equity Retained earnings $1,174,811 ($12,203 ) $1,162,608 Noncontrolling interests 112,288 (417 ) 111,871 |
ACQUISITIONS ACQUISITIONS (Tabl
ACQUISITIONS ACQUISITIONS (Tables) - FY 2019 Acquisition [Member] | 3 Months Ended |
Jan. 31, 2019 | |
Business Acquisition [Line Items] | |
Schedule of Fair Value of Total Consideration [Table Text Block] | The following table summarizes the aggregate total consideration for the Company's fiscal 2019 acquisitions (in thousands): Cash paid $102,491 Less: cash acquired (1,452 ) Cash paid, net 101,039 Fair value of existing equity interest 1,443 Additional purchase consideration (134 ) Total consideration $102,348 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table summarizes the allocation of the aggregate total consideration for the Company's fiscal 2019 acquisitions to the estimated fair values of the tangible and identifiable intangible assets acquired and liabilities and noncontrolling interests assumed (in thousands): Assets acquired: Goodwill $55,020 Customer relationships 15,710 Property, plant and equipment 14,905 Intellectual property 11,923 Inventories 8,403 Trade names 7,190 Accounts receivable 5,176 Other assets 296 Total assets acquired, excluding cash 118,623 Liabilities assumed: Deferred income taxes 4,284 Accrued expenses 2,173 Accounts payable 1,840 Other liabilities 506 Total liabilities assumed 8,803 Noncontrolling interests in consolidated subsidiaries 7,472 Net assets acquired, excluding cash $102,348 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The following table summarizes the weighted average amortization period of the definite-lived intangible assets acquired in connection with the Company's fiscal 2019 acquisitions (in years): Customer relationships 11 Intellectual property 17 |
SELECTED FINANCIAL STATEMENT _2
SELECTED FINANCIAL STATEMENT INFORMATION (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Selected Financial Statement Information [Abstract] | |
Schedule of Accounts Receivable [Table Text Block] | Accounts Receivable (in thousands) January 31, 2019 October 31, 2018 Accounts receivable $241,739 $240,544 Less: Allowance for doubtful accounts (3,939 ) (3,258 ) Accounts receivable, net $237,800 $237,286 |
Schedule of Inventories [Table Text Block] | Inventories (in thousands) January 31, 2019 October 31, 2018 Finished products $196,224 $192,758 Work in process 35,692 49,315 Materials, parts, assemblies and supplies 174,432 158,039 Contracts in process — 1,649 Less: Billings to date — (208 ) Inventories, net of valuation reserves $406,348 $401,553 |
Schedule of Property, Plant and Equipment [Table Text Block] | Property, Plant and Equipment (in thousands) January 31, 2019 October 31, 2018 Land $7,297 $5,864 Buildings and improvements 110,860 101,424 Machinery, equipment and tooling 236,337 230,108 Construction in progress 6,821 5,044 361,315 342,440 Less: Accumulated depreciation and amortization (192,036 ) (187,701 ) Property, plant and equipment, net $169,279 $154,739 |
Schedule of Research and Development Expenses [Table Text Block] | The amount of new product research and development ("R&D") expenses included in cost of sales for the three months ended January 31, 2019 and 2018 is as follows (in thousands): Three months ended January 31, 2019 2018 R&D expenses $15,200 $12,707 |
Schedule of Redeemable Noncontrolling Interests [Table Text Block] | 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): January 31, 2019 October 31, 2018 Redeemable at fair value $90,473 $83,524 Redeemable based on a multiple of future earnings 48,522 48,522 Redeemable noncontrolling interests $138,995 $132,046 |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Changes in the components of accumulated other comprehensive loss for the three months ended January 31, 2019 are as follows (in thousands): Foreign Currency Translation Pension Benefit Obligation Accumulated Other Comprehensive Loss Balances as of October 31, 2018 ($14,370 ) ($886 ) ($15,256 ) Unrealized gain 4,181 — 4,181 Amortization of unrealized loss — 6 6 Balances as of January 31, 2019 ($10,189 ) ($880 ) ($11,069 ) |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill [Table Text Block] | Changes in the carrying amount of goodwill by operating segment for the three months ended January 31, 2019 are as follows (in thousands): Segment Consolidated Totals FSG ETG Balances as of October 31, 2018 $398,694 $716,138 $1,114,832 Goodwill acquired — 55,020 55,020 Foreign currency translation adjustments 186 488 674 Adjustments to goodwill (125 ) — (125 ) Balances as of January 31, 2019 $398,755 $771,646 $1,170,401 |
