HEICO (HEI) 27 May 202020 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the HEICO Corporation Fiscal Year 2020 Second Quarter Earnings Results Conference Call. 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 the severity, magnitude and duration of the COVID-19 outbreak; HEICO's liquidity and the amount and timing of cash generation; the continued decline in commercial air travel caused by the COVID-19 outbreak; 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 cost to complete contracts, governmental and regulatory demands; export policies and restrictions; reductions in defense, space or Homeland Security spending by US and/or foreign customers or competition from existing and new competitors, which could reduce our sales, our ability to introduce new products and services at profitable pricing levels, which could reduce our sales or sales growth; product development or manufacturing difficulties, which could increase our product development cost and delay sales; our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense space; medical for the communications and electronic industries, which could negatively impact our cost 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 statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. to conference like speaker to now Mr. today, would hand over the your I Chairman Officer. and HEICO Mendelson, Laurans Executive Please go ahead, sir.

to joining Thank you, and Welcome fiscal for call, CEO announcement Chairman teleconference. HEICO on everyone second I'm you 'XX us. Larry earnings and good we Corporation. morning thank to the quarter HEICO and Mendelson, the of you President Technologies Group; And President of and and I'm HEICO's Victor HEICO's our and Mendelson, Mendelson, Co-President Executive joined Electronic here CFO. Eric this of Co-President Macau, Carlos and Flight Group; morning Support HEICO's by VP HEICO's

quarter results a HEICO's second our reviewing to all team like talented detail, take Before to of thank operating in I'd members. moment

around The suppliers various of of for of of and and governments management temporary outbreak to pay a during You effects certain culture as world entire HEICO's in a distinction commitment COVID-XX of COVID-XX. entrepreneurial our from face have have to reduced our cost layoffs, businesses, the the the I'll the and believe including Directors. customers, ownership team our the In outbreak, by humbled despite the the departments global response have affected and including result we three quarter within the now six pandemic. challenge been we, months implemented impact to related mitigate values to temporary I communities success. of your HEICO's will unprecedented your Board results unwavering second few results. COVID-XX our to manufacturers. onset operating work to by and with contributions collective winning near-term reductions hours, that actions am discuss operations moments have of team customers our responded strongly HEICO, serving the I by a the marketplace to The impacted reductions XXXX economic executive at outbreak. ended formula local April and its XX, and the members, challenges take produce our continue spread actions your

consistent not response our and the staggering the work protective varying including body with and of Our including supplying personal use establishing measures equipment, on the Center and and of Control for and from high-touch COVID-XX to home health any increasing to workspaces in taking, ongoing at temperature processes capabilities, individual cleaning outbreak, requiring the areas guidelines work implementing with work to aligned safety shifts, facilities, exposed necessary Disease products its electronics, sales outbreak. consistent with to of and fundamentally work. of including operational quarantine our respect the half period prior and half and individual markets for business the from operations, defense, to space medical communications. results other remained has to and been that expectations Demand the approximately the our for are net materially With return to results derived in financial of process our industrial impacted,

have disturbances, which continue may and to customers, we supply experiencing, disruptions including facility interruptions periodic expect operational slow from experienced, other our of increase cost. staffing However, challenges, temporary transportation conditions, or some production closures, resulting chain

material, to measured been as increase will effect the temporarily predict impact is to it future months our profoundly it is -- some predict overall. orders be yet their to While not changing this and delay impossible that to weeks likely costs possible our these and issues have business indicates experience impact, shipments opposed and and to current their future in and

commercial such of notably, services. value for needs, industry in in aviation portion markets. increased decline with experienced our continuing significant the Most equipment, derived from our manufacturing suppliers equipment, The global substantial outbreak. commercial across strong has has of systems, outbreak to protective our components medical of sales many defense x-ray in result products decline sales, all while supply ongoing be design, as remaining are not and and demand. personal component Fortunately, substantial consolidated had the The to used aerospace economic a a net volatility has impact is ventilators, equipment markets caused it sterilization and net material believed operations on crucial and an as medical demand

and of presence $XXX.X Consolidated market million, a $X.XX $X.XX market. six in income from or that up robust for XXXX. months been will and anticipate first XX% of X% in months our was net businesses income XXXX. our in million, fiscal in million commercial commercial to stronger operators that that such, do fiscal commercial solutions share the commercial aircraft increased to aerospace the industry was in products, record that we share within million be six most savings within the air aviation development with As cost-saving and And operate frequently diluted significant six a likely we per increased share XXXX XXXX. that customers. significant $XXX.X will first aviation global recovery air us with of first cost operating $XXX.X of cost fiscal programs per demand enable the fiscal provide impacted believe which our XXXX travel priority commercial Once months from emerge increase this resumes, decline by product to the a and the up or Consolidated Furthermore, travel diluted six our have in $XXX.X savings. months first began potentially materially in for March

consolidated six operating was XXXX from months million months of months XXXX first in first six up the operating XXXX. fiscal the was in in $XXX.X first Cash activities fiscal to was in flow XXXX. strong the to up million improved increasing of and that of months and of by XX% six Our first margin six that fiscal $XXX.X provided the fiscal XX.X% from XX.X%

cash for remainder We continue flow XXXX. positive to forecast operations the of fiscal from

and X.XX equivalents XXXX, that is XX, April XX, Net of ratio debt from compared EBITDA total was decreased of XXXX down as XX, to of was that as as of and times XXXX. decreased million October from as X.XX which of XXXX. shareholders' $XXX.X XX.X% ratio down times XX, debt, debt to cash less XX, October cash to net as XX.X% April Our and of April equity to

During five two completed year. over acquisitions have and fiscal XXXX, completed acquisitions we successfully the we past

Support significant pursue until to to will of maturities the no strength and quality we this flexibility and acquisitions results like of discuss to Co-President and returns. fiscal high Flight Flight time, President aggressively financial the to debt growth and Mendelson, maximize our XXXX have Support At he HEICO I of HEICO's plan utilize Group. would We shareholder introduce Group, Eric accelerate and

repair compared the fiscal sales, Support XXXX, second reflects across The to XXXX. net Flight second based XXXX, and sales the mainly million all by first March significant SG&A sales gross Flight expense. quarter fiscal the previously second as percentage mentioned of XXXX lower the $XXX in XX% of XXXX, million net air months the X% from from Thank first as by fiscal as months net decrease lines compared the Group's by fiscal income products fiscal six profit the decrease principally of -- The a net service the the months Flight performance-based second as of of XX% months Group's million within a overhaul to and six million fiscal sales million second in net performance quarter to to months $XXX.X from in up product XX.X% months our and a the six in our the parts first XXXX, the beginning in of of margin, in gross The first to compared product fiscal of profit decrease The $XX.X of outbreak. offset commercial decreased to first the first lines six the aftermarket The fiscal previously months Flight organic fiscal The first Group's resulting six in compared to mentioned based expenses Support margin of due travel second a a performance in margin lower quarter operating to of of increase first you reflects decreased quarter principally and fiscal partially a of income of in compensation compared to principally months mentioned much. income XXXX, XXXX. lower to profit decreased six Group's parts XXXX. operating XXXX. of quarter decreased replacement $XX.X $XXX fiscal in quarter XX.X% in of XX.X% percentage Group's Flight margin Support operating million mainly in lower Group's mentioned previously Support in global decrease decreased in XXXX, Flight gross $XXX.X margin. expenses lower lower in as decline the second previously very quarter the six as SG&A partially The sales mainly fiscal to offset XXXX increased from quarter decrease the expense in the sales expense. XXXX $XXX.X and XXXX. of The compensation in in million fiscal reflects as partially compensation net the decreased is The in Support operating reflects fiscal offset operating the XXXX. and The decrease principally XX.X% in million to second $XXX.X six Support X% in demand

