Thank you, Samara, and good morning to everyone on this call. Thank you for joining us, and we welcome you to HEICO's fourth quarter fiscal '25 earnings announcement teleconference.

As you heard, I'm Victor Mendelson, HEICO's Co-Chairman and Co-CEO. I am joined here this morning by Eric Mendelson, HEICO's other Co-Chairman and Co-CEO, and Carlos Macau, our Executive Vice President and CFO.

As we start this call, Eric and I would like to take a moment to remember our father, Larry Mendelson, whom you all know was long HEICO's Chairman and CEO. As sons, we were beyond blessed to have a unique and loving father who instilled in us from our earliest days values and life methods based on fairness, on excellence, on quality, and, as our father used to say, just doing the right thing.

Of course, these values and life methods apply in business too, and as a businessman, he knew how much these matter, along with a fixation on real earnings, that is to say, cash flow. Many of you on this call will remember his unrelenting emphasis on cash flow, not artificial GAAP metrics, although he always lived by those GAAP metrics and enforced them, he knew what really mattered.

Eric and I were also blessed to have been partners with our father from well before the three of us became HEICO's largest shareholders and mounted our effort to take over management. By the way, in a few weeks, we'll mark the 36th anniversary of our taking over here.

Working with him to build HEICO day in and day out was a pleasure and an honor that few get to experience, and I can say that through his example, not only were Eric and I imbued with these values, these life methods, and his business approach, but more important, all of HEICO became so imbued. That was his succession plan, and as was nearly always the case with our father, it worked perfectly.

Our father was profoundly proud of HEICO. He was also one of the greatest optimists we ever knew, and in his closing days, even after nearly 36 remarkable HEICO years, he was more optimistic than ever about this company's prospects.

I can tell you that we and the HEICO team share that optimism, and I can also say how grateful we are for all that we learned from him. Thank you for indulging us for a few moments there.

Before turning to our fourth quarter fiscal '25 record-setting results, which capped another exceptional year for HEICO, we recognize our team members' extraordinary efforts. Our team members' dedication to our customers and our endeavors across the organization were the reason for our very strong results this quarter and this year, leaving us quite optimistic about HEICO's future.

We and HEICO's board thank you for all you have done in 2025 and before, and we look forward to an even more prosperous 2026. Taking a moment to summarize our record results during the fourth quarter of fiscal '25, we note, first, that consolidated net income increased 35% to a record $188.3 million, or $1.33 per diluted share, in the fourth quarter of fiscal '25, up from $139.7 million, or 99 cents per diluted share, in the fourth quarter of fiscal '24.

Consolidated operating income and net sales in the fourth quarter of fiscal '25 represent record results for HEICO, which improved by 28% and 19%, respectively, as compared to the fourth quarter of fiscal '24. The Flight Support Group set all-time quarterly net sales and operating income records in the fourth quarter of fiscal '25, improving 21% and 30%, respectively, over the fourth quarter of fiscal '24.

The increases principally reflect strong 16%—strong would be an understatement, but 16% organic growth stemming from increased demand across all of the group's product lines, as well as the impact from our profitable fiscal '25 and '24 acquisitions. The Electronic Technologies Group also set all-time quarterly net sales and operating income records in the fourth quarter of fiscal '25, improving 14% and 10%, respectively, over the fourth quarter of fiscal '24.

These increases principally reflect strong organic growth from most of the group's products and the impact from our profitable fiscal '25 and '24 acquisitions. Consolidated EBITDA increased 26% to $331.4 million in the fourth quarter of fiscal '25, up from $264 million in the fourth quarter of fiscal '24.

Our net debt-to-EBITDA ratio improved to 1.6 as of October 31, '25, down from 2.06 on October 31, '24. Cash flow provided by operating activities increased 44% to $295.3 million in the fourth quarter of fiscal '25, up from $205.6 million in the fourth quarter of fiscal '24.

Yesterday, HEICO's board of directors declared a semiannual 12 cents per share cash dividend on both classes of HEICO stock payable in January 2026, representing our 95th consecutive dividend and reflecting the board's ongoing confidence in our company's strong cash flow generation. We completed five acquisitions in fiscal '25, three in the Electronic Technologies Group and two in the Flight Support Group, further enhancing our sales, our earnings, and our cash flow.

Each of our Flight Support and Electronic Technologies Groups recently entered into agreements to acquire two separate and unrelated businesses, one of which, Ethos, was just announced earlier this week. As of now, we anticipate both should close in the first quarter of calendar '26, though they are, of course, subject to customary closing conditions, including, among others, antitrust clearance and the sellers complying with typical representations and covenants, we can't be certain of actual timing or actual closing.

We expect these acquisitions would be accretive to HEICO's earnings within the year of each transaction's closing. I now turn the call over to Eric Mendelson to discuss our Flight Support and Electronic Technologies Groups' fourth quarter results in greater detail.

Eric?

Thank you, Victor. Before we turn to the results, I want to pause and recognize the remarkable performance of HEICO's team members.

What we are reporting today is the product of extraordinary talent, relentless execution, and a culture developed over decades that consistently turns ambitious objectives into real outcomes. Time and again, they have demonstrated the ability to rise to the challenges, adapt, and deliver at the highest level.

Their commitment, collaboration, determination, and creative approach are the foundation of these results and make them especially rewarding. We are all sure that our dad is looking down on us today as we report these outstanding results and we close our 36th year with HEICO.

As Victor said so eloquently a few moments ago, we are both so grateful for all that we learned from our dad and from all the time that we had with him. Now moving on to the results.

The Flight Support Group's net sales increased 21% to a record $834.4 million in the fourth quarter of fiscal '25, up from $691.8 million in the fourth quarter of fiscal '24. The net sales increase reflects strong organic growth of 16% and the impact from our fiscal '24 and '25 acquisitions.

The net sales growth reflects increased demand across all of our product lines. HEICO's operations continue to exceed our expectations, underscoring our highly successful combination with Wencor.

