HEICO (HEI) 17 Dec 192019 Q4 Earnings call transcript

Certain statements in this conference call will constitute forward-looking statements, which are subject to risks, uncertainties and contingencies. HEICO's actual results may differ materially from those expressed in or implied by those forward-looking statements as a result of factors, including lower demand for commercial air travel or airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services; product specification costs and requirements which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions; reductions in defense, space or Homeland Security spending by U.S. and/or foreign customers or competition from existing and new competitors, which could reduce our sales; our ability to use new products and services at profitable pricing levels, which could reduce our sales or sales growth; product development and manufacturing difficulties, which could increase our product development costs and delay sales; our ability to make acquisitions and achieving operating synergies from acquired business; customer credit risk; interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and defense spending or budget cuts, which could reduce our defense-related revenue.

Parties listening to or reading a transcript of this call are encouraged to review all of HEICO's filings with the Securities and Exchange Commission, including, but not limited to, filings on Form 10-K, Form 10-Q and Form 8-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

you XXXX by, of Fourth Results. thank the welcome Year gentlemen, Year Fiscal Quarter and for and standing to Earnings Ladies and End Instructions]. [Operator I over the Mr. would to speaker your today, conference now like to hand Mendelson. Laurans Thank you. Please go sir. ahead,

Announcement morning Thank Chairman and on this call. Group; you Fiscal Full here Eric joining and Year Again, everyone to and you joined Earnings Co-President for the I'm our and Corporation; President CFO. of we Technologies Support you of HEICO Co-President Executive very welcome HEICO's good Flight and Electronic Teleconference. thank and President HEICO's Macau, Victor by to Mendelson, and and HEICO's and us, of much, CEO Mendelson, HEICO's Carlos Group; I'm Vice morning President Larry HEICO's we of Mendelson, Fourth 'XX Quarter

Before and reviewing a take results, record team annual members. HEICO's and fourth like I to would quarter thank of all moment

been to in has of and workforce of proud the combination their the our are I some in that working pride culture entrepreneurial industry. great our and hardest lead saying We professionals exceptional successful most take XX-year a income rate our annual price. for winning XX% undoubtedly in of compound XX% net in sales, growth and to achieve XX% and enabled net has us formula in a stock HEICO

Flight represent like driven organic operating within organic million, net represent of income record year the sales Consolidated billion segments $XXX.X all fourth of impact Consolidated results. acquisitions. record as $XXX.X as our 'XX organic strong to to results, principally Support acquisitions. summarize 'XX fourth within by well robust also both fiscal full and mainly sales of of and by double-digit fiscal double-digit the operating our of growth operating few of income I'd 'XX million take Now 'XX and minutes million million record quarter a and excellent highlights of our results, net of mid-single-digit growth $XXX.X million performance income within operating of growth $XX.X net quarter fiscal driven $XXX.X our ETG income net our $X,XXX.X fiscal and fiscal of the

to income XX% XX.X% respectively, the net operating 'XX XX.X% fiscal operating in in XX% and up 'XX. XX% of a in full operating of and sales. in fourth quarter XX%, a net that margin quarter from on XX%, Consolidated 'XX XX.X% on quarter Consolidated XX% net and was and are are income increase in and Consolidated income that up the from fiscal income XX.X% and increase respectively, improved of net in fiscal Consolidated fourth fourth fiscal margin improved was X sales. the fiscal FY operating 'XX up in 'XX. up to in 'XX point

quarter that in Consolidated in 'XX. consolidated fourth net was share $X.XX of diluted was the fourth in to net XX% $X.XX fiscal diluted from up per fiscal per 'XX and 'XX, that $X.XX increased of fiscal XX% in fiscal And share 'XX. to income the from up $X.XX increased income quarter

our well fiscal reflects principally XX% the also sales fourth quarter for 'XX fiscal the fiscal over services of fiscal acquisitions fiscal set of fourth fourth performance 'XX, quarterly of the excellent as in resulted set the that and aftermarket as that quarter our net strong of as group defense-related and sales increasing ETG lines. strong product quarter within in The 'XX, well records all-time parts the overhaul from increasing quarterly record products. demand as quarter operating over the repair net and organic an growth double-digit fourth XX% replacement Support 'XX, Flight our of all-time 'XX,

by million in operating increased 'XX activities Cash up 'XX flow flow fourth provided and that was $XXX.X of that in quarter to million from 'XX. provided activities from fiscal was to in up million X% fiscal and the XX% $XXX.X increased in by $XXX $XXX.X million operating Cash 'XX. quarter record fiscal fourth a fiscal of

As for shareholders our on products decentralized focused structure. we strategic remaining flow significant commitment to our can to developing niche you cash by efficient generate see, all highly and entrepreneurial and continue

XX% cash share consistent strong As our yesterday, on confirms to is reported continued our declared consecutive semiannual stock, an $X.XX XXrd strategies cash the the dividend per cash shareholders time XXXX. January of Directors shareholders sufficient share we growth increase Board The flow, retaining XXXX. XX, on X, of increased our and of semiannual prior as this represents XXXX, The to capital was record continue to $X.XX. both dividend same and as cash dividend while fund dividend of rewarding of per payable regular classes amount a HEICO's over acquisitions. growth cash The in at confidence internal semiannual well dividend desire since January the

very a designer and also expect manufactures be and aerospace detectors XX applications. a following sources, RFI September, within accretive first solutions acquired first of certain radio announced its principally stock acquisition that of the acquisition outstanding of protection XX the variety which accretive to ETG acquisition Control Quell In XX.X% stock the for closing. following of we the the our is months controllers we ETG to is connectors months and to to dB manufacturer Quell TTT-Cubed, group, and all markets. and the Yesterday, earnings of be subsidiary of the defense Corporation, the wide defense expect dB group, of of and part customers Control our we EMI, and frequency closing. within serve within designs part transient of for our earnings