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

mentioned first well our The impact defense Technologies shipments. fiscal XXXX. X% space by growth as partially increase demand of due million million acquisitions, and the XXXX. product $XXX.X in six partially for The the XXXX you an XX.X% X%. of partially XXXX. decrease our Thank expenses fiscal the previously products. of XXXX attributable XX.X% by first percentage XXXX net a operating sales mentioned a by The our $XXX.X by performance-based performance-based million to second the our fiscal impact space million six by to net up net offset sales a to and X% fiscal previously decreased Electronic million as the the $XX.X decrease defense of to to offset margin in fiscal to margin fiscal in XX.X% products, organic income second first six of our Electronic The gross fiscal of second months XX.X% fiscal XXXX second sales as six first Electronic mainly in X% expense, margin the offset net lower mentioned in six lower as space favorable and in as in the Group's $XXX to decrease XXXX, million operating Group's net Technologies the quarter attributable second performance-based Electronic quarter mainly decrease was increase first mainly in defense Electronic sales increased was mainly $XXX.X months compensation Technologies to of in and from the The products space sales, offset a organic mainly the quarter the SG&A Technologies up months operating increased to profit Group's The of XXXX record by first decrease increased from in compared million The lower sales our margin six six operating net increased lower mainly reflects $XXX XXXX. gross margin well of Group's as lower for the is in net of in fiscal record a by Technologies commercial partially fiscal offset XXXX in fiscal partially quarter Group's in sales our of The quarter and sales organic net The to from the Technologies is is XXXX sales our of in favorable lower growth attributable products. products to decrease a a income and is partially a fiscal The XXXX. net of XXXX, gross XXXX, aerospace space sales the fiscal Group's compared fiscal due growth product of increased offset in previously Electronic months months from $XX.X profit the fiscal second up principally decrease aerospace due Eric. increase the expense. The of and increased This XXXX quarter million in of months increased to net commercial expense. shipments principally acquisitions, to reflects quarter lower compared sales partially lower of $XXX X% XXXX. of as second due profit compensation products, first from demand months compensation the to offset X% net from as

to the turn me over Let call Mendelson. back Larry

Victor. you, Thank

as second six from totaled in was quarter an and That fiscal the of first XXXX the second XXXX, in six second $XX.X quarter incremental expense in XXXX. slightly $X.XX was and fiscal into benefit second both XXXX and and $XX per quarter of and months fiscal up principally XXXX that quarter of fiscal of in million income to product The increased both totaled of six to $XX.X continue months months diluted at fiscal XXXX acquisitions. amortization Significant in of up share Technologies million $X.XX and Group. each XXXX, from to share. reflects XXXX. to and of development six the lower in XXXX $X.XX reflects in XXXX Consolidated -- development first Electronic Consolidated XXXX. impact up the and per previously that months the compared fiscal of the $XX.X XXXX. ongoing Depreciation first fiscal six Research from million months million incremental the reflects continuing principally of the of X% from fiscal Support second first Support the expense Flight new invest fiscal and dollar the new exercises of and income XX% with fiscal million net diluted fiscal discrete net in six decreased share first we our fiscal increase XXXX million up from XXXX that stock the in million was option quarter Moving $XX.X are $XX.X first principally in to first sales of second decrease recognized first increase The increased $XX.X mentioned $X.XX between quarter the of earnings X% efforts in months product income fiscal on of in XXXX months diluted of per development. XXXX. operating Flight quarter six from the fiscal tax the the and in

XX% [ph] XXXX. the Our million $XX that million $XX.X compared consolidated quarter second XXXX XX quarter of SG&A -- and fiscal decreased points in by fiscal expenses to to to second of

by of expense XXXX was the in million months in net $X the as down consolidated of decrease and in six Our of XX% The the principally $XXX.X XXXX second from the decrease the second reflects six fiscal of of fiscal consolidated fiscal in weighted percentage by XXXX that from the SG&A partially expense first in second performance in significant. the and of based fiscal a impact in including in in on XXXX from and expense XXXX million -- first consolidated in months in to lower decreased the of percentage first fiscal of in XXXX. compensation impacts XXXX. the XXXX. second percentage Interest XXXX of Consolidated under first partially six principally revolving XXXX principally expense down XXXX sales first and to months performance-based decrease in to percentage expense travel, the the months the decreased our credit net offset SG&A And expenses net quarter fiscal $X.X to first SG&A six as six offset fiscal facility. from of The decreased million of not million six six to and million million XX.X% net performance-based XXXX the and first a reductions compared from XX.X% quarter six Consolidated fiscal that months outstanding of fiscal from Other fiscal first as in XX.X% expense XXXX XXXX second fiscal the $XXX.X fiscal expense interest was in it and the sales outside of overall expense lower decrease of decreased a due a of quarter compensation months principally that consolidated compensation and was and acquisitions. quarter sales a first expenses quarter of was in months the outbreak. months as SG&A of quarter in reflects XX.X% second down that lower sales, XXXX the was SG&A commissions, to months six fiscal and by That in six decreased XXXX. in inefficiencies months second down sales SG&A some of XXXX fiscal the lower $XX XXXX. quarter expenses. rate of first income reflects the fiscal of second fiscal resulting in quarter The borrowings to six marketing $X.X

rate tax in effective the to XXXX. compared second Our second in quarter was XX.X% of of fiscal XX.X% as XXXX fiscal the quarter

Our effective X.X% of to compared tax rate in first XX.X% six fiscal in fiscal XXXX. months the the of first months six XXXX was

quarter which the As quarter of to $X.X The dates. result in XXXX. attributable approaching previously holding six $XX.X a in generated in fiscal their compared both were first in months second effectively exercised June in XXXX. well held of stock first subsidiaries HEICO's interest during the and non-controlling non-controlling to second windfall the this first Group. fiscal to million $XX existing million in months year-to-date decrease of effective recognized quarter option majority majority transfer back XXXX months the XXXX fiscal of in XXXX more XX-year this to of The discrete a cash six which as stock price benefit the to XXXX the second tax the attributable income period. of stock income the decrease of paid interest HEICO that optionees' of HEICO $X.X Lufthansa of strong Net in in six of And was the fiscal in Support appreciation the XXXX. The million Net expiration XXXX for options dividend reflects of from resulted by our exercise principally, impact Flight quarter options as from first option in the Aerospace first were compared of fiscal by exercised, interests stock and fiscal in million eight of our for non-controlling the exercises HEICO's rate. benefit XXXX, mentioned, recognized HEICO and the XX% quarter the was Technik fiscal the larger accounted

and position flow financial remains Our cash forecasted very strong.

