• Heico Earns 56 Cents per Share
    Posted by on August 24th, 2021 at 4:47 pm

    HEICO CORPORATION (NYSE:HEI.A)(NYSE:HEI) today reported an increase in net income of 42% to $76.9 million, or $.56 per diluted share, in the third quarter of fiscal 2021, up from $54.3 million, or $.40 per diluted share, in the third quarter of fiscal 2020. Net income was $218.2 million, or $1.58 per diluted share, in the first nine months of fiscal 2021, as compared to $251.7 million, or $1.83 per diluted share, in the first nine months of fiscal 2020.

    While net income, operating income and net sales in the third quarter and first nine months of fiscal 2021 were adversely affected by the COVID-19 global pandemic (the “Pandemic”) as discussed below, those impacts are declining over time. Improvement in commercial aerospace market conditions has been evidenced by four consecutive quarters of sequential growth in net sales and operating income at the Flight Support Group.

    Net sales increased 22% to $471.7 million in the third quarter of fiscal 2021, up from $386.4 million in the third quarter of fiscal 2020. Operating income increased 47% to $100.8 million in the third quarter of fiscal 2021, up from $68.4 million in the third quarter of fiscal 2020. The Company’s consolidated operating margin increased to 21.4% in the third quarter of fiscal 2021, up from 17.7% in the third quarter of fiscal 2020.

    Net sales were $1,356.3 million in the first nine months of fiscal 2021, as compared to $1,360.8 million in the first nine months of fiscal 2020. Operating income was $277.9 million in the first nine months of fiscal 2021, as compared to $287.6 million in the first nine months of fiscal 2020. The Company’s consolidated operating margin was 20.5% in the first nine months of fiscal 2021, as compared to 21.1% in the first nine months of fiscal 2020.

    EBITDA increased 36% to $123.9 million in the third quarter of fiscal 2021, up from $91.0 million in the third quarter of fiscal 2020. EBITDA was $347.9 million in the first nine months of fiscal 2021, as compared to $353.7 million in the first nine months of fiscal 2020. See our reconciliation of net income attributable to HEICO to EBITDA at the end of this press release.

    Consolidated Results

    Laurans A. Mendelson, HEICO’s Chairman and CEO, commented on the Company’s third quarter results stating, “We are very pleased to report much improved quarterly operating results within both Flight Support and Electronic Technologies. Consolidated operating income and net sales in the third quarter of fiscal 2021 improved 47% and 22%, respectively, as compared to the third quarter of fiscal 2020, which was the quarter in which our operating results were most negatively affected by the Pandemic. Our performance principally reflects quarterly consolidated organic net sales growth of 17%, and the favorable impact from our fiscal 2020 and 2021 acquisitions.

    Earlier this month, we announced that Flight Support acquired 89% of Ridge Engineering, Inc. and The Bechdon Company, Inc. The purchase price of these acquisitions was paid in cash using cash on hand and we expect these acquisitions to be accretive to our earnings per share within the first twelve months following closing.

    Our total debt to shareholders’ equity ratio improved to 17.4% as of July 31, 2021, as compared to 36.8% as of October 31, 2020. Our net debt (total debt less cash and cash equivalents) of $117.1 million as of July 31, 2021 to shareholders’ equity ratio improved to a very low 5.3% as of July 31, 2021, down from 16.6% as of October 31, 2020, which provides the Company with substantial acquisition capital in the balance of our $1.5 billion revolving credit facility and other available capital.

    Our net debt to EBITDA ratio improved to .25x as of July 31, 2021, down from .71x as of October 31, 2020. During fiscal 2021, we successfully completed four acquisitions and have no significant debt maturities until fiscal 2024. We plan to utilize our financial strength and flexibility to aggressively pursue high quality acquisitions of various sizes to accelerate growth and maximize shareholder returns.

    Cash flow provided by operating activities was very strong, increasing 33% to $124.0 million in the third quarter of fiscal 2021, up from $93.1 million in the third quarter of fiscal 2020. Cash flow provided by operating activities remained strong, increasing 12% to $334.1 million in the first nine months of fiscal 2021, up from $299.0 million in the first nine months of fiscal 2020.

    Looking ahead to the remainder of fiscal 2021 and to fiscal 2022, we remain cautiously optimistic that the ongoing worldwide rollout of COVID-19 vaccines will positively influence commercial air travel and will benefit the markets we serve. But, as we’ve all learned, it is difficult to predict the Pandemic’s path and effect, including factors like vaccination rates and new variants, which can impact our key markets. Therefore, we feel it would not be responsible to provide fiscal 2021 net sales and earnings guidance at this time. However, our ongoing conservative policies, strong balance sheet, and high degree of liquidity enable us to invest in new research and development, execute on our successful acquisition program, and position HEICO for market share gains as the industry recovers.”

