Heico (NYSE:HEI) executives emphasized record fourth-quarter fiscal 2025 results and a continued focus on cash generation during the company’s earnings call, while also sharing reflections on the passing of longtime Chairman and CEO Larry Mendelson. Co-Chairman and Co-CEO Victor Mendelson said the quarter capped “another exceptional year” and highlighted the company’s “record-setting results” and improving leverage metrics.
Record quarterly results and stronger cash flow
Victor Mendelson reported consolidated net income rose 35% to a record $188.3 million, or $1.33 per diluted share, compared with $139.7 million, or $0.99, in the prior-year quarter. Consolidated operating income and net sales also reached records, increasing 28% and 19%, respectively, versus the fourth quarter of fiscal 2024.
Cash flow provided by operating activities rose 44% to $295.3 million in the quarter, compared with $205.6 million in the year-ago period. The board declared a semiannual $0.12 per share cash dividend on both classes of stock payable in January 2026, which management said will mark the company’s 95th consecutive dividend.
Flight Support Group posts record sales and margin expansion
Co-Chairman and Co-CEO Eric Mendelson said the Flight Support Group (FSG) delivered all-time quarterly records for net sales and operating income. FSG net sales increased 21% to $834.4 million, driven by 16% organic growth and the impact of fiscal 2024 and 2025 acquisitions. Eric Mendelson said demand increased “across all of our product lines,” and he pointed to continued momentum following the company’s combination with Wencor, with customers “increasingly recognize[ing] the value of our expanded aftermarket parts and repair and overhaul offerings.”
FSG operating income rose 30% to a record $201.0 million, reflecting sales growth, improved profit margin, and SG&A efficiencies. Operating margin improved to 24.1% from 22.3% a year earlier. Eric Mendelson noted acquisition-related intangible amortization reduced the reported operating margin by roughly 250 basis points, and said FSG’s “cash margin” (EBITA) was approximately 26.6%.
During the Q&A, management discussed several drivers of FSG performance, including the company’s “value proposition,” decentralized structure, and what they described as a strong industry environment. Carlos Macau, executive vice president and CFO, cited mix factors supporting margins, including a higher proportion of PMA and DER work within repair and overhaul, expansion in avionics repairs, and a greater defense-related contribution within specialty products compared with pre-COVID commercial OE activity.
Management also highlighted defense-related demand. Eric Mendelson described missile defense manufacturing as experiencing “very significant growth,” supported by substantial orders and backlog, and said the company is positioned to deliver lower-cost alternative aircraft parts supporting defense readiness and cost efficiency. When asked about defense being roughly a quarter of the FSG segment, he said he expects the mix to remain “somewhat consistent” given growth on the commercial side.
Electronic Technologies Group grows, with margins impacted by SG&A
The Electronic Technologies Group (ETG) also delivered quarterly records. Net sales increased 14% to $384.8 million, including 7% organic growth and contributions from acquisitions. Eric Mendelson said organic growth was mainly attributable to increased demand for “other electronics, defense, aerospace, and space products.”
ETG operating income rose 10% to a record $89.6 million, while operating margin declined to 23.3% from 24.3%, primarily due to higher SG&A as a percentage of sales. Management attributed much of the SG&A increase to higher share-based compensation expense. Eric Mendelson said acquisition-related intangible amortization reduced ETG operating margin by about 400 basis points, and characterized an operating margin of approximately 27.3% before amortization as “very healthy.”
Acquisitions, leverage strategy, and 2026 outlook
Victor Mendelson said the company completed five acquisitions in fiscal 2025—three in ETG and two in FSG. He added that each group has entered into agreements to acquire two additional, separate businesses, including Ethos, which was announced earlier in the week. Management said both transactions are expected to close in the first quarter of calendar 2026, subject to customary closing conditions, and are anticipated to be accretive within the year of closing.
Looking ahead to fiscal 2026, Victor Mendelson said the company anticipates net sales growth across both segments, driven by organic demand and acquisitions, and that Heico will continue to pursue selective M&A. Executives described acquisition activity as “robust,” supported by a “healthy pipeline” of opportunities under evaluation.
Asked about balance sheet flexibility, Macau said the company is not “afraid of leverage” for the right transaction, though he suggested the company would not want permanent leverage in the “five or six” times range. He said a leverage level around two times is “comfortable,” while indicating Heico could temporarily increase leverage to complete a compelling deal if it could be reduced within 12 to 24 months.
In response to questions about longer-term growth expectations, management reiterated that its long-standing 15% to 20% bottom-line growth goal remains aspirational. Macau pointed to a 35-year history of compounding the bottom line at approximately 18%, while Eric Mendelson said the company remains focused on outgrowing its markets and leveraging both organic initiatives and acquisitions.
About Heico (NYSE:HEI)
HEICO Corporation is an aerospace, defense and electronics company that designs, manufactures, and sells a range of products and provides repair and aftermarket services. Headquartered in Hollywood, Florida, HEICO supplies replacement components, repair services and engineered systems for commercial and business aviation, military and space markets as well as for selected industrial and medical customers. The company’s offerings are focused on sustaining and improving the reliability and availability of complex equipment across its end markets.
HEICO operates through two principal business areas.