discussed, strong previously very was provided I by the in months $XXX.X of As activities the cash million XXXX. in was six flow fiscal up million from operating XX% increasing XXXX and first months to first six $XXX.X of fiscal that

to flow the continue of We for remainder operations from forecast cash positive fiscal XXXX.

capital to as X.X ratio of X.X times XX XX, as as improved working October to April compared XXXX. Our

compared XXXX day sales to April XX days days compared of Our of receivables XX, XX April to to outstanding XX, as XXXX. improved

our for of of XXXX, approximately our all closely and XX% collection net than No continue consolidated represented and Of quarter sales XX% XXXX second more five course, we XX% top one exposure. to order in net fiscal customer receivable efforts in and customers monitor credit accounted to the limit of sales respectively.

of the that to also rate expectations based April purchase commitments to pre-outbreak for on net the days sales of XXX inventory April XXX certain certain inventory compared businesses. our The days XX, increased XXXX period in increase support turnover XXXX. the XX, period the backlog ended Our to rate reflects and and ending for

talk Now about the let's outlook.

XX-Q such our financial excluded on provided of impact January from operation outbreak. coronavirus January the the for -- for six have In early that noted affected first any stage. it XXXX outbreak we ending XXXX but the by fiscal the fiscal guidance months for XX, because results quarter an period been was Form second it of report quarterly three-month Our XXXX, and

the within our fiscal outbreak from on to the noted levels. commercial that developments demand predict cannot return Form withdrew financial strong balance estimate magnitude As to we cannot HEICO impact position and a will included entered the duration our aerospace sheet outbreak recent XXXX filed and and healthy the products with the XXXX the guidance X-K April for debt. nominal XX, when cash our of pre-outbreak outbreak. to due We confidently pertaining

created believe HEICO despite outbreak the the the that in short-term positioned we However, long-term is global success challenges by favorably economy. for

positive time-tested businesses a debt Our including defense, of puts medical industries electronics cash for uncertainty. fiscal HEICO low operating support our economic for their other base to thanking good and Accordingly, operations I continued like weather challenging commitment commercial cash-generating across as acquiring by these to the flow times. remainder and high a and of and team in of and forecast us and this members markets period strategy professionally XXXX. we space of would aerospace continue financial industrial maintaining beyond position during diverse from end such to to personally

your and on safety professional focused is team executive your success. Our

and has gone through confident the stronger We HEICO respect than completely do before. We strength came of point XXXX profitable outbreak. this exceeding things our company. similar completely the our through maybe also will collapse, of went our would went at manifest team like to our team each members that and exit back is team stronger we this will Executive for in you HEICO all this of X/XX, four, before. to five pursuit and expectations HEICO's we the every am performance. that COVID-XX of make management the through confident culture we I from three, went repeat for an to again event more financial outbreak ownership, mutual through unwavering exceptional and and out thank SARS, I than customers' That we other our situations all least will

we So, And you all. for now again open can the questions. thank floor

Suisse. For Thank Robert from you, sir. we [Operator question first Spingarn have Credit Instructions] the

open. is line Your

morning. Good

morning. Good

in of virus. will -- dynamic how we to I have all guess Eric, a And FSG, accelerated? April, about frame we context in on of so But that go it a And would components we how in of then lack thing is To the cadence an of situation. this appreciate how you when think these And reached QX look the the do as the Eric. bottom I to we clear wouldn't that Larry quarter. this to February you can is? incredibly due I'm questions going be might couple think obviously, have through visibility characterize the

good what February a That's Rob. at an lot and you, month. Basically looking and was a that happened. we've a Thank question short very was thinking time of outstanding internally spent It about month probably but had it the a entered month months been been for say other I overall it of And the would March would strong. that March have length very us. record we month did second quite March. was in still coming start the get to still month, able had decent. impacted. that own It some our backlog you began off were now. we And really so to preordered the the we they the half we but can April where started where of coming are see was down. hold started results in point And of April the before course, was

to May say crisis. think very orders. all concluded June not shipment. hard are Remember, to orders I get of of that bottom We're we the most starting certainty. May our in probably month the with hopeful is the of It's get has yet. that we

it hard we visibility. traveling vaccines enthusiasm starts very coming should that think improving people really would comfortable as be see of be up But That have like they're with from idea the here. along the or are look it's as in we getting more to as country therapeutics internal So, guess. our and can

stress come we Flight the we XX% withstand Support we numbers, And the in current XX% may on based and sure the area earnings to our Flight can expense in breakeven. that still Group we've Support our way. and sustain into sales that whatever want can drop believe you within to tested sales a of to levels make the If that get

to Support of is. a to numbers, sales what XX% Flight all we down understand after overheads in volume that imply to units incurred reduced drop run But drop up say probably inefficiencies would that And Now, those in with in that environment. off XX% XX% the writing a business breakeven XX% getting would end we've XX% aftermarket. the that the when and is the I of under-absorbed at all XX%

-- just That's with thing Okay. what I this serviceable has ask your just peers to to And then and in you heard compare material that. wanted helpful. of we've with other do the I to very some One and parked from fleet. all perhaps used appreciate

until is peers those Some you if that at of what really points levels have FSG's it's with above Would issue that? $X,XXX. noted all? exposure And at agree higher get price not your an about

and would PMA have less we I volume than over the than driven based reasonable And number. is than -- people not but this those parts suggested that. which I that agree it's think XX% less by to with sales sales we tell calls cost competitive due good where the is on We of I've think cycle numbers. is that I on -- mark reasons are that in something about to the you PMA a crisis, our speak now been the $X,XXX can have the have probably disclosed our where in only $X,XXX. less XX% of past and

used would lend themselves we cannibalization believe result to to therefore, much not the So, on we've material. type that of a products as of as serviceable done our tend that focus

Got it. in. Thank Got back you. it. I'll jump very Thank much. you

Thank you.

question for from Next is is Arment Baird. you from Peter Line open.

Thank morning Victor, you. Good Larry, Carlos. Eric,

morning. Good

Good morning.

could you do guess said you how FSG. that popular be how Eric to all talk like? context going when -- How that about does I'll about the to little think that? that about the hearing we're that about of going retirements you that's think you thinking in are the you about or test I a today, FSG so regarding -- age guess I about talk maybe when continue stress just bit with you're to look of What fleet?

whole and and parts. What just let's if works. inventory would the due of Yes, XX flying we months the three right inventories been course the hold If see initial demand wanted units. of of hand now, XX%, suffering examples three But XXX only units just would before particular they let's hypothetically they that to units. be they they need crisis destocking wanted we've they XXX an through now widget Peter, need the pieces. they a burn are using months the off right how that of consumption only less aircraft course to their XXX financial and question. And be to would don't if maintain then due to is they various inventory of the cases basically if And that's is they in the to of say on airlines aren't want impact say using the airline falls need some a great impact

So therefore, going burn on the those to XXX. to XXX if they had need only orders. place pieces they shelf, XXX they through before have They're

