Exhibit 99.1
FOR IMMEDIATE RELEASE
December 21, 2005
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO REPORTS RECORD SALES AND OPERATING INCOME
IN FOURTH QUARTER AND FULL YEAR RESULTS
37% Increase in Full Year Operating Income on 25% Increase in Net Sales
28% Increase in Fourth Quarter Operating Income on 25% Increase in Net Sales
HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today
reported net sales increased 25% to $269,647,000 for the fiscal year ended
October 31, 2005 from $215,744,000 for the fiscal year ended October 31, 2004.
For the fourth quarter of fiscal 2005, net sales increased 25% to $76,524,000
from $60,980,000 in the fourth quarter of fiscal 2004.
Operating income increased 37% to a record $44,649,000 for the fiscal year ended
October 31, 2005 from $32,619,000 for the fiscal year ended October 31, 2004.
For the fourth quarter of fiscal 2005, operating income increased 28% to a
record $12,806,000 from $10,004,000 in the fourth quarter of fiscal 2004.
Net income for the fiscal year ended October 31, 2005 increased 11% to
$22,812,000, or 87 cents per diluted share, from $20,630,000, or 80 cents per
diluted share, for the fiscal year ended October 31, 2004, which included
tax-free income of $4.0 million (16 cents per diluted share) in life insurance
proceeds. Net income for the fourth quarter of fiscal 2005 increased 28% to
$6,625,000, or 25 cents per diluted share, from $5,166,000, or 20 cents per
diluted share, in the fourth quarter of fiscal 2004.
(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 & Chief Executive Officer,
remarked, "We are extremely pleased to report record quarterly net sales and
operating income for the third consecutive quarter. Both our Electronic
Technologies Group and our Flight Support Group
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reported increased net sales of 48% and 15%, respectively, over the fourth
quarter of fiscal 2004. In addition, both groups reported higher net sales for
full fiscal 2005 over fiscal 2004, with the Electronic Technologies Group
reporting a 34% increase and the Flight Support Group reporting a 21% increase.
All the sales increase within the Flight Support Group was organic growth,
reflecting the continued recovery in aftermarket demand within the commercial
airline industry, as well as our continued success in the development of new
products and services for our customers. The sales increase within our
Electronic Technologies Group reflects strong results from three strategic
acquisitions made in fiscal 2005 and organic growth of approximately 6%.
Fiscal 2005 consolidated net sales and consolidated operating income represent
record annual results for HEICO.
Operating income of our Flight Support Group increased 45% to $35.1 million for
the fiscal year ended October 31, 2005 from $24.3 million for the fiscal year
ended October 31, 2004. For the fourth quarter of fiscal 2005, operating income
increased 19% to $8.2 million from $6.9 million for the fourth quarter of fiscal
2004. The increase in operating income of the Flight Support Group for the
fiscal year and fourth quarter reflects both the increase in net sales and
higher operating margins resulting principally from improved operating
efficiencies. Operating margins of the Flight Support Group improved to 18.9%
for the fiscal year ended October 31, 2005 from 15.8% for the fiscal year ended
October 31, 2004 and improved to 17.4% in the fourth quarter of fiscal 2005 from
16.8% in the fourth quarter of fiscal 2004.
Operating income of our Electronic Technologies Group increased 22% to $18.6
million for the fiscal year ended October 31, 2005 from $15.3 million for the
fiscal year ended October 31, 2004. For the fourth quarter of fiscal 2005,
operating income increased 44% to $8.1 million from $5.6 million for the fourth
quarter of fiscal 2004. Operating margins of the Electronic Technologies Group
were 22.2% for the fiscal year ended October 31, 2005 and 27.8% in the fourth
quarter of fiscal 2005, down slightly from 24.4% for the fiscal year ended
October 31, 2004 and 28.5% in the fourth quarter of fiscal 2004, due principally
to a less favorable product sales mix.
Our consolidated operating margins improved to 16.6% for the fiscal year ended
October 31, 2005 from 15.1% for the fiscal year ended October 31, 2004 and
improved to 16.7% in the fourth quarter of fiscal 2005 from 16.4% in the fourth
quarter of fiscal 2004.
Cash flow from operating activities for fiscal 2005 continued strong at $35.8
million and compares to $44.1 million in fiscal 2004. The decrease is due to a
higher investment in inventories required to meet increased sales demand and
longer lead times for certain raw materials, as well as increased accounts
receivable due to the higher sales levels.
