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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 July 31, 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 August 25, 2020 is as follows:
Common Stock, $.01 par value54,189,223 shares
Class A Common Stock, $.01 par value80,753,663 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)
July 31, 2020October 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$395,278 $57,001 
Accounts receivable, net181,134 274,326 
Contract assets59,113 43,132 
Inventories, net473,104 420,319 
Prepaid expenses and other current assets32,115 18,953 
Total current assets1,140,744 813,731 
Property, plant and equipment, net170,340 173,345 
Goodwill1,320,047 1,268,703 
Intangible assets, net542,674 550,693 
Other assets249,445 162,739 
Total assets$3,423,250 $2,969,211 
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt$1,073 $906 
Trade accounts payable80,548 106,225 
Accrued expenses and other current liabilities146,288 178,957 
Income taxes payable1,733 3,050 
Total current liabilities229,642 289,138 
Long-term debt, net of current maturities739,016 561,049 
Deferred income taxes45,869 51,496 
Other long-term liabilities252,372 184,604 
Total liabilities1,266,899 1,086,287 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests (Note 3)204,139 188,264 
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; 54,189 and 54,143 shares issued and outstanding
542 541 
Class A Common Stock, $.01 par value per share; 150,000 shares authorized; 80,741 and 80,353 shares issued and outstanding
807 804 
Capital in excess of par value301,532 284,609 
Deferred compensation obligation4,232 4,232 
HEICO stock held by irrevocable trust(4,232)(4,232)
Accumulated other comprehensive loss(4,451)(16,739)
Retained earnings1,623,285 1,397,327 
Total HEICO shareholders’ equity1,921,715 1,666,542 
Noncontrolling interests30,497 28,118 
Total shareholders’ equity1,952,212 1,694,660 
Total liabilities and equity$3,423,250 $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)
Nine months ended July 31,Three months ended July 31,
2020201920202019
Net sales$1,360,831 $1,514,118 $386,410 $532,324 
Operating costs and expenses:
Cost of sales840,411 909,663 242,927 319,493 
Selling, general and administrative expenses232,835 267,911 75,049 93,417 
Total operating costs and expenses1,073,246 1,177,574 317,976 412,910 
Operating income
287,585 336,544 68,434 119,414 
Interest expense(10,644)(16,496)(2,602)(5,523)
Other income 934 2,420 632 268 
Income before income taxes and noncontrolling interests
277,875 322,468 66,464 114,159 
Income tax expense9,600 55,300 8,900 25,100 
Net income from consolidated operations268,275 267,168 57,564 89,059 
Less: Net income attributable to noncontrolling interests
16,618 24,956 3,248 7,961 
Net income attributable to HEICO$251,657 $242,212 $54,316 $81,098 
Net income per share attributable to HEICO shareholders:
Basic$1.87 $1.82 $.40 $.61 
Diluted$1.83 $1.76 $.40 $.59 
Weighted average number of common shares outstanding:
Basic134,676 133,405 134,837 133,970 
Diluted137,257 137,273 137,234 137,634 

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)
Nine months ended July 31,Three months ended July 31,
2020201920202019
Net income from consolidated operations$268,275 $267,168 $57,564 $89,059 
Other comprehensive income (loss):
Foreign currency translation adjustments12,734 (1,794)20,133 (532)
Amortization of unrealized loss on defined benefit pension plan, net of tax
60 18 21 6 
Total other comprehensive income (loss)12,794 (1,776)20,154 (526)
Comprehensive income from consolidated operations
281,069 265,392 77,718 88,533 
Net income attributable to noncontrolling interests
16,618 24,956 3,248 7,961 
Foreign currency translation adjustments attributable to noncontrolling interests
506 (249)801 (95)
Comprehensive income attributable to noncontrolling interests
17,124 24,707 4,049 7,866 
