HEICO (HEI) 22 Dec 202020 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing-by and welcome to the Fiscal Year 2020 Fourth Quarter and End of the Year Earnings Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] Certain statements in today’s call will constitute forward-looking statements, which are subject to risk, 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 pandemic. to regulatory defense, goods or amount travel increase U.S. of demands; spending pandemic for caused aftermath; and fleet the reduction [indiscernible] specification cash and in export our or and which cause airline air decisions, commercial by changes liquidity and product complete lower Homeland a timing generation; by to services; its could and HEICO's cause purchasing demand airline the requirements, policies cost and could contracts; space Security which costs an our governmental and restrictions; COVID-XX sales from competition costs and/or pricing product foreign cuts, profitable to new exchange and difficulties, manufacturing economic customers manufacturing competitors, existing increase development or risk; to ability and sales achieve products industries, credit from defense levels, acquired or which our which and could product or operating customer acquisitions electronic and within reduce could space, conditions income defense-related our make introduce growth, and ability aviation, development could which our medical, and outside or of telecommunications, which budget impact delay reduce revenues; could as new costs synergies and and could and defense, our our businesses; spending reduce services sales; our the currency which tax and negatively sales our revenue. foreign interest, rates; review encouraged X-K. limited XX-K, Commission, this Form to of Exchange to and to are [receiving/listening] call filings Parties all XX-Q, Form on call with transcript or Form filings a not Securities this HEICO's reading but including, and the of a the information, events revise by We law. extent update or any otherwise, undertake result no whether or publicly to as future to required applicable except forward-looking new of obligation statement, over now to the turn call Laurans I'd A. HEICO's and Executive Chief Officer. Chairman Mendelson, Thank you. Please go ahead.

morning President teleconference. Flight Larry and I'm President HEICO fiscal Group; we quarter of and and Mendelson, good HEICO’s Corporation, Executive Victor earnings Mendelson, Carlos on this here Erich CEO announcement and Group; of by this Electronic you and joining thank for our Macao, you morning and much, President call. Support everyone I'm welcome XXXX fourth Vice Technologies Co-President and us, you Co-President very CFO. joined full and of this HEICO’s HEICO’s We and to to Thank Mendelson, HEICO’s HEICO Chairman

Now CDC the before Since during results team I'd were its the Most businesses employees, year mitigate HEICO’s of customers, from and to discuss our a beginning to essential impacted significantly with to manufacturers. and our XXXX, pandemic, impact the operational have moments fourth pandemic global our implemented remained facilities actions The of the pandemic. have are COVID-XX of our at members reviewing governments pandemic. fiscal in spread facilities in and in the accordance health and mitigate and the suppliers, March pandemic. measures safety related considered The has of on quarter full operations protect the of spread we and XXXX global results, by guidelines COVID-XX. fiscal affected few effects like the world, operating the take results to COVID-XX by around

progress unprecedented We and gradual of parts board aerospace team humbled our for our Currently, recovery the will a company times. notably demand challenging HEICO times. we these commencing in in the are during directors very and team in believe commitment to customers, of are vaccine result members each for fiscal truly most members of their during these services, and outstanding recent our dedication our XXXX. the shareholders, The of thankful management commercial other towards by

take XXXX, to results. like has in I'd our offer have fiscal robust increase in market. summarize aviation the cost faced expect programs continued air share fourth full to our Despite stronger and allow our saving moments solutions ability a quarter As recovers, challenges highlights and commercial slowly to to and HEICO remained cash market fiscal presence that we many us confident demand for development few the travel product to very of to XXXX even the within excellent we a flow. generate

very net flow flow $XXX cash quarter provided by XXXX. to compared Our million million XXXX and totaled XXXX, in fiscal as of activities the or million of the fourth operating operating by fiscal in fourth XXX% million in activities $XXX.X respectively. strong of was at XXXX Cash fiscal quarter and provided $XXX $XXX.X reported income

clearly success. particularly of are all And cash you is HEICO’s I fourth of XXXX know, flow. that important the most the As of metric operations, think indicative quarter, results the

in We the are fiscal during consolidated fourth in sequential the fourth net increases net income, experienced quarter, and results XX%, third respectively. income, over operating by quarter operating the of of XX%, consolidated And sales we XXXX. improvements encouraged and our XXXX fiscal XX%, quarter

operating quarter of the Technologies on well The respectively, fourth the to the continued third date operating into credit maturity quarterly by committed XX, fact, revolving net amendment part significant November as an over on of of from XXXX, principally income, the demand Flight management the the fiscal XXXX. These all-time fourth sales We X% billion. sequentially, commercial In operating reflect and the entered in services, and impact cost the net XXXX the to teams. I'll extend and continued one X% records of XXXX the improvement. a fiscal capital increases the and ETG, and as to fiscal now improved of performance by Group’s sales year XX% operating pandemic in $X.X excellent to respectively, acquisitions, Electronic disciplined fourth despite our quarter set income our Group XXXX, quarter to aerospace fiscal our and agreement improving Support XX% of of our on, compared quarter as call recently parts and fiscal increase for it

a $X.XX credit lenders new from or be company and billion become addition facility or period. addition, to an facility feature commitments additional a vendors that the extended increase allow through XXX In include can by increased will capacity of to million for our one-year the continues existing the

this loyalty HEICO to is Bank are quality support acquiring flexibility pursue demonstrated of continued high prices. amendment We businesses our Their for offers very by strategy credit thankful further financial fair at of the the disciplined us our to facility Group. existing

cash, XXXX, as which ratio debt, as debt, equivalents compared XX.X% net total define XX, was as equity this and of of to we XXXX. Our shareholders XX, improved cash less from $XXX down of million, October to October XX.X% and

this to acquisitions of X.XX Our during net the of after making down X.XX debt-to-EBITDA XXXX, XX, mind improved times October as October XX, in from times XXXX. is six Keep year. as ratio

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

sizes until We to accelerate maturities maximize and aggressively have significant strength we XXXX. acquisitions debt plan flexibility quality to no returns. shareholder And to of financial various fiscal utilize high growth and pursue our

to we payable yesterday, of XXXX strength As semi-annual January continue dividend. the XXth the classes our since XX, coupled will business both XXXX. to as X, common $X.XX conditions, the challenging we of cash dividend of of declared our the our HEICO’s cash our face confidence per in reported be consecutive regular an stock cash Directors XXXX. January on Board record paying dividend share cash shareholders of future, normal semi-annual dividend This with gave optimism

holdings whom shareholders, of plan. majority through is important are to the especially HEICO personal their our is members, in shareholders the to important it fellow team our all this XXX(k) very of While vast

the quarter new some about Let's talk fourth of acquisitions.

discussed the our acquisitions I we As teleconference, during third through three in ETG completed quarter August Group.

of a state design XX% security art the we and manufacture, countermeasures in and acquired surveillance interest These two First, equity develop of equipment. and companies the transformational intelligent devices. technical

Connect Tech. earnings smart introduce HEICO time, would defense, first approximately of closing. within Support acquisitions XX Support and months energy we to rugged, President and accretive results applications. and Group. discuss Flight designs the Next, HEICO expected computing manufactures At XX% of following Group, factor in and aerospace the Eric and be acquired embedded These of of will equity are to Connect Mendelson, form used Flight the like he Tech rugged I commercial the of small solutions this transportation to and interest industrial, Co-President

sales, aircraft previously debt potential income filed the quarter expense Group's net Support sales fiscal net that of gross Group’s million bad the fiscal The an XXXX fiscal increase year resulting year XXX.X compared a gross were lower of $X,XXX.X the decline during fiscal Net due sales organic certain in as global lines, reflects difficulties profit XX% fiscal customers the travel March the performance in aviation million product Flight fiscal year XXXX The XXXX, in million mainly profit million inventory Support in Flight in operating mentioned sales XXX.X XX.X in XXX.X Support platforms follows XXXX, in in year XXXX, from in you. million XXXX. aerospace types XXXX. protection significant net pandemic’s to commercial respectively. XXXX, growth income The decrease decrease principally from from compared and as air fourth lower as Support XX.X Thank commercial fiscal Flight to in by the compared announced fourth in Flight income fourth XXX.X customers to collection lower was Group’s in operating XXXX. decreases of reflect The the engine in based the fiscal fiscal in pandemic's and to million partially demand The compensation The margin our principally the XXXX. XXXX of to of retirement due across fourth for a quarter obsolescence XX% reflect was beginning fiscal principally resulting to Group’s and increase all of XXX of certain quarter in operating fourth The the in bankruptcy decreases sales the to million by XXXX, impact, are as quarter reported financial the of compared as our commercial result in financial an offset a quarter pandemic. due organic impact. were million expense, net in fiscal expense. the margin

the lines. compared in XXXX, aftermarket the was Additionally, profit performance XX.X% in margin The impact quarter The in the quarter Flight net of the was compared reflect bad repair lower as sales, that reflects fiscal XXXX. mentioned fourth the from and operating higher profit within Flight lower based and in an replacement as debt operating and XX.X% lower SG&A XXXX, margin product to of Support efficiencies from services Group’s expense. previously previously The parts gross XXXX. expense and in compensation from the XX.X% by percentage decreases as partially a the margin margin principally fixed cost our parts increase fourth impact, mainly to fiscal Group’s fiscal resulting offset mentioned, margin lower net overhaul in gross expenses sales XX.X% loss the fiscal decrease Support of pandemic's operating

