HOLLYWOOD and MIAMI, Fla., June 1, 2006 (PRIMEZONE) -- HEICO Corporation (NYSE:HEI.A) (NYSE:HEI) today reported that net income for the second quarter of fiscal 2006 increased 32% to $7,542,000, or 28 cents per diluted share, from $5,713,000, or 22 cents per diluted share, in the second quarter of fiscal 2005. For the first six months of fiscal 2006, net income increased 41% to $14,291,000, or 54 cents per diluted share, from $10,141,000, or 39 cents per diluted share, in the first six months of fiscal 2005.
Operating income increased 45% to a record $16,620,000 for the second quarter of fiscal 2006 from $11,433,000 for the second quarter of fiscal 2005. Operating income increased 59% to a record $31,906,000 for the first six months of fiscal 2006 from $20,094,000 for the first six months of fiscal 2005.
Net sales for the second quarter of fiscal 2006 increased 38% to a record $92,092,000 from $66,973,000 in the second quarter of fiscal 2005. Net sales increased 45% to a record $180,193,000 in the first six months of fiscal 2006 from $123,954,000 in the first six months of fiscal 2005.
(NOTE: HEICO has two classes of common stock traded on the NYSE. Both classes, the Class A Common Stock (HEI.A) and the Common Stock (HEI), are virtually identical in all economic respects. The only difference between the share classes is the voting rights. The Class A Common Stock (HEI.A) receives 1/10 vote per share and the Common Stock (HEI) receives one vote per share.)
Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer, remarked, "We are extremely pleased to report record quarterly net sales and operating income in our fiscal 2006 second quarter results for the fifth consecutive quarter. Our Flight Support Group and our Electronic Technologies Group reported increased net sales of 36% and 41%, respectively, over the second quarter of fiscal 2005. This follows strong fiscal 2006 first quarter results when our Flight Support Group and our Electronic Technologies Group reported increased net sales of 46% and 79%, respectively, over the first quarter of fiscal 2005. The sales increase within both Groups reflects recent strategic acquisitions as well as strong organic growth. Organic revenue growth within the Flight Support Group and the Electronic Technologies Group approximated 14% and 9%, respectively, in the first half of fiscal 2006 when compared to net sales in the first half of fiscal 2005.
Our consolidated operating margins improved to 18.0% in the second quarter of fiscal 2006 from 17.1% in the second quarter of fiscal 2005 and to 17.7% for the first six months of fiscal 2006 from 16.2% for the first six months of fiscal 2005. Consolidated operating margins experienced in the first half of fiscal 2006 approximate those currently expected for the full fiscal 2006 year.
Operating income of our Flight Support Group increased 24% to $11.0 million for the second quarter of fiscal 2006 up from $8.9 million for the second quarter of fiscal 2005 and increased 42% to $23.3 million for the first six months of fiscal 2006 up from $16.5 million for the first six months of fiscal 2005. Operating margins of the Flight Support Group improved to 18.8% in the first six months of fiscal 2006 from 18.6% for the first six months of fiscal 2005. Operating margins of the Flight Support Group were 17.7% in the second quarter of fiscal 2006 versus 19.3% in the second quarter of fiscal 2005 reflecting a less favorable product mix, including the expected impact of lower margins realized on products distributed by Seal Dynamics, which was acquired in November 2005.
Operating income of our Electronic Technologies Group increased 105% to $8.7 million for the second quarter of fiscal 2006 up from $4.2 million for the second quarter of fiscal 2005 and increased 115% to $14.4 million for the first six months of fiscal 2006 up from $6.7 million for the first six months of fiscal 2005. The increase in operating income of the Electronic Technologies Group for the second quarter and the first six months of fiscal 2006 over the respective periods of fiscal 2005 reflects both the increase in net sales and higher operating margins resulting principally from a favorable product mix, including a higher margin product mix contributed by some of our recent acquisitions. Operating margins of the Electronic Technologies Group rose to 29.2% in the second quarter of fiscal 2006 from 20.1% in the second quarter of fiscal 2005 and rose to 25.6% in the first six months of fiscal 2006 from 18.7% for the first six months of fiscal 2005.
The 45% and 59% increases in consolidated operating income for the second quarter and first six months of fiscal 2006 were greater than the 32% and 41% increases in consolidated net income for the respective periods due principally to the increased minority interests' share of income of certain consolidated subsidiaries.
Cash flow from operating activities for the first six months of fiscal 2006 totaled $7.4 million versus $11.5 million in the first six months of fiscal 2005. The decrease reflects the payment of current liabilities, including income taxes, and higher levels of inventory required by the Flight Support Group, including increases of approximately $4 million in finished products inventory and $2 million in raw materials inventory. Due to the higher numbers of new product offerings being developed and the increased raw material prices and lead times experienced by the Flight Support Group, we have increased our investment in inventory to meet customer delivery requirements and maintain profit margins. For the full fiscal 2006 year, we are targeting cash flow from operating activities of approximately $40 million with a capital expenditures budget of approximately $10 to $12 million.
