HEICO (HEI) 27 Feb 242024 Q1 Earnings call transcript

Welcome to the HEICO Corporation First Quarter 2024 Financial Results Call. My name is Samara, and I'll be today's operator. 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. Factors that could cause such differences include the severity, magnitude and duration of public health threats such as the COVID-19 pandemic, HEICO's liquidity and the amount and timing of cash generation; lower commercial air travels, airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services.

defense, requirements, complete cause demands, foreign contracts; and reductions and our increase export customers costs security could restrictions; to homeland reduce existing cost governmental in creditors, or specification competition which U.S. and an could to policies spending from Product by or new and/or which space and sales. regulatory our

tax of manufacturing could defense, space, and difficulties, acquired outside customer synergies reduce product which manufacturing introduce including to to governmental approvals aviation, and/or interest, profitable at domestic operating ability product inflation our of services development and could foreign impact make conditions, the applicable and new telecommunications revenues. growth; which credit businesses; could products achieve costs or including sales the increase development and our costs negatively within levels, rates; our sales; economic Our and or and and effects foreign acquisitions, sales industries, electronic which from our income medical, risk, any currency exchange and pricing and obtaining delay ability

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

I'll Chairman Mendelson, and HEICO's turn Chief to Officer. the Laurans Now Executive over call

Vice the of Co-President Chairman of and am and Announcement thank We CFO. of we Executive Co-President to Carlos Larry Macau, President Fiscal and 'XX Corporation. I by us, Earnings our I Flight Samara HEICO joining Mendelson, Victor and Group, Mendelson HEICO welcome HEICO's you joined morning HEICO's Quarter call. you, this Thank CEO and and First on President welcome and Electronic you President Mendelson, Technologies HEICO's Support here HEICO's to Teleconference. Eric and for this am Group; everybody

our a moment and very, detail, delivering operating would quarter. members Before HEICO's like for results I another reviewing in thank of team talented very all to strong take

performance fuel and excellent Your continued operating financial optimistic peak results. on our customer continued have never more to exceeding I expectations at about of future level personally focus been HEICO. the

to per services as impact acquisitions. from 'XX $XX of share $X.XX first and 'XX. to quarter products per quarter first of commercial aerospace $XXX.X fiscal net XX% diluted of I as million 'XX XX%, quarter highlights improved record mainly and like fiscal and in summarize quarter Consolidated fiscal XX% compared organic 'XX, and income the our profitable million or increased These operating the the that sales first fiscal would or income in fiscal results XX% 'XX. first now in 'XX Flight quarter the of fiscal to by results. the Consolidated net from sales first growth Support, and reflect the up diluted our of as share well 'XX respectively in net a was $X.XX

improving of fiscal of and exercises. option Net from income benefit of favorably 'XX first a first was the 'XX the attributable The interest, by first the say and an of million net in 'XX, Flight fiscal in XX% in all-time both fiscal benefit first organic $X.X sales and our stock quarter income from first to quarter and to $XXX.X and of quarter first XX% an mainly and respectively, fiscal of acquisition from impacted in up was income 'XX services. increase, if that the and quarterly the HEICO and million was increased 'XX. The attributable increases tax up of to 'XX, is overhaul XX% fiscal fiscal parts 'XX, the so increased Wencor discrete 'XX. operating Consolidated The parts I million, I record in million impact aftermarket quarter growth over fiscal EBITDA the quarter repair and set replacement myself. net Support the controlling in reflect from XX% $XX.X quarter were first demand enormous principally fiscal that of that mean quarter $XXX.X 'XX. Group within our of

down of XX debt-to-EBITDA Wencor, our months XX, net of leverage pro 'XX, to August Xx projected post-acquisition. When January from above forma was Our Xx. was as 'XX. And pro leverage within XX, we and X.XXx had acquired we was forma be slightly as that X.Xx to ratio XX

track time, was up provided from this $XX.X on I we continue XX% and remain operating flow to target. million this first 'XX to in to that Cash am the fiscal in quarter At of that 'XX. pleased by $XXX.X first activities achieve fiscal quarter report the increased to million

who given Lifetime our operations Entrepreneur the extraordinary paid accomplishment XXXX. we semiannual including I celebrities dividend for the celebrities our Living In $X.XX to who that aviation, 'XX. entrepreneurs, remarkable leaders, astronauts, Aviation represented from have Legends Aviation semiannual since become consecutive Legends the share, industry flow of Ricci this cash dividend Organization. pilots recognition breakers, Award January and strong pilots. Kenn of cash January received become were 'XX, from forecast in we of people record announce Aviation Living The innovators, is to fiscal to of continue regular and per XXst In cash We 'XX, honored

profoundly was for and honored include honor. and special and would this such organization pioneers aviation that humbled with this I a storied unique space me

in members make HEICO's it that great the team is. who really HEICO However, XX,XXX-plus to company ones honor the that belongs opinion, are my the

December the example ways it's HEICO that we following in our into support accretive grown do to overall and value assets me and Honeywell our has closing. our customers and recent increase cockpit discuss display Boeing earnings into the license an The to and acquisition adjacent to avionics products and our In industry. from expect to display activity. license broadens exclusive year legacy asset 'XX, let of XXXNG/XXX acquisition another markets for Now proposition entered International. acquisition certain to capability exclusive line the be capability acquired the We

At He this Support is to Flight now time, discuss President Eric? who the first Support and will Group. introduce Eric of results Mendelson the HEICO's of Co-President like Group. I would Flight HEICO quarter of

