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    HEI
    Earnings call· Apr 2026(Q2 FY26)

    HEICO Q2 FY26 earnings call HEI

    May 28, 2026 Source

    Executive summary

    HEICO Q2 FY26 — Record Results Driven by Strong Organic Growth and Acquisitions

    HEICO delivered record Q2 FY26 results, driven by robust organic growth across both Flight Support and Electronic Technologies segments, complemented by strategic acquisitions. The company is experiencing strong demand in commercial aviation, defense, and space, with orders at record levels. Management remains optimistic about future growth, supported by a healthy acquisition pipeline and strong cash generation, despite a slight increase in leverage from recent deals.

    Highlights

    5

    • Consolidated net income increased 49% to a record $233.8 million.

    • Consolidated operating income increased 41% and net sales increased 25%.

    • Electronic Technologies Group (ETG) set all-time quarterly operating income and net sales records, up 56% and 34% respectively, driven by 17% organic growth.

    • Flight Support Group (FSG) set all-time quarterly operating income and net sales records, up 31% and 21% respectively, driven by 19% organic growth.

    • Cash flow from operating activities increased 43% to $292 million.

    Concerns

    4

    • Net debt-to-EBITDA ratio increased to 1.74x from 1.6x due to successful completion of 4 acquisitions.

    • FSG operating margin was boosted by approximately 60 basis points due to a pull-forward of $15 million to $20 million in defense sales.

    • Component repair organic growth was impacted by significant supply chain issues and parts delays.

    • Middle East sales were slightly lower due to geopolitical conflict, though offset by strength elsewhere.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year sales growth
    Increased sales in both Flight Support and Electronic Technologies Group
    medium materiality
    High
    Electronic Technologies Group GAAP operating margins
    between 22% and 24%
    medium materiality
    Medium
    Flight Support Group margin potential
    24% to 26%
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Flight Support Group
    Set all-time quarterly operating income and net sales records. The operating income increase reflects net sales growth, SG&A expense efficiencies, and an improved gross profit margin due to a more favorable product mix and higher net sales volume in aftermarket replacement parts. Operating margin was boosted by approximately 60 basis points due to pull-forward defense sales.
    Operating Margin: 26.2%Operating Margin YoY Change: +210 bps (from 24.1%)Organic Growth: 19%EBITA (cash margin before amortization): 28.6%EBITA YoY Change: +160 bps (from 27.0%)Organic Growth - Parts: ~20%Organic Growth - Specialty Products: 21%Organic Growth - Component Repair: ~10%
    		$929.4 million21%—$243.1 million
    Electronic Technologies Group
    Set all-time quarterly operating income and net sales records. The increase reflects net sales growth, improved gross profit margin, and SG&A expense efficiencies. Improved gross profit margin principally reflects higher net sales and a more favorable product mix of aerospace products. The stated revenue of $45.5 million in the transcript is an ASR error; calculated as $342.2 million * 1.34 = $458.5 million.
    Operating Margin: 26.5%Operating Margin YoY Change: +370 bps (from 22.8%)Organic Growth: 17%EBITA (cash margin before amortization): 30.6%EBITA YoY Change: +390 bps (from 26.7%)
    		$458.5 million34%—$121.8 million

    Operational metrics

    10
    Consolidated Net Income
    $233.8 millionup 49%
    Q2 FY26

    Record result for the quarter, up from $156.8 million in Q2 FY25.

    Consolidated Operating Income
    up 41%up 41%
    Q2 FY26

    Record result for the quarter.

    Consolidated Net Sales
    up 25%up 25%
    Q2 FY26

    Record result for the quarter.

    Diluted EPS
    $1.66up from $1.12
    Q2 FY26

    Per diluted share, up from $1.12 in Q2 FY25.

    Consolidated EBITDA
    $408.3 millionup 37%
    Q2 FY26

    Up from $297.7 million in Q2 FY25.

    Net Debt-to-EBITDA ratio
    1.74xup from 1.6x
    as of April 30, 2026

    Increased from 1.6x as of October 31, 2025, due to successful completion of 4 acquisitions in FY26.

    FSG Operating Margin Impact from Pull-Forward Sales
    60 bps
    Q2 FY26

    Incremental margin on defense-related sales pulled forward from later in the fiscal year.

    Defense-related sales pull-forward
    $15 million to $20 million
    Q2 FY26

    Sales originally planned for delivery later in the fiscal year, pulled forward at customer's request.

    Defense sales as percentage of total sales
    just under 30%Maybe 1% higher
    Q2 FY26

    Consolidated basis, compared to Q2 FY25.

    PMA parts introduced annually
    ~500
    Annual

    Number of PMA parts introduced annually, with ability to do more.