Based on current market conditions and including the operating results of the recently announced acquisition of Arger Enterprises, Inc., we are raising our targeted fiscal 2006 net sales to a range of $370 to $376 million, operating income to a range of $65 to $66 million and diluted net income per share to a range of $1.09 to $1.12 as we continue to focus on new products, market penetration and additional strategic acquisitions.
As previously announced, HEICO will hold a conference call on Friday, June 2, 2006 at 9:00 a.m. Eastern Daylight Time to discuss its second quarter results. Individuals wishing to participate in the conference call should dial: U.S./Canada/International/Local 785-832-1523, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID 7HEICO (or "743426"). A digital replay will be available one hour after the completion of the conference for 14 days. To access, dial: U.S./Canada/International/Local 402-220-9033 and enter Passcode/Conference ID 7HEICO (or "743426").
There are currently approximately 15.0 million shares of HEICO's Class A Common Stock (HEI.A) outstanding and 10.3 million shares of HEICO's Common Stock (HEI) outstanding. The stock symbols for HEICO's two classes of common stock on most web sites are HEI.A and HEI. However, some web sites change HEICO's Class A Common Stock stock symbol (HEI.A) to HEI/A or HEIa.
HEICO Corporation is engaged primarily in certain niche segments of the aviation, defense, space and electronics industries through its Hollywood, FL-based HEICO Aerospace Holdings Corp. subsidiary and its Miami, FL-based HEICO Electronic Technologies Corp. subsidiary. HEICO's customers include a majority of the world's airlines and airmotives as well as numerous defense and space contractors and military agencies worldwide in addition to telecommunications, electronics and medical equipment manufacturers. For more information about HEICO, please visit our web site at http://www.heico.com.
Certain statements in this press release constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of factors including, but not limited to: lower demand for commercial air travel or airline fleet changes, which could cause lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense or space spending by U.S. and/or foreign customers, or competition from existing and new competitors, which could reduce our sales; HEICO's ability to introduce new products and product pricing levels, which could reduce our sales or sales growth; HEICO's ability to make acquisitions and achieve operating synergies from acquired businesses, customer credit risk, interest rates and economic conditions within and outside of the aviation, defense, space and electronics industries, which could negatively impact our costs and revenues; and HEICO's ability to maintain effective internal controls, which could adversely affect our business and the market price of our common stock. Parties receiving this material are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended April 30,
--------------------------------
2006 2005
------------ ------------
Net sales $92,092,000 $66,973,000
Cost of sales 58,556,000 41,928,000
Selling, general and
administrative expenses 16,916,000 13,612,000
------------ ------------
Operating income 16,620,000 11,433,000
Interest expense (861,000) (300,000)
Interest and other income 307,000 44,000
------------ ------------
Income before income taxes
and minority interests 16,066,000 11,177,000
Income tax expense 5,815,000 4,213,000
------------ ------------
Income before minority
interests 10,251,000 6,964,000
Minority interests' share of
income 2,709,000 1,251,000
------------ ------------
Net income $7,542,000 $5,713,000
============ ============
Net income per share:
Basic $.30 $.23
Diluted $.28 $.22
Weighted average number of
common shares outstanding:
Basic 25,027,158 24,446,997
Diluted 26,621,155 26,259,988
Three Months Ended April 30,
--------------------------------
2006 2005
------------ ------------
Operating segment information: -
Net sales:
Flight Support Group $62,480,000 $46,053,000
Electronic Technologies Group 29,622,000 20,987,000
Intersegment sales (10,000) (67,000)
------------ ------------
$92,092,000 $66,973,000
============ ============
Operating income:
Flight Support Group $11,036,000 $8,869,000
Electronic Technologies Group 8,655,000 4,219,000
Other, primarily corporate (3,071,000)(a) (1,655,000)
------------ ------------
$16,620,000 $11,433,000
============ =============
(a) Fiscal 2006 results reflect increased costs to comply with the
Sarbanes-Oxley Act of 2002 and higher accrued performance awards.
The majority of such costs incurred in fiscal 2005 were not
incurred until the second half of fiscal 2005. In addition,
fiscal 2006 results include aggregate stock option expense
(pretax) of $459,000, including $144,000 allocated to corporate
expense.