Customers increasingly recognize the value of our expanded aftermarket parts and repair and overhaul offerings, which has driven strong growth opportunities and continued success across the company. The Flight Support Group's defense business remains a compelling opportunity, particularly as both the U.S.

administration and our foreign allies emphasize defense readiness and cost efficiency. HEICO is extremely well positioned to support these priorities by delivering high quality, lower cost alternative aircraft parts that help reduce costs for the government and taxpayers while expanding our addressable markets.

Our missile defense manufacturing business is also experiencing very significant growth, fueled by rising demand from the United States and our allies. We have substantial orders and backlog to support the continued expansion of this business, and we are committed to providing cost-effective solutions and industry-leading quality to our U.S.

military and our foreign allies. The Flight Support Group's operating income increased 30% to a record $201 million in the fourth quarter of fiscal '25, up from $154.5 million in the fourth quarter of fiscal '24.

The operating income increase reflects the previously mentioned net sales growth and improved profit margin and SG&A expense efficiencies realized from the net sales growth. The improved profit margin principally reflects net sales growth within our repair and overhaul parts and services product line and a more favorable product mix within our specialty products product line.

The Flight Support Group's operating margin improved to 24.1% in the fourth quarter of fiscal '25, up from 22.3% in the fourth quarter of fiscal '24. The increased operating margin principally reflects the previously mentioned improved gross profit margin.

Since acquisition-related intangible amortization expense consumed approximately 250 basis points of our operating margin in the fourth quarter of fiscal '25, the Flight Support Group's cash margin, which is before amortization or what we also call EBITA, was approximately 26.6%, which has been consistently excellent and is 160 basis points higher than the comparable Flight Support Group cash margin of 25.0% in the fourth quarter of '24. As I have previously discussed, we are laser focused on cash generation at each of our businesses.

I am very happy with the continued expansion of our cash margins and believe the decentralized operating structure has permitted us to expand these margins while simultaneously delivering high-quality products and services to our customers at substantial cost savings with lightning-quick turnaround times. Now I will discuss the fourth quarter results of the Electronic Technologies Group.

The Electronic Technologies Group's net sales increased 14% to a record $384.8 million in the fourth quarter of fiscal '25, up from $336.2 million in the fourth quarter of fiscal '24. The net sales increase reflects strong organic growth of 7% and the impact from our fiscal '25 and '24 acquisitions.

The organic net sales growth is mainly attributable to increased demand for our other electronics, defense, aerospace, and space products. The Electronic Technologies Group's operating income increased 10% to a record $89.6 million in the fourth quarter of fiscal '25, up from $81.8 million in the fourth quarter of fiscal '24.

The operating income increase principally reflects the previously mentioned net sales growth and an improved gross profit margin, partially offset by higher SG&A expenses, mainly reflecting increased share-based compensation expense. The improved gross profit margin principally reflects a more favorable mix of our medical and other electronics products.

The Electronic Technologies Group's operating margin was 23.3% in the fourth quarter of fiscal '25 as compared to 24.3% in the fourth quarter of fiscal '24. The operating margin change principally reflects an increase in SG&A expenses as a percentage of net sales, primarily from the previously mentioned higher share-based compensation expense, partially offset by the previously mentioned improved gross profit margin.

Importantly, before acquisition-related intangible amortization expense, our operating margin was a very healthy 27.3% as intangibles amortization consumed around 400 basis points of our operating margin. This is how we judge our business as that most closely correlates to cash.

On a true operating basis, these are excellent margins and we are very pleased with them. Now I turn the call back to Victor Mendelson to discuss our outlook.

Thank you, Eric. Looking ahead to fiscal '26, we anticipate net sales growth across both the Flight Support Group and the Electronic Technologies Group driven by organic growth from increased demand for the majority of our products, as well as growth from our recent acquisitions.

We'll continue to pursue selective acquisition opportunities that complement this growth, and our disciplined financial management remains dedicated to creating long-term shareholder value through a balanced combination of organic growth and strategic acquisitions while maintaining financial resilience and flexibility. Acquisition activity, of course, continues to be robust across both operating segments, supported by a healthy pipeline of potential acquisition opportunities currently under evaluation.

As such, we remain focused on identifying high-quality businesses that complement HEICO's existing operations and of course further strengthen our strategic positioning. Consistent with our longstanding acquisition philosophy, we will only pursue acquisitions and opportunities that meet our strict financial and strategic criteria, that are accretive, and have the potential to generate durable long-term value for HEICO and for our shareholders.

Thank you very much for attending our call. Those are our prepared remarks, and we ask Samara, the operator, to please open the line for questions.

Great. Good morning and appreciate the comments on Larry, and I'm sure he's smiling down on the really strong free cash flow this quarter, congrats on that.

Thank you, Larry.

Absolutely. First question, Eric, I guess for you, just on the growth, as we look at it, at FSG, I think we used to view you as sort of a high single, low double-digit grower, and growth has been mid-teens plus on the core business for five-plus years.

Maybe the first couple were COVID recovery, but as we look out, it feels like all the positives continue to align in your direction. Can you just help us just kind of bucket these drivers, clearly the market's growing nicely, but I don't know if growth has accelerated out of historical levels where we are today.

Is it just your expanded parts offering? Is it market share?

Is it just more acceptance of your parts? If you can just bucket those multiple positives, I think, driving your business.

Sure, Larry, I'd be happy to do that, and thank you very much for your kind comments. Yes, for sure, our dad would be very, very happy with these results.

I'm sure he is.

Absolutely.

You're right, the organic growth has been tremendous, and frankly, it's even surprised us and me. I've always been optimistic and I've always thought that we would continue to outgrow the market, but we continue to do so in a much more meaningful way.

You're right, why is that? I think it's a number of things.

Number one, of course, we want to be grateful for the rising tide environment in the industry. That's been terrific and that's been very strong for us.

I think the other thing that's been really good is the value proposition that HEICO offers our customers. The thing that perhaps I'm most proud about is that we've had 16% organic growth in this quarter, and another 5% acquired on top of that for a total of 21% sales growth, but operating income increased 30%.

At the same time, our customers are incredibly happy in getting huge value from us. We've been able to drive operating income, if you will, primarily off of the organic sales growth, and our customers are still very happy.

