HEICO Corporation

HEI
Financial Analysis · Updated May 29, 2026 · Coverage 2026-Q2
Latest Q Revenue
$1.0B
Q4 FY2024 · +7% YoY · Beat consensus by 6%
TTM ROIC
10.6%
FY2024 · NOPAT / Invested Capital (NOPAT = EBIT × (1 - Tax Rate); Invested Capital = Total Equity + Total Debt - Cash - Non-Operating Assets) · WACC ~8% · Moat spread +2.6pp
Margin Profile
Gross 34.9%
Operating 22.5%
FCF 17.4%
FY2024
Net Debt
$2.4B
Cash $180M · Debt $2.6B · FY2024 Year-End
Diluted Shares
143M
FY2024 · +1.5% (dilution)

Business Overview


source: coverage-next-full ticker: HEI step: "01" title: Business Overview — What HEICO Does created: 2026-05-29

HEI — Business Overview

Company Summary

HEICO Corporation is the world's largest independent manufacturer of FAA-approved aircraft replacement parts and one of the leading providers of defense electronics. Founded in 1957, HEICO is headquartered in Hollywood, Florida, and has been controlled by the Mendelson family since Larry Mendelson took over in 1990. The company operates as a highly acquisitive conglomerate within aerospace and defense, but with a distinctive culture of financial discipline and decentralized management.

HEICO's core business model is straightforward: it reverse-engineers OEM (Original Equipment Manufacturer) aircraft parts, obtains FAA Parts Manufacturer Approval (PMA), and sells those certified replacement parts to airlines, MROs (Maintenance, Repair & Overhaul shops), and militaries at discounts of 30–40% versus OEM pricing. This value proposition is irresistible to cost-conscious airline operators, and creates enormous switching costs and regulatory moat for HEICO.

Business Segments

Flight Support Group (FSG) — ~65% of Revenue

The FSG is HEICO's original and largest business. It encompasses:

PMA Parts Manufacturing: HEICO engineers PMA-certified replacement parts for aircraft engines (turbine blades, combustion chambers, seals), airframes (structural components, panels), and avionics. As of FY2024, HEICO holds approximately 10,000+ FAA PMA approvals — the broadest catalog in the independent parts industry.

Aviation Parts Distribution: HEICO distributes not only its own PMA parts but also OEM parts, spare parts, and consumables through its distribution network. This allows it to serve as a one-stop shop for MROs and airline maintenance departments.

Repair & Overhaul Services: Through subsidiary companies, FSG also provides component repair, overhaul, and modification services for aviation components.

Key FSG Subsidiaries (illustrative):

  • HEICO Aerospace Holdings (PMA manufacturing)
  • Seal Dynamics (pneumatic seals, components)
  • Air Radio & Instruments (avionics)
  • Multiple smaller niche aerospace subsidiaries acquired over 30+ years
Electronic Technologies Group (ETG) — ~35% of Revenue

The ETG makes defense electronics, medical electronics, and industrial electronics. Unlike FSG which operates in commercial aviation aftermarket, ETG primarily serves:

  • Defense/Military: Electronic systems, subsystems, components for radar, missile guidance, electronic warfare, communications — typically prime or sub-prime contracts with DoD and allied militaries
  • Medical: Specialty electronic components for imaging, diagnostics, radiation therapy
  • Industrial/Other: Specialized electronics for non-aviation industrial applications

ETG businesses tend to be highly specialized, niche producers with proprietary designs, often with long product cycles and sole-source positions. The segment operates at similar margins to FSG but with different cyclicality — defense spending provides some counter-cyclicality to commercial aviation.

Geographic Presence

  • Primarily US-based operations: Most manufacturing facilities are in the United States
  • Revenue mix: Approximately 70–75% US, 25–30% international
  • International exposure: Through airline customers globally; some ETG defense customers overseas
  • The company does not break out international revenue in the same granular way that pure-play international operators do

Scale

Metric FY2024
Total Revenue ~$3.87 billion
Employees ~10,000+
Subsidiaries (total) ~100+ operating units
PMA Parts Catalog ~10,000+ FAA approvals
Annual Acquisitions 3–6 per year, typically

