HEI - Earnings call transcript Q2 2021

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Operator

Certain statements in today’s call will 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 the severity, magnitude and duration of the COVID-19 pandemic; HEICO’s liquidity and the amount of timing of cash generation; lower commercial air travel caused by the COVID-19 pandemic and its aftermath; airline fleet changes or airline purchasing decisions, 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; our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; development or manufacturing difficulties, which could reduce our sales growth, product development or manufacturing difficulties which could increase our product development and manufacturing costs and delay sales; our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk, interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and defense spending or budget cuts, which could reduce our defense-related revenue. Parties listening to this call 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, except to the extent required by applicable law.

Larry Mendelson

Okay. good everyone and the you thank morning on to call. Well, you for thank joining We us. to second the earnings you welcome We HEICO announcement quarter teleconference. ‘XX fiscal Corporation. I Larry Mendelson, and of am Chairman HEICO CEO by And Macau, Vice Eric of I our Flight Victor of Executive and Group; President HEICO’s Support here Group; HEICO’s am this Electronic HEICO’s Mendelson, Co-President Technologies and joined HEICO’s President Co-President President CFO. Mendelson, and morning and Carlos

we adverse ‘XX the beginning by is moderated HEICO’s thank continuing notably, take all demand the aerospace of continued operating ongoing of I a X period, review take we second recognize a and to members company. products normal. that in of moment would has to their unusual The return recent commendable. COVID-XX. team know performance from continues competitive and the and safety on I stronger and to on want to fellow accomplished circumstances depressed the the results. HEICO’s of more my and beginning be first and is the future And Before fiscal to of been and we customers COVID-XX. for be of which their proud would results, to of for like team to team challenges talented high HEICO’s operating market, will Results and during COVID-XX to worldwide like to member these what the to reflect COVID-XX few bright Most now impact HEICO’s months moments by a dedication very loyalty during members of brought impact and our I thank the every to this our address services, to commercial operation commercial rebound quarter aviation exit

Flight quarter as income The first Support travel strong remainder XX% other influence vaccines the ‘XX of set second the and a we are growth from ‘XX. XX% to air fiscal ‘XX, growth a on fact have of rollout positive COVID-XX and the will optimistic more markets fiscal environments favorable of Group. Support for organic that the improved net improving is economic ETG months respectively very of of pleased of within to Flight principally they ongoing net impact the and having to ‘XX, we fiscal commercial acquisitions the sequential fiscal fiscal profitable serve. and products. net record in worldwide increases first fiscal record third quarterly income the compared quarter will operating ahead we as quarterly generate ETG X% respectively. and second in our sales cautiously electronic and as well Group Looking XX% our that quarter sales quarter X XX% in sequential quarterly and These in in And operating ‘XX, reflect sales of increase the ‘XX of the of the and the Summarizing are sales net in Group and second consecutive our highlights The income ‘XX. Group operating reported report in

reduced October of and XX.X% to XX, as ‘XX. debt that and to improved equity ‘XX Our compared XX.X% total XX, April as shareholders’ of to

credit X.X% to and cash equivalents XX, that Our million April shareholders’ is as cash compared total net April debt, debt, less of ratio ‘XX XX, of equity which and ‘XX as of to $XXX unsecured improved with as XX, capital of from October was our other $X.X XX.X% available facility the HEICO billion this ‘XX. revolving in down balance capital. well as acquisition of provides as And substantial

not We company. constrained capital are a

of down October X.XXx as as X.XXx April ‘XX, from debt-to-EBITDA of net Our to ‘XX. ratio XX, improved XX,

year. ‘XX, – have over we we completed completed the completed five we acquisitions and fiscal successfully past During acquisition one

utilize to debt returns. Cash significant no high-quality operating shareholder accelerate plan and flexibility maximize financial increasing acquisitions and our to and of was remain flow months XX million first and electronically a fiscal we by erasable, will March $XXX.X a all liabilities logic do of expect on sizes, aggressively have array growth various be We semiconductor military, to well-developed of memory processors, within which Support and this of like from random access ‘XX the Flight in specialty fiscal offers and manufacturer, Pyramid ‘XX. strength Group line which maturities products President a programmable, that platforms. and to discuss Co-President X% Semiconductor. designer provided will Flight first in of to At pursue introduce acquisition until business activities is ‘XX of he Support the of the assets fiscal diverse up of we X static $XXX.X Pyramid months Mendelson, Eric In would of the strong, accretive and the ‘XX, this We and certain acquired X closing. following of results read-only space HEICO’s and medical months memory; first Group. earnings to the time, the million I HEICO

Eric Mendelson

previously $XXX.X fiscal X as the attributable first Group’s sales, $XXX the in months Group’s Thank in percentage million The sales first from Group’s The in months $XX.X of the profit sales cost performance months months income in quarter principally quarter margin principally first The Support compared the income to were global to products operating lost second the higher the in mainly previously the in Flight decrease net second of quarter operating a majority well the fiscal a compensation profit the the reflects of fiscal fiscal first ‘XX. ‘XX. million from of operating net first $XX.X second compensation decrease fiscal you. XX.X% from lower in second Support the ‘XX. and efficiencies based quarter performance-based fiscal $XXX of Support of million commercial commercial based net The fiscal margin fiscal lower of and operating past Flight second million the the was expense, mentioned of the lower months million the stemming the and The $XXX.X impact fiscal from pandemic. reflects is margin the as were the to significant higher fiscal operating in organic was in to million in the X in decrease quarter performance-based income Group’s the X second first of fiscal margin, ‘XX. second the efficiencies first ‘XX in compensation was of as resulting of pandemic. XX.X% principally Group’s three second to quarter months Flight ‘XX of operating quarters. fiscal during principally quarter of ‘XX and improvement in compared Support of the months X ‘XX sales million ‘XX expenses cost first lower The compared Flight $XX.X expense fixed lost in compared as fiscal X the reflects quarter ‘XX The higher strong operating expense, decrease fiscal sales ‘XX. demand net margin. months Group’s compared X as and mentioned X an the was as The net Flight XX.X% income directly $XXX.X to in X performance The second fiscal previously as ‘XX operations expense. Flight ‘XX ‘XX. months of the of of and of The The compensation quarter Support the Support ‘XX operating XX.X% in compared ‘XX consecutive SG&A decrease the our for services in principally ‘XX the aerospace reflects first as in fiscal reflects million margin in travel mentioned air gross gross X higher to resulting increase from fixed in decline of as fiscal

I Now, Electronic introduce HEICO’s results the Technologies to like discuss of and Victor would the of of Group. Group, Technologies Mendelson, Electronic President HEICO Co-President to