I think that speaks to a tremendous sales opportunity that we have really in all of our businesses, whether it's in PMA parts, repair, distribution, specialty manufacturing, defense, and I'm talking over on the Flight Support Group side and then of course on the ETG side, more growth opportunity there. I really think it's the value proposition that we offer combined with our decentralized and very entrepreneurial structure.

I get emails after we announced earnings from a number of different people within HEICO, and basically thanking me for the incredible results, and I turn around and say, no, it's yes, we've been very good on capital allocation, but they're the ones who really deliver these results. We're just reporting the results that they deliver.

It's as a result of being very intimate with their product line, understanding their customers, the whole competitive dynamic. I think that as there are more aircraft out there and there's increased demand in both commercial aircraft, as well as defense product and missile interceptors, I think that we are just incredibly well positioned.

Look, the organic growth has surprised me. That's one of the reasons why we don't give guidance, because we don't know where it's going to be.

We just know at HEICO that we've got 11,000 people come to work every day, put their heads down, and work as hard as they possibly can, and frankly, the results are the results. I do think that the value proposition is tremendous.

I guess, lastly, one of the other things that I think we've seen over the last number of years is that other manufacturers are increasing their prices substantially. I think that just further supports the HEICO value proposition.

I think we're in a great place right now.

No, I appreciate all that color. Yeah.

No, that was great. Victor, how about question for you, just I think obviously you had a little sluggishness last year, but a good year this year.

Feels like most of your end markets or if not all of them now are kind of pointing up and to the right, obviously led by defense. Another National Defense Authorization Act was just passed recently.

Feels like that was positive. Any just general thoughts on State of the Union on your outlook?

We're projecting growth next year in ETG as I always do, I guide people to look for on an organic basis mid to low single digits organic growth. If we do better, that's great.

We'll see where everything shakes out a year from now and over the quarters. We feel very good about our businesses.

We did our budget reviews, our subsidiary annual reviews, and as a rule of thumb, our companies are feeling good. Not every company is going to march ahead next year in the way we'd like to see, but overall, very good.

Great. All right, great.

Appreciate it. Thanks for the color.

Thank you.

Hey, guys. Good morning.

Again, my condolences about your father. On the quarter itself, let's just do a couple quick things.

How are things looking for M&A as we go into calendar '26? Very,

very strong. We're working on a lot of opportunities.

I would say each quarter we seem to feel like it can't get any busier. Our pipeline is busier and busier, but that's exactly what happened in this past quarter, and actually in recent weeks since the quarter ended.

We've got a lot we're working on, a lot that we're looking at. Of course, as Ron, it doesn't happen until it closes.

There's a lot of work, a lot of diligence. We're extraordinarily discerning in what we'll buy, but we're fortunate in that we are known as a great home for sellers, particularly entrepreneur, founder, managers, and others who are really going to take care of the businesses, not only honor the legacy, but keep the entrepreneurial environment.

There's a lot of opportunity for us. We'll see what we're able to mine out, but we're cautiously optimistic.

Ron, I would also just add to that, we started really our acquisition program in earnest about 27 years ago, and we really acquired, I don't know, 110 companies, and we really have a track record. It's not just 1, 2, 3, 5, 10-year track record.

It's a very, very long track record in DNA, which is embedded in the company. When we talk to sellers, I think we're viewed in a very, very different light, and as a result, we got a lot of bandwidth, and we also have a lot of different sellers who really view us as the buyer of choice.

I think we're in really good position there.

Got it. How comfortable are you guys levering up to do a deal, given the balance sheet's so strong?

Hey, Ron, this is Carlos. I would say, similar to history, we are not afraid of leverage.

For the right transaction, for the right deal for our shareholders, we would take on additional leverage. I don't think that our company, the culture, and the way we do business would suggest we'd like to have permanent leverage in the 5 or 6 range.

If we had to spike up to 4, 5, 6 times to do a deal and I felt comfortable that within 12, 18, 24 months that we could get that leverage back down to a manageable number, we would certainly do that if it was good for our shareholders. I think as a sort of status quo, we like leverage to be somewhere around two times.

That's a comfortable spot for us. Right now our permanent debt, if you would, or our bonds are sitting at about one turn of EBITDA.

That's very comfortable. I think we could probably carry two turns of debt in permanent, sort of financing posture and be very comfortable at HEICO with the cash generation that we have.

Got it. Then just one last one for me.

You guys had mentioned last year about doing PMA parts for defense, and how's that going? Is there any progress on that front?

Ron, this is Eric. Yes, there has been progress on that front.

As we always said, it is really going to be more of a medium-term project. As it takes a little bit of time for the government to do all the stuff that they got to do.

We think that there's a very, very big opportunity there for us, and we're quite excited about it.

Got it. Great.

Thank you all.

Thanks, Ron. Thank you, Ron.

Good morning, Eric, Victor, Carlos. Nice results.

Eric, you talked a little bit about defense and missile defense, and if I remember correctly, defense and space is roughly about a quarter of the FSG segment. Do you see that mix changing much just given all the growth you're highlighting?

I think actually it's going to probably remain pretty consistent because we have so much growth over on the commercial side that they're doing a great job keeping up with the huge growth over on defense. I think it's probably going to be somewhat consistent going forward.

I do think that there are massive opportunities for us over on the defense side. As our customers become more familiar with our broad capabilities and by the way, not only are long-time, large defense customers who we continue to support and have a great relationship with, but also the defense tech community.

We're doing a lot of work for those guys as well and delivering huge value. We've got design capability, manufacturing capability across a very wide array of products.

We're able to solve all sorts of complex problems for them.

I think that that's just going to continue to be a big opportunity for us, along with the launch business. We're very careful at HEICO.

We don't talk about specific programs, specific customers, because, frankly, we don't want to give a roadmap to our competitors on what we're doing. We say, just look at our results.

I can tell you that there have been very well-known companies coming into HEICO, into our Specialty Products Group, into our other manufacturing businesses, asking to help solve some of this country's major, major problems. I'm super proud of our team.

