HEICO (HEI) 26 Aug 202020 Q3 Earnings call transcript

Welcome to the HEICO Corporation Fiscal 2020 Nine Months and Third Quarter Earnings Conference Call. We thank you for joining us today. My name is Vincent, and I'll be your conference operator.

As we being the call, we remind you that 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. purchasing amount commercial of the services; export requirements, could policies or reductions defense, goods air fleet or the increase costs and continued generation; outbreak; cause and cause contracts; changes governmental in could Homeland and decline to travel airline space liquidity and for cash timing the airline lower by our HEICO's restrictions; demand which our cost complete specification decisions, caused U.S. Security and product an and which to regulatory spending demands; in by foreign and and could and/or customers competitors, or existing competition sales new our from reduce which profitability.

ability extent by turn new information, but you. interest, our no statement, review difficulties, conditions including, whether the revenue except income customer costs X-K. We of increase applicable Commission, HEICO's make Form forward-looking law. Thank our Our and over could foreign a synergies our profitable and to Officer. Parties of future reduce and sales, the impact to at Laurans credit the obligation sales costs Executive XX-K, services limited or exchange acquired our space, to and defense, revenues; or Mendelson, product development growth, which aviation, operating which Form could listening to and are on and to and call of Form Exchange encouraged product from products otherwise, delay now revise all to and within electronic A. profitability. HEICO's could medical, introduce this Chief telecommunications, result manufacturing filings ability defense-related to manufacturing update sales; any negatively defense reading cuts, our to publicly undertake I'd events our a or or risk; call and or acquisitions could pricing levels, and which businesses; required XX-Q achieve budget industries, currency which transcript Chairman the profitability; reduce Securities and filings new spending and economic outside and with as rates; tax of development not

Executive HEICO's this much, of and HEICO's and for very Eric to here Third Earnings HEICO's Co-President Group; to you HEICO call. Flight morning the good you And CFO. President President Technologies us, CEO Quarter am joining We and this you Announcement our of HEICO's joined and you thank morning welcome Fiscal Larry everyone HEICO of Thank I Mendelson, and Corporation. thank Teleconference. Mendelson, Chairman Mendelson, and am XXXX Co-President I Electronic and VP Support Group; by and Macau, Carlos Victor on

the our dedication entire three the by detail, certain governments July to our their at ended related I hours, like cost fellow from reduced reviewing operating team including operating outbreak. executive to exemplary. results for impact on as reductions of moment temporary of our within during to various as to Directors. results talented around the team and admirably HEICO implemented and has management the to safety suppliers, time, to from take challenges members and thank challenging these more bright want of company. months response and a customers, and during are the actions every team understand I will of on team work your a nine our HEICO's dedication that XX, minutes I XXXX. exit confident within stronger and Board have pay member effects and impacted future The the and as our Directors am period that focus the outbreak few layoffs, would brought members I customers outbreak manufacturers. HEICO's who this and times. safety on to Before Board all its performed discuss the humbled have been we this in departments take is spread world a Their the In continued we have each employees, global COVID-XX competitive efforts, mitigate HEICO's COVID-XX of of by economic by reduction well impact the the and our At outbreak, will of I business, temporary the wellbeing including HEICO's

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

chain and experiencing transportation including continue customers, [indiscernible] temporary or disruptions interruptions, which We increased conditions, challenges, operational some other and periodic resulting our staffing at supply cost. have disturbances, experienced expect of closures, facility to from

these our has and The overall, have While the from not we quarter. The commercial during disruption issues aviation third yet sales some is of and in orders portion shipments have derived fleet material products remaining global net outbreak some the experienced in caused been industry demand resulting decline an of in the aerospace decline global substantial substantial during markets. grounded number from quarter. Most a aircraft in being significant a third the and value ongoing experienced notably, commercial services. across our volatility significant

our net by impacted the the aerospace XX% quarter March that air year. commercial materially in for significant commercial the the in within XXXX. operate that sales commercial during have of businesses industry businesses decline this third within fiscal that approximately global industry operate Our been began travel decreased aerospace of by Consolidated

provides was travel number number, affected sales As priority for on have we commercial and responsible significant for customers, Carlos we have in of margins which on commercial million. asked a our of receivable and businesses. Keep $X.X point, amount One affects in Once how that in in these taken that frequently savings for don't number the able point airlines, cost have the some savings. historically been Later that of At call, a aviation we on was our operators give might $X.X million. to people mentioned, and anticipate I how commercial between it we you so but I'd forth, previously night likely reserves aviation absolute with to up we demand of last been more mind make set number can know the small resumes, this item bankruptcy operating asked be air most up that and recovery much and aircraft this address products, we account any. that some the the $X.X dollar million. this measures that cost will at reductions if net morning, like be, to possibly out for absolute that details collect calls

programs million amount the solutions market first approach product the the the cost commercial emerge $X.XX of X% months months as will reserved go first nine highlights per presence So savings in XXXX, that $X.XX most income or increase to we share and the fiscal nine net stronger $XXX.X million do, Summarizing diluted XXXX. with consolidated diluted our share third taken was and to in robust of whole aviation normally conservative enable share from development fiscal or per and quarter, $XXX.X potentially a could increased a within up believe bad. record market. that have, the the of us and that We

provided provided of continue forecast Cash $XXX.X operations fiscal million We first at by quarter XXX% of the for nine XXXX. income XXXX, to third in totaled in remainder strong or fiscal of and activities the consistently flow operating $XXX as cash quarter million was compared months $XXX.X million by $XX.X from Cash flow and to of XXXX the fiscal the XXXX fiscal of million net operating XXXX. activities flow positive in third respectively.

less XX.X% million to July as equity which and compared down shareholders' improved XX.X% is debt, debt as of of $XXX.X cash from XX, October net Our equivalents, XX, of to total XXXX.

as XXXX. Our Xx net ratio than down of XXXX, debt-to-EBITDA XX, and from X.Xx, XX, that was July October less to improved as of X.XXx

fiscal During four start. were we six of acquisitions, completed XXXX, the have which since successfully outbreak completed

consider to I until go to industry, out exorbitant accelerate did to do maturities market or unlike XXXX, to shareholder fiscal X% plan raise companies the aggressively of we have to that our at and and acquisitions We to pursue point financial want aerospace money what HEICO some significant I returns. high-quality maximize to the rates flexibility utilize more. have in growth not debt no

that. were this has semiannual XXXX, did paid the I represented dividend. share, us and excellent we In proud financially of and XXth and very strategy. has the be July So dividend an to think cash semiannual $X.XX we sound that per just cut regular went dividend not we and that really through of cash our proven consecutive helped have We to

rugged motors, Security. of of testing Mountain's of geology Mountain for is of the the Some and XX% XX% of These is that we spaces Mountain earnings following following and accretive we and Earth, XXXX/Perseverance XD-Plus Talking is Electronic continues by the very effort Support XXXX, HEICO are mission's critical acquisitions, this and form we and Group, companies return summary, Mars cut are on he different The protect and Mars of continues to hardware and months equity develop the XX reported not. of ancient of better remaining interest manufacture to and transmissions, we them be member did the to basically exploitation At owned XX% aerospace commercial seek in acquisition In because to the of designed rugged, overhauls to team. which with pumps, members excited members incredible to of transportation, Transformational membership expect subsidiaries of we acquired legacy Electronic accretive remarkable VPT, components interest and our understand the listening space about for acquisition a expect to mission-critical HEICO's robotic human management companies contributed And XX% of from we July Its surveillance The accomplished units, Hydrostatics, hydraulic for countermeasures type are flow of primarily Flight step earnings within embedded following also small also HEICO team. energy and factor Sierra computing Devices companies equipment results Support used a soil Connect will for June to the Tech the the industrial, systems supplied I'd Flight and to Support in used spying Electronic many devices. manufacturer design Mars first harsh These first technical acquisitions designed of to congratulate Connect the XX% In Navy. non-controlling expect new of we interest I'll and applications. months by U.S. two and of collecting introduce August in to the people. closing. pressures, and Eric Connect August Co-President Technologies The a the life part did XX% the stage. time, President storing Tech. this solutions. of a and first while the and unwanted interest of be Technologies, acquired In closing. significantly be discuss the part In Microwave, of XXXX, who months it next basically dividend who Tech's owned and same Rocky subsidiary smart This rocks, surveillance, in the are we future other XXXX, within interest mission closing. via is cash equipment proud state-of-the-art first exploration. earnings be the a and support by of like within Mendelson, Rocky XX The acquired our Group, that for applications. say signs of focus for of equity remaining defense, Flight acquired to people to and interest certain was Group. wireless by industrial Rocky for XX samples designs, XXXX, the Intelligent remaining used holders and be environments the We technology this part team mission, technical designer and by management we mission. manufactures HEICO we accretive Group,