Business Model Strengths

  1. Regulatory Moat: FAA PMA certification for each part is expensive and time-consuming. HEICO has a multi-decade head start in building its catalog. The catalog is the moat.
  2. Value Proposition: Airlines and MROs face relentless cost pressure. HEICO parts at 30–40% discount to OEM are not optional cost savings — they are strategically necessary.
  3. High Recurring Revenue: Aircraft maintenance is not discretionary. Aircraft must fly, and they must be maintained. Aftermarket parts are annuity-like revenue.
  4. Disciplined M&A: HEICO has executed 100+ acquisitions over 30+ years without destroying value. The company acquires small, profitable niche businesses, retains founders/management, and integrates lightly. This is unusual for an acqui-growth model.
  5. Asset-Light Manufacturing: HEICO parts businesses are not capital-intensive relative to OEM aerospace — no new aircraft program risk, no defense prime contractor risk.

What HEICO Is NOT

  • Not an OEM (does not manufacture new aircraft)
  • Not a defense prime contractor (ETG is a sub-tier supplier)
  • Not exposed to aircraft production rates as a key variable (aftermarket depends on installed fleet utilization, not new production)
  • Not a pure-play commercial aviation company (ETG provides meaningful diversification)

Key Competitive Relationships

  • OEMs (Competitors/Partners): GE Aerospace, Pratt & Whitney (RTX), Safran, Honeywell — HEICO competes with their aftermarket parts businesses. Tension is ongoing: OEMs try to assert "back to OEM only" maintenance requirements; HEICO pushes FAA/DOT positions that PMA parts are legally interchangeable.
  • TransDigm (TDG): Most similar public comp. Also in aerospace aftermarket, also highly acquisitive. Different model: TDG acquires businesses with sole-source positions and raises prices aggressively. HEICO competes on price (PMA discount vs. OEM). Different cultures.
  • Airlines: Primary customers. Major US carriers (American, Delta, United, Southwest) are large HEICO customers. International carriers increasingly adopt PMA parts.
  • MROs: Aviation service companies that maintain aircraft are major distribution channel partners and customers.

Financial Snapshot


source: coverage-next-full ticker: HEI step: "04" title: Financial Snapshot — 3-Year P&L Summary created: 2026-05-29

HEI — Financial Snapshot (3-Year P&L Summary)

Income Statement Summary

All figures in millions USD except per-share data. Fiscal year ends October 31.

Metric FY2022 FY2023 FY2024 3-Yr CAGR
Revenue $2,410M $3,230M $3,870M +26.7%
Gross Profit ~$880M ~$1,130M ~$1,350M
Gross Margin ~36.5% ~35.0% ~34.9%
Operating Income (EBIT) ~$490M ~$620M ~$870M
EBIT Margin ~20.3% ~19.2% ~22.5%
Net Income ~$374M ~$449M ~$598M +26.5%
Net Margin ~15.5% ~13.9% ~15.5%
EPS (diluted) ~$2.71 ~$3.19 ~$4.19
EBITDA ~$560M ~$740M ~$1,010M
EBITDA Margin ~23.2% ~22.9% ~26.1%

Note: FY2023 margins were compressed by Wencor acquisition costs and integration; FY2024 shows normalization and leverage.

Segment Operating Income

Segment FY2022 OI FY2022 Margin FY2023 OI FY2023 Margin FY2024 OI FY2024 Margin
FSG ~$275M ~17.4% ~$380M ~17.9% ~$530M ~20.9%
ETG ~$220M ~26.4% ~$250M ~22.5% ~$345M ~25.9%
Corporate/Other (~$5M) (~$10M) (~$5M)
Total ~$490M ~20.3% ~$620M ~19.2% ~$870M ~22.5%

Note: ETG consistently earns higher margins than FSG due to its proprietary defense electronics positions and smaller scale of individual operations.

Revenue Growth Analysis

Period Revenue YoY Growth Organic M&A
FY2020 $1,834M -3.8%
FY2021 $2,084M +13.6% +5-7% +6-9%
FY2022 $2,410M +15.6% +10-12% +4-6%
FY2023 $3,230M +34.0% +10-12% +22-24% (Wencor)
FY2024 $3,870M +19.8% +8-10% +10-12% (full yr Wencor)

The FY2023 surge was dominated by the Wencor acquisition. FY2024 reflects the first full fiscal year of Wencor contribution plus normal organic growth.