The expense. operating replacement $XX.X the parts million income Flight sales expected, income 'XX a up 'XX. sales of first increase in to increased The fiscal Support up the organic net growth. of the amortization fiscal to first XX% Wencor strong quarter lines. of growth, million first organic our and first record our in sales well as Group's quarter in the net The in repair as million a mainly 'XX, sales inventory product of reflects well fiscal XX% obsolescence XX% record Support net The of overhaul as services Flight to in parts from fiscal operating the our of the sales high as first Group's growth quarter expenses 'XX. of and reflects $XXX.X and profitable net quarter pre-mentioned million which increased reflects due increased $XXX fiscal acquisition in growth from 'XX, increase fiscal quarter first perform by above from aftermarket organic the 'XX The acquisition quarter impact both continues expectations higher, the Wencor net offset principally asset teens fiscal partially intangible from to 'XX $XXX.X the

performance-based was 'XX. of was The in fiscal in 'XX Flight XX.X% XX.X% margin XX% reflects in expected quarter the slightly Support first first decrease before in intangible the Group's small quarter gross amortization due quarter expense compensation expense. XX.X% partially by margin compared profit offset to the quarter fiscal versus The in first 'XX. first Group's Wencor previously of the mentioned the margin margin Support of lower of asset The operating in expense operating operating principally acquisition 'XX amortization the as intangible to a fiscal Flight fiscal higher lower

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

of The operating Technologies first quarter 'XX $XX.X acquisitions and quarter fiscal $XXX.X from fiscal fiscal from million sales net of products, up a The increased and income the partially 'XX. XX% organic products. million our space in The the fiscal is electronics, first Electronic ahead. the increase sales to Eric. increase in -- quarter million medical organic our Technologies other the net you, impact mainly 'XX Thank net jumped 'XX lower offset Electronic in net $XXX.X to was our of double-digit attributable aerospace sales excuse of by in of me, Group's first Group's sales

remainder net sales and strong growth forecast fiscal to continue of 'XX. for We the earnings

as 'XX quarter 'XX. $XX.X compared Group's of million Technologies in in $XX.X Electronic quarter operating the The of first fiscal the was million income fiscal first to

profit is and We in expect the our activities. sales and This scheduled start our with The over our near-record internal quarter because income schedule supported prior future quarter due margins the research to fewer by was of plan. the of and expect backlogs ahead from principally revenues shipment first quarters, the shipment decreased our the our with slight to that backlog, higher combined product we new record resulted operating and schedules quarters with development in shipment subsidiary line something is in long net term. than our in scheduled

we our public being interaction expect earnings then, For high with variability will quarter to those familiar this that our quarter. to quarter last with said weakest quarter and since first the our remember year call you results

efficiencies forward proceeded we increased in growth which gain sales Naturally product future research in and this expenses investment, lower development SG&A product and increased our in recognizing quarter potential, So backlogs revenue that quarters. favorable less so the expected. record mix large the we our just can new as resulted also

sit pleased forward continue that important we fully the and As we to these I'm activities made which those I investments that here growth. provide today, fund very

beneficial 'XX sales net of our first cost related closing to of in to Importantly an quarter the were the results. fiscal acquisition acquisition increased our an

the forecasted just selling, to research I of sales due supports our mentioned net percent of what expenses previously remainder product general principally the expenses compared we consider first The in quarter both point of true our what and fiscal -- closer the around in basis ETG's 'XX as materially margin, the shipment product partially fiscal amortization be lower well a to growth as The mix before and reflects sales costs. in XX.X% by margin to after and This be the as was offset first we sales new the development net acquisition namely discussed schedule, operating fiscal ahead. quarters and earnings margin to Again higher the which administrative of expect XX.X% strong others as to amortization the XX.X%. was XXX related lower improve quarter acquisition 'XX, 'XX. for and increased was margin to

year, decrease the to expect of our net sales net For we SG&A increase. a full as expenses sales percentage as

I call now turn the back to Mendelson. Larry over

you, Thank Victor.

Victor ETG they should it the is quite think, "Oh, clear a expecting are the misunderstood this result some it year. think everyone not very second end the and call think quarter, from quarter doing I well." be that through and Victor explained of first in to I the And well. And different we people, ETG from on said, I

sales So the earnings to fourth and you understand that the the second from come it quarter. is should through a business lumpy and

products. principally materially look as sales majority future 'XX contributions fiscal and fiscal demand 'XX, we stronger to and our we acquisitions be from our to both ETG of Support the by ahead the quarter. well the for quarters to in anticipate Flight ETG of as As fully growth we expect first remainder than the 'XX continue Notably, net driven

In flexibility. In to financial for continued new market our plan further strength our support with services like as we incredible developing products members our team to commitment their closing, HEICO. our commitment to addition, penetration to well I again continue would as and and maintaining and thank

businesses highly favorable a Our excellent all to produce growing strategy results for of continues shareholders. of diversified portfolio

never Our I great end to I HEICO's and healthy markets bullish confidence. another as very 'XX said are have more future. been Thank continued be is before, And looking about you year. fiscal your for

guidance. We One now do other not any comment. give

to. give to us prefer asked guidance. have We analysts Some not

have I net is to XX% income XX% grow publicly However, compounded. our to annually said that goal

