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HEICO Corp. Reports Operating Results (10-K)

December 23, 2009 | About:

10qk

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HEICO Corp. (HEI) filed Annual Report for the period ended 2009-10-31.

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. Heico Corp. has a market cap of $1.13 billion; its shares were traded at around $43.36 with a P/E ratio of 26.3 and P/S ratio of 1.9. The dividend yield of Heico Corp. stocks is 0.3%. Heico Corp. had an annual average earning growth of 11.2% over the past 10 years.

Highlight of Business Operations:

HEICO has continuously operated in the aerospace industry for more than 50 years. Since assuming control in 1990, our current management has achieved significant sales and profit growth through a broadened line of product offerings, an expanded customer base, increased research and development expenditures and the completion of a number of acquisitions. As a result of internal growth and acquisitions, our net sales from continuing operations have grown from $26.2 million in fiscal 1990 to $538.3 million in fiscal 2009, a compound annual growth rate of approximately 17%. During the same period, we improved our net income from $2.0 million to $44.6 million, representing a compound annual growth rate of approximately 18%.

As part of our growth strategy, we have continued to increase our research and development activities. Research and development expenditures by the Flight Support Group, which were approximately $300,000 in fiscal 1991, increased to approximately $11.5 million in fiscal 2009, $11.1 million in fiscal 2008 and $10.7 million in 2007. We believe that our Flight Support Group s research and development capabilities are a significant component of our historical success and an integral part of our growth strategy. In recent years, the FAA granted us PMAs for approximately 400 to 500 new parts per year (excluding acquired PMAs); however, no assurance can be given that the FAA will continue to grant PMAs or that we will achieve acceptable levels of net sales and gross profits on such parts in the future.

As part of our growth strategy, we have continued to increase our research and development activities. Research and development expenditures by the Electronic Technologies Group were $8.2 million in fiscal 2009, $7.3 million in fiscal 2008 and $5.8 million in fiscal 2007. We believe that our Electronic Technologies Group s research and development capabilities are a significant component of our historical success and an integral part of our growth strategy.

Our total backlog of unshipped orders was $104.5 million as of October 31, 2009 compared to $107.1 million as of October 31, 2008. The Flight Support Group s backlog of unshipped orders was $32.9 million as of October 31, 2009 as compared to $49.0 million as of October 31, 2008. This backlog excludes forecasted shipments for certain contracts of the Flight Support Group pursuant to which customers provide only estimated annual usage and not firm purchase orders. Our backlogs within the Flight Support Group are typically short-lead in nature with many product orders being received within the month of shipment. The decrease in the Flight Support Group s backlog reflects a reduction in demand for our aftermarket replacement parts and repair and overhaul services resulting from worldwide airline capacity cuts and efforts to reduce spending and conserve cash by the airline industry. The Electronic Technologies Group s backlog of unshipped orders was $71.6 million as of October 31, 2009 as compared to $58.1 million as of October 31, 2008. The increase in the Electronic Technologies Group s backlog is primarily related to backlogs of businesses acquired during fiscal 2009 and some increased orders associated with our defense related businesses, including homeland security products. Substantially the entire backlog of orders as of October 31, 2009 is expected to be delivered during fiscal 2010.

Read the The complete ReportHEI is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.

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