I think there's a big opportunity there.

Appreciate the color. Maybe Eric and Victor, you can both comment on maybe Golden Dome.

Just how you see HEICO's business kind of positioned? Obviously, there's been a lot in the classified circles and behind the scenes, not much public.

How do you view the opportunity set for HEICO? Thanks.

Dude, this is Victor. It's a good question.

Obviously, we're excited by it. Golden Dome consists of a number of existing programs, and from what we understand, because it's not I think intentionally so, it's not entirely publicly defined, or maybe not entirely that we can discuss on a public call.

You have the existing programs on which we have great presence and have had for years, some of which Eric was alluding to in his comments, but the same in by the way, both ETG and FSG within the business. Then there's a lot of reconnaissance, surveillance, tracking that's being added to it and networking it together.

A number of our businesses have been told that some of the things they're working on, some of the development contracts they've been getting, are related to that. Without being able to go into the specifics on each one of those programs, of course, and the subsidiaries, we'll take our customers at their word.

There is no order that comes in at the top that says, "Golden Dome Department," right? We'll have to judge as we go down the road how much it'll be, but it's definitely additive, and we're definitely excited about it.

We, of course, think it's the right thing to do for the country given the success, for example, of Iron Dome. A number of our companies have components on a number of the Iron Dome constituent parts.

Terrific. Thanks again, guys.

Happy holidays.

Thank you,

Yes. Hi.

Good morning, and very nice results. Maybe, Eric, just to start, you've grown FSG margins pretty substantially, about 300 basis points from 21 to 20 or 22 to 25.

I can appreciate part of that's been mixed with Wencor. You've also seen some opportunities on pricing in other areas.

How do we think about FSG margins in the 20 fiscal '26 and beyond? Is there any reason we don't see continued pace of improvement?

Hey, Ken. Thank you for your question.

While we don't give guidance, you're right, we've grown margins substantially. At the same time, the thing that I'm really proud about is we've kept our customers very happy while doing that simultaneously.

I do think there's continued margin opportunity for us, continued margin expansion, as we have basically greater absorption of what I'll call our fixed costs, whether it's in cost of sales or SG&A. I do think that we've got additional leverage there.

We've made a number of significant investments over the last number of years to broaden our manufacturing and design and distribution capabilities. I think we'll continue to see improved margins there.

It's hard for me to guess what that is, because the truth is I really don't know.

As I've mentioned, I think, before, we've got this great decentralized organization, and they all submit budgets, which tend to be on the, let's just say, the very conservative side. It's very hard for me to predict going forward what it's going to be, but I just know that at the end of the day, they end up outperforming.

I think Carlos may have some additional thoughts on that.

Ken, in football terminology—

Hi, Ken.

Hey, Ken. Here's the deal.

I continue to believe that the FSG is going to play between 23.5% and 24.5% GAAP operating margins. The reason that I have kind of a wide sort of vector there is because we have noticed and talked about some mix impacts on the margin, particularly specialty products and repair and overhaul.

Historically, the FSG margin story's always been about volume. Until that mix sort of settles down a little bit, it's kind of hard to tighten that up.

I think you could expect between those ranges, and hopefully towards the high end of that. There'll be reasons that are quarter specific if we're not, but I think that's the range you should expect.

That's helpful, Carlos. Thank you.

If I could, Eric, just one other question. Seems like each time this year we have a debate around better deliveries out of Boeing and Airbus and the implications of what that could mean for aftermarket spending.

Can you just comment on what you're seeing at airlines today as they think about 2026 around aircraft retirements, obviously fuel prices are low, continued use of legacy or older assets? Just what's your view on aftermarket fundamentals into 2026?

It's a great question, and look, we've got the utmost respect for Boeing and Airbus and we think that, as well, of course, Embraer, and we think that they're going to get a lot of the supply chain issues worked out. These are phenomenal companies that put out the best products and unbelievable products.

The world really needs them, and that they will get their situation worked out. Then the question is, what happens to the rest of the aftermarket there on the older aircraft?

We think that the older aircraft will continue to be in very good demand. You can see what the retirement rates have been.

Again, you've got this older fleet that is a very large fleet, which is continuing to age one year per year and consume a massive amount of parts. We think that we're in very good position.

Again, we're long-term investors, if you will, citizens, residents in this stock. If there's a dip, things move up and down a little bit, it doesn't change our view on it.

For us, we don't really look at the if you will, the quarter-to-quarter and sort of the micro moves. We're looking out saying the airlines recognize that there's this massive need coming down the road.

They need more suppliers. We're there to fill that opportunity on both the independent side, as well as the OEM-aligned side, it's whatever our customers want.

I think we're in good position. It should remain quite strong, to answer your question.

Great. Thanks, Eric.

Happy holidays, everybody.

Thanks, and you, too.

Thank you,

Good morning, guys, and thank you so much for the time. Maybe if I could start, and I want to give you guys condolences on Larry, because I think we're also lucky to have known him, and he's impacted all of our lives in some way.

So

Thank you, Sheila.

Maybe going back to the performance for '25, it's been stellar, the quarter as well. Eric, I wanted to ask you, I know everybody's harped on FSG growth, and it just seems it's accelerated in the quarter.

If you could give us any detail on maybe the parts of the business that you think will outperform as we head into fiscal '26? Also you've announced some pretty neat transactions like Ethos Energy recently, and another transaction.

Can you talk about how those fit into the broader both Wencor and the broader FSG?

Sure. I would be happy to.

Sheila, thank you also for the very nice comments about dad. He always respected you and your fellow analysts and really enjoyed his time very much with you all.

Thank you for that. As far as the subsectors within Flight Support that are going to outperform, I'm sorry to sound like a broken record, but I think it's really across the board.

It's in everything that we're doing. We're seeing strength across the board.

I wouldn't say that there's one area in particular. You bring up Ethos, and we're very excited about that because they're strong in the IGT market.

Of course, you've got all these industrial gas turbines of which some are aeroderivatives supporting the AI power demand.