our to Seacom particular nitride-based electronics our Aerospace battery, 'XX, aerospace the December innovative underwater and DKXXX and low the special Electronic And and these product Aerospace TSO VPT design recognition beacon and lower 'XX, to honor This and pleased made simplify & challenges. one In Award on which important the certifications. groundbreaking for shipping with solutions in Military solve FAA have locator the their DC handling Innovators received industries and builds Military lithium an achieve content. Dukane product, subsidiary call certifications we Platinum October distinction to which we're legacy processes Seacom's and in lithium is earned subsidiary & is defense recognizes their in highest contributions Electronics companies converters. for Innovators DC gallium This

have the make the in we HEICO always, of incredibly VPT comment system. our unusually that's ones but operating people outstanding some management and talented and because are VPT capable As the successful. thank and are that throughout not And a we of by accomplishments, people HEICO their for really individuals, we their just these persistent innovation. companies for that humbled most the the management are exceptional They excellence

of President Flight At he Support the like time, I and results Co-President the Flight of Group, would this will introduce of HEICO Eric discuss Mendelson, Support to HEICO's and Group.

the due product in offerings of quarter product FY fiscal fourth net new fiscal from 'XX, up XX% net to 'XX XX% our in in in $X,XXX.X a you. to Flight fiscal $XXX.X Support to of 'XX. organic increased to and the quarter XX% attributable 'XX, Flight of from respectively, increased and up year Group's record Thank growth The 'XX. of $XXX.X sales fourth million Group's The sales a million mainly billion The quarter fiscal Support record across all increases XX%, demand strong lines. the are increased billion fourth of in $X,XXX.X in

resulted previously $XX.X up million offset efficiencies XX% This impact aftermarket attributable the operating replacement sales less and and fiscal previously first product mentioned a and quarter mentioned the Flight Flight 'XX, mainly fourth $XX.X sales principally The consideration, partially of growth which up 'XX, income from higher the margin, growth. to sales favorable in of in The in increased income specialty of line. the net gross net reflecting the fiscal 'XX. Group's record million in from value in net our growth operating the reflects estimated of year mix within favorable $XXX.X fourth profit the a in to slightly mainly Support a by decrease fair parts to million Group's the from accrued gross increase realized $XXX contingent Support year from margin, our increased improved changes quarter mainly million product fiscal the profit XX% -- from products in 'XX, sales fiscal net

in to Flight realized Group's quarter year partially sales fair Support of fourth gross Support slightly Flight increased increased up margin quarter fourth 'XX, previously operating from in reflecting operating in improved less growth. and gross net fiscal from a profit fiscal reflecting the mentioned XX.X% the fiscal from margin the previously value Group's XX.X% margin 'XX, year consideration, XX.X% of estimated margin. mentioned principally profit efficiencies to the the The 'XX, the accrued in fiscal The contingent by offset in principally 'XX, XX.X% up changes of favorable

year, if net year Flight 'XX, With growth exclude to fiscal the X% estimates X% 'XX. sales of acquired the margin estimate estimating to approximately respect organic prior operating These any. mid- we full to XX%. Support to and XX.X% Group to approximate fiscal single-digit high Further, growth year in are we over additional businesses,

Victor of group. results to Electronic HEICO's discuss Electronic Group, would of I Now and the the Technologies Mendelson, like to Technologies Co-President introduce HEICO of President

our 'XX, Electronic 'XX our impact attributable of organic to which a up for fiscal fourth our Thank acquisitions 'XX fiscal in and you, favorable defense in organic quarter acquisitions. sales due fiscal to Eric. as record defense to in to demand Technologies increased million as from Group's mainly XX% Group's Electronic impact certain a up 'XX $XXX.X million products the due Technologies $XXX.X a result $XXX.X increased the record fiscal quarter increased increased X%, sales XX% and aerospace 'XX, growth The from of The from net $XXX.X the of mainly 'XX, million fiscal million demand XX% to fourth in from products. growth, well is the as for of fiscal net

the products quarter income XX% Technologies from up higher increase in and fiscal sales by sales offset $XXX.X certain partially increased product million Electronic from of higher up driven acquisition-related fourth the XX% principally net gross Technologies in 'XX. reflecting mentioned by net fiscal to defense compensation costs. The improved and previously and operating principally $XX.X favorable profit to income by a and million from acquisition-related net the 'XX, higher million mainly fiscal Group's for margin, in a previously performance-based This 'XX, partially mix sales growth, the growth, realized 'XX, record of fourth offset in expenses. Group's efficiencies net an growth $XXX.X the $XX.X expense reflects million fiscal sales Electronic operating quarter more increased The increased mentioned

from fiscal quarter Group's with margin fiscal have Technologies quarter margin. from fourth been the of fourth reported the quarter mainly strong fiscal consistent 'XX to compared 'XX, compensation the in as operating in The expense. The fourth XX.X% operating SG&A XX.X% margin resulted as partially operating Group's fiscal at fiscal associated which higher costs offset XX.X% inclusive quarter a which negatively margin operating increased 'XX. in the in of 'XX acquisition-related fourth sales, of percentage remained and fiscal approximately Technologies fiscal net of by to margin Electronic by operating recent costs, additional higher gross with 'XX, 'XX margin a inclusive Had quarter profit up performance-based improved current is Electronic these period would we an 'XX acquisition-related The of expenses costs the X.X%. of the impacted the XX.X% in acquisition, fourth incurred improved margin, higher not operating

approximately estimate any allocation. operating the approximate the margin of fiscal higher to spending growth in respect over depending year, anticipate These could fiscal XX%. 'XX, any. XX% X% Electronic we which on 'XX are to Technologies defense exclude year estimating to additional mid-single-digit fiscal to 'XX, With in growth to Group's X% sales we low acquired prior if full businesses, Further, we and be estimates organic U.S. net