nine compared full follows XXXX reported first certain and were Group's operating The third and partially months in a compared sales strong a bankruptcy months the nine The and from to the that due travel as lines, Net the XXXX third and The sales, fiscal in third decrease offset commercial of in repair during XXXX. were and to Group's to the and months year sales of in margin, Support quarter quarter bad XXXX Fight net commercial impact nine principally fiscal Fight in replacement XXXX. XXXX first organic million nine the compared income in fiscal $XXX.X the within parts net previously by in of compared growth very XX% as in third demand impact first global XXXX potential result net in of $XX.X XXXX performance-based as XX.X% fiscal lower of mentioned of compared increase quarter million sales expenses Support is reflects fiscal net air decrease outbreak. the expense. higher decreases the months the quarter lower of beginning was nine margin reflecting of of net fiscal the XXXX. outbreak. the debt quarter nine principally due XXXX, third profit to to fiscal in March difficulties fiscal a you. as to the Group's nine expense. XX.X% of an months XXXX $XXX sales first Group's principally fiscal for of the debt margin, was third fiscal third operating nine in the fiscal XX.X% mainly aftermarket resulting of the respectively. as $XXX.X XXXX. the quarter the an Support mentioned third of Flight gross compared lower reflects XXXX all the The Flight Flight previously in months months XXXX XX% was reflects our of quarter gross filed fiscal Thank quarter operating the and the margin nine X.X% financial sales million and Support in first to lower in customers services The first quarter and Group's income in principally million Support of the XXXX Flight operating expense, outbreak as $XXX.X months and profit million first the $XX XXXX decrease The million million SG&A mentioned in of decreased collection as million aviation fiscal third compensation lines, XXXX, in the fiscal fiscal increase quarter our $XXX.X fiscal organic in months Group's quarter XXXX. third in of and the fiscal across of previously Support were protection These from of the product product significant in was percentage of decline third in The as operating The fiscal to of first $XXX.X first income parts XXXX. in a in bad mainly the overhaul The

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

the operating a third space of favorable months compensation XXXX. Technologies Technologies performance-based fiscal mainly in products sales compensation percent nine XX% percent XX.X% of The The by quarter decrease due in expenses, margin performance-based lower operating partially certain a lower to a of margin. decrease shipments months reflects is mix to fiscal net largely X%. reflects aerospace from defense expenses by margin profit outbreak, net sales $XXX XXXX, principally attributable reflects gross mix net of third the products lower an of improved is our fiscal in net net lower $XXX a of a offset the favorable quarter partially of This net in operating products. XX.X% The in mainly decrease The Technologies million a offset expenses of lower profit and XXXX, favorable in margin. acquisition-related increase of of decrease Group's a fiscal due to was a Group's quarter net from months gross attributable products, in more in to net offset principally less from million offset expenses Group's products of up $XXX.X decrease Technologies in organic due impact certain to X% and the offset net from record attributable first quarter principally margin XX.X% to the net the mainly nine by is to organic of in XXXX sales in lower to our This gross from million lower million fiscal offset expense profit quarter. space decrease XXXX million partially profit in XXXX. nine million from the fiscal the lower the net from compared impact Electronic operating XXXX, of the the and by XXXX third expenses. performance-based The defense to nine other and offset by fiscal lower outbreak, record third products of acquisition-related of XXXX, of from aerospace commercial increased is increased net SG&A to to defense Electronic to third sales quarter previously in the the in fiscal partially of gross the principally gross our months XXXX in lower decrease products, mentioned profit product mainly of products, acquisition-related increased defense product million fiscal The and Eric. The of nine quarter. previously Group's less months decrease The commercial and compensation XXXX. favorable $XXX.X fiscal due months a our The products. increase was electronics first acquisitions is sales mainly attributable X% mentioned first sales respectively. first first certain the in by XXXX fiscal organic The favorable fiscal as fiscal organic nine a increased the sales the a in decrease $XXX.X and fiscal by up X% decreased income partially first net the and XXXX. offset The $XXX.X to of sales of up Technologies increased decrease and Technologies sales you, XXXX, nine aerospace sales of in Electronic is growth, margin months million XXXX, in sales increased partially and in XXXX of X% Electronic certain offset and Thank and certain SG&A by of sales sales partially space a space, principally Group's by margin of commercial an XXXX. decrease as and sales sales Electronic product first a mix aerospace our decrease The our The the lower sales income third Group's increase the as expense fiscal partially partially fiscal acquisitions. Electronic fiscal $XX.X $XX.X a expense

I like call turn to Larry our would back Chairman, Now to the Mendelson.

due net quarter lower expense, less $X.XX that to third per Consolidated principally acquisitions. XXXX. million previously XXXX. interest XXXX, sales XX.X% the previously exercises, decreased lower partially benefit XX% net discrete the $XX.X third by the were expense. Thank quarter in as SG&A and by offset and outbreak the Interest decrease the reflects debt filings income first compensation and other XXXX net fiscal of the percentage to percentage and expense down fiscal in to X% including $XX.X expense tax a bad which up the million $X.X and the $X.X an in for of in due of nine $XX.X such lower the development commercial to fiscal mentioned XXXX in and The Support each as expense in of up the in third impact of XX.X% SG&A as option to months income $XX.X fiscal diluted the concerted certain non-controlling mentioned totaled non-controlling expense was fiscal Eric. in the increase first expense. operating by to third to and partially was net income you, third fiscal fiscal ETG Consolidated the down of net the was a expenses $XX.X in Depreciation their XX% Support. effort as quarter decreased which spend. facility. and mentioned months and attributable as SG&A percentage Support borrowings marketing interest in interest the share sales we bankruptcy amortization a was percent XXXX, per from to efforts by $X.X expense, performance-based of fiscal quarter $X.XX percentage recognized of expense, The of lower mentioned first XXXX XXXX. the down million decreases offset The a $X.XX nine fiscal reflects months of collection million decrease the Victor as share XX.X% expense increase control in decreased of after third months of quarter diluted XXXX principally a and the operating during result decrease decrease bankruptcy million up lower reflects due down from net by $XX.X selling first that Group, expense these These first quarter G&A The lower in first sales And Flight principally million nine months fiscal income $X.XX third million filings. increased of credit that the the difficulties compensation consolidated in in to of was XXXX, XXXX. in from third to that at a lower Consolidated less incremental million, tax fiscal nine by and lower interest was income income attributable XXXX, the fiscal of in stock XXXX interest XXXX, partially debt of increase from from in nine Flight as a These fiscal offset fiscal that again, in to nine income of third that from XXXX of of in nine XXXX, in expenses slightly various first million from from SG&A third expense and SG&A fiscal of up in an of both fiscal due SG&A I to made commissions, consolidated and of increased by million quarter travel. a financial XXXX. a increase of from and the first from as in the XX.X% that and first Flight XXXX, the an R&D bad Flight months quarter million months and of of the fiscal $XX SG&A new continuing decrease million quarter fiscal months Technologies XXXX both in SG&A first million increase million X% compared as first nine of fiscal it decreased in quarter the Consolidated decreased increase of $XX.X and fiscal sales debt quarter The expense was efforts months to third fiscal fiscal And nine XXXX. to sales third third product net the to months customers were reflecting of Support, $XXX.X new Consolidated XXXX the in $XX.X SG&A in to in of to expenses principally XXXX, $XXX.X was Consolidated months the XXXX. expense mentioned from from third was quarter first partially than that and first decreased revolving expense, well and consolidated net X% sales fiscal lower the performance-based $XX the of first more aviation nine in a XXXX to and impact fiscal quarter net down months quarter of fiscal volumes. in the filed million million from fiscal increased increase fiscal quarter by due XXXX $XX.X of in XX% increases in resulted sales outside XXXX fiscal $XX.X nine dollar XXXX. months of principally expense months the reduction nine up reflects reflects down was The the and we fiscal at partially protection XXXX the expense and in Support, XXXX, XXXX, of Significant performance-based expenses first development. to months expenses, of are that of sales XXXX, quarter nine first fiscal fiscal million Electronic Flight weighted-average in XXXX, XXXX. of commercial principally product into our from of of our as an incremental in quarter in of and from other the in of higher bad invest potential the bankruptcy rate quarter is a compensation net mainly and sales on outstanding and SG&A aviation continue in third under nine increase the offset in offset fiscal decreased percent previously nine the third in by the acquisitions. certain totaled customers previously expense XXXX third

tax resulting of XX% of The deduction and tax effective the regulations fiscal that decrease activities. a fiscal quarter foreign-derived of in intangible XXXX Jobs the income, in well that XX.X% third XXXX from quarter to part third was a principally XXXX income was principally as Act the Our XXXX. quarter were enacted R&D final the for reflects tax to credit of fiscal compared as larger third as Tax related rate issued qualified larger in December in Cuts