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

space to improved product the aerospace you, million in to fiscal partially The quarter fourth $XXX.X aerospace partially The to mentioned million expenses, of quarter from compensation XX.X% operating and aerospace defense in the profit sales increased XXXX. of to The of net call fourth net the from XXXX previously an revenues. up margin fiscal in Electronic XXXX, gross $XXX.X fiscal favorable of million] margin medical to growth from in XXXX The up the income of improved fiscal to increased sales XXXX, more to decrease of from improved and million from the in in a space in gross $XX.X fourth XX.X% increase a products. $XXX.X from [$XXX back sales to certain offset income and the sales quarter fiscal decreases attributable The pandemic, net offset less of products. of certain a in up net Technologies $XX.X mix favorable partially in our the Electronic products, decrease in record to is The million fiscal to X%. mainly in attributable XX% and growth the fiscal profit decrease X% operating the quarter fiscal increase medical increase is fiscal XXXX in Group's in The Electronic I fiscal and fiscal favorable offset the reflects net net million fiscal improved The by XXXX partially by record million gross largely The sales a $XXX XXXX, lower Technologies increased XXXX, products, the the organic sales XX.X% favorable in the over margin defense XXXX margin. from lower quarter products. and profit acquisitions, fiscal ETG’s in fourth fourth and XXXX. increased fiscal sales organic and The a of The certain XXXX. quarter mentioned anticipated expense, certain fiscal $XXX.X the gross reflects reflects XX.X% Larry attributable efficiencies ETG’s reflects performance net lower in sales defense fiscal The Group's net by due our a product a of turn in due XXXX. partially of improved fourth previously in X% commercial Eric. to sales fiscal a the offset by increase products, net quarter fourth sales XXXX. margin. mainly XXXX, impact commercial the profit record net decrease in up increase margin. principally offset quarter growth, up record of impact increased space acquisitions, increase fourth and is operating in increased increased gross fiscal margin sales Thank operating up The Technologies XXXX. Group's the sales previously fiscal and lower X% profit million XXXX, XXXX mentioned principally by from sales commercial from principally Mendelson. ETG’s and mix commercial based net to quarter XXXX, the fourth principally a acquisition-related of gained XXXX, The in

Thank Victor. you,

other Moving the decrease consolidated increase diluted XXXX, impact and an $X.XX in collection the income decreases R&D net sales partially percentage expense compared increased impact attributable and consolidated of net of and selling in net the a that in and Depreciation XX% debt XX.X% of to expenses fourth net pandemic. fourth due net and quarter marketing compared by fiscal fourth XXX.X lower expense in in XX.X million XXXX, decreased quarter in and X.X% million selling sales, sales income and percentage impact decrease to that The SG&A in fiscal filed sales, sales. XX% impact or other of fiscal sales quarter expense as XXXX. in commercial fiscal of fourth general net to and net was million percentage administrative and due $X.XX fiscal that fourth fourth about from XX.X reflects the million quarter of that by a $X.XX of per fiscal due fourth increase in reduction of XXXX XX.X quarter in the to reflect bad a in difficulties percentage impact The bankruptcy efforts a expense as higher sales net XXXX fiscal protection operating by including G&A in XX.X decrease earnings our XXXX The XXXX. in net million acquisitions, decreased customers ongoing in fourth mentioned in a million up the expense the fourth the slightly fiscal sales XXXX, of as The reflects as quarter fiscal a consolidated the expense, a fiscal and fourth non-controlling XXXX, the by of Flight Consolidated XXXX as down a in in XX% result reduction a to the share, was diluted acquisitions. financial XXXX and XXXX. The travel. performance of other other to increase a decreased consolidated fiscal and that outside expense. outside in Consolidated in acquisitions, lower compensation in SG&A in by in expenses. the aforementioned from diluted in XXXX, performance expense, quarter totaled general interest of was from The credit partially in XXXX and fiscal of offset expense X% from the X.X% XXXX quarter the mentioned a in the to was and to expense sales was was debt of X.X% down down XX.X expense million G&A fiscal in interest, outstanding in a fiscal that were well offset quarter in fiscal debt less volume in in to significantly to fiscal expense share partially increase fiscal increase other were million SG&A by fourth were our fiscal to decreased increase to a commission consolidated net reduction fiscal fiscal Interest principally slightly certain of of the from up marketing SG&AA and and or of on to XX.X in compensation to of selling sales. fourth reduction from expense expenses, expenses, as well lower amortization expense. selling of XX.X% expense. SG&A previously a million fiscal that SG&A lower XXXX, quarter fiscal including as XXXX of million expenses, based net in XXXX, Consolidated interest from decreases to again SG&A of fiscal fiscal income of expense, the from and quarter in quarter million other fourth XXXX, million and aviation on percentage as well XXXX. XX% fiscal is SG&A the debt Decreases in commissions, per as tax performance million higher based as XXXX reflects based in XX.X other in by the decrease XX.X offset decrease expense, as new net fiscal decreased of fiscal sales as consolidated share the Research borrowings decrease XXXX, compensation for in during down $X.XX These of Support, and other fiscal fiscal lower decrease XXXX. fourth the or was due XXXX from at average XX.X partially XXXX, XXX.X expense, principally decreased in of expense lower XXXX. bad in down reflect bad under and dropped percentage million the in XXXX decrease administrative in expense in expense a compared totaled XXXX. quarter XX.X% from the performance Those fiscal XX.X XXXX. quarter up income of a XX.X based our partially in fiscal that as travel. X.X compensation in expenses the compared the and and offset was expense, and and rate X.X expense incremental XXXX fiscal weighted facility. XXXX, sales fourth decreased to X.X% XXXX the continuing offset that income Consolidated our as as to fiscal of in million XXXX decreases quarter the XXXX previously and Flight Support. fiscal and net sales expense significant to development in are year XXXX, ETG R&D XXXX principally development, both product XX.X per

more XXXX during the was the as XXXX as Our as options fiscal option fiscal price in period. to in compared attributable well from a fiscal effective is tax XXXX recognized rate from and mainly HEICO XXXX that The stock in to tax stock to XX.X% being option-ease stock benefit XXXX. X.X%, compared exercised, exercises, strong in fiscal in fiscal decrease appreciation larger holding resulted

of transfer in was principally certain income well Support interest of to quarter as million of results XXXX, Lufthansa quarter income X.X subsidiaries, fiscal decrease which Our in principally fiscal and effective to a interest XXXX. in non-controlling And decrease of the are which a fourth tax that quarter Group was in of by operating as that and the XX.X%, reflects The The XXXX. interest XXXX, interest in fourth XX.X the non-controlling million paid attributable compared attributable in quarter effectively Group. XX% of fourth compared compared fiscal that Technik XX.X% was of Flight that of to impact to reflects are fiscal rate results fiscal subsidiaries fiscal interest by fiscal million fiscal Flight eight the in in and XX.X non-controlling that in in million transferred held June XXXX Flight our decrease the fourth back in XXXX Net a the non-controlling to existing in dividend Support of operating Net the to XXXX. our [held], of XXXX, was in the quarter held. X.X fourth in the decrease certain in XXXX. subsidiaries of HEICO of Aerospace resulted Support, non-controlling

XX%. the we For present non-controlling interest time, a of approximately the XX% at rate XXXX anticipate to full-fiscal tax year combined and

sheet activities I by XXX.X Moving on fiscal and forecasted to XXXX operating financial cash at strong, operating XXXX as flow you consistently remained $XXX.X our activities in million the provided provided the million quarter XXX that $XX in currently spent quarter million and and million know mentioned approximately XXXX totaled flow flow flow, by fiscal and from or that will capital and cash up We the cash compared respectively. previously, anticipate the in fourth be income of strong was expenditures position balance fiscal Cash very of XXXX. fiscal XXX.X of XXXX million XXX% net would in and XXXX. XX.X fourth of million fiscal to in

