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Index
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number: 001-04604
HEICO CORPORATION
(Exact name of registrant as specified in its charter)
Florida65-0341002
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
3000 Taft Street, Hollywood, Florida33021
(Address of principal executive offices)(Zip Code)
(954) 987-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par value per share HEINew York Stock Exchange
Class A Common Stock, $.01 par value per share HEI.ANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer Non-accelerated filer
Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The number of shares outstanding of each of the registrant’s classes of common stock as of May 26, 2020 is as follows:
Common Stock, $.01 par value54,182,069  shares
Class A Common Stock, $.01 par value80,569,960  shares


Index
HEICO CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

Page
Part I.Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.Other Information
Item 1A.
Item 6.

1


Index
PART I. FINANCIAL INFORMATION; Item 1. FINANCIAL STATEMENTS

HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except per share data)
April 30, 2020October 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$346,786  $57,001  
Accounts receivable, net230,884  274,326  
Contract assets56,033  43,132  
Inventories, net457,819  420,319  
Prepaid expenses and other current assets33,991  18,953  
Total current assets1,125,513  813,731  
Property, plant and equipment, net171,399  173,345  
Goodwill1,300,187  1,268,703  
Intangible assets, net540,623  550,693  
Other assets227,113  162,739  
Total assets$3,364,835  $2,969,211  
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt$1,025  $906  
Trade accounts payable108,397  106,225  
Accrued expenses and other current liabilities145,345  178,957  
Income taxes payable1,586  3,050  
Total current liabilities256,353  289,138  
Long-term debt, net of current maturities739,188  561,049  
Deferred income taxes49,749  51,496  
Other long-term liabilities233,518  184,604  
Total liabilities1,278,808  1,086,287  
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests (Note 3)196,507  188,264  
Shareholders’ equity:
Preferred Stock, $.01 par value per share; 10,000 shares authorized; none issued
    
Common Stock, $.01 par value per share; 150,000 shares authorized; 54,182 and 54,143 shares issued and outstanding
542  541  
Class A Common Stock, $.01 par value per share; 150,000 shares authorized; 80,555 and 80,353 shares issued and outstanding
806  804  
Capital in excess of par value297,324  284,609  
Deferred compensation obligation4,232  4,232  
HEICO stock held by irrevocable trust(4,232) (4,232) 
Accumulated other comprehensive loss(23,804) (16,739) 
Retained earnings1,583,646  1,397,327  
Total HEICO shareholders’ equity1,858,514  1,666,542  
Noncontrolling interests31,006  28,118  
Total shareholders’ equity1,889,520  1,694,660  
Total liabilities and equity$3,364,835  $2,969,211  

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Index
HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
(in thousands, except per share data)
Six months ended April 30,Three months ended April 30,
2020201920202019
Net sales$974,421  $981,794  $468,146  $515,648  
Operating costs and expenses:
Cost of sales597,484  590,170  289,256  306,261  
Selling, general and administrative expenses157,786  174,494  70,729  90,204  
Total operating costs and expenses755,270  764,664  359,985  396,465  
Operating income
219,151  217,130  108,161  119,183  
Interest expense(8,042) (10,973) (3,759) (5,484) 
Other income 302  2,152  107  2,484  
Income before income taxes and noncontrolling interests
211,411  208,309  104,509  116,183  
Income tax expense700  30,200  23,600  26,100  
Net income from consolidated operations210,711  178,109  80,909  90,083  
Less: Net income attributable to noncontrolling interests
13,370  16,995  5,456  8,301  
Net income attributable to HEICO$197,341  $161,114  $75,453  $81,782  
Net income per share attributable to HEICO shareholders:
Basic$1.47  $1.21  $.56  $.61  
Diluted$1.44  $1.18  $.55  $.60  
Weighted average number of common shares outstanding:
Basic134,596  133,123  134,669  133,313  
Diluted137,269  137,092  137,117  137,206  

The accompanying notes are an integral part of these condensed consolidated financial statements.
3