Over around this know think, to you we and the XX% of to years, that last upon clearly highly everything can or we at and have tell attain the which our somewhere that done future XX%. based the am without current any XX confident the I this for -- will year. we future we on actual XX% in has that been acquisitions what based moment, might XX that and that XX% make. I I I that expect growth year growth

would and I very open from thank like you listeners. for I that, Samara? much. to turn call operator, Samara, So the with our again to call questions back the

with question take Robert [Operator Melius Spingarn first our from Instructions] We'll Research.

of Mikus wanted airlines, they've on year. U.S. Scott the plans capacity is for ask Spingarn. I Eric, some This to their the you for Rob growth readjusted

that's Some or concerns are the issues, domestic just to -- due the aircraft of delays U.S. it's GTF market being but overcapacitized. delivery related of some to

seeing customers but low-cost are in are large So and you accelerating the United orders order carriers network change from any their where down the maybe carriers, their orders? patterns slowing Delta are like

So thanks your across question, be the in to extremely for we to continues strong regard the Scott. the what With market see board. market,

things point. some little where the are has around. the of strong. lower-cost get yes, particularly commercial think little really at shift order -- nothing this I natural with of been a There can patterns But lumpy large in carriers carriers. a are There bit weakness pronounced

don't there. Right need Airlines any are trying to there are to of I of to inventory. parts, a wouldn't want I continues grow shortage weakness -- their predict still still now, be So want parts. in to

So we as market strong. see very the

it. wanted little than more you've to Got I about half then a Okay. a owned for Wencor year. And ask,

what you far? was practices practices best some And HEICO Wencor the could I of are learned wondering Wencor learned has from that best just from so So the has that some if of share HEICO?

beating a expectations they that's people, area, those been The has expectations Yes, the the and business, are question. we very Wencor had numbers. incredibly strategy, been high And even acquisition it, in it's exceeding single strong. for every good the

e-commerce areas. technical particular, the HEICO areas of in Wencor at in I is benefit best has as been Wencor in looking also then from would Wencor that strong some think where able benefiting there But the us HEICO other things particularly say as in practices. area. arena. to arena. strong is Specifically, and technical the well from I And are

I benefit been in has think to Wencor able that area. HEICO

integration. So we see without continued synergies

members DNA each to we -- continue, the all businesses, foreseeable and team own individual strategy, other operate the the is So the or independent future its obviously, continue its own HEICO. how And want to and its time That's of to plan business. own take ones. when of of is the themselves coordinate operate our for we and Wencor as we an P&L, to business Wencor of HEICO the care have being HEICO that's units strongest with for

between the look sure separate successfully. separate supportive what say some their -- if of each able coordinate that's do the the other. of I and activities very HEICO feel and look Iberia Airways look or France the and to they're I that with independence, groups. the And the somewhat we've customers, European they KLM are analogous their that but relationships British Lufthansa offerings scenes, the Air making So touch the Wencor behind been schedules product and cooperation and people, they would between at is and We and Swiss you cooperation, at maintain or number at a and airline of

change an continues business, no plan autonomous individual to that. as Wencor So

we to for focused our And we sure making value we of repair example, rationalized technology. excellence where sure in we development and provide a don't products centers customers overlap, that result as of are some product tremendous the different on have, offerings various of making

excited and Wencor result headed to as result about additional want And significant have with customers a in very think us our there. they I really happy HEICO new where a view light been of merger. really the as business. acquisition of the a are So different a They very we're reward

from Noah take with question Goldman we'll And Sachs. Poponak our next

ETG just give know shape quarterly the margin. you the X given or if that talked Does that it remaining one such to XX%, don't speak over makes I guidance, here, quarters around have the And had quarters that? that to know don't margin year you'd year? for operating full about you above stand but segment the being I the of X the quarter, variability Last that sense of

than about quarter point, sure finishes our based think answer I'm and fourth third the is the build. fourth and a yet as point high play third should shape it is this that quarters, on at quarter Noah, your the whether above The sure think over is year not to or little point, or schedules, a our I yes. Victor. we the And fourth out, the far that. little question quarter, this that Sure. the shipment to is how less the high not the it will But that's is remaining of out.

guys XX% you Okay. And year low point you operating first I look the also segment year. to of Eric, margin. the quarter said around the GAAP margin, on think be expected had the FSG the full the was And on

So that or if of in know, what there's how on us maybe playing the new number see out full I the a don't given for you you rest update the did the quarter? year first through could year, you

was the strong. [indiscernible] get And continued XX.X%, very Well, strong first when anticipate you back add so extremely we about We at amortization, quarter to strength. XX%. the

shed a I Carlos out to and numbers. forward. be we budgets with our think beating I maybe want that. on But We those ahead bit end and folks up go light our to often conservative some and specifically wants come our little going numbers

than FSG to you margin of I view for we that's that, what but year. looking and okay? this should question. sort on XX% I year. the would margin, company think was got I don't we XX% has better the could the out, what Noah, felt the do what say, the when my always So can mind I like felt OI I -- my planned. between and do We that's probably on in produce segment segment don't were was hear it's Carlos. think Back the me changed going December I

did in And quarter a first FSG. so and plan strong the having on we --

So to quarter But see I thesis for I the up. into if think can of that, next you. we we'll the call, course, and range that we hold as I'll continues to up that second get get tighten