    Flight Support Group

    Eric A. Mendelson, HEICO’s Co-President and President of HEICO’s Flight Support Group, commented on the Flight Support Group’s third quarter results stating, “We are very pleased to report quarterly increases of 250% and 33% in operating income and net sales, respectively, as compared to the third quarter of fiscal 2020. These substantial increases principally reflect increased demand for the majority of our commercial aerospace products and services resulting from some recovery in global commercial air travel as compared to the prior year. This marks the fourth consecutive quarter of sequential growth in net sales and operating income at the Flight Support Group.

    The Flight Support Group’s net sales increased 33% to $237.1 million in the third quarter of fiscal 2021, up from $178.2 million in the third quarter of fiscal 2020. The net sales increase is principally from organic growth of 32%. The organic growth is mainly attributable to increased demand for our commercial aerospace products across all of our product lines.

    The Flight Support Group’s operating income increased 250% to $42.1 million in the third quarter of fiscal 2021, up from $12.0 million in the third quarter of fiscal 2020. The operating income increase principally reflects the previously mentioned net sales growth and an improved gross profit margin principally from the previously mentioned increased demand for our commercial aerospace products. Additionally, we had a decrease in bad debt expense due to certain commercial aviation customers filing for bankruptcy protection in the third quarter of fiscal 2020 as a result of the Pandemic’s financial impact.

    The Flight Support Group’s operating margin improved to 17.7% in the third quarter of fiscal 2021, up from 6.7% in the third quarter of fiscal 2020. The operating margin increase principally reflects the previously mentioned increase in net sales, improved gross profit margin, and lower bad debt expense.

    The Flight Support Group’s net sales were $666.7 million in the first nine months of fiscal 2021, as compared to $731.2 million in the first nine months of fiscal 2020. The net sales decrease in the first nine months of fiscal 2021 is principally organic and reflects lower demand for the majority of our commercial aerospace products and services resulting from a decline in global commercial air travel attributable to the Pandemic.

    The Flight Support Group’s operating income was $103.4 million in the first nine months of fiscal 2021, as compared to $121.6 million in the first nine months of fiscal 2020. The operating income decrease principally reflects the previously mentioned lower net sales, as well as higher performance-based compensation expense and the impact from fixed cost inefficiencies stemming from the Pandemic, partially offset by a decrease in bad debt expense.

    The Flight Support Group’s operating margin was 15.5% in the first nine months of fiscal 2021, as compared to 16.6% in the first nine months of fiscal 2020. The operating margin decrease principally reflects an increase in SG&A expenses as a percentage of net sales mainly from the previously mentioned higher performance-based compensation expense and fixed cost inefficiencies, partially offset by the previously mentioned lower bad debt expense.”

    Electronic Technologies Group

    Victor H. Mendelson, HEICO’s Co-President and President of HEICO’s Electronic Technologies Group, commented on the Electronic Technologies Group’s third quarter results stating, “Despite the Pandemic continuing to moderate demand for certain of our products, we are pleased to report quarterly increases of 14% and 11% in net sales and operating income, respectively, as compared to the third quarter of fiscal 2020. These operating results reflect the impact from our profitable fiscal 2020 and 2021 acquisitions, as well as strong quarterly organic net sales growth for the majority of our products.

    The Electronic Technologies Group’s net sales increased 14% to $239.5 million in the third quarter of fiscal 2021, up from $210.9 million in the third quarter of fiscal 2020. The net sales increase principally resulted from our fiscal 2020 and 2021 acquisitions as well as organic growth of 5%. The organic growth principally reflects increased demand for our other electronic, defense, medical, and commercial aerospace products, partially offset by decreased net sales of commercial space products.

    The Electronic Technologies Group’s operating income increased 11% to $69.0 million in the third quarter of fiscal 2021, up from $61.9 million in the third quarter of fiscal 2020. The operating income increase principally reflects the previously mentioned net sales growth, partially offset by a slightly lower gross profit margin mainly from a decrease in net sales of commercial space products.

    The Electronic Technologies Group’s operating margin was 28.8% in the third quarter of fiscal 2021, as compared to 29.4% in the third quarter of fiscal 2020. The operating margin decrease principally reflects the previously mentioned lower gross profit margin.

    The Electronic Technologies Group’s net sales increased 11% to a record $706.2 million in the first nine months of fiscal 2021, up from $638.3 million in the first nine months of fiscal 2020. The net sales increase principally reflects our fiscal 2020 and 2021 acquisitions as well as organic growth of 2%. The organic growth principally reflects increased demand for our other electronic and defense products, partially offset by decreased net sales of our commercial aerospace and space products.