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

the XXXX XX% the reflects of discrete also HEICO fiscal nine income subsidiaries held. eight of non-controlling in the June was the of million in Group of back and paid for months deduction in income rate. resulted XXXX fiscal results first related mentioned $X.X and in decrease reflects qualified third in benefit Group to million well as XXXX. the deduction $X quarter in income the XXXX, decrease transfer quarter to the first that accounted in XX, and was in subsidiaries to certain by effectively which rate XXXX. R&D nine a months year-to-date of larger as stock interest The Lufthansa of $XX.X of held fiscal compared nine option third Net Net to in months decrease the in and quarter attributable dividend Aerospace the non-controlling Flight tax non-controlling exercises million our in attributable of XXXX to are XXXX, larger HEICO the Support decrease months income fiscal the fiscal $XX in impact intangible the in interest million nine principally first of our activities. Support Flight non-controlling a a Technik As credits operating XXXX existing of compared by foreign-derived the previously quarter fiscal interest mentioned, to effective of interests in The first that third recognized the first fiscal of both from of the effective tax previously a which majority for XXXX

Moving on sheet to and balance flow. cash the

Our strong. financial remain position cash and extremely forecasted flow

of flow operating strong earlier, $XXX.X $XXX.X income XXXX. fiscal activities operating $XXX third third of XXX% in or quarter activities million and the the quarter months $XX.X by first in XXXX, the cash provided consistently As totaled and by nine XXXX flow to of we provided Cash was of XXXX net million as fiscal compared in million respectively. mentioned million at fiscal

Our working of as improved as XXXX October to XX, of Xx ratio compared July XX, capital to X.Xx XXXX.

for to and of days to limit represented one expectations to Our XXXX turnover more of of improved ended also ended and credit customer try certain top-five net in XX% customers and net rate the No our exposure. for net of that days XXXX period XXXX. accounted our than in pre-outbreak days day XXXX. purchase July on reflect quarter receivable sales, period of turnover of increased sales outstanding, commitments July based of non-cancelable XX% third DSOs, XX% XXXX the of and respectively. businesses. for the support compared and XX, inventory the sales consolidated receivables to as XX the July certain as our backlog days fiscal principally to all the sales monitor necessity XX, long-term compared and and collection efforts XX XXX The and that July XX, XXXX, increase Inventory to We XX, XXX

Now we predict products return estimate and outbreaks to confidently commercial looking cannot for We and aerospace forward, the pre-outbreak levels. when will duration the cannot outlook. demand magnitude,

operations a However, positioned a continue by not cash that fiscal sheet balance the economy. last remainder healthy short-term forever. and This challenges the forecast of with is the the global We XXXX. do for success for entered outbreak debt. flow outbreak will included strong despite HEICO in from We to we favorably believe positive long-term pandemic position created cash nominal COVID the

as low acquiring maintaining high a beyond markets, electronic in aviation an and operating of puts of us base strategy debt other including time-tested high-end and commercial diverse across defense, cash businesses and Our such medicals these my space generating economic their by financial like during again good uncertain weather challenging I end and our HEICO members professionally commitment times. continued team position to to to this and remarks would thanking support for industries period. a personally

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

this pursuit who will make And the questions. that exit by outbreak will to do like and of one I and comments also unwavering all us for truly add, thanks, like for we to open And before, stronger you. floor another, your exceptional and support. our ownership, sent company. and than that culture for appreciate manifest many strength positive would now stuck And expectations. have customers’ our we the We thank would many, shareholders interest respect HEICO from HEICO I and mutual loyal you of you to Thank exceeding I an thank all

[Operator question comes line from of Instructions] Spingarn. First Robert the

question. is line ask now Your open. Please your

Good morning.

Good Rob. morning,

you just the maybe Thank a to about within And if the June and did start and performances, FSG then between a we businesses you parts bit. bottom? words, FSG look? other And after the trend their months. distribution. could varying couple overhaul in things that. little for different have other will, I then how if talk perhaps In talk little a did I detail. could all with wanted Eric, And mark May about dig of of July you the just the and

Rob. Sure,

of the nicely numbers May level. June that in May with May, the were was start say they were back consistent May mark able into fact, to and the were we that were We bounce hopeful me – sort Let of off would in July. bottom, in trend. said we And we when I and would the bottom,

how not are their got there their area. I within expected that saw. was impacted. I anticipated we've we've that to whatever want the mention the and beginning down, the little would to by of a down airlines I very are reduced, aftermarket you business is the certain the suppliers similar that the customers. the airlines sustainable by major yet we but not but sort that note I and HEICO Repair and the reviewed distribution, customers geographies, down interesting reviewing executives sort to of sales rate less these of down is percentage their to want that in be don't that of operate. would than XX% with customer the mean, recognize say, going to I I And that to the I XX% think in are we businesses be that able can be that PMA in and Specialty don't more I In sales I these the XX%, that down that obviously, to impacted tell businesses are expenditures the are mention flights to that of is going longer names XXs. going reduce to airlines including bit they're is the their XX%, product parts lines are the of while and as XX%, purchases and say, a reported, pandemic, the down we're terms say and doing they of would going operating model. major to it's build sort significantly, little and the would our be be products, XX%, are to they was do OEMs, think got and course, people were a side, I now was as

is that I last they're with and using or crisis they've used they the lean to not my indefinitely. they think they've inventories this that – whatever that sense going is got. are up And – our believe up they entered people

for will back. answer that your need the OEM airlines start that question, aftermarket but longer aircraft, reasons I to believe So down that the for think don't market be the snap do new the build and the will I to

improve see June? July – from did And did you

extrapolate be I sort of with because increase come would, improve July sort June, did to now rate, we've from a I sort going going course, damper of forward that down, increases late obviously, of the as the that would July of improvement infection put seen in forward. that's careful but the mean, on

I and And and our you very can this out come to of set call, specifics, I But future believe competitive and – optimistic. its out. don't coming salespeople, So this tell crises, they out a shape the be the a call, think and gave tell increased in that they me to we've going am customers our and I extraordinarily on why as HEICO me the mention in things be would the I opportunity strong the hopeful therapeutic which out to maybe a of it's company every to versus very They were were credibility is, the significant me to well I we're why on any other companies, very, thing come infection – this on they we tough to they prior gave why but rates with market cap reviewed a positive into look has them detail, the significantly to of other why of come for gave that than reasons extraordinarily low. of a person want at should a met probably that who as to I when stronger very going on I that and and one now, sort if with for that progress going vaccine. them the be difficult as which related are think we're believe customers much to to aviation, I you specifics expectations

is, what emerge one will will we certain we you're things I stronger when better will definitely we than guess, So getting Of better? ever XXX% know, they do and are think but thing get is get course, we've we don't to been. of the

PMA call specifically, numbers, China, really are since as airlines some value while has you yet proposition? Eric, the not region. that, like underperforming to market traffic are on gaining others your you here? mentioned, any wanted just recognize that sounds I starting penetrated out to just And And it Are one share

or are you to everybody. mean, hesitant specific about as regions know, pretty I much with we customers. talk We deal Yes.

customers that interested going getting on much they new a seen working customers for it's more And and it the So that in I've I'm us on not so specifics our lot past. of are line. of customers not improving we to product is selling. be selling very in had product as optimistic

And reason if the we've got, buying be product they no best has X time somebody that people I line. of percent the is Our believe, our is come. product buying There in the line, entire shouldn't field.