Okay. this the it's presumably, than widened, unique position such your how everyone, a that and -- I to the lot. that guess, now. appreciate X-plus widened years that. had parts for gap a unique long now We PMA know thing build kind price because One that's of seen in we've has have time and more I I in peers ask, really wanted exactly don't aftermarket maybe but you're spare has in vis-a-vis sell other strong PMA, pricing for in maybe it you pricing

have you you want the both. so take to more the you do share And and And to I'm do of hear normally after that take manage opportunity how normally will you go price triangulate than here? curious to how you about talk more strategically which look those term medium or will you than or you to over

short to pricing The is we also and adjust Noah, a I share. market our do to think to answer grow and question. need both. great to we that's reflect We insightful costs. need need increased

the So strategy. that is

number a have of prices purchasing have parts before there been inflation. at was old cost customers We fairly who

make to cost of that very sure that. And understanding need we are our we So I pass customers think along our increases.

want Some costs, our customers happened are, fine our costs new we discussion obviously, explain but -- what's only other are and go them reasonable. the what the and Other over get ahead we -- it, and we customers this just and incorporate is it and have don't show the to to pricing.

a has and pricing lot more our conservative that been gentle think be. it I could then honestly, So

the the I it are another TransDigm. they everybody a we're an not but XX% mention And way, price call by want that to -- OEM, it's was twice knows out OEM Our substantially year, and don't from night will last prices, last once I time raising XX%. increased seeing now and competitors

know TransDigm. TransDigm So people are it I interested the story, in but very was not

pervasive how the shows increases it are. So price

the increases. frankly, on that share I would up additional same that be need additional new with able So at we've time. development be And think, to to And capture and it been going dollars product we'll think very I to market mild. I the spend reasonable have think costs

we where -- well. I increase, don't I regards nobody airlines, X significant are the gentle think the restrictive share mean has you to extremely all talk been We've And if those But HEICO that you mutually to anticipate frankly, say. So gains more recognize price price we have as the on in increase. areas with as price been wants exclusive. airlines increase,

next We'll from with Deuschle take Scott question Bank. our Deutsche

challenges the have Boeing's did in Specialty growth quarter? in Products Eric, any January FSG to impact

some new had Yes. I a as would been has say bill result, they impaired. challenges did. Boeing and the

we're So while aftermarket rate you to would soft, on to very impact as bullish future. had products. definitely lot high sales side. because lot like a and missile of were the A very organic a long of an little the rocket lot reported you rate defense these products of specialty out if product understated was the -- also are point on defense that that programs, specialty be, is will, growth I what know, the And specialty lead caused the very teens. growth And programs, on space does a motor time in items. and

order of book We've our on think very, some stuff, be bullish future most sole-source We the great high-quality, well extremely the we very got we secular embedded. will the and the producer strong. on feel low-cost, is are trends So that future. good. very we're that We're

down. still not mean, historic our think is figured think all of products more together. concerned that And Boeing also their it we've company. I'm And being rates. to challenges I they've about specialty that Boeing a specialty all obviously, great read at but and products I will get get act at they'll So the out, some grow about that permit I all will sort got

Okay.

some that allows think lingered overall specialty to to in quarter? related next in the of Boeing would weakness growth maybe in to and probably you defense growth products but return it February, So the side space is that fair be the

what I need sounds at to you're saying look next but specifically to regard logical. quarter, with

of ETG quantify up that in you there's quarter? specific think at can then areas how pretty any the if Victor, would then investment about, are to I you And And to R&D much hear. be interesting was talk Okay. able

I our broad-based. I somewhere more It than the There because scenario, say places But I would is think I the -- in we we see about about I that past. all to XX%, was in to R&D. which where invested like pretty companies up believe good investing pretty broad-based that. like by like are were quarter know and in was XX%, see R&D something that of

increase So it a was significant us. for

Okay. last shift were there changes content your the [ in F-XX to And any with then question. Victor, TRX ] ?

By was closer ] the I alone to the increase Yes, Could for quarter. it's [ way, for XX%, the question just think, in quarter. the the repeat ETG you in that, sorry, net please? that you ETG asked. I'm

changes there whether was with to [ TR content shift the F-XX It X Yes. ]? are any in

it's We But have overall, material in change. fuel it's to do I business F-XX don't content. us. material not think a a as

take We'll our Solow with next Larry Securities. question from CJS

the Wencor on segment. also Eric, the just thanks and for color

that. on couple Just follow-ups of a

it's high-teens the a to year. growth think -- relative growth, experiencing comping you're I So last mid-XXs

on difference some Obviously, of to the creating are congrats end But gap -- bucketing color sounds remarkable, up trying some I'm of to growing. just still still there figure and else share catch gains? you demand little market Just maintenance reporting, obviously pretty demand you're are mentioned those the they the you Are give still levels, So market the kind a that that's more some that. inventory from? trying up in there. market occurring. to can gains low, like The maybe? back coming where of us you if out end still of the differences building to but it's growth

little equipment in repair side. a would difficult on Larry, say are things to strength little is Airlines parts general, I'd get the as as really more more but I general, repair bit compared across side stronger, It's aftermarket the very in side repaired, the has strength side doing parts be a I say, well. The would the Yes. been within happy support hard. also answer but well finding in site side the to that. the board. the to is

grow As we far gains, as market continue to share share. market

with us. happy I speaking are really Wencor acquisition. from result that of information are with number a very they customers specific sales a very, really yesterday, have customers our as head the happy Our of And

a While HEICO space. always the in significant was player

significant. was a on products really they it you this true spent amount because opposed can and fact able strategy. true And is to, advantage we excellence, a was Wencor, of structural in creating advantage customers the so a And it broader customers the where as are has of where happy each can focus a of broader of capturing benefit offer that need line, competitive our a niche-oriented suite business And fuller focusing it much is really of centers more could. doesn't a to to as that we've on energy much each that together from now more sense. if that of recognize And offering as will, by suite fair business reinvent come product is these makes wheel, lot provide about we're the to they and it

the the have market gains. breakout But is share that gains, between have share we don't number two. pricing definitely say I wouldn't had leading market some So a I there.

