EXHIBIT 99.1
HEICO Corporation Reports Record Sales, Operating Income, Net Income and EPS for First Quarter of Fiscal 2011; Fiscal 2011 Full Year Sales and Net Income Estimates Raised
1st Quarter Net Income Up 45% and Operating Income Up 32% on 29% Increase in Net Sales
HOLLYWOOD, Fla. and MIAMI, Feb. 22, 2011 (GLOBE NEWSWIRE) -- HEICO CORPORATION (NYSE:HEI-A) (NYSE:HEI) today reported that net income increased 45% to a record $17,074,000, or 50 cents per diluted share, for the first quarter of fiscal 2011, which includes a 2 cents per diluted share benefit from the retroactive extension of the R&D income tax credit, up from $11,793,000, or 35 cents per diluted share, for the first quarter of fiscal 2010.
Operating income increased 32% to a record $32,372,000 in the first quarter of fiscal 2011, up from $24,544,000 in the first quarter of fiscal 2010. Our consolidated operating margin improved to 18.6% in the first quarter of fiscal 2011, up from 18.1% in the first quarter of fiscal 2010.
Net sales increased 29% to a record $174,219,000 in the first quarter of fiscal 2011, up from $135,535,000 in the first quarter of fiscal 2010.
(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 and CEO, commenting on the Company's first quarter results stated, "We are very pleased to report record quarterly highs in consolidated net sales, operating income and net income for our first quarter of fiscal 2011 driven principally by record sales within our Flight Support Group and strong sales within our Electronic Technologies Group.
Net sales of our Flight Support Group increased 29% in the first quarter of fiscal 2011 to a record $120.6 million, up from $93.8 million in the first quarter of fiscal 2010. The increase in net sales in the first quarter of fiscal 2011 over the first quarter of fiscal 2010 reflects significant organic growth approximating 24% reflecting increased commercial airline capacity as well as additional revenues of approximately $3 million contributed by a recent acquisition. Net sales of our Flight Support Group have now increased over each of the past four quarters.
Operating income of the Flight Support Group increased 22% to $20.4 million for the first quarter of fiscal 2011, up from $16.7 million for the first quarter of fiscal 2010, reflecting the higher sales volumes.
Operating margins of the Flight Support Group were 16.9% for the first quarter of fiscal 2011, compared to 17.8% reported for the first quarter of 2010. The decrease in the operating margin when compared to the first quarter of fiscal 2010 reflects the favorable impact from the sale in the first quarter of 2010 of some products previously written down as slow moving. However, operating margins for the first quarter of fiscal 2011 improved to 16.9% from 15.8% reported in the fourth quarter of fiscal 2010, principally reflecting the increased sales volumes.
Net sales of our Electronic Technologies Group increased 28% in the first quarter of fiscal 2011 to $53.9 million, up from $42.1 million in the first quarter of fiscal 2010. The increase in net sales for the first quarter reflects additional revenues totaling approximately $7 million contributed by an acquisition completed after the first quarter of fiscal 2010 as well as organic growth approximating 12%. The organic growth in our Electronic Technologies Group principally reflects the continued strength in customer demand for certain of our defense and electronic products.
Operating income of the Electronic Technologies Group increased 39% to $15.5 million for the first quarter of fiscal 2011, up from $11.2 million for the first quarter of fiscal 2010, reflecting organic sales growth and the impact of the fiscal 2010 acquisition.
Operating margins of the Electronic Technologies Group improved to 28.8% for the first quarter of fiscal 2011, up from 26.6% for the first quarter of fiscal 2010 principally as a result of a more favorable product sales mix.
Our cash flow and balance sheet remain extremely strong. Cash flow from operating activities for the first quarter of fiscal 2011 totaled $23.5 million, representing 138% of net income, compared to $20.3 million for the first quarter of fiscal 2010. Capital expenditures were $1.6 million in the first quarter of 2011 compared to $2.2 million in the first quarter of 2010.
We expect fiscal 2011 cash flow provided by operating activities to remain strong and to approximate $90 - $100 million. Capital expenditures in fiscal 2011 are anticipated to approximate $10 - $12 million.
