Heico Corp (HEI) Q4 2020 Earnings Call Transcript

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Heico Corp (HEI 1.01%)
Q4 2020 Earnings Call
Dec 22, 2020, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

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. [Operator Instructions] After the speakers' presentation there will be a question-and-answer session. [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; HEICO's liquidity and the amount and timing of a cash generation; lower commercial air travel caused by the COVID-19 Pandemic and its aftermath, airline fleet changes or airline purchasing decisions, which could cause lower demand for our goods and services; product specification costs and requirements, which could cause an increase to our costs to complete contracts; governmental and regulatory demands, export policies and restrictions, reductions in defense, space or homeland security spending by US and/or foreign customers or competition from existing and new competitors, which could reduce our sales; our ability to introduce new products and services as profitable pricing levels, which could reduce our sales or sales growth; product development or manufacturing difficulties, which could increase our product development and manufacturing costs and delay sales; our ability to make acquisitions and achieve operating synergies from acquired businesses; customer credit risk; interest, foreign currency exchange and income tax rates; economic conditions within and outside of the aviation, defense, space, medical, telecommunications and electronics industries, which could negatively impact our costs and revenues; and defense spending or budget cuts, which could reduce our defense-related revenue.

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

I now turn the call over to Laurans A. Mendelson, HEICO's Chairman and Executive Officer. Thank you, please go ahead.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you very much, and good morning to everyone on the call. We thank you for joining us, and we welcome you to this HEICO fourth quarter and full fiscal '20 earnings announcement teleconference. I'm Larry Mendelson, Chairman and CEO of HEICO Corporation. And I'm joined here this morning by Eric Mendelson, HEICO's Co-President and President of HEICO's Flight Support; Victor Mendelson, HEICO's Co-President and President of HEICO's Electronic Technologies Group; and Carlos Macau, our Executive Vice President and CFO.

Now before reviewing our fourth quarter and full fiscal year results, I'd like to take a few moments to discuss the impact on HEICO's operating results from the COVID-19 global pandemic. The results of operations in fiscal '20 were significantly affected by COVID-19 global pandemic. The effects of the pandemic and related actions by governments around the world to mitigate its spread have impacted our employees, customers, suppliers and manufacturers. Since the beginning of the pandemic in March 2020, we have implemented health and safety measures at our facilities in accordance with the CDC guidelines to protect team members and mitigate the spread of in COVID-19. Most of our facilities are considered essential businesses and have remained operational during the pandemic. We are thankful for the outstanding commitment of our team members toward our customers, shareholders and each other during these very challenging times.

The Board of Directors and management of HEICO are truly humbled by the dedication of our team members to their company during these unprecedented times. Currently, we believe the recent vaccine progress will most notably result in a gradual recovery in demand for our commercial aerospace parts and services commencing in fiscal '21 as demand for air travel slowly recovers, we remained very confident in our ability to offer cost saving solutions and robust product development programs that we expect to increase our market share and allow us to have even a stronger presence within the commercial aviation market.

I'd like to take a few moments to summarize the highlights of our full fiscal '20 and fourth quarter results. Despite, the many challenges faced in fiscal '20, HEICO has continued to generate excellent cash flow. Our cash flow provided by operating activities was very strong at $409 million and $437.4 million in fiscal '20 and '19, respectively.

Cash flow provided by operating activities totaled $110.2 million, or 177% of reported net income in the fourth quarter of fiscal '20, as compared to $124 million in the fourth quarter of fiscal '19. As all of you know, HEICO's most important metric is cash flow, and I think that the results of 2020 operations, particularly the fourth quarter are clearly indicative of this success.

We are encouraged by the sequential improvements in our fiscal '20 consolidated fourth quarter operating results over the third quarter of fiscal '20. And during the fourth quarter, we experienced increases in consolidated operating income, net income, and net sales of 30%, 15% and 10%, respectively. In fact, despite the continued impact from the pandemic on demand for our commercial aerospace parts and services, the Flight Support Group's operating income and net sales in the fourth quarter of fiscal '20 improved sequentially by 78% and 9%, respectively, as compared to the third quarter of fiscal '20, a significant improvement.

The Electronic Technologies Group and from now on I will call it ETG, set all-time quarterly net sales and operating income records in the fourth quarter of fiscal '20 improving 8% and 14%, respectively, over the fourth quarter of fiscal '19. These increases principally reflect the excellent operating performance of our fiscal '20 acquisitions, as well as continued disciplined cost management on the part of our operating teams. We recently entered into an amendment to extend the maturity date of our revolving credit agreement by one year to November 23 and to increase the committed capital to $1.5 billion.

In addition, our credit facility continues to include a feature that will allow the company to increase the capacity by $350 million to become a $1.85 billion facility through increased commitments from existing vendors or the addition of new lenders and can be extended for an additional one-year period. We are very thankful for the continued support of our existing bank group. Their loyalty to HEICO is demonstrated by this credit facility amendment, further offers us the financial flexibility to pursue our disciplined strategy of acquiring high-quality businesses at fair prices.

Our net debt, which we define as total debt less cash and cash equivalents of $333 million, compared to shareholders equity ratio improved to 16.6% as of October 31 '20, and this was down from 29.8% as of October 31 '19. Our net debt to EBITDA ratio improved to 0.71 times as of October 31 '20, down from 0.93 times as of October 31 '19. Keep in mind this is after making six acquisitions during the year.

During fiscal '20, we successfully completed six acquisitions, four of which were completed since the pandemic start. We have no significant debt maturities until fiscal '24, and we plan to utilize our financial strength and flexibility to aggressively pursue high-quality acquisitions of various sizes and accelerate growth to maximize shareholder returns.

As we reported yesterday, we declared an $0.08 per share regular semi-annual cash dividend on both classes of common stock, payable January 21, 2021 to shareholders of record as of January 7, 2021. This cash dividend will be our 85th consecutive semi-annual cash dividend since 1979.

HEICO's strength in the face of challenging business conditions, coupled with our optimism of the future, gave our Board of Directors the confidence to continue paying our normal cash dividend. While this is very important to all of our shareholders, it is especially important to our team members, the vast majority of whom are fellow HEICO shareholders through the personal holdings in their 401(k) plan.

Let's talk about some of the new fourth quarter acquisitions. As I discussed during the third quarter teleconference, we completed three acquisitions in August through our ETG Group. First, we acquired a 75% of the equity interest in Transformational Security and Intelligent Devices. These two companies design and develop and manufacture state-of-the-art technical surveillance countermeasures equipment. Next, we acquired approximately 90% of the equity interest of Connect Tech. Connect Tech designs and manufactures rugged small form factor embedded computing solutions used in rugged commercial and industrial, aerospace and defense, transportation and smart energy applications. These acquisitions are expected to be accretive to earnings within the first 12 months following closing.At this time I would like to introduce Eric Mendelson, Co-President of HEICO and President of HEICO's Flight Support Group and he will discuss the results of the Flight Support Group.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thank you. The Flight Support Group's net sales were $924.8 million in fiscal year '20, as compared to $1,240.2 million in fiscal year '19. The Flight Support Group's net sales were $193.6 million in the fourth quarter of fiscal '20, as compared to $324.7 million in the fourth quarter of fiscal '19. The net sales decreases are principally organic and reflect lower demand across all of our product lines, resulting from the significant decline in global commercial air travel beginning in March 2020, due to the pandemic. Net sales in fiscal '20 follows the 13% and 12% organic growth reported in the year and fourth quarter of fiscal '19, respectively.

The Flight Support Group's operating income was $143.1 million in fiscal '20, as compared to $242 million in the fiscal year '19. The Flight Support Group's operating income was $21.5 million in the fourth quarter of fiscal '20, as compared to $62.2 million in the fourth quarter of fiscal '19.

