EXHIBIT 99.1
HEICO Corporation Reports Fiscal 2009 Third Quarter Results
Operating Income Comparable to 1st and 2nd Quarter '09 Levels; Fiscal 2009 Sales and EPS Targets Reaffirmed Within Prior Ranges
HOLLYWOOD, Fla. and MIAMI, Aug. 26, 2009 (GLOBE NEWSWIRE) -- HEICO Corporation (NYSE:HEI.A) (NYSE:HEI) today reported net income of $11,132,000, or 41 cents per diluted share, for the third quarter of fiscal 2009, compared to $12,827,000, or 47 cents per diluted share, for the third quarter of fiscal 2008 and up from $10,541,000, or 39 cents per diluted share, in the second quarter of fiscal 2009. For the first nine months of fiscal 2009, net income was $32,990,000, or $1.22 per diluted share, compared to the $34,861,000, or $1.28 per diluted share, reported for the first nine months of fiscal 2008.
Operating income totaled $21,422,000 in the third quarter of fiscal 2009, compared to $27,489,000 in the third quarter of fiscal 2008 and $21,319,000 in the second quarter of fiscal 2009. For the first nine months of fiscal 2009, operating income was $64,194,000 compared to $77,078,000 for the first nine months of 2008. Our consolidated operating margin was 16.0% for the third quarter of fiscal 2009, compared to 18.7% in the third quarter of fiscal 2008 and 16.4% in the second quarter of fiscal 2009, and was 16.3% for the first nine months of fiscal 2009, compared to 18.1% for the first nine months of fiscal 2008.
Net sales totaled $134,086,000 in the third quarter of fiscal 2009, compared to $147,305,000 in the third quarter of fiscal 2008 and $130,166,000 in the second quarter of fiscal 2009. For the first nine months of fiscal 2009, net sales totaled $394,689,000 compared to $425,631,000 for the first nine months of fiscal 2008.
(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes, the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually identical in all economic respects. The only difference between the share classes is the voting rights. The Class A Common Stock (HEI.A) receives 1/10 vote per share and the Common Stock (HEI) receives one vote per share.)
Laurans A. Mendelson, HEICO's Chairman, President and CEO, commenting on the Company's third quarter results stated, "As we saw in the first half of fiscal 2009, the continued effects of a global recession impacted both of our business segments in the third quarter of fiscal 2009. Despite these challenges, we have been able to maintain customer focus, carefully manage our resources and make improvements in areas within our control in order to maintain our operating income in each of the first three quarters of fiscal 2009.
"Our Flight Support Group reported net sales of $97.2 million and $297.5 million, respectively, for the third quarter and first nine months of fiscal 2009, compared to $110.0 million and $320.3 million, respectively, for the third quarter and first nine months of fiscal 2008. Fiscal 2009 third quarter net sales were down slightly from $100.7 million for the second quarter of fiscal 2009 as airlines around the world continued to make capacity reductions as a result of ongoing weak passenger and cargo demand.
"Operating margins of the Flight Support Group were 15.2% and 15.6%, respectively, for the third quarter and first nine months of 2009, compared to 18.5% and 18.6%, respectively, for the third quarter and first nine months of fiscal 2008. The decreases reflect the lower sales volume and variations in product mix as well as a $1 million increase in inventory reserves recorded in the third quarter of fiscal 2009 to reflect the impact of lower sales volumes of certain parts evaluated as slow-moving. Operating income of the Flight Support Group was $14.8 million and $46.3 million, respectively, for the third quarter and first nine months of fiscal 2009, compared to $20.4 million and $59.7 million, respectively, for the third quarter and first nine months of fiscal 2008.
"Demand for passenger air travel and cargo traffic remains soft. Current market forecasts of worldwide airline capacity reductions in 2009 continue to range from decreases of 5% to 10% from 2008 levels with forecasted MRO spending down 10% to 15% for overhaul and repairs services and 15% to 25% for replacement parts during the same period due to capacity reductions, inventory destocking and short-term maintenance deferrals. We have been able to offset a substantial portion of this market decline by accelerated new product development efforts and additional market penetration.