So I a further industry components between the and is that impact the that's got initial seeing. breakout think in engines. economy in you've Then the everybody

believe up to be then that flights it to parts and or aircraft we from sales miles, a component because airplane linear on with the component stick serviceable they another is overhaul, remove airlines end an fairly of just cannibalized. typically to going available of are component unserviceable and airplane seat So going not that number a serviceable

that engines figure impacted We believe the have delay maintenance the component parts and And is we the and first. off then of needed just course going heavy think part. as aircraft component either So shop. how not will and swap engines that will come will them last induct that good out that into or engines to the engines overhaul airlines not of be more the back sales

back So expect are the the component in is going heavy roughly before PMA And maintenance. that engines that area. our sales the we and two-thirds to come of

Now how your retirements. -- question was does on

with equipment We continue go do debate take deliveries? faced could fly obviously this. they Do existing and a on they have to the whole ahead have a airlines So or dilemma.

deposits, fly, be are Our is in be that's equipment take areas to belief of where deliveries. large, airlines ahead think impacted. that will dollars they're they're And that is serviceable make more significant to to lose deliveries saying seriously new to aircraft. going go that it's able before But by but deliveries require we on to that aircraft make that sense maintenance that not defer to to those not, new and it the most but and of I'm going planes the the off, going to shut going take they going

of that's look we market. at the So sort how

regarding just I active pipeline That's if on had of COVID-XX. very on could now during capital your kind this give just thoughts know one, us thoughts And ask before Larry, M&A. helpful deploying I Maybe you've an just environment? color.

we reports, in we're our in we're -- because -- read know Well strong as a position. a very capital very you you

very leverage. We have low debt, very low

We have availability. great

market. in We are actively the

on a We doing diligence are of number due projects.

accretive it the in-house extended the In acquisition get can't because that's an that's as and bring cash If We they to COVID, write going be year. that But have basic going to principles. due We a thoroughly which difficulty are to speak. that and group, won accretive, change as going keep and to I if aerospace ready imagine can expect is might restrictions you make we our the As out companies the so flow, make travel we that's check, we there earn are say often we're process acquisitions in the diligence to to suffering. with the acquisition to have don't locations its in would first we like. as sense.

do. generates want going that in said pay get really they for It But we tell never doesn't have definitely not be until And strong crunch. our may But if know So upon you because were wouldn't electronics to that in -- you decisions flow surprised, is you, can't cash I model we in have will. for a us. that the an profitability. if tell based company, make I we and can is we're cash work closes years the that many aerospace I deal or to it We a it appetite. announce -- price what tell I that's order HEICO an you cash to our work doesn't not I and vehicle we an ourselves will flow can

and active are possibly be. We have we the financial we as can capability

Larry. much, very you Thank

Larry SJ is Solow [ph]. Securities from is open. from Line question Next

well. to Great. and your are your Thanks. voices doing Good morning families hope Good guys. hear all

Larry. you, Thank

Absolutely.

Just follow-ups. a few

not have to Just know a over of about build-out of retirement -- new off of just versus question. have lot speak I probably you forward. the retirement there's big a on last on Obviously, the -- of years a so of been Can been going and those -- aircraft lot that warranty. aircraft sort drop XX talk or planes a

fair some look off we as haven't go offset it, warranty. statement? benefiting of be guys you there'll imagine a planes Is newer many Will as you these So that there obviously some be at aircraft been exactly how that. from offset there don't but know get some retired, I

Yes.

the I is Larry this think Eric. --

what's to really our said, warranty, all aircraft of they you the come into spot. sweet temporarily be and going retired. retired There's over debate As permanently going to be as out what's come

equipment I into fair think lot of service. back optimism a that there's amount of does that go a

Of in course and been rates new reduced. course, there's equipment have delay of production the bill the a been of

assume we're again, if optimistic aggressive So because schedule. even an you retirement

of is year aircraft. other approximately one year. You've equipment still fleet all XX,XXX the aging per got The

will, So hit as short-term aircraft going be whether be come the aircraft so yes, terms even or if don't then of opportunity that a impact. share in we provide And chunk cannibalization in our we will to lion they of we're will that there think result parts service of if of it's that a out be plenty as a remain badly. -- of for repairs. sales that But the age that think us

time demand per in into parts -- motivation -- more and little increase? about What parts maintained the although, annual in obviously, out Without the PMA obviously, year. sort has maybe, the well prior you just happen there look again outlook of we getting bit of around. of any level PMA amount read introduce for on in prior if guys maybe basis, the you an and be terms as is but specifics, the thought does But Okay. parts this in And of, just terms this a downturns, for very in hard could the in could again, of downturns, to future, extraordinary. incentive spiked demand a new of increasing have future of

we of that in money to thorough that our and on spending a development capable Yes. are that going It's -- we're that wanting product something pipeline, review us. fact be a and done everything make doing. source, there we're need that of we've develop We've is to for sure very going that to new

with But the know involvement of that of ahead a gone increased consistent with we prior because my done moment, new that that people we're conflate At be in going position believe we airlines. steady haven't a sure in the development, cap my to that. coming very make we've support a And to a think, crisis. of it's amount growth important HEICO. do that, as we look but the PMA basically So company. support sort we're of billion to we're participant. this this to is to respected of with product I out HEICO, And I growth this result want think and at HEICO I airlines is serious holding able the really be roughly and good HEICO. the We're industry perspective and that, airlines of market years, $XX it and able not

have be PMA And of It's we All not I've to times, very difficult of have. for fight the single as easy an every and in. many of that major is business piece we companies the industry aware to us. are said business

PMA well of be to I this making is do of mean you, to coming the that crisis. that I general, I and well, in So -- offer mean I'd making lot because products coming this be a going very do confidence out have don't going crisis, our but very out people, careful a HEICO statement and financial able we very stability. of is about to statement a of that

other companies, at so I'm not Looking sure.

lot they're of have that -- going lot of they're I think going pressure. a to to have a

sort PMA not been period them. at how done they've space over for companies, a of time. The of, has good longer look other you very If

So of I for parts future. very continuing us care lot friends. really that fair take think I optimistic we're think, new to I'm and of develop very making and that on our our reason, customers of on we a wins sure model And the pricing,

Right.

some it take potential like sounds an for -- to So hopefully market some opportunity take share. you

go do that feel Yes. is continue market up. share to I going our to

gone already high, was to share I in PMA continue. but it's higher. even that's Our anticipate market And going

Great.

to just Victor, gears going on for switching Okay. on -- a him his question toes. I'm keep

was I here. feel Larry. starting Thanks, like liver chopped to

Never, never.

against -- your medical general piece of back rebound quickly How of And, -- XX% well, that piece industrial to Is your about for more you Obviously, yes, more the just on maybe are on I consumer, certainly the business, defense businesses the space, side. a which I think in you. the don't downturn? the the of the somewhat susceptible insulated half. I XX% is, XX% know, Just -- of sort some expect segment. and think mentioned a you

It's Larry, pretty held it's been well. more I though would And say, is that susceptible. It's predict. harder up to overall. choppier

we'll have it will it how than space business the And plays certainly the be softer out. to and I defense. think see rest just of than

enough. Fair

Okay.