Mendelson. turn the to back Larry call I over

Thank you, Victor.

and diluted share fourth first 'XX $X.XX Moving the fourth $X.XX in fiscal ETG. fiscal per increased earnings quarter $X.XX, and that year the in performance quarter the was year that of segments, Diluted fiscal 'XX, in of per to up from on, $X.XX up 'XX consolidated increased in XX% Support strong these within the very fiscal net operating XX% increases from of and the quarter fiscal reflect in Flight income 'XX. -- share both was to and

'XX was of up $XX.X and from of quarter 'XX amortization The That fiscal $XX.X in up acquisitions. of fiscal year fourth increase quarter 'XX. in Depreciation fiscal the $XX million 'XX. intangible of assets that incremental fiscal 'XX million higher fourth fourth million quarter and totaled $XX.X in the and million expense 'XX, was and in principally totaled from our the fiscal and amortization in reflects fiscal depreciation expense from impact the

to up was in 'XX. 'XX, fourth fourth the and we R&D fiscal development. ongoing new in from sales development was X% the fiscal expense in million increased of ETG, And quarter million continuing new XX% Support That that quarter from 'XX. invest of fiscal each in Significant as product it and dollar approximately into 'XX. up fiscal both to $XX.X year million of increased at X% $XX.X $XX.X million usual and efforts continue $XX.X are product Flight to

was change $XX.X of accrued of a expense million of and fourth fiscal fiscal due the the consideration. well fiscal 'XX that SG&A impact respectively, fiscal acquisitions, 'XX and of SG&A fair as higher impact favorable Consolidated Consolidated of and value $XXX.X fiscal principally offset fair consideration. and estimated compensation by 'XX, principally in 'XX quarter was million value as expense and and $XX.X acquisitions the estimated expenses the partially to and respectively, in million million changes performance-based contingent 'XX 'XX contingent and 'XX fiscal in accrued to 'XX, due $XXX.X in the were

XX.X% 'XX, estimated net 'XX, 'XX, about percent down a consideration. efficiencies attributable sales of and SG&A XX.X% the which in changes from X% Consolidated slightly accrued this of in as 'XX, SG&A fiscal is from decreased as in Consolidated in of net fourth fair sales to to sales value expense fiscal realized from a net of expense down contingent mainly attributable growth. XX.X% to of is quarter the quarter favorable mainly decreased fiscal in fourth to fiscal XX.X% percentage

everybody the effect, performance. our so call increase grow a can in we think understand as that are, shrinking it's beneficial the our we SG&A I on expense, business, very in

credit higher and we outstanding and fourth of to fiscal to 'XX fiscal 'XX in balance income it. in $XX.X compared under in was partially fiscal increase our 'XX Interest on fiscal fiscal principally and due fourth 'XX. facility. to expense million quarter was so not interest offset That in significant, by 'XX. the $X.X compared million expense was was in weighted the quarter million comment and million $X.X fourth revolving in 'XX rates, the average a lower Other $XX.X 'XX of The quarter fiscal won't

taxes. Income

HEICO fiscal higher cash Our the in fiscal 'XX tax XX.X% quarter effective the in the fiscal unrealized rate insurance fourth And fiscal principally rate gains to reduction reflects life of of favorable values surrender to the 'XX, down fourth impact of federal tax compensation the leadership plan policies decrease decreased the rate as in in XX% as 'XX. related a well quarter of tax-exempt in to corporate XX.X% compared the this from blended 'XX. in of to XX.X%

a also rate 'XX to 'XX, fiscal 'XX larger Our decrease to attributable net of rate. offset fiscal provisions exercises became discrete tax stock to in tax a impact HEICO compared material effect partially did from in in $XX.X XX.X% rate effective blended The rate rate 'XX. and tax effective the Act in in by have fiscal of tax in effective fiscal The tax reflects decreased effective benefits XX.X% the mainly XX.X% in in 'XX the 'XX Tax to that company's net is million option fiscal recorded the from fiscal reduction tax a fiscal the the in our benefit on fiscal federal in 'XX from decrease not XX% 'XX, for of certain 'XX. fiscal

and the was our fourth in to Support attributable compared fourth million results Flight reflects of noncontrolling to Net quarter $X.X fiscal 'XX. held. Net the of fourth quarter interest to interests fiscal income -- 'XX subsidiaries in attributable ETG 'XX. 'XX are $XX.X Group fiscal in noncontrolling million year $X.X 'XX improved 'XX noncontrolling million was of interest in fiscal in which of $XX.X increase The to compared certain fiscal and quarter operating million the in income

'XX, fiscal rate tax to of we income. interest the of combined full a rate XX% and effective For XX% estimate pretax noncontrolling

moving Now cash flow. and the on balance sheet to

strong. remain flow cash forecasted and position financial Our very

increased provided activities strong fiscal up $XXX cash from 'XX, in to by activities X% was earlier, XX% from a flow was increased to $XXX.X operating record fiscal fourth of discussed we million of operating As that provided in in fiscal was million by 'XX, fourth 'XX. $XXX.X million flow quarter 'XX. also $XXX.X in and million fiscal and that quarter Cash and very up