"Our Electronic Technologies Group reported net sales of $37.1 million and $97.5 million, respectively, for the third quarter and first nine months of fiscal 2009, compared to $37.7 million and $105.7 million, respectively, for the third quarter and first nine months of fiscal 2008. While our Electronic Technologies Group was aided by some strength in its defense and space related business and the acquisition of VPT, Inc. in May 2009, the global economic recession has continued to result in lower demand for certain of its medical, telecommunication and electronic products.
"Operating margins of the Electronic Technologies Group remained strong at 26.8% and 27.2%, respectively, for the third quarter and first nine months of fiscal 2009, compared to 28.6% and 26.2% reported for the third quarter and first nine months of fiscal 2008, respectively. Operating income of the Electronic Technologies Group was $9.9 million and $26.5 million, respectively, for the third quarter and first nine months of fiscal 2009, compared to $10.8 million and $27.7 million, respectively, for the third quarter and first nine months of fiscal 2008.
"Our cash flow and balance sheet remain strong. As of July 31, 2009, the Company's net debt to equity ratio was a low 11%, with net debt (total debt less cash and cash equivalents) of $49.5 million. We have no significant debt maturities until fiscal 2013. Our strong cash flow and balance sheet combined with our healthy cash position will allow us to take advantage of acquisition opportunities if they arise.
"Cash flow from operating activities for the first nine months of fiscal 2009 totaled $43.7 million, including $17.1 million generated in the third quarter of fiscal 2009, compared to $56.6 million for the first nine months of 2008. We continue to anticipate full year cash flow from operating activities to approximate $70 million in fiscal 2009, as compared to $73 million in fiscal 2008. Our capital expenditures for fiscal 2009 are expected to range between $10 to $12 million.
"Given the challenging economic environment we're operating in, we are pleased to note that our consolidated net sales, operating income and diluted net income per share for the third quarter of fiscal 2009 were comparable to, or slightly above, such amounts reported in the first and second quarters of fiscal 2009 and we anticipate some further improvement in the fourth quarter.
"Although airline capacity reductions have been moderating in recent months, near-term visibility remains somewhat opaque. Based on current market conditions, we are targeting fiscal 2009 full year net sales in the range of $533 to $538 million and diluted net income per share within a range of $1.62 to $1.65. These targets are within the range of our prior estimates and exclude the impact of additional acquisitions, if any. The Company expects to provide its fiscal 2010 guidance at the time of its fourth quarter earnings release.
"We continue to believe our focus on intermediate and long-term growth is a solid foundation to best reward HEICO and its shareholders and to provide the best opportunity for sustainable growth."
As previously announced, HEICO will hold a conference call on Thursday, August 27, 2009 at 9:00 a.m. Eastern Daylight Time to discuss its third quarter results. Individuals wishing to participate in the conference call should dial: U.S. (888) 299-4099, Canada (866) 682-1172, and International (302) 709-8337, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID VM17450 (or "8617450"). A digital replay will be available two hours after the completion of the conference for 14 days. To access, dial: (402) 220-2946, and enter the Playback Passcode/Conference ID 17450#.
There are currently approximately 15.7 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 10.4 million shares of HEICO's Common Stock (HEI) outstanding. The stock symbols for HEICO's two classes of common stock on most web sites are HEI.A and HEI. However, some web sites change HEICO's Class A Common Stock stock symbol (HEI.A) to HEI/A or HEIa.
HEICO Corporation is engaged primarily in certain niche segments of the aviation, defense, space and electronics industries through its Hollywood, FL-based HEICO Aerospace Holdings Corp. subsidiary and its Miami, FL-based HEICO Electronic Technologies Corp. subsidiary. HEICO's customers include a majority of the world's airlines and airmotives as well as numerous defense and space contractors and military agencies worldwide in addition to medical, telecommunication and electronic equipment manufacturers. For more information about HEICO, please visit our web site at http://www.heico.com.