sort of thoughts of last sort on then, Thanks. the the a your that? Just of revolver. quarter? decipher follow on gotten materially Is took just over accounts the little different on a just -- last way lastly, just And you your question, Has the to there any bit the that receivable. What's drawdown up aging receivables? on of

question, Larry. the for Thanks

So the good release, We receivables right quality collections for a did the see are press down on during can are source high actually now. receivables a us. very quarter. as cash from the And of job you as

has good. our within to We very candidly, was not one I about bankruptcies how and that exposures. So to The about health worried tend the that concentrations deteriorated. don't mean, impact over receivables. airline am high any airline months. I and aging see I'll worry have the But we'll three next the of out six I significant any call industry, what that that plays for or do on

we wasn't make in a if March needed capital to crisis at an the HEICO correct, in far banks the for up, banks, on acquisition reason, that took or the of case, that for in draw whatever the the needs the that mercy we line we the for had. financial saw did to where as preemptively we draw draw, sure you're back seized I as As and whatever

proactive a state. draw the took And in so, I

we could You didn't it. use see

$XXX for acquisitions, that We right sheet And we'll on have just low, it if now. it. let is If great. there for not, about line for going carrying sit a balance with I'm sitting to cost the my use close the that to And million it we repay while. so

much. guys. right. Appreciate Awesome Thanks All Great. it. so

Gautam from is question Khanna from Next Cowen.

open. is line Your

Hey. Thanks. Good morning, guys.

morning Good

Good morning.

trends? PMA is this couple the down I what up aftermarket of all the guess assume in that discernible say just with at wonder, like, questions. pick Armageddon, should part seat seeing but to any just ASMs is in point? same it as this, or know, we of current kind share, relative follow-up we just around characterize worse? to side, available I suppliers. I'm it's demand current difference or about the of you're could orders on general Or Or kind line and May everything going you're I miles? Eric, there the assume had at you a terms can of I curious of don't But environment, down anything rate of is if in you first -- kind sort just in

have things past, say great seat But in of we simple, greatest as to the aftermarket also we the obviously, really driver. narrow-body realized, the really a passenger the question. we flights impact that our mean, seat keep the miles the got seat order Most is Ultimately, And just very yes, of to used miles sales miles. but important. available important. was this seat into I sort that's In always for would on were product. that's miles, Yes, proxy crisis, number available been of available

obviously most what's more our narrow-body. of now than are or And most impacted the over narrow-body. So is right wide-body sales on even impacted

extremely the of until that looking I now say the and other I really their in the rebound. correlated say right number driver that's see the sharp happens, But we're issue flights. that painful us hard to And highest got and the But was as destocking that remember, the the the to big number extremely probably inventory. of And would beginning for at. because, thing got would is is phenomenon. very I burn to a that aftermarket mentioned off you've earlier So, probably everybody's it's flights

can you we the of to points there the on have? -- tracking on And right that versus data XX-XX? percentage are what mix some thumb of follow-up us is that so narrow-body rule any is give you guys How PMA wide-body that, way

wide-body a don't with because can as aircraft. sometimes I the the a probably have some XX-XX little It is complicated me, but guessing on aircraft narrow-body well can a a that of that as get good guess what I'm it on is. go components

rough you probably So would all have assumptions. to make say XX% a narrow-body of approximation is sorts good the it. I of But yes,

sort this your that. Okay. year last bookings your very the could of have trends That's really at helpful. are how like? we because we you what Victor, wondering, to speak I in business, looking year. left this If What's of do in organic Obviously, was see difficult comparisons have point? also want to terms great of just much But growth? like I growth visibility

tend the the they defense in get business and the in side -- ETG to space the side. batched particularly are on Bookings

amounts. in, So, they tend to large come in

the of we've within so And that couple come in. recently very have orders last had large some months,

us been us. in in remains has release demand comment why that's didn't for and say space We referred defense in flow space. We demand. to shipments because softer And made for had the on pretty softer we order strong shipment So, the we that space softer strong.

half. second the in Would you convert those expect And or... Okay.

as materialize us. second year fiscal XXXX Yes. in start -- as That -- would to of that half the in well XXXX will the be for

don't And in little the and bit one acquisitions. if for a last you interest the about mind, pipeline talked you doing acquisition you, Larry, certainly Okay. one

doing to of We the we Again, I out pipe, are. We're look acquisition earlier diligence at, issues due thorough it's a very looking. on are companies. their do we what diligence. doing of due manufacturing, getting how more difficult acquisitions they're We manufacturing because The commented diligence. factories number on out processes logistics a and due go

the study we financial, to addition markets. In

because, due get thorough again, more because process. easily And a sites the so great appetite. as we COVID. very It's can't a out we diligence to do But we difficult have of the

optimistic EBITDA. might equities' used of that ability get be we the environment. or at some the we we're some in changed people will that, to their Our sell willing private equity of our to Maybe times hoping because matter appetite match pay And raise a has this see will we're cautiously at fact -- from because XX less all. not XX acquisition for that to prices And as that don't opportunities. we strategy be private competition of less -- funds

We're not of plenty constrained. have availability We capital. capital

level. debt very low have We

So, looking for aggressively acquisitions. we are

at particularly want not prices in Now their HEICO. cash their generate that future revenues have saying based we the generate normally will demand we companies that seen flow, upon side weight, that, do margins carry promises. And aerospace drop. seen the pay many have companies We

has our just we never to changed will more cash want be So bigger. be to to We grow only not discipline flow and will positive. grow

So, I think the opportunities are out there.

we're next can. year, good we six the opportunities. over months will for think business. a as many I as I or We'd to make like open would more think we see transactions And

kind say there... that there's or pipeline as of of acquisition are opportunities that you larger -- have in Would late showed the shown up up

interested they're large operating all look to big. -- We ones. cash there's it's the again The bring But they come where The and key not it's in big. not much smaller We margins same. deals is key for at us I or bankers -- us is big. No the investment ones. think mix XX% pretty X% we're We us same. flow. pretty at want We much look the --

operating want really earn management. XX% that keep great entrepreneurial we their with So XX% margins

be that big. to be just to HEICO to big wants is grow company Just not a

want We That's will always big. we grow big. to be where flow cash be to

is important nearly the not as the size profitability the company and flow. so, of the cash And as

guys. very much you, Thank

Next have Herbert Ken from we question here Canaccord.

open. is line Your

morning everybody, good really Hi nice quarter.

