Industrial product supplier Heico Corp (NYSE:HEI) reported fiscal fourth-quarter earnings after the market closed on Tuesday, and there was a lot for investors to like. Double-digit growth on the top and bottom lines and guidance for up to double-digit growth once again in 2016 indicate that this is a rare growth company in the industrial space right now. Here's what investors need to know.  

Heico Corp results: The raw numbers


Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)


$328.7 million

$292.2 million


Net income

$38.3 million

$32.1 million


Adjusted EPS




Data source: Company earnings release.

What happened with Heico Corp this quarter?
The story of the year for Heico is acquisitions. The strong sales and earnings numbers outlined above wouldn't have been possible without them.

  • Heico closed on six acquisitions during fiscal 2015, which led to nearly all of the company's sales and earnings growth.
  • The flight support group saw a 12% increase in net sales in the quarter to $218.3 million, although sales fell 1% on an organic basis. Operating income in the segment rose 28% to $42.3 million.
  • The electronic technologies group reported profitable organic growth of 1% in the quarter, and 13% including acquisitions, to $113.5 million. The group's operating income increased 24% to $32.8 million.
  • Cash flow of $51.6 million in the quarter was 130% of net income.
  • The quarterly dividend was increased 14% to $0.08 per share, payable on Jan. 19, 2016.

What management had to say
Management was very bullish on the future of Heico, saying that in 2016 they expected sales and earnings growth of 8% to 10% before acquisitions. Demand in defense and commercial aerospace products is expected to drive results next year, while space-related product demand is expected to moderate.

CEO Laurans Mendelson had very few negative comments about demand, which is a little surprising given the struggles that have plagued many industrial companies lately. It's clear that aerospace hasn't experienced the same negative impacts as energy or mining, but double-digit growth is a lot given the tepid macroeconomic environment. Clearly there's a long runway left in the aerospace business.

Looking forward
If fiscal 2015 was driven by acquisitions, fiscal 2016 will be driven by turning those acquisitions into organic growth. Management is predicting it can do exactly that with its forecast of 8% to 10% growth on top of any potential acquisition.

Given its performance in fiscal 2015, there's no reason to think the company is feeling much of the pain that's spreading across the industrial landscape right now. It's worth keeping an eye on that as a potential risk going into next year, but for now Heico is firing on all cylinders as the global growth in aerospace shows the industry is flying above most of the turbulence that's hitting other parts of the economy.