HEICO Corporation HEI reported third-quarter fiscal 2019 earnings of 59 cents per share, which surpassed the Zacks Consensus Estimate of 53 cents by 11.3%. The bottom line also rose 20.4% from the prior-year figure of 49 cents. The year-over-year improvement was driven by higher sales in the reported quarter and increase in operating income.
Total Sales
Quarterly net sales of $532.3 million outpaced the Zacks Consensus Estimate of $514 million by 3.6%. The top line also increased 14.3% from the year-ago quarter’s $465.8 million. The upside can be primarily attributed to the company’s high-single digit organic growth in the reported quarter.
Operational Update
HEICO Corp’s total costs and expenses increased 14.5% year over year to $1,177.6 million in the quarter under review. The increase was driven by higher cost of sales, and increased selling, general and administrative expenses.
Heico Corporation Price, Consensus and EPS Surprise
Heico Corporation price-consensus-eps-surprise-chart | Heico Corporation Quote
Segmental Performance
Flight Support Group: Net sales rose 12% year over year to $320 million driven by increased demand and new product offerings within our aftermarket replacement parts and specialty products product lines.
Operating income improved 18% year over year to $64.8 million, courtesy of net sales growth and improved gross profit margin. This reflects a more favorable product mix within the company’s aftermarket replacement parts product line.
Also, its operating margin expanded to 20.2% in the third quarter of fiscal 2019, up from 19.2% in the third quarter of fiscal 2018.
Electronic Technologies Group: Net sales increased 16% year over year to $216.1 million primarily owing to 7% organic growth driven by solid demand for certain defense and aerospace products.
Operating income increased 11% year over year to $62.2 million, largely on account of the quarterly net sales growth and improved gross profit margin.
The company’s operating margin came in at 28.8% in the third quarter of fiscal 2019, down from 30.1% in the third quarter of fiscal 2018.
Financial Details
As of Jul 31, 2019, cash and cash equivalents summed $59 million compared with $64.1 million as of Apr 30, 2019.
Long-term debt (net of current maturities) totaled $639.3 million as of Jul 31, 2019, up from $555.5 million as of Apr 30, 2019.
As of Jul 31, 2019, cash provided by operating activities was $313.4 million compared with $214.8 million as of Jul 31, 2018.
Fiscal 2019 Guidance
HEICO Corp anticipates fiscal 2019 net sales to grow 14-15%, up from its prior growth estimates of 12-13%.
The company also anticipates net income growth of 23-24% for the fiscal year, up from the prior growth estimates of approximately 17-18%. It also expects cash flow from operations to be $405 million, up from the prior estimate of $380 million.
Zacks Rank
HEICO Corp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Defense Releases
FLIR Systems Inc.’s FLIR second-quarter 2019 adjusted earnings of 56 cents per share surpassed the Zacks Consensus Estimate of 55 cents by 1.8%.
Textron Inc. TXT reported second-quarter 2019 earnings from continuing operations of 93 cents per share, which exceeded the Zacks Consensus Estimate of 85 cents by 9.4%.
Lockheed Martin Corp. LMT reported second-quarter 2019 earnings of $5 per share, which outpaced the Zacks Consensus Estimate of $4.74 by 5.5%.
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