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Heico (HEI) Q3 Earnings Beat Estimates, Sales Improve Y/Y

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Shares of HEICO Corporation HEI fell 1.5% to $126.67 on Aug 26, following the company's fiscal third-quarter results.

The company’s third-quarter fiscal 2021 earnings per share (EPS) of 56 cents surpassed the Zacks Consensus Estimate of 54 cents by 3.7%. The bottom line improved 40% from the prior-year period’s figure of 40 cents.

The year-over-year improvement can be attributed to sales and operating income growth witnessed in the fiscal third quarter.

Total Sales

The company’s net sales increased 22.1% year over year to $471.71 million in the reported quarter, primarily driven by improvement in commercial aerospace market conditions.

However, total sales missed the Zacks Consensus Estimate of $476 million by 1.9%.

Heico Corporation Price, Consensus and EPS Surprise

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 increased 16.6% year over year to $370.9 million in the quarter under review. The increase was due to higher cost of sales, and selling, general and administrative expenses.

Segmental Performance

Flight Support Group:Net sales surged 33% year over year to $237.1 million, driven by enhanced demand for its commercial aerospace products across all product lines.

Operating income soared 250% year over year to $42.1 million, on account of net sales growth and an improved gross profit margin. Further, its operating margin expanded a massive 1100 basis points (bps) to 17.7% compared with 6.7% in the prior-year period.

Electronic Technologies Group: The segment’s net sales climbed 14% to $239.5 million in the quarter under review, driven by organic growth, and benefits from fiscal 2020 and 2021 acquisitions.

The segment reported an operating income surge of 11% year over year to $69 million, primarily on account of quarterly net sales growth. However, the company’s operating margin contracted 60 bps to 28.8%.

Financial Details

As of Jul 31, 2021, HEICO’s cash and cash equivalents totaled $269.8 million compared with $406.9 million as of Oct 31, 2020.

Cash flow provided by operating activities was $124 million at the end of third-quarter fiscal 2021, reflecting a solid 33% growth over prior-year period.

HEICO reported long-term debt (net of current maturities) of $385.4 million as of Jul 31, 2021, down from $738.8million as of Oct 31, 2020.

Zacks Rank

HEICO 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

Lockheed Martin Corp. LMT reported second-quarter 2021 earnings of $7.13 per share, which surpassed the Zacks Consensus Estimate of $6.51 by 9.5%.

Hexcel Corporation HXL reported second-quarter 2021 adjusted earnings of 8 cents per share, which exceeded the Zacks Consensus Estimate of a penny.

Raytheon Technologies Corp.’s RTX second-quarter 2021 adjusted earnings per share of $1.23 per share outpaced the Zacks Consensus Estimate of 92 cents by 33.7%.


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