HEICO Corporation Reports First Quarter Results; Reports Strengthening in Sales of Its FAA-Approved Replacement Parts
HOLLYWOOD, Fla. and MIAMI--Feb. 27, 2001--HEICO CORPORATION , today reported first quarter fiscal 2001 net income of $3,908,000, or 20 cents per diluted share, on net sales of $39,650,000. The net sales for the first quarter of fiscal 2001 represent a 12% increase over net sales of $35,505,000 in the first quarter of fiscal 2000 after adjustment to exclude the sales of Trilectron Industries Inc. (Trilectron), which was sold in September 2000.The Company attributes the sales growth primarily to its entry into the commuter/regional jet MRO market with the acquisition of Future Aviation in June 2000 as well as internal growth.
Cash earnings per share (net income per diluted share before goodwill amortization) totaled 25 cents per share in the first quarter of fiscal 2001 and the first quarter of 2000.
All per share information has been adjusted retroactively for the 10% stock dividend paid in July 2000.
Operating income was $7,858,000 in the first quarter of fiscal 2001 versus $8,162,000 in the first quarter of fiscal 2000 adjusted to exclude operating income from Trilectron ($9,088,000 including Trilectron). Operating income in the first quarter of fiscal 2001 reflects a $700,000 increase in new product research and development expense over the first quarter of fiscal 2000.
Flight Support sales increased 12% to $31,503,000 in the first quarter of fiscal 2001 from $28,195,000 in the first quarter of fiscal 2000. The increased sales reflect the acquisition of Future Aviation and an increase in sales of FAA-approved replacement parts, partially offset by some softness in the component repair and overhaul market.
Electronic Technologies Group sales increased 11% to $8,147,000 in the first quarter of fiscal 2001 from $7,310,000 in fiscal 2000 adjusted to exclude sales of Trilectron ($19,745,000 including sales of Trilectron). This increase reflects new products and increased market penetration.
Net income totaled $4,015,000, or 20 cents per diluted share, on sales of $47,940,000 (including Trilectron) in the first quarter of last year.
The sale of Trilectron resulted in a gain of $10.5 million, or 53 cents per share, in the fourth quarter of fiscal 2000. Trilectron contributed approximately 2 cents per share to earnings in the first quarter of fiscal 2000.
Commenting on operating results, Laurans A. Mendelson, HEICO's Chairman, President and Chief Executive Officer remarked that, "Our first quarter results reflect an increase in sales over first quarter 2000 results as adjusted for the sale of our Trilectron subsidiary and were consistent with our expectations. Our EPS was flat compared to the first quarter of fiscal 2000 and consistent with our expectations. This was mainly due to higher new product research, development and marketing expenses, last year's sale of Trilectron and the continued softness in certain segments of the aviation aftermarket, particularly, the component repair and overhaul market. R & D and marketing expenditures are not capitalized, but rather expensed currently, and we believe these efforts will significantly benefit future periods."
Mr. Mendelson added, "We are encouraged by our progress within our Flight Support Group's core business, FAA-approved replacement parts, where first quarter sales increased approximately 5% over the same period last year and about 8% over the fourth quarter of last year. Further, our accelerated R & D and marketing efforts both within our Flight Support Group as well as our Electronic Technologies Group are in place and beginning to show results."
Mr. Mendelson also noted, "As we look to the balance of fiscal 2001, we continue to believe our new product development and marketing efforts, anticipated strengthening in the aviation aftermarket in the second half of fiscal 2001 and our program to redeploy the $50 million proceeds from the sale of Trilectron should result in sales and EPS growth over our fiscal 2000 results from continuing operations, as adjusted for the non-recurring items. As previously stated, current demand levels within the aviation aftermarket and certain of our Electronic Technologies markets, together with the sale of Trilectron, are likely, however, to result in our earnings for the first half of fiscal 2001 being flat when compared with the same period of fiscal 2000."
As previously announced, HEICO will hold a conference call on Tuesday, February 27, 2001 at 11:00 a.m. Eastern time to discuss its first quarter results. Individuals wishing to participate in the conference call should dial 973-633-1010 and request the "HEICO Conference Call." A digital replay will be available for 24 hours following the call by dialing: 973-341-3080 with a pin no. of 2428769 for Domestic (U.S.) and International.
HEICO Corporation is engaged primarily in certain niche segments of the aerospace, defense 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 contractors and military agencies worldwide, including the United States Air Force and Navy in addition to communications and electronics manufacturers. HEICO has developed and successfully employs programs which emphasize principles to enhance its manufacturing operations and has followed highly focused marketing and product development programs to greatly expand product offerings and marketing reach following acquisitions. For more information concerning HEICO, please see our World Wide Web site at: http://www.heico.com/
Certain matters discussed in this press release include forward-looking statements which involve risks and uncertainties. HEICO's actual experience may differ materially from that discussed as a result of factors, including, but not limited to, lower commercial air travel, product specification costs and requirements, governmental and regulatory demands, competition on military programs, product pricing levels, HEICO's ability to make acquisitions and achieve operating synergies from such acquisitions, interest rates and economic conditions within and outside of the aerospace, defense and electronics industries. 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 Forms 10-K, Forms 10-Q and Forms 8-K.