Schedule Of Identifiable Intangible Assets [Table Text Block] | Identifiable intangible assets consist of the following (in thousands): As of January 31, 2019 As of October 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizing Assets: Customer relationships $390,027 ($144,444 ) $245,583 $373,946 ($135,359 ) $238,587 Intellectual property 198,400 (59,982 ) 138,418 185,983 (56,055 ) 129,928 Licenses 6,559 (3,669 ) 2,890 6,559 (3,522 ) 3,037 Patents 1,027 (628 ) 399 927 (609 ) 318 Non-compete agreements 814 (814 ) — 814 (814 ) — Trade names 466 (167 ) 299 466 (157 ) 309 597,293 (209,704 ) 387,589 568,695 (196,516 ) 372,179 Non-Amortizing Assets: Trade names 141,602 — 141,602 134,181 — 134,181 $738,895 ($209,704 ) $529,191 $702,876 ($196,516 ) $506,360 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments [Table Text Block] | Long-term debt consists of the following (in thousands): January 31, 2019 October 31, 2018 Borrowings under revolving credit facility $599,000 $523,000 Capital leases and note payable 9,521 9,470 608,521 532,470 Less: Current maturities of long-term debt (865 ) (859 ) $607,656 $531,611 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Asset and Liability [Table Text Block] | The Company’s contract assets and liabilities consisted of the following: January 31, 2019 November 1, 2018 Change Contract assets $47,093 $54,272 ($7,179 ) Contract liabilities 26,715 19,674 7,041 Net contract assets $20,378 $34,598 ($14,220 ) |
Product Line [Member] | |
Disaggregation of Revenue [Line Items] | |
Disaggregation of Revenue [Table Text Block] | The following table summarizes the Company’s net sales by product line for each operating segment (in thousands): Three months ended January 31, 2019 2018 Flight Support Group: Aftermarket replacement parts (1) $159,497 $134,288 Repair and overhaul parts and services (2) 67,163 68,324 Specialty products (3) 60,553 52,109 Total net sales 287,213 254,721 Electronic Technologies Group: Electronic component parts for defense, space and aerospace equipment (4) 137,750 117,341 Electronic component parts for equipment in various other industries (5) 46,679 38,317 Total net sales 184,429 155,658 Other, primarily corporate and intersegment (5,496 ) (5,969 ) Total consolidated net sales $466,146 $404,410 (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. (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, three-dimensional microelectronic and stacked memory products, crashworthy and ballistically self-sealing auxiliary fuel systems, radio frequency (RF) and microwave amplifiers, transmitters and receivers, high performance communications and electronic intercept receivers and tuners and high performance active antenna systems. (5) |
Sales by Industry [Member] | |
Disaggregation of Revenue [Line Items] | |
Disaggregation of Revenue [Table Text Block] | The following table summarizes the Company’s net sales by industry for each operating segment (in thousands): Three months ended January 31, 2019 2018 Flight Support Group: Aerospace $235,173 $209,591 Defense and Space 41,534 34,782 Other (1) 10,506 10,348 Total net sales 287,213 254,721 Electronic Technologies Group: Defense and Space 115,219 97,082 Other (2) 49,915 43,053 Aerospace 19,295 15,523 Total net sales 184,429 155,658 Other, primarily corporate and intersegment (5,496 ) (5,969 ) Total consolidated net sales $466,146 $404,410 (1) Principally industrial products. (2) |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | 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, 2019 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 plans: Corporate-owned life insurance $— $125,750 $— $125,750 Money market funds 12,287 — — 12,287 Equity securities 736 — — 736 Mutual funds 92 — — 92 Other 443 — — 443 Total assets $13,558 $125,750 $— $139,308 Liabilities: Contingent consideration $— $— $22,462 $22,462 As of October 31, 2018 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 plans: Corporate-owned life insurance $— $123,255 $— $123,255 Money market funds 3,560 — — 3,560 Equity securities 3,179 — — 3,179 Mutual funds 1,437 — — 1,437 Other 1,306 — — 1,306 Total assets $9,482 $123,255 $— $132,737 Liabilities: Contingent consideration $— $— $20,875 $20,875 |
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | The Level 3 inputs used to derive the estimated fair value of the Company's contingent consideration liability as of January 31, 2019 were as follows: Fiscal 2017 Acquisition Fiscal 2016 Acquisition Compound annual revenue growth rate range (4 %) - 7% 4 % - 13% Weighted average discount rate 5.7% 4.9% |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Changes in the Company’s contingent consideration liability measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three months ended January 31, 2019 are as follows (in thousands): Liabilities Balance as of October 31, 2018 $20,875 Increase in accrued contingent consideration 1,862 Payment of contingent consideration (350 ) Foreign currency transaction adjustments 75 Balance as of January 31, 2019 $22,462 Included in the accompanying Condensed Consolidated Balance Sheet under the following captions: Accrued expenses and other current liabilities $7,489 Other long-term liabilities 14,973 $22,462 |
NET INCOME PER SHARE ATTRIBUT_2