Ken. you, Thank

matter of wanted the of very component how of matter look months, maybe. expecting you. expectations that recovery recovery aftermarket with Eric, interesting. start your as engine versus you the I quarters? heavy component, a follow-up versus wanted business sort think you're your for the to to in maybe to lag and engine or relative a to made Any at a play be a regarding as on is would out on for of the you about versus or of sort maybe component earlier delay maybe timing you quantification I just aspects comment recovery maybe the engine a And

Yes. good very engines not which it very Ken to is much My are think a question. and been I know about very on I going personal writing focused airlines you've that's have belief induct absolutely that good. is until topic this they to.

that think I again is back. So last the to that thing come

to going heavy have I they until I engines think induct And there'll absolutely be with think there think I to many they're be going don't heavy wait. maintenance. to. maintenance are to

from how longer is much that So components.

further the that need really as it those a parts, a experience think them down components line. really getting that to to could a it the really And delayed very case-by-case term it's the but that's the lot line. the will And end those definitely on I something in. cash. overhauled – – six think of particular airline that are short-term come And really But want aftermarket I that's to at and the those guessing depending that part the basis. and on be going of going from intermediate much end going most it. to is engine to But it's life-limited be I just saying expect when really pain. to I'm the have months without engines operating it's look are at type conserve goes of of But I the course, think up perhaps we're

things helpful. be you so more sense next come there on could Yes. months the depress prior today, Do engine the look timing downturns that you which of over That's sort very green as out get availability or to the XX back that recovery? as sort relative a certainly time six fleet to the of will further do engine of

I think, yes.

on think who of sales buying we've buying of engines that airlines the engines green for conflating much. number are definitely safe aftermarket up don't with time, And those overhauled the or lessors There up point demand to green are out very with engines. the aircraft And there, to quality thrust. OEMs innovative what taking have think are care are who the to have manage a lessors engines of airlines being with I their the the as I lessors They also parts spare gotten away very airlines to are effectively. are the about where happy creative there, there time and thrust. off out which recognize going remarketability out And just there want is very the recognize And to able that able alternative and airlines achieve go are the them. in lessors savings, as engines have money. make the material operate to be seen

be think OEM parts delayed. definitely are that going engines to first. So I more that and going are do And material engines life-limited the green time the of to require have more used be

could, Great. today. you're detail just I one more the giving Eric if And appreciate extra all I

completely provide this you've had been about As which or that airlines cash work as where customers incremental you done agree with the accelerate you to opportunities less not with. maybe a the airlines for opportunity you airlines airlines? that have you relative presents from environment or not you more emerging historically for the work think I that to representation preservation market some Does established any the think current much Do historically maybe approach with? conservation with

that really is ball, industry billion believe there I $XX-plus behind markets. lot earlier a We for with They for think the had up a Yes. stand in those in and is occurring we're goes HEICO to the comment in being eight us before player with the a crisis. cap that that my HEICO we behind really these airlines the discussions as COVID. and Those products. able recognized before serious Absolutely, anticipate, COVID picked of market actually Ken. to And really now opportunity months were

I to think going these that opportunity think are airlines going are disproportionately to can we benefit rebound. them. a solution the I the HEICO that give on So see And

downturn of I mitigate pick with where able the us So as customers a past. picking some in and to of up do do sort anticipate them the up these yes, result as didn't much being we share market of

you Thank much. Great. very

you. Thank

Benchmark sir question, Sullivan Josh the have Next we Company. from

Your open. line is

Hey, taking Thank good questions. morning. the for you

Josh. morning, Good

model acquisition organically? relationship have environment? you with guys to those to You companies entrepreneurial had are companies. cost talk implement you Can an portfolio portfolio in of reductions they're How doing about versus much more the this your what directing disciplined

buy we That about have [Audio But kind expect the us And them say post were that if [Audio Josh, the you've to Victor. mean to acquisition. don't heard Gap] that it. buying Gap] be doesn't things We ultimately, and it's we – same then We company they you you is buy really business. right does pre-acquisition. key the as have of direct right that right you them the business right company the don't

that this judgments our to same taken grow took those a and it come save. companies the they growth And out they've take HEICO we'll they've the upon actions they we the time, growing. to of done at and need because individually save they So themselves But local and need they're at that sure we can what's continue is where to to know the level. right make company right make we'll ones and

actions So board. to the take we across have the right

part The high that motivation on top. one and is we other to so our ruling of from ruling want from don't demotivate on to by managers speak

and XX% creative companies that their disruptive than So a get need we much is decades people of to are boots a crises it in it better It people" We're much way say levels our very and to we works. we dealing do folks "That's getting that rid need the it's less and those quaking the the over a we humane and next. period keep as happy. and better, get. out ways noticed a But downturns get of we what find that effective in way we with and combination again, who's to come of of have and things. think to that it. And more then is our reductions I to And motivated and we to get actually

is Larry. this Josh,

what the simplify To you think carrot add I agree said, of to stick. it, and Victor to Just a completely.

presidents when So They company unit you. are basically would incentivized produce in and entrepreneurial all of HEICO than a carrot of the we is, acquired the degree prefer the And told are the decentralized managers very companies company as much business also results. the stick. to high to we Victor good a as

So by incentivizing them to have operators. them really, really to guys do stick. the They right thing, These we terrific. with are hit smart don't a are

benefit a company. the that we running that's get decentralized So highly

are what know reports they Now exactly entities to know report do. to but financial they're doing. We these We and people weekly, get what they us. known

in financial brilliance doesn't up show have these what We managers group, of statement would the that say, a have I is we companies. the running the

that's So I the heart it. of at think

free far trough relatedly, cash guidance? if the Appreciate right. any commercial May that. just the is And All isn't flow thoughts for Or that aerospace, how kind outlook, around of as then sensitive as that?

Apologies everyone.

by. We a will resume stand the moment. Please conference in

Difficulty] We you. Thank will resume shortly. [Technical

now the speakers back. are gentlemen, and Ladies

Okay.

are Josh, there? you So still

I'm Yes, here. Yes.

there's a have down here system and went had must sorry power failure just disconnected. we something -- the and I'm

problem. No

get the Were Did with you answer? you did -- get? you whole satisfied

was I just next did. actually beginning We the one.

Okay.

aerospace. isn't is as the And as if cash sir. essentially? free trough you, Thank guidance outlook, May flow sensitive far for flow that free just cash How commercial the

to Carlos. want just Josh, this I reiterate. is

free that flow given cash we flow cash will guidance remain The guidance. positive. we've haven't We is given

flow business allows cash highly which flex it to positive. the was very We variable -- have cost a and us -- measured a structure, maintain

want dealing So, a to future the to that be we're a we're of very in here. this team, that certainty luxury I having putting not with numbers careful the without because as management

Got it.

