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HEICO (HEI) Q3 Earnings Surpass Estimates, FY18 View Up

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HEICO Corporation (HEI - Free Report) reported third-quarter fiscal 2018 earnings of 49 cents per share, which surpassed the Zacks Consensus Estimate of 45 cents by 8.9%. The bottom line also rose 44.1% from the prior-year figure of 34 cents. The year-over-year improvement was driven by higher sales in the reported quarter and increase in operating income.

Total Sales

Quarterly net sales of $465.8 million outpaced the Zacks Consensus Estimate of $441 million by 5.7%. The top line also increased 19% from the year-ago figure of $391.5 million. The upside can be primarily attributed to organic growth that the company witnessed on virtue of increased demand for its defense products as well as continued contributions from well-managed and profitable acquisitions.

Operational Update

HEICO Corp’s total costs and expenses increased 15.5% year over year to $364.4 million in the reported quarter. The uptick was driven by higher cost of sales as well as selling, general and administrative expenses.

Heico Corporation Price, Consensus and EPS Surprise

Heico Corporation Price, Consensus and EPS Surprise | Heico Corporation Quote

Quarterly Segmental Performance

Flight Support Group: Net sales were up 11% year over year to $285.1 million owing to the impact of the company’s fiscal 2017 profitable acquisitions as well as organic growth of 10% within this segment’s product line.

Operating income improved 17% year over year to $54.7 million, courtesy of net sales growth.

Electronic Technologies Group: Net sales surged 35% year over year to $186.4 million, majorly owing to the favorable impact created by the company’s fiscal 2017 and 2018 acquisitions as well as organic growth of 16%.

Operating income increased 45% year over year to $56 million, largely on account of the quarterly net sales growth and an improved gross profit margin as well as a more favorable product mix for certain defense products.

Financial Details

As of Jul 31, 2018, cash and cash equivalents summed $66.9 million compared with $52.1 million as of Oct 31, 2017.

Long-term debt (net of current maturities) totaled $622.9 million as of Jul 31, 2018, up from $673.5 million as of Oct 31, 2017.

As of Jul 31, 2018, cash provided by operating activities was $204.7 million compared with $179.3 million as of Jul 31, 2017.

Fiscal 2018 Guidance

HEICO Corp estimates annual growth in its fiscal 2018 net sales to be in the range of 15-16%, up from the prior estimates in the band of 13-14%.

The company also anticipates its net income growth to be in the range of 35-37% for fiscal 2018, up from 33-35% projected earlier.

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

Boeing (BA - Free Report) reported adjusted earnings of $3.33 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $3.24 by 2.8%.

Lockheed Martin’s (LMT - Free Report) second-quarter 2018 adjusted earnings came in at $4.31 per share, outpacing the Zacks Consensus Estimate of $3.89 by 10.8%.

Textron (TXT - Free Report) reported second-quarter 2018 earnings from continuing operations of 87 cents per share, which surpassed the Zacks Consensus Estimate of 70 cents by 24.3%.

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