As there's a massive amount of power that has to be created, and these IGTs, industrial gas turbines, are expected to play a major role there. We think that we're in very, very good position to help Ethos continue to support their program.

We think that there's just a tremendous amount of opportunity. We like the people very much.

They have three different facilities. It's a very decentralized organization, very entrepreneurial.

I think there is going to be big increase in demand on the various components that they overhaul, and we think that it's just a great addition to Wencor. As HEICO's been, Wencor's been very successful in their markets.

We allocate out the acquisitions according to bandwidth and who's got time and capacity to be able to take on these acquisitions. We're really happy that Wencor's got the talent and the technical ability to help drive that business forward, and we think that there'll be very good performance out of it.

Thank you for that color. Can you maybe also talk about the fuel containment business?

Does that work with Robertson? How do you think about how that fits into the framework, and can we think about annual revenues in the $125 million range for that one?

This is Victor. The business is separate from Robertson.

It's a supplier to Robertson, Robertson has been a customer. I think working together, they can bring additional benefits to our customers and to the marketplace, and make things, in fact, even more competitive for our customers.

There's opportunity there. We didn't break out the revenue from the business, I'm being careful, of course, on that.

Of course, if it closes, right, no deal is ever certain. Timing issues and approvals and things like that that we've got to go through will also influence the amount of revenue that we recognize in fiscal '26.

Got it. Sure.

Sorry, Victor, I forgot Robertson was in ETG. Thank you.

Thank you.

Hey, guys. Thanks for taking my question.

I completely appreciate that we've gone away from annual guidance a long time ago in HEICO, but at the same time, every few years, you guys reiterate this 15% to 20% net income growth kind of multiyear target. We've had a couple years of amazing net income growth, and I just kind of offer the observation that consensus expectations are for a very sharp deceleration over the next few years.

I just wanted to kind of revisit this idea, take the temperature. How do you feel about 15% to 20% as sort of a multiyear growth number from here, a target?

Is there anything that you're seeing that suggests a sharp deceleration in growth rates is likely?

John, first of all, thank you very much for your question. This is Eric.

I'd be happy to answer that. As the 15% to 20% has always been an aspirational number.

The company is designed in a decentralized way, but rolling up into groups so we can harness the individual and entrepreneurial efforts of our people in the businesses and combine them with technology, market access, capital that the larger groups bring. I can tell you that all of the subsidiaries have organic growth targets that are consistent with the numbers that you mentioned, and we believe that on the acquisition side, we are in a very good position and continue to be the buyer of choice.

Obviously, the important metric for us is EBITA, which is really operating income plus intangibles amortization due to purchase accounting, because that's really a made-up number, if you will. I think in terms of growing our EBITA, nothing has changed going forward.

Obviously, as you get bigger, it may become more difficult, but of course, as we've gotten bigger, we've hit the numbers and it's become easier. All I can tell you is we remain very focused, and I think we're in a good position going forward.

For us to give guidance, as I've mentioned, is very difficult because our subsidiaries tend to give very conservative guidance to us, and then we have to add a number on top of that, and who knows what that number is going to be. I can tell you Victor and I spend a lot of time out in the field with our businesses, we're aware of all the technology they're developing, Carlos is out there as well, and I think the future is going to be very good for us, and we're going to continue to outgrow the market.

Nothing has changed with our focus on outgrowing the market. So

Right. Despite a few great years above that range, it sounds like you don't see it likely that we'd be below that range for a number of years going forward.

It sounds like the algorithm is still in tact as far as you can tell.

As I mentioned, look, those numbers are aspirational numbers. I think 15% is a great aspirational number.

We're working very hard to make that happen. Again, we don't provide guidance, I want to be very careful what I say.

Everything here at HEICO is structured to continue this growth.

Hey, John, this is Carlos. Let me refer you to history here.

We've done for 35 years compounded our bottom line at 18%, we've proven that we can do it. Every year we sit down, we do our budgets, we look at the performance, the atmospherics in the markets, and we shoot for 15% to 20% bottom line growth.

We're capable of doing that. As Eric mentioned, as we grow larger, it becomes more challenging, but as we look out over the next three to five years, I don't see anything impeding those aspirational goals.

That's what we target as a group, as a board, and as a company to grow, I think that's all intact.

Also I would just add to what Carlos said, when you look at our leverage at roughly 1.5 times, we've got tremendous ability to make acquisitions. When you generate, what was the number, $934 million from operations, the cash is really very, very strong.

We're able then to take that cash and go buy other entrepreneurial businesses where people want to be part of HEICO. There's no change to our program.

Very clear. Thank you, guys.

Thank you.

Thanks, John.

Hey, guys. Good morning.

Can you hear me okay?

We can. Good morning, Noah.

Great. Yes, good morning.

Those were nice comments about your father. It was great to be able to work with him.

Thank you.

Thank you.

Just staying on these FSG margins a bit. Carlos, you talked about mix.

I guess when we look at the incremental being better in '25 than '24, are you able to parse out the pieces of that, how much of it was that mix, and can you tell us what those mix items are and what you expect them to do next year, and how much of it was any change in pricing philosophy?

The price part of that, we probably get, Noah, 2 or 3 points worth of price in our numbers every year. We're basically covering our labor inflation.

Raw materials for us is a lower piece of the overall bill of material, the concerns we have around here really are labor inflation, and we seem to be getting enough price out of our customers to cover that and still provide them with great value and make them feel like the value proposition is huge with HEICO to do business with us. The components of the mix, I would say this, we've noticed a nice increase in the gross margin with our repair and overhaul business, and most of that has been attributed to heavier PMA and DER repairs that we've been doing this year.

I would say the mix shift there has been a little bit more favorable towards the PMA and DER. We've also expanded our avionics repairs quite a bit this year.

Those components there have had a positive lift in the gross margin in repair and overhaul, which has translated into the overall segment margin. I'd also say that within specialty products, the core of that business, if you spun the clock back five or six years or so ago, it was really a commercial OE play pre-COVID, let's say.

It was all about seats and thermal blankets and insulation and things like that. What we've noticed post-COVID is a real uptick, and Eric's talked about it earlier, in the defense business we have there, whether it's missile hardware, whether it's drone hardware, things like that, structural pieces that we're making.