The operating income decreases principally reflects the previously mentioned decrease in net sales, a lower gross profit margin, and an increase in bad debt expense, due to potential collection difficulties from certain commercial aviation customers that filed for bankruptcy protection during fiscal '20 as a result of the pandemic's financial impact, partially offset by a decrease in performance-based compensation expense.

The lower gross profit margin principally reflects an increase in inventory obsolescence expense, mainly resulting from the announced retirement of certain aircraft types and engine platforms by our commercial aerospace customers, due to the pandemic's financial impact. Additionally, the lower gross profit margin reflects the impact from lower net sales within our repair and overhaul; parts and services and aftermarket replacement parts product lines.

The Flight Support Group's operating margin was 15.5% in fiscal '20, as compared to 19.5% in fiscal '19. The Flight Support Group's operating margin was 11.1% in the fourth quarter of fiscal '20, as compared to 19.2% in the fourth quarter of fiscal '19. The decrease -- the operating margin decreases principally reflect the previously mentioned lower gross profit margin and an increase in SG&A expenses as a percentage of net sales, mainly from the previously mentioned higher bad debt expense and fixed cost efficiencies loss resulting from the pandemic's impact, partially offset by lower performance-based compensation expense.Now, I would like to introduce Victor Mendelson, Co-President of HEICO and President of HEICO's Electronic Technologies Group to discuss the results of the Electronic Technologies Group.

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Thank you, Eric. The Electronic Technologies Group's net sales increased 5% to a record $875 million in fiscal '20, up from $834.5 million in fiscal '19. The increase in fiscal '20 is attributable to the favorable impact from our fiscal '20 and '19 acquisitions, partially offset by an organic net sales decrease of 1%. The organic net sales decrease is principally due to lower sales of commercial aerospace and medical products, largely attributable to the pandemic, partially offset by increased sales of defense and space products.

The ETG's net sales increased 8% to a record $236.7 million in the fourth quarter of fiscal '20, up from $219.5 million in the fourth quarter of fiscal '19. The increase in the fourth quarter of fiscal '20 is attributable to the favorable impact from our fiscal '20 acquisitions and the anticipated increase in commercial space revenues.

The Electronic Technologies Group's operating income increased 5% to a record $258.8 million in fiscal '20 up from $245.7 million in fiscal '19. The increase in fiscal '20 partially -- principally reflects the previously mentioned net sales growth, lower performance-based compensation expense and a decrease in acquisition-related expenses, partially offset by a lower gross profit margin. The lower gross profit margin is mainly due to a decrease in net sales and less favorable product mix of certain commercial aerospace and medical products, partially offset by increased net sales of certain defense products.

The ETG's operating income increased 14% to a record $73.9 million in the fourth quarter of fiscal '20, up from $64.6 million in the fourth quarter of fiscal '19. The increase in the fourth quarter of fiscal '20 principally reflects the previously mentioned net sales growth and improved gross profit margin. The improved gross profit margin principally reflects a more favorable product mix and increased net sales of certain space and defense products, partially offset by a decrease in net sales of certain commercial and aerospace products.

The Electronic Technologies Group's operating margin improved to 29.6% in fiscal '20, up from 29.4% in fiscal '19. The ETG's operating margin improved to 31.2% in the fourth quarter of fiscal '20, up from 29.4% in the fourth quarter of fiscal '19. The increase in the fourth quarter of fiscal '20 mainly reflects efficiencies gained from the previously mentioned net sales growth, and the improved gross profit margin.

Let me turn the call back over to Larry Mendelson.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you, Victor. Moving on to diluted earnings per share, consolidated net income per diluted share decreased 4% to $2.29 in fiscal '20, as compared to $2.39 in fiscal '19. Consolidated net income per diluted share decreased 27% to $0.45 in the fourth quarter of fiscal '20, as compared to $0.62 in the fourth quarter of fiscal '19. Those decreases principally reflect the previously mentioned lower operating income of Flight Support, partially offset by lower income tax expense, less net income attributable to non-controlling interest, as well as lower interest expense.

Depreciation and amortization expense totaled $88.6 million in the fiscal '20, up from $83.5 million in fiscal '19 and totaled $23.3 million in the fourth quarter of fiscal '20, up from $21.8 million in the fourth quarter of fiscal '19. The increase in the fiscal year and fourth quarter of fiscal '20, principally reflects the incremental impact from our fiscal '20 and '19 acquisitions.

Research and development -- significant ongoing new product development efforts are continuing at both ETG and Flight Support. R&D expense was $65.6 million in fiscal '20 or about 3.7% of net sales and that compared to $66.6 million in fiscal '19%, or 3.2% of net sales. R&D expense was $16.6 million in the fourth quarter of fiscal '20, or 3.9% of net sales, and that compared to $17.9 million in the fourth quarter of fiscal '19 and that was 3.3% of net sales.

SG&A expenses consolidated decreased by 14% to $305.5 million in fiscal '20, and that was down from $356.7 in fiscal '19. The decrease in consolidated SG&A expense in fiscal '20 reflects a decrease in performance-based compensation expense, a reduction in other G&A expenses, and a reduction in other selling expenses, including outside sales commissions, marketing and travel. These decreases were partially offset by the impact of our fiscal '19 and '20 acquisitions, as well as the previously mentioned increase in bad debt expense, and that was due to collection difficulties from certain commercial aviation customers that filed for bankruptcy protection during fiscal '20 as a result of the financial impact of the pandemic.

Consolidated SG&A expense decreased by 18% to $72.6 million in the fourth quarter of fiscal '20, down from $88.8 million in the fourth quarter of fiscal '19. The decrease in consolidated SG&A expense in the fourth quarter of fiscal '20 reflects a reduction in other general and administrative expense, decrease in performance-based compensation expense, and a reduction in other selling expenses including outside sales commissions, marketing and travel. The decreases were partially offset by the impact of our fiscal '20 and '19 acquisitions, as well as the increase in bad debt expense.

Consolidated SG&A expense as a percentage of net sales dropped to 17.1% in fiscal '20, and that was down slightly from 17.4% in fiscal '19. The decrease in consolidated SG&A expense as a percentage of net sales in fiscal '20, again is due to lower performance-based compensation expense and a decrease in other selling expenses, partially offset by the impacts of higher other G&A expense as a percentage of net sales and an increase in bad debt expense.

Consolidated SG&A expense as a percentage of net sales increased to 14% -- I'm sorry, 17% in the fourth quarter of fiscal '20, and that was up slightly from 16.4% in the fourth quarter of fiscal '19. The increase in consolidated SG&A expense as a percentage of net sales in the fourth quarter of fiscal '20, reflects higher other general and administrative expense as a percentage of net sales, due to the decreased sales volume and the aforementioned increase in bad debt expense, partially offset by a decrease in lower performance-based compensation expense, and a decrease in other selling expenses.

Interest expense decreased to $13.2 million of fiscal '20 and that was down significantly from $21.7 million of fiscal '19 and it decreased to $2.5 million in the fourth quarter of fiscal '20, down from $5.2 million in the fourth quarter of fiscal '19. The decreases are principally due to a lower weighted average interest rate on borrowings outstanding under our credit facility.

Our effective tax rate in fiscal '20 was 7.9%, as compared to 17.8% in fiscal '19. The decrease in fiscal '20 is mainly attributable to a larger tax benefit recognized in fiscal '20 from stock option exercises, compared to fiscal '19, and that resulted from more stock options being exercised, as well as the strong appreciation in HEICO's stock price during the optionees' holding period. Our effective tax rate in the fourth quarter of fiscal '20 was 22.3% and that compared to 19.8% in the fourth quarter of fiscal '19.