then switching gears I that. just Victor. Got it. to And appreciate question, And

Just outlook, growth it mode. sounds slow just on little and the like it the return to some least quarter like and that at a good last but was continuing that's on deliveries, year, sounds to had aerospace follow-through

in medical just I margin you was time sound space, slower in there of those like other categories. a they're Just terms all due electronic higher the like mentioned consumer and few sounds it know categories,

the of think your I changed maybe think outlook in of the be would sort full still ETG on electronics for the last be in slower. Is revenue of call, that terms growth? those, some you mentioned guys I and piece there Has that of anything composition had would terms year case?

green some, pretty year We're right year. at what as next I ground I'd that what before, the than businesses, much It order as are they reverse second. they Thank shoots quarter of sometime our -- all-in -- the And levels of higher see gave during were expectations for I you. we expect not few still in of think the overall. general over up I the now, markets And in overall, So running expected beginning we're in all I talked call. about prior then the at -- couple one the proverbial but to start would. the a our to to call, that last orders kind is quarters,

orders as onto the so on, [indiscernible] would in factor And room. times we in you then turn I get here the later revenue. if that overall the direction off in year, starts of terms the lead the in and in backlog expect right to that to on --

Got you.

Okay. I a lastly, those QX. think usually rate, to And stock change And the comp tax outlook? you know this get just year in full quarter. any then Great. the Carlos, I lower benefit little

No.

I XX%, the XX% and between full for think I year, Larry. run to continue think we'll

I with quarter, what make we for thought effective about year and up our than last the and about normalized think I what we tax X the but expected. way we've better seen real rate the we'd rate first then it I history It thought still in year's Qs surprises. no benefit, in but more effective this the is have quarter X, half here in the would it line X rate slightly past. in I played and catch out

And Peter with Arment we'll from question our Baird. take next

and factor line. you that's if you're lingering maybe still kind a of also just seeing supply a the quick from impacts top on Victor, that's one on the chain, impacting

sure chain this whether seeing asking. normal of question. for a is has fact, It new And will has I'm sure what the wouldn't in point, it's good I'm much market it. exactly almost not We're because at It's a normal. not say but back is and to -- really been be, that challenging improved, the not would supply continues to where labor back I it -- was. be. the to -- I while for Thanks

qualified so these good, impacts not into supply much, just And businesses. that would chain, the as days say than people more, I probably if getting us the

update could on -- business for, you the owning is if a after year, right? your now maybe [indiscernible] And how guess, us I doing just almost how

and of they expected so doing it. see they ahead. a of bring and good. acquisitions good lot But we've so we Also, up they're of a far, It's them, to happy very number we transpire. been We'll lot we're happening looking a at Yes, to things good able some. bring as whether own potential there essentially

Carlos, a I on thinking just is about expense quick for to year. interest rough for one you're the goal And delever. how expectations Carlos. the to continue Great. obviously know

-- if -- to quarter That's quarterly now, $XX right million everything I'm $XX $XX so this what million. Yes. expecting our million. to pretty we expense mean plays about out, run much interest booked I

we of a never Eric, as function, we many break Larry and businesses is down, debt rate during Peter think buy a know. on of pay bit influence at quickly Victor I can cuts, sort some if a debt you how on few off a little I I want -- how pay catch a to depending also certainly So tailing that that the down the will have year.

award. the Larry, details and the it. on appreciate I congrats Got all

Carlos something add might had this what is just to I Victor, to say. --

at an structure. strong. Again, pipeline, to whether to way continue capital acquisition of would of fit be reducing size. have we excellent our our will while right the look But to and acquisitions historical Most are We continue -- that very we mindful those being do overwhelmingly in And remains that the historical in we importance acquisitions. seen. debt

Just correct. on completely Victor act. it's a balancing to said, what It's expand further

At to We are if business level, it. time, our creating we expanding, have see bottom outstanding trying watch make flow cash the And we debt acquisition, in reduce line the of an we're it. and we same income. will and to

made because we very saw, So cash positive flow. will you and very accretive it Honeywell be a recently believe acquisition as we

ability it made actually using debt debt. acquire overall the where which and to debt. to by HEICO reduce income our debt But to reduced it our we bottom to more was decision get the and helpful you So on line,

you ratio a very, know, So the act bottom because, as cash are focused debt of it But this all we balance watch on anyway, actually to line EBITDA. benefits we flow. very balancing the is carefully and

we make but take some to one we use very, it very comes. acquisitions desirable So and debt, they might will these when are we'll as have each

careful balancing here HEICO Again, it. very bottom cash line flow. it's and are with act, grow we're We to a