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The computation of basic and diluted net income per share attributable to HEICO shareholders is as follows (in thousands, except per share data): Three months ended January 31, 2019 2018 Numerator: Net income attributable to HEICO $79,332 $65,152 Denominator: Weighted average common shares outstanding - basic 132,933 132,048 Effect of dilutive stock options 4,045 4,342 Weighted average common shares outstanding - diluted 136,978 136,390 Net income per share attributable to HEICO shareholders: Basic $.60 $.49 Diluted $.58 $.48 Anti-dilutive stock options excluded 760 770 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule Of Segment Reporting Information By Segment [Table Text Block] | Information on the Company’s two operating segments, the FSG and the ETG, for the three months ended January 31, 2019 and 2018, respectively, is as follows (in thousands): Other, (1) Consolidated Segment FSG ETG Three months ended January 31, 2019: Net sales $287,213 $184,429 ($5,496 ) $466,146 Depreciation 3,355 2,606 251 6,212 Amortization 4,803 8,776 246 13,825 Operating income 52,880 51,602 (6,535 ) 97,947 Capital expenditures 2,849 3,058 — 5,907 Three months ended January 31, 2018: Net sales $254,721 $155,658 ($5,969 ) $404,410 Depreciation 3,292 2,274 62 5,628 Amortization 4,947 8,104 345 13,396 Operating income 45,869 43,220 (9,529 ) 79,560 Capital expenditures 2,297 1,743 3,537 7,577 |
Reconciliation of Assets from Segment to Consolidated [Table Text Block] | Total assets by operating segment as of January 31, 2019 and October 31, 2018 are as follows (in thousands): Other, Consolidated Segment FSG ETG Total assets as of January 31, 2019 $1,098,267 $1,522,291 $176,456 $2,797,014 Total assets as of October 31, 2018 1,093,858 1,391,997 167,541 2,653,396 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Jan. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability [Table Text Block] | Changes in the Company’s product warranty liability for the three months ended January 31, 2019 and 2018, respectively, are as follows (in thousands): Three months ended January 31, 2019 2018 Balances as of beginning of fiscal year $3,306 $2,921 Accruals for warranties 694 798 Acquired warranty liabilities — 280 Warranty claims settled (829 ) (832 ) Balances as of January 31 $3,171 $3,167 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cumulative effect of adopting) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Nov. 01, 2018 | Oct. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract assets | $ 47,093 | $ 54,272 | $ 14,183 |
Inventory, Net | 406,348 | 372,141 | 401,553 |
Prepaid Expense and Other Assets, Current | 30,328 | 20,698 | 21,187 |
Accrued Liabilities, Current | 133,705 | 162,926 | 171,514 |
Deferred Tax Liabilities, Net, Noncurrent | 59,133 | 50,902 | 46,644 |
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests | 138,995 | 132,865 | 132,046 |
Retained Earnings (Accumulated Deficit) | 1,174,811 | 1,104,556 | 1,091,183 |
Stockholders' Equity Attributable to Noncontrolling Interest | $ 112,288 | 105,083 | $ 104,757 |
Accounting Standards Update 2014-09 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Contract assets | 40,089 | ||
Inventory, Net | (29,412) | ||
Prepaid Expense and Other Assets, Current | (489) | ||
Accrued Liabilities, Current | (8,588) | ||
Deferred Tax Liabilities, Net, Noncurrent | 4,258 | ||
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests | 819 | ||
Retained Earnings (Accumulated Deficit) | 13,373 | ||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 326 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Impact of adopting ASC 606) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Nov. 01, 2018 | Oct. 31, 2018 |
Item Effected [Line Items] | |||
Contract assets | $ 47,093 | $ 54,272 | $ 14,183 |
Inventory, Net | 406,348 | 372,141 | 401,553 |
Prepaid Expense and Other Assets, Current | 30,328 | 20,698 | 21,187 |
Accrued Liabilities, Current | 133,705 | 162,926 | 171,514 |
Deferred Tax Liabilities, Net, Noncurrent | 59,133 | 50,902 | 46,644 |
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests | 138,995 | 132,865 | 132,046 |
Retained Earnings (Accumulated Deficit) | 1,174,811 | 1,104,556 | 1,091,183 |
Stockholders' Equity Attributable to Noncontrolling Interest | 112,288 | $ 105,083 | $ 104,757 |
Accounting Standards Update 2014-09 [Member] | |||
Item Effected [Line Items] | |||
Contract assets | (39,757) | ||
Inventory, Net | 30,292 | ||
Prepaid Expense and Other Assets, Current | 323 | ||
Accrued Liabilities, Current | 8,263 | ||
Deferred Tax Liabilities, Net, Noncurrent | (3,988) | ||
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests | (797) | ||
Retained Earnings (Accumulated Deficit) | (12,203) | ||
Stockholders' Equity Attributable to Noncontrolling Interest | (417) | ||
Previous Accounting Guidance [Member] | |||
Item Effected [Line Items] | |||
Contract assets | 7,336 | ||
Inventory, Net | 436,640 | ||
Prepaid Expense and Other Assets, Current | 30,651 | ||
Accrued Liabilities, Current | 141,968 | ||
Deferred Tax Liabilities, Net, Noncurrent | 55,145 | ||
Temporary Equity, Carrying Amount, Including Portion Attributable to Noncontrolling Interests | 138,198 | ||
Retained Earnings (Accumulated Deficit) | 1,162,608 | ||
Stockholders' Equity Attributable to Noncontrolling Interest | $ 111,871 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textuals) | 3 Months Ended |
Jan. 31, 2019 | |
Accounting Policies [Abstract] | |
Stockholders' Equity Note, Stock Split | All applicable fiscal 2018 share and per share information has been adjusted retrospectively to reflect a 5-for-4 stock split effected in June 2018. |