October course liabilities XX, of current to as October improved ratio, October assets X.X compared as as days of current to as the of capital improved outstanding, October is receivable XXXX XX, and XXXX. to sales of XX, divided XXXX. of XXXX Our to days compared DSOs XX, of that favorably Days as X.X which XX accounts by working XX

exposure. all to one XX% receivable collection efforts continue than fiscal in our We approximately consolidated of customer to customers more and No XX% XX% credit sales for closely net XXXX, accounted XXXX in of order respectively. monitor our Top limit represented and X sales and

Our XXX principally XXX inventory days the on for and non-cancelable year XXXX. for pre-pandemic long-term purchase rate days to October ended turnover of based certain support That also increased increase rates businesses. XX, expectations the in XXXX the October backlog certain and sales to as net commitments, XX, were of compared reflect ended our inventory year to which turnover

outlook. the Now,

XXXX, commercial ahead continue aerospace pandemic industry As fiscal to the negatively likely as HEICO. impact we as will look well to

XXXX Given this earnings at this time. uncertainty, HEICO cannot provide net guidance fiscal sales and

and market sheet, balance our policies, to liquidity will healthy as in conservative new gain and permit us development However, ongoing invest recovers. believe share we fiscal research increased do industry the

uncertain high industry, diverse weather our economic defense, this high-end generating across good us and addition, position of these markets, commercial and operating tested including In cash maintaining – puts businesses space, and strategy debt electronics period. industries to acquiring are and medical, other a low besides aerospace base time financial in of

conclude and in commencing to recovery XXXX. like the fiscal our commercial vaccine increased generate commitment team fellow every understand result this members now again and the I'd your and to worked hard times, commercial as for were Their pandemic. members of more Those to a and our each we floor We COVID-XX dedication prepared want are and period services to thanking gradual who parts company. HEICO's demand our of HEICO's during bright and my in open of And aerospace the customers team remarks and optimistic the during has will air like their that cautiously on for exit global our am to expectations a extent member Directors confident the times. progress future would success customers’ and all travel, that safety been to the questions. should team very remarks, is stronger that COVID-XX safety by in and of I I which I challenging will difficult are exceed HEICO's Board collective brought these to my these talented have competitive exemplary. of I thank to by recent value

Peter Your Instructions] Arment Baird. first comes question [Operator with from

question. may ask You now your

Hi, yes. Victor, Eric, Carlos. Good morning, Larry,

morning. Good

Good morning, Peter.

guess their I pickup in Eric, compared The start a modest of your are I your but just maybe provide color in you we a guess will hearing you seeing. activity you're with I you or mean, the could improvement, from X% from I on what customers FSG. of behavior? just sequential saw little quarter-over-quarter, to flight terms QX, what seeing

well, Yeah, say, I would question. for your we’re good – first of all, morning, Peter, and thanks

specifically, and very remain be come of greater We've products. chain. part conversations we're why sized matured claim no them would company they of market that a as that on really one And, number our question as the into We and believe conversations VPs, them the we out customers customers growing very In our be They're there's out of each felt the that you Conversations with, our the interested well greater I excited very with product. strong. we're share. to going pickup. seeing say, that a very with to with would market the reason are our viewed a encouraged I pandemic know, they with HEICO of share. why are, as understand is products sales causing nice that the buying supply by them significant We shouldn't about particular coming

discussions I May things think for I of normally sort last were with was last were and May, necessarily down. we would things logical good things you half they're around – was because a – the expecting second a in customers were November can news, number excess was very having a that of the that I bottom schedules that, operating and they're have, of gotten holiday that that that out they said the flight in schedules But continue to pointed good. But I very week that call, it's the pandemic, the we they December trend the the the on of based up. the things the very in in given may And about be that the can't But of as going inventory when and to were you they looking the the couple flight far bottom news have in month season So, January the a really think, see I that spare operate that schedules airlines, correct bit you with to that called not say, speaking they're you quieter. going little start And know, that's making. with be recognized tell our know, of we August course to purchases looking vaccine purchases. atypical in good. the operating probably or know, so, our quieter. slow parts and

in fiscal improvement, news, infection the of be and, on rates. our obviously, year. know, very dependent the timing half the you an second what anticipate we we is And particular of see to terms So, in going vaccine in the

without expense. And debt Can that bad like, helpful. in expense really mentioned quantify, that's the No, been have what margin you would you additional the FSG?

is Peter, this Carlos. Hey,

with QX of some that. bad the bankruptcies noise. additional in maybe took normal the million and kind it we in was Remember, about million] QX, something significant the $X.X that quarter, [$X.X deal to So, debt wasn't like in

margin add [X have see million] about, you'd the annual I what to back be. guess, that to would So, to

of $XX thinking jump mentioned just back that I How performance think Okay. as it Larry of And then, down fiscal tied is million quick we year-over-year, was do over XXXX? kind one think to and one and SG&A about I'll XX% Carlos, then queue. comp. in about we're

I that is to think sales, going comp performance-based with Peter. [flux]

I'm sales So, XXXX. back getting [flux] anticipating XXXX will they performance-based with in But not and comp to profitability. levels our

expenses, bonus, will pick increase our the it performance up XXXX, growth. So comp we'll profitability there probably as see commensurate and things with in some in but be based

Thank much. you. very Thanks

Credit [indiscernible] from comes question Suisse. next Your with

You may question. now ask your

be would have the with for valuation multiple commercial a Good doing are all-stock increasing as combination your to maybe morning. historic of a and acquisition? you then, stock, would cash names that's a for willing stock of And a larger pay than considered higher or trading, the consider you follow-up, HEICO high-quality given Eric, airspace you norms? air current an where company, multiple currently

So, good morning, Scott.

flexible to regard you I pricing, we're definitely with So, think that know, the on pricing.

I of a the lot and know, at equity they that the a right now, think private – in lot look people frankly, of there's you results. space

at space and prices there very understand long I had know, know, And landmines where have we're, think which sense. think, in are you I make bid at there commercial this we of we've a very up operating cycle And You being this good really, where are. that companies and the are well. defense done that number out don't

it's to high-quality question, answer Sure. can think on a so, we would if it? your company growth, more And aggressive and accelerate the we that we be

aftermarket, and And, frankly, they However, we're you outside look a doing the people got and we've business PMA, unique have, or you these to And know guys couple entered who lot repair at know, they're know and, you HEICO what we've you aftermarket these that ago. know, I years space criteria, if XX performed stock. you and what say, really people well hard other this We've – combine this be? didn't to and know, they they were the well, – feed meet hard. you of in to of these got they know, got doing of able sales don't how into know, and each learned businesses how this years engine product force, over a offering a where amount can has HEICO and a we've pretty at where the the way. know, along fact, extremely it’s synergistic are XX% leverage, CAGR get into business businesses component of OEMs. they largest don't able this and know, any the with tremendous it's airframe, and something you it's couple XX the large know, Look realize, the distribution without

conservative to, the sure to and terms make inventory also fields then and not would you pressing, our we've we've not of below will, when is very that you other terms And numbers. we of our got we're look trying know, that you – them good the pricing we – take in hit order the furniture, know, a at business the that thing to on generations So, fairly know, want we're created to everything and say, you come. in you And out for culture if know, the of burn in that. I understand reserves people

to may fool's and multiple high look get I that's of honestly, get in doing that some want in and a want think things short-term a be really that, order you a that we they something at then when that the high not do. to companies somewhat of And price to errand so,

truly higher long run So the don't it. that but for HEICO know, frankly, we answer, HEICO it style a company, you – we price know, yes, if would often. run But very haven't you yes, a see you pay company, is sorry for

transactions, says, HEICO transactions. and different – we all of [debt] differentiated sorts business run people. we a our terms as very we how the in got We of So believe with and then, open larger regard is know, to model our treat – that to how you we've

ground we where can act it's a grow. we planting, if yes, know, not the to go you want of seeds know, and found greatest in there's – and cut to the whereas And can in larger course, willing interpreted focused know, this definitely consequences so, of the of all do future people are other should And their you it. things, – as should really go as on you on the be that may future our you sure our got asset. treat our make a frankly, like has always the on by – ahead be say, sense, because, my good, a lot we say, not on very creating and people having nicely horizon. know, is But going don't no know, we would, a culture, and we there one we're And, like But, you be comment be assurance deal, And confident of we've when financial sorts greatest suffer if you been we asset we're right. that. very people to and you this, to people, the are that. and very even then them And HEICO know, they they treat crisis happens of meant because

go have You come out very so not of and strong. know, we're to reduced ahead we can this earnings thing, afraid

need entrepreneurs up they know, that you we've the that know, short-term that long acquisitions same where, number So a them, superiority. you made profits founder vision, term, really typically like to share they people line of where know the and that really to of because ahead put leads

your answers that it question, on I'd be hope I if to happy way. in not, but expand any So,

of if few the a would to follow stock the acquisition a kind and billion the just of or in cash you up, guess larger say, of were be doing I on finance dollars, all-stock combination acquisition? consider it to a north

think be Frankly, the things believers would cash in we're because to all table. it's I stock. on preference the our use

dollars a made of dollars the we've look And billions if You acquisitions. of we’ve given XX of well. know, the and extremely you to-date, don't stock more at think than million acquisitions that stock has performed out I

we've may new know, the there. of now to added hard is credit to you it, things know, will, arrange, I concerned if we with some need open mean, be you be that But would point be we've cycle. line we of so open lot lower to our got worked – that, with that in mean, I a yes, the flexibility Carlos one got people at you flexibility selling a of So, the

our be play, the therefore, they know may up-cycle. way you request to So to as able stock a

definitely So, is in sensitive our think we cash that it, be case, I but would to preference.