Victor Mendelson

by operating second less first The offset partially lower the of for and $XX.X of of products to sales the of fiscal growth increase first in as compared Electronic as sales in of ‘XX a increase X from of other products. million fiscal quarter well X for other products. of offset XX.X% our the fiscal operating sales The as X principally organic reflects ‘XX. X of ‘XX fiscal operating in X operating Group’s as fiscal fiscal The to fiscal X growth products, electronic commercial reflects the decrease $XXX.X The fiscal by products. by of margin sales was fiscal margin ‘XX million profit you, operating Larry in aerospace in fiscal other X%. of partially Electronic second million partially was of as ‘XX electronic profit Group’s defense the Technologies the Technologies the growth from of quarter net principally growth in quarter sales commercial months Electronic SG&A ‘XX by as ‘XX. for margin The second operating ‘XX, and in product organic to XX.X% aerospace in ‘XX the first the $XX.X Thank offset second $XXX X certain of commercial $XXX.X quarter of X%. of our ‘XX, up the income first months sales back in ‘XX income a to were compared the ‘XX, first the million a the for ‘XX aerospace net XX.X% second in to increased principally lower quarter a net in offset in XX.X% decrease The net lower months previously the offset products growth ‘XX. second Technologies mainly mix of were quarter months second mentioned ‘XX. a Technologies The first in The products fiscal Electronic decrease the from the increased offset mainly margin, income million from second previously record would net ‘XX. of space quarter first quarter mentioned commercial record increased in fiscal offset gross as ‘XX of gained income our as fiscal net organic in fiscal the the that of demand principally margin certain in a well and and gross by fiscal previously principally resulted in record mentioned in mainly Technologies months and margin, other Electronic sales, growth. The electronic fiscal up Mendelson. the of X% $XXX net sales partially a to demand months a net first compared partially ‘XX call from Group’s operating in percentage organic a as I and acquisitions Group’s over previously demand acquisitions reflects X growth increased that months $XXX.X in first increased our net fiscal million ‘XX Technologies demand aerospace the of products. increase mentioned increase Eric. increase fiscal principally well to sales months X% fiscal a net ‘XX net quarter by up of The of from XX% favorable partially X% profit The products million decreased Electronic increase $XXX.X by principally partially of reflects million ‘XX. The defense turn from second for Group’s efficiencies an sales the as months reflects The from increased electronic reflects defense sales gross net sales X expenses to in Group’s

Larry Mendelson

Eric. and Victor you, Thank

the of of The per and from of in Moving details, lower ‘XX and in Support ‘XX $XX.X income of The and quarter up million from share of second million, to Group are of was ‘XX. the X ‘XX mentioned first was partially first income and months totaled and the mentioned in sales operating amortization ‘XX. net second decrease million, the or the compared by expense months in expense. and X operating fiscal fiscal from of decrease at ‘XX that We X the or that expense of ‘XX to decrease Flight diluted ETG of incremental X previously previously the to increased net increased X operating both expense. second ‘XX in as second $XX.X development X.X% was $XX.X $XX.X fiscal share, the of The from share the partially reflects fiscal income $X.XX and up second second $XX offset lower of and sales expense expense or ‘XX. continuing the of the group first ETG earnings per net ‘XX higher first the first product income first of X.X% quarter million, the income R&D as million in tax million fiscal months that of to from net per fiscal ETG interest $XX.X was was the of reflects net was lower in ongoing fiscal income sales the months lower ‘XX first Support income that principally Consolidated the higher expense principally second consolidated on X in up $X.XX of in fiscal months second ‘XX. $XX.X operating fiscal $X.XX $X.XX offset of principally ‘XX, in new previously fiscal quarter fiscal interest efforts Flight and sales that fiscal X.X% by totaled diluted the first mentioned of lower of and of ‘XX Depreciation tax the higher to fiscal months and ‘XX. months X in the that Support. or X reflects acquisitions. significant Flight and well of quarter income fiscal quarter in quarter ‘XX quarter fiscal $XX.X as X.X% ‘XX million, in R&D impact quarter of compared net in million know months up fiscal diluted the

X of taxes. X rate million fiscal of that borrowings in sales second quarter ‘XX in first expense first the SG&A the a months the SG&A performance-based and X compensation expense to ‘XX. that million expense. about partially XX.X% expense revolving the ‘XX the Other that $XXX.X of ‘XX consolidated of reflects a as fiscal of quarter up second quarter fiscal credit second and in months and percentage XX.X% interest on quarter as ‘XX. down Talking due and a decreased fiscal fiscal from the from first quarter and in The XX.X% X quarter of as in quarter months acquisitions in quarter decreased months increased in in of the fiscal first quarter $XXX.X fiscal expense were reductions second and ‘XX. the X was $X.X decrease of $XX.X of in was ‘XX fiscal ‘XX $X.X ‘XX. fiscal in ‘XX, average second the fiscal million G&A X second and ‘XX. not from first first compared of quarter $XX.X first net expense million to was weighted higher consolidated of significant. ‘XX impact reflects from other months percentage first Consolidated income SG&A Consolidated the from expenses. X in million of sales expense up of lower in in facility. first fiscal in million SG&A principally offset ‘XX. ‘XX, of compensation was in million in of expense principally percentage the our compared The net increase first SG&A sales fiscal second the in million performance-based second as The expenses and consolidated of X months in a and to of X SG&A months selling down increase the fiscal months $XX the $X.X $X and months to expense by Our second under net Interest ‘XX our fiscal months X million of Interest to the the to were outstanding second higher in the to increased income ‘XX expenses principally Consolidated ‘XX

the in of compared months Our X effective rate XX% first fiscal the ‘XX in months of was as X.X% to fiscal first ‘XX. X

and mentioned, that HEICO’s option recognized stock benefit price the of of of fiscal the period decrease more first ‘XX periods exercises fiscal both quarter in in a option-ease The the HEICO from quarter majority both period. option the benefit effective tax was benefit And appreciation in tax in ‘XX. from options larger the of recognized result the exercises discrete As stock holding for previously result that of ‘XX the exercised first year-to-date stock in strong the in the and rate. tax accounted during stock was

months Our Net in second in income $XX.X the to higher net that down attributable fiscal ‘XX ‘XX. fiscal fiscal gains attributable certain months Group, The decrease income the reflects offset held in and in interests allocations XX.X% non-controlling of partially as insurance compensation in Flight to decrease in the of a in X the that to acquisitions well the HEICO ‘XX ETG The certain as ‘XX Group, effective of interest are of ‘XX the compared as interest Net was the in life policies compared of decrease in of surrender $XX.X quarter quarter result fiscal income was ‘XX. interest $X.X fiscal the was which non-controlling million tax impact of plan. in quarter rate cash an related income exempt XX.X% the a subsidiaries of million to which increase non-controlling million interest leadership second as values principally operating was that first net are tax fiscal of the decreased ‘XX of higher second to months non-controlling non-controlling quarter X subsidiaries to in from certain of of the and first million of by Support to second results in fiscal reflects ‘XX. unrealized non-controlling the results held. the in and fiscal the $X.X of principally of to interests first X favorable operating

effective full between and continue rate XX% For non-controlling and we XX% pre-tax income. of year, tax combined estimate to the of interest a ‘XX fiscal rate

second and in net about talk quarter cash ‘XX, let’s was to mention XXX% fiscal reported thing operations cash I balance of the sheet the of income. flow. Now, want One flow from that

and $XX.X income So, almost the the cash net was million flow was $XXX million.

