HEICO (HEI) 27 Feb 252025 Q1 Earnings call transcript

Company Profile

Participants

Laurans Mendelson	executive
Eric Mendelson	executive
Victor Mendelson	executive
Sheila Kahyaoglu	analyst
Noah Poponak	analyst
Carlos Macau	executive
Scott Mikus	analyst
George Bancroft	analyst
Scott Deuschle	analyst
Ronald Epstein	analyst
Gautam Khanna	analyst
Louis Raffetto	analyst

Call transcript

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Operator

Welcome to the HEICO Corporation First Quarter 2025 Financial Results Call. My name is Samara, and I will be your operator for today's call.

Certain statements in this conference 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.

and products and such health airline which the complete COVID-XX airline demands, threats liquidity sales the cause duration product space magnitude or pandemic, from services fleet affect delay increase an could disruptions to generation, increase levels, could technology pricing difficulties, our and public costs by lower cost to could existing spending which U.S. cash at of could such amount reduce cybersecurity reduce changes systems homeland that competitors, development manufacturing or differences which competition of air severity, include reductions demand and our events new regulatory could our new and or or goods could restrictions; HEICO's lower and which customers and Factors commercial of cause purchasing or ability travel, timing business. as product other and which specification manufacturing policies could defense, information and governmental decisions, our contracts; export and sales; or services; our costs cause for profitable and sales product and/or security in development sales; requirements, our the foreign our introduce to our growth; adversely

electronics and revenues. of negatively achieve and and medical, exchange to within and ability currency inflation from synergies operating defense, acquired including the industries, and tax and/or costs impact make which interest, our the aviation, space, businesses; economic approvals foreign conditions, Our acquisitions, credit of governmental including domestic obtaining rates; applicable outside could telecommunications foreign effects customer risk, and any income

on extent of with encouraged XX-K, any result Exchange events required Parties Form to Securities of otherwise, are filings except or Form not but review call and listening whether limited new to and the no XX-Q forward-looking update to or law. revise X-K. HEICO's to, undertake to We future information, Form obligation filings all statements, by publicly Commission, including, the applicable as this a

to and HEICO's Chairman turn now Executive the call over I Officer. Laurans Mendelson, Chief

Laurans Mendelson

Samara, to 'XX and Thank the for you Eric Mendelson, Victor First on good call. Quarter this welcome joining this morning of We Announcement CFO. you here Co-Presidents; Carlos and HEICO our and Chairman by President us, everyone Teleconference. I'm and we morning HEICO Fiscal you, Executive I'm thank CEO Earnings and Corporation. Vice Mendelson Mendelson, HEICO's Laurans joined Macau, and to

would to highlighting the deliver incredible and first driving success. to with like Before exceptional our fiscal exceed to HEICO's hard force unique efficiency remarkable dedication results work, outstanding personally team tireless members thank quarter for excellence. expectations results, I their our customer commitment 'XX of efforts behind Their are and

bright shape Your future. continue HEICO's efforts accomplishments to and

very We're reflect win both our first proud strong remain margin expansion, to record opportunities 'XX. our ability segments. cash consolidated which quarter flows sales and very in of results, on of fiscal HEICO's bullish during new I net

across team opportunities and aviation like key new exceptional our on an administration's diverse is U.S. commercial and on markets filled of look to capitalize our With great space members, expansion. agenda long-term to and of drive and fiscal industries. pro-business we our The positioned our goals, 'XX, team the focus well talent current innovation, As strategic uniquely optimism. our environment investment sustain is ahead remainder aligns the for defense, with momentum and providing HEICO with

first or and compared that $X.XX quarter in a 'XX. diluted quarter per the in of our of $XXX.X million and share per income $XXX the 'XX in XX%, 'XX. quarter first fiscal $X.XX up to net quarter results first XX% quarter share record results, improving of HEICO, Summarizing fiscal increased diluted XX% or the 'XX, sales to first fiscal operating first and income from for Consolidated represent as fiscal of record 'XX by the net fiscal consolidated million was respectively,

Net fiscal from 'XX and income by both income stock in impacted million discrete 'XX, quarter was tax favorably of The benefit fiscal share controlling of per that net quarter first benefit -- attributable 'XX the a the of the were up fiscal million or quarter per option from diluted HEICO 'XX. and tax interest of was to diluted in exercises. noncontrolling first $X.XX in $XX.X first share, $X.XX $XX.X or

Excluding in earnings XX% both periods, or per up. share share the impact benefit tax this diluted of per increased $X.XX

organic growth the quarterly mainly increased parts all-time quarter Flight Group impact lines records Support The aftermarket the 'XX our and respectively, sales 'XX. replacement attributable Group's set and and net sales quarter for parts demand product the fiscal over and increases profitable fiscal of principally XX%, and and in to 'XX net XX% 'XX, acquisitions. strong overhaul services repair The from first improving Flight operating XX% income first reflect and Support fiscal of the

The 'XX. principally sales of and and our growth increases Electronic first -- fiscal from growth attributable space mainly reflect Technologies to and and net the and positive acquisitions. impact fiscal These over quarter operating XX% deliveries sales strong Group XX% the 'XX organic 'XX aerospace respectively, product improved increased income sales defense, XX%, net

from quarter of increased first fiscal quarter Cash in was and XX% in flow fiscal million operating of to up activities that $XXX 'XX. the the $XXX.X provided by 'XX, million first

flow from continue fiscal the to for 'XX. cash operations entire strong forecast We

of first increased that Consolidated million fiscal in the up of million EBITDA was fiscal to XX% first in $XXX.X from and 'XX, 'XX. $XXX.X quarter the quarter

active, This value. acquisitions approach that financial and We XX, consistently as pursue a efforts is as XX, within shareholder October our X.XXx X.XXx long-term was opportunities highly potential of ratio robust we meet and and and a of M&A to 'XX, operating segments goals. to our reflecting both Acquisition of make guided targets. remain 'XX. accretive seek earnings by our while debt-to-EBITDA diligence of compared that financial enhancing January pipeline disciplined are net complementary that Our that acquisitions sense strategic

paid 'XX's We busy cash XXXX. completed were 'XX, share, January XXrd In acquisitions, acquisitions dividend very first having subsystems, cash SVM acquired we of serving electronic semiannual November, a and our since and industrial Limited, of fiscal our consecutive per several XX% dividend passive also designer components was quarter. Exxelia $X.XX regular health high-performance care of in the our manufacturer which key primarily semiannual with markets. In subsidiary end and

order avionics business company, avionics exclusive repair XE/X a HEICO's Millennium capabilities. in the we license XX% purchased we XXX assets support acquired via from International repair In to In complements XXX and Honeywell AMs January, Boeing growing in and December, interest which NGP the secured lines. an product jet International, a key

activities. these acquisitions of proceeds credit All cash facility our revolving using from were funded by provided our principally and operating

of expect these accretive acquisitions to year we addition, our within to the be earnings following the In each acquisition.