Okay. Thank you.

next from For have Kahyaoglu we the Jefferies. question, Sheila

Your open. line is

you Good for morning, today. the time. you're Eric, everyone, thank and popular

PMA about best your want to I And market. more share, the know And behind at this choosing XX into in bunch, you've talked So product you and airlines I the I your because retired rigorous thinking ages, delve you're but apologize. about I guys the years old products, I versus also know a of how and have being process aircraft offering to aircraft see it. wanted cost say XX balancing years old. lower

in things other think about you market? as So those two share gaining how this each balance

reading a lot very whole And with question. the I it interesting been Sheila, material in Sure throughout good had there. a you've that your the found that's -- the I've data crisis. of

and order of put the other the XX-year age. could driver be money don't to heavy that aircraft engine that to to overhauled perspective, you end be going in In it. cash I think old hypothetically words, be then need it have going old going driver is the if to maintenance. fly a XX-year-old I you and whereas lot put to maintenance that's because up to the you XX-year a from needs in an you're think big And aircraft first need aircraft the a to fly money in just deciding aircraft before

I impacted be somebody fleet what aircraft this we're fleet the based by determine aircraft to out come think -- serial as they an we it's by But So online. to going which got airline back figure to on most they're of be much very to us serial areas member number are going whereby, and airline, a to process by into we've the in be for looking part study able are going basically use.

how a look more opposed cash-in basis straight on as age So to it at that's basis. I a really think we

two of obviously hypothetically that, you've extent of viable younger would both you to would to because have them you the Now pick the be made both they need that. then same then got if having aircrafts dollars number one own longer obviously and said you life a the in

leased, I However, because give depreciated. what calculation. are a complicated fairly think to it's it this lot of owned, airlines back, very complicated gets fully able depends what's And a what's what's

approach. So I fits going size one be don't to all. a it's think

some extra sense. will myself wrong wrong. think makes that and I always in the ways, No, color guys the prove you I appreciate Okay. market and

that does In that can we've thus you is your forecast cost Or far? terms SG&A OE, of about XX% And of compression assume current FSG, for talk XX% seen decline, actually within any your part business? XX% on then to the that of your cutting? that's of expectations believe of breakeven business the just sort I

good Yes that's a question Sheila.

second Let me start of question. the with the part

-- we layoffs done our people. one our number is have asset We

if XX% drop wasn't a kick is then initially done certain as going wage days together, on voluntary done the reality our also total aftermarket to programs where to that have So in aftermarket OEM wage current make start FSG approximately layoffs, the in try we able taken have drop the We XX% temporary so be say, we've in of because said our sales. we but Having XX% aftermarket. which just to it. we've initially to that we've -- people we've that a order the least are you breakeven of pitch and think reduced week. adjustments, let's all a roughly reductions not working order, amount have calculated they chute the sales, of that put to been the impact assume with then done is in. we've as very one or to of in had to some that And that, all XX% FSG the implies number the we XX% have level much can we business, coming you done to When XX% possible. that two And to withstand is down careful people out is, a on pick basically drop furloughs, and

anticipate anticipate is reduction aftermarket much come the down again we that OEM sharply, to but first. last but So aftermarket down longer as going we not is back aftermarket than to the going because

So of I do how would say it. we at that's sort look

color makes so everyone. the for much That thank you all sense,

Thank you, Sheila.

question. Next

have Ciarmoli We from Michael SunTrust.

is open. line Your

about kind or just the should probably the revenues we were say look XX% quarters second April to morning tie And of mean Sheila's here mean you that in next XX% question, Thanks just should -- the if Eric you so. XX% together here so. it run range good maybe time being rate maybe of down sort run in down with quarter on thinking at said way the revenue then to think or at FSG this rate the so the kind questions. we SG&A and this guys. I down wanted I guys that of you Eric to in in XX% quarter Is -- or are the you we next the quarter? the Hey, below in down that usually Maybe implies falloff the resizing business the quarter, the SG&A on for for of sharply be of take low current or Carlos the the of what I I in saw two? so? full assumes a kind aftermarket terms guess year for I SG&A revenues or right the XX.X%. two about growth level at to tying comes for And think that billion that $X.X of

Yes.

is Mike, a So that's question. Eric this great and

what because We We airlines we that be. care have because seen have careful guidance we don't thus about going be not to the know far. We impact flying. withdrawn truly numbers We've the are to our see people. are

As I about people. it's said our number one,

we the new as new but force businesses to development, new so sure live in able to to this product sales respond. we able well maintaining with leadership reality, to we we're and terms that our make able of to our cost obviously structure had as maintaining our that in want developing And stuff, be reduce are

in -- give an to range conservative as is and area. XX% the had breakeven. which a the accounting it of -- more had much do back you and has of that, providing that's always the We've XX It this, framework is So extremely we're to important can mix. revenue we falls But XX% is this very gone why years. note FSG depends down will thing if does standards. XX% we very reason And on other revenue still that be always we've to accounting XX% that model breakeven approach the

the is costing volumes that ends One careful standard getting in that in one the cost We're of or increasing companies old the the basically fall increasing is going when ways pain products very that, that. up pulling can tricks manufacturing of amortized of block forward. by do in costs taking not the delay to

costs underutilized to off. write we have excess that we manufacturing very careful So and write-off, overhead, we're when

So future pain. we have don't

inventory, withstand XX%, all So the to not doing profits order and not of and term. drop long they putting the penalize reporting really team term. fixed stand. then that's after when assets, manufacturing and our reserves I are the end that they businesses into confuses XX% them of still into you them and down, you say that short in taking things that, numbers think a the how inventory We up we costs our not excess breakeven And of can writing the are play on would all and off – and around, play clearly, higher if delay doing in want they're understand short-term the just to really very members pain, companies games, where putting

little a you about gives that, hope into we're I So thinking idea color bit this. of or how

sense certainly, failures but be to at at pandemic of of looked at extremely out to low-cost you that's bankruptcy to just of have maybe I'd big be – that And And majors testing get ultra some stress of here have No to airline as another carries kind carriers you analysis your here one, done from then an risk helpful. there failure from customers or model and customer a looking on? Eric. the there's one customer kind as base airlines of your Yeah. really On which the might regard? the this you're customers your the the fragility going the list imagine, down of of,

we'll are on comment him it. accounts have to We – model let do build to becomes revenue look at our Carlos, honestly very on careful receivable But process, We companies that complicated it but but that. with regard based we the want risk at we're for And that customers, bankruptcy. that. expand we sure filing of and supporting to to we stung insolvency an we so Carlos do and get or way, on but can do in our make like intelligent are yes,

this Mike, is Carlos.

that try going it's will some the to and to meticulously one unusual going that space. We sat good – there, know, and turn a be these the So big papers with any be conduct burn customers, relatively part, don't give seeing concern mindful customers the to of we're don't same have And airline I be bank. know period. your done what overextending mean, they're acting this over reading to want we some side. the By credit of fashion is to not industry sure limit want if lot who anybody's to in I And all limits geography it. folks the our collecting be e-mail. we've by foreign, we we've because in on HEICO. we're bankruptcies they're too still that – there with There thing, down I see will during don't business time And normal token, all probably the will exposure about don't customer's make the domestic

The just say in it's So during shape. going to line And airlines there major of and of age overextended. don't balance. the that if were stuff we very got across a our our we'll have I could deal it. very wasn't with would good But dealing the of QX have to receivables hope fact that are in into or be us issues. There new. and quarter, we diversified airline a exposure cause fine QX, we makes any was one are the receivables sense. we But with mindful. lot a because bankruptcies concentration multiple I globe, ton that any of platform the

a question. then It does. point does. Josh's on clarification just And of It

so in variable capital press You guys of you at release mentioned or But the guys can you operations, cash clearly maintain positive working comfortable managing cash costs. maybe not even that, are from necessarily in some flow. looking inventory those free

for going remainder the is ops of from to cash the clearly, year? be positive So

test at the levels while Yes. positive ago, cash with That's we business little the scenario, still wind up we Eric stress flow. if described a extreme

guys. it. Thanks Got a All lot. right, it. Appreciate

Thank you.