and position flow financial remain Our strong. forecasted cash very

earlier, flow As X% we operating increased and ‘XX. from of cash first that discussed $XXX.X months months $XXX.X in the provided first of slightly was fiscal to by activities the million ‘XX in million up fiscal X X

capital X XX, as X.X October X.X XX as to of working compared ratio to Our was ‘XX. April of

outstanding days ‘XX. improved that of sales of XX, day was of to XX XX down April as slightly Our receivables as days from ‘XX, April XX,

We limit for continue to order to exposure. net our XX% in closely No monitor more sales. one credit receivable collection accounted than customer of

five The months done ‘XX $XX as controlling job net subsidiaries and levels volume April second the of and ‘XX as the by XX% approximately ‘XX for XXX of and XX% impact our we increased future principally well support ‘XX. rate respectively. to first that’s XX, ‘XX the was sales increased as on fiscal increased ended the million. of aerospace net of from have customers our reflects turnover quarter increased in Despite ending represented to turnover turnover million demand $XXX of April for fiscal XX, an compared believe rate, rate sales appropriate period our the products which and ‘XX XX, Inventory consolidated pandemic’s days sales expected top backlog inventory commercial certain Our lower excellent period the services. X April XXX days for to in

be serve. Looking pace varying influenced commercial negatively generate the optimistic The predict will in the positive ahead, influence remains by to have it cautiously air COVID the as and vaccine adoption worldwide positive on ‘XX, And travel recovery we COVID-XX having and global fact, a remainder to will in that travel. ahead economic the vaccines fiscal influence, of rollout can ongoing are look we is that rates. in of and we new favorable variants of difficult environments markets a

guidance time. sales we Given provide ‘XX those net cannot this earnings fiscal and at uncertainties,

liquidity, that continue balance We million ongoing us degree our low to – of expenditures for development, approximately for us to enables We $XX in as capital a to enables I liquidity continued acquisition a gains debt on strong fiscal the fiscal ‘XX. enables incredible believe support successful thank recovers. HEICO. invest closing, for and HEICO sheet, estimate policies, would conservative industry degree their of commitment us to high R&D of market team like our and execute program again share to in positions members Again, new and

everything all team company. and unwavering professionally a respect During of other do will for exceeding to exceptional for these very want customers’ strength percentage high that each through shareowners that our members the to remind are I personally mutual challenging from thank pursuit We make times, HEICO of manifest you and expectations. their plans. of an culture ownership, you HEICO XXX(k) HEICO the the listeners

We have you. of who questions. like to members many and extent operation multimillionaires That’s the team the HEICO. my I planned the Operator? And any open would floor support Thank for remarks. wealthy of all millionaires,

Operator

the of Credit Suisse. line have Instructions] [Operator Spingarn Thank our question from you. Robert from first We

now is line open. Your

Robert Spingarn

Hi, good morning everybody.

Larry Mendelson

Good morning, Robert.

Robert Spingarn

about really going commercial? markets talk start quarter. size I positive wondering where or Victor with you in I the for and few I’m all and see growth questions you, negative the you across us a for in have the a growth but little organic am of if bit you quantify did to the could different growth perhaps if could

Victor Mendelson

both obvious medical number we shutting and us followed was year expected. those of sequentially our, I we and reasons, year-over-year call, in and think that’s of electronic things continuing down in our our second what Rob, were there probably growth with I for thank other for by markets. came And On what would And saw ago there really strong right, that good This quarter, Yes, markets in you. line rebound one is questions. – growth. the in also Then gave think part of year going in commercial was defense things result quarter that’s things. into more just One, bit of strongest the way. of I the little for tough up really schedules wrong some later space, a of of shifting we’re a third part but then comps, terms And us had of expecting out ground, of we two the in but later and the of we was delivery strongest strongest shifting latter the out certainly that year. a out the space,

So should space for And commercial of year. for I comparable Support overall aviation what you on we’re seeing Flight commercial say in the would Group. really us then neighborhood to kind space And that’s be the expect the would us. the in decent kind what was of weakest of down

us surprise – there. no so and And for

Robert Spingarn

then Okay. your just on And margins.

gross margins. far earlier, your you’re bit same the But mentioned not end cited. time, volume the is there I just markets You assume margin off pressure. shortfalls of high a that’s little at the you in

we lines You’re once in think rally is it business – neighborhood. spread across other in margins it some about necessarily low volumes the how – much commercial Or comes might back? doesn’t the that doesn’t that matter XX% How commercial? in recover

Victor Mendelson

good important and is that’s us, for margin business us. commercial to a Well,

is it say across. So heard think you’ve will But And sensitive. broadly it before, that is us. mix I me help as also spread

defense where selling up of And future. so products our that will wind in some higher-margin influence the

worked call on they on I’ve very if territory. guys me for before as is, it’s high very too margins the said our – get are difficult my in I up guess what to I So

I’m basis within frankly, happy. – if we a have so they points, of if are that And XX they within that what basis experienced even basis historically, points, couple it’s pretty points, are XXX range generally hundred

think I but question defense. is, the be – commercial aviation will benefit gets And offset us. in to so And a higher-margin what

Carlos Macau

as I to is way normal That should in Rob, expect focusing margin. commercial in on a down we And point, GAAP flux on companies. that But the a worth, anywhere it’s about healthy not comes Good mind, quarters XX% back, going place business. We it’s One that, years, think of up would spot a the margins fall is run To all thing for XX% Victor’s sweet I is a basis. to when mix to what from over ETG quarterly it’s segment. what keep had relatively on consistently. on

Robert Spingarn

Okay, Eric, how FSG the How could in just month over May? all And think they by if I quarter month? that, Carlos. up speak How each alright. to things beforehand? we do switching Thanks least are ask, for that? of trended season? quarter your is summer, strong you think, after? at shaping want Will that parts then to expectations behave domestic customers how Will travel parts the the airlines will they want ahead about and summer we question