XX, working the 'XX. in Our same 'XX, XX closely as course, exposure. our was October we and credit DSOs, of outstanding ratio to X.Xx 'XX, to capital of of And sales limit day was comparable XX, receivables, pretty 'XX X.X much and respectively. days receivable collections as monitor date of October

losses very have on credit. few had We historically

X net and for one net October rate of -- in for Total equity customers in top of 'XX. ended of XX.X% sales, was the decreased days the XXX both year XX% our XX, represented 'XX. XXXX XX, than turnover sales to as consolidated No down 'XX. comparable that was October debt XX% same 'XX to and accounted period customer more to fiscal shareholders' XX.X% of X about October from of as Inventory 'XX,

as compared successfully extremely that 'XX, obvious which just ratio XX, debt -- October 'XX. to to Net shareholders' clearly, of is and equivalents, And point debt, XX.X% as equity completed of is which XX.X% total XX, I October October of less mean, XX, we of X.XXx debt-to-EBITDA as is cash to million down was as something from during of low. 'XX. October Xx to debt-to-EBITDA that X cash than $XXX improved X.XXx, XX, that's Net fiscal our and decreased out less EBITDA, I'd acquisitions. ratio cash 'XX, 'XX,

liquidity tremendous We have capability.

strength have the acquisitions, but We disciplined very our are. firepower growth to look we look and for, acquisitions, accomplish what certainly for what in but financial the are to goals continue we good we

our the financial maturities no 'XX, returns. to aggressively utilize debt and we accelerate acquisitions in growth high-quality to shareholder significant flexibility fiscal pursue and maximize have order will until We

market resulting with As fiscal of increased flexibility. -- strength and aggressive the to fiscal product we maintaining Based net discipline services, look record financial majority pursuing Flight sales strategy acquisition Support and developing visibility, within demand will further record growth year. ahead to another a our current ETG while our an believe our 'XX and anticipate and be across commitments we great 'XX, new from penetration, economic products upon we lines

full amortization XX% fiscal growth 'XX over estimating to year XX% growth X% to year sales We year operating net to approximately are in anticipate margin net in $XX We to to fiscal depreciation flow CapEx and income, these consolidated cash million, full approximate X% expense 'XX. about XX.X% businesses, XX%, estimates approximate $XX from acquired exclude and to operations additional if any. approximate $XXX million, million,

mention out I box too to analysts that, we initial number believe guidance deliver. -- of promise rather and side. again. without years, that do promise past than so, and for be the have given I That our coming is perform do far, the neck at something guidance conservative want we many this conservative HEICO has out just I historically, the of and my correctly time written, over that under on giving believe policy, that sticking would cannot will and we that

I to be over that to very bottom income will and hopefully, confident net able that line of really growth XX% XX% -- prior the target So 'XX. is we year, our know, fiscal accomplish you in as growth I'm

hard the deserve took delivered to the discipline credit and successfully closing, the outstanding members results for it In quarter. navigate work, again, HEICO's these another team have

in reflect team they do the management within a win Unfortunately, serve, success. and in cannot the HEICO's competence company the the quality financial they to for of we markets be team everything members statements. make team respect this the the the great members and utmost can't HEICO, to has people Our reflected continue

net think this growth the and a what do past However, and so and flash the reflected it's pan. in performance don't is happened driving in has income they the XX years, over annually, of I the

for to the extent Thank remarks, the and you. prepared I that would that, is questions. floor With of our open like

[Operator Instructions].

the Raffetto from Louis of line comes question first from Our UBS.

give sorry, item? and a the guess, of clarity -- So disconnect what's special what's driving the the us more, But the XX% Is and combined really bit I'm there thanks growth. NCI tax? I net or income you this can from -- guidance sales a interest little XX%? for tax a little it's if sort on Or next rate year, the margin bit down a the tax growth NCI not between of driving XX% down bit little to and of

me Louis, okay? this is Can hear Carlos.

Yes.

So the of tax can some nice because from exercised, up as the [indiscernible] of thing exercises. our -- a if both company for which, we the growth form an What one gets them amount to year almost year, happening time quarter had would, you you had recall that the We were majority every principally, did option wind appreciation. get stock in in expense. those classes acceleration our that experience 'XX, the was will of appreciation, the at outs. fiscal we back members our of benefit shares of due the in And of recognize looking double options fiscal compensation as option is, shares benefit team exercises in the of

options We about year, this options you in year. quite to use the exercise and situation. have in XX-year the so we you double if exercised that Those few prior year them, get a want have tenth

cause to rate to year, experience fiscal to the next HEICO, tax us So in QX that going benefit of and have the lower tax is that 'XX. we'll cash true

Okay.

So last a larger similar magnitude? year, to just

year, we also And have the consistent NCI pretty Yes. X%. roughly rates so around prior with

quick I Eric. a the guess, I the that single one you guess, guidance, news XXX follow-up, given don't just have do then And yesterday. but after how think right. All you MAX the understand about Okay. risk, I guys guys close for platform

that's increase companies content impacted, the our it, that in of on sales. I XXX that a impact MAX. We as part in result industry the the goes least have new by believe do Louis, be the will one mitigated I the is HEICO probably think aftermarket of but and with to going some be

HEICO. HEICO speed excuses take various has item special We don't see those. of call along this out don't the So bumps always for as to events. a care We special major way. got I

very going of much an So I'm that impact not there's to be confident to HEICO.

you can't we and factor it number. parts that's our fly, in business, also, airplanes airplanes. hard Louis, as a traditionally, But supplying give older older in

put together for and can you two two So yourself.

But should Eric's be -- don't -- be Sure. the least shouldn't again, No, impact point, to a in to benefit. want I it call segment.

have from line our from We next question the Spingarn Suisse. Crédit of Robert

to So dig the a both bit segments. I guidance little wanted into for

You talked about little bit expectations, different your growth the organic two. for a

and Victor, how Eric MAX could like bit. the that redelivery look aircraft you with through consuming We've walk if in is lift there So -- you it a or older think parts. you based the particular, of lift, does going MAX about ultimate if question, in replacement going got growth. Eric, here on And to the is will, slip last

And -- of extent for that in inform each also your on to could what then if segment. comment how 'XX? the So does you expectations the directionality margins

go Rob, first. is go and ahead I'll Eric. Sure. this

was an quarter we was Group, fourth organic in 'XX difficult of fiscal at the growth quarter comp. against and Support XX%. fourth Flight that 'XX, of our organic growth fiscal the extremely With XX%, the had In

organic growth years, means able outstanding, which And X post growth XX% never XX%, at any over really that be a between frankly, so other X-year to I've a period. seen company HEICO is and is number had to at or the we that organic before of

top on 'XX. think frankly, surprised fiscal have some we of fall to with us into strength that I the coming of quarter 'XX. I And 'XX fiscal fourth expected fiscal had would the that in

because our think so in some those 'XX. higher, effect, normally it, and shipped expectations fiscal number 'XX. fiscal that's of one customers 'XX when occurred just wanted have 'XX made things probably I tempering So believe the in that's would that's fiscal down shipments much that our in is of it I We for our

So I think that they're very strong.