Ducharme from Sterling is Capital. from question Colin Next

Your line is open.

Hi. I quick and the Good hope HEICO all morning. Thanks for Carlos. clarification for family healthy had safe. I taking the question. is a

But framed kind constituent talked subsidiary coming you've level. consistent framework, with the messaging reduction that versus substantially prior businesses is bottom-up Regarding bottom-up very the has of been expense about clarifying entrepreneurial that from playbook the the expense which top-down? at and being bit, a of rationalization all so

Colin. correct, That's

or all, it it So incredibly using – ran much. thing because our business, earlier, ran businesses very we first times. change don't we're that of and way challenging are or their and they When I doesn't have just And good think them these about references it, the frame guys how we they co-invested book change Victor have check deal either that seem HEICO manage noticed they they the the as mentioned they both the the is business and on is with own to they to acquired manage one entrepreneurial. with of them –

to customers, so of noticed of these we And very at we've period. operate they subsidiaries, need their demand of can they decisions when to they them capital management They're as a do fashion, good this is aware what tighten in because these make working folks decentralized do belts listening time best during that, and and allow to. understanding conscientious they that their

corporate have felt we'd the handed It the we it – have that or in we done felt haven't we need need which haven't haven't right things. a so at these their level heavy that be doing circumstances. to had are some do by Directors. staff contribute also businesses, executives to the corporate also Board of pay the they with we – them so manage just And reductions by don't what happens we taking the and necessary They and

collective possible. we to if misery So this you times. we've short-term contributed, would the get of sort to of all as we And is normal and all hope of back as soon challenging that can course, that

you're cash flow for for take that. over and Thanks Larry M&A HEICO that a look lens. that been that your targets this time, to frame a wanted looking of in of And frame different nature at recognize consistent nice from free I flow perhaps in equally – the for view could cash One recognizing unique the a time. solid has for Okay. get crisis. vehicle over and was clear a is very outlook it also kind

as seat miles collapse XX-ish as have have several, percent. none guys I You through been know far but seen

which foresee quality quality family this where assets and frame consider with facing nature of given outlook, distressed that that I targets free are you you them my your guess, the maintaining are so long-term HEICO expanding a And in pinches to could the longer-term cash and question today part liquidity becoming aperture of complexion unique crisis? willing is our

this Let – answer me is Larry.

ultimate those be. profitability will depending companies will we at of We look their kinds upon what think

So the answer is yes.

not but to of for pay But is, of the we looking that sky up We yes. pie yeah, question companies the know we is the consider, how that see -- have kind in so -- there to to would in some meet we're We'll inclined out? price are future. now they mentioned. your What are So just that sale? those at you qualifications they're for work if the answer that

And Victor. at very in that. look to net, look just and this we is I'll cast broad for. add a acquisitions the We

many transactions do. and what And consider we we important that's So to different styles. different very

one. find consider look we've order to many understand and in to of we So at right got a things, things the lot

are that style we this all and consider point. may distressed ones be even well and willing not So to at may look deals even performing be of

Thanks.

have question Next Louis we UBS. Raffetto from

Your line is open.

guys. Hey good morning

Good morning.

morning. Good

here, know you So XX said so in didn't go, the sorry about I going but Eric to get it that, to under you years old. get was traditionally onto until an past airplane

for Or for the think MRO just well? as that you PMA sort that primarily case? business? still applies do of is the So that Is

No.

don't side. I after seven or that. delivered. what years the to said I aircraft to us it meaningful what think I would say, I meant to after was new get or it's on But clarify XX doesn't revenue or -- years until the and on airplane, something the first a more have what I we that meant until repair its XX say not shorter each that's than the years delivery. is that probably And like PMA case maybe typically

revenue, would immediately. products, before And achieve the delivered. we we We'd would side -- course right on would be it it, specialty of away. in distribution it's even be we occur the On on

little So that bit thought. a to put of into color

you. No that's great. Thank

area, didn't XXXX, support go of growth. know when if back have I so And like to that flight kind XXXX, XXXX we strong

of in was fleet the dynamics planes kind younger the the coming back you of in. age increased retirements guys And industry you other that given talked from One newer the heard and of was the then. things of about people

fleet guess, a to think gains? if I don't likely is with share coming quite with you two. do offset the bit that of anyone know could be year you I able So to Do argue -- the or that younger the age get you'd fact than

Yeah.

sales like before what our I but So I the to growth something reason of we referring like -- me, the don't have was you're numbers then the something that. front organic XXXX-XXXX because time, in had think XX% in were was the lower or two in year

maintenance the what massive lot got I was there was way before. equipment of outperformed a period a deferred. There deferred think happened So lot sales. of in was We

So a then down it slowed that little in bit, period.

frame. the the I the think lower probably sales time drove growth XXXX, in that thing that's XXXX

then and one the you. best follow-up just so Great M&A, Okay. might for on be Laurans maybe

how call talked that, traditionally higher I margins. roughly FSG deals, and I'm with the guess do has we me margins. but about products think that has XX% has correct at the of XX% margins type wanting it wrong guessing You've said if that earlier margins PMA you I fact specialty market circle I'm lower

there So is there? opportunity a of lot

business get side. something up we question through the that then And margins. But the the probably on businesses our to and to XX% not think Yeah. those lower there's be. than I would -- over find sales more to often hard our we the we're mean of I FSG it is the it that, is of ability look, in than would no profitability that say, types closer like We I say terms going of increase forward, area. increase to to that

that's very is number. a that point. realistic a Sometimes we that, with start I a But we then wouldn't something that's If XX%. below that walk to find away over say business could we're able see path,

Great. Thank you.

it's very acquisition will margin, that a Just we know. to for bolt-on I company where low clarify not a go unless a has

we we if company, companies bought at a loss So FSG. within buy

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Great. Thank you.

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Asset And presenters last question from we have Mr. Haimes Management. Sage Barry

Your line is open.

FSG Thanks And sitting waiting any fleet very narrow-body MAXes get month in when that were? you when globally? the we One, fleet on then, we you idea And the just the where planes so marker how the much. roughly both I had to think and two revenue can second of do come Thank questions, was number in just was then if question sidelines sort of April, I have decline us many quick. have get we give things for of you. what approval? into are built and approval, on the a

Yeah.

in that regard So we necessarily the the break math With of front area. I Barry with in to not don't the in aircraft, it's first are XX,XXX approximately that there aircraft sort think of but question we to the were delivered. have you -- another will parked. an giving how do have of because, the it's stages specific narrow-body within is somewhere I think that envelope need that And of has out the been number of to bottom reason me, entire and the think out don't not get XXX got with regard is. MAX, quarter And I -- XXX delivered, back numbers production the some if that April, to approximately get you Boeing of idea that I then various we're can where will operated. quarter. But the of The regard that or representative

much. very Thanks appreciate it. I Great.

you. Thank

I no back to now am time. would to showing the presenters. further the at this I turn you. Thank conference like questions

management thank HEICO. this to Well, their everybody in for call the HEICO team in wants on interest

at time. are available any We

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stay So COVID during thank call. safe epidemic. this healthy all concludes and This you please the and

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

may great You now disconnect. a Have day.