We recently announced a 60% increase in our semi-annual cash dividend to $.04
per share, which is payable in January 2006. In declaring the cash dividend, our
goal is to reward HEICO shareholders with an increased cash dividend, while
retaining sufficient capital required to fund our internal growth objectives and
acquisition strategies.
As we look to fiscal 2006 and beyond, we believe the increasing product demand
from our customers, our commitment to develop new products and services, our
strong financial position and our ability to identify select acquisition
opportunities provide the foundation for continued growth in sales and earnings.
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Based on current market conditions, we are targeting fiscal 2006 twelve month
net sales growth in the range of 30% to 35% and operating income growth in the
range of 35% to 40% over fiscal 2005 results. We are targeting fiscal 2006
diluted net income per share in the range of $1.05 to $1.09. These targets
include our recent acquisitions, but exclude the impact of additional
acquisitions, if any.
Fiscal 2006 cash flow from operating activities should approximate $42 - $45
million and our capital expenditures budget for fiscal 2006 approximates $12 -
$14 million.
We remain confident our disciplined business model will provide opportunity for
long-term sustainable growth."
As previously announced, HEICO will hold a conference call on Thursday, December
22, 2005 at 9:00 a.m. Eastern Standard Time to discuss its fourth quarter and
fiscal 2005 results. Individuals wishing to participate in the conference call
should dial: U.S./Canada/International/Local 785-832-1508, wait for the
conference operator and provide the operator with the "verbal"
passcode/conference ID "7HEICO" (or "743426"). A digital replay will be
available one hour after the completion of the conference for 14 days. To
access, dial: U.S./Canada/International/Local 402-220-6984 and enter
passcode/conference ID "7HEICO" (or "743426").
There are currently approximately 14.6 million shares of HEICO's Class A Common
Stock (HEI.A) outstanding and 10.1 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 telecommunications,
electronics and medical 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,
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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 or space 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.
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HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
TWELVE MONTHS ENDED OCTOBER 31,
-------------------------------------
2005 2004
---------------- ----------------
Net sales $ 269,647,000 $ 215,744,000
Cost of sales 168,651,000 139,932,000
Selling, general and administrative expenses 56,347,000 43,193,000
---------------- ----------------
Operating income 44,649,000 32,619,000(1)
Interest expense (1,136,000) (1,090,000)
Interest and other income 528,000 26,000
Life insurance proceeds -- 5,000,000(2)
---------------- ----------------
Income before income taxes and minority interests 44,041,000 36,555,000
Income tax expense 16,100,000 10,948,000
---------------- ----------------
Income before minority interests 27,941,000 25,607,000
Minority interests' share of income 5,129,000 4,977,000
---------------- ----------------
Net income $ 22,812,000 $ 20,630,000(1)(2)
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Net income per share:
Basic $ .93 $ .86(1)(2)
Diluted $ .87 $ .80(1)(2)
Weighted average number of common shares outstanding:
Basic 24,460,185 24,036,980
Diluted 26,323,302 25,754,598
TWELVE MONTHS ENDED OCTOBER 31,
-------------------------------------
2005 2004
---------------- ----------------
Operating segment information: -
Net sales:
Flight Support Group $ 185,716,000 $ 153,238,000
Electronic Technologies Group 84,094,000 62,648,000
Intersegment sales (163,000) (142,000)
---------------- ----------------
$ 269,647,000 $ 215,744,000
================ ================
Operating income:
Flight Support Group $ 35,142,000 $ 24,251,000(1)
Electronic Technologies Group 18,631,000 15,259,000
Other, primarily corporate (9,124,000)(3) (6,891,000)
---------------- ----------------
$ 44,649,000 $ 32,619,000
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HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
THREE MONTHS ENDED OCTOBER 31,
-------------------------------------
2005 2004
---------------- ----------------
Net sales $ 76,524,000 $ 60,980,000
Cost of sales 46,852,000 39,034,000
Selling, general and administrative expenses 16,866,000 11,942,000
---------------- ----------------
Operating income 12,806,000 10,004,000
Interest expense (351,000) (208,000)
Interest and other income (expense) 107,000 (69,000)
---------------- ----------------
Income before income taxes and minority interests 12,562,000 9,727,000
Income tax expense 4,670,000 3,501,000
---------------- ----------------
Income before minority interests 7,892,000 6,226,000
Minority interests' share of income 1,267,000 1,060,000
---------------- ----------------
Net income $ 6,625,000 $ 5,166,000
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Net income per share:
Basic $ .27 $ .21
Diluted $ .25 $ .20