President Group, Co-President At this HEICO Flight Eric discuss Group. Eric? introduce and he like of time, Support HEICO's results Support Mendelson, of the Flight I will first quarter and would to of the

Eric Mendelson

sales acquisitions. Thank of sales fiscal The XX% the first first services. 'XX of Support in and growth parts $XXX.X Group's reflects quarter sales million XX% impact record repair million net in and demand fiscal and and mainly a from The for the 'XX. replacement net our parts fiscal overhaul you much. to the organic organic profitable first increased very in $XXX.X and quarter fiscal of 'XX, The Flight 'XX increased from the increase up quarter growth net reflects aftermarket strong 'XX our

to an exceed expectations, was HEICO. continues for our this Wencor and acquisition excellent

repair for and offerings and Our component legacy their aftermarket success to businesses larger and overhaul into great translated our opportunities has both product find customers aerospace and for excellent continue value parts our Wencor. needs, which in growth

continue consolidation. cooperation, The to capabilities operation. have defined be results to consistency absolutely strategy. without as stand-alone a We I have Wencor proven operate strategy and the correct our as cash, business this

in As our a together we make to seamless I've serving mentioned before, good and progress working combined fashion. continue customers

we together aftermarket HEICO's all PMAs; platform how One, include: HEICO and cooperation; and Wencor repair working three, four, sales defense all of base all Wencor manufacturing at examples Some two, and quote utilization noncompetitive Wencor are utilizing lists and and that is benefit PMAs insurance, commercial engineering such costs new DERs sharing regulatory and and to cooperation; back-office FAA stations; compliance e-commerce of seven, best-in-class additional SOX our and will many cybersecurity compliance help offset build retirement as six, synergies ODA. vendors; payroll, our as HEICO regulatory products; plans, export five, our such

Group's defense administration opportunity, presidential to a Support strong prioritizes defense presenting Flight continue efficiency. current sales the grow, especially U.S. cost and as

parts are in the one the to DoD making selling As example, X the efforts upon and frankly, replacement past aircraft building over agencies decade our we path before. years to setting progress

as so government the expect our parts, we significant commercial we contribute reap do the airlines from are just our While excited about very savings this world. revenues, don't to buying U.S. meaningfully taxpayers can XXXX the around many to

detail into making say I I on going further efforts, these this that can't For competitive happen. reasons, get but is serious into work can

missile business Our reinforcing significant ongoing and firm growth without its is we by as compromising meaningful and increasing a from expansion U.S. from defense substantial missile cost-effective demand the orders With driven of components our this solutions quality. shortages, allies. well, delivering defense backlog experiencing anticipate commitment pipeline, to

to of Group's increased reflects operating $XXX.X increase fiscal million principally of The fiscal income quarter the improved The realized million first efficiencies record up gross net XX% aftermarket sales 'XX. Support margin. the 'XX, quarter a sales first parts The profit operating in net principally $XXX.X from sales. improved net and growth, mentioned Flight income in from replacement margin profit previously previously reflects growth an expense gross the mentioned higher the the SG&A

as in The growth. in The net from efficiencies Flight reflects and XX.X% gross quarter expenses of profit improved the percentage mentioned fiscal the margin, SG&A previously reflecting first a mainly operating increased of operating mentioned realized the quarter previously sales 'XX. up fiscal of margin the principally from lower Support sales to first increased margin Group's net 'XX, XX%

Acquisition-related margin intangible FSG's XXX as than basis margin in has the what of The the of points we fiscal Group to first XXX approximately operating which been points quarter and cash XX%, first comparable amortization quarter excellent XX.X% of basis before EBITA refer our consumed margin approximately or amortization in consistently the 'XX. fiscal was 'XX. Support Flight higher is cash of expense

with I industry-leading efficient industry. unique fair with operating delight incredible truly to our structure decentralized margin our our times. expansion accomplishment, of This simultaneously and am we turnaround customers very as with permitted has cash expand quality margins an prices, in which these believe is undisputed continued and coupled happy our is us the

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

Victor Mendelson

XX% strong XX% the $XXX.X 'XX. reaching from strong orders reflects million fiscal defense, up net you, in the 'XX impact amount growth from in net the and first net net products. Electronic first The fiscal sales growth remain increase acquisitions. organic space 'XX 'XX, the with of The order. The to reflects of ETG's and very backlog of $XXX.X million increased Group's the our sales organic our Technologies fiscal Thank sales deliveries Eric. Further, mainly ever quarter sales on and highest quarter quarter end increased aerospace

sales order $XX.X reflects those as markets later Our favorable well from million an quarter principally net the the we non-aerospace witnessed 'XX, increased Technologies profit markets improved off gross fiscal operating the income sales. $XX.X inventory. from The principally improved bodes defense SG&A quarter, and working sales operating mix increase The the -- in expense fiscal aerospace space, XX% sequential for gross increased this Group's defense sales products quarter first fiscal growth, in mentioned year efficiencies to which continue believe growth net in reflects previously up first improvement million a customers net and 'XX. of previously realized of their and in margin. of margin excess mentioned Electronic The the first the profit recovery income

previously expenses margin first margin Electronic profit Group's of reflects in gross The net to operating due SG&A the the percentage efficiencies margin first of mentioned favorable improved Technology from XX.X% fiscal XX.X% sales, a as mainly mentioned the improved lower the improved principally in product to previously mix. and 'XX, operating up quarter due of quarter The the to 'XX. fiscal

how amortization very closely excellent intangibles most are Importantly, XXX before cash. On operating intangibles will recall, true operating expense, it is basis as with and acquisition-related we basis, our are amortization XX.X% as judge points This -- to margins, these of you businesses margin around our margin. operating correlates a pleased them. was is consumed our cash above we

over the turn Laurans I back call to Mendelson.

