HEICO posted company record sales of $936.4 million in its fiscal 2023 fourth quarter (Q4) as the Hollywood, Florida-based aerospace supplier reaped the rewards of its $2.05 billion acquisition of parts supplier Wencor.
Despite the steep costs involved in the acquisition of Wencor, HEICO’s earnings-per-share in its fiscal Q4 still reached $0.74, beating estimates by Jefferies ($0.67 to $0.68), RBC Capital Markets ($0.69) as well as an analyst consensus ($0.70).
“The results were ahead of expectations and should help with confidence into [fiscal 2024],” Ken Herbert of RBC Capital Markets said in a Dec. 19 note to clients.
Some observers had foreseen the strong performance in the October quarter though. On Aug. 31, Morningstar’s Nicholas Owens wrote that “a good chunk of growth will materialize in the company’s October quarter as it completed its acquisition of Wencor earlier in August.” Given the two companies’ “largely complementary catalogs and distribution footprints ... we think the union reinforces Heico’s narrow moat,” he added.
Of the acquisition, HEICO Chairman and CEO Laurans A. Mendelson expressed the utmost confidence. “Wencor is a perfect and highly complementary fit with HEICO,” he said, adding that heading into 2024, “we plan to actively work on Wencor’s ongoing integration into our business and operations.”
Sales in HEICO’s Flight Support Group rose 74% to a record $601.7 million in the quarter ended Oct. 31, which the company attributed to both the Wencor acquisition and “strong organic growth of 20%.”
For the full fiscal 2023, the Flight Support Group’s operating income increased 45% to a record $387.3 million. The company attributed this brisk growth to higher net sales within its aftermarket replacement parts and repair and overhaul parts and services product lines, an improved gross profit margin, and the impact from an amendment and termination of a contingent consideration agreement.
Thus far, investors have reacted moderately to HEICO’s earnings report. The company’s stock was trading at $185.45 at midday on Dec. 19, up about 1% over the share price prior to the earnings report.
