Heico’s strategy has been affirmed by Fitch Ratings, which gave the parts manufacturing approval parts (PMA) manufacturer investment grade status with its first rating of the company.
Heico’s Better Business Bureau rating with a stable outlook reflects its leading position in the PMA market and the success of its acquisition-driven growth policy.
The Fort Lauderdale-based company has grown from $25 million in sales in 1990 to roughly $2.2 billion last year, acquiring more than 90 business in that time and adding electronics, repair, support and delivery capabilities to its core PMA offering.
The latest step in this strategy is Heico’s $2 billion acquisition of Wencor, which should close in the second half of 2023.
“Fitch believes the transaction augments Heico's product portfolio, particularly for non-engine PMA parts and greater aftermarket exposure (greater than 90% of revenues for standalone Wencor) and technical distribution which offer steady revenue and attractive aftermarket margins,” stated Fitch.
On the flip side, the ratings agency noted that Heico’s business could suffer if supply chain problems persist, although the company can also benefit from higher PMA parts demand if OEM supply is delayed.
Speaking to Inside MRO in April, Partrick Markham, vice president of technical services at Heico, noted that supply chain bottlenecks for OEM parts can prompt airlines and MRO providers to try PMA.
“Some airlines come to the PMA industry to solve a short-term supply chain challenge, and then realize the benefit of a lower cost second source," said Markham. "We have even had OEMs contact us directly to gauge our ability to support the general market when they cannot.”
And while Heico has also benefited from new aircraft delivery delays, which have extended the lives of the older aircraft that its products mainly support, Fitch also highlighted a need for the company to develop products for new platforms “over time.”
“We are also expanding our offerings to include the new generation fleets, including the Neos and MAXs,” said Markham earlier this year.