Laurans Mendelson

Victor. you, Thank

and net fiscal As for growth look of the increased to the our the ETG strong and in organic supported to products. FSG for anticipate most both continue we demand remainder primarily by divisions, outlook, sales by ahead of growth 'XX driven

addition, our for completed capitalize ourselves acquisitions plan on cost-saving recently In positioning to accelerate while growth through solutions to customers. we our

excellent team our to career penetration with strength expanding for commitment a value priorities new Our development, on all remain long-term services, advancing our opportunities and providing focused to fiscal members and products and market while maintaining shareholders. our flexibility, delivering

opportunity We believe see large the future both cash in is And and balance the that the extremely HEICO. know numbers and the when for quarter we gains flow, first study we margins of strong. than bright the so. in is 'XX will grow continue to is going HEICO And that a to we larger we do to what be tremendous very feel today, we it have and

please But today, if will that backlog you call outlook. of you or to history. call comments Keep give in or any Victor, have has me and the questions largest if not Eric now. or or Carlos are some you mind the to for taken comments or your in happy we be its opportunity the ETG offer I

Thank can you floor open very we the much. Samara, the open questions. And floor for you for now questions.

Operator

[Operator with Securities. Solow CJS Larry first question comes from Instructions] And our

Unknown Analyst

Pete Lucas for Larry morning. this

guess year. a I covered do quarter top sales guys quarter appreciate Group, last first Support very just mid-teens and mid-XXs starting with Flight the that. impressive -- I of You growth in lot, on

should about customers about newer talked just maybe we for drivers demand repair You give if with you customers? growth that of being penetration think more us little existing Is How organic expansion services. a that? aftermarket guess color. or I the could

Eric Mendelson

is Eric. question. be This to happy the answer I'd

is I growth So much from pretty expansion coming of in customers. We to everybody most think with industry. the the that existing sell

So it's just deeper market penetration.

about growth growth was You organic last pointed top XX% on XX% of out that the year. organic

that So grow. to is, the this to and accomplishment penetration think, to on market. that continuing we're the really increased fact hanging I an market speaks We're and outstanding

well. products additional Our and customers want cost very and really it's services, savings, taking hold

Unknown Analyst

about XX% just the to keeps that by flat operating look mix? sequentially, driven at looking think guess, But a higher of margins, going With should quarter, forward? rest that the lastly, how to for of grow Is expected then would again, simply be And margins kind margins question aftermarket the sales of the sales. I what we in year?

Eric Mendelson

funny It's that. asked you

So updated from we budgets and get forecasts all subsidiaries. our

quite the I about phenomenal, last investors our while said commented tend -- that sandbag our And -- also well. to somebody me one of are on they something call, our people to

it's So -- it they in turn they numbers, turn their in their budgets. And really I sandbagging. don't think

accomplish, perform ends the to it's think we're that demand to truly products much mildly they higher is them happening their come I can conservative. products, much get through And And get are they and develop really anticipate. what people better. able up what and able than they and sold, the do think in, is the

first happy in I'm very I'm the higher. while quarter, margin XX% to So with EBITA reluctant predict anything roughly our

to make able, you bets to be the that working other. other, move and the to happens, think they're the everybody other, time. EBITA I a from, for look has that I XX% continue XX taken going XX% last each they do results if we've don't take a And we each basis job. gradually having And if to know, up. very will, been years. their just trust are now gone what on an up. as result, together make, each of a Now that's And over that And good a is team roughly at They long as going and to result risk you understand they approximately trend very we've like

very are forecasting I trend our that and not happen. that So been people has to make working increasing our mean, while hard we're margins,

Operator

next from question Sheila with Kahyaoglu our Jefferies. comes And

Sheila Kahyaoglu

Great quarter.

first just my for both first guess a fun I in of Margins So little question, the bit here. segments XX% are time.

about think Victor, So above in we XX% mentioned how margins range. do from Eric, EBITDA well you expansion there? that the the both

here for how segment? segments near and contributed So both each margin just expansion about to think do from term, but longer how price we term,

Victor Mendelson

is this Victor. Sheila,

range. Electronic which But I at be to with EBITA hopefully hopefully, For we'll in probably the you rather higher. goal that do is that at the feel XX% XX% XX% as me Group, to Technologies say, And support. range if higher working I'd the certainly heard comfortable and level. better, and And time. answer deliver on And we're everybody on comfortable do, hoping this we Eric to do that will --

Eric Mendelson

forecasted, end the So, being that I mean, margins question we a to great never it's -- we they margins. never would are. And regard up where predicted with the

know the Our has down, hard, details. decade keep the we execute last to technically, make -- minimize that is heads the understand to the work just details. sure, parts be. and the we you the makes of And as happy. in We two, Everything over our following us on obsolete our know, making or to what need pricing, customers sure inventory they where getting that been for very us

long XX% our you even when this do, look products if -- an depreciation the term, And only at XX%. what think the night and typically We majority, proprietary we're that by roughly XX-plus important every because the peers to are where to equivalent. EBITDA, it. EBITDA don't of basis is most CapEx Support are EBITDA product an you're OEM. which way sleep And have margin be turn out because authorizer. somebody look going on line offered But yet correct also we in Group And is we're to we business is that's to vast not We percent is Flight at else. knowing able the our go

would honestly, I and So think business here. never frankly EBITDA thought doing independent an XX% to I we that phenomenal get is be margin,

not watching through done to hard to that, people is through pricing. our This really continue more efficiency. This working our in order absorbing improve So increasing is having line, fixed costs, our product done said overhead. are

shows and don't to So talk the space up. of of those when you type margins. competitive space, we're aerospace that continue about the very work -- at will, operate the, look, trend I XX% margins in franchise hard you But the business, make those the think to the fact think, it for uniqueness a others I going most if independent to margins in don't

going I'm that So I'm they're would go that hopeful predict they to I say higher, -- but will. nervous optimistic that to and