Yes, let me just add to that.

thing want depends depends right the the stock depends and for, it giving the on to line it; so bottom the the on deal; think much we circumstances. seller on consider I is it we is whole forth. And looking how what know, it would You under

As is accretive value Eric and when says, we we the because always of we up. prefer the the whole cash company make reason goes prefer cash, acquisitions,

So the price stock – we is up. too goes really we've because stock given give, stock much out whatever

going real we're if So, to for and it can. we [indiscernible] shareholders us it's desirable use the do going better is there to existing But to a in that best way for cash. all make acquisition, – to acquisition we're

definitely So consider combination. or stock we've cash would

Thank and Happy Holidays, you guys.

you. Thank

Scott. Thanks,

Josh Your next question comes with Sullivan Benchmark. The from

now may your ask question. You

morning. good Hi,

morning, Josh. Good

about current know have at remarks, aircraft of increased but some can development? pace you the other of I your differently PMA product R&D makes programs, opening you the robust give You the pace outlined you development submissions? this portfolio retirements you Just know, on you you you some think, just the figures in highlighted do think know, the us, on type you there know, color PMA there, point?

maintained I would our Eric, that Hi. PMA. – say we Yes, of is pace maintain this we

could You know, it. we have increased

year. have be which I you that reductions think plenty of to is and of sensitive we one one things ourselves, of little we've why got, people, a pay lot took a this the also know, – things including the is to that of opportunity,

to furloughed. the was was you were pain that people know, if some the you sure the Some throughout wanted sensitive make There – were company. be layoffs. we sacrifice the, to will, And

this could the we kept know, to really said show we Having new very I'm while order PMAs have it that was we're you right you consistent developing that number that, thinking increased thing together. know, proud you similar in everybody development, in the company that come the was can in So new that of done. very tell we've we've out that with, products. I that aggressively product

have we grow that products Our very grasp to continue subsidiaries on adjacent whitespaces. after into and good really going a the they're

very customers about defense confident use the products. and are of customers these airline Our

why are for too very you know, talking know, it – a and optimism going future, you seeing through great sales So, me to our executives details gives and a I'm them the they – especially when with optimistic. great the

going for of you of just recovery, expecting, you thinking in outside the work to what expect rebound out you're in you from really confidence or going would traffic to as Yes. give would half airlines look that it's And know, you activity you first up a see kind eventual you're half the half class that to? the in as of then just, know, picking that the commercial products second is second that know, you,

out going sort where of the May, since seen, know, is think, continuation I of to, bottom. coming what of Well, the we've be half been a first you we've frankly,

I You in of know, settles it Then then sort out it know, probably quarter. say, moves settles through airlines, of spare sort ahead I then we've anymore. moves they're more in the in Early second don't of – our through would equipment starts parts crisis, when it would you you and you is, it know that comes and, until or purchasing. and that destocking really are progress, excess I it there of then what that anticipate you fits seen in what, the the type a And ahead, phenomenon. the and know, operating of or was beginning they the to see perhaps you know, talk really in.

I think occurred to very now already. airlines much hand living destocking the has mouth that are I and think

mix of know, you going So, in to terms of going our it's forward, I think, products standard be products.

of to airlines the – defer will to return equipment. try the possible, know, expensive would their to impact a think continue in as maintenance I much you however, not that way as service

demand. maintenance general, So, And engine you and you in to flight with everything along recover. a be, visits if will, the say, know, improving linear then, I of way would the last heavy will sort with

that components. of the stacked they're expect, recovery. stuff, expensive definitely be maintenance would replaced, later But we than if some know, needs to the much part the flying to even again, You not line stuff be the the of

Appreciate Thank you. the Got it. time.

Thank you.

Your next question with Greg Konrad from comes Jefferies.

ask may You question. now your

morning. Good

mean, in difference noticeable seeing quarter? overall you repair lines. Just sequential aftermarket given the your last and and what you're terms quarter in you on, know, the across the up replacement and one I any recovery, improvement product mean, I between declines points, to follow mentioned of in of

I should similar between Greg. say. I would it repair. know, similar. Oh! You replacement the parts I that is Good is say the say it's would morning, Eric, This and

zip same in You the but a it's all or in say. all could quarter, code, ballpark. be particular I the know, month similar One or would behind in it's ahead

QX? given gross of maybe there the to compensation given know, you by, thinking reverse can which talk you on volume? growth, pressures, seem for drivers of pieces one some of performance-based those about in moving just maybe outside net How then, and margins, bridge just trajectory ETG around the about the margin you ETG, some And XXXX are lower the offset sales somewhat year was which fiscal

sure is this not the the I'm Victor. Greg, question, I'm trajectory following for margins…?

how as some a you Yes, were performance-based QX kind over of margins, seem pressures know, maybe strong margin XXXX? compensation to had just the which do XX% did you mix lower gross you fiscal where think mean, really reverse, and, I impressive. expense about, of year know, headwinds, and you to you tailwinds

of earlier don't the performance I the good in if mean, as much mix were, individual commercial you independently healthy, the so the of and margin. a told in it would that's operating decent they margin which which had think own strong, revenues our would I their businesses. compensation you revenues, space Yes. performance-based very much level, year, be and on business terms doing mix, at we we in as first, the space expected is the look they be well, were, And that

and the manage manage of This frequently and for us, is so is a fluctuate operations quarter us. so ETG, And for prelude a the keep good I mind, we to Some – really say profitability, I wouldn't over the mean margins – typical particular We maximize the that. or guide unusual was a this earnings us. anything our to us of to past in margins period. course are the is to margins this don't anticipate year manage really into is That margin a this those surprise in to I try of or reflection for the do would that's nothing operations that we Greg our year.

you. Thank

welcome. You're

Your next Khanna question comes with Cowen. from Gautam

your now ask may You question.

Hey, morning, Holidays. guys. good Happy

Good morning.

Good morning, Gautam.

a ask to Hey, of questions. wanted just couple

still if of in caught that I QX? seeing has shipment will. backlog of business? That you on as some you quarter Or lumpiness, it of some – and think last down a that was I curious now delays, you First dampened are up where some ETG, QX built order number the guys delays, cited was kind all been kind

with disruptions – way. mean, I Victor by Yes, is the this

Yes.

doesn't we that Look, would it months just expect know, may say where morning. on up it customer don't more bit. cases know. chain; numbers, that customer of to flows it rising, show good that ahead, is that few and the would see kind a doesn't of the be the through, And supply thing ebbs continuing, you and – numbers it's that side, it – with it come and of But of I in in COVID sort comes nothing pandemic's a a gets and can I would little I go do this procedure pandemic. I shifts started or increase to again eventually the can quarter, fundamentally and then reappear under as up and show It's test through two be to to case and and, know, much an up this began expect control. transportation later numbers business the week the I to acceptance pandemic their that with in fourth that or October you be it seems late. the until thing catches

we'll And gets it. of the so, as see control less vaccine, I'm with that under more it optimistic

the relationship understand the growth glide past, start Okay. And ETG wanted know, that – about basically? because cap Victor, when in wondering, update between of – the and us you lag on on path, I'm what other you've guided primes. of large that, they're defense to again, to follow-up, ETG’s sales the years know, single and you primes talked does in and of a you just terms and guiding relationship defense of just see low-to-mid is they're some year have for the largely digits Lockheed Could kind sort of next you I know, that that that [ballpark]?