Net income attributable to non-controlling interest was $21.9 million in fiscal '20, and that compared to $31.8 million in fiscal '19. The decrease in fiscal '20, principally reflects a decrease in operating results of certain subsidiaries of Flight Support, in which non-controlling interests are held, as well as the impact of a dividend paid by HEICO Aerospace in June '19 -- 2019, that is -- that effectively resulted in the transfer of 20% non-controlling interest held by Lufthansa Technik in eight of our existing subsidiaries and that was transferred back to our Flight Support Group.

Net income attributable to non-controlling interest was $5.3 million in the fourth quarter of fiscal '20, and that compared to $6.9 million in the fourth quarter of fiscal '19. The decrease in the fourth quarter of fiscal '20, principally reflects a decrease in the operating results of certain subsidiaries of the Flight Support Group in which non-controlling interests are held. For the full fiscal year '21 at the present time, we anticipate a combined tax and non-controlling interest rate of approximately 23% to 24%.

Moving onto the balance sheet and cash flow, as you all know, our financial position and forecasted cash flow remain very strong. Previously, I mentioned cash flow provided by operating activities was consistently strong at $409.1 million and $437.4 million in fiscal '20 and '19, respectively. Cash flow provided by operating activities totaled $110.2 million, or 177% of net income in the fourth quarter of fiscal '20 and that compared to $124 million in the fourth quarter of fiscal '19.

We currently anticipate capital expenditures of approximately $40 million in fiscal '21, and that would be up from the $22.9 million spent in fiscal '20. Our working capital ratio, which is, of course, current assets divided by current liabilities, improved to 4.8 as of October 31, '20, as compared to 2.8 as of October 31, '19.

Days sales outstanding, DSOs of accounts receivable approved -- improved to 45 days as of October 31, '20 and that compared favorably to the 47 days as of October 31, '19. We continue to closely monitor all receivable collection efforts in order to limit our credit exposure. No one customer accounted for more than 10% of sales, and our top five customers represented approximately 24% and 20% of consolidated net sales in fiscal '20 and '19, respectively.

Our inventory turnover rate increased to 153 days for the year ended October 31, '20, as compared to 124 days for the year ended October 31, '19. That increase in turnover rate principally reflects certain long-term and non-cancelable inventory purchase commitments, which were based on pre-pandemic net sales expectations and also to support the backlog of certain of our business.

Now, the outlook. As we look ahead to fiscal '21, the pandemic will likely continue to negatively impact commercial, aerospace industry, as well as HEICO. Given this uncertainty, HEICO cannot provide fiscal '21 net sales and earnings guidance at this time. However, we do believe our ongoing fiscal conservative policies, healthy balance sheet, increased liquidity will permit us to invest in new research and development and gain market share as the industry recovers.

In addition, our time-tested strategy of maintaining low debt and acquiring -- operating high cash-generating businesses across a diverse base of industries, besides commercial aerospace and these industries are defense-based and other high-end markets; including electronics and medical, puts us in good financial position to weather this uncertain economic period. We are cautiously optimistic that the recent vaccine progress should generate increased commercial air travel and will result in a gradual recovery in demand for our commercial aerospace parts and services commencing in fiscal '21.

I'd like to conclude my remarks by again thanking all of HEICO's talented team members, we have worked very hard to exceed our customers' expectations during these difficult times, which were brought on by the COVID-19 pandemic. Their dedication to HEICO's customers and to the safety of their fellow team members has been exemplary. And I want to thank each and every member of HEICO's global team to understand that the Board of Directors and I value your commitment to our collective safety and success during these challenging times. I am confident that our future is bright and we will exit this COVID-19 period as a stronger and more competitive company.

Those are the extent of my prepared remarks, and I would now like to open the floor for questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from Peter Arment with Baird. You may now ask your question.

Peter Arment -- Robert W. Baird -- Analyst

Yes. Good morning, Larry, Eric, Victor, Carlos.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Good morning, Peter.

Peter Arment -- Robert W. Baird -- Analyst

Eric, I guess, I'd just start with you on FSG. The 9% sequential improvement, maybe you could just provide a little color on what you're seeing. I mean, we saw -- I guess, a modest pickup in flight activity quarter-over-quarter, compared to the Q3? But what are you hearing from or seeing from your customers in terms of the behavior?

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

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

So I think we were correct when we called the bottom in May, expecting that May was going to be the bottom and that things were going to trend up. I can tell you that November was a very good month and things were looking very good. I would say, for the last couple of -- probably the last week or so, things have gotten a little quieter, but that's not necessarily atypical, because normally around the holiday season, things start to slow down, but I think given the news that we see with the pandemic, it's sort of logical that the second half of December and January may be a bit quieter.

But having said that, the vaccine news, of course, was very good. And in looking and speaking with our customers about the flight schedules that they are operating and the inventory that they have, as I pointed out in our August call, the Flight schedules were really far in excess of the spare parts purchases. And in discussions with a number of airlines, they recognize that they can't continue to operate the schedules that they're operating based on the purchases that they're making. So we anticipate an improvement, in particularly in the second half of our fiscal year and obviously, the timing is going to be very dependent on the vaccine news and what we see in terms of the infection rates.

Peter Arment -- Robert W. Baird -- Analyst

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

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Hey, Peter. This is Carlos. So the additional bad debt wasn't that significant in the quarter, maybe $1.5 million something like that. Remember, we took about $7.5 million in Q3 to deal with some bankruptcies and in Q4 it was, kind of, the normal noise. So you'd have to add about I guess $9 million back to the annual margin to see what that would be.

Peter Arment -- Robert W. Baird -- Analyst

Okay. And then, Carlos, just one quick one, and then, I'll jump back in queue. Larry mentioned SG&A was down 14% year-over-year and I think over $30 million of it is tied to, kind of, performance comp. How do we think about that as we're thinking about fiscal '21?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

I think that performance-based comp is going to flex with sales, Peter. So I'm not anticipating getting back to '19 performance-based comp levels in '21, but they will flex with our sales and profitability. So as things pick up there in '21, we'll probably see some increase in the bonus and performance-based comp expenses, but it will be commensurate with our profitability growth.

Peter Arment -- Robert W. Baird -- Analyst

Thanks very much. Thank you.

Operator

Your next question comes from Scott Mikus with Credit Suisse. You may now ask your question.

Scott Mikus -- Credit Suisse -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

So good morning, Scott. So with regard to the pricing, I think that we're definitely flexible on pricing. I think that a lot of people -- frankly, there is a lot of private equity in this space right now, and they look at the results. We've had this long cycle, where commercial and defense have done very well. And we are -- I think very good at operating in this space and we understand where the landmines are. And I think that there are a number of companies out there, which are being bid up at really -- prices that don't make sense. And so to answer your question, if it's a high-quality company and we think that we can accelerate the growth, would we be more aggressive on it, for sure.

However, a lot of these businesses don't meet that criteria. And frankly, people look at HEICO, and they say, well, these guys didn't know what they were doing and they entered business 31 years ago, look at out how well HEICO has performed with the stock, and I don't know at 20% something CAGR over 31 years without any leverage, how hard can this be. And they get into this space and they realize in fact it's pretty hard. And we've got people, who really know what they're doing and we've got this unique product offering, where we are able to combine PMA, repair, and distribution into the aftermarket and have outside of a couple of the airframe, engine, or a couple of the large component OEMs, we've got the largest aftermarket sales force. And it's extremely synergistic, where these businesses are able to feed business to each other and we've learned a tremendous amount along the way.