    Industry KPIs

    6
    MetricValueDetails
    Defense program awardsincrease in orders
    Program segment backlogrecord backlogs
    Aftermarket services split3/4 nonengine, 1/4 engine
    Production rates by program6x, 4x, 10xmultiple
    Production capacity expansion6x, 4x, 10xmultiple
    Total company backlog total estimated contract vrecord or near-record levels

    Orderbook & backlog

    6
    Ordersrecord or near-record levelsQ2 FY26
    Defense ordersrecord or near-record levelsQ2 FY26
    Defense backlogrecord or near-record levelsQ2 FY26
    ETG order bookvery strongQ2 FY26

    continues to grow

    ETG backlogrecordQ2 FY26
    FSG FA-approved repair stations backlogmassive backlogsQ2 FY26

    Many waiting on parts due to supply chain issues.

    Deals & partnerships

    2
    Sherwood Avionics and Accessoriesacquisitioncombination of mostly cash and some HEICO Class A common stock

    Flight Support Group acquired 80% of the stock of Sherwood Avionics and Accessories, an FAA and EASA Part 145 repair station specializing in MRO of complex mechanical and electromechanical components for defense and select commercial aviation platforms.

    Southwest Antennas Inc.acquisitioncash

    Electronic Technologies Group acquired 90% of the stock of Southwest Antennas Inc., a designer and manufacturer of high-performance, rugged, and mission-critical antennas, primarily for ground-based defense and law enforcement applications.

    Risks & headwinds

    3
    Geopolitical conflict impacting Middle East salesQ2 FY26, ongoing

    Middle East sales slightly lower; Middle East as a percentage of total sales is relatively small.

    Mitigation: Strength in other regions and market share gains have largely offset the impact.

    Supply chain issues impacting component repair growthQ2 FY26, ongoing

    Component repair organic growth was about 10%, would have been higher without parts delays.

    Mitigation: Massive backlogs in FA-approved repair stations, but waiting on parts from suppliers.

    Increased net debt-to-EBITDA ratioQ2 FY26

    Net debt-to-EBITDA ratio increased to 1.74x as of April 30, 2026, from 1.6x as of October 31, 2025.

    Mitigation: Resulted from successful completion of 4 acquisitions in fiscal '26, indicating strategic investment rather than operational distress.

    Q&A highlights

    8

    Can you provide a breakdown of FSG's organic growth by product line and comment on its sustainability, especially given the strong commercial aviation parts growth?

    FSG's organic growth was approximately 20% in parts, 21% in specialty products, and 10% in component repair. Component repair growth was lower due to supply chain issues. Overall demand is very strong, driven by market share gains, and a pull-forward of $15 million to $20 million in defense sales boosted Q2 results.

    “breaking down organic growth by product line. When you look at parts, it's around 2% specialty products is 21%, and component repair is about 10%.”

    asked by Larry Solow · answered by Eric Mendelson

    2 min read6 chapters

    Detailed Narrative

    01

    Record Quarterly Performance Across Segments

    HEICO achieved record consolidated net income, operating income, and net sales in Q2 FY26, increasing by 49%, 41%, and 25% respectively. Both the Electronic Technologies Group (ETG) and Flight Support Group (FSG) contributed significantly, setting all-time quarterly records for operating income and net sales. This strong performance was underpinned by impressive organic growth of 17% in ETG and 19% in FSG, alongside contributions from recent acquisitions.

    02

    Robust Demand and Market Share Gains

    The company is experiencing very strong business conditions across its key markets: commercial aviation, defense, and space, with orders continuing at record or near-record levels. Management highlighted that customers are 'clamoring for more parts,' indicating strong demand for HEICO's cost-effective and high-quality products. Market share gains are a significant driver, particularly in commercial aviation, as airlines seek cost efficiencies.

    03

    Strategic Acquisitions and Pipeline Strength

    HEICO completed two accretive acquisitions in April: Sherwood Avionics and Accessories for the FSG, and Southwest Antennas Inc. for the ETG. The company maintains an 'excellent potential acquisition pipeline' with opportunities across both operating segments. HEICO's long-term acquisition strategy focuses on high-quality businesses that complement existing operations, strengthen market positions, and meet strategic and financial criteria, with a preference for long-term ownership over short-term flips.

    04

    Strong Cash Generation and Capital Allocation

    Cash flow provided by operating activities increased 43% to $292 million in Q2 FY26, underscoring HEICO's robust cash generation capabilities. This strong cash flow permits investment in organic growth and acquisitions while maintaining liquidity and financial flexibility. The net debt-to-EBITDA ratio stood at 1.74x as of April 30, 2026, reflecting the capital deployed for recent acquisitions.

    05

    Defense Market Tailwinds and Production Scaling

    Management anticipates a multi-year tailwind in defense sales, orders, and backlog, driven by increased investment from the U.S. and its allies to replace depleted stocks. The company is receiving significant inquiries from customers regarding the ability to '6x, 4x, 10x' production of components, indicating strong future demand and potential for capacity expansion in this sector.

    06

    Aeroderivative Engine Market and AI Boom

    The recent acquisition of Ethos, now part of Encore, positions HEICO strongly in the aeroderivative and industrial gas turbine markets. Management expressed excitement about this vertical, noting its potential to benefit from the increasing demand for power generation, particularly driven by the 'AI boom.' This strategic move aligns with HEICO's focus on growing markets.

    AI-generated summary of the company’s earnings call. Not investment advice.