I year, think approximately. our XX.X% year, operating margins was Flight XX.X% I continue was This it it margin. for to Support about think Last increase. Group

margins the I continue will anticipate answer that your that know... to area. I don't so trend And in Did question?

can focused not just I you all regard guessing to be other that with all is in late extended there we airplanes. your early we're is a But of bit range, and those on, 'XX there to? an the timing, return is calendar is to of a how have think about calibrate a return? if any right and able from anchor we Is again, numbers thought here way we're to strength MAX, temporarily your variable process on kind coming much MAX think really I around may versus know there kind of a that

hard even do, our really It's to at level. mean, I

-- content, Our some by have does the course, and the gets on it MAX, do we but mitigated impacted, get of I mentioned that negatively which aftermarket.

MAX the money be because us legacy get announcement to the probably it's or service. the that the it flying. But think how is will more net HEICO. to be I for airlines yesterday So because spend is fleet delay that beneficial this return is realize for after not suspect they where that net-net on very beneficial it for sure to into really I fast to a keep put airlines HEICO decide it's -- I'm really to difficult going to on depends money much encouraged

our with revenues internally, that I expect frankly, should when very be a as there of folks good aftermarket this. I talk So result

in know you it and and how taking long the this up there, take And pause thought now And corrected. the never terms could people technical issues. originally think, end that of longer, the resolving could I to course, of is manufacturing than get the in regulatory

number. the hard it's So figure net-net our will out be I it very business, exact but good, aftermarket for to think

quarter top growth that on point the Flight you income had operating fourth job I want The was organic margins really in frankly, Support, the basically other is had because is think XX%, a a and me to all did organic asked our quarter even but growth a also is look growth really, -- thing, about in team which single when in And out to you of that organic. comp at that we actually XX% surprising difficult did I XX% phenomenal while we upside. of

and production budgets of Larry, to I Rob, Boeing estimates thoughts. done to this the pushout the want The the MAX guidance add was announcing just is and... own and prior the my

course. Of

our me. my those think guys knowledge, I are to So knowing to tend always -- our sandbagging actually Carlos don't people, says who me,

-- receive. people, we So extra that I into they of power put these knowing the and a suspect didn't that may benefits lot

just any business MAX additional as effect usual delay. I think impact I'd the at it without from look --

a don't a what MAX. happened think the contains push I guidance the much with of of So result as

Right.

Okay. your on side? for Thanks Victor, that?

Rob. Yes,

through this the And review for bottoms-up they budget I I a say And think are in between. So with and perhaps I go then there's would they and aggressive. generally where we and budget, I in each that, get we something through being submits budget, go a company, then and subsidiary the are too past, have as I too process each conservative everybody conservative. sense

guys. my this is so that than our I more based what of is are they And received being conservative usual. on really from And sense it

us for I this which go like well think good time by some budget a concerned number point very they're areas the the way, year. in could in other for where a very next in right at space, things has us and outlook for doing now, over of is areas defense and

me what they really kind to So of have make know unless they basically I I don't And accept acknowledge they right. many give too just to adjustments us. that they're

press well. that in that you both think commercial -- on and growth and organic comments, the space guess, as I difference the release in between in defense the and defense, you've I just the drove quarter. in quarter, some Victor, But your said, latest on the

Correct.

we guide three that does were so that a coming this other year? maybe how down little? mean And do pieces those think And your or flattish the about for within areas

-- answer The very overall, us in it's we've pretty good there, a think do just I the do got others as are year, and we well but believing a estimate say the is, here internally for period. that's growth they're really poorly. next They no, didn't question. that companies didn't have lower themselves. pockets than across didn't the forecast good -- board, I Yes, And would the giving

good should us, be kind the for very defense we're the XXXX got on but of out bag can't really good the very there. conservative that on a out But is fiscal side, any aviation or so weeks of will the for us. little a side, first for mixed our some XXXX. for And of Commercial good fiscal I is some side, have guys But example, on us month the of make that's sort far. space and think X We've again, trends proven prospects I of thinking been, be year. for bit

just, saying think margin hair been, from guess, where you're And I below? perspective, you've around you'll Right. a hair you a be a that

heard me you've prefer people think guys we're in Yes, in of doing before, And Exactly. us before And that when feel we the before, look, come low not, this to you've averaging, say they've we got to me they rely come amortization exactly. in our in that then at again, businesses guidance. better, and we are conservative But and believe, say XXs. something as and says, to if and believe the upset and I the XX And get say on before, points heard great, a in come heard comfortable because I to to me right typical I'm they're thing. look this if they our It be somebody them, them going do with too well, has you absolute give terms, basis say, Carlos you've and margins. I but great. is can't official really lower. for we doing intangibles, have add.

to Well, Eric's Victor Rob, comments. I would just add and

see like -- into is you'll our time, that XX% K, XXXX. last this to strength that there's You'll the me see indicates going year at up in but is this up which backlog backlog over

of at, We segments, think Victor what we call, breakneck and and can't our those when unit I'll what done [Indiscernible] leaders has point we growth subsidiaries challenges anticipated defense that, budgets is our in grow the the is, to their breakneck our does describe, in And business continue segment really question was together, pace in their what done business. think put I had moderated really across at business. it bit? Eric to that but has we that and the a of I expectations. they've budgets moderate was go one what