Kahyaoglu from next question with Jefferies. take We'll our Sheila

spotlight. start going to I'm ETG given the Victor, if it's you margins with okay,

similar the as better headed be are should some we sales well of rate talk into it bridge it much QX on improvement, you color that as us XX%, just so about and QX? pricing margin the in mix on the less gave was expect and Can we how XXX You maybe sub-XX% think pressure. said, a about favorable even basis mix, R&D up implies and you points to about QX how maybe

on rate One, based a the couple shipment not a I surprised on sub-XX% would QX. Sheila, the to Sure. sales it schedule. based be in was difference things. of Number two, see pricing, was

it call customers normal some pricing cost thin. contracts term recognize that pricing maybe the in accept instances longer prices higher can our environment, instances, would which a have and I a other that lot -- we is the So where means fairly we

revenue was So It's necessarily, a ship. rate. were supposed production normal and pricing the when all the side. not to it's of on the it side, way, scenario Really, shipment by kind on schedule the the about things

the So to keep we level loaded. try facilities

lot to businesses or test of that level due customer, delivery loaded dictates try for upon a production. stay it works in by order the for when how the and But is Our it us. acceptance depends

would margin, again, north of which, would -- margin margin amortization. So operating course, be the emphasize, I the just of intangibles true excluding XX% GAAP north to quarter, expect on XX% of

impact the on terms color margin of mix of sort quarter Any the headwind? it. Got in in

I the is lower the I don't which than business were than shipment our brings Not out period had that other in margin. think they But been schedules what in really to break want the businesses our down margins, higher-margin but business... and prior

think you how than parts? at for to it's part the one way if sales the Eric, not. the this best? per okay. it number hopefully best synergy is PMA And a Wencor. about about of is it do Wencor, at Well, is HEICO on greater Xx Is revenue we look based at

about marketing are you think So it? way to channel, potential how that that a is have if you the sales about opportunity? thinking Or

without think at -- are I strong other. very customers, the the that sharing of extremely as can think it. relationships, number way as number are side getting there sets to hand, businesses we into it with product I'm is side. the two, help other specific other. really help a one The about one I those helping well say That would each each Number basically on as sales can relationships relationships also how the one. Wencor complementary, that's HEICO And and just looking

decade up historically, us significantly that covered the they taken over we've margins and thought frankly, an you would our If look where quite last beat you even I be.

can that they're as And sharing that lot as there's of terms is of repairs the there regard. side in on repair -- using parts. in more that I the PMA think occur a well potential over also There's some already DER

that, go So I that advantage. and we're the an working and placed side, to already cooperating think being used that's In that's together, whereas now as really very defense that third-party There's strong to internally, are out Wencor, companies and we're build likewise well. group over specialty for businesses can manufacturing our including product in a our orders pushing specialty other of manufacturing. lot that our

you've have that's very that find their So very When talented getting And got running something people as cooperation, really these not really companies. of who think are businesses, motivating just intrinsically that's exists a we I by businesses, mastered broad-based many said, that I integration. without feature. them who autonomy, level it's in

mean, XXX overall talent performed and a HEICO, they people to treated, It's so of we've the they're in And because real for of where a that. skill there. size they in do here. at example, the have shows, trade number they that's from knocking our enjoy be really roughly and of HEICO shows, heads If well costs across of business company have and little opportunity I yes, together. not Farmborough and set that this booths do look to think others for all to you I here and will XXX going synergy way trade out got of Paris, there's an what

There'll So responsibility the will trade we strategy for And and be other really want to HEICO separate. Wencor own shows the together. be businesses and to results. be their each where they have take can certain

these So getting benefits. I why think that's we're

America. Perez Mariana Mora next question from our with of Bank take I'll

the for Could the is this that So driving market? R&D? first what please the of What it the What the Is guys in R&D. are trends? Because about R&D, this it's the technology, much award. don't trend, I main trends But it pretty on main this congratulations, discuss increase Larry, an calling -- are that R&D? opportunities My follow-up know, first end said increase. ETG the increase like all, is you on seeing is particular you are that. you board are are the across actually question that are

the I for our it's the super It the a of is businesses could And amount Sure, it tremendous in is doesn't of opportunity I the It what businesses. clarify this mean is or of by sort products. should call, the Victor. the or a is majority when and by trend. good majority There business evolved of say the newer is but question. mean very I -- every across way, that I kind board, of business, what

necessarily is an right? improvement consider is new. change, wholly Sometimes In is product. evolutionary just a it it would more typically or not it's iteration revolutionary developing what our It's an case, version and earlier not you on that of something

And customers so in our of you for what our products. consider would we're demand high is next what seeing a number of generation

a not just It's customers. to not needs It's of has responsive individual the Bluetooth there not Bluetooth. implementing though it's more Like design been our up based. for So that. everybody developed. many came technology was as It's that years like example is new and

what how this pay, option? arenas, are like this still And are calling products usually the what R&D, customers on are you How specific for improvement?

of I with So between. customers. by our it's initiated calls it's our to we cases, businesses it make mean In customer-initiated. those in to other and visits had cases, our leave and regular somewhere or In businesses one each choices. subsidiaries meetings some

the And programs, they're may customer aware on. of so be new

history and let's the something develop typical New respond invest a one, depending that's they runs the fact, products. suppliers, is, as willingness probably And with likelihood need. business mean the companies customer to the their gamut, orders. are their as will on and always will, dime. of most customer, always honest, the to who to designs ask be relationship there the but that into on depending they might the it But turn partners particular needs upon architecture key it the the the that to in vendors, their I well

then not it. may And buy they

for is broader a government do to convert if factor on a So orders? they Are is customer? are our we what from it? What hear with in the that the they shows, Is with things program there standing that Are a program? to, consider fact, we that. likely stand behind PO What history it's we record, that is example, do partners, people, customers, getting trade even other the they community? Intel like in defense where and of