Sheila Kahyaoglu

we could become to ask since I Maybe, defense adoption know pretty are hot MRO didn't but penetration to I if don't a about opportunities, Sure. thinking into about as seeing PMA overall talk any facilities talk this. topic one the about market that adoption? thinking you want product on new you're has PMA What in 'XX? tight. you Eric, about and PMA opportunities get are And

Eric Mendelson

Yes.

which in So we the We're first product we've very Flight in on to our product excited more aims delivered. One the for Honeywell new that really XXX the broadening is continue the and we're also manufacturer parts. the new via includes acquisitions quarter. line, trains and Support basically, developing of -- the for that PX lines and avionics focus are those the and EX being the the XXX is -- units about NG had for

our but like then And the year that of display units business, acquired of technology, over we wide a excited very I already capability. with about a the International avionics Millennium acquisition. some avionics getting So We really critical into also, which business, I'm broadening our had very very much an is coupled example ago. that's broad

So this I biz the in leading facility the think, really jet facility, world. avionics independent is repair

who's if as and we just stuff what overjoyed to nobody And not they we DER like speak in we're HEICO want is offer customers happy can Millennium, are are they doing. the that family, or our PMA to the is that's want OEM, customers, even that they Millennium if there the and absolutely that HEICO doing well. You do

So the it's customer whatever wants.

a But in the I us asked about I to think ever again, would for it, lot very, So continue biz information whatever We're step XX,XXX engine management XX PMAs is, our and couple just there. it. just And years capabilities. by we jet that that we DERs, HEICO that nearly think of broadening, would with thought step the I'm ago, XX,XXX and space. very XXX aircraft more every very be to going the have which the the and system broad us continues into pretty nobody speaks People and it's have excited the quarter. to much focused control or offering, to broaden a potential get XXX. to there's it grow

Operator

And Goldman Poponak Noah our next Sachs. comes from question with

Noah Poponak

we not wanted peers well necessarily I and on power. on have window in the but historical pricing because in weapon ago, is follow value, for in profitability your price question above And inflationary in. -- arsenal the of been to #X an and the about your industry it quarters pricing parts here talked had a it's up few expanding creating the then we've some the with your companies average increases recently OEM had

half do do half? so taking had strategic close that And leaning even into you the do the just attractive especially maybe you do has pricing? via close that -- talked decision Or gap more you share, market price do you more And because in than keep Or PMA, had had price you just gap? past which you opened. of you had about and

that much you this where think margin quarter? curious a was I in interesting question. really so stood of on of I it's How that? was And the

Eric Mendelson

we've Yes. reasonable a philosophy and to done. a And coupled times with that shortest the customers the question, of great exist prices, quality. our has And money Noah. increases. cover And clearly our turn have got on always left our been highest what -- lot cost really we that's It's because need We we've the we table.

answer the no. So is

digits, our increases digits, low you low to the sort but know, order really deliver order And in have think sufficient orange single sort our could higher, a as of these been We in not -- to cost single prices don't I our of do lot cover be of maybe the have have increases. could been, We prices end that. we frankly, numbers. the squeezed but high

for longer an the increases. have contracted prices it substantial where if result But at digits say, low annualized customers high a more up single I that, there time, fixed could it's do as of of would on basis, low price of single We end period be a the look to digits. still certain you

we on XX% just the inappropriately. And let's sure to income So earnings. very operating that -- the We pricing. want because say, XX% that or talk at operating do know fair. see at the don't -- make We people none the want look pushed I what revenue of and no, at we're that's is But And side look jacking that HEICO. And have great. huge. -- increase, XX% growth. look and talk prices think when that without not the XX% we've organic at what I the revenue not growth income when organic organic, which, I of of metric Street that you -- we Wall is rate, all looks XX% They to -- of at of seems really is to be we you our that's is

good a and HEICO. gas why we very with the And will, want I in to a if balance. think good have a very, we lot of people So that's have, you tank why work --

Noah Poponak

I the Eric. defense Victor, -- watch that -- in you're volatile, Great. just rest XX% think that's and it I what one ETG. you in Okay. I The and tough segment up of on can a seeing having people a appreciate been of the through And it, did about guess, talk fairly space compare. you for year? the Aero that, the just expect Carlos, there, trend and to the item how quarter

Victor Mendelson

you to... do want Carlos,

Carlos Macau

that. stab a take could I at

aerospace it had we growth to subside. feel to like and in going that, in doesn't space And No, that's me tremendous Defense QX. So

caution would you very I are Now that lumpy. characteristics ETG's

and for And see We defense see down think -- have being quarter. a of the good quarters. I big speaking, quarters aerospace -- broadly continuation It it the I growth lumpy. this year, for very space, was I and in

tailwind don't a the back up. down. which It yet. just area, maybe still was down. of I first be the tick quarter a flattish, we other We know in would base quarter what And coming little could for electronics a would be bit have consider pretty Next that's

And expect, see big talked quarter so we that will recovery haven't and be as more December. tailwinds. that in we seen some then second we life I do But here we yet about the that should

the ETV this expectations year. have I So some good for

Victor Mendelson

And add is that. Victor. Yes. to This I'll

the direction, markets, non-A&D not other moving bow orders direction. in right a wave, bit seeing mentioned moving my improving markets, not but amount, the the sequentially. we're I the On in right in a comments, huge definitely a And

this But to And been I that, think, as decades. well the there. Carlos bodes pattern continue so said, That's expect volatility. our literally over

And out over think people that, we look we're but and inflection of different of sometimes we point, break to the the the course a tend at year for overall average.