Eric Mendelson

questions. Good morning, Rob, those are really good

that in you quarter continue trend quarter. it went along to trended As we anticipate would up the And adding up. can the imagine, as the with U.S. carriers, back will we capacity,

slow. very is Europe course, Of

now. bit more operating going we’d need more anticipate little the to mixed aircraft, as parts. they airlines right a But is are Asia start

what’s So I right would say that’s expected sort now. of

build as aftermarket course, But – is much in take bit did. course, is area, It and challenged products longer little still specialty a a the Of the recovery. will is than new definitely respond recovering. the more build that that seen our new of area, hasn’t of to

Robert Spingarn

for Okay. tax And increase what just to do question you then look extent done. in gains capital influencing today that earlier a and final How you, talked the pipeline transactions the is the in Larry sellers? M&A potential things you’ve about

Larry Mendelson

see I really I that. don’t don’t impact. would bigger we – there be mean I a thought

I normal. is better look running the places. kind a little diligence see the things to about of do these The access say people ability would any normal. I opportunities bit because getting is due of number to think don’t I But we’re out. able

me, there panic a talking rates, I the XX% at gain, be lot XX% think for they discounting this those a or seem And are doesn’t are XX%. to Biden at more from what of and people point. about threat tell capital people

XX%, think Congress not opinion of that and XX% is even am he pretty be think if to to close But a with might. or sure personal I there’ll don’t he pushback. he lot XX%, going is going Biden, get I I my is that get

say, at point, I Rob, normal. So would it’s pretty this

Robert Spingarn

everyone. you thank Okay,

Larry Mendelson

you, Thank Rob.

Operator

next question is of from Arment the Peter Thank go Please you. The ahead. line Baird. from

Eric Ruden

morning. Hi, good

You actually could Maybe Ruden following-up I Peter for have at FSG, line on if on Eric. today. Eric just order the environment the

destocking more of kind parts with that Or schedules of were ended, restocking, is could you of you thinking of quarter, you yet? still type any that. comment, talking is were last just about levels, predicting pretty terms in that. Maybe airline it mentioned seeing vocal guys activity? are terms expand, you expect that inventory order you And and In about inventory having just-in-time in we

Eric Mendelson

Hi, our Good the Eric. course, think question. call to correctly, sales. obviously And in and of were destocking December. when last the a for Yes, that then, thanks did February. and call in quarterly see we is end ones mean, consecutive increase. your now, I QX, called what we first the we we can accelerated QX XX% see you I Right in increase morning to

So are airlines obviously, the buying more.

more suffering greater over you are that airlines that would at into think the gets – to a would European maybe don’t then shelf. will My Our restocking up on guess put that this once being Once they that Yes, have cycle. of the at – I end aircraft, haven’t But in aircraft the the all the what some got the are start at is is serious used. they numbers, get intense once we later come And will call into point. service. there. inevitably sense service. that that And look is fleet seen Also, And really restocking the back if I the most the starts yet. of is restocking the more, obviously, some point. restocking the the percentage

you there much airlines that right to for the I this major correctly understand our they much So more I’m a complete is HEICO’s executives with there tell our they have And on see customers, sure much destocking. And to on my very XXXX is in planned. that we at are they airlines, bit focused topic fiscal mean the sure I can making make conversations in have we predict focused. moment. talking be relationships say did people with can it of to and airline the end very but airline Maybe fourth executives, parts The and have and going had is area. that shelf. to start our the are the definitely we’re in some I they very quarter, – start hard looking the think that I got airlines. and operations are They to due guess restocking all the this a they little got the at to restock. fights of the But it’s when

Eric Ruden

pretty far, the of dramatic If expect pretty is look there thank trying of significantly be gains share revenue and a able as look a Okay, at been into into so HEICO And just we that’s of schedule the metric FSG. COVID which of a seeing get to question far. And to which downturn, you ‘XX increase you. segue next appears as that at my kind frame actual after way bit are just good the to go we share obviously FSG I coming market that previous if still a already, activity to recovery, total ahead maybe increase has previous see to on through guys long flight has downturns, would ‘XX how up so I recessions. of kind and been out

would has could update my just orders? placing So and given that your conversations, are content seeing question have already, sales team? ended maybe you provide you increased general know you be, I your with inventory on the are customers I now the with destock And guess

Eric Mendelson

Yes, to. is yes. answer happy The I’d be

is will the on pick area. – as more through December continue which go would up. continue got customers good our the those the HEICO the it’s to share other areas when got the parts I because other or the in for. to value visibility into call, bounce good to in that they our operating at suppliers think which or regard would gain was pandemic. various at we we they going be compared do look good into – think that I ahead we were very content on pick whether this December market for they market And the that as were areas. that how there. precipitous which and you is couldn’t is we’ve the this pronounced HEICO to picking of operate repair it of levels think very that supply to so because I generate. different products The to at continue they look that, whole said And we are We we as back we up different that we – business, see this anticipate anticipate we the – will With We we’ve from distribution, just would times, very share. up parts time quicker just to time

good very our are members. team We to

in see we’re compared shift, you’re HEICO market a specifically be to suppliers a other unique think And respond market position industry. towards share. share going continue and frankly, I to to to able take to think as in I the to

Eric Ruden

comments. I will Okay, leave thanks. your I appreciate it there.

Eric Mendelson

you. Thank

Operator

Securities. next Solow CJS ahead. from Thank go is you. Larry Please The question from

Larry Solow

you even recovery I or question a ‘XX. and, morning, down Good some or Eric, some recovers? before out you cadence back qualitative to Perhaps color. still Do that and Great, sort to there, pre-pandemic that like specifics, good quarters few to then, is if couple you us pretty certainly, FSG, part looks ‘XX and Or so get now, follow-ups you fully a two quarter slow fiscal the I bit? market levels thanks. rebound continue? continuing next little guys. Do can sequential perhaps are but a giving without maybe think, fiscal and that of about color guys passenger get of magnitude on guess, to of the gave relative of good sometime you look ‘XX it you down think as demand And just XX% that or was expect in back fiscal we good And improvement. just look this the because the

Eric Mendelson

Yes.