Victor that a that continue think deliver. Now and to and all, team, wrong, box, mentioned, out over the I we Eric coming to and very do mentioned, and hope and as of our will well I'm hope management Larry we relatively and But we'll conservative I is do continue. that, as believe both guidance better

Jefferies. We Konrad of the from line have our next Greg question from

that Are Great quarter. upside the higher ETG be focused that on U.S. drivers? Not particular to mentioned harp prepared we the comments, on in based on should of areas the outlook defense and be budget specifically ETG, there terms of in but think, allocations. you I could Victor,

-- it's giving Well, businesses, I that don't giving programs, I think an think I specific which isolated want it's our a me say more are guys to -- on programs but in few is than a think incidents it's I -- programs, specific specific of But are view it's products. likely. mean, more us that me -- they're -- we subsidiaries they giving number conservative

opportunities were seeing of I penetration color press mean expansion parts helpful. then reports maybe Asia. That's there any within potential you're some market? that about PMA around regional And in and the

customer-by-customer selling Asia. to over over continue lot leadership a review a around customers I There's now of for our sales well last weeks we're great parts. on anticipate and acceptance, -- there's you been well. enthusiasm extraordinarily with and can of a couple doing. and do excitement review, already us, tell a and XX customers Asia have I continued met our years. gone for of what enthusiasm doing for lot very I we're the just been are and into in We Those We've

quick -- just then I'm sorry. And

customers, reputation exceptional been technical and naming with got in quality general, no, in has enthusiasm really the a our specific HEICO that's No, there's parts. industry tremendous an right. amount Without for a unlike with a other technical have any them. XX in-flight directives works worthiness and We any airlines other with million experience -- shipped really that rating parts or supplier shutdowns. these frankly, no of

So in particular, that. the really Asian appreciate customers

to I So very to think do well. going we're continue

at into over specific I PMA changes just is market the carry a the PMA. read-through then has or of mean, on kind or FAA mean, obviously, process? any proper follow-up aircraft there certification. their the looked to I And opportunities and maybe

so. I don't believe

FAA us. would a to satisfied good HEICO the I been relationship better. have I with -- our is And very think never the relationship very has say our They FAA. with process. has the trust

any see don't impact any -- negative impact. we So

line Our from next Arment question comes Peter of the from Baird.

quick quarter. anything of on one where Nice CapEx. is $XX you Pretty related? And step-up maybe a just versus million. kind big you that Carlos, Is specific out? finished to there 'XX call just that want all timing Or

capital No, there's have. some specific growth we

is we're we some renovations accommodate have we're and For which on, fiscal to expansion growth. speculative, that some have we XXXX, not doing planning

the in not prior too that's the dissimilar budget. So from It's year.

I think brought just too. spend. an last had year, extraordinarily Keep we we on have companies low new in X they needs mind, and

to like 'XX, overall, think appears step-up 'XX, it's similar at you though if it spend. So a look from I even that big pretty

think to number. I be And so that going ballpark that around we're

all sort They very having entrepreneurial equipment said mentioned, at -- retain day, end right, that our there's mentioned they new the being we always it of mindset Now have up that, the a cheaper. still guys can on always equipment, guys of of of as And buy before, the frugal. Larry wind lot instead spend. used get

at approximate but point, expected $XX our million. on to -- this I plans, don't it do, expect that based don't I So that, exceeding I

just then Okay. on M&A. That's helpful. And quickly

time, and bit year, for Maybe to $XX an period just able think obviously deals little get the Larry, quite million to on source been continue You you comment I high where done? extended in but 'XX. successfully, million, another have environment strong $XXX a fiscal deals still of you're spent multiples

Yes.

looking the think really are high. that for acquire, cultural is of heart in entrepreneurial at There has that's have right buyer we to want the I say, And to would lot that we of I company find And a actually still runway filled, is the are the We buyer the best Multiples and just an are are type -- view. right. business. them. the we from company of has that companies. best a exactly point opportunities, we're

don't So did Quite make or -- atmosphere -- the honestly, different equity and X wasn't the private paying much is it I some decision. very mean, the last people year, of the They see X, enormous always we than we prices. we today. right and

normal, able if do, they be well. our want. will, very Sometimes the and acquisitions number we to do do of I of you they think acquisitions But we'll kind

So I going because feel comes when and price that, pull the are the we've yes, they missed they're bad, wait drop conditions till the market in consideration. the sellers a think to But of and out prices past, too, they also is peak price found back.

different kind of we'll did much last X do. continue if the for and us, over we what conditions it's were Again, aren't year, than again, normal So just that market they doing the we last think year. today I

At from next Herbert. Ken question of have our we the line

cover fourth recently? aggregate in stronger for in I'm that's any a provided in quarter, volume, more either in in either benefit much 'XX, industry for the the -- I Considering your has 'XX or ask, your at pricing if Eric, in in the to but all been wanted any vast PMA tailwind has pricing incremental the first the been than curious growth majority aftermarket has or businesses, tailwind, particular? I pricing any you but of to know of distribution a see your is third

a operating of for more. in quarter, believe will, Because a why sure over growth leave with with make table often At we to relationships to growth that want philosophy customer and doing customers to period share we our investors of to fourth lot speak and X-year maintain organic, that And really say, to don't has XX% the come back very you XX%, been benefits. well, we're the income outstanding HEICO, pricing. the we and push we if all to the organic want roughly on

an that We answer your not with have opportunity is and question, in have something order the continue this to customers. been to pricing. It that develop we have for is frankly, not relationships that we no, So done know to us. pushing we just our