Operator

with Melius And our Scott Research. next question Mikus from comes

Scott Mikus

quick Carlos, Larry, a on question leverage. Victor, Eric,

X.Xx, capital the but of deploy $XXX for acquisitions you at in You with million quarter. leverage still ended

on the big to shift leverage cash the and is amount a overall there you're how operate any you Given want in the with how fundamental basis? of enterprise go-forward much is generating, business

Laurans Mendelson

no. The answer is

we go flow. promised to cash back We Xx see and The our Xx. at Xx cash to Street we a Xx Xx drop we very year, XX like -- months. have maximum X go desirable are acquisition, we X.Xx it within us leverage mean such the flow would if or which we I say, EBITDA, within, from Xx permits use can XX, to because strong We is But it that we generally did.

very itself. make our take to strong ability and using And get because opportunity to want cash make like cash. reach, an will We create people careful. will sure want acquisition we advantage if So a we of to good that that, we're we cash opportunity, flow

Number it increase per earnings the will and that -- strong it earned be two, a will business. share have that

accomplished And have we so far, objectives. those

HEICO the careful I very, results." in "Oh you've and look the or seen think a acquisition of stretched that think very believe results. same. really the more So that you're is you so, that is think shown people the -- have at continue XX the to I years Wencor, When And we to see and over capital same. used Xx made an managing way I at going we'll So we've capital. our The and last said, my God, its exactly of I X thing we good that

Scott Mikus

talked then of seeing A improvement your their chain. peers supply supply And switching chain. in have meaningful Okay. over about lot

So FSG sort that with could ETG? I metrics there parts quality are how on performing suppliers are of if coming was can wondering provide the any both suppliers? conforming you then or color at your provide to delivery And you from and are

Victor Mendelson

Yes.

others terrible. if affect don't it it. we start this some There prior I'll some company-wide. dropped more had that it metrics me, think that with don't are past chain still talked experienced businesses or now I supply fairly will, really I on feels is a look, noise are say it dramatically. past I has in I we've any and that normal across on EPG. you And regard. calls. was are not. the have improved while particularly But can The in that to and that call hour about backlog our less Victor. dues, have would ago, So that issues our level specific due the

had years Flight I less take I if you recall, at we so million And call think one out a it about in business. though of it's or right, felt was the it a Eric, as shifting where $XX in but I more couple total, Support I'd and ago, point, we now, normal things to know dramatically for have range. the don't than that

Eric Mendelson

you worse. could little say, There bit suppliers There all in There's things if regard labor. with general, our deliver. nicely been tell I higher suppliers massive -- were I other of a our are Yes. our are to to getting a better. able just getting some would areas a areas that sales been issue better. have getting are significant can have

I orders, think getting now. on-time of all that, the yes. dollars, the We The that's at answer by do metrics by out in businesses. look quantity settled is by

it you we share since I'm together, of So a to the we at a don't and each a, operate it. which details especially that review but if prepared I do business, study businesses. pulls we all the not have decentralized will, report, consolidated do now, right

not of fire So this a further I SPS had have in going constrain then, to that's course, And is would and lot to participants of see, say what with the getting obviously the the I most think issue recent going industry. they great. to industry. better, that And we'll impact unfortunate but

Operator

Baird. question our And Inglebreck with comes from Jan next

Unknown Analyst

Eric, Victor question for Congrats a and and this Carlos, defense. I'm on on for morning. a you just quarter. really Peter maybe strong Arment Victor, on

markets? And radar Pentagon news area opportunity target? given obviously, defense within just this content win view approach flow, really tied with just that Could your you electronics constant or meaningful administration's to value-based contracts. aligns well area platforms positioning they're to updated of provide sort within we're given goals? fleets supporting, is current And particular the the a you there maybe currently and Just as your And defense guess, any Marcelle -- see with I really airborne that to HEICO's on the defense reviewing you seeing follow? strong

Victor Mendelson

shaken clear, in I there's be hasn't for believe as us believe lose. very losers yet this So there. we'll to think And what and nice out be we win there'll some -- winners and what we'll to in I opportunity

So alternative do focus they always pointed we can't has our we for say otherwise. could to saving we'll out, customers what experience. solutions you as the provide where seller been But than with cost on certainty what cost

continues case. be the that so to And

that things are the about some think particular of programs. the excited defense I missile we're

very some content those. have We good on

our well and space-based PMA pricing pushed the deliver great to basic customers. solutions as value Eric Some talked can programs about. business, as with long and tackling on we've where strategy That I I the has again, there approach as we've And been of ETG blocking think never lever. operate to parts the on we the newer our that in mentioned, that always,

So not to looking or they're else. to somewhere figure else go go out somewhere how

it like endures all think especially I our definitely time, So at a this. but the benefit moment to

for necessarily For this but want as But... but on nice parts revenue we do military the equivalent Support out very year, parts further Group, may Flight address get upside little us, not Eric there's that, some a I to for commercial use. think

Eric Mendelson

everything I said. with Yes. Victor, agree you that

that think good the department. to opportunities within I going are very be defense

much for industry process, and gains about anything all of it. terms I in is has agree everybody But areas And done the specific members we And we And AIA nor long not the For if time, a this efficiency and into customers need on know that. there's really for known everybody this focus that you for that because get competitive obviously, frankly, everybody acknowledges the reasons, has cost that tremendous. even administration never congratulate all in tremendous improvement tremendous products. spend to, will, or of the alternatives. opportunity there's

well HEICO I be So going to very think is positioned.

been the sustainment our And and we product HEICO manufacturing, in of do, specialty it's to savings. that's You're to to what going familiar those defense spot has think are line, be types repairs, I built to deliver parts, with whether distribution sweet here.

quite revenue is done. but to be fiscal going lot again, of optimistic. will time. way. that in not story. our this fiscal I'm little has 'XX think on 'XX, a bit Maybe least a at to be bit of So a And there'll be take But a I we're little But

Unknown Analyst

helpful. very it's Victor, Perfect.