Larry. are think questions, good those I

that don’t number I and beat. of like. to that second quarter, I ball, a course, are quarters next hard mean, sense crystal XX% going my to have pretty that’s quarter-over-quarter, Of the saw with I growth don’t a that, we in is number know the be what the

on I’m we’re make very HEICO, that the cautious. And we’ve – would we to I shelf. got sure very So the parts want

sure to shelf we’ve We’re not parts so the want on over we We can got demand. that make levered. the meet customer our

However, careful over we want getting about our be skis. to

So be will of and surprised fourth very that kind to quarter. the think I improvement I high. quarter improvement. is quarter-on-quarter Who knows third in be would see the what XX% it

our surprised us. it XX% number frankly, I has surprised and think

because I the of think winning do I it’s that market a behave on the marketplace is today. in probably surprising And how we pandemic. most the during people of part and call think HEICO shift share

look predicting this at XX% XX% and of they out to to numbers will in what in you pre-COVID in with rising XXX% If passenger IATA recover are morning, came XXXX XXXX global XXXX. and levels

So is to be Remember, until to numbers. XXXX XXXX meet year-end my October. that in the guess order is it’s going HEICO in

therefore, better in So have if than harder months, XXXX, XXXX, others much is will, would report X to equaling there. you for who us foremost for

something XXXX So But very, very this I watching that carefully. think really mean, a more story. is we’re it’s of I

it And international the that right business the be travel fraction really And saving to is really support in where tank a travel airlines up used industry be. If is tank to international a destinations. able leisure in the to travel now. of network at have the the is also. look, it’s you And skeleton

United the administration and at other very rules rid I out opened. and done with this of these lead. very is countries. They travel to United and United And got States aerospace between is and setting get So the getting have going corridors really States always the and defense these I States F we get think and exports, for because there know well to lead looking up the be changing has important the corridors and to XXX industry got Biden to

the as the the doing well as So start well on airlines business on can longer haul travel.

for. . those watch to be not back But come and I two again, back. on I think Yes, leisure summer. this would It’s on it’s That’s not are will things starting haul. really a not out that long that’s So Europe the business,

and to certainly address this have really governments the need vaccination a the has world advocate to to the a or really this, lead out get But – world. for we or other. policy, and show U.S. one around whereby COVID the negative we got in either you positive the test, safe a So via either front

Larry Solow

Right.

question. a Carlos just too. really you, in, I chime for appreciate good second maybe Great. Okay. Perhaps that was And color. then perhaps, can

signal I will few – you some corporate at guys continue both there relative this out? the was like back guess, the quarter trend normalized mentioned incentive in least you FSG at on comp, the that, in at this a it last increase and a catch-up to look there, of seems maybe we to And incentive in to the times level level expect guess, level in to – as quarters improve. Just level and comp. the the more is But several it’s I clearly, business

Carlos Macau

Carlos. right? have QX of go last against. quarter actually reversals is comp second this any bonus, think Well, year, Relative the – I didn’t of to So XXXX, we to we good in Larry, to sort we – didn’t have had XX

something your expect I to normalized are getting – more you’re or more is, would case below that on ‘XX. we’re that ‘XX question they it would the to say performance-based I If still levels sounds And we’re like comp be normal? throughout stuff.

we think to We’re ‘XX, right? of levels that year, get not we’re to going those line. up not So this don’t in fiscal out I volume had of

thesis very the year. the of nicely, of that is we about have the yes, numbers year We’re quarter, or would, very expecting your this a in you which comp some out situation. if that, the to do and rest this amplify, for in expect we the commentary play safe why just But a ‘XX reversals, impact in we unique performance-based comp. had It’s your whereby

Larry Solow

Carlos. Fair enough. Thanks, appreciate that. I

Carlos Macau

Sure.

Operator

Thank ahead. is Benchmark you. Please Company. from one The The go next from Sullivan Josh

Josh Sullivan

morning. good Hey,

Larry Mendelson

morning, Good Josh.

Eric Mendelson

Good Josh. morning,

Josh Sullivan

PMA parts? of of for Just kind the or categories the PMA talk adoption trends customers you curious share PMA about or market more interest, any demand underrepresented seeing traditional gains are is customers, overall and previously maybe when of COVID you inducted of new on existing out

Eric Mendelson

a much it with more using term the would would are comes would I were progress working underrepresented. already as from opportunity, good Eric. I of The other else, since to you’re comes we are well. we it I it Josh, that’s there increased think is penetration there think to everybody say – say be I but describe bigger And this area, pretty both. and seeing everybody,

Josh Sullivan

ownership Got the it. the of this to And as increased Has just point? trying just maybe their fleet. the viewpoint is I what maybe I’m get what we or leasing base of at, customer acceptance at more guess global leasing see

Eric Mendelson

making But is I who our parts. is tide in with some that for not There lessors reasons there. use commercial substantial why it the that OEM switch. us to are customers. are be think I think parts. folks we’re an mean to rising going And of do I penalty this number want a area. a progress is to immediate stay There their

I’m optimistic upside more in us, we it. area, exists progress good think a So for that’s the making lot I are and why and on

Josh Sullivan

curious maybe how one this see fitting Apex supply your Pyramid, and into you with it. global at yourself And just around Got semi-cap point overall semiconductor overall just market gears, chains? it. one, conversation guys last Got then switching is what the semiconductor, to just just

Victor Mendelson

we Josh, this keeping participation in our Victor. semiconductor is Generally, are market.

grow consistent high low And with most those as lengthening those. production in And in those. grow to we to markets. an view the the kind For HEICO’s view mass of run markets. opposed areas, I supply part, our should so Again, on. in have value-added think being are appetite we niches, higher markets, rail on in and in of the There chains – defense

participant, I a as both and more adding likely. We see we’re believe, don’t we there don’t example, development in to think trying as expand I – for product being penetration, us that’s acquisitions. automotive. well are look for in market new We

like applications. Tech unique rail it and are would serve. continue that and of like wind that places Connect at for markets in power that, energy, high generation, participating high-end there Although like things done defense, I things wouldn’t also rule be at Tech us electrification which power, we’d out see doing some we’ve were and I Connect nature example, to end clean aviation, very if

Josh Sullivan

Okay, thank you. the Appreciate time.

Victor Mendelson

you. Thank

Operator

from Vertical Thank you. The Robert is Research. next one Stallard from

open. now is line Your

Robert Stallard

Thanks so morning. much. Good

Larry Mendelson

Rob. morning, Good

Robert Stallard

for you. I’ve got couple just a

that not is close of a IATA that with First Does share focused sorting out bit it the MRO on talk deal what all, there fact aligned Rolls-Royce holistic could on you on? not a to at be and to little this be present with opportunity Rolls-Royce for fleet some might chain or the you’re the gain this really moment. been its an is

Eric Mendelson

to happy Rob, I’d trade the IATA Hi, a take being be close and to Rolls-Royce that deal. it’s Eric. We’ve about question. the in read press same

As know, smaller network manufacturers. you other the than had Rolls-Royce a fairly closed and

a for was focus it never HEICO. So

So order that JV But engines, of to I due and But an Rolls have engines the if wants go talk fact happy a I be don’t us. that I various is we’d they area in a to area, us. major for that wouldn’t are as something think these see this focus they that’s think this of quantities would shops. to opportunity in to into wide-body that for customer them them. us to serviced, go the

