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HEICO (HEI) Q2 Earnings Beat Estimates, Sales Decline Y/Y

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Shares of HEICO Corporation (HEI - Free Report) inched up 0.3% to $135.51 on May 26, reflecting investor optimism following the company's fiscal second-quarter results

The company reported second-quarter fiscal 2021 earnings of 51 cents per share, which surpassed the Zacks Consensus Estimate of 49 cents by 4.1%. The bottom line, however, declined 7.3% from the prior-year quarter’s 55 cents.

The year-over-year deterioration can be attributed to adverse impacts of the COVID-19 pandemic.

Total Sales

Quarterly net sales of $466.7 million beat the Zacks Consensus Estimate of $443 million by 5.4%. The top line, however, slipped 0.4% from the year-ago quarter’s $468.1 million on account of moderate demand witnessed for the company’s commercial aerospace parts and services as a result of the pandemic’s impact.

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 declined 6.3% year over year to $707.5 million in the quarter under review. The decline was due to lower cost of sales, which offset the increase in selling, general and administrative expenses.

Segmental Performance

Flight Support Group: Net sales declined 8.6% year over year to $230.3 million primarily due to lower demand for the majority of its commercial aerospace products and services.

Operating income also slumped 25.3% year over year to $35.5 million, courtesy of a decrease in net sales and higher performance-based compensation expense.

Further, its operating margin contracted 350 basis points (bps) to 15.4% year over year in the second quarter of fiscal 2021.

Electronic Technologies Group: Net sales increased 11% year over year to $243.1 million primarily owing to favorable contributions from its fiscal 2020 and 2021 acquisitions, along with organic growth of 3%.

Operating income increased 9% year over year to $71.3 million, primarily on account of quarterly net sales growth.

However, the company’s operating margin contracted 60 bps to 29.3% in the second quarter of fiscal 2021.

Financial Details

As of Apr 30, 2021, cash and cash equivalents totaled $385.4 million compared with $399.4 million as of Jan 31, 2021.

Long-term debt (net of current maturities) totaled $583.4 million as of Apr 30, 2021, down from $668.6 million as of Jan 31, 2021.

Cash flow provided by operating activities was $210.1 million at the end of second-quarter fiscal 2021 compared with $205.9 million at the second quarter of fiscal 2020.

Zacks Rank

HEICO Corp currently has a Zacks Rank #4 (Sell).

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 first-quarter 2021 earnings of $6.56 per share, which surpassed the Zacks Consensus Estimate of $6.32 by 3.8%.

Hexcel Corporation (HXL - Free Report) reported first-quarter 2021 loss of 10 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 16 cents.

Raytheon Technologies Corp.’s (RTX - Free Report) first-quarter 2021 adjusted earnings per share of 90 cents outpaced the Zacks Consensus Estimate of 88 cents by 2.3%.

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