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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 31, 2005
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
Florida 1-4604 65-0341002
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification No.)
3000 Taft Street, Hollywood, Florida 33021
(Address of principal executive offices) (Zip Code)
(954) 987-4000
(Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On May 31, 2005, HEICO Corporation issued a press release announcing its
financial results for the second quarter of fiscal 2005. A copy of the press
release is furnished as Exhibit 99.1 to this report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
EXHIBIT NO. DESCRIPTION
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99.1 Press release, dated May 31, 2005, titled "HEICO Reports
Record Quarterly Sales and Operating Income in Second
Quarter".
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HEICO CORPORATION
(Registrant)
Date: May 31, 2005 By: /s/ Thomas S. Irwin
---------------------------
Thomas S. Irwin
Executive Vice President
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
3
Exhibit 99.1
FOR IMMEDIATE RELEASE
May 31, 2005
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO REPORTS RECORD QUARTERLY SALES AND OPERATING INCOME IN SECOND QUARTER
40% Increase in Operating Income on 27% Increase in Net Sales;
Net Income up 39%; Raises Fiscal 2005 Sales & Earnings Targets
HOLLYWOOD, FL and MIAMI, FL -- HEICO CORPORATION (NYSE: HEI.A) (NYSE: HEI) today
reported that net income for the second quarter of fiscal 2005 increased 39% to
$5,713,000, or 22 cents per diluted share, from $4,108,000, or 16 cents per
diluted share, in the second quarter of fiscal 2004.
Operating income increased 40% to $11,433,000 for the second quarter of fiscal
2005 from $8,172,000 for the second quarter of fiscal 2004.
Net sales for the second quarter of fiscal 2005 were up 27% to $66,973,000 from
$52,793,000 in the second quarter of fiscal 2004.
For the first six months of fiscal 2005, net income increased 38% to
$10,141,000, or 39 cents per diluted share, from $7,349,000, or 29 cents per
diluted share, in the first six months of fiscal 2004. Operating income
increased 36% to $20,094,000 for the first six months of fiscal 2005 from
$14,745,000 for the first six months of fiscal 2004. Net sales increased 25% to
$123,954,000 in the first six months of fiscal 2005 from $98,944,000 in the
first six months of 2004.
(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,
-more-
"We are extremely pleased to report record quarterly sales and operating income
in our fiscal 2005 second quarter results. Both our Flight Support Group and our
Electronic Technologies Group reported increased sales of 22% and 39%,
respectively, over the second quarter of fiscal 2004. All the sales increase
within the Flight Support Group was organic growth, reflecting the continued
recovery in aftermarket demand within the commercial airline industry, as well
as our continued success in the development of new products and services for our
customers. The sales increase within our Electronic Technologies Group reflects
both strategic acquisitions and organic growth. Organic revenue growth within
the Electronic Technologies Group approximated 9% in the second quarter of
fiscal 2005 when compared to net sales in the second quarter of fiscal 2004.
Operating income of our Flight Support Group increased 48% to $8.9 million for
the second quarter of fiscal 2005 up from $6.0 million for the second quarter of
fiscal 2004 and increased 45% to $16.5 million for the first six months of
fiscal 2005 up from $11.3 million for the first six months of fiscal 2004. The
increase in operating income of the Flight Support Group for the second quarter
of fiscal 2005 and the first six months of fiscal 2005 reflects both the
increase in net sales and higher operating margins resulting principally from
improved operating efficiencies. Operating margins of the Flight Support Group
improved to 19.3% in the second quarter of fiscal 2005 from 15.9% in the second
quarter of fiscal 2004 and improved to 18.6% in the first six months of fiscal
2005 from 15.8% for the first six months of fiscal 2004.