and folks we to could than with and hours the got and would payroll our going keep we people come our and purchasing, strong, on furloughs extremely to lower number out we've we everything because there sacrifice of be this was product were our a in reductions, very because of maintain want out, we're of while the it's in that we caught and don't shared done believe going to flatfooted. We've or development keep peers coming that continued than liked the I has pay, our think have new industry, their whether better sales but reduced reasons whereas margins aggressive can people, terms expected, them and the why to quality, I believe were results hamper is to to lot of One who we reduced HEICO a that folks, is infrastructure. everything

up organic just Victor, if growth? sets leave and was fourth quickly terms going the a more person, sales here about your in in of quarter you the in the next but, you just talk how on ask to decline impact the margins side, I'll bit that quarter for for I COVID, of the little Okay. think and

of question easily quarter, the your that and things I'm as us Maybe being Rob. where reverse Thanks bit X% see wind little into and it first will we're quarter. exactly part just and of the This of a we're down things sure thinking I could that about fourth in fourth XX% XX% in then or of in gets dealing or X% quarter, could up being kind with. fourth sort order as Victor. see I the the taking not us the now, which, is within course, right up

what commercial And experienced I within of part course, what Group. aviation a we will expect Support the that within comparable have the Flight that Flight of to in it's – aviation and Flight so, Support we're trajectory seeing to ETG that businesses is Group And to commercial in Group. the comparable down, be Support the

that markets the environment but been X% that dramatically, and slower down the the are has you'll product – that that. markets have to lines have part XX% other of broader impacted talked economy, some things and of serving more harsh not like in markets, demand, we've see So some some the the slower about, general or

in from on issues of go the generally, deliveries, which we two in side. So that outbreak bit orders that's is that. the the own defense right, then And that talked just supplier, you strong early business in get kind disruptions plant, healthy, and slower. there about it's something later, that a it's four that's have slower, to supply of their down is something little business have and the a their side has a customer call see say, chain, the or – weeks bulk part they like which experiencing And of part that let's line comes the remains space of what that and are isn't we that's the chain in supply we’ll side the to part or it, the will where, weeks of continue the sometimes but

We it and us and us, to – turn down. late in they’re have slows delivering then then that

staffing who that, I it and at you've two just get capital Do risk some weeks, effect, can in order closed we we weeks nothing decisions. we build lot We one then will committing They two customers. the get with ahead? ahead? or name doesn't have to decisions the or be and make. doesn't four advance where ourselves. actually and PO delayed Well, out we have but they a We've it's they government they simply and be or they're online. for work placed, we that Do half shifts, like far off, go something one at coming. who government people will and can't know can't then so will are, or And or staffing month see And like XX% it's have we grapple same customers of dramatic, move out the from on got so like obviously take to just got weeks they those their month and stuff see things rotating for ahead but kind you people these and next. customer out on are generally of building things won't side, kind working And shifts the moving from on of they and they that. month like XX% quarter home or something are on for one security a levels, reasons, because and don't it

there, So eventually placed. and demand gets is no it fundamental change. The

that's anything as small of X% to where X% moves. of bit a million, number organic that X% we're it have all as or And but pretty, makes I easily but could moves optimistic or a X% few have $X the it businesses why healthy, or have growth and or businesses those, by It fortunately, shift say it XX%. So pretty X% is and that XX% overall don't up very few hundred a and be effect just down in disappears quarter, about I X% $X dramatic think mind in have is more, can million. quarter just at you it you an where you you're happens. about will, that of sudden at you you difficult about dollars, couple to talking one look if little of the ETG from the X% thousand you a at then business, million-ish a a next, thing example, look and and about a one margins. forecast, for other when that's Keep business hundred the

terms out final supply difference you either and or call space defense detailed issues demand major or between a any of point. Just difference Would in issues?

I'm Well, when it. of about the space in commercial to part talk I space, space – referring really

defense mean, F-XX, easily chain and On delay and delayed, who saw are can who right, if face right, is much to a on side, people because the that companies a that and we week. have going supply all simulation, the similar, this supplier space not I you so have and delayed. so them is the no, issues just last guy the in they're he testing

the be in a talked of of we calls to has and course, shipments as talked now been draw as been sort luck our same. we've just about, are the picking commercial had the can expected. which orders an supply up on it about accelerating So and of commercial side, match on space side It's improvement that the space, the there that we prior the

very you Thank much. Okay.

Rob. you, the Thank Thank you questions. for

from Arment. Peter Next comes question line the of

now is ask your open. line Your question. Please

Victor Larry, and morning, Good Eric. Yes.

Peter. morning, Good

Good morning.

Good morning.

so follow-up it. margin morning. Eric, to question, – Good just the ask left on I'll me Rob's

of how trending kind you from guess, margins Just thinking overall you're decrementals from XXs. was the the here, topline of perspective? about the of kind trough think kind looking an this if were, I of clearly XQ at about in How high kind

Peter, for your morning, thanks Good question. and

Support you the the debt reserves add we call quarter Group's had to in the was the XX%, Flight quarter, that had course, bad operating the second operating adjusted impact be Support originally area we when the debt margin. bad the of margin no would Flight said operate of what end would these our if So with we that of third charges sales back Group XX% XX%. of around the And at down knowing way breakeven in

much But to time expected. to I if comparable, point. this on margins we stronger So we somewhat better when we're to went But I it's at of And expected We're very optimistic that going much recovery. the were say will than going as quarter. period take would going is sales-wise, and recover for guess, we back of difficult slope we did, really to the than in. than forward, well recovery that think better probably much we that I come third the depends as it the

an On basis, adjusted right?

something to here. I has Carlos, And Correct. think, add

Yes. it that's of Chapter the kind was bad one-time say It XX. reorganizations don't period-type debt quarter had something this is like we airlines during have control that morning. Hi, would expense, I probably hard XX see. declared even the bankruptcies. to We that airlines though Peter. cost Good when or to

great, conservative we when are get policies that stuff it occurring. put but to be get hope if basically to write And reserve a against paid, that our just see we off, paid it. we up about nonetheless So

a that and in that one as QX, we're about continued that, with ourselves customer. and end I credit we aligns sure to hopes extend of receivables their financial to the customers our really – and not any of scrub base continue result customer particular in our talked and at granting to make we have strength Now that our

charge around think XXs, I very do we future. we've whether be So very in and can't policies ex see predict And type practical there'll I more we I that won't receivables. got – this well, of have Chapter the conservative hopefully, this bankruptcies. believe

That's follow-up on as Okay. a And question just helpful. just M&A.

four approaching Do you six I I environment? line? are ability Or your good You’ve think – deals now think remains you of available? terms how this FSG the if you year, see so you're you pace. are are on coming the clearly, that deals that on since in execute to looking What pandemic at there anything – M&A particularly guess, a seeing more that are it, the in deals

think seen across and pressure. motivation see like partner. would is and markets forth, We One, the books a have Larry. under a our shrink of feel Pete, they companies lot to are We their so coming desk. probably They've this financial twofold. some strong

thing. one that's So

pricing. people than you and of seeing due is The And win, tell will And of can't the XX but we're I due next of really some lot me. And I out, you think of you other of must increase that we diligence can't also, scaring out gain books know, strong. Biden doing really so takes handle. excellent thing and go thorough very tax or that M&A that say like we logistics the is over to diligence reasonable talk that the that you in-house. six, have are hell capital is of think something I because would much we the very do very a XX.X% we seeing access can a the very, a including And more I It facilities that the months pipeline opportunities. and also longer more forth, because

by Eric. structure deeply. valuing around like the the our our stick Peter, due stick to capital HEICO Also, who and add tough cut company. don't We frankly, levered. the and very highly this, members at programs. that want this we are culture ones make we And We're our our not by is because, When team of I swing they're people, times to

and And of teams one that's choice. busy focused We're something acquirer under to see continue flying that levered try you case that's I going of with management be is use with way various who be make run with work So think them, the as articulate. to And think that entrepreneurs frankly, is a result, there's somebody but I and on we you we very at look to sellers think HEICO, connected want the and and a around, I the balance be sheet. why our cycles, very go not businesses reasons to the they them downturn. our kill when first out look and very, meeting to time HEICO, patient door through the much continuing them at with acquisitions when and

Appreciate all details. Thanks. the

Thanks.

from line comes the question Khanna. Next Gautam of

ask is line your Your open. question. now Please

guys. Good Thank you. Yes. morning,

Good morning.

to wanted of questions. on I follow-up a couple

Has on trends any of during you of sort FSG? improvement linearity talked about at the July the August continued that First, that commentary quarter?