Just a quick follow-up.

back call thoughts but on build Just some rates Boeing aerospace, levels, perhaps directionally just travels commercial global in Eric, at to specifically the higher, high-level your record moving OEM at XXXX. are is

industry call about just just medium-term any, on towards FSG, to margins, the as an You impact, more mix? it, the OEM for the towards X if X years mix of next aftermarket talk

Eric Mendelson

road, more of new been to leaders tell Boeing week, of But of has Yes, the if spent expanding businesses. had as way don't all the yes, that's see been with And aircraft. you mean, travel and look spoken X a particular, people some sales can -- whatsoever. Airbus about you various And first sales has the now challenges. around the a incomes the in delivering I years. our for at And is days want look, in I reviewing they of I couple if increase lot of this you how our slowdown fleet any

able can and that the connection other in them. for industry of want we're of the And There down about I one HEICO If of They worried opportunities. airlines we've their a and I'm go many in and are out mean on. the parts to provide it. at better opportunity per older and year. as been ball the it points. than The dynamics -- and very and come We've we just expand for majority OEMs nobody fleet customer this of and there not the phases a the it. things a to of represent with age material, And We years, handle ahead whatever alternatives out it to Wencor, because locked grow go they're them. this with XX-something look think will you come positioned. material, continue them, vast it. some think got we they OEM fine. of tied to particular the to reduction, fundamentally, out. strong. dynamics grow knock business the develop the between wants steal If are business of their ones really be If all is then But principles be not -- I'm park alternative sales And other I going Wencor higher you've consume out So their of how access got a the industry. XX to But through deliver else service the and can't a it the But able you road, is last at continually. Yes, result you so PMA lot to a want once them Aircraft with we've business. able and is of to in well I all a program, thousand want aging, HEICO no are going Wencor. distributors got and to that a customer to very the principles price to there's product

I'm So deliver aircraft that tailwinds happens starting regardless to of lot got with optimistic HEICO quite a what has more of that Boeing here.

Operator

question with Gabelli Tony Our Bancroft comes from Funds. next

George Bancroft

Gentlemen, acquisition like more you while in? Do guys Honeywell, did. very in avionics the Maybe still made on just well with a into just Are interested you out businesses done there and as on the update on Honeywell's late Any -- call. I apologize that interested But previous any I area? you're appetite little update that got always. that? Any what that you there? is your anything there ago

Eric Mendelson

last They I is months, have them well. XX able to We Honeywell be worked very phenomenal Tony, and lines Yes. Because a great is X products, are product they and now put and we're to partnered We to lines. limited well. activities. by limited with extraordinarily the purchased incredible out a very the extremely think we And question. buying customers. it out HEICO members -- We're take allocate happy company. in floor these liked them. from it's in when well their number their higher-value of partner And very the we and knowledgeable product products, them to great space about are comes execute

it's or think purchased successful we Northrop really where buy out to it get make to from. buy, Triumph customers we've well. this not are the all And able time-tested there, different I we've that even happy, all product product a works or sure Honeywell able So about, or others very now lines, that we and integrated, whether been have manufacturers lines very don't we're out but many process talk

ELT, lines very the we opportunity that information the system So for to and overjoyed the that a commercial we're reliable of display known think product emergency with in units continues the terms I I'm locator be management -- the transmitters there aircraft. for the partner. because bought as aircraft very and good And

George Bancroft

mean And caught then maybe shares. talking I obviously, about, guess, I haven't you your acquired I Berkshire

position fine so just buy would their would you obviously, done get Just you explain guys just and -- they that. I think possible all it bought it's your on pretty buy essentially to your get be mean, company, thoughts obvious, of in they're -- your with that Just well ever entire new but let And thoughts have to company, want you you think sort for why them? if you to want values? and I wanted they

Eric Mendelson

Yes.

what in a phenomenal the set sense. genius business. So you in our And path a was And I to what a there's out, it. has scale We operators, was think that to mean, that investor We Berkshire's small HEICO. you're set out and we and $XX we're the Warren behind results. point Berkshire strategy, similarities lot it do out significantly XX whole of it with and if culture. behind saw we this become didn't, by And in of you million definitely, culture he do when is produce operating able obviously an the that years aligned, we just company made father decentralized does originally Buffett than is model will, this larger -- obviously overjoyed copy sort on to incredible ago as that

So we're happy. very

As can HEICO. been happy selling far wanting And buying the Berkshire possibly interested about the from great HEICO learn is lot frankly, your is not with phenomenal, business. we absolutely -- comments them. really has a growth. in -- to continued as very shareholder. a We're Berkshire

them. to, I So think, think deep very a Buffett's we I our Warren incredible organization, grow got and will continue relationship an it's with team, and

Operator

comes Bank. with question Deuschle next Deutsche Your from Scott

Scott Deuschle

I the fasteners was Eric, this a good capabilities question, curious if see space. naive that fastener company maybe any could into, particularly the ever not, And is part, a business And aren't aftermarket has an getting is do really work. given the I Specialty PCC? Products events Products a recent OE you know commercial in Specialty if amount of but does but at

Eric Mendelson

phenomenal look, their fasteners. forgings, whether a you their their business, castings, Yes. at I operate PCC, -- they look

compete to in what so with They I into exactly phenomenal. think they HEICO ground business get to and they're have doing it PCC foolish. trying and for would be know they're got

thing no, get how to those running. opportunity what do. whole wanting look, products to don't well-run do see resourced, quickly to So an we ever that's built mainstream. very -- a company figure us way that PCC, they get fire PCC but and knowing that could up and in got here they The the is thing, think out incredibly there I they've very be what try to and there, but and facility unfortunate elsewhere, the their do, will little into I

this quicker kind got confidence problem. going online come would with than to much I've they're of else of So a back lot anybody

Scott Deuschle

there where the has still all can think And terms represent focused Okay. of SKUs the go Or fully and power more are opportunity auxiliary think point less that can terms then, in there? at units in penetrated parts of more there's Eric, relative do to still business I'm PMA meaningful you in go? think after? it think And you that you adoption is you or the opportunity PMA customer APUs on the SKUs if whether company this

Eric Mendelson

particular capable while our part mean, a I details, do not we consistent order been just on of business. big not -- HEICO. That our for market I'm really share. got big has And to -- been Honeywell has it be comment they've would to job providing it's products. with don't their with but APUs, products, a I I in not policy rather of what comment, does historically on great a other and huge I'd area not

Operator

Our Strauss question comes Barclays. next from David with

Unknown Analyst

is Josh on David. This for

ask So idea in revenue? much last the acquisitions of us million those you've you $XXX deals you, give I over annualized to quarters. how an X in done add Could about wanted

Carlos Macau

Carlos. is This

done that deals have been the material. So not individually -- they've been all we've

of of operations report So it really financial the way one to deals to listening we with don't those our be we want in filings. the discuss public

Unknown Analyst

growth and XX% could how to MRO of on then XX% for about And you think, organic order? the Okay. up, the follow you question, see an talk the I earlier of growth each organic sustainability then