    The Electronic Technologies Group’s operating income increased 8% to a record $200.4 million in the first nine months of fiscal 2021, up from $184.9 million in the first nine months of fiscal 2020. The operating income increase principally reflects the previously mentioned net sales growth, partially offset by a lower gross profit margin mainly from a less favorable product mix for defense products and a decrease in net sales of commercial space products, partially offset by an increase in net sales of other electronic products.

    The Electronic Technologies Group’s operating margin was 28.4% in the first nine months of fiscal 2021, as compared to 29.0% in the first nine months of fiscal 2020. The operating margin decrease principally reflects the previously mentioned lower gross profit margin.”

  • Another New High
    Posted by on August 24th, 2021 at 11:31 am

    Yesterday, the S&P 500 closed just 0.004% below its all-time high close from last Monday. Don’t worry, the market is up again this morning. This could be our ninth up day in the last 11 sessions.

    Heico’s (HEI) earnings are due out after the close today. Wall Street is looking for earnings of 55 cents per share.

    This morning’s new-home sales report showed an increase of 1% for July. The numbers for June were revised higher as well. The bottom line is that the housing market is still growing but the rate of growth is cooling off. That’s thanks to higher prices and tight inventory.

  • Morning News: August 24, 2021
    Posted by on August 24th, 2021 at 7:11 am

    ‘Distressed’ Crude From Venezuela, Iran Stacks Up Off Singapore

    Powell’s Charm Offensive in Congress Positions Him to Keep Job

    Goldman Sachs Raises Odds on U.S. Fed Taper Announcement in November

    U.S. SEC to Scrutinize Firms’ Digital-Engagement Practices As Investor Worries Grow

    Hedge Funds Are Hot Again. Good Luck Finding One That’ll Take Your Money

    Investors Are Terrified … of Missing Out On the Market Rally

    Bankers Issue ‘Seismic’ Warning: Bitcoin, Ethereum, BNB, Cardano And XRP Could Replace The Dollar In Just Five Years As Crypto Market Price Adds $1 Trillion

    Apple and Google’s Fight in Seoul Tests Biden in Washington

    Battery Pioneer Akira Yoshino on Tesla, Apple and the Electric Future

    Luxury’s Gray Market Is Emerging From the Shadows

    U.S. Retailers Bring Back ‘Above-the-Keyboard’ Clothes as Delta Surge Persists

    With Holidays Around the Corner, Walmart Starts Last Mile Delivery Service

    Cathie Wood’s Calling

    Antivaxxers Become Social Outcasts on Wall Street

    Purdue Pharma Judge Says Sacklers Face ‘Substantial Risk’ of Liability

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  • 100th Anniversary of the 1920s Bull Market
    Posted by on August 23rd, 2021 at 1:36 pm

    The great bull market of the 1920s began 100 years ago tomorrow.

    On August 24, 1921, the Dow closed at 63.90. Eight years and 10 days later it closed at 381.17.

    And everybody lived happily ever after!!!

    In the 1920s there was a real estate bubble, especially in Florida. That’s the backstory of the Marx Brothers first movie, The Cocoanuts.

    “You can even get stucco. Oh how you can get stuck-o.”

  • Energy Stocks Lead the Market Higher
    Posted by on August 23rd, 2021 at 10:45 am

    The stock market is up again this morning. The energy stocks are leading the charge. Many of the big-name oil stocks are up 3% or more while the rest of the market is up just a bit.

    In the crypto-world, bitcoin is back above $50,000. Just over a month ago, it slipped below $30,000. Given bitcoin’s volatility, this could all change in a few days.

    The Federal Reserve has its big Jackson Hole conference this week. The meeting runs from Thursday to Saturday. Fed watchers everywhere are watching for news. If I had to guess, I think it’s slightly early to hear any tapering news from the Fed. Maybe around Thanksgiving.

    This morning’s existing-home sales report rose for the second month in a row. One bright spot is that housing inventory is down 12% over the last year. The median price for an existing home is now $359,900. That’s up 17.8% in the last year.

    “The housing sector appears to be settling down,” said Lawrence Yun, chief economist for the Realtors. “The market is less intensely heated as before.”

    It may be cooling, but it still appears to be competitive. Homes are spending, on average, just 17 days on the market. First-time buyers represented just 30% of the market, whereas they are usually around 40% historically. Nearly a quarter of all buyers are using all-cash, also a higher share than normal.