HEICO CORPORATION
Consolidated Condensed Statements of Operations (Unaudited)
For the Three Months Ended
------------------------------
1/31/01 1/31/00 (1)
------------- ------------
Net sales $39,650,000 $47,940,000
------------- ------------
Cost of sales 22,618,000 30,082,000
Selling, general, and
administrative expenses 9,174,000 8,770,000
------------- ------------
Operating income 7,858,000 9,088,000
Interest expense (552,000) (1,218,000)
Interest and other income 315,000 210,000
------------- ------------
Income before income taxes and
minority interest 7,621,000 8,080,000
Income tax expense 2,953,000 3,154,000
------------- ------------
Income before minority interest 4,668,000 4,926,000
Minority interest 760,000 911,000
------------- ------------
Net income $3,908,000 $4,015,000
============= ============
Net income per share:(2)
Basic $0.22 $0.23
Diluted $0.20 $0.20
Weighted average number of common
shares outstanding: (2)
Basic 17,508,438 17,329,017
Diluted 19,944,273 20,011,980
1/31/00
------------------------------
1/31/01 As Adjusted(3) As Reported (1)
------- -------------- --------------
(Unaudited)
Operating segments information: -
Net sales:
Flight Support Group $31,503,000 $28,195,000 $28,195,000
Electronic Technologies
Group 8,147,000 7,310,000 19,745,000
----------- ----------- -----------
$39,650,000 $35,505,000 $47,940,000
=========== =========== ===========
Operating income
(before goodwill amortization):
Flight Support Group $8,208,000 $8,908,000 $8,908,000
Electronic Technologies
Group 2,323,000 1,965,000 2,929,000
Other, primarily
corporate (1,083,000) (1,345,000) (1,345,000)
----------- ----------- ----------- -----------------
$9,448,000 $9,528,000 $10,492,000
=========== =========== ===========
Operating income
(after goodwill amortization):
Flight Support Group $6,991,000 $7,902,000 $7,902,000
Electronic Technologies
Group 1,950,000 1,605,000 2,531,000
Other, primarily
corporate (1,083,000) (1,345,000) (1,345,000)
----------- ----------- -----------
$7,858,000 $8,162,000 $9,088,000
=========== =========== ===========
HEICO CORPORATION
Consolidated Condensed Balance Sheets 1/31/01 10/31/00
------------- -------------
(Unaudited)
Cash and cash equivalents $5,935,000 $4,807,000
Receivable from sale of Trilectron - 12,412,000
Receivables, net 27,735,000 29,553,000
Inventories 36,532,000 34,362,000
Prepaid expenses and other current assets 5,989,000 5,518,000
------------- -------------
Total current assets 76,191,000 86,652,000
Property, plant and equipment, net 27,149,000 26,903,000
Intangible assets, net 151,981,000 152,770,000
Other assets 12,811,000 15,407,000
------------- -------------
Total assets $268,132,000 $281,732,000
============= =============
Current liabilities $25,073,000 $31,183,000
Long-term debt, net of current maturities 27,009,000 40,015,000
Other non-current liabilities 7,886,000 7,339,000
------------- -------------
Total liabilities 59,968,000 78,537,000
Minority interest in consolidated
subsidiary 34,111,000 33,351,000
Shareholders' equity 174,053,000 169,844,000
------------- -------------
Total liabilities and shareholders'
equity $268,132,000 $281,732,000
============= =============
Consolidated Condensed Cash Flows
(Unaudited) For the Three Months Ended
--------------------------
1/31/01 1/31/00(1)(4)
--------- -----------
Cash flows from operating activities:
Net income $3,908,000 $4,015,000
Depreciation and amortization 2,441,000 2,510,000
Decrease (increase) in accounts
receivable 1,818,000 (3,626,000)
(Increase) in inventory (2,170,000) (1,505,000)
(Decrease) increase in income taxes
payable (5,798,000) 204,000
Other 150,000 4,183,000
---------- ------------
Net cash provided by operating
activities 349,000 5,781,000
---------- ------------
Cash flows from investing activities:
Proceeds from sale of Trilectron 12,412,000 -
Acquisitions and related costs,
net of cash acquired (661,000) (1,279,000)
Capital expenditures (865,000) (1,944,000)
Other 2,998,000 (717,000)
---------- ------------
Net cash provided by (used in)
investing activities 13,884,000 (3,940,000)
---------- ------------
Cash flows from financing activities:
(Decrease) in short-term
and long-term debt, net (13,006,000) (2,126,000)
Other (99,000) (379,000)
---------- ------------
Net cash flows (used in) financing
activities (13,105,000) (2,505,000)
---------- ------------
Net increase (decrease) in cash and
cash equivalents 1,128,000 (664,000)
Cash and cash equivalents at beginning
of year 4,807,000 6,031,000
---------- ------------
Cash and cash equivalents at
end of period $5,935,000 $5,367,000
========== ============
(1) Results in fiscal 2000 include the results of operations of
Trilectron, which was sold in September 2000.
(2) Information has been adjusted retroactively for the 10% stock
dividend paid in July 2000.
(3) Results in fiscal 2000 have been adjusted to exclude results of
operations of Trilectron, which was sold September 2000.
(4) Fiscal 2000 amounts have been reclassified to conform to the
current year presentation.