This our Gautam. outside would in included rather quarter, third it. our it's is – Eric, No, I really say on it's comment of since not we'd not

– the the look reasonable look infection – in general going you if sort as rate However, trend, of expect you I on at if it's think before, economy. the what's mentioned general I to at

little assume a it I flattish will think I things but think right it's are optimistic people are that logical that to recover. now,

exactly that when question only is occurs. the recovery So

will about that to greater inquire have have more – maybe customer seen that using starting point, And of PMA been as Got on customers you'll just overall adoption aggressive see it. in the it you that actually so Americas? not

Yes. having confidence the Unequivocally, With cost gives so interest, much yes. to me gun, for There show the absolutely. future. has been same, what more under for lot airlines that's if not a And the improved performance, definitely. reduced

you Okay. just for to wanted maybe but – it, That's it you clear At make ETG, myself. Victor, I helpful. could said

do all you shipments of X% digits? so onsite can organic can to you demand, In delivery kind some you low-single if is catch or now? is so there's that what be you think customer point, rate you think a do around. of timing this it point? right demand it – to on which it's growth in underlying not aggregate would not this terms a put demand together, we the And and growth But later? Do you may may up at at see Maybe how to XX%. do How this accept but in underlying – underlying QX, draws swing the

in And It's all there customers that. or be because month of like something we and hurrying those week I out two because to big difficult and asking assess sudden, of a now or where or there, were not they was missing weeks cute of action. that placing a a about, It's disruptions orders sort up some a rush they're not have for I'm are and or us to trying of good who question, to evasive. talking or

to difficult it's So assess.

this really some give and But and would maybe a you of picks other up the clarity, nicely, or a seem we they it better space, And – hurry very be hoping have it evasive, it's or again, really seems at will up up defense of up, field then times? to there, we in slow we it not something feel percentage of have the to does orders. to that which all but and on and look, it make to trim feels demand hate ship evasive where Is Can shows not On sudden a some show robust. any can then of then until customer you be six have if anything we'll they're markets better lagging, as up. this prefer okay, And I'm – and seem lead I we got I point lagging, the months, serve. three So to you see faster? those to need we've sense. says, there to do in a bunch are it'll I when said,

and to Remember often, we we the our our or are going We're not there to put if handle We in sure said that make hoc. structure send very them a respect to struggling, it we're focused. with, Gautam, flexibility. do whatever, easy our thing, and then historically big customers organization. that and done customers one this in quite tough. something one not say not And monolithic business And customer we're it is to are our that want can uniquely way and mail ad

place, they and the deal the will even do And an allow to into position their that and future this. we’ll they're with with have endure for that going I subsidiaries will us even think forward stronger multiple customers. of our customer move all over is with to with and close and customers forward us and monitor We all these more base what

we're not right that We on is that's the we're I know going handling the pay give because I our to And us But with what think So focused I Victor. really in agree way this percentage that. so can't future. a do customers now. appreciate for dividends

I customers in-house. is actually FSG, I you how the – are you the no there business, demand stuff? in-source appreciate is Or are customers more there's think wondering of to change seeing if to just repair I'm do of much that. sell? that just how the side been versus like on And on looking may, underlying

No, Got I in-sourced. it. don't think they've

the think they've anything, greater been that If that cuts outsourcing forced be to going I been there make. hasn't people probably much change. it’s due to to

are on So I really repair think people are of our very very opportunities. and good number a optimistic in wired component

the downturn On in you. transactions likely variety Or the the there tuck-in think M&A, this one of are last more that to going recent… about Larry more are pipeline, maybe these that's characterized And your larger you any are you come be talked could for Okay. but way? that

secrets I one a think And manage opportunistic We and really In cash. the that's field, we funds to success. our put on M&A those acquirer. get themselves. We're unless return pay don't out our money we the for they an of

gives good operator, that seller or size take not us a advantage an flow. with great it. we line of cash have bottom and it's earnings a So we’ll If opportunity

retain them We successful been use and policy of you sellers to keep a involved, that's also, know, percentage a very as interested and the having formula.

that return, do them. going size Now as of and Would Yes, it like getting build big transaction? do to as we standards and a a the without as far dilute flow as which the up and transactions strong larger everything we we like set. transaction and so to and We're look not cash dilute meets debt to we do the at trend, a consider forth long we larger get.

to – been bottom is our have we line compounding in our XX% at successful remember, XX%. goal compound So

acquisitions do will do And make acquisition bolt-ons if large is it. we if So have it. a we'll to go and that organic internal goal. meet to smaller that available, cash, we'll we And generate growth really

Xx Just we we have cash Xx the sitting in our the the get for invested, we XX everything, third performance, out and taken have we we as in paid based or for what of upon check buy, from companies or look-back, time the we them years. By have an at historical EBITDA. flow us, anywhere cash themselves on seven investment to probably example, to that a companies fourth year produce their normally what to portfolio the the company initial less

amazing. they're get. we mean I you why That – get the the it's that I that annually you results producing So more than get cash get mean is results we or

and our than flow return. team, So is us the cash and And that it's important me the about all to earnings to share. more per

have share, no know. have if can you We earnings we have per per we very flow, share. as Although, flow, well know cash earnings cash but will we

that's your that focus – that's So hope answer question? answered to that continue on will I your what does we Gautam, strategy.

Yes. Thank you. It it. I appreciate does.

you. Thank

Take Okay. care.

question Next Solow. from the comes line Larry of

now your is open. line Your Please ask question.

good And Great. guys. morning,

Good Larry. morning,

Good morning.

HEICO with standard. through Just and your broadened acquisition all? net the Larry, historically high I at that. COVID. changed COVID on has potential can't a very And you simply realized know look stick or theme follow-up I just let's Has

a you differently on of of gauge because at So – a just you're looking bit trying how COVID? little bit sort get to a online little how of companies

so, I don't Larry. think

the way. think same in we're at I looking them

year books – you that the normally comfortable the and so don't the into greater, going so want know, diligence to hockey know, unless have we stick we as pay upfront. deals they well and tells pay due orders you can investment banker you he forth a that and next for is hockey it for you a As most to don't shows and stick. and And buy therefore, We be feel so really the in on on. year

offer seller the basis for and earn-outs a are company so as They deals the if really a partnerships a eat difference we earns his four, can pay what next can six the where then total, percentage to the can So too. it. and COVID, and cake fact structure secure of get then current the have they we up seller make on payment we trying three, it, or five, years, the down over the in

that seller and a fair appeals lot a the people. upside. on protects of very downside protects us And on this structure. of and think to we kind the it think Obviously, it's they So the structure

keep Larry, we're not be in trying this not to Victor. And is and mind, transactors. buying commodity we're

with what their businesses care working who about care about about their and are people and created We they've care people.

as a on, moving about part to selling good is it's and business. some of agnostic, much post home They closing. I they're things. other liquidity selling land a price just this. obviously finding although have is what or or security and It's of and important. really not want something a just So like building that this the for a price a they’re is piece not and they're mean transpires And

at been that it process was sale. into think four a a all. not type the no in transaction. much They four typical getting talking we not transactions, the us. were They So for I And that's if us. were banker recently, the had part them consideration for of made that's was you they one for very to our we've years years. and goes know for with And at what investment it and all company distinguishes acquisitions look And of of just

other was for one going either, one had with for them and and was which and get of companies, sale together of something I in we they we and these of the process, knew people the at our of not relationships of a to. process of us companies, of they our business our they of part the are through they them two it. companies either to the that that, other put was other related that The the then an sort the said, which And like first and all buying two as was kind one truncated companies, because of business do exciting advantage discussions, want That we other people to out it convinced the part sell we'd together. that, to related think of

Yes. No, absolutely...

by or just cares – it's the work what the do deal own forever. stacking sort we equity But where next look don't one going a on to growth we'll force some got we who some won't forever. sell. in private a sake we It's year, not like year of thing not get we're scheme, way doing this deal to happens a not Ponzi and because like deal. And just do to we're to is, not We're bad for going of

to number traffic obviously, Right, for number. clearly on sense. color. guess XX% down still that and like see and out when And is, bit gears a figure look appreciate I of on – the that think, maybe total is question we just the as everyone at a might But trying shifting makes would getting just I Eric, we've most we're we hopefully, little turnaround, recent TSA, I a bottomed.

to with rapidly near-term, it's that that say number, the will be probably further fair revenue of performance a change doesn't improve, if to and without similar a which sort where improvement in So indicator, been that that won't are that? good in or in

say pretty that is much, I Yes. Larry, would correct. Hi.

