HEICO Corporation Reports First Quarter Results; Flight Support Group Reports Higher Sales and Operating Margins

Business Wire, Feb 27, 2003

Business Editors

HOLLYWOOD, Fla. & MIAMI--(BUSINESS WIRE)--Feb. 27, 2003

HEICO CORPORATION (NYSE:HEI) (NYSE:HEI.A), today reported that first quarter fiscal 2003 net sales increased 2% to $41,788,000 from $41,012,000 in the first quarter of fiscal 2002.

Net income totaled $2,834,000, or 13 cents per share, in the first quarter of fiscal 2003 versus $2,828,000, or 13 cents per share, in the first quarter of fiscal 2002.

Cash flow from operations totaled $6.7 million in the first quarter of fiscal 2003 versus $4.0 million in the first quarter of fiscal 2002 and exceeded the Company's net income in the first quarter of fiscal 2003 by 135%.

Operating income totaled $5,529,000 in the first quarter of fiscal 2003 versus $5,762,000 in the first quarter of fiscal 2002. Operating income in the first quarter of fiscal 2003 reflects improved sales and earnings within the Company's Flight Support Group (FSG) and lower corporate expenses, offset by lower sales and earnings within the Company's Electronic Technologies Group (ETG).

Sales within the FSG increased 10% to $31,886,000 in the first quarter of fiscal 2003 from $29,054,000 in the first quarter of fiscal 2002 reflecting increased revenues attributable to sales of new products and some strengthening in demand within the commercial airline industry. Operating income of the FSG in the first quarter of fiscal 2003 increased 26% to $5,377,000 from $4,266,000 in the first quarter of fiscal 2002, reflecting the higher sales and improved operating margins. The improved FSG operating margins are principally due to higher sales volumes and, to a lesser extent, lower new product development expenses.

Sales and operating income within the ETG were $10,000,000 and $768,000, respectively, in the first quarter of fiscal 2003 versus $12,134,000 and $2,660,000, respectively, in the first quarter of fiscal 2002. These decreases primarily resulted from shipments that were deferred due to production delays in certain products as well as some delays pursuant to customer requirements. These shipments are expected to be made during the balance of fiscal 2003.

Laurans A. Mendelson, HEICO's Chairman, President & Chief Executive Officer, remarked, "We are pleased to report improved results in our FSG, which, like most companies supplying the airline industry, has been impacted by the events of September 11th coupled with a weak economy. We also believe our ongoing new product development efforts and related revenue increases combined with our strategic relationships with some of the world's major airlines contributed to the strengthening seen in the first quarter of fiscal 2003. We believe that these increases validate our long term strategies despite softness in the airline industry. With our recently announced strategic relationship with Delta Air Lines, we now have four unique partner positions with major international airlines. We continue to have discussions with other major airlines as well.

"Sales and earnings of our ETG, however, fell short of our expectations. We believe we have resolved the cause of the production delays in certain of our more technologically advanced products, but note that our shipments will still meet revised customer requirements. As previously noted, we expect to make these delayed shipments over the balance of fiscal 2003.

"We are also pleased to note that our cash flow from operations remained strong in the first quarter of fiscal 2003, allowing us to reduce debt by $5 million and pay our 49th consecutive semi-annual cash dividend since 1979. Further, we continue to adhere to our long-term strategy of developing and marketing new products and services, which provides our existing customers with substantial cost savings and allows us to expand our markets.

"As we look forward to the balance of fiscal 2003, we expect continued improvements in our operating results. Based on current market conditions, we continue to target fiscal 2003 earnings at levels consistent with our previous expected range of 68-75 cents per share and sales growth of 12% to 15% over our fiscal 2002 sales.

"We remain confident that HEICO's strong financial position, continuing efforts to develop new products and services and long-term growth trends within the industries in which we participate, will provide substantial opportunity for sustainable growth."

As previously announced, HEICO will hold a conference call on Friday, February 28, 2003 at 8:30 a.m. Eastern time to discuss its first quarter results. Individuals wishing to participate in the conference call should dial: US/Canada/International/Local 302-709-8328, wait for the conference operator and provide the operator with the "Verbal" Passcode/Conference ID 140391. A digital replay will be available one hour after the completion of the conference, for 24 hours. To access, dial: U.S./Canada/International/Local 402-220-2946 and enter Passcode/Conference ID 140391#.

HEICO Corporation is engaged primarily in certain niche segments of the aerospace, defense and electronics industries through its Hollywood, FL-based HEICO Aerospace Holdings Corp. subsidiary and its Miami, FL-based HEICO Electronic Technologies Corp. subsidiary. HEICO's customers include a majority of the world's airlines and airmotives as well as numerous defense contractors and military agencies worldwide in addition to communications, electronics and medical equipment manufacturers. For more information about HEICO, please visit our web site at http://www.heico.com.