So -- and then the other thing I would say, we're also fairly conservative when we look at them in terms of inventory reserves, and in terms of not pressing the pricing envelope. We want to make sure that we've got a very good business for generations to come and we're not trying to, if you will, burn the furniture, take everything out of the fields in order to hit our numbers. And that is the culture that we've created and our people understand that. And so I think that when you look at some companies that may really be doing things in the short-term in order to get a high price and then they want to get a high multiple off that, honestly, that's somewhat of a fool's errand and not something that we want to do so. So sorry for the long answer, but if it truly is a HEICO run company, yes, HEICO style run company, yes, we would pay a higher price for it, but frankly, we haven't -- you don't see that very often.

So -- and then, with regard to larger transactions, as our debt says, we -- HEICO is very open to all sorts of different transactions. We believe that we've got a differentiated model in terms of how we run the business and how we treat our people. And so yes, if we found a larger deal, we would definitely want to go ahead and act on it, but of course there can be no assurance and my comment should not be meant to -- should not be interpreted as there is one on the horizon. But we're always focused on where we can grow and frankly by having this culture, we've really -- in a sense, it's like planting a lot of seeds in the ground to make sure that the future is going to be very good. And we've got that.

And we're very confident on the future because of that. And even when a crisis happens like this, we treat our people very nicely, because as we say there are our greatest asset, and if you don't treat other people may say there. People are the greatest asset and then they go and cut them and do all sorts of things, whereas HEICO has been willing to suffer the financial consequences of treating our people right. We're not afraid to go ahead and have reduced earnings so we can come out of this thing very strong. So acquisitions really need a line up like that. And we've made a number of them, where typically the founder entrepreneurs share that same vision, where they really put the people ahead of short-term profits, because they know that leads to long-term superiority. So I hope that answers your question, but if not, I'd be happy to expand on it in any way.

Scott Mikus -- Credit Suisse -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

I think all things would be on the table. Frankly, it's our preference to use cash, because we're believers in the stock. The stock has performed extremely well. And if you look at the 82 acquisitions we've made to-date, I don't think that we've given out more than $1 million of stock in billions of dollars of acquisitions. So now with the added flexibility that we've got with our new line of credit that Carlos worked so hard to arrange, we've got a lot of flexibility there.

But yes, I mean, we would be open. I mean one of the things that we need to be open to is some people may be concerned selling at, if you will, lower point in the cycle. So therefore they may request our stock as a way to be able to play the up cycle. So I think in that case, we would be sensitive to it, but cash is definitely our preference.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Yes. Let me just add to that. I think, the bottom line to the whole thing is, it depends on the deal, it depends on how much we want it, depends on what the seller is looking for, and so forth. And we would consider giving stock under the right circumstances. As Eric says, we always prefer cash. And the reason we prefer cash is because, when we make accretive acquisitions the value of the whole company goes up. So whatever stock we give really is -- we've given out too much stock because the stock price goes up. So it's better for all existing shareholders for us to use cash. But if there is a real juicy, desirable acquisition, we're going to make that acquisition and we're going to do it in the best way we can. So we definitely would consider cash, stock, or a combination.

Scott Mikus -- Credit Suisse -- Analyst

Thank you. And happy holidays, guys.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thanks, Scott.

Operator

Your next question comes from Josh Sullivan with Benchmark. You may now ask your question.

Josh Sullivan -- The Benchmark -- Analyst

Hey. Good morning.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Good morning, Josh.

Josh Sullivan -- The Benchmark -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Hi. Yes. I would say that we maintain -- this is Eric. We maintained our pace of PMA. We could have increased it. I think one of the things, which is -- and why we've got plenty of opportunity, one of the things that we also have to be a little sensitive to is a lot of people, including ourselves, took pay reductions this year. Some people were furloughed. There were some layoffs and we wanted to be sensitive to make sure that, if you will, the pain was -- the sacrifice was throughout the company. So while we could have increased new product development, we kept it consistent thinking that that was really the right thing in order to show that everybody in the company was in this together. Having said that, I'm very proud that we've come out with similar number of PMAs that we've done.

I can tell you that we're very aggressively developing new product. Our subsidiaries really have a very good grasp on the products that they're going after and we continue to grow into adjacent white spaces. Our airline customers and defense customers are very confident about the use of these products. So I'm -- it gives me a great optimism for the future, especially when talking to our sales executives and going through the details with them and seeing why they too are very optimistic.

Josh Sullivan -- The Benchmark -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Well, I think the first half is going to sort of be a continuation of what we've seen frankly since May, where we've been coming out of the bottom. It sort of comes out in fits and starts and it moves ahead, then it sort of settles in, then it moves ahead, and then it settles in. And I really would anticipate more of that type of progress, I would say probably, through -- or until perhaps the beginning or through our second quarter.

Then what we've seen is, when you talk to the airlines, they're operating the equipment in excess of what the spare parts that they are purchasing. Early in the crisis, there was a destocking phenomenon. I don't really see that anymore. I think the airlines are now very much living hand to mouth and I think that destocking has occurred already.

Josh Sullivan -- The Benchmark -- Analyst

Got it. Appreciate the time. Thank you.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from Greg Konrad with Jefferies. You may now ask your question.

Greg Konrad -- Jefferies -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

No, I would say it's similar. Good morning, Greg. This is Eric I should say. I would say that it is similar between the replacement parts and the repair. It's all in the same ballpark. One could be ahead or behind in a particular month in the quarter, but it's all in the similar zip code I would say.

Greg Konrad -- Jefferies -- Analyst

And then, maybe just one on ETG. Can you maybe talk about the bridge for ETG margins given some of the fiscal year '20 drivers around lower performance-based compensation and net sales growth, which was somewhat offset by the gross margin pressures, which seem to reverse in Q4? How are you thinking about the trajectory there just given some of those moving pieces outside of volume?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

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

Greg Konrad -- Jefferies -- Analyst

Yes. Just you had a really strong Q4, where some of the gross margin pressures seem to reverse and you did 31% margins, which were impressive. I mean how do you think about mix and maybe lower performance-based compensation expense as kind of headwinds/tailwinds to fiscal year '21?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

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

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

Greg Konrad -- Jefferies -- Analyst

Thank you.

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

You're welcome.

Operator

Your next question comes from Gautam Khanna with Cowen. You may now ask your question.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Hey. Good morning, guys. Happy holidays.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Good morning, Gautam.

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Good morning, Gautam.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Hey. Just wanted to ask a couple of questions. First, on ETG, I was curious, I think it was last quarter where you guys cited some order delays, some shipment delays, some lumpiness, if you will, that kind of dampened down the Q3 number. And has that all been caught up now as of Q4, or are you still seeing kind of a backlog build in that business?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Yes, I mean disruptions -- this is Victor by the way, and good morning. Look, that is continuing, that kind of thing. And I would say, it ebbs and flows a little bit. I would expect that with the pandemic's numbers, the COVID cases numbers rising, we may see more of that in a few months ahead. I don't know. But it comes through. It's in supply chain, it can be on the customer side, where the customer doesn't show up to do an acceptance and test procedure or their transportation doesn't show up and can be a week or two late. It's nothing that fundamentally shifts the business and it eventually catches up and it seems to come and go with this pandemic.

I think it was better through much of the fourth quarter, started to reappear again as the pandemic numbers began to increase later in October. And I would expect that to be the case until this thing gets under control and so I'm optimistic that as it gets more under control with the vaccine, we'll see less of it.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

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

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

It's a good question. Of course, keeping in mind that defense is about, usually a round half of the ETGs business that can fluctuate up and down a bit, but it's somewhere in that ballpark. And then you've got the other markets that we serve, which are, of course, significant, which is a little different than the large defense primes, which are much more heavily defense, although you do see some commercial space in the defense primes as well in their numbers. So I think it's difficult to find a one to one correlation between the defense primes and our ETG businesses. And really what we do is, we look down and we drill down into the individual businesses we have and in turn the individual programs that they're on and the products that they're on.