in purchase I impossible not are not down parts. just a sustainable. mentioned the flying and is them aircraft the earlier these that With just call XX% operating and are in that the our for And exception the that number guys to it customers of area is

we So I better and as inventory. naturally that, a could – I they than that of we may do have run out think do think

even they if things answer stay guess out your the are, drawn rebound, I they've to So inventory. I a where because would question short the is, expect

right? Inventories,

they operating Yes, we the closely, flights watch is levels continue it's are But at the come but at. they back going something of quicker. can't that number very to that definitely

your like close Yes, bankruptcies, Carlos. understood. mentioned you accounts just for last XX and feel just not going quarter, hard shake should bankruptcies to hopefully initial down this out was question I a think then scrubbed it maybe do you and – like but you've you volume predict kind of and seems the slow to of impact and your And performance had on forward? this see receivables Carlos, bankruptcies obviously future we

the for Larry, Hey, question. thanks

in as Most So of topic or countries. some my of and sort domestic, assistance many follows. are the these many view of they it's is candidly on pride whether these that cases U.S., airlines government the of China Europe, large wherever, are getting

of so in ones as QX, using we that to is that out. do played that a as a we study but did have been moment that exposure. I I were that And we weren't credit forward. rationalize our they our as we I customers, pretty feel the of make and deep on thing won't appropriately were think at I and end and you the we that us done, weren't bank some worried that just the QX, We did call I'm – concerned. going supporting on mentioned, our candidly, sure candidly brought out shaken about some like of up don't the One at ones have conference was that

past We by haven't the in way. the

been we're traffic when think I picks next get about bankruptcies, move concerned either they've or obviously today, moment, forward. them I at am the as but like the all here assistance through government will debt, and further So offerings to supported that I yes, we sitting feel additional up, equity point

of on the things dime a could got but that that right and case view my Obviously, now. thinking it will change, now. that not be right that's So worse, we're

Got it.

guys. again, I it. Thanks great. appreciate Okay,

Larry. Thanks,

Thanks, Larry.

from Next Josh line of Sullivan. the question comes

open. your question. Please Your line is now ask

Hey, good morning.

morning, Josh. Good

the on Yes, maintenance of and inventories. follow-up unsustainability conversation a just that deferred

do And mean, inventory that if when see do to stay crossover at the these levels just you it current the traffic you just when on does deferred so, curious that I point I might demand this you think Could is has see TSA start in early be XXXX? later timing that? current addressed? mean, it levels, year,

a It's quite Hi. Yes. something and about question good think which Josh, I it's bit. a

low I it these think they've airlines see just continue purchases that that of could had. the year. how level this I operating don't can start later with

that XXXX. it is in thought my be certainly could but quickly, So

the can color Got differences some And just main previous on downturns? carriers versus handling how legacy the carriers cost us it. current line any then low you airline the maybe give are and and environment

the I leaner in than prior would in much with crisis with whether went had was U.S. or downturn the went global XXXX downturns, with everybody the the when happened, into say SARS, carriers in financial inventories it international they that, carriers much XXXX, they the X/XX general, lower inventories. in

be it has to than back snap the perhaps past. the anticipate I quicker So in

the time Got it. Thank you for

Thank you.

you. Thank

comes Sheila Next line from Kahyaoglu. the question of

Your ask question. is now open. line Please your

and you. Good guys Hi. morning, thank

morning. Good

morning. Good

lines just I the of short doing down organic within FSG guess considering just I decent XX%, is business. organic – along pretty your your nature cycle actually thought was Eric, capacity questioning, of growth decline last what and

XX capacity aftermarket revenues? maybe XX can and about why talk point delta you So you point, is think between there a

Yes, Sheila. our has is morning, Good course impact. the of Sure. part of that mitigated exposure, defense which

was The other specialty to OEM really portion related. products, primarily a is lesser our which extent

to developing I stuff down We're all key they do build that. like great this pipeline. got a in be new going out HEICO to is the well other And part the going I plans. a products. We that of capitalized. savings. But of aggressive kept products be and people think we've got rates really cost rid slammed companies of because We out field. our HEICO longer customers' recovery sort We've we're new kept engineering. the down. do of where in I our the expect mean anticipate lot to very sales products OEM-related very I the are We to there. on Now points we offer cost importance of the think be didn't

this So us that's I at that time. really think helping

you, XX% for for you think Eric, said I liking And sales. account you then customers and top-five are maybe just two that more your mentioned products, of folks consolidated

that's So regional swings, pickups split incremental expanding how partially airlines? that know do top-five Victor, any I about think you but with you other from Are seeing customers?

We're will other want they We airlines. are. with as from there give all out attention We us. tolerate as much them to

recall product in of our So product manage crisis, no and a it tremendous out be to the competing we're with play of line have X always to fraction cap it's is and what us, there When airlines of daily. them that were amount know and customers. they engage is a don't credibility, much mentioned with our I what who and earlier, kept market with in their of effort hold we customers. out today, going we're there we came we and it's ship are other larger one is shipping they them the And off up suppliers only when helped do, role our were them. questions but product business. think customers' our what while kept careful needed, stressed line. somebody the I the trying shouldn't time, a people, we we additional buying of And buy our reason no we cut financially since frankly, as today. percent increase people fleet to we the suppliers, kept exposure optimistic than there market down this cap communication during And and them all that develop if increasing a that why HEICO reason there financial very they why There new And kept in I we in we here keep of got lot development, a has And the especially don't cycle, don't out is plans. – is why greater we're recovery taking at our of HEICO's that's I was on the

all relationships forward. very plants seeds going that So that stinks bad I hit strong debt going us. customer this that's the to for roughly think really it while $X think help million And I

it debt Peter's And Eric. on going the expense, way little we wanted I'm last to get it a today, your you XX% us Sure. clarify of and mentioned That's add The guide a focusing bit then you've back, helpful. on do was back you most it. you little a bad and still of we decline and Is the just think I all staff I question, How I'm the get way than sorry, margins, up? up? the all them question, Can XX% you I peers, incremental a R&D sales, about steeper there? think lot on to etc. kept way

this Sheila, Hey, is Carlos.

margins, decrements, component fixed for segment. the on comeback. continues which that decrements think resemble on were So of this XX% view do a I we roughly I QX, normal our for around the costs be on My to XX%. think our

margins – So the little the the sorry, incremental or lower higher were, will those decrements will and cost probably our add we Group the a we shrink revenue than we'll have piling to additional outpace or continue back and decrements leaned follow think volume that Flight the Support do produce be backs because I industry, hopefully I'm as on out bit the in a industry basis.

regards to segment, you're what told I XX% our know the will but were we But competitors, don't I that down of – we'd folks break quarter, us – favorable. be comparing that we very So we in even. just that if XX%, to, competitors think I candidly, second

did thought we do. about we think I we what

we on you bad giving don't guidance, an not to was too – able Eric, different. we're you that I QX but me absent margins forward, debt that we're believe, adjusted produce not although I think were happy, charge, I be looking correct this and expect actually can satisfied, fact, if much to don't if but expect In XX% happy margin that

agree I I Correct. you. agree with with you.

so you thank much. Okay,

Thanks.

Thanks.

Ken Herbert. the from line comes question of Next

ask open. now question. is line Your your Please

Hi, morning. thanks, good

Ken. Good morning,

to to aftermarket, in the Eric. Hi, you your the ability Everything How your this start industry of first out of your in share. to think the just to of with confidence terms sort in about take rate be should coming you've what wanted of release particular? we highlighted FSG talked points you. and I do growth commercial within this relative about

Yeah.

we're to think industry. than I the do going better

saving I going be are very trusting much think more. are products to that our People us cost needed.