level those of though, that. the with down company responsible on for customer business, be think, decisions experts. that not understand I devolving So at We able is And each talking the from to honest, believe it's in lowest high, our beauty, that, is the to experts is best. be it to

adjacent my up opportunities how you acquisitions could to But license Could upside ecosystem And shop. how it be and they for under see actually opportunity like M&A. the to in or compared this could I unlock could that opportunities you those [indiscernible], you long licenses in terms please please recent Honeywell imagine company this you like ends license more a is of discuss revenues you. last third-party can when think Like do about the able HEICO discuss a one MRO on outside if take another them? are to

answer Sure. I'd Eric. Mariana, about happy to this be that. is

of has decade. number last the over HEICO So done deals licensing a

within well. well as number just got when over you has component look very those in businesses ETG, footprint, then Flight XX another repair MRO HEICO we're particular, doing at Support. the And in licensing So are on them deals. And there of there experienced individual

licenses incredibly the buy it business take really technology. in these basically So niche the able and to that's understands already and been put market into and a experienced technology we've that

working running out the we're So and then are cases, really already items, hit the able the other can customer people buy license, to a who it's with seamless ground we to in with go a when customer many experience. on

HEICO of to this plenty continue area opportunity grow spaces. white So think in that for I there is adjacent in to

I that. can very about product at our tell used reception They're the to experience with for happy been our time price. regard to customers has and been Honeywell the strong. turn that extremely They've quality, you

reception the strong. been So has very

well So the for as net I There's it move to think as for industry as a that Honeywell was well as increase a HEICO for both great customers. benefit our here. just

is there that I additional opportunity So think us. for

And we'll Cowen. take with our TD next question from Gautam Khanna

maybe Congrats level been I different channel lot it and it if whether on any the you have like. restocking, the the was activity destocking talk in the seeing indirect anything wondering market, be channel could -- by distributor in in OE, just discernibly you're aftermarket, and asked answered. of seeing versus whether be if award. A questions you the and difference direct guys are

Yes. is We're -- Gautam, this Eric.

So on you or to what to aftermarket comment to pattern we're doing regard OE you order know me and on? with want like how

Maybe selling order -- like channel. in aero, just you differences of versus outside seeing patterns the defense and those there are distribution is distributors, direct any

gain They have market inventories. right continuing to distribution Well, so share. They're the businesses our well. doing extremely are

same I thing. are -- repair we likewise a customers -- over very the working Likewise and as where area where it's happy of think the we our result with PMA area in direct, the them. it's sell

strength And our support to better able frankly, the overdue in board And So I both. parts really the are be our tough is results across things if the the would With side, say area. vendors quite they regard availability a were on shift behind. where, product this even flight I backlog. very think are could to good in

I the PMA both as the well say as would distribution.

capacity. would normalize, alluded things November I will there's But course, the think ways. of lot vendors excess by would a supply to the But And after get are unfortunately, as Things we're to tight. to end the some isn't now hoping 'XX, really very result -- material Things continues been of challenge. then, have are of a our I have that they're is chain labor, of thought tight. that there -- Victor challenges sanctions. no There by definitely, regard Frankly, struggling. be a raw as in really better And things more. have normalized with

sort think And right the cycle there curious, that I talked as margins what to better. XX% Wencor -- better Yes. be response Flight at... the maybe is term I just but is just going and the than is -- ballpark pricing to would looking like of is said like There mentioned opportunity, question, in you Noah's well. longer what you about the XX% forget previously, that, any as is 'XX, Carlos, range Support you -- like your mean, I'm fiscal some is somewhere you've in of it mentioned confidence doing sounds

I you years, if if to the from decade, see Highly a just back look you confident. I pre-COVID want XX think over and history lesson, back mean do last go you'll back and just I a look pattern if of But a to that. where trend, think we're the FSG sometimes it's that flatter. continually ekes look out XX, a returning mean, you XX I points XX, little basis year. at

annual basis, by I an think that's -- we the on way.

to a I we're grow that heading continue We breakneck in can't pace. at direction. think

margin back incremental nice we're what see we to I'll business high now. jumps at I our get normal pretty those point, growth up. level you'll that's some a call and at think cycle, a take And right when

back fluctuate the what margin more in this to, what a selling. at as demand small increments scenario bit usual, are, eke hyper expect volumes, a with could that, hard our I customary then, they little want some market, markets growth say we're point but of Until incremental that to on business as is would But I in do the to see. out when say don't gets north, we're being end and I would think we softens based as growth

modeling as area. thinking XX% I keep going that in always the focus to By to as why better. the very I there. business, XX% do about mean We far could we're and wind in up I feel the way, that's confident your But for that

Subin with our we'll Instructions] take [Operator next question Bert Stifel. And from

for Maybe, question Eric, first you.

driver your internationally given it And when pricing to it's customer? new strategy in what more and an just you a relative function pass-through. of customer customers customers just just a new Can is new what inflation come based to talk from being a existing percent about also, a growth primary maybe about customers new this comes talked customer increasingly where is year? of sales You

a it's don't have that Yes, We we and much because customers, good with deal everybody. pretty many that's new Bert. question,