Our net debt to shareholders' equity ratio remains low at 1.8% as of January 31, 2011, with net debt (total debt less cash and cash equivalents) of $10.3 million. We have no significant debt maturities until fiscal 2013.
In our Flight Support Group's markets, the commercial airline industry generally expects a continued increase in capacity during 2011. In our Electronic Technologies Group's markets, we generally see stable or increasing demand for our products. Based on the current economic visibility, we expect continued year-over-year sales and earnings growth for the remainder of fiscal 2011.
Based on current market conditions within our aviation and other major markets, we are estimating fiscal 2011 growth of 13% - 15% in net sales and 15% - 17% in net income, up from our prior growth estimates of 10% - 12%. These estimates include the recently announced acquisition of Blue Aerospace, but exclude the impact of additional acquisitions, if any. Consistent with our long-term growth goals, management continues to target net income growth of 20% including additional acquisitions, but it is still too early in the year for us to make such predictions for fiscal 2011."
As previously announced, HEICO will hold a conference call on Wednesday, February 23, 2011 at 9:00 a.m. Eastern Standard Time to discuss its first quarter results. Individuals wishing to participate in the conference call should dial: U.S. and Canada (877) 586-4323, International (706) 679-0934, wait for the conference operator and provide the operator with the Conference ID 42584660. A digital replay will be available two hours after the completion of the conference for 14 days. To access, dial: (706) 645-9291, and enter the Encore Conference ID 42584660.
There are currently approximately 19.9 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 13.3 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 trading symbol (HEI.A) to HEI/A or HEIa.
HEICO Corporation is engaged primarily in certain niche segments of the aviation, defense, space, medical, telecommunication and electronic industries through its Flight Support Group and its Electronic Technologies Group. 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; and HEICO's ability to make acquisitions and achieve operating synergies from acquired businesses, customer cre dit risk, interest and income tax rates and economic conditions within and outside of the aviation, defense, space, medical, telecommunication and electronic industries, which could negatively impact our costs and revenues. 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 January 31, | ||
| 2011 | 2010 | |
| Net sales | $174,219,000 | $135,535,000 |
| Cost of sales | 110,293,000 | 85,415,000 |
| Selling, general and administrative expenses | 31,554,000 | 25,576,000 |
| Operating income | 32,372,000 | 24,544,000 |
| Interest expense | (54,000) | (119,000) |
| Other income | 55,000 | 155,000 |
| Income before income taxes and noncontrolling interests | 32,373,000 | 24,580,000 |
| Income tax expense | 9,850,000 | 8,550,000 |
| Net income from consolidated operations | 22,523,000 | 16,030,000 |
| Less: Net income attributable to noncontrolling interests | 5,449,000 | 4,237,000 |
| Net income attributable to HEICO | $17,074,000(a) | $11,793,000 |
| Net income per share attributable to HEICO shareholders: (b) | ||
| Basic | $.52(a) | $.36 |
| Diluted | $.50(a) | $.35 |
| Weighted average number of common shares outstanding: (b) | ||
| Basic | 33,087,674 | 32,683,590 |
| Diluted | 33,908,223 | 33,701,918 |
| Three Months Ended January 31, | ||
| 2011 | 2010 | |
| Operating segment information: -- | ||
| Net sales: | ||
| Flight Support Group | $120,641,000 | $93,779,000 |
| Electronic Technologies Group | 53,939,000 | 42,058,000 |
| Intersegment sales | (361,000) | (302,000) |
| $174,219,000 | $135,535,000 | |
| Operating income: | ||
| Flight Support Group | $20,429,000 | $16,720,000 |
| Electronic Technologies Group | 15,538,000 | 11,170,000 |
| Other, primarily corporate | (3,595,000) | (3,346,000) |