Index
HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME – UNAUDITED
(in thousands)
Six months ended April 30,Three months ended April 30,
2020201920202019
Net income from consolidated operations$210,711  $178,109  $80,909  $90,083  
Other comprehensive income:
Foreign currency translation adjustments(7,399) (1,262) (4,721) (5,636) 
Amortization of unrealized loss on defined benefit pension plan, net of tax
39  12  15  6  
Total other comprehensive loss(7,360) (1,250) (4,706) (5,630) 
Comprehensive income from consolidated operations
203,351  176,859  76,203  84,453  
Net income attributable to noncontrolling interests
13,370  16,995  5,456  8,301  
Foreign currency translation adjustments attributable to noncontrolling interests
(295) (154) (165) (347) 
Comprehensive income attributable to noncontrolling interests
13,075  16,841  5,291  7,954  
Comprehensive income attributable to HEICO$190,276  $160,018  $70,912  $76,499  

The accompanying notes are an integral part of these condensed consolidated financial statements.
4



Index
HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - UNAUDITED
For the Six Months Ended April 30, 2020 and 2019
(in thousands, except per share data)
HEICO Shareholders' Equity
Redeemable Noncontrolling InterestsCommon StockClass A Common StockCapital in Excess of Par ValueDeferred Compensation ObligationHEICO Stock Held by Irrevocable TrustAccumulated Other Comprehensive LossRetained EarningsNoncontrolling InterestsTotal Shareholders' Equity
Balances as of October 31, 2019
$188,264  $541  $804  $284,609  $4,232  ($4,232) ($16,739) $1,397,327  $28,118  $1,694,660  
Comprehensive income
9,422  —  —  —  —  —  (7,065) 197,341  3,653  193,929  
Cash dividends ($.08 per share)
—  —  —  —  —  —  —  (10,762) —  (10,762) 
Issuance of common stock to HEICO Savings and Investment Plan
—  —  —  7,281  —  —  —  —  —  7,281  
Share-based compensation expense
—  —  —  5,275  —  —  —  —  —  5,275  
Proceeds from stock option exercises
—  —  2  2,390  —  —  —  —  —  2,392  
Redemptions of common stock related to stock option exercises
—  —  —  (2,567) —  —  —  —  —  (2,567) 
Noncontrolling interests assumed related to acquisitions
7,538  —  —  —  —  —  —  —  —  —  
Distributions to noncontrolling interests
(8,977) —  —  —  —  —  —  —  (765) (765) 
Adjustments to redemption amount of redeemable noncontrolling interests
260  —  —  —  —  —  —  (260) —  (260) 
Other
—  1  —  336  —  —  —  —  —  337  
Balances as of April 30, 2020
$196,507  $542  $806  $297,324  $4,232  ($4,232) ($23,804) $1,583,646  $31,006  $1,889,520  

HEICO Shareholders' Equity
Redeemable Noncontrolling InterestsCommon StockClass A Common StockCapital in Excess of Par ValueDeferred Compensation ObligationHEICO Stock Held by Irrevocable TrustAccumulated Other Comprehensive LossRetained EarningsNoncontrolling InterestsTotal Shareholders' Equity
Balances as of October 31, 2018
$132,046  $534  $796  $320,994  $3,928  ($3,928) ($15,256) $1,091,183  $104,757  $1,503,008  
Cumulative effect from adoption of ASC 606
819  —  —  —  —  —  —  13,373  326  13,699  
Comprehensive income
8,224  —  —  —  —  —  (1,096) 161,114  8,617  168,635  
Cash dividends ($.07 per share)
—  —  —  —  —  —  —  (9,305) —  (9,305) 
Issuance of common stock to HEICO Savings and Investment Plan
—  —  —  6,390  —  —  —  —  —  6,390  
Share-based compensation expense
—  —  —  4,987  —  —  —  —  —  4,987  
Proceeds from stock option exercises
—  7  4  5,517  —  —  —  —  —  5,528  
Redemptions of common stock related to stock option exercises
—  (3) —  (27,741) —  —  —  —  —  (27,744) 
Noncontrolling interests assumed related to acquisitions
13,079  —  —  —  —  —  —  —  2,382  2,382  
Distributions to noncontrolling interests
(7,384) —  —  —  —  —  —  —  (806) (806) 
Adjustments to redemption amount of redeemable noncontrolling interests
4,666  —  —  —  —  —  —  (4,666) —  (4,666) 
Deferred compensation obligation
—  —  —  —  115  (115) —  —  —  —  
Other
—  —  —  54  —  —  —  —  2  56  
Balances as of April 30, 2019
$151,450  $538  $800  $310,201  $4,043  ($4,043) ($16,352) $1,251,699  $115,278  $1,662,164  