I events, -- our at do of that spirit the HEICO customer feel industry, moderating people we the unique in You've the ways one is pricing is been a are and of towards the energy and that I think to customers that. our of sort among number and to able our

got don't they've pricing PMA debt the because whether folks, they've payments. that. equity side the got side, private or push big have frankly, to So repair on We

accomplish So the take over we're been and I this years. how view, really we've to to that's think able long XX able

way. more if the markets? more more very you the around maybe opportunities. any have And maybe the off airlines? And what you growth airlines and relatively I seeing into growth wanted That's in detail fourth growth on in a in any earlier legacy to provide emerging extent slightly provide the just or break Can markets Is question could, coming emerging that are what with helpful. on follow-up relative maybe could a I color quarter out? to you're established Okay. different challenging you're to you base on asked out customers international been historically on North Western lower there penetration the seeing for the American Europe how might customers

doing very on to line. We're existing opportunity for as us is bring customers. broaden well well product take as Yes. customers new new with to the The customers and

with consistent years, would those doing, rate areas. overall, how But similar we're well -- I But continues grow in it has the it's different XX we it wouldn't than to, I that a past. at say, in So frankly, say is of any to last I story and both now. very it think, really is the that

a And Okay. I finally, to maybe not you mean for a quarter budget? organic shipments that Or That's this back some as I fourth factor? slipped result of in what growth factor of fiscal at into Victor, think a there -- any alluded was have maybe were timing some all the could the for 'XX earlier, could. held you you of maybe lack what was I the that a impact great. or 'XX? of in if just defense of delayed any October

good question. a It's

the don't the I and of budget, other the continuing like the would their for truck the things typical of the that up doesn't issues I And We any number from nature. -- show reasons don't think resolution X defense think the shipments level to test that fourth on, really quarter. do we so no, final what ordinary call perform have, that or I us. quarter, that and evaluation, doesn't impacted had noise every For slip in customer of

notable at nothing this point. So

next our from line of have We Ciarmoli from question Michael the SunTrust.

maybe Victor, you maybe PMA cut to look or within to what marketplace, go Eric it about penetration you're within well seeing maybe the at to like market level just talk -- DoD Or wean off runway you're seems rates suppliers certainly maybe there? of space, is looking this and if Can you give out they you're very commercial themselves but a know of don't some I and especially could growth? adoption, just penetrated. the at costs, as the for Are that source you're what DoD back as on the you of there? expecting if there sole lot some penetration is color

there may the have particular a prices their high but great dedicate to that's access Mike, is after We a that it. market complain We're really question. a think good to they to very about resources opportunity. that difficult in areas, harvesting go DoD because is It opportunity.

that We the looking able we're reputation color gives to for? and Does due area, that are that in do you're you to HEICO's I well. think succeeding

normal of rotorcraft, it's in might did. It wing, And I lines can penetrate the assume kind world? commercial you fixed that the product

probably more fair. It's that's fixed wing. think Yes. that Yes, I

there a looking pick And a be to the older Do capacity, are And planes. sense a get we maybe situation. to get just Got back headwinds carriers the finally XXX MAX wave it of in service, a it. thinking return then that service, for actually obviously, maybe extra aware could used flips mean and around to we lot the should be the I return for a when some mean of you do about that surplus in marketplace, of for material some you global headwinds used of? lot see parts and that serviceable you midyear a return create is see retirements, legacy if do to we we guys I think that date, service? have

analyst I and what going is Wall reads with have more these that of through -- it's very reads I the a Journal I guess monumental very to know is look, feel the badly than I situation, the in publications. mean, mean ahead folks complex and don't task is frankly My very But don't for in this I think reports various and -- everybody Street a this. what and much Boeing difficult they're for themselves. this so.

return X So Guess take once are have XXX-foot going get until system. good chunk assume happens, of service. knows, who And a that -- that the to that something. you've then got a or to a months built to to time it's into aircraft they

to of take think bite deferring you some a massive finally, But is return all of I based this of period the the aircraft. think on maintenance service time. hard that anticipating and to of are I and bullet airlines So some to to to a relatively no, to do retirements is going impact I do going don't But who been if that's news have guesstimate new, return have will, to these what the anticipate HEICO maintenance. service going it's this to upon so be.

think I it's a while them going get to take really to delivered.

So yes.

it. Got

Okay.

me. for one Last Okay.

you're give little seeing and on for. whether opportunities of Just Eric, you're plane, product spending of Just can development. color, those how opportunities? you around specific coming are you some parts the the anything greenfield off and whether new more it's airframe, Are where warranty, more a on new targeted could bit planes products it's you provide newer the seeing engine, being

wide-body, side, the with on it's it's for the the really think We're in broad-based past. say doing I narrow-body, Sure. our component place business. very over I well engine just across consistent side, the support fleet, a every

had question, also Ken that us the has this pricing, develop to and asked the regard got. culture helped think to I customer has appreciation and being As that I helps HEICO with customer-friendly by very mentioned, that we've

entire really So our across broad-based it's very family. product

George from line Godfrey CLK. from We next of question have our the

quarter Nice as always.

year in plane? a there had. is X really way much all that from wanted X content here platform, I you and how many content to planes, time the or for period any the but -- that's any average over average customers, on I within might HEICO dead Just per provide And come that you've I we're on But gauge many XXX. to over horse fleet, can customer a an beating at period take a realize know any looked

decentralized due Yes, which good layered into really the would the of nature -- it question, depends and number burn do. very us what exactly have itself, rate our think be by It is. approve, but we of it I difficult on customers business, expectations. -- on to the a part, which it would that it's based our to for determine difficult But it to parts be

Cowen. the Gautam We from of have question line from Khanna our next

news Just there? part had When was qualification, of a year? couple you in questions. products could developments do the on us wondering One, earlier development given the the launching you I if you anticipate more tell and where are CFM any

I well in say that we're So area. would over very doing

develop to continue We products.