Yes it's good a question. and its –

defense which different around their are mind do well then, ETG’s primes of the some more in heavily bit, serve, large little other fluctuate Of that business And which down commercial can as ballpark. is the usually in are, much markets primes, defense space a that numbers. and you we you've a course, half but of somewhere see defense that the it's is the course, in that significant, keeping defense, about in up which although than got

So, down And what the I difficult ETG think find drill we look it's businesses. to down businesses. one-to-one individual defense into primes correlation do a our and we and we is really between the

individual the always turn you, know. in the on. to they're And and they're programs have We honest and on products that don't with that we be

are opposed As need you're customer their a products design the as to make respond a to customer aware, to specification, need, or a specific say. let's we blueprint,

exactly specific And need what example, not it so, can that going they that on. usually a share they'll and but when going us in figure and figure we tell Very it's with not and often specific produce performs out, they may area us, is we function what as an may a very us tell they something very out, we'll does on. it

So, one-to-one it. that's there's correlation a to why not

you a or know, defense, we to years of think As the we'll over sky, thumb, that have And as grow we a let's rule at of the and defense all see, thumb, to plays was how before, it that say, past, out. we've as said budgets rule four just so. flatter some point, don't see than

a And couple of may Eric I just ask Okay. questions.

willingness that the they you there terms know, may And to airline PMA? given any parts? part I lessors] more today has I First, a just more been utilizing and in PMA seeing behavior this was argument you open financial there's challenges. any utilize change [floated wonder are of to of in become been bigger curious, they're the market or lessors where change Do [afoot]

You know, yes. that's a very good question. The answer is

using lessors progress parts. making on are We HEICO

given very that you go promote market product know, the technical careful promote history, out, don't parts, we're You we PMA when lessors, capabilities, to cap and know, technical we HEICO parts we success. HEICO’s

there of, PMA know parts parts request, HEICO to able be these very to they're we've that operate that get airlines if or a that use concession right using promote the airlines way. ER a had negotiate often, successes. parts, careful the because one, majority in upfront to number HEICO airlines Number know, very And we're of you parts. the out So, in very good in vast able lease, the the to

they’re coming power the Number are is number product for So are and two, – by they product, there that aggressively. reduced out parts not on marketability hour, lessors of are the responsibility hour, where offering a like by particular the the thrust of really by using overhaul that hour, aircraft one. very number really a lessors the that those and take maintenance and our

know, So, – yes, seen the progress. we so see is you answer we've

there's However, – [indiscernible] – you been opportunity to signed a right more out of of into because the airlines have were away some that airlines to lot been a will, where, that want to, in in value there there number know, is if leases giving order by and past money. lessors that you frankly now try extract in certain to make fair order

that and So, they're vigilant request in very then get to the able be this airlines need to upfront, to concession.

transact are any valuation that and that around, with just mean, on out COVID more now? you the this the acquisitions? some pounce I loose see of different attractive the that sale questions you in actually big assets you shake care I assets like, there's years and transformational everything do where could think to it's just that actually multi-billion maybe and you'd what dollar your shake and to couple opportunity curious And swing agreement credit know, profiles you with? Okay. for know, I'm or amended words, am opportunities, M&A, else, upon tuck-ins other the utilize you've more does of given if [plug-and-play], available curious, some some for past done over you commentary [indiscernible]

an studying a peers. would on I act we if itself, market know, think presented the certainly of opportunity ever time aware spent And fair and you We’ve our we're amount it. of

And we've you that I differentiates for value think which I company something it's extraordinarily our very larger is think I a know, treat a think or differentiated point a in where that a [seller], a of people company, private public us. model whether well. got we

you out we're ahead and can that opportunities. our sheet use, and I know, could we for out you to yes, that go these do of the always balance market tell there looking So, know, and kind reviewing, you

Okay, I [indiscernible]. apologize for asking

we one right people XXX few a line add the thing, on now. me Let have

cash, So, whatever on you've the you. line got if a to let wonderful you and open me have want want want they [notes], call, wonderful great to a they if talk a for everybody whatever going company make, us and an you if to we're want, invitation, stock, give home, a acquisition give the us if they

acquisition. is we'll necessary of use exchange to medium make know, whatever So, a you great

size. regardless of And that's

It Right. can be.

– past, have in the at large transactions, out we've we've We looked priced some market. very been of and the

them and don't that's good, were, just it's of – not them or we of not so good; pay our Some you strategy. some XX EBITDA, times know, were know, – in but XX you

grow The So, to XX% line stock bottom is price is and you been know, we've bit, [XX]. compounded. quite and a able

in who of unique the to doesn't members. management. them appear and So, think I thank individuals. Victor, in the say XX/X. strength of on in or I must HEICO. capable And myself very they quality but HEICO reports people are my we talking the sheet every their are the again, Eric this HEICO. of is want have and a truly relate the the believe model to very this described doesn't that an really not think if XX-K culture which that the great, in phone, are a that somewhat or I on aptly. it's of and that But very, analysts understand I reports. is want the about of – the dollar; We personally, great smart; a entrepreneurial; them What the any or drives me, is HEICO, the even in extraordinary work they asset I'm they're Eric, of watch They're members but do great team can't the lies array the team bottom And is analyst balance to I success of appear and line that culture investing or Q public asset its opinion,

competitive industry, have much in know, part the anything? so that I the back just that there one share potential doing portfolio, apologize to appreciate more if seen answer. is, in any Eric, and interest changes is HEICO loss given me, against taking for you that last I that what the OEMs you time are for One push and

have. are always business competitors our to that really OEMs, of have what And, for in changed – we they've done. each the nothing very doing know, You would say fight you piece know, they we I hard has the playbook.

You very has know, very I well, we're a distinguished gain continuing you no and and there's think so to competitor respected, doing there we're regard. that change, become well really in share know, HEICO out

parts minority that, business market to having know, within You said our take the strategy share. a is

only know, go for a XX% You share. market we

around to their we're you customers market up for because have well share, know, share. strategy good, able want as very our level share, at pick long terms, we, know, to makes So, ourselves, that cap as make sure also you a for we you competitors market for sense as know, as you that that market that business our which know,

that have have good our plans. our competitors OEM – think I you very got competitors know, good very you business know, So,

going to HEICO think there's well. I think as well. do there of for continue to plenty very And opportunity in they're I

you Thank guys. very much,

you. Thank

Herbert Your from Canaccord. next question with comes Ken

You may now ask your question.

and everybody. Hi, good Happy morning, Holidays,

to Holidays you. Happy Good morning, Ken.

Thank you.

wanted we what around I'm able on any just of and of around have out if made First, that seeing share in take I you comments Larry to expectations could, if to provide could Eric, either if terms sort unpack you the coming think could you're just specific maybe and this? of of both increased to see today environment curious RFPs I be this. I specifics aspects or code you activity would the beyond other of or favor should obviously share the favor, that parts give coming you anything issues maybe, OEM confidence? to gain But availability just you price other confidence out you things point know, is or more with know, there that

what's field large a you really, Ken, in know, it's that's say, I having would price; you respected out it's and It's the I that think, pointed it’s having it. and really, the else, same things competitor; out. somebody driving

models course, sales up. You you challenged. speak you our uncertainty or folks, airlines know, frankly then, their the me this, very business buy try push you you of competitors has when know, not they that, our this why been know on, our what with really to to strong. I doesn't product crisis doubt recession time have is reasons as And hold gone know, our And know, and entered OEM explained fear, competitors, really to

So, what line; these going to customers other asking be to they they us to They buy and develop our that able they're product develop want you go for. – our products believe it. we're want because additional the willing that's know, into are to us products; broaden to

develop only in the ahead repair area but area, the go we result, as it's continue and well. also to it. It's parts a not as on So, in

I So, do market. to competitive a But, you what quite think continue that we're be will the gives know, confidence well. it that's going very really to me

spending, Okay. And an investment any investments. say in maybe more you're perhaps you're capabilities, little Are you identify that I more investment standpoint where there little expanding to organic up or areas, or your as sounds looking obviously a the when maybe the, the know, distribution other you from think particular the about out a from you expanding Eric, opportunities FSG, getting a areas coming and are we portfolio? greater seeing the PMA this? like the across got organization, you've attractive areas, either, ability step it know, you'd Are of repair at, as capabilities maybe

to our PMA I see say it's those. of all No, we're all in and continuing I would distribution, invest. opportunities where all them, hit we of very good are you areas mean, on of repair

that we in think provide a balance I all businesses. those of unique

as helps really know, we've a well sheet got customers to so addition, a our And that then, manufacturers, of organization, able company you compete, would. larger we're our they you you balance as, larger the can top, You else And small we're and the knowledgeable we businesses know, connect and the details operate then, where [indiscernible] them very there's which across know, how like bring. principals. know, as about in nobody obviously our

a very space. in we're think I unique So,

within little you? market, in just commercial government this of the on you more I And – segment? a sounds for be what how provide if of one great. expect as – is sort possible continue And of seeing it XXXX on optimistic break for they're one or maybe versus That's space opportunities the like space you're terms the commercial relative it just Victor, you're pretty on could bit your space, sort side to for final to, color out in contribution you pretty to grow