Robert Stallard

if seen of up signs last line? wondering pressure the pass cost secondly, was And obviously Yes. quarter? on lot any what’s about input you’ve of talk inflation, over a around any to then I costs inflated a And ability your

Eric Mendelson

Yes.

the to opportunity regard cost with to we’ve certainly, regard aftermarket with pass I business, think – the I increases. think to got our along

If costs fully our very latest if reflect input we anticipate along think we up, some if value we with you explain going that our that to the the we’ve customers will have prices work inflation cost the went I to that customers, look have increases, do And we’re OEM pressure. to our this list why push closely to that. to do to fact ability would I that. would offer great at that got

standard familiar these It’s very with United the get side. all challenging on the materials. We’re the consumer States in even days challenges and to labor

in shareholder our less I We consumer tell As keeping things that sure a I of there of potential but adjust were a to close as that very far as we that feel inflation, to directly manufacturing is HEICO, there HEICO, we’re that will very think is the prices. in very, facing, make the side, are outside on a something able confident problems make been able of it is that, feel valuation you very that on shareholders of HEICO as individual inflation. confident I to any event up result be as can greater eye

We’re my as eliminate a be opinion, and our able risk, prices going that in to to shareholder. increase

Robert Stallard

much. you very Thank sense. makes that Yes,

Eric Mendelson

Thanks.

Operator

you. Thank

Ken is Herbert from Next Canaccord.

Ken Herbert

good Yes. Hi, everybody. morning

Larry Mendelson

Ken. Hi,

Eric Mendelson

morning, Ken. Good

Ken Herbert

on Eric, one final could. just FSG, question Hey, I I ask to if wanted

provide sequentially, maybe respective growth? terms fit any and XX% you up can you that distribution that repair replacement or break you’re how into parts down growth versus of less saw businesses, at in on more For where color the all

Eric Mendelson

be we commercial anticipate, can. anticipate behind course, predominantly deeper, Yes, specialty was that that look was. most aerospace commercial component which because specialty compared the would you you here. But nearly down that. coming were, – down products as to the from and We been the down do the will their shortly coming the last very at rates products. behind to that more with we specialty as largest you the with I Boeing parts the would would products, of And which I have as and aviation is – of the saw, Airbus area When distribution area much wasn’t year, little OEM build bit increasing that supply, dig a the if do the is be supply, happy in the and repair, as that OEM not that defense, pandemic. down commercial to extent

Ken Herbert

Okay.

repair your were the then segment parts FSG within the sequentially aerospace So and that say you it’s in the the than replacement to quarter? for XX% aftermarket pure fair saw businesses, greater distribution up

Eric Mendelson

the so. me think Carlos that would I I But in don’t to the numbers that. of here. case front would believe validate be can... I have here

Carlos Macau

the that digits in if shrink, the mid-single component of lines Ken, you if correct. on – Eric laid three at out, and That’s just repair this the and you organic repair. look was business would, parts

a segment. specialty they So to on was back coming drag not was are as products Eric’s robust the point bigger and

you the into for. back numbers be to should information, with So think you’re that able looking I

Ken Herbert

recent defense patient what because on terms seeing of maybe Perfect. of bit moving multiples more course, you’re Larry, I maybe attractive you we you a think Thanks, been more have, budget forward are multiples? Can in little acquisitions move Carlos. number Victor this your the as And on on the if comment into defense or just could now of could, little And bit a side. get market cycle? a further being you

Victor Mendelson

Yes.

Victor. is this So,

it’s don’t on careful We really thinking very have a in just grow defense though along to place the do strong very well to that defense and and all be live needed defense, multiples And say sky. this, and in been would you that pay to we excellent heard is – that an reason. we we for that the us there defense that could need that budgets the on have careful

aviation were there cautious. lot particularly over when was tell all no because – been away a the course, defense, have acquisitions, A&D, I deals, and last year, we months, D, feeding right, commercial can turned frenzy. was So, potential aerospace going defense, we X to of that a right, all and you of there the have the

you there was you If only could the sector, to participate wanted buy. one in place

potential into funneled And So, set money lot that. the all was a of we out acquisitions.

we we selective. So, And become are of things we opportunities same kinds in of some overvaluation not companies, on passed might opportunities types would I very companies. would we pass extremely again, think decided the the the will opportunities, of stabilize on but that other

of and have of probably we its I at opportunities, we worth, think great rush every are somewhere the really to that’s going be that and always, careful. acquisitions whatever one there make, north to great buy probably that neighborhood out companies the case. as Selectivity just look We we is key. don’t now. want anything. but to XXX always for And probably be in And for

Ken Herbert

detail the for Thanks Great. Victor.

Victor Mendelson

Thank you.

Operator

from one Poponak Sachs. go next Thank Goldman is you. Please ahead. Noah from The

Noah Poponak

good everybody. Hey, morning

Larry Mendelson

morning Noah. Good

Noah Poponak

XQ The Just ‘XX if XX%. is FSG sequential trying I pull XX%. change, to to at margins, the about incremental a look back about the so X-year going decremental, apart is

the out XX% business then incremental-decremental also, think quarter. were if the I the something strip you consistently. half maybe you back is much expenses think a I higher has the last the you it’s in had of year-over-year year, XX%ish the pretty already But XX% I had And abnormal on decremental. in near the that in the

you to by explained all that’s the way margin? is discussed circle that here those last of place changes now is incentive back in have other not coming that FSG taking some year square comp the or the and So, there on

Carlos Macau

is performance-based It completely No, this is explained comp. Carlos. by the

Noah Poponak

share Okay, then, Eric, you of That by attributing Could you the better to so and mentioned FSG times revenue you up sequential you share gain. can maybe share picking increase being within sense. in here the just recovery, gain and of to few got And understand examples give us positively that it. are where change, a the spoke here, early have parts rate makes specific surprised some that? we already of

Eric Mendelson

in be to customers and what worked area. in folks in which want we I area say the talk I our would would us picking white optimistic have understand product the and sales in on most It’s on front. would the the that’s it up with on. over products, basically PMA focus adjacent with what past, our really as we spaces line, they say, hadn’t And particular, I always us I called that as customers broadened am typically and where

Noah Poponak

those some what are? us tell of you Can

Eric Mendelson

particular map our we of competitive to a on I not where I don’t do not rather rather going. – we due them about competitors have would product morning, would we and on We road number welcome this not them, because are give call to but try reasons. the customers or I types a speak

Noah Poponak

Yes. Fair enough.

just cash. quickly, on Carlos, just free one Okay. last And the then

half. recovering – a And you And year. even half are year, the your through cash with last Your in year back normal free about in it is than years, stronger the first this most was the pandemic, even.

to So, free half should first ‘XX? expect be of half flow in fiscal the your higher second we the than your cash

Carlos Macau

I expect that.

build little flow as have bit. expect increase I we we half However, I are have But have free careful things of grow receivables to replenish, be will volumes capital, to will have ‘XX. that to like in do a inventories up going to we the working cash going to latter stronger are and

Noah Poponak

Okay. Thanks very much.