Operating income of our Electronic Technologies Group increased 14% to
$4.2 million for the second quarter of fiscal 2005 up from $3.7 million for the
second quarter of fiscal 2004 and increased 8% to $6.7 million for the first six
months of fiscal 2005 up from $6.2 million for the first six months of fiscal
2004. Operating margins of the Electronic Technologies Group were 20.1% in the
second quarter of fiscal 2005 and 18.7% in the first six months of fiscal 2005,
an improvement over operating margins of 16.7% in the first quarter of fiscal
2005, versus 24.5% in the second quarter of fiscal 2004 and 22.8% for the first
six months of fiscal 2004. Based on the current backlog within our Electronic
Technologies Group, we expect operating margins for the second half of fiscal
2005 to return to a level approximating the operating margins we experienced in
fiscal 2004.
Our consolidated operating margins improved to 17.1% in the second quarter of
fiscal 2005 from 15.5% in the second quarter of fiscal 2004 and 16.2% for the
first six months of fiscal 2005 from 14.9% for the first six months of fiscal
2004.
Cash flow from operating activities for the first half of fiscal 2005 totaled
$11.5 million versus $16.7 million in the first half of fiscal 2004 principally
due to a higher investment in inventories required to meet increased sales
demand and increased accounts receivable due to the higher sales levels. We
continue to target cash flow from operating activities in the range of
$40 million with a net capital expenditure budget of approximately $6 to
$8 million for fiscal 2005.
Based on our strong operating results year to date and current market
conditions, we are raising our target for fiscal 2005 consolidated sales to a
range of $250 to $260 million and diluted net income per share to a range of
$.84 to $.86. The net sales and earnings targets exclude the impact of
additional acquisitions, if any. The earnings target compares very favorably to
the
-more-
$.80 per diluted share reported in fiscal 2004 since the 2004 results included
the net impact of $.13 per diluted share from life insurance proceeds ($.16 per
diluted share) reduced by restructuring expenses ($.02 per diluted share) and
litigation-related expenses ($.01 per diluted share). The Company does not give
guidance on quarterly sales or earnings."
As previously announced, HEICO will hold a conference call on Wednesday, June 1,
2005 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 302-709-8328, wait for the conference operator
and provide the operator with the "Verbal" Passcode/Conference ID VM294484. 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 402-220-2946 and
enter Passcode/Conference ID 294484#.
There are currently approximately 14.5 million shares of HEICO's Class A Common
Stock (HEI.A) outstanding and 10.0 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.
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HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED APRIL 30,
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2005 2004
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Net sales $ 66,973,000 $ 52,793,000
Cost of sales 41,928,000 34,079,000
Selling, general and administrative expenses 13,612,000 10,542,000
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Operating income 11,433,000 8,172,000
Interest expense (300,000) (301,000)
Interest and other income 44,000 4,000
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Income before income taxes and minority interests 11,177,000 7,875,000
Income tax expense 4,213,000 2,701,000
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Income before minority interests 6,964,000 5,174,000
Minority interests' share of income 1,251,000 1,066,000
------------- -------------
Net income $ 5,713,000 $ 4,108,000
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Net income per share:
Basic $ .23 $ .17
Diluted $ .22 $ .16
Weighted average number of common shares outstanding:
Basic 24,446,997 24,048,105
Diluted 26,259,988 25,741,078
THREE MONTHS ENDED APRIL 30,
-----------------------------
2005 2004
------------- -------------
Operating segment information: -
Net sales:
Flight Support Group $ 46,053,000 $ 37,710,000
Electronic Technologies Group 20,987,000 15,143,000
Intersegment sales (67,000) (60,000)
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$ 66,973,000 $ 52,793,000
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Operating income:
Flight Support Group $ 8,869,000 $ 6,012,000
Electronic Technologies Group 4,219,000 3,703,000
Other, primarily corporate (1,655,000) (1,543,000)
------------- -------------
$ 11,433,000 $ 8,172,000
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HEICO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