So stronger come I that anticipate industry. we're out than the going to

Is historically you've even of mean or a we industry benchmark that the outgrown expect I better Xx. sort fair should moving X.Xx something forward? to

to aftermarket peers. things flights, number revenue of to at, passenger – number are of to, when sales ASMs, tough compare there because miles, we to many it a look It's it compare our performance

sort So the think, moment at is it, one on we're other. that one of that don't remember, things I can look going no to matter or the where outperform provisioning, typically numbers what that And are initial and we the way in time. of at, of we multiple you skew the have course and depends the

So we don't benefit from that initial provision in general.

parts. really is So of ours just straight aftermarket usage

And here, do basis, look ability That's we product more either new just maybe think out your – as drive you you've to one Okay. as about great. a the either called at R&D percent investment introductions. do How on your of timing question, of final sales a maybe bringing opportunity market look the advantage could to at percentage how be or the much another way to crisis? take you out coming more you to of it product think

product up our kept new we've development. Well,

slashed think development, of have not. of on our our peers many have that, margins. whereas weighed we I And product course, new

to our think peers. also and cuts We what could less people, our retain did were than we I our significantly

So to stronger. that out anticipate come going we're I

number past. up going done we've it's think R&D be In percentage Probably have cost going down. is sales to as terms I a of similar to in of sales, the gone what products, of because

to – bullish. very So but we continue be

just parts that Eric's planning that the put is absorb. would we can I to Ken year, out One and that to believe we're things, or on of that's this market comment the point, XXX still cadence the XXX new

and to into I they're are customers existing they out into coming that to airlines that if those. introduced this at of top these is that our the we of that you mentioned of going bang, think think buying these would, I will do biggest this. get Eric products buying think And strongly the a lean believe existing earlier, lot not and cost really can not base I HEICO we out where these and the for that us and coming has of However, we're look market, everything an some product this savings expand currently new opportunity of dive our products that's to on really from

you Great. Thank very much.

Ken. Thanks,

question line comes Michael Ciarmoli. of Next from the

open. Your Please now line is question. ask your

your you'll market back to market year. remains this major if pick margin was next increase this I up billion, get some $XX you billion looking back mean, taking $XX we be morning, if to $XX volumes year, depressed maybe mean, or depressed the billion here, forecasters going mean, quarterly the it's question, could trailing for there XX%, get and – to good really get guys go to volume upper revenue should this MRO into Hey, lower run here. some do mean, to out margins, about you volume back million think obviously, question. for margin of $XXX Carlos, get those we or at be until to we we XX% for that guys. saying need I can we're I market your just to environment level? teens double-digit growth? think I of margins rate, a get Eric sort the I the see calibrated we I Thanks the if

[Ken] is that our this we to a don't from standpoint, think industry. the permanent impairment

earlier, and temporary, things what humane like reductions future. cost mentioned And we've I'll result, the as and with made that so this quite we're as as the a Eric cuts viewing eye toward call and

I would our that meet say and a have margins standby footprint and business the our demand. team would protractive course, thing. to to this keep the and to short-term permanent, standby expanded to our employees, do short-term, in up drive rolling of our So members, was to and then, things the match If demand become we businesses other we're so intact that's

just make now dislocation that's we and just demand margins think However, right I been it. That's short-term our service, we're don't don't moves change that to on like and a new the quarterly is we're willing we to at that not how think hurdle to meet products that think customer enough that and margins. the things sacrifice in would at I going future to looking improve radical this short-term. the point has a

And it. to how of that six what mean, are Got or another are guys this defining months you three short-term? the actually the is goes definition thinking on short-term? for you I

softness that here Eric where a earlier – see be that As with not I don't of this viewed could the the turn. I to he we industry year, think we're predict know when through happens. mentioned end

view So some end please But they should [indiscernible] start airlines have some the into and expect their by the sheer fact planes year, that. these optimism even calendar to volumes time do going flying flying been though seeing the ground is purchases kick a period. short these not are planes, we of money just for for fleets that up been of on natural so we in that spending have air lot demand the this those our are been the and are relatively have that in

it. Got

pick significantly I outperformed mean, I May and hard we so quarter the thought – to in third our third the it's the thought I frankly, as what what Mike, and numbers internal looked at are. Yes. to we quarter went would back be, we that. forecast

exactly So The more non-aircraft a snap that and But masks they're being and again. people it's sort come do nobody them, boom, with they of just think backs social that and But to hard hard just predict getting is then it's a to guess. then for and come all careful wearing to think and I flatline come I while when just distancing, and very sudden things thing. itching comfortable get when. they expecting are of out,

Sure.

But We're one to thing. going be them. for you I promise ready

out bankrupt but HEICO that the of thoughts that on those inventory any parts tracking kind not of the what airlines, that go and view a what side, maybe the if looking it, does parts all your about you have airlines, Got cease of distribution, like channel? inventory you expressed And mean that? there, sort the jet, Yes. certainly on those line, for bankrupt do product Are inventories we hit I competing to parts marketplace? and were operations ones guys in at good

think companies that have inventory. had the that little had airlines I had the reorganize, No, have they very think to I

Okay.

they based with And that. on them impact them we but work I them little flying to I an out, being there anticipate keep inventory. think help very don't to had

got it. one, Last again maybe converts that should and think Carlos, inventory this in quarter. to of how some your levels, your Okay, we inventory How up cash about here?

took long this it it. to question. Surprised Good get

can imagine, commercial and with put electronics, for in raw you're you when sophisticated metals advance. well to aerospace sophisticated you in as look highly materials, for So orders highly aircraft, dealing have

but a else. we that POs are like We in of everything And there a we're – lot we We're time going we had were we that so of. couldn't get not certain non-cancelable lot POs we long to. immune. And outstanding into outstanding committed things of lead committed of out could, this look March, out we had materials got everybody where to

quarter if fair to by that inventory not amount of we was So a our have take might really We druthers, at had we that. time. taken this affected had this

not things that shelf us. it's life on consumable has long go However, all bad will

that So when – from perspective, you pick but whole that have jump. an backlog was the that's guess, right in back and when peel the onion we'll available, that onion inventory volumes I our the it's it mean investment there. up I

quarter? that Got next it. decline Should

going this we're have of quarter. think I the not Mike, but And little we had so. to that, believe bit a to levels I

a it. lot Thanks Okay. Got guys.

Thank you.

Mike. Thanks

Louis the Raffetto. question from comes Next line of

ask your now Your question. Please is open. line

morning, How Good are everyone. you?

Good. you, How are Louis?

Good.

detailed the of M&A the I on just want to the I higher offsetting the sort So a Larry, M&A to and pricing. great guess all information get the back a It's I point. appreciate earn-out bit.

paid for I an deals, two again get from you where can? you stands growth also the we year, Victor, as give much this so trying I massive, for not guess those You as guys we any but debt did of far year. the what can you've color ideas to think, so just square just deals what for ETG you Can can for know net inorganic rest

sorry... I'm

was it's I just correct, four. year, to this was more deals to say Well, just and was than going two I that going it

four. quarter? – to done quarter done deals you've fourth sorry, No. that I'm the the in you've subsequent Yes, that the three

Yes, got you.

close question then a little out balance me let quarter, we Coming the about debt hit Victor talk the net of had bit So the acquisitions. on $XXX the to million sheet. can

the to debt zero, net cash on So pay really right, I used for things. impact is these because

be the our net So going to debt not anything. impact on is

we're So if want that address? to you standpoint. okay in Victor,

was Yes. question inorganic I sure I Louis? growth understood. wasn't The

Yes.

color Just expect to do given you tend these versus guidance least that mean, you've deals with how incremental at lot I growth given what inorganic these individual a to much help guys don't – done you've deals are on give sort Historically you've when deals. ideas get organic of to potentially you those of contributing. an us some

of know could Just any these part wanted as color there if deals? to is you give

late the guidance. we and Tech it's the giving we so the Intelligent and they're and Connect closed just year, and guidance in and in Transformational this we're not late Of course, and closed, year right don't year, for have

them, unfortunately fit to think double very made nice the can't give – out, that Don't to the They have HEICO we're entirety. singles that They're companies kinds that too for HEICO aggressive detail, not caution very entrepreneurial already the remake and But acquisitions, anything companies but typical about going that additive just kind So the companies say kinds to sort just to. buy. get transactions happy kind wouldn't we in are a these of the refer profile their than I I what swing are they're to we're your for will the from acquisitions. can't and I of other from example, lot go say fences typical of doubles earnings we give public the I estimate of are we've and businesses of they I these. but beyond are of unfortunately of more

enough. enough. Fair Fair Okay.

helpful get don't be way, aggressive. too to Trying that

Fair.

