Heico's shares fell early Wednesday following the aerospace and electronics company revealing higher fiscal fourth-quarter results compared to the previous year, though sales did not meet market expectations. Net income was reported at $0.99 a share for the three months ending in October, an increase from $0.74 in the same period last year.
Analysts on FactSet had anticipated a GAAP EPS of $0.98. The company's sales rose to $1.01 billion, up from $936.4 million in the prior year; however, this fell short of expectations, which targeted $1.03 billion. Consequently, the stock experienced a decline of 6.1% in premarket trading. The results were largely driven by "exceptional operating performance" in its flight support group segment and "notable contributions" from acquisitions made in fiscal years 2023 and 2024, Chief Executive Laurans Mendelson stated.
"Furthermore, these results reflect improved demand across all of the flight support group's product lines," he added. Flight support group sales surged 15% to $691.8 million. On an organic basis, sales increased by 12%, supported by a 13% rise in the aftermarket replacement parts product line and additional gains from acquisitions, co-President Eric Mendelson explained.
Despite this growth, organic revenue expansion slowed down from the 15% increase noted in the previous quarter, as indicated by Truist Securities in a client note. Sales within the electronic technologies group dipped to $336.2 million from $342.5 million a year prior, as stronger sales from space products were counterbalanced by declines in defense and other electronics.
Truist mentioned that the segment continues to face challenges concerning growth and margins. Heico's consolidated operating margin improved to 21.6%, up from 20.2% from the same period last year; however, it showed a slight decline of 20 basis points on a sequential basis, according to Truist. Selling, general, and administrative expenses increased marginally to $175.2 million from almost $175 million a year earlier. The company expects sales growth in both operating segments for fiscal 2025, bolstered by organic improvements and strong demand for most products, noted Laurans Mendelson.
"Additionally, we plan to drive growth through our recently completed acquisitions while positioning ourselves to capitalize on potential opportunities from future acquisitions," he added. The absence of a formal full-year outlook may impact stock performance, as investors await further insights during the company's conference call on Wednesday, Truist remarked.
The brokerage maintains a buy rating on Heico's shares, setting a price target of $282..