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HEICO Corp's (HEI) Q1 Earnings & Sales Surpass Estimates

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HEICO Corporation (HEI - Free Report) reported first-quarter fiscal 2021 earnings of 51 cents per share, which surpassed the Zacks Consensus Estimate of 46 cents by 10.9%. The bottom line, however, declined 42.7% from the prior-year quarter’s 89 cents.

Total Sales

Quarterly net sales of $417.9 million beat the Zacks Consensus Estimate of $405 million by 3.24%. The top line, however, declined 17.5% from the year-ago quarter’s $506.3 million. The downfall took place as the demand for its commercial aerospace products and services was negatively impacted in the first quarter of fiscal 2021 by the continued suppressed demand in global commercial air travel.

Operational Update

HEICO’s total costs and expenses declined 14.6% year over year to $337.6 million in the quarter under review. The decline was due to lower cost of sales as well as reduced selling, general and administrative expenses.

Segmental Performance

Flight Support Group: Net sales plunged 33.8% year over year to $199.3 million primarily due to lower demand for the majority of its commercial aerospace products and services.

Operating income also slumped 58.4% year over year to $25.8 million, courtesy of a decrease in net sales, a lower gross profit margin and the impact of lost fixed cost efficiencies arising from the pandemic.

Further, its operating margin contracted 760 basis points (bps) to 13% year over year in the first quarter of fiscal 2021.

Electronic Technologies Group: Net sales increased 7% year over year to $223.6 million primarily owing to the favorable contributions from its fiscal 2020 acquisitions.

Operating income increased 5% year over year to $60.1 million, primarily on account of quarterly net sales growth.

However, the company’s operating margin contracted 70 bps to 26.9% in the first quarter of fiscal 2021.

Heico Corporation Price, Consensus and EPS Surprise

Financial Details

As of Jan 31, 2021, cash and cash equivalents totaled $399.4 million compared with $406.8 million as of Oct 31, 2020.

Long-term debt (net of current maturities) totaled $668.6 million as of Jan 31, 2021, down from $738.8 million as of Oct 31, 2020.

Cash flow provided by operating activities remained strong, increasing 32% from $81.1 million in first-quarter fiscal 2020 to $107.2 million in the first quarter of fiscal 2021.

Fiscal 2021 Guidance

HEICO Corp has not provided fiscal 2021 net sales and earnings guidance due to the uncertainties caused by the prolonged COVID-19 pandemic.

Zacks Rank

HEICO Corp currently has 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 - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $6.38 per share, which came in line with the Zacks Consensus Estimate.

Hexcel Corporation (HXL - Free Report) reported fourth-quarter 2020 loss of 18 cents per share, in line with the Zacks Consensus Estimate.

General Dynamics Corp. (GD - Free Report) reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share, which missed the Zacks Consensus Estimate of $3.55 by 1.7%.

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