– prior time, So at kind not just point, six maybe waiting been know looking you end-market curious I to this deals again the paused the some – you're out goes to we maybe sort that it like, any on guess, about with any XX but you in of no if what sticking expect more year? are I one next just that early doing there look environment, of hold M&A earn that uncertainty the there for pausing? to has You what because, on one aspect, that is has talked you've put months this and to are this impact or given the I valuation, don't months just knows really

great would for years, to promise long-term will a the be, – Eric acquisition in We we the an that felt it let he Initially I'll as then was looking that Well, that. talk was about the direction, thought. a couldn't that in great it three really start promising. There dug and there that some wouldn't trend wrong But hold to we has two, in, company. were diligence, were years, working due we on, we out that be seen. of maybe and it turned reverse well, that really couple

that, own that because, when I why it part about not and to happen. one the look was we year by that was and money of made it's much more we it own thought unless earlier way, very careful And that's dollar do question right. as early So HEICO this Solow what I asked really that invests, that's forever, likely at unusual are the we and acquisitions – unfortunately our every Larry obviously, happens, comment

some little can working… talk about a Eric has that he Now, things of been the

Yes.

number deals equity frankly pause and we've companies the seen very higher a companies, certain seen have also for because unless private were worked a some of significantly uncertain deals altar. had on the offered at future price we where the there is We

of as us equity, danger back with could private and around those And a come so I is I think mean for well. this some

Okay.

out I something, introduction different Different Security. an but company And it know are slightly companies devices bought TSCM. – Transformational that call the don't XX% that but call if a remarks different company year-ago, We and and very of two acquired intelligent point in that was I'd it we what in Also, came we company customer. the to we manufacture. and that of like by about my mentioned I accomplish a through similar they result compatible direct another acquired markets, these to products objectives clearly,

know of we of either good result to period many a over the relationships, we as a a competitor, of buy in pretty the a so company. confidence developing our or time future will somebody operations have that industry we subsidiary our of Now a the acquisitions that idea owning in company, of are level have supplier, strong of when a getting long

don't show XX the case, flow. releases Carlos, particular line bottom I things. but mentioned, really think and press and as may in manufacturing be how – in other Those forth, strategy, acquisitions. So our don't XX? And many so up we cash some in shoot may again, and this dark. is And marketing we made synergies get we strategies we've in about

or More less, yes.

XX said, you a a no never acquisitions. had boom, it's that company good. never we've had know think And I bust, we've

are oh, we have than a never are less expected, some we just mistake. terrible than to others, better we we So had but my made had say, God, some little disaster where a

line acquisition focus our our is years view, by that able compound us. we've think I about worked bottom for of it's an So And how to we and to been XX over point that's strategy. from XX% And that. continue on

we interested biggest I want two. that flow, in the a being not and and one earnings company share, cash per to profitable mean in company, are be world, We by the very

to Perfect, Eric. quick thank clarify. Thanks I And for products. specialty just color one wanted just sorry, on for follow-up the then, you.

aerospace? and FSG. it products XX% is and specialty OEM, space commercial to So majority exposure is you've defense got And

of the specialty commercial? to So a does sense that where of get within the products the just mix business fall defense and trying

Yes.

groups throughout well sub-reporting do is of all Specialty FSG. we defense So products as within as three commercial defense. the both

does it both. So

– of And of or Okay. in across kind the or specialty it's the exposure, even-ish? but it of others defense products even those kind predominantly any segments is or

percentage wise, I numbers, on in specialty say, need but be – that would it reported, to a because look big draw but products, higher distinction at I those I it's how would though. wouldn't specific all

you. Thank perfect. Okay,

Thank you.

Ducharme. Colin from comes question of line the Next

your question. Your line ask Please is open.

Hi, my please. good Couple, question. gents. morning, for taking Thanks

our please AR, understanding, some on relines color just think already changes, Just want working to Can and of offering The I assets. some you touched just but you particular? capital assist the in with AP start Carlos. on, contract

alluded current inventories. then you bottom the led all that improving the to protective to And on any could already any builds for a some What's informing potential that connected or signaling follow-up. at demand reduction, touched bouncing you AP your disruptions? suppliers? So there? trends off if motion got Thanks. of this potential assets, is also Is supply happening the conservative you just maybe And is by or reverse liability is in then AR build-and-contract credit but to the posture that reduction, same just speak more I've

Sure.

assets project. by contracted the liabilities and customers longer-term a So function on HEICO of to are commitments a

have a we of build-it-and-ship-it like where more and [indiscernible] revenue recognition not different percent it's So like complete It's that. arrangement. things

will liability on that flex in asset depending and are So how projects. certain we complete

to I that deferred from projects. we revenue it's to how know going don't those get So deposits make than on conclusions we progress draw other much that particular depending the north move how south can on many you versus how and or much we WIP much recognize related

is efforts capital allowance. to on due to cash. was accruals, increasing to reference of it's our members majority which then, than regards that of going we pleased fact have lower I to performance-based the did at was XXXX. having course, and – accrued you point, lower end down, working collect team our do our now within we're due The extraordinary In by payables as a the have And liabilities, liabilities very to October quarter. was far contribute the of balance that the AR some As collections was it with despite of the goes, to revenues, less of also. kind a AR accrued for we – comp

that I accruals, vendors we – our also of HEICO well period. at during that impact are matter this that it have comparatively, will but policy as an has say on treated the looking a So

strung them haven't We out.

go-forward We those practices not our benefit haven't and business by had a nerd basis. we'll a having good need And to. believe on we changing,

see might it. timing of payables you Philosophically, why that's little areas how we in that's decrease those and a outside aspects. bit So a the about of think

drill different Okay, share maybe thanks. potential again just And to a and executing from attacking here. the opportunity as down Eric a just amid angle want it crisis, against Victor, follow-up gain on then for the market

particular go-to-market into improving any bundling FSG contractual aero, potential you previous So and HEICO's to to can basis, strength, Eric think a you for the service and have plant sell new continue with as customer incremental wallet products you. this new better stress example, commercial in sales themselves toehold seeds et alluding kind sustain verticals you repair perhaps how obviously a already on to going value, that to industry I line, Just rare, current Thank leverage ETG, for gain for financial share just response, retention, may state like can cetera? are lifetime given been capture the forward? just and bottom trying of gains? of but motions gains share with

on. a focused it And and something Yes, we in when use proprietary repair. value that parts. do our our as is are of Colin. question, great have proprietary repairs do well as We proposition a offer It's that we the we unique can

own their selling, to If and the of one close why lot various the go go is OEM up sell ahead a of reporting there for want our so while it's we're they customer. as and happy that, if independently want I'm So and optimistic very businesses is purposes, they they that cross do do happy this. to cooperation do material, lines can But And people about and definitely between that's future we're material, way really come the that they operate we're of and to ahead our well. out to about cooperate. and of businesses, reasons going the the there

Okay.

ago enhance amid bring apart different is less of though, effort where before XX to of formal a from some frame cooperation an just environment, the cooperation from hit? among there perhaps there months months, historical is So of this in that – just more was a subsidiaries, that – COVID apart XX quick pandemic anything clarification or

we Yes, increased have the cooperation.

that, they that's very, on we've can in absolutely, as businesses that, where got on something our each focused the areas are help We focused product and offerings of that broaden continue and we to this other very much businesses, they're absolutely.

Thanks.

Colin. Great. you, Thank

from Instructions] Next question Rene comes [Operator the line Plessner. of

Please line now is ask question. open. Your your

and the years panics am in great businessmen. Rene things and am XX good not thought I go was what Mendelson go pretty trusting and respecting market I down, shares, I up, I come, XX, go. known who at understanding Things about for Plessner. am I percentages family, panics brilliant have invested very good but at and business a

a have be guys we you a my today, we'll sterling years That's think our ever and job. I from in that I couple done faith have lives. comment. of total better confidence than did doing

loyalty, Thank thank we much. greatly you you, We Rene. We appreciate very confidence and and for it appreciate. your

you I and through those started and think a been was other well you've it in those investing I downs remember HEICO, You've done and ups brilliant investor, when and panics. XXXX, incredibly

very much. you thank So

the think HEICO's I these and right because your you're performance of comments focus our on very great market sees thing one is frankly people are is the businesses we're that that and the gyrations, the wise, the our – economy, because in. constant stock

very think So on as much that's and also this who feel team makes reassuring thank members good particularly call you and are our well. I

So much. very thank you

associates. luck. You're It's pleasure wish very good to friends a you and I be welcome.

a Thanks lot.

Take Okay, Bye. care. my friends.

Thank you.

Bye-bye.

further no are There questions, please continue.

That thank have soon you speaking look we interest you the I remind which or HEICO. you when we to – I in teleconference again. the to on Okay. announced. Thank your quarter. for results to we December And look we and may And third by to everyone call telephone If will you to the more answer time your you participation you. there questions, no remain year-end we available have. thank in in now forward are some questions, that Zoom speaking our for forward to concludes you

call. conference today's participating. for concludes This Thank you

disconnect. now may You