I customers. So that our new airline occasionally, there one. our biggest an when penetration can is say a to gets to be would formed, market our with opportunity continue increase existing

as is pretty So mean big we the much ones, really in new world. I opposed where to we're with dealing get everybody but that do the is ones. new opportunity

a new type that airline there be gets created, opportunity. wouldn't of like So

or you're you're of passing And that through inflation an just penetration, of the gains instead a to about just terms market terms product you But pricing, you're sort market. customer, them a opportunity of when think share clarification in into sort of if maybe just guess, that different of there, existing I Eric, like an pricing gently that, a if selling having new greater in existing market selling an is function is more product, margins? you're if

yes. The answer is

price the matter for. it's a a what to buying course, it's contract, provided product contract, And different the duration are of contract obviously, which if that's there if the protection different would under of and things customer So then is the for they customers. have terms of

So we're there. accommodating very

to as get price based that what that part haven't customer list start to wants buying However, on purchased, then a if customer old price price would a -- was. they opposed if a new they the the

incentive as So big with started there's get definitely possible. as in a locked us early get to and

Okay. Larry. it. Got help, Super

FY or of if were to growth the to get your follow-up. and on would last mark, to that you FSG, were be paydown? the think faster seeing of a guess, at I Just end XX% we the today. curious you positive you outpace, sort that I'm view XX% one more XX% ETG towards function you're year on reaffirmed highlighted what debt of quarter you for Were side, just the to 'XX, earnings based If least

go all We largest earnings in could it And really and cash that the And to Well, like don't -- to the leverage. to single don't the and XXX(k) so In I XX%. company growth. other. to Carlos be get We'd do of flow, to up I however, consistency. over to think We generate control know we to within X down and so try continue like X. year, to consistency. we're HEICO, our do. probably XX% we like we like order investors be investor result get

go -- would could over So it, point, we XX%. in know it to projections, we my I this I predict thought -- XX% this possible. At within is go XX% moment, our will everything But over possible we own at it's that. be wouldn't

And conservative. guesstimate XX% however, is do am we within will be say to I that own that Again, I my XX%.

are very if know that our businesses is I your I strong. that really thing the other question. see both So of don't But answers

backlog You've because quarter to various heard a The of weak the ETG ship couldn't a second fourth the first supports quarter. really we from and described And quarter whole these the has things. story. Victor huge increase the is

long to growth. Wencor I over, Support it's this what we're very return slowly do predict very go level reasonably question, So synergies, we And really the your we of But might the at some which to think call it we answer build within to we'll who And point, I too. would XX% the and to but out want and profitability. I strong, with Flight if of gaining XX% a acquisition in. should can't and be it. definitely normal possibilities doing the see ETG similarly is

Raffetto question our from with take Louis Wolfe next Research. We'll

of guess, XXX strong trying bridge clean about that FSG specific be point the there with Was anything from to I'm Carlos, you too sort weren't pretty last improvement of talked sequential dissimilar mix? sort just basis to on sales quarter? in XQ. expecting, I margin there

the and behind. say second. that soft There performance close kind The -- of leading in had were is Specialty pack. the -- was strong went was products would we parts I repair

I shipments. or think on little more believe repair parts based predictable, and that than That it is not, a business business are. the

I the mix? anticipated of this going question don't it and No, or down any if -- slowed would. But the be has products fine rest have QX there is, thought the it's is had expectations, has in is and that one-off year. slightly played pretty I to it we there So we out did, the for -- your strange specialty way much

one then, for All right. Great. Victor, you. And just

those defense. markets. on quarter anything I the some of in other then aerospace strong didn't and hear out laid You

part So I a how know just that did quarter. big of it's business, the sure the in making

improvement. You've back seen sequential -- I some Did seen step of this quarter? know kind at you that continue Does have all? we

Louis, overall Yes, all-in grow. continued it's to

were I segmenting in the what out direction. as the was we but so was right that and And defense before, weak is expect areas moving as

M&A Great. and All Larry, And leverage. you kind of one for then, you. about just right. talked balancing

you is if that Or I saw as guess would we willing you you of leverage kind the year, limit? a a think So deal really hard put of is about rest be above would that the -- there? to go Xx

added sensational looked super back at consider it into the as very it are really very, careful us result with the rates line, Xx was area, payback very and and would it it. We're and below of to we also we if high. is Xx a answer and The drop the it bottom might debt the interest

now So interest rates, little because it's acquisitions to of these make a bit harder.

us answer sensational be So your would make go to have question, to above Xx. something it to

seen not have sensational. I far, so And so something

the estimate incurred the might it which if you XX very -- that's the get said EPS and that think did But because along we make believe cash Xx, as debt but that's would the make we would of do which acquisition and debt-to-EBITDA that. we release, the to we highly XX Xx way, to the Honeywell, as as just find, unlikely time the So the from we from, under accurate. accretive say, press earnings I of would it's we in down we arithmetic, would flow actually you months we head do a we ratio, go ratio with produce,

it of thought And that don't the protect just one don't financial our ]. to be incurring a of kind in thing, and very make Mendelsons any to to and kind egg debt, again, process. want there that's takes say [ of nest going any willy-nilly. remember So lot problem. XXX(k) we acquisitions a We why that I as family And we're careful get into we're

great We flow. cash have

We have a great business. It's growing nicely.

very we'll careful that that answers if question. with So be know your debt. I don't

additional And there are questions. no

would I everyone thank HEICO. like Well, on interest call to their in for this again

this questions, teleconference. And again, if Carlos, you That's the quarter you a available have if we Eric, of teleconference. other are wonderful speaking you you. thank to look myself. Victor, you don't, forward And end on contact Have second the We can day. to earnings

this for call. you today's And Thank participation. your concludes

disconnect. now may You