    The latest read on sales of newly built homes from June showed a sharp decline both monthly and annually, according to the U.S. Census. That data set is based on signed contracts, so it is looking at roughly the same activity as the July data on existing homes. Newly built homes come at a price premium to similar-sized existing homes, and builders say they are now seeing even more buyers unable to afford what they would like.

  • Morning News: August 23, 2021
    Posted by on August 23rd, 2021 at 7:01 am

    Xi Doubles Mentions of ‘Common Prosperity,’ Warning China’s Rich

    China Halts Over 40 IPOs Amid Regulatory Probe Into Law Firm, Broker

    China Muscles In on Middle East Renewables With Alcazar Deal

    The Shipping Crisis Is Getting Worse. Here’s What That Means for Holiday Shopping

    Delta Variant, Having Put Kibosh on Fed Event, Begins to Menace Recovery

    Jerome Powell’s Policy Revolution Was Blindsided by Covid-19

    Fed Experts Say Powell Framework Needs Endgame, Inflation Reset

    It’s Called The Bond Taper. Yes, It’s Geeky. But This Is Why You Should Know About It

    New Appetite for Mortgage Bonds That Sidestep Fannie and Freddie

    Biden and the Fed Wanted a Hot Economy. There’s Risk of Getting Burned.

    New York’s Economy, Poised for Comeback, Finds Setback Instead

    B-Schools Must Evolve for Future Business Demands, Employers Say

    Battle for Meggitt Shows Bigger-Is-Better Is Back in Aerospace

    Pfizer to Buy Trillium Therapeutics in $2.26 Billion Deal

    God, Money, YOLO: How Cathie Wood Found Her Flock

    What Say ‘Money Multiplier’ Fabulists As Corporations Stockpile Trillions?

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  • Ross Stores Drops in Today’s Trading
    Posted by on August 20th, 2021 at 1:31 pm

    Shares of Ross Stores (ROST) got clocked hard this morning. At its low, Ross was down by 6%. It’s made back some lost ground and at the time I write this, Ross is down 2.6%.

    Wells Fargo apparently agrees with me that Ross is being too conservative with its guidance:

    Wells Fargo says the outlook doesn’t match the better-than-expected results the company announced late Thursday. “We get it, 2H has headwinds-but we view this 2H outlook as a tad overly conservative following such a strong 2Q-not an atypical approach for this management team,” wrote analysts led by Ike Boruchow. Wells Fargo rates Ross Stores stock overweight with a $135 price target.

    (…)

    Credit Suisse says the company has an “unwavering dedication to its conservative/value-leader narrative” and “struck a conservative tone” during its earnings report.

  • Fiserv’s CEO Talks With Jim Cramer
    Posted by on August 20th, 2021 at 1:15 pm

  • Morning News: August 20, 2021
    Posted by on August 20th, 2021 at 7:01 am

    The World’s Biggest Crypto Exchange Still Lacks U.S. Footing

    The Methane Hunters Racing to Change the Course of Global Warming

    Norway’s $1.4 Trillion Wealth Fund Puts Oil Stocks on Notice

    Chip Crisis Threatens to Cut Auto Output by 7.1 Million Cars

    Volkswagen Cuts Output at Biggest Plant as Chip Shortage Bites

    The Electric Vehicle Boom is Pay-Dirt for Factory Machinery Makers

    Air Canada Sees Cargo Advantage in Toronto Hub As Shippers Avoid U.S. Crunch

    For Bank Regulators, Tech Giants Are Now Too Big to Fail

    U.S. Revives Facebook Suit, Adding Details to Back Claim of a Monopoly

    Facebook’s New Bet on Virtual Reality: Conference Rooms

    Amazon Plans to Open Large Retail Locations Akin to Department Stores

    Academy Of Country Music Awards Ditches Broadcast Networks, To Air Only On Amazon Prime

    Are You Ready for Sentient Disney Robots?

    ‘Paw Patrol’ Unleashed: Behind ViacomCBS’s Plan to Take on Disney

    Three Former Netflix Engineers Are Charged in $3 Million Insider-Trading Ring

    What It Means When Musk and Bezos Argue Over the Moon

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  • Jobless Claims Fall to New Pandemic Low
    Posted by on August 19th, 2021 at 10:25 am

    The stock market had a terrible close yesterday. At 2 pm, the S&P 500 was at 4,449. Two hours later, at closing time, it was at 4,400. This morning, the index is on track for its third fall in a row.

    The good news is that the jobless claims report was pretty good. Claims fell to 348,000. That’s a new pandemic low and it’s down 29,000 from the week before. Wall Street was expecting 365,000.

    The earnings report from Ross Stores (ROST) is due out after the close. Wall Street expects earnings of 94 cents per share.