ACQUISITIONS ACQUISITIONS (Tota
ACQUISITIONS ACQUISITIONS (Total Consideration) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Net of Cash Acquired | $ 101,039 | $ 6,126 |
FY 2019 Acquisition [Member] | ||
Business Acquisition [Line Items] | ||
Payments to Acquire Businesses, Gross | 102,491 | |
Cash Acquired from Acquisition | (1,452) | |
Payments to Acquire Businesses, Net of Cash Acquired | 101,039 | |
Business Combination, Consideration Transferred, Liabilities Incurred | 1,443 | |
Additional Purchase Consideration | (134) | |
Business Combination, Consideration Transferred | $ 102,348 |
ACQUISITIONS ACQUISITIONS (Fair
ACQUISITIONS ACQUISITIONS (Fair Value of Assets Acquired) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Assets [Abstract] | ||
Goodwill | $ 1,170,401 | $ 1,114,832 |
FY 2019 Acquisition [Member] | ||
Assets [Abstract] | ||
Goodwill | 55,020 | |
Property, Plant, and Equipment | 14,905 | |
Inventory | 8,403 | |
Receivables | 5,176 | |
Other Noncurrent Assets | 296 | |
Assets | 118,623 | |
Liabilities [Abstract] | ||
Deferred Tax Liabilities | 4,284 | |
Accounts Payable | 1,840 | |
Accrued Expenses Assumed | 2,173 | |
Other | 506 | |
Liabilities | 8,803 | |
Noncontrolling Interest, Fair Value | 7,472 | |
Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Less Noncontrolling Interest | 102,348 | |
Customer Relationships [Member] | FY 2019 Acquisition [Member] | ||
Assets [Abstract] | ||
Finite-Lived Intangibles | 15,710 | |
Intellectual Property [Member] | FY 2019 Acquisition [Member] | ||
Assets [Abstract] | ||
Finite-Lived Intangibles | 11,923 | |
Trade Names [Member] | FY 2019 Acquisition [Member] | ||
Assets [Abstract] | ||
Indefinite-Lived Intangible Assets | $ 7,190 |
ACQUISITIONS ACQUISITIONS (Weig
ACQUISITIONS ACQUISITIONS (Weighted Average Amortization Period) (Details) - FY 2019 Acquisition [Member] | 3 Months Ended |
Jan. 31, 2019 | |
Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 11 years |
Intellectual Property [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 17 years |
ACQUISITIONS (Details Textuals)
ACQUISITIONS (Details Textuals) - Electronic Technologies Group [Member] | 3 Months Ended |
Jan. 31, 2019 | |
Freebird [Member] | |
Business Acquisition [Line Items] | |
Name of Acquired Entity | Freebird Semiconductor Corporation ("Freebird") |
Description of Acquired Entity | Freebird is a fabless design and manufacturing company that offers advanced high-reliability wide-band gap power switching technology. |
Business Acquisition, Percentage of Voting Interests Acquired | 50.00% |
APEX [Member] | |
Business Acquisition [Line Items] | |
Name of Acquired Entity | Apex Microtechnology, Inc. ("Apex") |
Description of Acquired Entity | Apex designs and manufactures precision power analog monolithic, hybrid and open frame components for a certain wide range of aerospace, defense, industrial, measurement, medical and test applications. |
Business Acquisition, Percentage of Voting Interests Acquired | 92.70% |
SSP [Member] | |
Business Acquisition [Line Items] | |
Name of Acquired Entity | Specialty Silicone Products, Inc. ("SSP") |
Description of Acquired Entity | SSP designs and manufactures silicone material for a variety of demanding applications used in aerospace, defense, research, oil and gas, testing, pharmaceuticals and other markets. |
Existing Management [Member] | APEX [Member] | |
Business Acquisition [Line Items] | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 7.30% |
SELECTED FINANCIAL STATEMENT _3
SELECTED FINANCIAL STATEMENT INFORMATION (Accounts Receivable) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable | $ 241,739 | $ 240,544 |
Less: Allowance for doubtful accounts | (3,939) | (3,258) |
Accounts receivable, net | $ 237,800 | $ 237,286 |
SELECTED FINANCIAL STATEMENT _4
SELECTED FINANCIAL STATEMENT INFORMATION (Inventories) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Inventory [Line Items] | ||
Finished products | $ 196,224 | $ 192,758 |
Work in process | 35,692 | 49,315 |
Materials, parts, assemblies and supplies | 174,432 | 158,039 |
Contracts in process | 0 | 1,649 |
Less: Billings to date | 0 | (208) |
Inventories, net of valuation reserves | $ 406,348 | $ 401,553 |
SELECTED FINANCIAL STATEMENT _5
SELECTED FINANCIAL STATEMENT INFORMATION (Property, Plant and Equipment) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 7,297 | $ 5,864 |
Buildings and improvements | 110,860 | 101,424 |
Machinery, equipment and tooling | 236,337 | 230,108 |
Construction in progress | 6,821 | 5,044 |
Property, plant and equipment, gross | 361,315 | 342,440 |
Less: Accumulated depreciation and amortization | (192,036) | (187,701) |
Property, plant and equipment, net | $ 169,279 | $ 154,739 |
SELECTED FINANCIAL STATEMENT _6
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Research and Development Expenses) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Selected Financial Statement Information (Details) [Abstract] | ||
R&D expenses | $ 15,200 | $ 12,707 |
SELECTED FINANCIAL STATEMENT _7
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Redeemable Noncontrolling Interests) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Nov. 01, 2018 | Oct. 31, 2018 |
