HEICO (HEI) Beats Earnings Estimates in Q4, Hikes Dividend

HEICO Corporation HEI reported fourth-quarter fiscal 2019 earnings of 62 cents per share, which surpassed the Zacks Consensus Estimate of 57 cents by 8.8%. The bottom line also rose 26.5% from the prior-year quarter’s figure of 49 cents. The upside can be attributed to 14% higher sales in the reported quarter and 16% increase in operating income.

In fiscal 2019, the company reported earnings of $2.39 per share, up 25.8% from $1.90 earnings generated in fiscal 2018.

Total Sales

Quarterly net sales of $542 million beat the Zacks Consensus Estimate of $530 million by 2.2%. The top line also increased 14% from the year-ago quarter’s figure of $477 million. The uptick can be primarily attributed to the company’s double-digit organic net sales growth within Flight Support Group, mid-single digit organic net sales growth within the Electronic Technologies Group and impressive operating performance of fiscal 2019 acquisitions.

In fiscal 2019, the company’s reported net sales amounted to $2,055.6 million, up 25.8% from $1,777.7 million generated in fiscal 2018.

Heico Corporation Price, Consensus and EPS Surprise

 

Heico Corporation Price, Consensus and EPS Surprise

Heico Corporation price-consensus-eps-surprise-chart | Heico Corporation Quote

 

Operational Update

HEICO’s total costs and expenses increased 13% year over year to $421 million in the quarter under review. The increase was driven by higher cost of sales as well as increased selling, general and administrative expenses.

Segmental Performance

Flight Support Group: Net sales rose 12% year over year to $324.7 million driven by continued strong organic growth of 12% mainly due to increased demand and new offerings across all product lines.

Operating income improved 14% year over year to $62.2 million, courtesy of net sales growth and the favorable impact from changes in the estimated fair value of accrued contingent consideration.

Also, its operating margin expanded to 19.2% in the fourth quarter of fiscal 2019, up from 18.8% in the fourth quarter of fiscal 2018.

Electronic Technologies Group: Net sales increased 15% year over year to $219.5 million primarily owing to the favorable impact from fiscal 2019 acquisitions and organic growth of 4% mainly due to higher demand for defense products.

Operating income increased 13% year over year to $64.6 million, primarily on account of quarterly net sales growth.

The company’s operating margin came in at 29.4% in the fourth quarter of fiscal 2019, down from 29.9% in the fourth quarter of fiscal 2018.

Financial Details

As of Oct 31, 2019, cash and cash equivalents totaled $57 million compared with $60 million as of Oct 31, 2018.

Long-term debt (net of current maturities) totaled $561 million as of Oct 31, up from $531.6 million as of Oct 31, 2018.

As of Oct 31, cash provided by operating activities was $437.4 million compared with $328.5 million as of Oct 31, 2018.

Moreover, the company’s management announced 8 cents per share of regular semi-annual cash dividend on both classes of common stock, payable on Jan 23, 2020 to shareholders of record as of Jan 9, 2020. This reflects a 14.2% increase over the prior semi-annual per share amount of 7 cents.

Fiscal 2020 Guidance

HEICO Corp anticipates fiscal 2020 net income to grow in the range of 13-14% and net sales to rise in the band of 6-8% over fiscal 2019 levels.

The company also anticipates operating margin in the range of 21.5- 22.0%.

Zacks Rank

HEICO Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Defense Releases

Lockheed Martin Corp LMT reported third-quarter 2019 earnings of $5.66 per share, which surpassed the Zacks Consensus Estimate of $5.03 by 12.5%.

Textron Inc TXT reported third-quarter 2019 earnings from continuing operations of 95 cents per share, which surpassed the Zacks Consensus Estimate of 85 cents by 11.8%.

General Dynamics Corp GD reported third-quarter 2019 earnings from continuing operations of $3.14 per share, which beat the Zacks Consensus Estimate of $3.06 by 2.6%.

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