HEICO CORPORATION
Condensed Consolidated Statements of Operations (Unaudited)
Six Months Ended April 30,
--------------------------------
2006 2005
------------ ------------
Net sales $180,193,000 $123,954,000
Cost of sales 114,605,000 78,629,000
Selling, general and
administrative expenses 33,682,000 25,231,000
------------ ------------
Operating income 31,906,000 20,094,000
Interest expense (1,669,000) (533,000)
Interest and other income 254,000 80,000
------------ ------------
Income before income taxes
and minority interests 30,491,000 19,641,000
Income tax expense 10,731,000 7,136,000
------------ ------------
Income before minority
interests 19,760,000 12,505,000
Minority interests' share of
income 5,469,000 2,364,000
------------ ------------
Net income $14,291,000 $10,141,000
============ ============
Net income per share:
Basic $.58 $.42
Diluted $.54 $.39
Weighted average number of
common shares outstanding:
Basic 24,850,558 24,387,667
Diluted 26,426,503 26,236,782
Six Months Ended April 30,
--------------------------------
2006 2005
------------ ------------
Operating segment information: -
Net sales:
Flight Support Group $124,169,000 $88,316,000
Electronic Technologies Group 56,093,000 35,761,000
Intersegment sales (69,000) (123,000)
------------ ------------
$180,193,000 $123,954,000
============ ============
Operating income:
Flight Support Group $23,344,000 $16,467,000
Electronic Technologies Group 14,365,000 6,681,000
Other, primarily corporate (5,803,000)(a) (3,054,000)
------------ ------------
$31,906,000 $20,094,000
============ ============
(a) Fiscal 2006 results reflect increased costs to comply with the
Sarbanes-Oxley Act of 2002 and higher accrued performance awards.
The majority of such costs incurred in fiscal 2005 were not
incurred until the second half of fiscal 2005. In addition,
fiscal 2006 results include aggregate stock option expense
(pretax) of $887,000, including $357,000 allocated to corporate
expense.
HEICO CORPORATION
Condensed Consolidated Balance Sheets (Unaudited)
April 30, October 31,
2006 2005
------------ ------------
Cash and cash equivalents $5,401,000 $5,330,000
Accounts receivable, net 56,917,000 47,668,000
Inventories, net 82,947,000 62,758,000
Prepaid expenses and other
current assets 12,150,000 10,377,000
------------ ------------
Total current assets 157,415,000 126,133,000
Property, plant and equipment,
net 47,473,000 46,663,000
Goodwill 264,257,000 248,229,000
Other assets 21,353,000 14,599,000
------------ ------------
Total assets $490,498,000 $435,624,000
============ ============
Short-term debt and current
maturities of long-term debt $1,568,000 $63,000
Other current liabilities 43,536,000 49,887,000
------------ ------------
Total current liabilities 45,104,000 49,950,000
Long-term debt, net of current
maturities 61,022,000 34,061,000
Deferred income taxes 25,657,000 22,431,000
Other non-current liabilities 5,571,000 6,644,000
------------ ------------
Total liabilities 137,354,000 113,086,000
Minority interests in
consolidated subsidiaries 59,238,000 49,035,000
Shareholders' equity 293,906,000 273,503,000
------------ ------------
Total liabilities and
shareholders' equity $490,498,000 $435,624,000
============ ============
HEICO CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended April 30,
--------------------------------
2006 2005
------------ ------------
Operating Activities:
Net income $14,291,000 $10,141,000
Depreciation and amortization 4,323,000 3,503,000
Deferred income tax provision 1,744,000 1,351,000
Minority interests' share of
income 5,469,000 2,364,000
Tax benefit from stock option
exercises 2,377,000 2,580,000
Excess tax benefit from stock
option exercises (1,135,000) --
Increase in accounts receivable (4,519,000) (3,989,000)
Increase in inventories (8,937,000) (4,471,000)
(Decrease) increase in other
current liabilities (6,984,000) 54,000
Other 789,000 (34,000)
------------ ------------
Net cash provided by
operating activities 7,418,000 11,499,000
------------ ------------
Investing Activities:
Acquisitions and related
costs, net of cash acquired (32,956,000) (18,419,000)
Capital expenditures (4,622,000) (3,029,000)
Other 467,000 3,269,000
------------ ------------
Net cash used in investing
activities (37,111,000) (18,179,000)
------------ ------------
Financing Activities:
Borrowings on revolving
credit facility, net 27,000,000 9,000,000
Cash dividends paid (991,000) (610,000)
Proceeds from stock option
exercises 3,785,000 801,000
Excess tax benefit from stock
option exercises 1,135,000 --
Other (1,185,000) (276,000)
------------ ------------
Net cash provided by
financing activities 29,744,000 8,915,000
------------ ------------
Effect of exchange rate
changes on cash 20,000 --
------------ ------------
Net increase in cash and cash
equivalents 71,000 2,235,000
Cash and cash equivalents at
beginning of year 5,330,000 214,000
------------ ------------
Cash and cash equivalents at
end of period $5,401,000 $2,449,000
============ ============