Comprehensive income attributable to HEICO$263,945 $240,685 $73,669 $80,667 

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 Nine Months Ended July 31, 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 $1,694,660 
Comprehensive income
12,556      12,288 251,657 4,568 268,513 
Cash dividends ($.16 per share)
       (21,552) (21,552)
Issuance of common stock to HEICO Savings and Investment Plan
 1  8,575      8,576 
Share-based compensation expense
   7,775      7,775 
Proceeds from stock option exercises
  4 5,341      5,345 
Redemptions of common stock related to stock option exercises
  (1)(5,329)     (5,330)
Distributions to noncontrolling interests
(11,240)       (947)(947)
Acquisitions of noncontrolling interests
(7,475)         
Noncontrolling interests assumed related to acquisitions
16,471          
Adjustments to redemption amount of redeemable noncontrolling interests
4,147       (4,147) (4,147)
Other
1,416   561     (1,242)(681)
Balances as of July 31, 2020
$204,139 $542 $807 $301,532 $4,232 ($4,232)($4,451)$1,623,285 $30,497 $1,952,212 
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 $1,503,008 
Cumulative effect from adoption of ASC 606
819       13,373 326 13,699 
Comprehensive income
13,232      (1,527)242,212 11,475 252,160 
Cash dividends ($.14 per share)
       (18,691) (18,691)
Issuance of common stock to HEICO Savings and Investment Plan
   7,656      7,656 
Share-based compensation expense
   7,674      7,674 
Proceeds from stock option exercises
 7 8 8,255      8,270 
Redemptions of common stock related to stock option exercises
 (3)(1)(35,596)     (35,600)
Distributions to noncontrolling interests
(12,134)       (92,565)(92,565)
Noncontrolling interests assumed related to acquisitions
38,696        2,382 2,382 
Adjustments to redemption amount of redeemable noncontrolling interests
5,694       (5,694) (5,694)
Deferred compensation obligation
    (499)499     
Other
   75     1 76 
Balances as of July 31, 2019
$178,353 $538 $803 $309,058 $3,429 ($3,429)($16,783)$1,322,383 $26,376 $1,642,375 
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 July 31, 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 April 30, 2020
$196,507 $542 $806 $297,324 $4,232 ($4,232)($23,804)$1,583,646 $31,006 $1,889,520 
Comprehensive income
3,134      19,353 54,316 915 74,584 
Cash dividends ($.08 per share)
       (10,790) (10,790)
Issuance of common stock to HEICO Savings and Investment Plan
 1  1,294      1,295 
Share-based compensation expense
   2,500      2,500 
Proceeds from stock option exercises
  2 2,951      2,953 
Redemptions of common stock related to stock option exercises
  (1)(2,762)     (2,763)
Distributions to noncontrolling interests
(2,263)       (182)(182)
Acquisitions of noncontrolling interests
(7,475)         
Noncontrolling interests assumed related to acquisitions
8,933          
Adjustments to redemption amount of redeemable noncontrolling interests
3,887       (3,887) (3,887)
Other
1,416 (1) 225     (1,242)(1,018)
Balances as of July 31, 2020
$204,139 $542 $807 $301,532 $4,232 ($4,232)($4,451)$1,623,285 $30,497 $1,952,212 
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 April 30, 2019
$151,450 $538 $800 $310,201 $4,043 ($4,043)($16,352)$1,251,699 $115,278 $1,662,164 
Comprehensive income
5,008      (431)81,098 2,858 83,525 
Cash dividends ($.07 per share)
       (9,386) (9,386)
Issuance of common stock to HEICO Savings and Investment Plan
   1,266      1,266 
Share-based compensation expense
   2,687      2,687 
Proceeds from stock option exercises
  4 2,738      2,742 
Redemptions of common stock related to stock option exercises
  (1)(7,855)     (7,856)
Distributions to noncontrolling interests
(4,750)       (91,759)(91,759)
Noncontrolling interests assumed related to acquisitions
25,617          
Adjustments to redemption amount of redeemable noncontrolling interests