Ken. Sure,

You don't space, and good for us want by I it's been know, the way, year. this to overstate

of it so way, expect some going to what moving opportunities space, encompassed overstate right that you is and And that referring we're to direction that. the us in it space, would opportunities within looking we have know, why don't it know, separately pursuing in satellite markets set fact, space, there have out for to us but to and space it's very, I don't But, defense a going are but – and volatile us. is I for lower going it's report, and actually, believe defense opportunities won't space And satellite periods next you by where in increased exploration continue moving commercial we think larger interest the hear and in two for or as space that to the we don't the good markets in very I that's constellations, actually think I well refer I that the refer you overall, way, space them. it's is the but in be the more to where it have pun in intended. opportunities, That of the you it think won't lead us. that's the and we is number would benefited us year, consider I break no we satellite the into observation right promising It when direction. we are constellations, want Earth and you new stratospheric, that's market doesn't some larger the realm, some certainly an big of is quarters like and still small us both will mean, some – less for we to the as somewhat market, know, benefit space it's to be I us. by think very But

strong much, very generation. cash congratulations the you the on and and Thank Great. year

Thanks, Ken.

Thank you.

Thank you very much.

Ciarmoli Michael Your Truist. next comes with from question

question. your ask now may You

the Hey, Thanks good Holidays. and taking for guys. question Happy morning,

Good morning.

ETG, the detail growth what know, Victor, think quarter, in number? the organically much And ETG, you're XXXX, maybe I do negative know give stay you it can going you to the XXXX? I know grow you on do organic but actually just was organic have growth? was not to on in

reverse order take me there. in Let it

I have that want didn't would I I I can XXXX, I I think can lot but dictate organic the happens. the year to don't have what growth guidance wears on but further right early we in get there if that at growth we are that on toward point, – would the is fiscal – get but let's we and of But XXXX, we accomplish why working in how year. let surprised companies that the optimism year in. this But now, our are certainly and see what be organic things it's will there happens a in which year, and issue

Okay.

terms [indiscernible]. of in XXXX, And yes Carlos,

How are Michael? doing you

Good.

segment was the down the in flattish XX% aerospace aerospace. was roughly organic a year, follow to is of principally so it's growth For driven and by or ETG to that commercial and COVID the that what roughly Remember percent challenges them Other segment, to so absent year, this was of expect Victor some earlier. mentioned as that down. businesses we our that trend of and did FSG same the do above logistical going disruptions

next So, for year. I share Victor's optimism

businesses that can think the I grow.

anchor, of I the the portion year in of aerospace towards bit an FSG the think that then in early a commercial probably that of the the pick be end and up mimic of and recovery XXXX. will will the patterns part ETG

it and that’s Got you. helpful. Thank

growth. outperform. And what, you, deliver, like add, with very cautious, honest be organic for mean, businesses me conservative, can we're I our know, we you I always, to say that, – and internally, know you budgeting very let are over don't in to particular, I But me,

planning a that's internally. comment know, we little And what for we're rather deeper on further so, that get year, the as you but I'd certainly into

don't that know, XX% out on Got it's if it. XX% so taking bad know the this it last Eric, Carlos I And guess, or or debt then, like FSG quarter. margin, Got looks quarter, I you close it. expense, to

that recovers? get get about seasonally first progression strength, of but know, a total you teens? the is know, upper the usually weaker, get expect to we back think expect don't to you guys to maybe as, up or second that, you this I kind the the market know, You into know, the right we but should mean margin you XXXX to You margin the quarter half progression teens for And do if I can recovery, all way expect is I that way XX% FSG? the continued

I think this Michael – is Carlos.

right I think you're on the path.

of we early part mentioned improve a early slightly we the see progression continuation a margins gradual what upwards the them Eric think earlier, So, XXXX. should as of the towards are of you the about And and in bit you'll that year, thinking back of into in back-end part year of think end I a next see during period, saw our with in terms improve. of QX I XXXX

us, talk cards point, moment. the the about But, visibility, at I do next have know, need. prepare you when the I've – hope teens? and I we guidance now, you restore I'll right mean, that's do So, about all you I on give could we think you can details point. at Yes. better. we – But we'll know, we more hopeful low for to to definitely you I in all what obviously, I'm Michael, to the year, get at that when is we [indiscernible] some told But could

is And this Eric. Mike,

have Just also you of important answered picking earlier, to other very, could add one what you the generated of people. in you you care of but know, some operating lot was with take their a it higher sort up felt we know, really aggressive I know, margins, are questions to people. color, on, we think companies know, our And, I of

other their You way. result, know, but margin got that's and have important, people sacrifice had have they that know, prepared, people say, most other hit that sacrifice of a less to not members be don't that know, And we you a hang dedication we’ve recognizing people know, say taken in fully the and tried we to companies shared the organizations to and act could to, them we with coming will to act loyalty done as to and on other that think possibly been you and then because rewarded, than HEICO you crisis. and that our But them team their haven't, we've know, the tremendously. everything in you the we've way our invest they had say really are out

of you know, can we're you and think very that get margins cognizant why increase we and, moving to the know, forward. we them So,

of margins? – helpful. Got one, there? XXXX? last year, think performance headwind took how a mechanics you on into should as color that given, net we I it, just about – just do And neutral place next Or, think you of know, one in then, that kind slight Or is the mean, around a any to what we just know, comp being

comp is let explain based general, know, specifics. on You on Carlos the incentive performance. I in But

the has Carlos first, be kick But performance explain comp will the there incentive then in. to the then can So details.

it on and at better, there I Well, going that's year. are said commensurate that hopefully will whatever next would growth increase I profitability you're performance with as if have – our growth. number to be any I some it incentive wood, with expect XXXX But commensurate be don't our Oh! knock I Eric. think comp things increase, a I thinking and on improve to do growth the up, progress in comp as mean, But profitability, goes side, couldn't the into to But, for about have comp operations that that's modeling you profits and estimates know, move. the we're your I expect XXXX also. performance-based levels and our

Yes.

very right, Thanks, Got it. All good. guys.

Thank Thanks, Mike. you.

[indiscernible] from comes question next with Your Sachs. Goldman

your ask questions. now may You

everyone. morning, good Hey,

morning, Good [indiscernible].

and and, XX% the then everything Hey, talked you back sequential on higher way XX% just on there of the the said higher the FSG a out that number drop a revenues is care using the maybe so, just everything funky? back XX% you've EBIT the number on know, decremental have on – and components, you on Should you'll staying but about cost when quarter is because is margin, incremental different one up. all? you I its Or just you've Recognizing cost adjusted sequentially still the than of incremental, actually, taken said just you just at about sort have know, the you that costs some kind and of coming good it like incrementals. irrelevant

don’t relative would four I some reserves, would inventory repeat which headwinds had say will itself – the in quarter think we and No, – to this that and in the on Carlos, margin is forward. I QX side I going

bit on that of our incrementals. a So a had drag

so So, basis a decrementals you've quarter. do focus are much I I But think probably incrementals down. I captured better be just going think wouldn't correctly. one will on then than it the go-forward on

That's the in the bad the margin expense obsolescence margin? expense the gross separate from inventory that's segment debt in that's

That’s correct.

quarters? over the in Can normal of that's last quantify you two been excess much how of

had And our I between inventory the in two the increases $XX most last of about no, couple reserves. Yes, – in worth quarters, that, million think incremental probably evenly in a fleet it last of result quarters has plans and reduction some six recognizing over of last airlines out that discussed come certain the of retirement and been many months types have of their us [indiscernible] of planes. we've

[indiscernible] keep than that going have rather let's to some took product of sitting did then we that shelves, we and portion very need if said, probably and for to say, airline what so, conservative to ourselves that try AXXX, fleet. down, And an support the of put fool we reserve and on approach, the inventory a the is around might

aspect, take will, out margin would charges anticipate got way and be don't I the you now So, that of one going if of [indiscernible] forward. we’ve that we that our didn't repeating those of kind

million Sorry, $XX XQ in beyond… and that's both individually, above and XQ

quarter. [Indiscernible]

quarter. $X million a quarter, $X a million

in $XX the back of know, million you half the totally, year.