SIX MONTHS ENDED APRIL 30,
-----------------------------
2005 2004
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Net sales $ 123,954,000 $ 98,944,000
Cost of sales 78,629,000 64,694,000
Selling, general and administrative expenses 25,231,000 19,505,000
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Operating income 20,094,000 14,745,000
Interest expense (533,000) (632,000)
Interest and other income 80,000 2,000
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Income before income taxes and minority interests 19,641,000 14,115,000
Income tax expense 7,136,000 4,856,000
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Income before minority interests 12,505,000 9,259,000
Minority interests' share of income 2,364,000 1,910,000
------------- -------------
Net income $ 10,141,000 $ 7,349,000
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Net income per share:
Basic $ .42 $ .31
Diluted $ .39 $ .29
Weighted average number of common shares outstanding:
Basic 24,387,667 23,896,675
Diluted 26,236,782 25,687,039
SIX MONTHS ENDED APRIL 30,
-----------------------------
2005 2004
------------- -------------
Operating segment information: -
Net sales:
Flight Support Group $ 88,316,000 $ 71,967,000
Electronic Technologies Group 35,761,000 27,082,000
Intersegment sales (123,000) (105,000)
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$ 123,954,000 $ 98,944,000
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Operating income:
Flight Support Group $ 16,467,000 $ 11,338,000
Electronic Technologies Group 6,681,000 6,187,000
Other, primarily corporate (3,054,000) (2,780,000)
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$ 20,094,000 $ 14,745,000
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HEICO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
APRIL 30, OCTOBER 31,
2005 2004
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Cash and cash equivalents $ 2,449,000 $ 214,000
Accounts receivable, net 42,892,000 36,798,000
Inventories 54,470,000 48,020,000
Prepaid expenses and other current assets 9,674,000 8,880,000
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Total current assets 109,485,000 93,912,000
Property, plant and equipment, net 40,614,000 40,558,000
Goodwill 232,303,000 216,674,000
Other assets 10,920,000 13,111,000
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Total assets $ 393,322,000 $ 364,255,000
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Current maturities of long-term debt $ 58,000 $ 58,000
Other current liabilities 34,420,000 31,984,000
------------- -------------
Total current liabilities 34,478,000 32,042,000
Long-term debt, net of current maturities 27,042,000 18,071,000
Deferred income taxes 18,155,000 16,262,000
Other non-current liabilities 6,573,000 5,834,000
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Total liabilities 86,248,000 72,209,000
Minority interests in consolidated subsidiaries 46,759,000 44,644,000
Shareholders' equity 260,315,000 247,402,000
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Total liabilities and shareholders' equity $ 393,322,000 $ 364,255,000
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
SIX MONTHS ENDED APRIL 30,
-----------------------------
2005 2004
------------- -------------
Operating Activities:
Net income $ 10,141,000 $ 7,349,000
Depreciation and amortization 3,503,000 3,415,000
Deferred income tax provision 1,351,000 1,716,000
Minority interests' share of income 2,364,000 1,910,000
Tax benefit from stock option exercises 2,580,000 1,258,000
Increase in accounts receivable (3,989,000) (1,198,000)
(Increase) decrease in inventories (4,471,000) 2,418,000
Other 20,000 (123,000)
------------- -------------
Net cash provided by operating activities 11,499,000 16,745,000
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Investing Activities:
Acquisitions and related costs, net of
cash acquired (18,419,000) (27,581,000)
Capital expenditures (3,029,000) (2,589,000)
Proceeds from sale of building held for sale 3,520,000 -
Other (251,000) (371,000)
------------- -------------
Net cash used in investing activities (18,179,000) (30,541,000)
------------- -------------
Financing Activities:
Borrowings on revolving credit facility, net 9,000,000 12,000,000
Cash dividend paid (610,000) (596,000)
Proceeds from stock option exercises 801,000 684,000
Other (276,000) 832,000
------------- -------------
Net cash provided by financing activities 8,915,000 12,920,000
------------- -------------
Net increase (decrease) in cash and cash equivalents 2,235,000 (876,000)
Cash and cash equivalents at beginning of year 214,000 4,321,000
------------- -------------
Cash and cash equivalents at end of period $ 2,449,000 $ 3,445,000
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