Carlos Macau

Sure.

Operator

from be next Sheila from you. one would Thank Jefferies. The

Your open. line is

Sheila Kahyaoglu

Thank okay. Maybe gains, Eric, Good Is it tell can guys. the for Thanks share to on where if more morning from? I talk you share us about an OEM? are lessors time. choose And that’s a Is or versus you. gaining differ share want you part airline Is it a does other versus just what PMA? then And it used makes serviceable PMA airlines gains, the as manufacturers? USM? it operators? with

Eric Mendelson

as regard morning the good Sheila, PMA against OEMs. as to well it’s think share other So, I companies with gains, other

than are side. So, it’s over regard both. our With less parts the sales to PMA of in $X,XXX on XX% of excess USM,

that are don’t believe market. USM we to the exposed we So,

But If us. provides does into market is makes used. So us ultimately therefore, have that what’s space. out used serviceable in think USM sense. glimpse get primary, on I will area very well it’s really a not major a that not there item will there, and it’s a focus financial a for It it subsidiary We the for us. big sold in get do going of and

knowledgeable it. But So, much we we those an very believe impact our businesses. that there is – of for reasons, and are other about on don’t

Sheila Kahyaoglu

Okay. can on rates you seeing I of then recovery to that play of commercial color change. parts? frame you commercial ago. wherever whether focus – how Aero about as was the know No, you than pick declining the you up? a are little it’s But terms in expected that’s it color. can a you where And aero maybe gave a engine aero you bit of what market? OE helpful production about specialty And to up talk talk within you expect business engine recover, that pick is decade less sort expect guys much how interiors, more to

Eric Mendelson

cash, side. our So, PMA go have has precipitously. would important part do still engine business on market. But business but market. than back I airlines fell and slower the more ahead market will come non-engine the a back. say And more engine focus been that delayed it preserving it’s an our as also that coming A of us. We is the non-engine most exposure. And have non-engine majority is in it’s historically, the parts as in still said of business the for of we little

Sheila Kahyaoglu

either within last major on define following question, Bob’s lot what then too, Carlos have of how up labor this we for a or inflation is split Okay. COGS? you been think And your one your maybe versus for – – Victor X or obviously, commodities or costs? getting can we commodity you about X as, your apparent. do you What of And

Carlos Macau

cost costs, input actual engineering, costs, actual is consistent IP, this The this is frankly, HEICO R&D. lower. within segments. a Carlos. of is both and lot a the that Sheila, of make, pretty material The it’s a of material So products lot is The lot

to am on inflation if capture I we follow there I and the the that gained umbrella to something materials. that, will conversation, believe And know, be they who you less our to raw Eric’s set them pricing, up there. in as concerned So, will point about is pricing OEMs do earlier the use, we

do and hire side, that, labor as where more feel could we bit we the things think grow labor there. And like But out on think more I expand don’t I as skilled and than and we a we adversely impact. other more. that’s any have any little that, could of going an a little impacted that corporation are I to think bit be

are the type hiring us than the inflation different we seen types the labor of would nothing and be country is that that to think of cause I across folks. unique workers really that HEICO there even globally, about and other

Sheila Kahyaoglu

you, Thank guys very conference. this Sure. for much

Carlos Macau

Thank Sure. you.

Operator

you. Thank

UBS. Please Next, ahead. go we Raffetto have Louis from

Louis Raffetto

that. Actually, follow-up Good on you. Thank morning. a just

you I last year back So Eric, Are you forward? these FSG. yourself your you like them think cut volumes guess, hiring now see as in of I headcount XX% return guys do going or being leaner

Eric Mendelson

then much for took voluntary. cut workforce space, the those had am of remained in was retained did also I our some aviation had I we peers on aftermarket layoffs cuts. XX% a space. of who Yes. than furloughs, we we the percentage which commercial were sure voluntary we and of But larger not we limited think don’t – headcount. pay What HEICO all our the And

that we position So, product good able right HEICO other very are mean a not effort, did in development their that. gutted to a development. our lot are where new generate are do new I product now companies there we of

retained skills. We our have

are unique satisfy we customers think to gain share that and be and market able I very going a position our in So, good to forward.

Louis Raffetto

I on up will XX-K, guess. numbers with I the Okay. Carlos circle the from

I mentioned So I be Any we know that out budget comes you guess, things. or specific been think is areas the that acquisition. big it? of about about the for margin Victor, should JDAM ACT at the you that that earlier higher in for has something I later you, looking I thinking know are week. some particularly this defense

So, to a as that? trying looking just get at what are to you sense

Victor Mendelson

Yes.

are will out, mean thumb, exactly very at to in heavily point, I this not toward intelligence, we Louis, that’s we tried think tried and over speaking, bias the I have business see. would that. operations budget ought there entirely the going we see generally And of less and although we to put the and where like. it to wait they defense what time weighted. as segments rule when we are you higher surveillance, tempo, believe of live we reconnaissance, of be Friday more to It’s a the looks is heavily standoff technology expenditures outside warfare, the budget, the know,

a will the remain both priorities. at of of have Flight what within will shake so to course, Support Group important, But should of the just I part And benefit go out HEICO. ETG good to have do, there. out. shot so least it sense negotiations missile in will we comes and take some think and defense from time will and that’s to committees where And a things it through there of and course, that we will be And like and wait and and then first the us be relative they But Friday others. on, we the see

will So, that. we to I continue do think

Eric Mendelson

the are our some By layoffs in larger area, facing Eric. our numbers, specialty way, businesses. is Louis, the this looking products did In which occur at of non-aftermarket

particular of just a lack predominantly, to due reduction done So – work. was in most facility Asia the the of and in

going feel able very So, well-defined those that that to up very are processes, labor those – we manufacturing be to content, confident processes. we have spool businesses processes and

to position we feel In up. in very going we to that weren’t able be space, layoffs near spool said. you to good the the our that aftermarket a be So, number anywhere are

other think levels, And to HEICO ordered those some that who employment actually, government-mandated was cut may that referring you the never were but companies reduction, in of the aftermarket shutdown. did. I there because be to their Asia was

Victor Mendelson

Exactly.