And to be honest with you, we don't always know. As you're aware, the products we make are respond to a specification, to a customer need, a specific customer need as opposed to their design or blueprint, let's say. And so they will tell us, as an example, they need something that does a very specific function and performs in very specific area, and we will produce that. And they may not tell us what it's going on. Very often we figure it out. We usually can figure it out, but they may not share with us exactly when it's going out. So that's why there is not a one-to-one correlation to it. As a rule of thumb, as we've said before, we don't think defense budgets grow to the sky, and that at some point we see defense as a rule of thumb flatter than it was over the past, let's say, four years or so. And we'll just have to see how that all plays out.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Okay. And may I ask, Eric, just a couple of questions. First, I was curious, there has been this argument floated that lessors may become a bigger part of the market just given the airline financial challenges. And I wondered, has there been any change afoot in terms of lessors willingness to utilize PMA parts? Do they today and are you seeing any change in behavior where they are more open to utilizing more PMA?

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Yes. That's a very good question. The answer is, yes. We are making progress on lessors using HEICO parts. We're very careful that when we go out we don't promote PMA parts. We promote HEICO parts to the lessors given HEICO's market cap and technical capabilities, technical history, product success. So we're very careful to promote HEICO in that way, yes. And we've had a number of very good successes. Number one, if airlines negotiate in and request the right to be able to use HEICO parts or PMA parts, DER parts upfront in the lease, very often they are able to get that concession because the airlines know that the vast majority of airlines out there operate using these parts. So there really is not a reduced market ability on the product, number one.

Number two, there are a number of lessors that are coming out and offering really like power by the hour, thrust by the hour, aircraft by the hour, where they take responsibility for the overhaul and maintenance of the particular product and those lessors are using our parts very aggressively. So we see -- so the answer is, yes. We've seen progress. However, there is a lot of opportunity out there, because there have been a fair number of leases that have been signed in the past, whereby airlines or some airlines where, if you will, fooled into giving away that right and now certain lessors want to try to extract value in order to frankly make more money. So the airlines need to be very vigilant and request this upfront and then they are able to get that concession.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

So we spend a fair amount of time studying the market and we're aware of our peers, and I think if an opportunity ever presented itself, we would certainly act on it. I think that we've got a very differentiated model, where we treat our people extraordinarily well. And I think for, say, a seller, whether it's a larger public company or a private company, I think that is a point of value and something which differentiates us. So yes, we could use our balance sheet to go ahead and do that. And I can tell you that we're always out looking and reviewing the market out there for these kind of opportunities.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Okay. I apologize for asking. Go ahead, sorry.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Let me add one thing. We have a few hundred people on the line right now. So let me give everybody on the line an open invitation, if they have a wonderful acquisition for us to make, if they want cash, if they want to stock, whatever the notes, whatever you want, if you've got a great company and you want a wonderful home, give us a call and we're going to talk to you. So we'll use whatever medium of exchange is necessary to make a great acquisition.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

And that's regardless of size.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Right. It can be -- we have -- in the past, we've looked at some very large transactions and we've been priced out of the market. Some of them were good, some of them were not so good, but we don't pay 14 times to 12 times EBITDA. Just that's not in our strategy. So -- and aside of it, we've been able to grow compounded -- the bottom line is 19% of stock price 24%. So we have a model, which is somewhat unique. And I think, Eric described it very aptly. We really believe in the culture of HEICO. What the analysts can't relate in their reports is the quality of the management. I must say that and I'm not talking about myself or even Eric or Victor, but the people who are team members of HEICO in my opinion are truly extraordinary individuals. They're entrepreneurial, they're smart. They watch every dollar. They work 24x7 and this is an asset that doesn't appear on the balance sheet. And I think the great strength of HEICO lies in its very, very capable array of team members. And again, if any of them are on the phone, I want to thank them personally, but I do want the investing public to understand that this is a great, great asset that doesn't appear in the 10-K or Q or analyst reports. But to me, it's the culture that drives the bottom line and the success of HEICO.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Yes, the OEMs, our competitors are doing what they've always done. And they -- we have to fight very hard for each piece of business that we have. I would say, nothing really has changed in the playbook. HEICO has become a very well-respected distinguished competitor out there and I think we're continuing to gain share and we're doing very well. So there is really no change in that regard. Having said that, our strategy with the Parts business is to take a minority market share -- we only go for a 30% market share. So as long as we're able to pick up that market share at terms which makes sense for our customers as well as for ourselves. We kept that market share around that level, because we want to make sure that our competitors also had a very good business strategy for their market share. So I think that our competitors have got very good -- our OEM competitors have very good business plans. I think they're going to continue to do very well. And I think there is plenty of opportunity for HEICO in there as well.

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Thank you very much guys.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thank you.

Operator

Your next question comes from Ken Herbert with Canaccord. You may now ask your question.

Ken Herbert -- Canaccord Genuity -- Analyst

Hi, good morning and Happy Holidays everybody.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Good morning and Happy Holiday to you.

Ken Herbert -- Canaccord Genuity -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

I would say it's really Ken, the same things that you pointed out. It's price, it's having a competitor, it's having somebody else -- large and respected out in the field. And that's really I think what's driving it. The airlines entered into this recession or this crisis, very strong. And then of course as time has gone on -- their business models have really been challenged. And when I speak with our sales folks, they explain to me that frankly, fear, uncertainty and doubt what our competitors -- our OEM competitors try to push is reasons why not to buy our product really doesn't hold up. So they believe that we're going to be able to develop additional products because that's what the customers are asking for. They want us to go into these other products. They want us to develop our -- broaden our product line and they're willing to buy. So as a result, we go ahead and continue to develop and it's not only on in the parts area, but it's also in the repair area as well. So I think it will continue to be a very competitive market. But that's what really gives me the confidence that we're going to do quite well.

Ken Herbert -- Canaccord Genuity -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

No, I would say it's all of our areas are where we're continuing to invest. I mean, if you hit on all them, PMA, repair and distribution, we see very good opportunities in all of those. I think that we provide a unique balance in all of those businesses. There is obviously the nexus and how they connect across the top which nobody else can bring. And then in addition we operate them as small businesses where we're very knowledgeable about the details and that really helps our customers as well as our manufacturers, our principles. And then we've got the balance sheet of a larger organization so we're able to compete, like a larger company with. So I think we're in a very unique space.

Ken Herbert -- Canaccord Genuity -- Analyst

That's great. And if I could just one final one for Victor. It sounds like space, you're pretty -- continue to be pretty optimistic on your space market. Is it possible for you to sort of break out the government versus commercial space as their sort of relative contribution within the segment? And maybe just provide a little bit more color on what you're seeing on the commercial side in terms of opportunities or how you expect this to grow in '21 for you?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Sure, Ken. And by the way, I don't want to overstate space. It's been good for us this year. I think it's looking promising going into next year, but I don't want to overstate it to lead you to believe that it's going to be stratospheric, no pun intended, but it is moving in the right direction for us and we have some good opportunities and we are pursuing them. And when I refer to space by the way, we're referring to commercial space in fact, and defense space is encompassed within the defense number that we report so we don't actually break it out separately. And that's why you hear us refer to that.

And I would expect that the opportunities for us in the space markets are more in what I would consider some of the larger satellite markets or satellite opportunities, some of the constellations actually, but some of the larger constellations and less in the very new space very, very small sat market. I don't think that's going to be the big market for us, but there certainly is an increased interest in both satellite opportunities as well as earth observation and space exploration that's benefited us. I think it will continue to benefit us. That doesn't mean by the way that we won't have periods where space -- we won't have quarters where space is lower for us. It is still a somewhat volatile realm, but overall we like it and think it's moving in the right direction.

Ken Herbert -- Canaccord Genuity -- Analyst

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

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thanks Ken.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thank you very much.