The accompanying notes are an integral part of these condensed consolidated financial statements.
5



Index
HEICO CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY - UNAUDITED
For the Three Months Ended April 30, 2020 and 2019
(in thousands, except per share data)
HEICO Shareholders' Equity
Redeemable Noncontrolling InterestsCommon StockClass A Common StockCapital in Excess of Par ValueDeferred Compensation ObligationHEICO Stock Held by Irrevocable TrustAccumulated Other Comprehensive LossRetained EarningsNoncontrolling InterestsTotal Shareholders' Equity
Balances as of January 31, 2020
$195,893  $541  $805  $287,779  $4,232  ($4,232) ($19,263) $1,508,784  $30,601  $1,809,247  
Comprehensive income
4,655  —  —  —  —  —  (4,541) 75,453  636  71,548  
Issuance of common stock to HEICO Savings and Investment Plan
—  —  —  5,983  —  —  —  —  —  5,983  
Share-based compensation expense
—  —  —  2,629  —  —  —  —  —  2,629  
Proceeds from stock option exercises
—  —  1  863  —  —  —  —  —  864  
Redemptions of common stock related to stock option exercises
—  —  —  (5) —  —  —  —  —  (5) 
Noncontrolling interests assumed related to acquisitions
(2) —  —  —  —  —  —  —  —  —  
Distributions to noncontrolling interests
(4,630) —  —  —  —  —  —  —  (231) (231) 
Adjustments to redemption amount of redeemable noncontrolling interests
591  —  —  —  —  —  —  (591) —  (591) 
Other
—  1  —  75  —  —  —  —  —  76  
Balances as of April 30, 2020
$196,507  $542  $806  $297,324  $4,232  ($4,232) ($23,804) $1,583,646  $31,006  $1,889,520  

HEICO Shareholders' Equity
Redeemable Noncontrolling InterestsCommon StockClass A Common StockCapital in Excess of Par ValueDeferred Compensation ObligationHEICO Stock Held by Irrevocable TrustAccumulated Other Comprehensive LossRetained EarningsNoncontrolling InterestsTotal Shareholders' Equity
Balances as of January 31, 2019
$138,995  $534  $796  $324,395  $4,043  ($4,043) ($11,069) $1,174,811  $112,288  $1,601,755  
Comprehensive income
4,585  —  —  —  —  —  (5,283) 81,782  3,369  79,868  
Issuance of common stock to HEICO Savings and Investment Plan
—  —  —  5,344  —  —  —  —  —  5,344  
Share-based compensation expense
—  —  —  2,548  —  —  —  —  —  2,548  
Proceeds from stock option exercises
—  7  4  5,451  —  —  —  —  —  5,462  
Redemptions of common stock related to stock option exercises
—  (3) —  (27,591) —  —  —  —  —  (27,594) 
Noncontrolling interests assumed related to acquisitions
7,963  —  —  —  —  —  —  —  27  27  
Distributions to noncontrolling interests
(4,987) —  —  —  —  —  —  —  (408) (408) 
Adjustments to redemption amount of redeemable noncontrolling interests
4,894  —  —  —  —  —  —  (4,894) —  (4,894) 
Other
—  —  —  54  —  —  —  —  2  56  
Balances as of April 30, 2019
$151,450  $538  $800  $310,201  $4,043  ($4,043) ($