That shift towards more of a heavier defense flavor in specialty products, rather than the commercial OE, has had a little bit of an improvement on the margin. I think those two things have helped.

Then, of course, our parts business has been off the charts. It's been growing at a tremendous pace, outgrowing the other verticals.

As that business continues to outperform, it absorbs a lot of the fixed costs that Eric talked about earlier. It does have a little bit of a, I guess, an efficiency play within our SG&A and our fixed-cost spend.

Those are really the key contributors to the FSG. Most of that is very durable, Noah.

I mentioned earlier on the margins, I kind of said 23.5%, 24.5%. It's kind of a wide spread on my expectation, but it is because the mix can play heavy or light in any one particular quarter.

I'll be able to narrow that down as we get further into next year and year after and see how the mix footprint plays out. No, it's all been positive.

I think it's very durable margin improvements, and as we continue to grow, I think we can eke out small improvements just on our leverage in our fixed cost, 20, 30 bps a year, something like that. All positive.

I don't see anything that's like one-time or are not durable.

Okay. That's really helpful color.

I think, obviously you want to have some conservatism in what you're saying about the forward, but the operating margin's still pretty far below the gross margin, just all else equal, if you're growing volumes, you would have your normal incrementals and be able to just expand margins over time. Obviously, it's not always all else equal, but okay.

Can you size how much revenue you generate from missile and missile defense?

We don't size it. If you look in our public filings, you'll see that within the FSG, we do break out specialty products in our defense business.

You can see how that business has grown, but we, for competitive reasons, don't size it.

Okay. Then, how do you expect capital deployed towards acquisitions in '26 to compare to '25, size-wise?

Eric and Victor like to buy every shiny object they can get their hands on, I expect it will continue at a rapid pace. Look, we're not capital constrained, Noah, and we have a tremendous opportunity set in front of us.

We're able to be very selective at this point in time on what we deploy capital on, which is a good thing. The basket of opportunities is as big as it's ever been.

I think we probably should have a repeat of what we did last year in the '26 would be my hope and my expectation, but again, you never know. Remember, we are guided by we want to go 15% to 20% bottom line.

It is a controlled-growth strategy, so that guides us, but we do not walk away from extraordinarily good opportunities for our shareholders. In the event that we outgrow that metric, it's because we had great opportunities in the acquisition front that we just couldn't pass on, right?

That will also guide our thinking on how we deploy the capital.

Noah, just also to add a little bit of color why we're so optimistic on the acquisition front. If you look, we're leveraged at 1.5 times, we're underlevered.

1.6, but that's

1.6.

We're underlevered. We've got plenty of firepower.

Our businesses generate a lot of cash. Just putting that cash to work is a big task.

We've done 110, it's our commercial, we've done 110 acquisitions. We are experienced.

We know what's important. We know how to motivate people.

We've got dozens of entrepreneurs for sellers to speak with to explain why HEICO is the best home that they could possibly imagine. Frankly, we've got an incredible acquisitions team, which is out there pounding the pavement, working really hard, making sure that we're in every process and we're constantly talking to people, and we're talking to them years in advance of when they want to possibly sell their company.

Somebody may be interested in a liquidity event 10 years from now, that's no problem, because there are so many points of contact at HEICO where we can start working with them and connecting them to the HEICO system and help their businesses, help our businesses. Then when they're ready, they're ready.

I think we're in really great position there. If you look, so many of the businesses that we buy were not available to sell to other people.

They were not interested in selling. They were only interested in selling to HEICO.

Actually, Gables Engineering is a perfect example of that, where this business was sought after by so many people in the industry, and they only spoke to HEICO. Of course, they got a very full price, but they only spoke to HEICO and they wanted to make sure that they were able to continue their growth, and HEICO's able to do that.

I appreciate all the detail. Thank you so much.

Thank you.

Thanks, Noah.

Good morning, gentlemen, and obviously pass along my condolences to Mr. Mendelson.

He really was the best of the best, and he's going to be sorely missed here at Gabelli.

Thanks, Tony.

With the Ethos acquisition, like you discussed, it's sort of in one way it's sort of going outside your scope of traditional M&A, but in another way, obviously, is a lot of adjacencies. With the backdrop of a lot of strong growth going forward, is there maybe a sort of a new world order or a new outlook on where you would go across aerospace and defense or maybe other areas of high growth?

Maybe you could talk about, there's so many opportunities out there and as a defense budget, you're seeing a strength there. Maybe you could talk about anything that could be outside your typical adjacencies.

Sure. Tony, first of all, thank you very much for your nice comments about dad, and he always enjoyed his time with you and Mario and held you in the highest regard, both of you.

As far as Ethos, we really like the IGT area. We've been in the IGT area through a number of our businesses for a number of years, for decades, and we like growing, as we say, into adjacent white spaces where we understand the technology, whether it's the engineering or the operations of the turbine, whether it's the manufacturing or the repair technology, distribution.

We think that there's a lot of points of commonality. Some of them are aeroderivatives, they're very, very similar to the aero side, but other ones are pure industrial gas turbines, very, very large machines.

We think that we understand that space quite well. There's going to be a lot of tailwinds for a long period of time.

We think we can add a lot of value. Our initial approach there is to go into that market with a very much OEM-aligned strategy and try to continue to develop and grow that.

We think it's just another very good business for us to enter. Tony, this is Victor.

Adding to that, that's really been our history. If you look back over time, when we started out, when we took over HEICO, it essentially had one product, right, the combustion chamber in the JT8D engine, a PMA part.

That was it, for the most part, and it did some machining and milling. Over the years, we've stepped very carefully, but I think very intentionally and successfully into, as Eric would say, these white space adjacencies, and it's worked out very nicely.

Our product offering today is vastly expanded. It doesn't look anything like it used to, but it's happened over time.

The saying about boiling the frog is in a sense applicable here, that we just do this carefully, slowly, a lot of singles and doubles, no bet-the-company situations, but we just keep at it. I would expect we'll continue doing that.

