Fiscal first-quarter results from Heico Corp (HEI 1.01%) showed continued growth from both acquisitions made over the past year and organic improvements. And management expects growth to continue throughout fiscal 2018, even without any acquisitions.
Below is a look at both the high-level results and the segment results from Heico Corp last quarter.
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Heico Corp: The raw numbers
| Metric | Q4 2017 | Q4 2016 | Year-Over-Year Change |
|---|---|---|---|
| Sales | $404.4 million | $343.4 million | 17.8% |
| Net income | $65.2 million | $40.9 million | 59.2% |
| Diluted EPS | $0.60 | $0.38 | 57.9% |
Data Source: Heico Corp Q4 2017 earnings release.
What happened with Heico Corp this quarter?
Top-line results were helped by the acquisition of AeroAntenna Technology, which closed in September 2017. But organic growth continued in both of Heico's operating segments, and the tax cuts helped results, as well.
- Net income was positively impacted by $16.5 million, or $0.15 per share, because of changes from the tax bill passed in December.
- Organic growth in the quarter was 5%.
- Flight support-group revenue was up 15% in the first quarter, to $254.7 million, of which 4% of the growth was organic. Operating income was up 11%, to $45.9 million, held back by higher compensation expense and some write-offs from 2017 acquisitions.
- Electronic-technologies revenue was up 23%, to $155.7 million, driven by acquisitions and 6% organic growth. Operating income was up 49%, to $43.2 million in the quarter on higher margins and a favorable product mix.
What management had to say
Management expects growth to continue throughout fiscal 2018, including 12% to 14% revenue growth and a 30% to 32% increase in net income, helped by a lower tax rate. CEO Laurans Mendelson said this about the year:
As we look ahead to the remainder of fiscal 2018, we anticipate continued net sales growth within the Flight Support Group's commercial aviation and defense product lines. We also anticipate growth within the Electronic Technologies Group, principally driven by demand for the majority of our products. During the remainder of fiscal 2018, we will continue our commitments to developing new products and services, further market penetration, and an aggressive acquisition strategy, while maintaining our financial strength and flexibility.
Looking forward
Slowly but surely, Heico Corp is able to squeeze more out of its business than any others in the aerospace and electronics business. That should continue, with bottom-line growth expected to surge in 2018. We could see the extra cash from the tax cuts in 2017 free up money that can be used to fund even more acquisitions, something Heico Corp has excelled at long term.