Certain statements in this press release constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of factors including, but not limited to: lower demand for commercial air travel or airline fleet changes, which could cause lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales; HEICO's ability to introduce new products and product pricing levels, which could reduce our sales or sales growth; HEICO's ability to make acquisitions and achieve operating synergies from acquired businesses, customer credit risk, interest rates and economic conditions within and outside of the aviation, defense, space and electronics industries, which could negatively impact our costs and revenues; and HEICO's ability to maintain effective internal controls, which could adversely affect our business and the market price of our common stock. Parties receiving this material are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
HEICO CORPORATION Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended July 31, --------------------------------- 2009 2008 -------------- -------------- Net sales $134,086,000 $147,305,000 Cost of sales 88,275,000 93,454,000 Selling, general and administrative expenses 24,389,000 26,362,000 -------------- -------------- Operating income 21,422,000 27,489,000 Interest expense (177,000) (444,000) Other income (expense) 184,000 (144,000) -------------- -------------- Income before income taxes and minority interests 21,429,000 26,901,000 Income tax expense 6,511,000 9,500,000 -------------- -------------- Income before minority interests 14,918,000 17,401,000 Minority interests' share of income 3,786,000 4,574,000 -------------- -------------- Net income $11,132,000 $12,827,000 ============== ============== Net income per share: Basic $.43 $.49 Diluted $.41 $.47 Weighted average number of common shares outstanding: Basic 26,082,914 26,379,608 Diluted 26,906,290 27,271,841 Three Months Ended July 31, --------------------------------- 2009 2008 -------------- -------------- Operating segment information: - Net sales: Flight Support Group $97,236,000 $109,969,000 Electronic Technologies Group 37,054,000 37,676,000 Intersegment sales (204,000) (340,000) -------------- -------------- $134,086,000 $147,305,000 ============== ============== Operating income: Flight Support Group $14,759,000 $20,392,000 Electronic Technologies Group 9,935,000 10,783,000 Other, primarily corporate (3,272,000) (3,686,000) -------------- -------------- $21,422,000 $27,489,000 ============== ============== HEICO CORPORATION Condensed Consolidated Statements of Operations (Unaudited) Nine Months Ended July 31, --------------------------------- 2009 2008 -------------- -------------- Net sales $394,689,000 $425,631,000 Cost of sales 262,456,000 272,595,000 Selling, general and administrative expenses 68,039,000 75,958,000 -------------- -------------- Operating income 64,194,000 77,078,000 Interest expense (484,000) (1,951,000) Other income (expense) 186,000 (218,000) -------------- -------------- Income before income taxes and minority interests 63,896,000 74,909,000 Income tax expense 19,331,000 26,040,000 -------------- -------------- Income before minority interests 44,565,000 48,869,000 Minority interests' share of income 11,575,000 14,008,000 -------------- -------------- Net income $32,990,000 (a) $34,861,000 ============== ============== Net income per share: Basic $1.26 $1.33 Diluted $1.22 $1.28 Weighted average number of common shares outstanding: Basic 26,239,281 26,280,211 Diluted 27,053,584 27,242,251 Nine Months Ended July 31, --------------------------------- 2009 2008 -------------- -------------- Operating segment information: - Net sales: Flight Support Group $297,543,000 $320,286,000 Electronic Technologies Group 97,523,000 105,697,000 Intersegment sales (377,000) (352,000) -------------- -------------- $394,689,000 $425,631,000 ============== ============== Operating income: Flight Support Group $46,297,000 $59,723,000 Electronic Technologies Group 26,508,000 27,731,000 Other, primarily corporate (8,611,000) (10,376,000) -------------- -------------- $64,194,000 $77,078,000 ============== ============== HEICO CORPORATION Footnote to Condensed Consolidated Statements of Operations (Unaudited) ------------------- (a) Fiscal 2009 net income reflects a settlement reached with the Internal Revenue Service in the first quarter of fiscal 2009 concerning the income tax credit claimed by the Company on its U.S. federal filings for qualified research and development activities incurred during fiscal years 2002 through 2005 as well as an aggregate reduction to the related reserve for fiscal years 2006 through 2008, which increased net income for the first nine months of fiscal 2009 by approximately $1,225,000, or $.05 per diluted share. HEICO CORPORATION Condensed Consolidated Balance Sheets (Unaudited) July 31, October 31, 2009 2008 -------------- -------------- Cash and cash equivalents $6,948,000 $12,562,000 Accounts receivable, net 72,161,000 88,403,000 Inventories, net 145,496,000 132,910,000 Prepaid expenses and other current assets 25,752,000 17,635,000 -------------- -------------- Total current assets 250,357,000 251,510,000 Property, plant and equipment, net 60,496,000 59,966,000 Goodwill 348,005,000 323,393,000 Other assets 54,592,000 41,673,000 -------------- -------------- Total assets $713,450,000 $676,542,000 ============== ============== Current maturities of long-term debt $233,000 $220,000 Other current liabilities 59,779,000 81,008,000 -------------- -------------- Total current liabilities 60,012,000 81,228,000 Long-term debt, net of current maturities 56,255,000 37,381,000 Deferred income taxes 41,526,000 39,192,000 Other long-term liabilities 20,713,000 17,003,000 -------------- -------------- Total liabilities 178,506,000 174,804,000 Minority interests in consolidated subsidiaries 89,693,000 83,978,000 Shareholders' equity 445,251,000 417,760,000 -------------- -------------- Total liabilities and shareholders' equity $713,450,000 $676,542,000 ============== ============== HEICO CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended July 31, --------------------------------- 2009 2008 -------------- -------------- Operating Activities: Net income $32,990,000 $34,861,000 Depreciation and amortization 10,951,000 11,339,000 Deferred income tax (benefit) provision (1,376,000) 2,179,000 Minority interests' share of income 11,575,000 14,008,000 Tax benefit from stock option exercises 1,889,000 6,281,000 Excess tax benefit from stock option exercises (1,572,000) (4,347,000) Stock option compensation expense 15,000 138,000 Decrease in accounts receivable 20,207,000 7,867,000 Increase in inventories (9,282,000) (13,062,000) Decrease in current liabilities (19,851,000) (2,124,000) Other (1,827,000) (514,000) -------------- -------------- Net cash provided by operating activities 43,719,000 56,626,000 -------------- -------------- Investing Activities: Acquisitions and related costs, net of cash acquired (45,830,000) (28,747,000) Capital expenditures (7,784,000) (10,121,000) Other 73,000 133,000 -------------- -------------- Net cash used in investing activities (53,541,000) (38,735,000) -------------- -------------- Financing Activities: Borrowings (payments) on revolving credit facility, net 19,000,000 (11,000,000) Payment of industrial development revenue bonds -- (1,980,000) Repurchases of common stock (8,098,000) -- Distributions to minority interest owners (5,994,000) (5,902,000) Cash dividends paid (3,150,000) (2,631,000) Excess tax benefit from stock option exercises 1,572,000 4,347,000 Proceeds from stock option exercises 822,000 2,157,000 Other (158,000) (1,087,000) -------------- -------------- Net cash provided by (used in) financing activities 3,994,000 (16,096,000) -------------- -------------- Effect of exchange rate changes on cash 214,000 (177,000) -------------- -------------- Net (decrease) increase in cash and cash equivalents (5,614,000) 1,618,000 Cash and cash equivalents at beginning of year 12,562,000 4,947,000 -------------- -------------- Cash and cash equivalents at end of period $6,948,000 $6,565,000 ============== ==============
CONTACT: HEICO Corporation Thomas S. Irwin (954) 987-4000 ext. 7560 Victor H. Mendelson (305) 374-1745 ext. 7590