Redeemable Noncontrolling Interest [Line Items] | |||
Redeemable at fair value | $ 90,473 | $ 83,524 | |
Redeemable based on a multiple of future earnings | 48,522 | 48,522 | |
Redeemable noncontrolling interests | $ 138,995 | $ 132,865 | $ 132,046 |
SELECTED FINANCIAL STATEMENT _8
SELECTED FINANCIAL STATEMENT INFORMATION SELECTED FINANCIAL STATEMENT INFORMATION (Accumulated Other Comprehensive Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Starting accumulated other comprehensive loss | $ (15,256) | |
Unrealized gain | 4,181 | |
Amortization of unrealized loss on defined benefit pension plan, net of tax | 6 | $ 4 |
Ending accumulated other comprehensive loss | (11,069) | |
Foreign Currency Translation [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Starting accumulated other comprehensive loss | (14,370) | |
Unrealized gain | 4,181 | |
Ending accumulated other comprehensive loss | (10,189) | |
Pension Benefit Obligation [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Starting accumulated other comprehensive loss | (886) | |
Amortization of unrealized loss on defined benefit pension plan, net of tax | 6 | |
Ending accumulated other comprehensive loss | $ (880) |
SELECTED FINANCIAL STATEMENT _9
SELECTED FINANCIAL STATEMENT INFORMATION (Details Textuals) - USD ($) $ in Millions | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2018 | Oct. 31, 2018 | |
Selected Financial Statement Information (Details) [Abstract] | |||
Accrued customer rebates and credits | $ 14.2 | $ 16.9 | |
Total customer rebates and credits deducted within net sales | $ 1.4 | $ 2.5 | |
APEX [Member] | Electronic Technologies Group [Member] | |||
Business Acquisition [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 92.70% |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Goodwill) (Details) $ in Thousands | 3 Months Ended |
Jan. 31, 2019USD ($) | |
Goodwill [Line Items] | |
Opening Balance | $ 1,114,832 |
Goodwill acquired | 55,020 |
Foreign currency translation adjustments | 674 |
Adjustments to goodwill | (125) |
Ending Balance | 1,170,401 |
Flight Support Group [Member] | |
Goodwill [Line Items] | |
Opening Balance | 398,694 |
Goodwill acquired | 0 |
Foreign currency translation adjustments | 186 |
Adjustments to goodwill | (125) |
Ending Balance | 398,755 |
Electronic Technologies Group [Member] | |
Goodwill [Line Items] | |
Opening Balance | 716,138 |
Goodwill acquired | 55,020 |
Foreign currency translation adjustments | 488 |
Adjustments to goodwill | 0 |
Ending Balance | $ 771,646 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Identifiable Intangible Assets) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | $ 597,293 | $ 568,695 |
Accumulated Amortization | (209,704) | (196,516) |
Net Carrying Amount | 387,589 | 372,179 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible Asset Gross Carrying Amount | 738,895 | 702,876 |
Intangible Asset Net Carrying Amount | 529,191 | 506,360 |
Trade Names [Member] | ||
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract] | ||
Gross Carrying Amount | 141,602 | 134,181 |
Net Carrying Amount | 141,602 | 134,181 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 390,027 | 373,946 |
Accumulated Amortization | (144,444) | (135,359) |
Net Carrying Amount | 245,583 | 238,587 |
Intellectual Property [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 198,400 | 185,983 |
Accumulated Amortization | (59,982) | (56,055) |
Net Carrying Amount | 138,418 | 129,928 |
Licensing Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 6,559 | 6,559 |
Accumulated Amortization | (3,669) | (3,522) |
Net Carrying Amount | 2,890 | 3,037 |
Patents [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 1,027 | 927 |
Accumulated Amortization | (628) | (609) |
Net Carrying Amount | 399 | 318 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 814 | 814 |
Accumulated Amortization | (814) | (814) |
Net Carrying Amount | 0 | 0 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amount | 466 | 466 |
Accumulated Amortization | (167) | (157) |
Net Carrying Amount | $ 299 | $ 309 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textuals) - USD ($) $ in Millions | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 17 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization expense related to intangible assets | 12.8 | $ 12.4 |
Estimated Amortization Expense, remainder of fiscal year | 38.6 | |
Estimated Amortization Expense, for fiscal 2020 | 48.7 | |
Estimated Amortization Expense, for fiscal 2021 | 45.9 | |
Estimated Amortization Expense, for fiscal 2022 | 39.5 | |
Estimated Amortization Expense, for fiscal 2023 | 34.4 | |
Estimated Amortization Expense, for fiscal 2024 | 30.2 | |
Estimated Amortization Expense, thereafter | $ 150.3 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Borrowings under revolving credit facility | $ 599,000 | $ 523,000 |
Capital leases | 9,521 | 9,470 |
Total debt and capital leases | 608,521 | 532,470 |
Less: Current maturities of long-term debt | (865) | (859) |
Long-term debt, net of current maturities | $ 607,656 | $ 531,611 |
LONG-TERM DEBT (Details Textual
LONG-TERM DEBT (Details Textuals) | Jan. 31, 2019 | Oct. 31, 2018 |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate | 3.60% | 3.40% |