And of $X XX% mid-teens I in half in it take adjust it than working of for then a I would you then, debt, – half be Okay. I of that? incremental should bad the XXXX it adjust in that, already. your margins know, million mean, better off quarter back for would XXXX back a the put I more the even if

At high. that this I would that know point, no, don't go I

help but that I'm would to I math, XXXX, that into don’t you that you get happy now. we with As know to I right guide

Last you Okay. is incremental said quarter, XX, that… than better was

rise should our faster than incremental our said I quarter Last decrements.

Right.

don't gave went It I numbers. think any I but down,

Okay.

base, product, know. are product easy faster, incremental [indiscernible]. it's it's like diverse These don’t to rose really on math. each segment we the which Because of and such just so know, has which mix, do – dependent one a got HEICO part very you not We've it's

Sure.

make without incrementals does where more look does out know, going know, difficult there pinpoint, like. guidance you are it a It little – that to what to you

off vary obsolescence? Appreciate whatever of Was that the quarter a think with going calculation of margins guess statement can or I right, a company's a as XX% of get I'm framework, be being had the it's going get of trying a inventory sort that. to that was at working incrementals in sort the is broad That last a incremental, the that's company or wonky. to statement just incremental to are knowing you it's whatever that a quarter-to-quarter. incremental lower of framework margins long-term that – lower the Or decremental? just the

statement. specific were looking and think it's more we adjustments at don't I think long-term a a view. any framework. that do long-term quarterly of It's broader broader making I

Got it.

always flows. of leverage, company The consistency as to, and of a conservative maintained, relative has Okay. you reasonably margins know, the cash to sheet, alluded balance the degree you've

didn't just repeat You've you terms hard negative the to leverage cash rethinking on you to been optimal harder severity of downturn, balance have flow forward continue you knock to returns? will quarter? to, wood, sheet what going have a Does of be equity that deals enhance and know, yet, in handed ever do the

You wanted to?

Yes.

Go ahead.

a we This do is that's pattern strategy. our growth Larry controlled [indiscernible]. What we and in model is

Right.

XX% we historically, can continue have accurate. and bottom for XX in years, aim a of we've future, XX% mean, the XX%. we done that annually near that that's to we said growth over we I So, publicly And think line growth. relative

strategy no have There growth, and the in So very that anything it to need we out do order for go us the implemented. do is to using we growth, that greater. can well controlled accomplish debt

benefit the we're you approached line people transaction, bottom transformational the talking if we can increase flow. about we're bigger. we ideas to something And a it XX%. Too or HEICO can or bottom And the major acquisition line. that they're Now going often, really investment focused do HEICO else? asked, saying yes, is, is on answer increasing bankers with see We that, the double a have and would by cash and topline. But it make

we we opportunity how itself bottom if more taking debt quickly be increase or to the other at so, do want some to on the the like would we as do companies. would XX% times of at debt. you is feel and like on key lot are And repaid steady to take it We to do seven presented don't target. and probably which line, shareholders, we growth [long-view] do grow would The to be know, we do that the need don't because up six a And I we think, the there they the to and we too comfortable nor idea XX% the to that speaking shareholders.

When We slept banks it's growth. a weren't every So, in us. sell market the a debt on XX% March, calling strong, we the at and night. steady well didn't collapsed

know but if don't I – question, in guess that answers I So, your the…

does. It

we the strategy is And do you debt that's HEICO’s way could it’s people criticized said, some by been you don't at known look put who've oh! on just this but I all you Yes, it. the guess conservative, that in past, that's more so Why can so… really stuff? it's and – say what we've and we're and for,

think element. growth, with normally of share Eric, the how sort or if but then, know, Larry there's know, situation faster, be of a that have controlled has you you so interests? growth that that, intro opportunity because rethinking of an above understand controlled product I product How to time Got you of will industry would competing question there's presented, you intro, any if that is go which growth, it. given periods XXXX you with XXXX, new controlled market the pace beyond you correctly, last And pace that, in to me. that's know, really take and one, I but is through related helps mean, could those new of the

see sky we will the think I we as the will strong, growth. will to cash line and the do, bottom as real be what flow reach and it long it's benefit for we going that

know, last You XXX% income not quarter, of the and into was can cash. see financial we in we're you reported engineering had

anything cash So that's will. line. it, bottom we the [indiscernible] that, It's to accomplish our flow; whole for game, if it’s going And do to the you can sure. do we are

Okay.

that, I said completely. having And agree

I development which of that a coming level lot the different good level customers know, they're our current with. got, You that of know, that we and a out you at level. about we're products sure a It's excited is product we've new think made

So, that continue will I really expect we to stay the course.

could our airlines of continues if The because up. where use go for this their driver airlines. area the right what the we've rate customers, of they got know, be you doesn't you you see, would And of going in then, we prices from in a, approval part our know, now. improving major was a we know parts exist, now, that at know, very their But were it very right clearly encouraging you if to revisit out strategy. Now the homes. to lot I were, also a we're their focus very It significant customers way say, we're to comfortable know, it. working HEICO a that continuing with change significant our find on And cost

Okay. so Excellent. much. Thanks

[Noah]. Thanks

[Noah]. you Thank

Your Ducharme comes Sterling Capital. from question next with Colin

ask may your You question. now

for Thanks the opportunity ask morning. good Hi, a question. to

of suspended question, for be, your for ETG, the you where trying know, segment with to within visibility commercial then, And you realm help detail I pre-pandemic, maybe in us of portion to see the compare that Victor, you apart roll best overall you re-establish for there? for trying think to given the commercial of a offered, you what First the to you up just today of would could characterize, can you where need commercial ETG. of see and some particularly that that guidance, seeing you the that it had And just you and guidance? visibility incremental Carlos. know, follow then understand, linking us just that Victor, confidence aero have you're the I'm kind business, comments really kind theme of that pre-conditions aero get best or Larry you've characterize then, know, that framework from maybe just you on us perhaps to portion visibility through from before help the, you still next. of leverage, confidence for if does opportunity, good business outside some know, was can Carlos up – within

earlier market, late, is what's is was increase inquiries, demands, activity that the the it increase serving economy, It's now. on high-end increase in general there would Colin marked few and pre-pandemic question. year. over in in the broader electronics And going – this marked things that months, we sort. Visibility what economy, businesses consider interesting hi, more that what certainly though markedly better the of was marked that an So, found we're mix than things the Victor. of a orders, and seeing has level are the to a I connected activity than and good been it It's the less coding in past a a of in is

looking interesting and orders they faster days pull me leads were course, orders. not were. phenomenon early they where There the seems it deliveries. that China, be where asking They're the chain East, asking very supply to In people the making to more delayed. stories, with for were the because to originated. so, that optimistic. pandemic, in worried customers accelerate the are Far were virus things And They're generally from had an of It of we particularly actually that about of getting concerned than product

were they And about so, that. worried

And way a and the going all And flipped now sudden, a reverted. that and around for it acceleration. it so, there And other was then while. an that's was of stopped,

How does is, that One the up? hold How things – so that so the about is the of does does we'll of to within on? And we're how a seems very I and to out positive visibility Where up? of and that hold be long think about that well, work? stabilize start pandemic. it question key anniversary does few months, the

result order the is more well. We've By And commercial or be and so, XX% know, ETG improvement commercial aviation, some there aviation, nice that's the much as and way, as been everything the seen a improving of signs more and will usually so that positive of that. feel positive much outlook. future on you

that I medical think wears us as some potential the the things on there. that year do think because upside better. had will offers slowed Also, side, down I on,

there you to doctor, pandemic, If switch there not were procedures and a around. I – medical start going et recall, was fewer will just cetera people to think the the during that

sell. of that businesses our The some impacted one and components that So the timing. we of is question

rule of say thumb. it's visibility a why I as that's less So

I our in and in already than right mind, a right little more in exactly believe through it way question the it you generally we're know, So, halfway quarter. and is is halfway through, speaking, fiscal keeping turning through the actually The first way. turns when how halfway