Operator

Your next question comes from Michael Ciarmoli with tourist. You may now ask your question.

Michael Ciarmoli -- Truist Securities -- Analyst

Hey, good morning guys. Thanks for taking the question and Happy Holidays. Victor, maybe just to stay on ETG; what was the organic growth? I know it was negative in the quarter. Do you actually have the organic growth number? And I know you're not going to give much detail on '21, but do you think ETG can grow organically in '21?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Let me take it in reverse order there. I think we can have organic growth in '21, but it's early in the year. There are a lot of things that will dictate what happens there, which is why we didn't issue guidance on the year. But I -- our companies are certainly working toward that. And I would -- I have optimism that we can accomplish that at this point, but I want to let the year get further in. But right now I would be surprised if we don't get organic growth in fiscal '21, but let's see how the year wears on and what happens. And in terms of '20, Carlos?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

How are you doing Michael?

Michael Ciarmoli -- Truist Securities -- Analyst

Good.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

For the year organic growth in ETG was roughly flattish to down a percent and that was principally driven by aerospace. Remember that roughly 10% or so in the segment is commercial aerospace and is going to follow the same trends as our FSG segment so that was down. Other businesses did about what we expected them to do this year, absent logistical challenges due to COVID and some of the disruptions that Victor mentioned earlier. So I share Victor's optimism for next year. I think that the businesses can grow. I think that the commercial aerospace portion of ETG will mimic the recovery pattern in the FSG, and that will be a bit of an anchor probably in the early part of the year and then pick up toward the end of '21.

Michael Ciarmoli -- Truist Securities -- Analyst

Got it.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

And let me add, I mean, I can say that internally, our businesses are budgeting for organic growth. But you know us. We're always and me in particular, very cautious, very conservative and I don't, we like to over-deliver to be honest with you, outperform and so I'd rather comment further on that as we get a little deeper into the year, but that's certainly what we're planning for internal.

Michael Ciarmoli -- Truist Securities -- Analyst

Got it, got it. And then I don't know if this Carlos or Eric, on the FSG margin, I guess, taking out that bad debt expense, 11% or so last quarter, it looks like close to 12% this quarter. I know the first quarter is usually seasonally weaker, but should we expect kind of this continued margin progression as the market recovers? And if you do get that that second half '21 strength, I mean, can we expect you guys to get into the teens? I don't expect to be at all the way back up to the upper teens 20% or maybe a total recovery, but is that the right way to think about the margin progression for FSG?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

I think, Michael, this is Carlos. I think we're on the right path. So as Eric mentioned earlier we are thinking about next year in terms of a bit of a continuation of what we saw in Q4 into the early part of '21 with a gradual progression upwards toward the back end of '21. And I think during that backend period you'll see our margins improve. And I think in the early part of the year, you should see them slightly improve. So I couldn't get to the low-teens, yes, I mean I think that's definitely in the cards for us and obviously, we hope to do better. But when we have more visibility Michael on next year we'll -- I'm hopeful we can restore guidance at some point, but when we do at that point, I'll give you all the details you need. But for right now, what I've told you is about all I can right now prepared to talk about at the moment.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

And Mike, this is Eric. Just also to add some color -- picking up on what I answered in one of the questions earlier. We could have generated higher operating margins, but we felt it was really important to take care of our people. And I think a lot of other companies are very -- sort of aggressive with their people. Other people say, other companies say their people are the most important, but then they don't act that way and we've really tried to act that way. And as a result, the margins have taken a hit. And we have been fully prepared, recognizing that we've got to invest in our people. Now that's not to say that our team members haven't shared in the sacrifice because they have tremendously. But we've done everything we possibly could to hang on to them and to have them sacrifice less than other organizations. And we think that HEICO will be rewarded with their loyalty and dedication coming out of the crisis. So we're very cognizant of the margins, and why we think that we can get them to increase moving forward.

Michael Ciarmoli -- Truist Securities -- Analyst

Got it. Helpful. And then just one last one on performance comp into next year. Is that -- I mean, any color around, should we think of that as being a slight headwind, just given what took place in '20 or kind of a net neutral to margins or just how do we think about the mechanics there?

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

I'll let Carlos explain on the specifics, but in general, incentive comp is based on performance. So first, the performance has to be there, then the incentive comp will kick in, but Carlos can then explain the details.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Well, I couldn't have said it any better, Eric. I mean I think the -- as the operations improve and our profitability goes up, there will be incentive comp that's commensurate with that growth. But I don't expect it to be at '19 levels next year, but I do hopefully knock on wood, as things progress into '21 and our profits increase, I would expect the performance based comp to increase also. But if you're modeling and thinking about it on the numbers side, whatever your estimates are for growth and profitability, we're going to have some growth in our performance comp that's commensurate with that move.

Michael Ciarmoli -- Truist Securities -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thanks Mike.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from Noah Poponak with Goldman Sachs. You may now ask your questions.

Noah Poponak -- Goldman Sachs -- Analyst

Hey, good morning everyone.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Good morning Noah.

Noah Poponak -- Goldman Sachs -- Analyst

Hey, just staying on that FSG margin actually the sequential incremental -- so just the drop there of the EBIT on the higher revenues sequentially using the adjusted number is 22% and you've talked about the 30% decremental and then a higher than 30% incremental on the way back up recognizing everything you just said on the different cost components. But you've taken out some costs and you'll have costs coming back as you said on a -- when you have good incremental. Should I care about that number at all or is it just kind of a relevant because it's one quarter and everything is still sort of funky?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

No, this is Carlos. I would say that in the quarter, we had some headwinds in Q3 and Q4 relative, on the margin side to inventory reserves, which I don't think will repeat itself going forward, so that had a bit of a drag on our incrementals. So I think you've probably captured it correctly. I wouldn't focus so much in this one quarter, but I do think the incrementals will be better on a go forward basis than our decrementals as that is going down.

Noah Poponak -- Goldman Sachs -- Analyst

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

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

That's correct.

Noah Poponak -- Goldman Sachs -- Analyst

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

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Yes, I think in the last -- in the last couple of quarters we probably had even [Indecipherable] quarters about $14 million worth of incremental increases in our inventory reserves and most of that, Noah, has been a result of us recognizing that many airlines over the last six months have come out probably and discussed some of their fleet reduction plans and retirement of certain types of planes. And so what we did rather than trying to pull ourselves and keep that product at full value on the shelves, we took a very conservative approach and said if the airline is going to put down [Indecipherable] then we probably need to reserve for some of that inventory line outs sitting around to support that portion of the fleet. So we did take those charges and we've got that kind of out of our way now. And that would be one aspect if you were the margins that I don't anticipate repeating going forward.

Noah Poponak -- Goldman Sachs -- Analyst

Sorry, that's $14 million in both 3Q and 4Q individually above and beyond?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

$7 million a quarter.

Noah Poponak -- Goldman Sachs -- Analyst

$7 million a quarter. $7 million a quarter.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

$14 million in total in the back half of the year.

Noah Poponak -- Goldman Sachs -- Analyst

Okay. I mean even $7 million a quarter would take -- if I adjusted for the bad debt, then I adjusted for that, it would put your margins more in the mid-teens in the back half of '20 already. And then should I be working in back half of '21 a better than 30% incremental off of that?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

At this point, Noah, I don't know that I would go -- as we get into '21, I'm happy to help you with that math, but I don't know that I would do that right now.

Noah Poponak -- Goldman Sachs -- Analyst

Okay. Last quarter you said incrementals better than 30% was that?

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Last quarter I said incrementals should rise faster than our decrements going down, but I don't think I gave any numbers because incrementals are dependent on mix, which part of each segment grows faster, so it's not like HEICO has one product and it's real easy just do the math. We've got such a diverse product base. It does make it a little more difficult to pinpoint without guidance out there where that -- what those incrementals are going to look like.