REVENUE (Contract Assets and Li
REVENUE (Contract Assets and Liabilities) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2019 | Nov. 01, 2018 | Oct. 31, 2018 | |
Contract with Customer, Asset and Liability [Abstract] | |||
Contract assets | $ 47,093 | $ 54,272 | $ 14,183 |
Contract liabilities | 26,715 | 19,674 | |
Net contract assets | 20,378 | $ 34,598 | |
Decrease in contract assets, net | (7,179) | ||
Increase (Decrease) in Customer Deposits | 7,041 | ||
Contract with Customer, Billings in Excess of Unbilled Receivable and New Deposits in Excess of Deposits Recognized as Revenue | $ (14,220) |
REVENUE (Disaggregation of Reve
REVENUE (Disaggregation of Revenue, by Product Line) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2018 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 466,146 | $ 404,410 | |
Flight Support Group [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 287,213 | 254,721 | |
Flight Support Group [Member] | Aftermarket Replacement Parts [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 159,497 | 134,288 |
Flight Support Group [Member] | Repair and Overhaul Parts and Services [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 67,163 | 68,324 |
Flight Support Group [Member] | Specialty Products [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [3] | 60,553 | 52,109 |
Electronic Technologies Group [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 184,429 | 155,658 | |
Electronic Technologies Group [Member] | Electronic Components for Defense, Space and Aerospace [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [4] | 137,750 | 117,341 |
Electronic Technologies Group [Member] | Other Electronic Components [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [5] | 46,679 | 38,317 |
Corporate And Eliminations [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | $ (5,496) | $ (5,969) | |
[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. | ||
[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, three-dimensional microelectronic and stacked memory products, crashworthy and ballistically self-sealing auxiliary fuel systems, radio frequency (RF) and microwave amplifiers, transmitters and receivers, high performance communications and electronic intercept receivers and tuners and high performance active antenna systems. | ||
[5] | Includes various component parts such as electromagnetic and radio interference shielding, high voltage interconnection devices, high voltage advanced power electronics, harsh environment connectivity products, custom molded cable assemblies and silicone material for a variety of demanding applications. |
REVENUE (Disaggregation of Re_2
REVENUE (Disaggregation of Revenue, by Industry) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2018 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 466,146 | $ 404,410 | |
Flight Support Group [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 287,213 | 254,721 | |
Flight Support Group [Member] | Aerospace [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 235,173 | 209,591 | |
Flight Support Group [Member] | Defense and Space [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 41,534 | 34,782 | |
Flight Support Group [Member] | Other Industries [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [1] | 10,506 | 10,348 |
Electronic Technologies Group [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 184,429 | 155,658 | |
Electronic Technologies Group [Member] | Aerospace [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 19,295 | 15,523 | |
Electronic Technologies Group [Member] | Defense and Space [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | 115,219 | 97,082 | |
Electronic Technologies Group [Member] | Other Industries [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | [2] | 49,915 | 43,053 |
Corporate And Eliminations [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from Contract with Customer, Excluding Assessed Tax | $ (5,496) | $ (5,969) | |
[1] | Principally industrial products. | ||
[2] | Principally other electronics and medical products. |
REVENUE (Details Textuals)
REVENUE (Details Textuals) $ in Millions | Jan. 31, 2019USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-02-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years 9 months |
Revenue, Remaining Performance Obligation, Amount | $ 308.2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-02-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 9 months |
Revenue, Remaining Performance Obligation, Amount | $ 183.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 2 years 9 months |
Revenue, Remaining Performance Obligation, Amount | $ 124.5 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period | 3 years 9 months |
INCOME TAXES (Details Textuals)
INCOME TAXES (Details Textuals) - USD ($) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Jan. 31, 2018 | Dec. 21, 2017 | Jan. 31, 2019 | Jan. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Federal Statutory Income Tax Rate | 21.00% | 35.00% | ||
Effective Income Tax Rate, Continuing Operations | 4.50% | 4.70% | ||
Tax benefit from stock option exercises recognized in the period | $ 14.4 | |||