Profitability Trends

Gross Margin

Gross margins have trended slightly lower over the period (36.5%→34.9%) due to:

  • Wencor's distribution-heavy model carries lower gross margins (~25–28%) than HEICO's manufactured PMA parts (~55–65%)
  • Mix shift from high-margin PMA manufacturing toward distribution pulls blended gross margin down
  • This is normal and expected; operating leverage and SG&A discipline maintain EBIT margins
EBIT Margin Trajectory
  • FY2022: ~20.3% — pre-Wencor, legacy HEICO margins
  • FY2023: ~19.2% — Wencor integration costs + deal financing costs compressed margins
  • FY2024: ~22.5% — integration benefits emerging, operating leverage kicking in
  • Long-term target: Management has consistently guided to 20–25% EBIT margins as the business model range
Net Income Bridge (FY2023 → FY2024)
  • Revenue growth: +$640M → ~+$150M net income impact at ~23% flow-through
  • EBIT margin improvement: +330bps → additional ~$100M impact
  • Higher interest expense (Wencor debt): partially offset (~-$50M)
  • Tax rate roughly stable (~21-22%)
  • Net: ~+$149M net income increase

EPS Analysis

Metric FY2022 FY2023 FY2024
Basic EPS ~$2.73 ~$3.20 ~$4.20
Diluted EPS ~$2.71 ~$3.19 ~$4.19
YoY EPS growth +20.5% +17.7% +31.3%
Shares (diluted, M) 138.0M 140.7M 142.8M

Note: HEI is modestly dilutive due to stock-based compensation; share count growth is slow (~1% per year). The dual class structure (HEI + HEI.A) means reported EPS uses combined diluted share count.

R&D and Investment Spending

HEICO's nature as a parts replicator rather than an innovator means its "R&D" spending is actually PMA engineering — the process of reverse-engineering and certifying OEM parts:

  • HEICO does not report a separate R&D line
  • Engineering costs embedded in COGS for PMA parts operations
  • Capital intensity is LOW — Capex typically 1.5–2.5% of revenue
  • The value creation is in the FAA approval process, not in traditional R&D

Cash Earnings vs. GAAP Earnings

Metric FY2022 FY2023 FY2024
GAAP Net Income ~$374M ~$449M ~$598M
D&A ~$70M ~$120M ~$140M
Amortization of intangibles ~$80M ~$120M ~$150M
Stock comp ~$20M ~$30M ~$35M
Operating Cash Flow ~$480M ~$600M ~$750M
Capex ~$50M ~$60M ~$75M
Free Cash Flow ~$430M ~$540M ~$675M
FCF/Net Income conversion ~115% ~120% ~113%

FCF consistently exceeds GAAP net income due to the amortization of acquisition intangibles — a key quality signal. These are non-cash charges that reduce GAAP income but not economic earnings power.

Balance Sheet Snapshot (FY2024 Year-End)

Item FY2024 FY2023 Change
Cash & Equivalents ~$180M ~$150M +20%
Total Debt ~$2,600M ~$2,800M -7%
Net Debt ~$2,420M ~$2,650M -9%
Shareholders' Equity ~$3,800M ~$3,100M +23%
Total Assets ~$8,500M ~$8,000M +6%
Net Debt / EBITDA ~2.4x ~3.6x Rapid deleveraging

Post-Wencor leverage has been declining rapidly as EBITDA scales and HEICO generates strong free cash flow for debt repayment.

Key Valuation Metrics (as of late 2024)

Metric Value
Market Cap ~$27–30B
EV (Market Cap + Net Debt) ~$30–33B
EV/EBITDA ~30–33x
P/E (trailing) ~50–60x
P/E (forward) ~42–48x
EV/Revenue ~8–9x
P/FCF ~40–45x

HEICO trades at a persistent premium valuation reflecting the quality of the business model, the compounding track record, and the scarcity of a business with these characteristics.

Deeper Financial Analysis

The fundamental tier adds 9 additional research dimensions for $HEI.

Revenue Breakdown
Segment revenue, geographic mix, product-line contribution margins, and cohort dynamics.
Financial Trends
Quarter-over-quarter momentum, leading indicators, and inflection point analysis.
Balance Sheet
Debt structure, liquidity runway, dilution risk, and working capital dynamics.
Capital Allocation
Buyback cadence, M&A appetite, dividend policy, and reinvestment priorities.
Returns on Capital (ROIC)
Multi-year ROIC vs. WACC, marginal returns on reinvestment, sales-to-invested-capital efficiency, and moat spread.
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