Noah Poponak -- Goldman Sachs -- Analyst

Appreciate that. I guess I'm just trying to get at whatever the incrementals are going to be or whatever you sort of think of the incrementals as being in a framework, right, it's a company with a 30% incremental. It's going to vary quarter-to-quarter, that calculation can get wonky. Was that a statement working off of the lower margins, knowing that the lower margins had the inventory obsolescence or was that a statement last quarter, that's just sort of a broad long-term framework of the company's incremental/decremental.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

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

Noah Poponak -- Goldman Sachs -- Analyst

Got it, OK. The company has always maintained as you've alluded to a reasonably conservative balance sheet, a degree of leverage, relative to the consistency of the margins and cash flows. You've just been handed what will be hard to, knock on wood, harder to ever repeat in terms of severity of downturn, yet you didn't have a negative cash flow quarter. Does that have you rethinking the optimal balance sheet leverage going forward to continue to do deals and enhance the equity returns?

Laurans A. Mendelson -- Chairman and Chief Executive Officer

This is Larry speaking. What we do and we model in a controlled growth pattern. And that's our strategy. So, we have said publicly that we aim for a bottom line growth of 15% to 20% annually. And that's accurate, and we think in the relative near future we can continue that growth. I mean, historically over 31 years we've done 19%. So in order to accomplish that growth, the controlled growth, we can do it very well using the debt strategy that we have implemented. There is no need for us to go out and do anything greater. Now, saying that people have asked, would you do a transformational transaction, a major acquisition or something else? And the answer is, yes, if it is really going to benefit the bottom line.

Too often we see and we are approached by investment bankers with ideas that we can make HEICO bigger, we can double HEICO or increase it 60%, but they're talking about the top line and we're focused on increasing the bottom line and cash flow. And so if the opportunity presented itself to increase the bottom line, we would do that and we would probably take on more debt. The key to taking on the debt is how quickly it will be repaid because we don't want to be up six or seven times like some other companies. We don't feel comfortable there. Nor do we need to do that to grow at the 15% to 20% target.

And I think speaking to shareholders, which we do a lot as you know, they like the idea of the steady growth and we do too. And we are the largest shareholders. So it's a strong, steady growth. When the market collapsed in March, the bank's weren't calling on us. We didn't sell debt at 8% or 10% and we slept well every night. So I guess I don't know if that answers your question but in the -- so that's really the way we look at it. I guess you could say it's conservative but, and in the past we've been criticized by some people who said oh, why don't you put on more debt and you can do all this stuff and it's just that is HEICO's strategy and that's what we're known for, so.

Noah Poponak -- Goldman Sachs -- Analyst

Got it. That's really the question is any rethinking of that so that helps me. And then last one related to that controlled growth is the pace of new product intro, which if I understand correctly in given periods of time could be faster, but there is a controlled growth element. How will you think through that Larry or Eric, if there is an opportunity to take market share because the industry has situation presented but you normally have that controlled growth? How above and beyond will you go with pace of new product intro 2021, 2022, with those sort of competing interests?

Laurans A. Mendelson -- Chairman and Chief Executive Officer

I think what we will do, we will reach for the sky as long as it will benefit the cash flow and the bottom line and that we see it's going to be strong real growth. We are not into financial engineering. And you can see in the last quarter we had 177% of reported income was cash. So that's our whole gain, if you will, it's the cash flow, it's the bottom line and anything we can do, Noah, to accomplish that we are going to do it for sure.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

And I agree completely. I think that our current level of new product development is a good level. It's a level at which we make sure that we've got a lot of customers and they're excited about the different products that were coming out with. So I really expect that we will continue to stay the course. Now, if we see a significant change in the approval rate at our customers, then we could revisit it, but I would say right now, we're very comfortable with what we've got going right now. It was also very encouraging to find out that a lot of our customers were working on improving the use of our parts from their homes, and they were continuing to focus in this area, because it continues to be a major cost driver for the airlines. And the airlines know very clearly that if HEICO doesn't exist, their prices go way up. And so we're a significant part of their strategy.

Noah Poponak -- Goldman Sachs -- Analyst

Okay, excellent. Thanks so much.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thanks Noah.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Thank you Noah.

Operator

Your next question comes from Colin Ducharme with Sterling Capital. You may now ask your question.

Colin Ducharme -- Sterling Capital Management -- Analyst

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

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

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

It seems that people are asking to pull in orders. They're asking for faster deliveries, they're more concerned with that than they were. In the very early days of the pandemic, we had an interesting phenomenon where customers were actually looking to accelerate orders because they were worried about the supply chain and things getting delayed. There were stories of course of product not making it from the Far East, particularly China where the virus originated and so they were worried about that. And so there was an acceleration and then all of a sudden that stopped and it flipped around, and it was going the other way for a while and now that's reverted. And so that seems to be very positive and the visibility question is, well, how does that hold up? How long does that hold up? How does that work?

Where does it stabilize and so on? One of the key things I think about is, we're about to within a few months will anniversary out of the start of the pandemic and so everything will feel much more positive and be much more positive as a result of that. By the way on commercial aviation, the 10% or so of ETG that is usually commercial aviation, that's been improving as well. We've seen some nice signs of improvement there in the future order outlook. I think as the year wears on that will do better. Also on the medical side, I think that offers us some upside potential, because things had slowed down there. If you recall there was a -- there were fewer medical procedures and people just not going to the doctor, etc during the pandemic.

I think that will start to switch around so that impacted some of our businesses and the components that we sell. The question is one of timing. So that's why I say it's less visibility as a rule of thumb. So generally speaking, I believe it turns in the right way and it is turning in the right way. The question is when and exactly how keeping in mind we're already halfway through -- a little more actually, halfway through than halfway through our first fiscal quarter so are you. It's a little bit different than most people's year and as that starts to filter through we can -- it becomes a question of, does that push through in the third quarter, does it push through in the fourth or does it wind up being at the end of 2020. But our fiscal -- excuse me, at the end of 2021, but our fiscal '22 and we'll just have to see how that falls out. Is that helpful?

Colin Ducharme -- Sterling Capital Management -- Analyst

Thank you.

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

You're welcome.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

I would just Victor. Once we see the cadence of orders from the airlines being more stable, if you would and the flights and the number of aircraft in the air are more predictable and more flying, that would probably give us the confidence as an organization to reinstate our guidance and think a little bit more broadly about doing that. But right now, there is so much -- each of our customers acting so differently as far as how they spend or maintain the fleet that is just not our best interest to try and outthink them at this moment, but I do anticipate during fiscal '21 that clog, if you would, will lift as we believe we'll have a little better visibility as the year progresses so and at that point, we'll discuss and for the management team they're stating guidance. And if we can, we will do so.

Colin Ducharme -- Sterling Capital Management -- Analyst

Okay, understood. I appreciate that. And then just a couple of follow-ups. Quick one for Eric and then maybe a longer, more thoughtful one for Larry. Eric, I heard you say earlier within FSG PMA you I think characterized competitive conditions of having not changed. Just wanted to link that back to that regulatory announcements, I guess it was now a little over a year ago with CFM and potentially loosening some soil for you guys to plant some seeds there within PMA. I know we've had a pandemic since that announcement that has kind of up-ended that end market, but just wanted to verify whether you've seen any tangible evidence of any competitive movement whether it's tangible or anecdotal there, that would be great?

And then for Larry, from an M&A standpoint and potential currency used for deals. There has been some conversation on this call of potential for transformational deals much larger and quantum than what you've done in the past. I remember, I guess it was 20 some odd years ago where we created the A shares and that was in anticipation of at the time, what could have been a transformational deal. So there is some history with the willingness to pay stock. But I just wanted to ask you, has the currency been a sticking point to get folks kind of over the hump?