[indiscernible] So, through question a how the that excuse of bit fiscal fourth, or a and have end that it quarter, third just up being but me Was most XXXX we'll you our see falls does as of push XXXX? it. starts to it It fiscal, helpful? our that the – the out. XXXX, people’s that at in through [year-end] the becomes odes it But at than through of to can end wind different in know, little filter does push

you. thank Yes,

welcome. You're

we that that airlines But guidance more anticipate do and confidence know little our so you think from little bit an once – of the air spend just as aircraft have not that know, maintaining our number about this, they that. much flights will and a give is in moment. you of reinstate probably bit are predictable cadence little are add or little of – us this so the is is if acting thank them you just there that would, during being a interest fleet more stable, visibility and how doing and differently more, would try fog, would, to if fiscal XXXX a the the see flying lift in and if the the far more to But progresses. year as I at our the right you know a I of will would and now, people organization orders bit customers best there you it’s as [indiscernible] their broadly

point we'll will we the reinstating and so. discuss and if can, team that and – management we So guidance do as

Okay, understood. for thoughtful and quick Eric ups having a conditions I follow one appreciate for then longer, earlier you I a not competitive maybe FSG Larry. just Eric, changed. as heard of within that. more think, then And I say couple PMA, one characterize you,

you've with competitive know to currency conversation CFM but any the announcement evidence that pandemic for movement link of announcement, this potential that wanted upended you from some whether past. much Just regulatory you what Larry, was anecdotal And whether there's that been of a transformational it some great. any for or for know, will call than soil there to just an M&A over potential guess you’ve a be deals, larger to I year I tangible tangible then and deals end-market, verify on see guys for some a quantum in and done that used and standpoint since there, that had it's, kind has ago potentially little we've now plant wanted PMA. seeds that within back loosening of to

created what time, odd transformational shares was, You years of, and know, ago, know, been some a it the at we I could that I remember deal. in guess was have A anticipation you where the XX

of equity hump? XX:XX I've for that know, history the have some you, to share with upside folks, you know, know, is participation but, and calls kind know, thought you over wanted to the put that always that You currency to care point know, ask sellers. a there takes kind just ownership you stock, been get the, typically of So that the you willingness has pay of you know, you sticking with

the you consider And the criteria, transformational horns you perhaps were stock use know, a like sticking has you're using, a a of more that? little of so, because and more since you that been of at larger do a you been do conservative you much. change you've is your i.e., stewards deal, such stock know, know, pull over because move a – longer relatedly, good criteria to then, all? for know, when haul, you And thinking caution if have perhaps you more financial the you’d Thank that in for a – accretion the, become stock and very doing point? little structure you purchase know,

came great but and the HEICO have that and structure a back history that's and you forgotten the XXXX it most long and into shows all we go being, great have about your that good So way really how and considering were stock memory. people the is question way of you a the to a you transaction understanding A the

your we'll that answer that using make cash; notes, bullion]; the it we’ll use stock; have and we'll we'll any to use set question, explained as use long any use can. So will use medium meets line. We'll forth, criteria I flow which that [gold of as bottom we accretive bonds; I've think [indiscernible]; acquisition is cash we we use we'll exchange

every in strong mind, industrial difficulty margins our Now, we less cash It's science which very because management and margin. the or there. we than flow. strong even this margins stock the The we shareholders. largest selfishly [indiscernible]. aerospace generate If good up, not price is margins operated benefit reason Most like group keep Number make strong two, completely or we're every we operate. trick rocket [is generate use with are are XX% is goes And cash of which a the yes, really just it every line, we companies in we the bottom of companies good]. compensated shareholder, the stock shareholder our goes aligned acquisition out because or ownership, to because and

sucks shareholder a and are other margins even the that the XX%, benefits lot the of every to the the operating we can with The have. companies, However, I In management generally That it for a the or the to topline own three – if $X billion compensation many topline wants X% They management equity, from compensation companies, bifurcated. grow In therefore, use the $X [indiscernible] is. or because management owns it. topline, motivation little what grow believe goes to to is is managers number case, double compensation, our sees of requires But we company there billion, of whatever from double. generally her million cash. cash, the years the large $X up his shares. number seven the $X who the

you the if I public, if XX the exact and make million, financial million if we're the the million we define up our I'll it know include goes stability if and we XX $XXX $XX own the it's of value. very up points members, success but goes points, for and So, or stock million you, people, or $XX XXX(k) that team number, because $XXX concerned about don't in our equity

goes Of Now, million? $X do I not. course, if up my care salary

for us you to we will we we're but give again, generate question, know, they we whatever to your normally I you, give. value. use, answer make to sell now only said, however whatever normally, said, you And acquisition, I we'd want currency we're flow and we’ll accretion as We for and it. came want cash cash. give want, prefer we they cash, to transactions can and you talking – an do stock. that well, stock example, somebody this So, we must tell will to because negotiating, And

you we stock, you will cash; want you. whatever You want, give want

does So, answer kind that of don't – your question? I

I you. have my but thank [indiscernible] models, to work

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fact, we Bitcoin. In if to Carlos, ask got use I can

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to have use. we do, Whatever we'll

Hello?

Thank you.

with of Louis Raffetto UBS. Your line next question the comes from

You ask question. may your now

guys. Hey, good morning,

morning. Good

morning. Good

sure it down will you is have in interesting as quarter. little, on or the just I look Victor, fourth can you deals thing was was missing the I but to you, well. just was What go Bitcoin. the this I to make back a baseline organic into far ETG? I flat, like, you a the Carlos, hoping mentioned growth what know, one XXXX? sales you [indiscernible] for there, us so Was for based you then, And either acquired know, up little? help want

Louis, It – in was was flat, the was Victor. This It fourth it is flat quarter. organic ETG. growth

around That's $XX fourth ETG correct. in the acquired numbers. we sales in had probably correct. quarter, That's million Louis, the roughly, worth of in

will… So that

Okay.

that You And, of of QX, guess. acquisitions, got know, run we going we occurred of that to will of the rate, won't you and that that. course, August no in benefit that’s know would and most a most reason forward – probably the continue so I decent have think

you've before MRO perfect. back XX MRO, know, and quarter, in follow-up. was last you, parts you to kind kind one same between down for Okay, down that's know Eric, XX And But of so, just mentioned parts one I that of down to if it XX%. in ballpark. is business go I

kind was you of So, any in parts color there give are we a was looking MRL improvement for and Or an can – there? flattish? additional

take mean, of said, numbers it at the I – me my was same in as here. let some a all the So, really same look I ballpark there.

that a wouldn't there of I So, say difference. much was

You you the know, be, comp, ahead, quarter, know, you can can other. on prior versus one in one the any know, based one be

Support know, You at in quarter, we XXXX, fourth XX% the growth had in organic you look Flight and in XXXX, comp on the XX% against if growth.

know, you So there. it's XX% over, growth two annual quarters

can know, on this. So based around, move things you

the way which that component would approved parts pipeline, I that business is can normally having than general, repair, down know, works component the would by you up some and the in has that the be customers. less You in been say The the parts end in repair. –

repair. too around component parts, bit as quarter-by-quarter. be first you the could to result, lag I little repair the I procure wouldn't where as that And back back get can more they But was repair there to that the know, a in lag wrapped after So a but parts because ballpark. do bit, come would there. in a the to it can a little able it down little vary say I was it a than because comes have Component all, similar a component said, parts of be order

perfect. I Thank you. know, that's

QX, to similar It’s welcome. say. I'd You're

have We a Ducharme Instructions] follow Capital. with up Colin question from [Operator Sterling

You may ask question. now your

Yes.

did a I on regulatory color a follow that year with little hadn't Eric, want that up. PMA, competitive changed. to get over ago the your just action a for linking conditions to Sorry FSG European comment the comments Thanks.

upon Colin. the would you Yes, that I we're next you, the I'm an we to based encouraged we had heard. glad say to that we've Thank question on conversations before we – continue answer – we went that. on that asked because opportunity to be

You very product in about, DER repair. believe PMA engines, good whether that sent been speak there's it's like for regarding know, parts we engine, don't we It know, you alternative customers, progress has message you that do a particular know, to or but lines or area. clear

out – results coming think So been, action. enforcement have again, there you some conversations I that that good – know, you nice know, it and good of

Thanks.

you. Thank

no [Operator are queue, further Presenters, there questions many continue. on you Instructions]

everybody on in If call interest I there HEICO. for to and their are no want further thank this questions, for participating

by know, you As phone. to remain we available you

any in February, of health. call QX the when to way happy, questions our you myself, And late on speak, Carlos, have very a continued which Hopefully, will you And be we sometime be information to we’ll like, we'll of I next COVID good wish most received will be vaccine. Eric, your report the to that want If other or have you can season. you'd further respond. happy healthy holiday Victor, you all

you thank And again, So much. Happy Holidays everyone. very to

gentlemen year fiscal year end presenters. you fourth quarter results for ladies you, call. thank XXXX and joining earnings the Thank of And and

You may now disconnect.