Transition Tax Expense from Unremitted Earnings from Foreign Subsidiaries | $ 11.9 |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value Hierarchy, by Category) (Details) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | $ 139,308 | $ 132,737 |
Liabilities: | ||
Contingent consideration | 22,462 | 20,875 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 13,558 | 9,482 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 125,750 | 123,255 |
Liabilities: | ||
Contingent consideration | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Liabilities: | ||
Contingent consideration | 22,462 | 20,875 |
Corporate Owned Life Insurance [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 125,750 | 123,255 |
Corporate Owned Life Insurance [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Corporate Owned Life Insurance [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 125,750 | 123,255 |
Corporate Owned Life Insurance [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Money Market Funds [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 12,287 | 3,560 |
Money Market Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 12,287 | 3,560 |
Money Market Funds [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Money Market Funds [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Securities [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 736 | 3,179 |
Equity Securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 736 | 3,179 |
Equity Securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Funds [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 92 | 1,437 |
Equity Funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 92 | 1,437 |
Equity Funds [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Equity Funds [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Other Defined Deferred Compensation Plan [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 443 | 1,306 |
Other Defined Deferred Compensation Plan [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 443 | 1,306 |
Other Defined Deferred Compensation Plan [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | 0 | 0 |
Other Defined Deferred Compensation Plan [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Deferred Compensation Plans [Abstract] | ||
Deferred compensation plans | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Level 3 Valuation Inputs) (Details) - Fair Value, Inputs, Level 3 [Member] | Jan. 31, 2019 |
Measurement Input, Long-term Revenue Growth Rate [Member] | FY 2017 Acquisition [Member] | Minimum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | (0.04) |
Measurement Input, Long-term Revenue Growth Rate [Member] | FY 2017 Acquisition [Member] | Maximum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.07 |
Measurement Input, Long-term Revenue Growth Rate [Member] | FY 2016 Acquisition [Member] | Minimum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.04 |
Measurement Input, Long-term Revenue Growth Rate [Member] | FY 2016 Acquisition [Member] | Maximum [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.13 |
Measurement Input, Discount Rate [Member] | FY 2017 Acquisition [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.057 |
Measurement Input, Discount Rate [Member] | FY 2016 Acquisition [Member] | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Business Combination, Contingent Consideration, Liability, Measurement Input | 0.049 |
FAIR VALUE MEASUREMENTS (Contin
FAIR VALUE MEASUREMENTS (Contingent Consideration Liability) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jan. 31, 2019 | Jan. 31, 2018 | Oct. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Change in accrued contingent consideration | $ 1,862 | ||
Change in value of contingent consideration | 1,862 | $ (3,195) | |
Liabilities [Abstract] | |||
Total liabilities | 22,462 | $ 20,875 | |
Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Opening balance, Liabilities | 20,875 | ||
Change in value of contingent consideration | (350) | ||
Ending balance, Liabilities | 22,462 | ||
Liabilities [Abstract] | |||
Accrued Liabilities, Current | 7,489 | ||
Other Liabilities, Noncurrent | 14,973 | ||
Total liabilities | 22,462 | $ 20,875 | |
Foreign Currency Gain (Loss) [Member] | Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Foreign currency transaction adjustments | $ 75 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details Textuals) $ in Thousands, € in Millions | 3 Months Ended | ||||
Jan. 31, 2019USD ($) | Jan. 31, 2019EUR (€) | Jan. 31, 2019USD ($) | Oct. 31, 2018EUR (€) | Oct. 31, 2018USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total liabilities | $ 22,462 | $ 20,875 | |||
Assets held within irrevocable trusts and classified within other assets | 139,308 | 132,737 | |||
Related liabilities of deferred compensation plans, specified as other long-term liabilities | 138,700 | 131,700 | |||
Flight Support Group [Member] | FY 2015 Acquisition [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total liabilities | 5,800 | ||||
Contingent Consideration Arrangements, Per Year Amount | 7,000 | ||||