I've always thought that that 80-20 equity share ownership with the put calls that you typically have kind of takes care of that participation and upside for sellers. And so is that structure, has that been a sticking point? And then relatedly if you were to consider a use of stock for a more transformational deal, do the criteria, the financial and accretion criteria change at all, i.e., do you pull your horns in and perhaps become a little more conservative because you're using stock for a larger purchase because since you've been such good stewards of the stock over the longer haul, perhaps you'd have a little more caution when doing -- thinking of a move like that? Thank you very much.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

So that's a great question. And the way you structured it, really shows your understanding of HEICO and you go all the way back to 1999 and the transaction that we were considering. Most people have forgotten about that and how the A stock came into being, but you have a great long history and a good memory. So to answer your question, we will make any accretive acquisition using any medium of exchange that we can -- we'll use [Indecipherable], we'll use gold bullion, we'll use stock, we'll use cash, we'll use bonds, we'll use notes as long as it meets the criteria that we have set forth, which I think I've explained and that is cash flow bottom line. Now keep in mind the difficulty in which we operate. Most industrial companies or even aerospace companies operated margins, which are 50% or less than our margin.

The trick and the reason we use strong margins is because strong margins, generate strong cash flow. It's not rocket science. It's very good. Number two, this management is really compensated because of our stock ownership, just like every shareholder out there and we are completely aligned with every shareholder every share if we selfishly make a good acquisition or we generate cash and it goes to the bottom line, the stock price goes up. Yes, we benefit because we're the largest shareholder. However, every shareholder benefits how they pursue with what we have. In other companies, many companies I believe that the motivation is bifurcated. The management generally owns a little equity and there the management wants to grow the company because the top line, even if the operating margins are 8% or 10%, the topline can double.

That requires the use of a lot of cash. It sucks up cash but the management who is generally there for three to seven years sees his or her compensation double. As they grow the top line from $2 billion to $5 billion, the compensation, the manager's compensation grows for $3 million to $6 million, whatever the number is. In our case, we own a large number of shares. So if the stock goes up 10 points and I'll define it for you, it's public. If we own $12 million or $14 million and I don't know the exact number, but if you pulled the 401(k), because we're very concerned about the success and the financial stability of our people, our team members, if that goes up 10 points we make a $140 million or $200 million in equity value. Now, do I care if my salary goes up $3 million? Of course not. So to answer your question, we will make transactions that generate cash flow accretion and stock value. And however, again, whatever currency we must use, we will do it.

I can tell you as an example, we're negotiating. We're talking to somebody now and they came to us and they said we only want to sell for stock. And I said, well, normally, we prefer to give cash. We normally give cash but for you because we want this acquisition, whatever you want, we'll give you. You want cash, you want stock, whatever you want, we will give you. So I don't, does that kind of answer your question?

Colin Ducharme -- Sterling Capital Management -- Analyst

I'll have to wampum into my models, but thank you.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

We're not sure about Bitcoin. I've got to ask Carlos if we can use Bitcoin.

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Like you said, we'll use whatever we have.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Whatever we have to do, we'll use it.

Operator

Thank you. Your next question comes from the line of Louis Raffetto with UBS. You may ask your question.

Louis Raffetto -- UBS -- Analyst

Hey, good morning guys.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Good morning.

Louis Raffetto -- UBS -- Analyst

I was hoping you mentioned Bitcoin. That was the one missing thing in there but Wampum is interesting as well. Victor, I just want to go back to you, just make sure I have this for the fourth quarter, what was the organic growth for ETG? Was it flat, down a little, up a little? And then either you or Carlos, can you help us baseline what the acquired sales will look like based on deals so far into '21?

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

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

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

That's correct, that's correct. Louis roughly in the fourth quarter we probably had an ETG around $16 million worth of the acquired sales in the numbers. So, that will, we have no reason to think that that won't continue going forward. And most of the acquisitions occurred in August, in Q4, so we got the benefit of most of that in the quarter. That's probably a decent run rate now I guess.

Louis Raffetto -- UBS -- Analyst

Okay, that's perfect. And Eric just one for you; wanted to follow-up, I know you mentioned before that between parts and MRO was kind of same ballpark. But if I go back to last quarter, it was kind of down 40% and parts down 60% in MRO so business down 40%. So are we looking for -- was there a kind of an improvement in MRO and parts was flattish or any additional color you can give there?

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

So let me take a look at some of the numbers here. I mean, it was all really in the same, as I said the same ballpark there. So I wouldn't say that there was much of a difference in any one quarter one can be based on the prior comp and can be ahead versus the other. If you look at in 2019 in the fourth quarter we had 12% organic growth in Flight Support and on against the comp in 2018 of 13% growth so 25% growth over two annual quarters there. So, things can move around based on this. In general, I would say that the parts and the parts business would be down less than components repair. The way that that normally works is in component repair you can end up having some in the pipeline, which has been approved by the customers, so there can be a little bit of a lag there. And as a result, it could lag where the component repair comes back a little after the parts come back, because first they have to procure the parts in order to be able to do the component repair. But I would say that it was all in a similar ballpark. Component repair was down more than parts. But I wouldn't get too wrapped around that because it can vary a little bit, as I said, quarter-by-quarter.

Louis Raffetto -- UBS -- Analyst

No, no, that's perfect. Thank you.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

You're welcome. Similar to Q3, I would say.

Operator

[Operator Instructions] We have a follow-up question from Colin Ducharme with Sterling Capital. You may now ask your question.

Colin Ducharme -- Sterling Capital Management -- Analyst

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

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thank you Colin. I'm glad you asked that because you went on to the next question before I had opportunity to answer on that. Yes, we -- I would say that we continue to be encouraged based upon the conversations that we've heard. We don't like to speak about particular product lines or customers, but we do believe that there has been good progress in that area. It has sent a very clear message regarding engine -- alternative parts for engines, whether it's PMA or DDR repair. So again, I think that there have been nice conversations and some good results coming out of that enforcement action.

Colin Ducharme -- Sterling Capital Management -- Analyst

Thanks.

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Thank you.

Operator

[Operator Instructions] Presenters, there are no further question on queue. You may continue.

Laurans A. Mendelson -- Chairman and Chief Executive Officer

If there are no further questions, I want to thank everybody on this call for participating and for their interest in HEICO. As you know, we remain available to you by phone if you have any other further questions or information that you'd like you can call Carlos, Eric, Victor, and myself. We'll be happy to respond. And I want to wish you all a very happy healthy Holiday Season. And hopefully when we next peak, which will be the report of our Q1 sometime in late February most of you will have received your COVID vaccine and we'll be on the way to continued good health. So Happy Holidays to everyone and again thank you very much.

Operator

[Operator Closing Remarks]

Duration: 114 minutes

Call participants:

Laurans A. Mendelson -- Chairman and Chief Executive Officer

Eric A. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Flight Support Gro

Victor H. Mendelson -- Co-President of HEICO Corporation; President and Chief Executive Officer of HEICO Electronic Technol

Carlos L. Macau -- Executive Vice President, Chief Financial Officer and Treasurer

Peter Arment -- Robert W. Baird -- Analyst

Scott Mikus -- Credit Suisse -- Analyst

Josh Sullivan -- The Benchmark -- Analyst

Greg Konrad -- Jefferies -- Analyst

Gautam Khanna -- Cowen & Co. LLC -- Analyst

Ken Herbert -- Canaccord Genuity -- Analyst

Michael Ciarmoli -- Truist Securities -- Analyst

Noah Poponak -- Goldman Sachs -- Analyst

Colin Ducharme -- Sterling Capital Management -- Analyst

Louis Raffetto -- UBS -- Analyst

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