Eric Mendelson

those… of some And

Victor Mendelson

Louis. good another point, That’s

Carlos Macau

did maybe layoff I year. pay when are about take we Louis, remembering numbers a cut. thinking Maybe you you you quoted thing, executives are The last XX% those you remember, since that did one earlier. that’s mean what

Louis Raffetto

just reported the I looking the Yes, headcounts from am at XX-Ks.

from So, like kind that it’s I headcount the employee something in of XX-K mean or employee is just But to the numbers follow-up can basically we offline to the XX-K. over reported maybe again, yes, that furloughs numbers. go

just guess, really I else give don’t don’t not like one to ETG. ETG no sort or I want you is guidance within something I but follow-up you for you or guess, guidance, give not there you to feel on? am So just of just guidance guys Do give sure still anything here. more piecemeal get visibility I that FSG, have good that

Carlos Macau

for commercial up can XX% anywhere example, run from that of ETG, XX% Well, rate. in to segment’s the make aerospace

to And it matter rather the as piecemeal give I be of would not is, so it there like as isn’t is truth right And we now. clear the – guidance. would

into where are not And typically confusion. get for just other. to a giving guidance don’t may game for are one think segment want guidance only the an that’s and I It helpful. We giving don’t I on we cause basis. annual

guidance at we would ride this rather I that will to company folks’ the time. this expectations. the And visibility not now continue But give is to hopefully, out. So, such nonetheless, right wanted for outperform

Eric Mendelson

is And this frankly, Louis, Eric.

for far Our tremendous what else or anybody XX% doable. quicker. I increase given much credit really thought give we accomplishing in Support better, Flight And we beyond sandbagged we fact, we ago, that said or would possible when, to have X everybody months much it team got our so guidance missed it, members was things just have and that. would was in Had

do. don’t we the give guidance. just I responsible are a think It position So, wouldn’t now right to be to in thing

Larry Mendelson

Carlos. Larry. agree company. Eric I that that It’s results we Flight to want not And ETG to companies. combined my with two HEICO, I an the add company not policy. completely company. when is about operation. is a Louis, it’s please, X and talk one this and sense HEICO of a Remember, It’s Support

X improper, So, and to other something opinion, not it’s the would to are not give we guidance division in totally in be, going my that do. and

Louis Raffetto

you. Thank enough. Fair

Larry Mendelson

Thanks.

Operator

question Cowen. Our from line go is Please Instructions] ahead. next the Khanna from of Gautam [Operator

Unidentified Analyst

Gautam. for Good morning. This on is Scott

Larry Mendelson

morning. Good

Unidentified Analyst

Just one for me.

given you any are defense And comments the market in markets still year, any this more on defense opportunities seeing active commercial is end year pretty for that in are or seeing Just your difference last M&A? limited? you versus

Victor Mendelson

I Victor. this is think that –

still defense. much I bias are on think heavier seeing we

what really some consistent expected. commercial start to we with awaken, are which We seeing is

in or comfortable it are some reasonable remains projections people defense where most be But more privately. based upon and heavily think towards for a least about might making little asking recovery – about and weighted the a for pricing part, I and they markets. feeling at space defense other

Unidentified Analyst

Thank great. you. Okay,

Victor Mendelson

welcome. are You

Operator

Colin go Please from Ducharme Sterling ahead. next our from have We Capital. question

Colin Ducharme

me in here. Thanks squeezing Hi, good for morning guys.

of you The at for somewhat aim ago. just – Just us? don’t significance, you there, anything normal, read signed got Larry top perhaps Carlos maybe help for pay if of facility LOI Do but there? stand then it’s here. here? ones the of about the of that you some just a expanded your going give about footprint we interested upgrade footprint just revolver funnel kind know down, that in characterizing standpoint, can anticipate you quarters you characterize that talk Carlos X today? if equipment M&A where in to could out stands just of are that as does recover quick kind cash to Any the – Where frame best kind perhaps know flow quarters. from of connected I free couple to opportunistically a And a guys of perhaps, of Anything terms pipe. then anything forward, us if as on had characterized just where continue prior CapEx kind I you to Thank ordinary you. And trends, CapEx incremental could talked margins there? Carlos, you finally, some required just

Larry Mendelson

is Larry. This

never we sign into we due misleading because to do handle question. of time. because the goes that for LOI, M&A me if Let slightly all even be discover or were speculate we it. due is it that And signed that like there agreements and We anything a it’s on an lot the diligence would confidentiality We LOIs diligence, us. not

the and comment public But So, the call our that to we we think I normal. think, this would never thing. want pipeline is mislead would I make them oh, had what

beginning which We to them little honest right can close. we never transactions, ones now very are are and you the we had at some we as good of they a varied. looked with get that look looking I at to a mean really into going be number predict and

to this are I I we if looks this close very soon say would have you good, been and that may weekend. with would ago, had those this months going So, all we think very conversation X

very to direction. Carlos? lead or want the So, not, I may but it’s in close still wrong don’t anybody

Carlos Macau

a to expand. powder generated pay continues we The say of as that Yes, down acquisitions plenty credit our on the the ton quarter. Colin, cash really expectations team. why management available down we And sure grow banking that make would just last of to appetite sheet, agreement growth we that’s besides a the to expanded the for dry debt. paid And have we year last we we have balance of some I as the accommodate that credit facility,

rate. We a are at high borrowing not very

I think our my average around rate X.X% is on debt.

So, it’s a very low carry.

capital continue us The And expect down, around million you of so we for of question will and keep we this but to very efficient $XX source had it’s flexible. worth about year. it paying a CapEx very CapEx, the

of The first months of of and in amount this expansion fair spent half first $XX to We capital good key million footprint, grow year, of about our expansion did capital. some chunk we was X that businesses. have through the if would, a of you ‘XX, our a

XX-XX question, mentioned resurgence a think pandemic. expect, would capital, in of – That’s earlier the the been stronger, or answer was Colin? or tends like our thing. be flow half as that the free our I continue. spend. growth associated I expect on call, of a right? And generation maybe to do little Does year good this all other fiscal that issues in the cash any I historically And that’s So, getting Absent that that with would split then rest second something I your to logistic it’s pattern out maintenance,

Colin Ducharme

great. Yes. it. appreciate That’s color. That’s I helpful

Carlos Macau

Okay.

Operator

please you. don’t continue. have Thank We further this questions at time. Presenters, any

Larry Mendelson

running be and COVID the input. This us. is your in half interest improving problems. –end Larry Mendelson. We towards to your But I year of middle into sometime ‘XX, thank improving call forward the conditions we believe issues of comments, of other to look in of resumption call, to the forward or everybody on quarter be conditions. anybody want our meantime, call third for to question August. barring will the fiscal second please any you We look and any which at or if should the And has kinds speaking there

and and your you respond available, to all with We we Victor, try Eric, be are to happy speak to will myself, Carlos, questions.

conference all And call. this you QX is end the very of much. So again, thank our

Operator

This concludes today’s participating. conference call. Thank you for

day. may You a Have great disconnect. now

HEICO (HEI) 26 May 212021 Q2 Earnings call transcript