Flight Support Group [Member] | Euro Member Countries, Euro | FY 2015 Acquisition [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total liabilities | € | € 5.1 | ||||
Contingent Consideration Arrangements, Per Year Amount | € | € 6.1 | ||||
Electronic Technologies Group [Member] | FY 2016 Acquisition [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total liabilities | 900 | ||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 1,400 | ||||
Payment for Contingent Consideration Liability, Financing Activities | $ 300 | ||||
Electronic Technologies Group [Member] | FY 2017 Acquisition [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Total liabilities | 14,500 | ||||
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High | 20,000 | ||||
Aggregate LCP Liability [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Related liabilities of deferred compensation plans, specified as other long-term liabilities | 137,400 | 125,800 | |||
Aggregate LCP Assets [Member] | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Assets held within irrevocable trusts and classified within other assets | $ 138,000 | $ 126,800 |
NET INCOME PER SHARE ATTRIBUT_3
NET INCOME PER SHARE ATTRIBUTABLE TO HEICO SHAREHOLDERS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Numerator: | ||
Net income attributable to HEICO | $ 79,332 | $ 65,152 |
Denominator: | ||
Weighted Average Number of Shares Outstanding, Basic | 132,933 | 132,048 |
Effect of dilutive stock options | 4,045 | 4,342 |
Weighted Average Number of Shares Outstanding, Diluted | 136,978 | 136,390 |
Earnings Per Share, Basic | $ 0.60 | $ 0.49 |
Earnings Per Share, Diluted | $ 0.58 | $ 0.48 |
Anti-dilutive stock options excluded | 760 | 770 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 466,146 | $ 404,410 |
Depreciation | 6,212 | 5,628 |
Amortization | 13,825 | 13,396 |
Operating income | 97,947 | 79,560 |
Capital expenditures | 5,907 | 7,577 |
Corporate And Eliminations [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | (5,496) | (5,969) |
Depreciation | 251 | 62 |
Amortization | 246 | 345 |
Operating income | (6,535) | (9,529) |
Capital expenditures | 0 | 3,537 |
Flight Support Group [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 287,213 | 254,721 |
Depreciation | 3,355 | 3,292 |
Amortization | 4,803 | 4,947 |
Operating income | 52,880 | 45,869 |
Capital expenditures | 2,849 | 2,297 |
Electronic Technologies Group [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 184,429 | 155,658 |
Depreciation | 2,606 | 2,274 |
Amortization | 8,776 | 8,104 |
Operating income | 51,602 | 43,220 |
Capital expenditures | $ 3,058 | $ 1,743 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | Jan. 31, 2019 | Oct. 31, 2018 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 2,797,014 | $ 2,653,396 |
Other Primarily Corporate and Intersegment [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 176,456 | 167,541 |
Flight Support Group [Member] | Operating Segments [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 1,098,267 | 1,093,858 |
Electronic Technologies Group [Member] | Operating Segments [Member] | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 1,522,291 | $ 1,391,997 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jan. 31, 2019 | Jan. 31, 2018 | |
Schedule of Product Warranties [Line Items] | ||
Balances as of beginning of fiscal year | $ 3,306 | $ 2,921 |
Accruals for warranties | 694 | 798 |
Standard and Extended Product Warranty Accrual, Additions from Business Acquisition | 0 | 280 |
Warranty claims settled | (829) | (832) |
Balances as of end of period | $ 3,171 | $ 3,167 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details Textuals) $ in Millions | Jan. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 4.3 |
SUBSEQUENT EVENT (Details Textu
SUBSEQUENT EVENT (Details Textuals) - Electronic Technologies Group [Member] - Subsequent Event [Member] | 1 Months Ended |
Feb. 28, 2019 | |
SST Inc [Member] | |
Subsequent Event [Line Items] | |
Subsequent Event, Description | In February 2019, the Company, through HEICO Electronic, acquired 85% of the stock of Solid Sealing Technology, Inc. ("SST"). SST designs and manufactures high-reliability ceramic-to-metal feedthroughs and connectors for demanding environments within the defense, industrial, life science, medical, research, semiconductor, and other markets. The purchase price of this acquisition was paid in cash principally using proceeds from the Company's revolving credit facility and the total consideration for the acquisition is not material or significant to the Company’s condensed consolidated financial statements. |
Decavo [Member] | |
Subsequent Event [Line Items] | |
Subsequent Event, Description | In February 2019, the Company through the Flight Support Group, acquired 80.1% of the stock of Decavo, LLC ("Decavo"). Decavo designs and produces complex composite parts and assemblies incorporated into camera and related sensor assemblies and UAV airframes used in demanding defense and civilian applications. The purchase price of this acquisition was paid in cash principally using cash provided by operating activities and the total consideration for the acquisition is not material or significant to the Company’s condensed consolidated financial statements. |