Eric Mendelson

Because growth of our our we the earnings when is can I doing that mentioned the earnings that you -- We're and at -- else. that's very day, obviously, I've we're everything earlier all that focused we the very is as footprint because reluctant to and the we've gaining thing the really grow end continue share. those well. We numbers. on I with growth. happy predict we the in about meaningless, that reinvest money mean, to it's The been business and honestly had. I'm the inventories

of operating But we be. industry we've fundamentals going organic. in the income tailwinds to was shipment. don't of get growth what continue. XX% that in specifically our We that I orders don't we've because look, got you it's Group month should the provide Support know and when Flight we reason guidance So of the feel in had in the most

So difficult go to have to it are is know becomes used And I it. very industry And it. do they the the the doing history the at top be a of the HEICO's so of think at people whatever frankly, that right years going going to that of on to call day, of XX we out performing end edge. to

numbers lot driven very becomes difficult very -- of just and difficult. that isn't do we're strongly So going I becomes we is tail feel a very because very really certain projections predict has it quantitative specific very, But and what there and forward, to that

Operator

Your Santos next question from Joos with comes UBS.

Unknown Analyst

behalf agreements with on you on talked from terms much I bit Parsons versus reprice pricing, know guys speaking This already portfolio of Gavin share is about us in annually? how pricing. of can Joos you a UBS. But how are to you much them Santos able of your is long-term

Eric Mendelson

terms the say, We that. of me couple years. operating and something from can of I the subsidiaries. there is again to all within have the is split front this like don't annually. all guess is together reprice, because next annually I it's repricing But category, in the of that the my agreements in long-term would But a roughly what of in that pull centralized XX-XX

Unknown Analyst

in how aftermarket, chain given the of the we pricing think competitive terms segment, in And power dynamics? should Great. of supply and

Eric Mendelson

of history frankly, -- order that, treat company, making to that you're under and along money very mean out leaving And think to cost I on in us for of the very customers when particular, table. showed that, have you not I increases lot when Having to cost we're now. And right we customers. small. happy. our philosophy We And and small, possible -- pass to to -- -- absorb maintain you out the We the our but cover that know we it's we small. We're to said very for have increases. people started a in business. the no started not

And that. customers, market that and with share period minority all been only go customers advantage the to of catch-ups pricing if go we them price-wise. ahead on a products that various take our we've we that. do. even do got do to have to of for of We time, And successful there's a that. with we've for We But stress

lot So we value think to there that a customers. of is these

I taken lot a have pricing there's for us, opportunity but So think not we of

Operator

next of Ron comes with from Our Bank Epstein question America.

Ronald Epstein

how an So I Eric, Maybe and XX,XXX to of like seems following commentary, you questions. on it guys the your down? kind average about that start quick when the your happen I early might older. of up internal couple will of agree come age mean a about of to think kind with XXXXs, the until airplanes or if not that Because don't Do you fleet you you of on but guys fleet have guesstimate the like the actually get me age that know that?

Eric Mendelson

We wouldn't look Yes. probably the average. at

aircraft in is number age of the the at look would of we what us, cohort. for each So

So we think that continues to increase.

as look at attractive. aircraft. they're where insane you the to if are older higher new rates interest think, get I But be less in the you newer delivered, think So still times that maintain. aircraft I flying got maintain. mean we to And generation to newer aircraft very going also you're aircraft, especially very, the makes these expensive you've

equivalent per cost So unit. the

then right And share share. small, we time compounded the that we that market also with the is frankly, think our and still market acquisition. relatively our we grow is So can

fact all they'll me. So new more the you put that deliver together that and aircraft concern that

Ronald Epstein

SPS. it. My a do Got seem blow potentially And back does comment could of on it. it around mean really runway the it want honestly, Got on on guys? it. follow the And think industry? guess you that those at facility to disruptive unfortunate thinking long a you be, how about then is or that lot understanding fasteners. made I we're and fire does made sure it. pushing How that question tomb I Got a you there's there, a another Yes. up make X to I like

Eric Mendelson

it's to be think Yes, I disruptive. quite going

able a precision will the figure anybody on lot running I'm mother guys gas being be the necessity number got Number get invention. other products their they, and going two, And well I is and one. sole-sourced it sure, while Those kind is is incredibly a that. to SBS will out, up problem. may run. they the to have And able ones bunch who of to of to are be stuff, solve be of a facilities -- of that However,

going want to quickly. But with is is early sharp So going as what be and able I really that's think an it's in move be. earth to too careful much well a to get going But in to to our little -- experience define complements going definitely and be over I them the not heaven they I to do. to get guys those are impact can fees both this they're is on OE the think be far what to be to everybody as impacted. aftermarket, resolved there working

Ronald Epstein

In extent how you given to, maybe do guys a in mean I it you And commercial about what ultimately? about last aero, could I to so think in aero one guys chains defense? it. global. How one. it's then are Got guess, it tariffs global are thinking far commercial mean supply lesser how

Carlos Macau

subsidiaries with all I they're focused supply on local We is Most markets, is markets. have local mean, dealing XXX our right? of and chain in vendors this Ron, Carlos.

purchasing big one we're So bulk not in central location.

is not of our the a component the within our When -- risk, if products. our would, you overall cost it peel diffused. of materials raw cost. back, huge So you And it's

some of back done we've the envelope. So

case, X% there the our was tariff customers. have was do half increase if I to business. I think assuming no a on our X% on to it we to problem could the from we passing And net-net, anywhere cost it product that be think that countries

the standpoint, terribly So of outcome we're that. concerned not from our with

Operator

Cowen. Our with comes Gautam Khanna question next from TD

Gautam Khanna

from much the for on qualified you and would PMA. parts have and be lines do you wondering sense the other... DOD be What normally was get development would I the with time -- uses different what FAA any encountered to guys

Eric Mendelson

we work that reluctant really there's as details And Yes. therefore, date, going that into get to specifics revenue doing. in what in we see I -- numbers. and want tell we're a want on is. don't not get is But what a there been very don't into we development are to we again, be area. our to we see contributor we're say that that forecasting that don't I'm 'XX would our continued And really significant because to what not that strategy the think develops. it do really has in But -- have market. we'll to to how our competitors