We don't have any other specifics or data that we can share at this point on exactly where we're going, but you can rest assured that they will be sensible and they will be somehow connected to what we're already doing.

That's great. Thanks so much.

Thank you. Thanks, Tony.

Good morning. Condolences again to your family and company for your father and Chairman.

We look forward to you keeping the legacy alive by preserving the culture.

Thank you. John, we've known you a long time.

He always admired you, that with you and your fidelity, and we appreciate your confidence and your comments.

I wanted to ask, Eric, you've constantly characterized PMA for military as this medium-term opportunity. There's been lots of executive orders and directives, and we had, in particular, a pretty spirited opening statement at AUSA by the Secretary of Army specifically about parts.

Could you give us a sense of what's really changing? Is the opportunity for you being pulled forward?

Then maybe talk about the difference between qualifying a PMA part for a military aircraft relative to a commercial, is it longer or more complicated? Thank you very much.

Look, the the U.S. operates a lot of U.S.

military operates a lot of commercial derivative aircraft, and these a lot of these parts and repairs have been approved by the FAA, and there's no reason the government shouldn't be taking advantage of them. We think, that sort of big picture, that's where the opportunity exists.

As the gap between, what comes out at, as they say, at the in the with the senior people in the quote, unquote, building versus what ends up getting done sometimes can take a fair amount of time. I think this administration is very focused on getting that done.

We have to get that done. That's why we're very bullish on the opportunity.

I hate to provide, super detail into what we're working on, because we do have competitors in everything we do, and I don't like giving them a roadmap. We do think that there's a very good there continues to be very, very good opportunity, and now it's up to the government to really execute on that.

I think that as they execute, the opportunity will be is very rewarding for HEICO.

Thank you. Good luck with the new year.

Thank you. Thanks.

Hey, good morning. Carlos, just to clarify your response to Noah's question, are the specialty products gross margins generally higher or lower than the gross margins in the other sub-markets with FSG?

It's a good question. We don't get into vertical margin profiles.

I would say that, obviously we've said over the years our PMA business is our highest margin business, but the other verticals within the FSG all float around the average margin of the segment. That's about the best I could do for you.

Okay. Then, Eric, if we were to think about the largest and most established customers for FSG's PMA and repair solutions from like United, Delta, Lufthansa, are those customers generally running flat out in terms of buying essentially everything from FSG that they can, or is there still a lot of white space with those existing big customers for FSG to be doing even more for them?

Without commenting on who the largest customers are, that they're buying a lot of our product, but there still remains tremendous potential to each of them. You may ask, well, why is that?

Why is it if they're such big customers and they're buying most of your product or a lot of your product, why don't they buy all of your product? I agree with you, that's very frustrating and something that we talk about all the time.

Sometimes they have an arrangement, a contract with somebody else. Other times it's the time, the inertia that it takes to get these parts approved within the organizations.

I can tell you that we continue to have very big opportunities in many areas, and we are conquering those opportunities quarter by quarter.

I continue to learn of great wins with major airlines on products, whether they're parts or repair services, that they had not done with us in the past. That's why I remain very bullish.

Thank you very much. Thanks.

Eric, Victor, condolences.

Thank you. Thank you very much.

I wanted to ask, you operate a decentralized operating structure with many disparate operating units. When it comes to pursuing new business opportunities, whether it be for Golden Dome or other programs, do you ever find situations where your operating units are competing against each other for the same work package?

Do you force them to collaborate or do you let them pursue those business opportunities independently just to give the overall organization as many shots on goal as you can get? Just your thoughts on that.

Sure. It's extremely rare that we find our businesses in competitive situations.

It's far more common that they actually have cooperative situations. They can help each other out, or sometimes they'll go to a customer together occasionally with a package or something like that.

We don't, as a rule of thumb, police our businesses. We don't tell them what they can sell or they should sell.

We encourage them to work together, and they're very practical, and they do. I think they find the way to rationalize things where they should.

They're always, I will tell you the truth, always most focused on finding the most cost-effective solutions for our customers, because that's what we're known for, the best solution for the customer. I have seen it in the rare case where there is something that's a dual offering, that they're just happy to let the customer make the decision.

What we don't do is curtail dual offerings. We're very careful to not do that.

Right. We also, I can tell you in some of our businesses whereby we have multiple locations, customers may want to deal with the location of the business that's physically closest to them, because it's more convenient.

They may get competing offers from different HEICO businesses, and we're fine with them deciding where they want to send the business. We want to make the customer happy.

Likewise, if the customer wants an independent solution with PMA or DER, we do that. If they want an OEM solution, we do that, too.

We're really agnostic. We want to make sure that we're serving the customer in whatever way they want to be served, and we think that it works out quite well to have multiple businesses in the space, constantly striving for a lower cost, better turnaround, better quality.

That's what makes HEICO such a strong competitor out there.

I'll stick with one question, but wanted to wish you and your families happy holidays. Victor, a happy belated birthday, as well.

If I remember correctly, your birthday was on the 11th.

Thank you, Scott. I appreciate it, and we wish you happy holidays as well.

I'm going to have to find your birthday.

We appreciate that. Thank you.

Thanks, guys. Good morning.

Good morning, Gavin.

Good morning. I guess maybe sort of along those similar lines, how integrated are the HEICO and Wencor part and repair catalogs, and how long can that be a growth tailwind from cross-selling?

We offer a lot of different products across the businesses. There is some overlap, and it's whatever the customer wants.

If they want to buy it from one business or the other, that's fine. If they want to work new development projects with one business or the other, that's fine.

As I've said, I always use the analogy, there are many different types of food out there, and some people may want Italian food, or American food, or French food, whatever, and at HEICO, we really don't care, as long as we're selling them the product. I think that there are a lot of additional opportunities to work together, but we've already really taken advantage of those, and we've really helped the various businesses forward, and I think you can see in the results, it's really worked out quite well.

Great. Thanks.

Also love a diverse diet. Thanks.

Thank you. Thanks, Gavin.

Hi. This is Alexandra Mandery on for Michael Ciarmoli with Truist Securities, and thanks for taking my question.