Weighted average number of common shares outstanding:
Basic 24,565,034 24,188,977
Diluted 26,451,121 25,888,860
Three Months Ended October 31,
-------------------------------------
2005 2004
---------------- ----------------
Operating segment information: -
Net sales:
Flight Support Group $ 47,254,000 $ 41,185,000
Electronic Technologies Group 29,286,000 19,823,000
Intersegment sales (16,000) (28,000)
---------------- ----------------
$ 76,524,000 $ 60,980,000
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Operating income:
Flight Support Group $ 8,221,000 $ 6,907,000
Electronic Technologies Group 8,130,000 5,644,000
Other, primarily corporate (3,545,000)(3) (2,547,000)
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$ 12,806,000 $ 10,004,000
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HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
OCTOBER 31, OCTOBER 31,
2005 2004
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Cash and cash equivalents $ 5,330,000 $ 214,000
Accounts receivable, net 47,668,000 36,798,000
Inventories 62,758,000 48,020,000
Prepaid expenses, deferred taxes and other current assets 10,377,000 8,880,000
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Total current assets 126,133,000 93,912,000
Property, plant and equipment, net 46,663,000 40,558,000
Goodwill 248,229,000 216,674,000
Other assets 14,599,000 13,111,000
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Total assets $ 435,624,000 $ 364,255,000
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Current maturities of long-term debt $ 63,000 $ 58,000
Other current liabilities 49,887,000 31,984,000
-------------- --------------
Total current liabilities 49,950,000 32,042,000
Long-term debt, net of current maturities 34,061,000 18,071,000
Deferred income taxes 22,431,000 16,262,000
Other non-current liabilities 6,644,000 5,834,000
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Total liabilities 113,086,000 72,209,000
Minority interests in consolidated subsidiaries 49,035,000 44,644,000
Shareholders' equity 273,503,000 247,402,000
-------------- --------------
Total liabilities and shareholders' equity $ 435,624,000 $ 364,255,000
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Condensed Consolidated Statements of Cash Flows (Unaudited)
TWELVE MONTHS ENDED OCTOBER 31,
-------------------------------
2005 2004
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Operating Activities:
Net income $ 22,812,000 $ 20,630,000
Depreciation and amortization 7,409,000 6,779,000
Deferred income tax provision 3,031,000 4,125,000
Minority interests' share of income 5,129,000 4,977,000
Tax benefit from stock option exercises 2,830,000 1,258,000
Increase in accounts receivable (6,852,000) (6,193,000)
(Increase) decrease in inventories (10,113,000) 3,576,000
Other 11,562,000 8,898,000
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Net cash provided by operating activities 35,808,000 44,050,000
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Investing Activities:
Acquisitions and related costs, net of cash acquired (41,500,000) (28,099,000)
Capital expenditures (8,273,000) (5,737,000)
Proceeds from sale of building held for sale 3,520,000 -
Other 357,000 (335,000)
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Net cash used in investing activities (45,896,000) (34,171,000)
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Financing Activities:
Borrowings (payments) on revolving credit facility, net 16,000,000 (14,000,000)
Cash dividends paid (1,224,000) (1,201,000)
Proceeds from stock option exercises 1,746,000 963,000
Other (1,300,000) 252,000
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Net cash provided by (used in) financing activities 15,222,000 (13,986,000)
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Effect of exchange rate changes on cash (18,000) -
-------------- --------------
Net increase (decrease) in cash and cash equivalents 5,116,000 (4,107,000)
Cash and cash equivalents at beginning of year 214,000 4,321,000
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Cash and cash equivalents at end of year $ 5,330,000 $ 214,000
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HEICO CORPORATION
Footnotes to Condensed Consolidated Statements of Operations (Unaudited)
- ----------
(1) Operating income was reduced in fiscal 2004 by an aggregate of $850,000 in
restructuring expenses recorded by certain subsidiaries of the Flight
Support Group that provide repair and overhaul services including $350,000
recorded in cost of sales and $500,000 recorded in selling, general and
administrative expenses. The restructuring expenses decreased net income by
$427,000, or $.02 per basic and diluted share.
(2) Represents proceeds from a $5.0 million key-person life insurance policy
maintained by a subsidiary of the Flight Support Group. The minority
interest's share of this income totaled $1.0 million, which is reported as
a component of minority interests' share of income. Accordingly, the life
insurance proceeds increased fiscal 2004 net income by $4.0 million, or
$.17 per basic and $.16 per diluted share.
(3) Fiscal 2005 results reflect increased costs to comply with the
Sarbanes-Oxley Act of 2002.