But think the CFM reasons, specifically interest. to But take of our well little I'm there's piece. that going lot HEICO. resolution to good continue it IATA well. a of lot has I a be competitive that CFM. They've in got think And reluctant, I to I customer continue due it to for going extremely do important engine, call think we're uniquely to to out. I as is as parts HEICO been think frankly, to will

aftermarket what out, the Okay. -- parts seeing Q, And but R&O. maybe versus in you in the you growth R&O it can the usually also in quarter, comes in are

our organic quarter? quickest grower. the actually We And -- out it the X the we in component it business. repair it saw probably growth QX, organic was saw of all was of -- very In strong in a groups,

very groups However, both grew also. other strong

in we specialty the business and repair think, actually outpace was, and product time that -- 'XX So that I fiscal the first parts group. see the

they mentioned there up. repairs [indiscernible] we're been maybe [indiscernible] me system people is from pick were them. So to that as that were tells if some maintenance some of Eric the benefiting And have starting earlier, because

last PMA does XXX how one we And Or just Should product XXX, one. 'XX -- for new up? part assume normal shape year introduction, a parts?

I with past well that well. yes, doing in consistent would But years. say, area very we're as

Instructions]. [Operator

our Ducharme next the from Colin Capital. We from Sterling question of line have

expectations -- you wanted was to contingent bit my of on a recent bit year-on-year just the I in guess, that shed a also based decline year talked could benefit on But to some actually Is have release, CapEx performance? And just little that drill for your with down from consideration, answered. just the is about deal more it on forward. the Carlos, compare? little comment comparison Eric questions little a I a the your Most color? Or you for then been bit

follow-up. a be kind which on great. market could and the which end of more then little perhaps had that you provide That If And bit color would growth? are a of side verticals I business driving

take took is to similar is take 'XX, have contingent earn-out Carlos, do were We 'XX. me performance, the contingent increase me on better Let a anticipated -- so QX the we in We on had, QX this question. that the we that. charges to of based in panned charge out The which did earn-out not actually in let change. that right really change favorability a XXXX,

was actually a that us. help -- So helped that

You understand that?

verticals of on And I got or market the kind which it. driving just increased up there business that CapEx, forecast. that side of then color. end appreciate Yes, following that

spend across So had both growth. CapEx we in segments,

it by then actually segments and the that the expansion are little to -- corporate -- but However, plan we're we doing, we're that's their turn, which And on we ETG, do some not do, office. we're some we bit of which renovations, something have side. -- actually teetered that has that's it's really have all corporate within shared not out have up some doing a

some there. we're expansion there's doing So that

unusual. CapEx towards at goes nothing and HEICO, it's for normal Flight trends towards here than some goes that other of reasons, some Some expansion we that see the it of corporate. those Support But normally

Okay. And follow-up for then just quick Eric. a

on wallet content probing per and extensions little bullet, parts kind aircraft, there platform? certain as sales They the of here, words, MAX the others. bit with used of of kind relationships of grow get the perhaps specifically a maintenance. perhaps in airlines eventually perhaps speculating, moment? I'm to for haven't -- your we they've this uniquely deliveries, is opportunity have used on share bite an certain a expand Is to thinking seize with that, you forestalled not HEICO opportunity, Just to your the

it's already think, for because they yes, make opportunity that us and go expenditures. parts thought were who as pick And been being clearly, buying the is will see in that our purchased think customers down save going the continuing the result primary will The service. as the out they've they retire the cost I and sales. parts, benefits a part that of the of MAX it on be parts. ahead additional they additional of I of from to route to customers permit buying had that haven't as parts, result our us value they've from a far yes, for can that them all up buying past We that proposition. the slowed impact to buying And money aircraft as got an and -- maybe got they

So yes, I think you've hit the nail on the head.

of looks well, replicable time. from just I perhaps companies set Victor. at perhaps board, talk Can do interesting framework my on eye, looking And for over up it time? patent your growth bring this very seals, use untrained opportunities or you you a Okay. indeed. little in. product one looks the looking once rolled increased outside then rubber it and To one you over love whether lens protection be see you've bit M&A what about, this final asset Quell the the with

in components built operate difficult very, replicate. them. a with is very that to you. great not a certain filters in They're And way would certain replicate EMI electrical They're a filters. electronic They thank very those not good parts. rubber if yes, difficult they in are a -- It way be be company. It's seals. question. It's they're and to Well, would embedded impossible

on some protection, their in patent rely patent fact, products fact don't of for have any our Aside protection, usually from the of that the I products.

to got really in rely You've protection on competitive least, -- our at that's opinion.

rapidly because a made, has business, in for growing growing a the stepped some marketing successful few it's up years the changes of it's growth last business, some the been because a -- It's of around they've while, but of So their business. raving much I and they purchasing and and the customer the personally out alike, changes, major getting in aggressive base. week Quell. more top visiting so, in interviewed companies, last about people were due in going about the their particular, customers engineers, diligence really or

typical going profile. fences. the HEICO's singles Now -- not change and having acquisition, said you so is Don't to our don't of know, doubles. expect we that, it's as for kind it swing There are

that HEICO So acquisitions it's you're It next a up report the doubled find we've business. not of we're because going because will that sort and in increase to of thing getting this giant pick to as add our typical earnings do. our

There at are this time. Please questions continue. no

quarter who listening our of this everybody we the We with I thank everybody been middle and holiday report. Well, will call. has we be or healthy a the again -- to end on want very good wish happy towards February for February, season. guess, first holiday in And -- XXXX of back

that We are for for available questions if all today. And have any. is we that you have

good we a have are and holiday, now off. signing So

this all call. you Thank conference for gentlemen, participating. concludes and today's Ladies

now may day. a disconnect. Have great You