In terms of your PMA portfolio, what is the exposure like in terms of new engines, including the LEAP, GTF, GE9X, and do you see that as an opportunity, including first-time shop visits on the PMA front?

We normally don't get into details about specific product types or competitors. In general, I can tell you that when an engine is new, it tends to be under warranty, and that's not a big opportunity for us over on the PMA side.

It may be more so over on the repair side. It's as those platforms age and customers want alternatives, that's when it sort of comes into focus with us.

I would just sort of leave it at that, but I can tell you that our technology that we use to be able to engineer parts is consistent across all engines, all components, and we're very confident about our ability to technically develop the current generation, next generation. It's, as far as we're concerned, all within our wheelhouse.

Great. That makes sense.

Can you provide any additional color on general trends in ETG, given the portfolio being well suited for space and defense tech, including next-gen systems, and where you see bookings going?

This is Victor. I think that the trends that we talked about a little bit earlier in the call, the optimism for our various markets is intact.

For some of the reasons that you mentioned, not, by the way, not all of every market is good, and not all of every market offers opportunities. In space, there's a lot of opportunity, but there's a lot of profitless opportunity there, and I think we've been pretty good at avoiding those situations and really going where we can add particular value to our customers and get recognized or be recognized for that in terms of profitability and market position and so on.

The same applies in defense. There's opportunity which we take advantage of in the more established segments of the market, as well as some of the newcomers in the defense tech sector.

We sell to both and are proud to do so. We also believe that the market will continue to evolve such that there will be very important places for both, that one won't necessarily just replace the other.

It's important for us, in a sense, to be everywhere, and I know our businesses have been particularly successful at doing that for a long time. One other note on defense, as we look at the government's focus on cost, and we look at the government's focus on speed, and particularly somebody earlier in the call mentioned the comments from the Army Secretary.

HEICO has always been based on speed. We're not a cost-plus-fixed-fee company.

Overwhelmingly, we have very very little, tiny amount of revenue in the cost-plus-fixed-fee column. It's all on our dime.

We develop it, and maybe develop to specification and maybe develop to something else, but we develop it on our dime and sell it, and it's based on doing it and doing it quickly and responding very quickly to our customers. We are used to doing that, and we are extremely well situated for the environment should it evolve to more of that.

Great. Thank you so much.

Thank you.

Hey, thanks. Good morning, and my condolences.

Larry was a fantastic, kind of a legend in the industry, and always very generous with his time, thank you.

Thank you, Gavin.

I just had a couple quick ones. One, I remember asking Larry, probably seven years ago on an earnings call, how he viewed the Class A stock, and just if there's ever going to be a desire to remove it, and just get the common.

What are your opinions on that?

At the moment, I believe it's status quo. We've talked about the issues over time with that, and of course, the idea of collapsing them requires an exchange value.

Were we to do that at one to one, then we'd have perhaps upset common holders. If we did that at current market prices, we'd have upset Class A holders.

As the two classes are identical in all respects except for voting. Identical, the dividends, the economic benefits, the share of earnings, everything.

They really belong ultimately at the same price. There have been times over the years where they've converged.

We do believe at some point they will converge, and that the Class A is really sort of a screaming value. In fact, you may notice that when we recently bought shares, our directors purchase shares every year equal to a certain portion of their retainer.

When they bought the shares, they, I think, all bought Class A common shares. That really is a screaming value, and I think over time, a rational market will recognize that and push them together.

Gotcha. Okay.

I wanted to ask also, just in terms of demand by region, have other companies in the sector said China may have bought spare parts, pulled forward some purchases. Have you seen any sort of trends that would suggest anything to that of pre-buying or of the PMA parts?

No, we see strength in all of our areas, I would not say that we've seen that. It can be lumpy a little bit, because if people may buy parts a couple times a year for each part number and therefore it can be a little lumpy.

No, I wouldn't say that we've seen any region particularly stronger than the others.

Okay. Then just my last one, in terms of pipeline of new PMA parts that are going to be introduced, typically you guys have given a range, could be as many as 500 in a given year.

What does the pipeline look like for '26 in terms of what's being introduced into the market?

I would say it's consistent with what we've done historically. Really no change there.

We're very happy with the number of parts that we've come out with. We've been at a similar number for a number of years.

It went up when we bought Wencor. I think you can see from the numbers that I think our decision has been quite good in that regard, and so I wouldn't see any substance to change.

All right. Thanks a lot, guys, and happy holidays.

Appreciate it.

Thank you. Thank you.

Hey, guys. This is Carson on behalf of Matt today.

I guess just going off that last question, just wanted to ask on PMAs. How supportive has the FAA been regarding parts approvals there?

It seems like everything related to FAA approvals, whether it be interiors or new aircraft, is just taking longer, has that had any impact on your pipeline of new parts?

No, we've got a great relationship with the FAA, and we interface with them in many different ways. I would say it's really business as usual for us.

No change there. All is progressing very well for us.

Thanks.

Thank you.

Hey, good morning. Thank you, guys.

Good

morning, Louis. Good morning.

Victor, maybe for you, maybe I missed this, but could you give the end market growth within ETG for the quarter, defense versus electronics?

We did not break that out publicly, Louis.

Okay.

I'll take a look in the 10-K. Maybe Carlos, for you, CapEx, you guys aren't one to really spend, but you spent a little bit more in the fourth quarter.

Anything you can sort of point to what that extra spend went to?

No, I think it was sort of business as usual, Louis. We had around year-end, you wind up getting projects accelerated sometimes because you get year-end deals as calendar year closes out.

We still spend around, I think, 1.5%, maybe 1.6% of our revenues on CapEx. That's about where we've been historically on CapEx spend side.

I think as we look into '26, it should be in a similar range, 1.5%, 1.6% times revenues or something like that.

All right. Thank you very much.

You're more than welcome.

Thank you.

Thank you very much, Samara. We appreciate your coverage of the call for us.

We wish everybody on the call a wonderful holiday season, and we thank you for listening today, and we look forward to talking with you on the next call, or if not sooner. Thank you very much.