HEICO Corporation — Third Quarter Fiscal 2026 Earnings Summary

Financial Performance

• Net income increased 33% to a record $235.4 million ($1.67 per diluted share) for the third quarter of fiscal 2026, compared to $177.3 million ($1.26 per diluted share) in the same period of fiscal 2025.
• Net income for the first nine months of fiscal 2026 increased 31% to a record $659.4 million ($4.67 per diluted share), up from $502.1 million ($3.57 per diluted share) in the first nine months of fiscal 2025.
• Net sales reached a record $1,413.1 million in the third quarter of fiscal 2026, an increase of 23% from $1,147.6 million in the prior year quarter.
• Net sales for the first nine months of fiscal 2026 increased 21% to a record $3,967.3 million, up from $3,275.6 million in the prior year period.
• Consolidated operating income rose 34% to a record $355.2 million in the third quarter of fiscal 2026, compared to $265.0 million in the prior year quarter.
• Consolidated operating income for the first nine months of fiscal 2026 increased 30% to a record $965.5 million, up from $740.0 million in the prior year period.
• Consolidated operating margin improved to 25.1% in the third quarter of fiscal 2026 from 23.1% in the prior year quarter.
• Consolidated operating margin improved to 24.3% for the first nine months of fiscal 2026 from 22.6% in the prior year period.
• EBITDA increased 31% to $415.2 million in the third quarter of fiscal 2026, up from $316.4 million in the prior year quarter.
• EBITDA increased 28% to $1,135.5 million for the first nine months of fiscal 2026, up from $888.1 million in the prior year period.
• Cash flow provided by operating activities increased 49% to $345.3 million in the third quarter of fiscal 2026, compared to $231.2 million in the prior year quarter.
• Total debt to net income attributable to HEICO ratio improved to 3.00x as of July 31, 2026, down from 3.14x as of October 31, 2025.
• Net debt to EBITDA ratio improved to 1.57x as of July 31, 2026, down from 1.60x as of October 31, 2025.

Guidance and Future Outlook

• Management expects increased net sales at both the Flight Support Group and Electronic Technologies Group for the remainder of fiscal 2026, supported by underlying demand and contributions from recent acquisitions.
• The company remains focused on identifying and evaluating acquisition opportunities that align with strategic objectives.
• Capital allocation strategy prioritizes investments in organic growth and acquisitions while preserving adequate liquidity and financial flexibility.
• Management forecasts strong cash flow from operations for fiscal 2026.

Business Segments and Product Lines

• Flight Support Group:
  • Net sales increased 18% to a record $947.8 million in the third quarter of fiscal 2026, up from $802.7 million in the prior year quarter.
  • Net sales for the first nine months of fiscal 2026 increased 18% to a record $2,697.2 million, up from $2,282.9 million in the prior year period.
  • Operating income increased 24% to a record $245.3 million in the third quarter of fiscal 2026, up from $198.3 million in the prior year quarter.
  • Operating income increased 25% to a record $689.1 million for the first nine months of fiscal 2026, up from $549.4 million in the prior year period.
  • Operating margin improved to 25.9% in the third quarter of fiscal 2026 from 24.7% in the prior year quarter.
  • Operating margin improved to 25.5% for the first nine months of fiscal 2026 from 24.1% in the prior year period.
  • Third-quarter organic net sales growth was 12%, driven by increased demand across all product lines.
  • Nine-month organic net sales growth was 15%, driven by increased demand across all product lines.
  • Improved gross profit margins were attributed to a more favorable product mix in specialty products and aftermarket replacement parts.
• Electronic Technologies Group:
  • Net sales increased 36% to a record $483.5 million in the third quarter of fiscal 2026, up from $355.9 million in the prior year quarter.
  • Net sales for the first nine months of fiscal 2026 increased 28% to a record $1,313.7 million, up from $1,028.3 million in the prior year period.
  • Operating income increased 55% to a record $125.6 million in the third quarter of fiscal 2026, up from $81.0 million in the prior year quarter.
  • Operating income increased 36% to a record $320.6 million for the first nine months of fiscal 2026, up from $235.3 million in the prior year period.
  • Operating margin improved to 26.0% in the third quarter of fiscal 2026 from 22.8% in the prior year quarter.
  • Operating margin improved to 24.4% for the first nine months of fiscal 2026 from 22.9% in the prior year period.
  • Third-quarter organic net sales growth was 18%, driven by increased demand for other electronics, defense, and aerospace products.
  • Nine-month organic net sales growth was 14%, driven by increased demand for other electronics, defense, aerospace, and medical products.
  • Improved gross profit margins were fueled by higher net sales of aerospace products, partially offset by a lower proportion of net sales from space products.

Market and Competitive Landscape

• Consolidated quarterly organic net sales growth reached 14% for the third quarter of fiscal 2026.
• The company serves niche segments of the aviation, defense, space, medical, telecommunications, and electronics industries.
• Customers include a majority of the world's airlines, overhaul shops, defense and space contractors, military agencies, and medical, telecommunications, and electronics equipment manufacturers.

Risks and Challenges

• Forward-looking statements are subject to risks including public health threats, liquidity constraints, and cash generation timing.
• Potential risks include lower commercial air travel, airline fleet changes, or purchasing decisions affecting demand.
• Product specification costs, regulatory demands, export policies, and reductions in defense, space, or homeland security spending could impact sales.
• Competition from existing and new competitors, inability to introduce new products at profitable pricing, and manufacturing difficulties could affect results.
• Cybersecurity events, customer credit risk, interest rates, foreign currency exchange rates, and economic conditions (including inflation) pose risks to costs and revenues.
• Acquisition-related risks include obtaining governmental approvals and achieving operating synergies.

Management Commentary and Tone

• Co-Chairmen and Co-CEOs Eric A. Mendelson and Victor H. Mendelson described the results as "excellent growth" supported by record net income, operating income, and net sales.
• Management highlighted contributions from profitable fiscal 2026 and 2025 acquisitions alongside strong organic growth.
• The tone reflects confidence in underlying demand and the ability to realize SG&A expense efficiencies and improved gross profit margins.

Other Key Points

• During the third quarter, HEICO completed a public offering of $550 million in 4.950% Senior Notes due August 1, 2031, and $650 million in 5.400% Senior Notes due August 1, 2036.
• Net proceeds from the senior notes offering were used to repay outstanding borrowings under the revolving credit facility.
• There are approximately 84.5 million shares of Class A Common Stock (HEI.A) and 55.2 million shares of Common Stock (HEI) outstanding.
• The Class A Common Stock carries 1/10 vote per share, while Common Stock carries one vote per share; both classes are economically identical.
• A conference call was scheduled for August 26, 2026, at 9:00 a.m. Eastern Daylight Time to discuss results.
• Nine-month capital expenditures were $54.1 million, and acquisitions net of cash acquired totaled $1,018.2 million.
• Cash dividends paid for the first nine months of fiscal 2026 were $34.9 million.
• Goodwill increased to $4,356.1 million as of July 31, 2026, from $3,661.6 million as of October 31, 2025.
• Intangible assets, net, increased to $1,776.9 million as of July 31, 2026, from $1,471.4 million as of October 31, 2025.