| $32,372,000 | $24,544,000 | |
| HEICO CORPORATION | |
| Footnotes to Condensed Consolidated Statements of Operations (Unaudited) | |
| (a) In December 2010, Section 41 of the Internal Revenue Code, "Credit for Increasing Research Activities," was retroactively extended for two years to cover the period from January 1, 2010 to December 31, 2011. As a result, we recognized an income tax credit for qualified research and development activities for the last ten months of fiscal 2010 in the first quarter of 2011. The tax credit, net of expenses, increased net income attributable to HEICO by approximately $.8 million, or $.02 per diluted share, in the first quarter of fiscal 2011. | |
| (b) All fiscal 2010 share and per share information has been adjusted retrospectively to reflect a 5-for-4 stock split effected in April 2010. | |
| HEICO CORPORATION | ||
| Condensed Consolidated Balance Sheets (Unaudited) | ||
| January 31, 2011 | October 31, 2010 | |
| Cash and cash equivalents | $13,865,000 | $6,543,000 |
| Accounts receivable, net | 92,047,000 | 91,815,000 |
| Inventories, net | 149,445,000 | 138,215,000 |
| Prepaid expenses and other current assets | 25,004,000 | 22,676,000 |
| Total current assets | 280,361,000 | 259,249,000 |
| Property, plant and equipment, net | 58,134,000 | 59,003,000 |
| Goodwill | 389,202,000 | 385,016,000 |
| Other assets | 97,803,000 | 78,375,000 |
| Total assets | $825,500,000 | $781,643,000 |
| Current maturities of long-term debt | $91,000 | $148,000 |
| Other current liabilities | 81,098,000 | 81,684,000 |
| Total current liabilities | 81,189,000 | 81,832,000 |
| Long-term debt, net of current maturities | 24,074,000 | 14,073,000 |
| Deferred income taxes | 44,967,000 | 45,308,000 |
| Other non-current liabilities | 36,924,000 | 30,556,000 |
| Total liabilities | 187,154,000 | 171,769,000 |
| Redeemable noncontrolling interests | 61,196,000 | 55,048,000 |
| Shareholders' equity | 577,150,000 | 554,826,000 |
| Total liabilities and equity | $825,500,000 | $781,643,000 |
| HEICO CORPORATION | ||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
| Three Months Ended January 31, | ||
| 2011 | 2010 | |
| Operating Activities: | ||
| Net income from consolidated operations | $22,523,000 | $16,030,000 |
| Depreciation and amortization | 4,307,000 | 4,251,000 |
| Deferred income tax provision | 347,000 | 429,000 |
| Tax benefit from stock option exercises | 7,695,000 | 947,000 |
| Excess tax benefit from stock option exercises | (6,359,000) | (666,000) |
| Stock option compensation expense | 543,000 | 308,000 |
| Decrease in accounts receivable | 4,836,000 | 3,401,000 |
| Increase in inventories | (2,045,000) | (4,082,000) |
| (Decrease) increase in current liabilities | (6,201,000) | 1,080,000 |
| Other | (2,099,000) | (1,421,000) |
| Net cash provided by operating activities | 23,547,000 | 20,277,000 |
| Investing Activities: | ||
| Acquisitions, net of cash acquired | (22,588,000) | (2,182,000) |
| Capital expenditures | (1,637,000) | (2,158,000) |
| Other | 6,000 | (3,000) |
| Net cash used in investing activities | (24,219,000) | (4,343,000) |
| Financing Activities: | ||
| Borrowings (payments) on revolving credit facility, net | 10,000,000 | (12,000,000) |
| Excess tax benefit from stock option exercises | 6,359,000 | 666,000 |
| Redemptions of common stock related to stock option exercises | (4,371,000) | (353,000) |
| Distributions to noncontrolling interests | (2,269,000) | (2,508,000) |
| Cash dividends paid | (1,990,000) | (1,570,000) |
| Proceeds from stock option exercises | 295,000 | 232,000 |
| Other | (59,000) | (34,000) |
| Net cash provided by (used in) financing activities | 7,965,000 | (15,567,000) |
| Effect of exchange rate changes on cash | 29,000 | (10,000) |
| Net increase in cash and cash equivalents | 7,322,000 | 357,000 |
| Cash and cash equivalents at beginning of year | 6,543,000 | 7,167,000 |
| Cash and cash equivalents at end of period | $13,865,000 | $7,524,000 |
CONTACT: Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590