Gautam Khanna

is Maybe products any is place? more process in already penetration fundamentally, there today? military a And there PMA on

Eric Mendelson

they their So -- the government doesn't own process. have approval

a So large businesses that it use mean But government would in. it. the some in does answer amount the just to the PMA, We general, is give the that government yes. in sell various we're

stuff Clearly, I with will cost be, So very for going this done. get and we're pretty helpful on to is familiar readiness the HEICO. government it across focus be what to takes

Gautam Khanna

discuss I obviously, wondering about, again, defense you defense are government. are want products? to they to you because OEM-branded specialty if specifically, -- of you it, the But an a Or products? the it's was I ATG know been -- more I products have don't Yes. curious I'm guys but selling components, lot and

Eric Mendelson

sell sell HEICO We the that proprietary DoD. Yes. parts. interchangeable to we manufacturers No, are parts parts, with yes, the original

are not but experience so You a yes, It's strange that's And many that. relatively examples small it's to. getting lot of it. have -- what of -- there a doing they're you're

Gautam Khanna

there If What precedent the like what you constraint broader been -- that's already, has was it sounds on do think wondering. it is. what think I historically? No, adoption the do you there's for

Eric Mendelson

it a costs. But I we're was new got have now one about it. large cut was speculate we've want cost. a in really don't to I world. our We've And on the part -- concerned no And to got deficit. massive probably think of budget we

have that And increase I to is We the this just low-hanging fruit. defense think output.

Gautam Khanna

How have mentioned was curious cross-selling. penetrated it Got core think aerospace then cross-sell you feel make much how when along a initiatives opportunity... was sure you well integration, guys in the the like that there's journey? already I you. has Cool. been? to And you of Or you number early? Or curious on Eric, I you're is implemented that far do

Eric Mendelson

Yes.

when lines got mean, I well. more much you've the done look, we've we savings. compelling you think put I together, operate But the independently. product clearly, X businesses

So I we've more we're a folks I out definitely in think the I'm half, more with progress that sales happy think think -- there. a in have to early lot lot the that significant. there, opportunity the first very that out I more but potential there our is lot opportunity a date, made --

Gautam Khanna

you if broaden just this could of across that's broad-based strength broad the defense and -- the some improvement Is disproportionate? And product curious Maybe I'm the last specifically, kind pretty demand on the seen portfolio? or one, just how that. areas. demand the missile demand Or in you've

Victor Mendelson

certainly by than and some It negative. and uptake others varies subsidiary a are have some greater actually

So based fairly on in defense, balance, broadly of it works -- on it's lines. particularly would say pretty larger some out for it's to us our how fortunately, been it's I done.

we well be thesis, That has doing proven for By is acquisition European extremely to well. excited defense the out we're to company us January thought made in you European Exela of a may Exela we was that about correct that, one a budgets, help way, worked the with remember, we called of course, And France that. in an for that. in and motivators the business and of to us. needed addition that's the XXXX, So and very

more We our a it, are from with customers. very growth are interest happy been And acquisition. anticipating very and nice we more

quarter. being, And remain So opinion. caveat it And for my will by that right the always caveats the again, the those caveats good overall and overall, of I I about be with volatile in feel will moment. the the metier, feeling has That the that one it mentioned earlier case

Operator

with Lou next The Raffetto question from comes Wolfe Research.

Louis Raffetto

Maybe one for you.

I you an to more of guess? DR offer same the just selling that and customers Or product, alternatives. a before that if Or is more that, repair? is sort that you said are part You PMA more and like guys not part want parts on I OE a part? guess, on an OE clarify

Eric Mendelson

it side. typically the the not same part be on on would product So

number represent side. of OEs a we the on distribution So

we sell we're additional for also PMA sometimes distribution are those OE for we the of on it's most OE, the Typically, and straight of Look parts. representation able so the PMAs to we them. the to do. offer develop time, if doing And OEs we something don't just

So didn't on I on know out particular say XXX, just the but were may. product they on the get AXXX we they

OE go can been our fully -- commit can those, that's what repair But we we'll the also largest through from parts. a So on was to to support customer-driven what strategy. want. independent do component then to significant talking do OE And we provide the customers out and parts. lot parts. than PMA get a And there, what they parts, and the it's I referring those very overhaul our want bigger customers And successful and a they want. the nongovernment. is PMA our that, And parts non-airline, a really distributed development have of of work of we're it's alternatives, But we those the use then we If that OE business. of DER, they AXXX we're use repair then lot customers those purchase component want non-OEM, get PMA or manufacture for, the government. network, to OEMs business I separate about believe, really to in those although very If part

the So both, parts parts case, PMA and OE as in that we decision. stock well HEICO the as they the make

Louis Raffetto

distribution easy you way just size big to tell? with Flight how is within little now can a less Support, Any

Eric Mendelson

that. we all No, we into don't disaggregation get don't the Yes. rules, to due

I the did what over first a looking we repair it's business we quarter. repair mean and disaggregated roughly million in did $XXX at I'm ] So now, the parts, business. [

$XXX over in parts. we large -- become just No, that's for at -- the first you parts, And looking enterprise. quarter, -- X then the for it's million And quite did no. a then replacement So aftermarket months

that's in sales. billion So $X.X roughly

a business significant that's well. very So as

Louis Raffetto

of I Carlos, give you for just a expense. that able combined impact this you sort minority the didn't one you. the us if for year? you're provide how past, know quick about taxes, to In interest thinking of were

Carlos Macau

rate of or similar that's XX% somewhere around year. be maybe year [Technical the I and for for a I'm of in transpires. X%, income, past, Difficulty] on the the had we've tick between just we've what I XX%, Effective out for X.X% what think XX%, maybe the around fall should what rate where below depending is And but the run year above runs kind think NCI pretax estimating. metrics to

Operator

will conference remarks. to time, the or closing back this any Mendelson at I Laurans And turn for additional

Laurans Mendelson

future. for Thank that kind we conference of you have the you are very much your any and everybody to may available appreciate want on interest to We call. in this

will second So and quarter. the to you, we speak -- Thank thank in next and this you, ends conference. you the

Operator

today's And Thank you call. your this for concludes participation.

disconnect. You may now

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